10-QPeriod: Q3 FY2010

ATMOS ENERGY CORP Quarterly Report for Q3 Ended Jun 30, 2010

Filed August 5, 2010For Securities:ATO

Summary

Atmos Energy Corporation (ATO) reported a net loss of $3.2 million, or $0.03 per diluted share, for the three months ended June 30, 2010, a decrease from a net income of $2.0 million, or $0.02 per diluted share, in the same period of the prior year. This quarterly decline was primarily influenced by unrealized net losses in non-regulated operations, which contrasted with gains in the prior year. However, for the nine months ended June 30, 2010, the company maintained profitability, reporting a net income of $204.3 million, or $2.18 per diluted share, compared to $206.9 million, or $2.25 per diluted share, in the prior year. Regulated operations significantly contributed to the company's financial performance, accounting for 84% of net income during the nine-month period. The natural gas distribution segment, despite a quarterly net loss, showed improved operating income year-over-year for both the three- and nine-month periods, largely due to rate adjustments and increased throughput. The company also highlighted its efforts to manage financial risks through various hedging strategies and maintained compliance with its debt covenants. Despite the quarterly loss, the company's overall financial position remains stable, with positive outlooks from credit rating agencies and ongoing efforts to optimize capital structure and shareholder value, including a recent $100 million accelerated share repurchase program.

Financial Highlights

44 data points
Beta

Net Income

-$3.15M

EPS (Diluted)

$-0.03

Total Assets

$6.59B

Cash & Equivalents

$180.38M

Free Cash Flow

$111.11M

Financial Statements
Beta
Cost of Revenue$517.03M
Gross Profit$247.67M
Operating Expenses$215.41M
Operating Income$32.26M
Interest Expense$37.27M
Net Income-$3.15M
EPS (Basic)$-0.03
EPS (Diluted)$-0.03
Shares Outstanding (Basic)92.65M
Shares Outstanding (Diluted)92.65M

Key Highlights

  • 1For the three months ended June 30, 2010, Atmos Energy reported a net loss of $3.2 million ($0.03/share), down from a net income of $2.0 million ($0.02/share) in the prior year's quarter, mainly due to unrealized losses in non-regulated segments.
  • 2For the nine months ended June 30, 2010, net income was $204.3 million ($2.18/share), a slight decrease from $206.9 million ($2.25/share) in the prior year, with regulated operations contributing 84% of the total.
  • 3Operating income in the Natural Gas Distribution segment improved year-over-year for both the three-month and nine-month periods, driven by rate adjustments and increased throughput.
  • 4The company announced a $100 million accelerated share repurchase agreement, expected to reduce outstanding shares and positively impact EPS.
  • 5Credit rating agencies (Moody's, S&P, Fitch) provided positive outlooks and affirmed ratings, indicating strong financial oversight and market confidence.
  • 6Capital expenditures for the nine months ended June 30, 2010, were $362.3 million, an increase from $342.3 million in the prior year, primarily for IT infrastructure and service centers.
  • 7The company maintained compliance with all debt covenants as of June 30, 2010.

Frequently Asked Questions

The net loss of $3.2 million for the three months ended June 30, 2010, was primarily driven by non-cash, unrealized net losses of $11.1 million in the company's non-regulated operations, which contrasted with net gains in the same period of the prior year.

For the nine months ended June 30, 2010, regulated operations were the primary contributor to profitability, accounting for 84% of the company's total net income, while non-regulated operations contributed the remaining 16%.

The company entered into a $100 million accelerated share repurchase agreement to offset the dilutive impact of stock grants under employee and director incentive plans. This is expected to reduce the number of outstanding shares and add $0.01 to $0.02 to fiscal 2010 diluted earnings per share.

Atmos Energy's liquidity is supported by internally generated funds, commercial paper programs, and committed revolving credit facilities totaling approximately $1.2 billion. The company believes its liquidity sources will be sufficient to fund its working capital needs and capital expenditure program for the remainder of fiscal 2010. Additionally, positive outlooks from credit rating agencies suggest continued access to financing at reasonable costs.