10-KPeriod: FY2020

ATMOS ENERGY CORP Annual Report, Year Ended Sep 30, 2020

Filed November 13, 2020For Securities:ATO

Summary

Atmos Energy Corporation, the nation's largest natural-gas-only distributor, is primarily focused on the safe and reliable delivery of natural gas across eight states. The company's strategy centers on modernizing its infrastructure, investing in its workforce, and enhancing its safety culture. Key to its financial performance are its regulated operations, where it utilizes various rate mechanisms, including formula rate mechanisms and infrastructure programs, to minimize regulatory lag and ensure timely recovery of capital investments. These mechanisms allow for annual rate adjustments, improving the predictability of earnings. For the fiscal year ended September 30, 2020, Atmos Energy reported net income of $601.4 million, or $4.89 per diluted share. The company continued its capital investment program, allocating $1.9 billion primarily to safety and reliability improvements, with over 85% directed towards these initiatives. Financially, the company maintained a strong position with approximately $2.6 billion in total liquidity and a debt-to-capitalization ratio of 42%. The company also demonstrated its commitment to shareholders by increasing its quarterly dividend.

Financial Highlights

47 data points
Beta

Revenue

$2.82B

76.6% Gross Margin

Net Income

$601.44M

21.3% Net Margin

EPS (Diluted)

$4.89

Total Assets

$15.36B

Cash & Equivalents

$20.81M

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$2.82B
Cost of Revenue$658.85M
Gross Profit$2.16B
Operating Income$824.10M
Interest Expense$84.47M
Net Income$601.44M
EPS (Basic)$4.89
EPS (Diluted)$4.89
Shares Outstanding (Basic)122.79M
Shares Outstanding (Diluted)122.87M

Key Highlights

  • 1Atmos Energy is the largest natural gas-only distributor in the U.S., serving over three million customers across eight states.
  • 2The company's core strategy focuses on infrastructure modernization for safety and reliability, workforce investment, and cultural enhancement.
  • 3Atmos Energy utilizes rate mechanisms like formula rates and infrastructure programs to reduce regulatory lag and recover capital expenditures efficiently.
  • 4In fiscal year 2020, net income was $601.4 million ($4.89 per diluted share), with adjusted net income of $580.5 million ($4.72 per diluted share) excluding a non-cash tax benefit.
  • 5Capital expenditures reached $1.9 billion in fiscal year 2020, with over 85% dedicated to safety and reliability enhancements.
  • 6The company maintained robust liquidity with approximately $2.6 billion in total liquidity and a strong equity capitalization of 60% as of September 30, 2020.
  • 7Atmos Energy increased its quarterly dividend by 8.7% for fiscal year 2021, reflecting its stable earnings and capital structure.

Frequently Asked Questions

Atmos Energy operates through two main reportable segments: the Distribution segment, which includes regulated natural gas distribution and sales operations across eight states, and the Pipeline and Storage segment, which comprises pipeline and storage operations primarily in Texas and Louisiana.

Atmos Energy employs several strategies to manage regulatory lag, including formula rate mechanisms in four states that allow for annual rate adjustments, and infrastructure programs in all states that enable annual rate adjustments for qualifying capital expenditures. These mechanisms aim to recover approximately 90% of capital expenditures within six months and substantially all within twelve months.

For the fiscal year ended September 30, 2020, Atmos Energy reported a net income of $601.4 million, or $4.89 per diluted share. Adjusted net income, excluding a non-cash income tax benefit, was $580.5 million, or $4.72 per diluted share. The company also saw an increase in operating income across both its distribution and pipeline and storage segments.

Atmos Energy, as an essential business, continued to provide natural gas services while implementing safety measures. While there was no material change in residential revenue, the company experienced a 10% year-over-year decline in nonresidential revenue, particularly in the third and fourth fiscal quarters, due to COVID-19. This decline was partially offset by reductions in certain operating and maintenance expenses.