01—Abstract
Summary
Summary of the 10-K filed November 12, 2019. Cited figures are marked; the original filing is the authoritative source.
Atmos Energy Corporation's fiscal year 2019 10-K report highlights a company focused on modernizing its natural gas distribution and transmission infrastructure, with capital expenditures increasing approximately 14%a annually to support these initiatives.
The company operates under a regulated model across eight states, with its primary segments being distribution and pipeline/storage. Atmos Energy benefits from regulatory mechanisms designed to reduce "regulatory lag" and ensure timely recovery of capital investments, which are crucial for maintaining safety and reliability. Financially, the company reported net income of $511.4 millionb or $4.35 per diluted share for fiscal year 2019.
Adjusted net income (excluding the impact of the 2017 Tax Cuts and Jobs Act) showed growth, demonstrating operational improvements. The company also demonstrated a commitment to returning value to shareholders through increased dividends and a strong performance relative to its peer group over the past five years. Despite the capital-intensive nature of its business and ongoing regulatory processes, Atmos Energy appears well-positioned to continue investing in its infrastructure and delivering stable returns.
02—Key points
Key Highlights
- Atmos Energy is a large, natural-gas-only distributor serving over three million customers across eight states.
- The company is actively investing in modernizing its infrastructure, with capital expenditures growing annually.
- Regulatory mechanisms are in place in most jurisdictions to reduce "regulatory lag" and ensure timely recovery of capital investments.
- Fiscal year 2019 net income was $511.4 million ($4.35 per diluted share), with adjusted net income showing year-over-year growth.
- Atmos Energy's total shareholder return over the past five years has outperformed the S&P 500 and a peer group index.
- The company's financial position is supported by a stable credit rating (investment grade) and access to capital markets.
- Dividend payments have consistently increased, reflecting confidence in the company's financial performance and future prospects.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Atmos Energy Corp kept $0.18.
- Revenue$2.90B100.0%
- Cost of revenue−$858.8M29.6%
- Gross profit$2.04B70.4%
- Operating costs−$1.30B44.7%
- Operating income$746.1M25.7%
- Interest, other & tax−$234.7M8.1%
- Net income$511.4M17.6%
Where FY2019 revenue went
$2.90B- Operating costs: $1.30B, 45% of revenue
- Cost of revenue: $858.8M, 30% of revenue
- Net income: $511.4M, 18% of revenue
- Interest, other & tax: $234.7M, 8.1% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed November 12, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.90B$3.12B | −6.9% |
| Cost of Revenue | $858.84M$1.17B | −26.5% |
| Gross Profit | $2.04B$1.95B | +4.9% |
| Operating Income | $746.06M$727.93M | +2.5% |
| Interest Expense | $103.15M$106.65M | −3.3% |
| Net Income | $511.41M$603.06M | −15.2% |
| EPS (Basic) | $4.36$5.43 | −19.7% |
| EPS (Diluted) | $4.35$5.43 | −19.9% |
| Shares Outstanding (Basic) | 117.20M111.01M | +5.6% |
| Shares Outstanding (Diluted) | 117.46M111.01M | +5.8% |
05—Questions
Frequently Asked Questions
What is Atmos Energy's primary business and service area?
Atmos Energy Corporation is one of the largest natural-gas-only distributors in the United States, serving over three million residential, commercial, public authority, and industrial customers. Its operations are primarily located in eight states, with a significant concentration in Texas.
How does Atmos Energy recover its infrastructure investments?
The company utilizes various regulatory mechanisms, including formula rate mechanisms and infrastructure programs in most of its service areas. These mechanisms are designed to reduce regulatory lag by allowing for annual adjustments to rates for qualifying capital expenditures, aiming to recover approximately 90% of capital expenditures within six months and substantially all within twelve months.
What was the financial performance of Atmos Energy in fiscal year 2019?
For fiscal year 2019, Atmos Energy reported net income of $511.4 million, or $4.35 per diluted share. When adjusted for the non-recurring benefit from the Tax Cuts and Jobs Act of 2017 recognized in fiscal year 2018, adjusted net income showed a 15% increase compared to the prior year, driven by positive rate outcomes and customer growth.
How does Atmos Energy manage commodity price risk?
The company's distribution segment is largely insulated from commodity price risk through purchased gas cost adjustment mechanisms, which allow for the pass-through of gas costs to customers without markup. This means increases in gas costs are offset by corresponding increases in revenues. While the company uses financial instruments to mitigate volatility for customers during the winter heating season, these are generally not designated as hedges for accounting purposes in the distribution segment.
06—Continue