10-QPeriod: Q1 FY2013

ATMOS ENERGY CORP Quarterly Report for Q1 Ended Dec 31, 2012

Filed February 7, 2013For Securities:ATO

Summary

Atmos Energy Corporation's (ATO) third-quarter report for the period ending December 31, 2012, shows a net income of $80.5 million, or $0.88 per diluted share, an increase from $68.5 million, or $0.75 per diluted share, in the prior year's quarter. This growth was driven by solid performance in both regulated and non-regulated segments, with regulated operations contributing 90% of the net income. The company successfully managed operating expenses and benefited from improved asset optimization in its non-regulated segment. Key financial strengths include an increase in cash and cash equivalents, rising from $64.2 million to $124.6 million, and a healthy debt-to-capitalization ratio of 53.5%. The company also demonstrated robust capital expenditure, investing $190 million in the quarter for infrastructure improvements. Furthermore, Atmos Energy continues to strengthen its financial position through proactive debt management, including issuing new long-term debt and amending credit facilities, while maintaining compliance with all debt covenants. The company also initiated seven regulatory proceedings expected to increase annual operating income by $63.7 million.

Financial Highlights

45 data points
Beta

Net Income

$80.47M

EPS (Diluted)

$0.88

Total Assets

$7.96B

Cash & Equivalents

$124.60M

Free Cash Flow

$29.86M

Financial Statements
Beta
Gross Profit$362.36M
Operating Expenses$207.44M
Operating Income$154.92M
Interest Expense$30.52M
Net Income$80.47M
EPS (Basic)$0.89
EPS (Diluted)$0.88
Shares Outstanding (Basic)90.36M
Shares Outstanding (Diluted)91.31M

Key Highlights

  • 1Net income increased by approximately 17.5% to $80.5 million ($0.88/share) from $68.5 million ($0.75/share) in the prior year's quarter.
  • 2Operating income from continuing operations increased to $154.9 million from $139.5 million, driven by both regulated and non-regulated segments.
  • 3Cash and cash equivalents significantly increased to $124.6 million from $64.2 million, indicating improved liquidity.
  • 4Capital expenditures were robust at $190.0 million, focused on infrastructure improvements across its segments.
  • 5The company completed seven regulatory proceedings expected to increase annual operating income by $63.7 million.
  • 6Debt-to-capitalization ratio remained manageable at 53.5%, with the company in compliance with all debt covenants.
  • 7The company is progressing with the sale of its Georgia natural gas distribution operations, anticipated to close in the third quarter of fiscal 2013.

Frequently Asked Questions

The primary driver of the increase in net income is the solid performance across all operating segments, particularly the regulated natural gas distribution and transmission/storage segments, which benefited from recent rate increases and improved operational efficiencies. Non-regulated segment performance also contributed positively through improved asset optimization.

Atmos Energy is actively managing its debt through a combination of issuing new long-term debt, such as the $500 million in senior notes, and amending its revolving credit facilities to enhance borrowing capacity. The company maintains a manageable debt-to-capitalization ratio of 53.5% and has sufficient liquidity, as evidenced by the increase in cash and cash equivalents to $124.6 million.

The sale of Georgia natural gas distribution operations is expected to close in the third quarter of fiscal 2013. The results of these operations are reported as discontinued operations for the current and prior periods, allowing for a clearer view of the ongoing business performance. This sale is part of the company's strategic focus to streamline its operations.

Operating expenses decreased primarily due to lower legal costs, reduced franchise fees, and regulatory asset establishment for pension costs. While total operating revenues decreased slightly, the company highlights gross profit as a better indicator of performance, which saw a modest decrease due to rate design changes, but was offset by operational efficiencies and the positive impact of regulatory proceedings.