01—Abstract
Summary
Summary of the 10-K filed November 13, 2020. Cited figures are marked; the original filing is the authoritative source.
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 milliona, 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 billionb in total liquidity and a debt-to-capitalization ratio of 42%. The company also demonstrated its commitment to shareholders by increasing its quarterly dividend.
02—Key points
Key Highlights
- Atmos Energy is the largest natural gas-only distributor in the U.S., serving over three million customers across eight states.
- The company's core strategy focuses on infrastructure modernization for safety and reliability, workforce investment, and cultural enhancement.
- Atmos Energy utilizes rate mechanisms like formula rates and infrastructure programs to reduce regulatory lag and recover capital expenditures efficiently.
- In 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.
- Capital expenditures reached $1.9 billion in fiscal year 2020, with over 85% dedicated to safety and reliability enhancements.
- The company maintained robust liquidity with approximately $2.6 billion in total liquidity and a strong equity capitalization of 60% as of September 30, 2020.
- Atmos Energy increased its quarterly dividend by 8.7% for fiscal year 2021, reflecting its stable earnings and capital structure.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Atmos Energy Corp kept $0.21.
- Revenue$2.82B100.0%
- Cost of revenue−$658.9M23.4%
- Gross profit$2.16B76.6%
- Operating costs−$1.34B47.4%
- Operating income$824.1M29.2%
- Interest, other & tax−$222.7M7.9%
- Net income$601.4M21.3%
Where FY2020 revenue went
$2.82B- Operating costs: $1.34B, 47% of revenue
- Cost of revenue: $658.9M, 23% of revenue
- Net income: $601.4M, 21% of revenue
- Interest, other & tax: $222.7M, 7.9% of revenue
Kept 21% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed November 13, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $2.82B$2.90B | −2.8% |
| Cost of Revenue | $658.85M$858.84M | −23.3% |
| Gross Profit | $2.16B$2.04B | +5.8% |
| Operating Income | $824.10M$746.06M | +10.5% |
| Interest Expense | $84.47M$103.15M | −18.1% |
| Net Income | $601.44M$511.41M | +17.6% |
| EPS (Basic) | $4.89$4.36 | +12.2% |
| EPS (Diluted) | $4.89$4.35 | +12.4% |
| Shares Outstanding (Basic) | 122.79M117.20M | +4.8% |
| Shares Outstanding (Diluted) | 122.87M117.46M | +4.6% |
05—Questions
Frequently Asked Questions
What are Atmos Energy's main business segments?
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.
How does Atmos Energy manage regulatory lag?
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.
What was the financial performance of Atmos Energy in fiscal year 2020?
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.
How did COVID-19 impact Atmos Energy's operations in fiscal year 2020?
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.
06—Continue