01—Abstract
Summary
Summary of the 10-K filed November 12, 2021. Cited figures are marked; the original filing is the authoritative source.
Atmos Energy Corporation (ATO) reported a strong fiscal year 2021, driven by significant capital investments in safety and reliability across its natural gas distribution and pipeline operations.
The company experienced a 17% increase in operating income for its distribution segment, primarily due to favorable rate adjustments and customer growth, partially offset by increased bad debt expense and maintenance costs. The pipeline and storage segment saw a slight decrease in operating income, mainly due to tighter regional spreads impacting APT's thru-system activities, though rate adjustments from GRIP filings provided a partial offset. Financially, ATO demonstrated resilience, with net income rising to $665.6 milliona ($5.12/share) from $601.4 million ($4.89/share) in the prior year, even after accounting for a non-recurring tax benefit in 2020.
The company successfully managed its capital expenditures, with over 85%b allocated to safety and reliability projects, and secured substantial long-term debt and equity financing. Despite a temporary credit rating downgrade by S&P following Winter Storm Uri, the company maintained investment-grade ratings and sufficient liquidity. The company's commitment to shareholder returns is evidenced by an 8.8% increase in its quarterly dividend for fiscal year 2022.
02—Key points
Key Highlights
- Atmos Energy reported a 17% increase in operating income for its distribution segment, driven by rate adjustments and customer growth.
- Net income increased to $665.6 million ($5.12 per diluted share) in fiscal 2021, up from $601.4 million ($4.89 per diluted share) in fiscal 2020.
- Capital expenditures totaled $2.0 billion, with over 85% dedicated to improving safety and reliability of its infrastructure.
- The company secured over $3.4 billion in long-term debt and equity financing during fiscal 2021, strengthening its financial position.
- Despite the impact of Winter Storm Uri, Atmos Energy maintained investment-grade credit ratings and reported approximately $2.9 billion in total liquidity as of September 30, 2021.
- The company announced an 8.8% increase in its quarterly dividend for fiscal year 2022, reflecting financial stability and commitment to shareholder returns.
- Regulatory mechanisms, including formula rate mechanisms and infrastructure programs, are effectively reducing regulatory lag, allowing for timely recovery of capital investments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Atmos Energy Corp kept $0.20.
- Revenue$3.41B100.0%
- Cost of revenue−$1.03B30.3%
- Gross profit$2.37B69.7%
- Operating costs−$1.47B43.1%
- Operating income$905.0M26.6%
- Interest, other & tax−$239.4M7.0%
- Net income$665.6M19.5%
Where FY2021 revenue went
$3.41B- Operating costs: $1.47B, 43% of revenue
- Cost of revenue: $1.03B, 30% of revenue
- Net income: $665.6M, 20% of revenue
- Interest, other & tax: $239.4M, 7.0% of revenue
Kept 20% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed November 12, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $3.41B$2.82B | +20.8% |
| Cost of Revenue | $1.03B$658.85M | +56.7% |
| Gross Profit | $2.37B$2.16B | +9.8% |
| Operating Income | $905.00M$824.10M | +9.8% |
| Interest Expense | $83.55M$84.47M | −1.1% |
| Net Income | $665.56M$601.44M | +10.7% |
| EPS (Basic) | $5.12$4.89 | +4.7% |
| EPS (Diluted) | $5.12$4.89 | +4.7% |
| Shares Outstanding (Basic) | 129.78M122.79M | +5.7% |
| Shares Outstanding (Diluted) | 129.83M122.87M | +5.7% |
05—Questions
Frequently Asked Questions
What were the key drivers of Atmos Energy's financial performance in fiscal year 2021?
Key drivers included significant capital investments in safety and reliability projects, leading to favorable rate adjustments across its service territories. Customer growth in the distribution segment also contributed positively. These factors were partially offset by increased bad debt expenses and system maintenance costs.
How did Winter Storm Uri impact Atmos Energy's financial results and operations?
Winter Storm Uri resulted in unprecedented natural gas costs, leading to approximately $2.3 billion in aggregated natural gas purchases in February 2021. To manage these costs, Atmos Energy incurred incremental financing and recorded a significant regulatory asset. While the storm led to a temporary credit rating downgrade by S&P, the company maintained sufficient liquidity and plans to recover these costs through securitization and regulatory mechanisms.
What is Atmos Energy's strategy for recovering capital investments?
Atmos Energy employs a strategy focused on modernizing its natural gas distribution and transmission systems. It utilizes regulatory mechanisms such as formula rate mechanisms and infrastructure programs in all its operating states. These programs allow for annual adjustments to rates to recover qualifying capital expenditures, effectively reducing regulatory lag and enabling recovery of approximately 90% of capital expenditures within six months.
How is Atmos Energy managing its debt and liquidity?
The company actively manages its debt through a combination of internally generated cash flows and external debt and equity financing. It has access to a $1.5 billion commercial paper program and $2.5 billion in committed revolving credit facilities. During fiscal year 2021, it raised over $3.4 billion in long-term debt and equity to fund capital expenditures and manage obligations, maintaining an equity capitalization ratio between 50% and 60%.
06—Continue