10-QPeriod: Q2 FY2010

ATMOS ENERGY CORP Quarterly Report for Q2 Ended Mar 31, 2010

Filed May 6, 2010For Securities:ATO

Summary

Atmos Energy Corporation (ATO) reported its financial results for the three and six months ended March 31, 2010. For the third quarter of fiscal year 2010, the company saw a net income of $114.1 million, or $1.22 per diluted share, a decrease from $129.0 million, or $1.40 per diluted share, in the same period last year. This decline was partly due to a decrease in net income from regulated transmission and storage, natural gas marketing, and pipeline, storage, and other segments, partially offset by growth in the natural gas distribution segment. For the first six months of fiscal year 2010, net income was $207.5 million, or $2.22 per diluted share, a slight increase from $205.0 million, or $2.23 per diluted share, in the prior-year period. The company's regulated operations contributed significantly to net income, with non-regulated operations showing mixed performance, particularly the natural gas marketing segment which saw an increase in unrealized margins. Management highlighted the continued access to capital markets and positive rating outlooks from credit agencies.

Financial Highlights

25 data points
Beta

Net Income

$114.13M

EPS (Diluted)

$1.22

Cash & Equivalents

$231.15M

Free Cash Flow

$483.36M

Financial Statements
Beta
Cost of Revenue$1.49B
Gross Profit$445.44M
Operating Expenses$229.78M
Operating Income$219.76M
Interest Expense$39.58M
Net Income$114.13M
EPS (Basic)$1.22
EPS (Diluted)$1.22
Shares Outstanding (Basic)92.52M
Shares Outstanding (Diluted)92.85M

Key Highlights

  • 1Net income for the three months ended March 31, 2010 was $114.1 million, or $1.22 per diluted share, down from $129.0 million, or $1.40 per diluted share, in the prior year's comparable period.
  • 2For the six months ended March 31, 2010, net income was $207.5 million, or $2.22 per diluted share, a slight increase from $205.0 million, or $2.23 per diluted share, in the prior year's comparable period.
  • 3Consolidated distribution throughput increased by 26% in the three months ended March 31, 2010 due to colder weather, while regulated transmission and storage throughput decreased by 20%.
  • 4Regulated operations contributed 84% of net income for the six-month period, with non-regulated operations contributing the remaining 16%.
  • 5The company reported $231.15 million in cash and cash equivalents at March 31, 2010, an increase from $111.20 million at September 30, 2009.
  • 6Long-term debt remained stable at approximately $2.16 billion as of March 31, 2010, with shareholders' equity increasing to $2.34 billion from $2.18 billion.
  • 7The company received an upgrade in its rating outlook from stable to positive from Moody's in March 2010.

Frequently Asked Questions

The decrease in net income for the three months ended March 31, 2010, was primarily due to lower net income contributions from the regulated transmission and storage, natural gas marketing, and pipeline, storage, and other segments, which were partially offset by an increase in the natural gas distribution segment. A state sales tax refund of $4.5 million positively impacted net income for the period.

Long-term debt remained relatively stable, totaling approximately $2.16 billion as of March 31, 2010, and September 30, 2009. Shareholders' equity, however, saw an increase from $2.18 billion as of September 30, 2009, to $2.34 billion as of March 31, 2010, indicating a strengthening of the company's equity base.

Atmos Energy continues to access capital markets effectively, with credit ratings affirmed and an improved outlook from Moody's. The company believes its liquidity from senior notes, committed credit facilities, and operating cash flows is sufficient to fund its working capital needs and capital expenditure program for the remainder of fiscal 2010.

Colder weather in most of Atmos Energy's service areas led to a 26% increase in consolidated distribution throughput during the three months ended March 31, 2010, positively impacting the natural gas distribution segment. This was partly offset by reduced demand in the regulated transmission and storage segment.