10-KPeriod: FY2014

ATMOS ENERGY CORP Annual Report, Year Ended Sep 30, 2014

Filed November 6, 2014For Securities:ATO

Summary

Atmos Energy Corporation's fiscal year 2014 report highlights strong financial performance, driven by colder weather and successful regulatory rate adjustments. The company's net income increased by 19% over the previous year, reaching $289.8 million, or $2.96 per diluted share. Significant capital investments were made, primarily focused on improving the safety and reliability of its distribution and transportation systems, with a substantial portion of these expenditures being recovered through regulatory mechanisms that reduce lag. The company's strategy emphasizes delivering superior shareholder value and consistent earnings growth. The regulated distribution segment remains the largest contributor to net income, accounting for 89% of consolidated net income from continuing operations. The company also demonstrated a commitment to financial strength by amending its credit facility to increase borrowing capacity and issuing new senior notes to replace maturing debt, while maintaining investment-grade credit ratings. The dividend to shareholders was increased, reflecting confidence in the company's stability and growth prospects.

Financial Highlights

46 data points
Beta

Net Income

$289.82M

EPS (Diluted)

$2.96

Total Assets

$8.59B

Cash & Equivalents

$42.26M

Free Cash Flow

$732.81M

Financial Statements
Beta
Gross Profit$1.58B
Operating Expenses$971.08M
Operating Income$611.35M
Interest Expense$129.29M
Net Income$289.82M
EPS (Basic)$2.96
EPS (Diluted)$2.96
Shares Outstanding (Basic)97.61M
Shares Outstanding (Diluted)97.61M

Key Highlights

  • 1Net income increased by 19% to $289.8 million, or $2.96 per diluted share, in fiscal year 2014.
  • 2Capital expenditures totaled $835.3 million, with 80% dedicated to improving the safety and reliability of its distribution and transportation systems.
  • 3The regulated distribution segment accounted for 89% of consolidated net income from continuing operations, underscoring its importance to the company's financial performance.
  • 4The company successfully amended its credit facility, increasing borrowing capacity to $1.25 billion and extending its expiration date to August 2019.
  • 5Atmos Energy issued $500 million in 30-year senior notes, replacing maturing debt and strengthening its long-term capital structure.
  • 6The company's credit ratings were upgraded by Moody's and S&P, reflecting improved business risk profile and financial stability.
  • 7The quarterly dividend was increased by 5.4% for fiscal year 2015, signaling confidence in future earnings and cash flow.

Frequently Asked Questions

The primary drivers were colder weather conditions, which increased natural gas demand and price volatility, and successful regulatory rate adjustments across its service territories. These factors led to a 19% increase in net income compared to fiscal year 2013.

Atmos Energy invested $835.3 million in capital expenditures, with 80% allocated to enhancing the safety and reliability of its distribution and transportation systems. A significant portion of these investments are expected to be recovered through regulatory mechanisms that reduce the lag time between incurring costs and receiving rate recovery.

Atmos Energy focuses on maintaining a balanced capital structure, targeting a debt-to-capitalization ratio between 50-55%. In fiscal year 2014, the company amended its credit facility to increase borrowing capacity to $1.25 billion and issued $500 million in long-term senior notes to manage its debt profile. Its liquidity remains strong with over $1 billion in capacity from its short-term facilities.

While the regulated operations form the core of the business, the nonregulated segment, which includes natural gas management, marketing, transportation, and storage services, also contributes to overall results. For fiscal year 2014, the nonregulated segment's net income was $32.0 million, and it is managed with a focus on managing commodity price risk.