10-QPeriod: Q2 FY2012

ATMOS ENERGY CORP Quarterly Report for Q2 Ended Mar 31, 2012

Filed May 3, 2012For Securities:ATO

Summary

Atmos Energy Corporation (ATO) reported its fiscal second-quarter 2012 financial results, showing a decrease in net income compared to the prior year. The company's performance was impacted by warmer winter weather and unfavorable natural gas market conditions, particularly affecting its nonregulated segment. Despite these headwinds, the regulated segments demonstrated resilience due to favorable rate designs and rate case increases, which largely mitigated the impact of reduced throughput. For the three months ended March 31, 2012, net income was $109.1 million ($1.20 per diluted share), down from $132.2 million ($1.45 per diluted share) in the same period of 2011. This decline was partially attributed to one-time items in the prior year's results. The company is actively pursuing growth in its regulated operations through rate proceedings and infrastructure investments, including significant pipeline expansion projects. Atmos Energy also continues to manage its financial position, with a healthy debt-to-capitalization ratio and ample liquidity from its credit facilities.

Financial Highlights

44 data points
Beta

Net Income

$109.11M

EPS (Diluted)

$1.20

Total Assets

$7.37B

Cash & Equivalents

$47.04M

Free Cash Flow

$376.01M

Financial Statements
Beta
Gross Profit$425.79M
Operating Expenses$223.35M
Operating Income$202.43M
Interest Expense$36.64M
Net Income$109.11M
EPS (Basic)$1.20
EPS (Diluted)$1.20
Shares Outstanding (Basic)90.02M
Shares Outstanding (Diluted)90.32M

Key Highlights

  • 1Net income for the three months ended March 31, 2012, was $109.1 million, a decrease from $132.2 million in the prior year, primarily due to warmer weather and unfavorable market conditions impacting the nonregulated segment.
  • 2Diluted earnings per share (EPS) decreased to $1.20 from $1.45 in the prior year's comparable period.
  • 3The company is undergoing a sale of its natural gas distribution operations in Missouri, Illinois, and Iowa, which are reported as discontinued operations.
  • 4Operating revenues decreased across all segments, with the natural gas distribution segment seeing a notable drop.
  • 5Capital expenditures increased significantly to $311.1 million for the six months ended March 31, 2012, from $246.7 million in the prior year, reflecting investments in infrastructure and system improvements.
  • 6Atmos Energy maintained compliance with its debt covenants and had a total debt-to-capitalization ratio of 50.2% as of March 31, 2012.
  • 7The company actively pursued rate increases and infrastructure program filings across its regulated divisions to support earnings growth.

Frequently Asked Questions

The decrease in net income was primarily due to warmer winter weather and unfavorable natural gas market conditions, which negatively impacted the performance of the nonregulated segment. Additionally, the prior year's results benefited from certain one-time items.

Atmos Energy utilizes a combination of physical storage, fixed-price forward contracts, and financial instruments (such as swaps and options) to mitigate commodity price risk, particularly for its regulated natural gas distribution segment. The nonregulated segment also employs hedging strategies, though its results are more directly influenced by market price fluctuations.

The company entered into a definitive agreement to sell these operations in May 2011, and the transaction was anticipated to close during fiscal year 2012. The financial results for these operations are reported as discontinued operations in the current filing.

Atmos Energy is focused on growing earnings in its regulated segments through rate case filings, infrastructure programs, and annual rate filing mechanisms. These initiatives aim to increase annual operating income and allow for timely recovery of capital investments.