10-QPeriod: Q1 FY2021

ATMOS ENERGY CORP Quarterly Report for Q1 Ended Dec 31, 2020

Filed February 2, 2021For Securities:ATO

Summary

Atmos Energy Corporation reported a strong financial performance for the three months ended December 31, 2020, with net income increasing by 22% year-over-year to $217.7 million, or $1.71 per diluted share. This growth was driven by positive rate outcomes from investments in safety and reliability, customer growth in the distribution segment, and disciplined operating expense management across both distribution and pipeline segments. Capital expenditures remained robust at $456.8 million, with over 85% allocated to enhancing the safety and reliability of its infrastructure. The company also successfully managed its capital structure, completing approximately $722 million in long-term debt and equity financing and maintaining a healthy equity capitalization of 58.5%. The company's Board of Directors approved an 8.7% increase in the quarterly dividend for fiscal year 2021, reflecting confidence in sustained financial performance.

Financial Highlights

43 data points
Beta

Revenue

$914.48M

68.5% Gross Margin

Net Income

$217.68M

23.8% Net Margin

EPS (Diluted)

$1.71

Total Assets

$16.48B

Cash & Equivalents

$457.60M

Free Cash Flow

$157.07M

Financial Statements
Beta
Revenue$914.48M
Cost of Revenue$288.26M
Gross Profit$626.22M
Operating Income$298.84M
Interest Expense$22.01M
Net Income$217.68M
EPS (Basic)$1.71
EPS (Diluted)$1.71
Shares Outstanding (Basic)127.03M
Shares Outstanding (Diluted)127.03M

Key Highlights

  • 1Net income rose 22% to $217.7 million ($1.71/share) for the three months ended December 31, 2020, compared to $178.7 million ($1.47/share) in the prior year.
  • 2Operating income for the distribution segment increased 16% driven by rate adjustments and customer growth, despite a slight decrease in sales volumes due to warmer weather and pandemic impacts.
  • 3Pipeline and storage segment operating income saw a significant 23% increase, largely due to rate adjustments stemming from increased safety and reliability spending.
  • 4Capital expenditures totaled $456.8 million for the quarter, with over 85% dedicated to safety and reliability improvements.
  • 5The company raised approximately $722 million through debt and equity financing, maintaining a strong equity capitalization of 58.5% as of December 31, 2020.
  • 6The quarterly dividend was increased by 8.7% for fiscal year 2021, signaling management's confidence in future performance.
  • 7The company maintained compliance with all debt covenants, reporting a total debt-to-total capitalization ratio of 43% at quarter-end.

Frequently Asked Questions

The primary driver of the 22% increase in net income was the positive impact of regulatory ratemaking actions, which included rate adjustments for investments in safety and reliability, coupled with customer growth in the distribution segment. Additionally, a reduction in certain operating and maintenance expenses across both segments contributed to the improved profitability.

Atmos Energy invested $456.8 million in capital expenditures, with the majority focused on enhancing the safety and reliability of its infrastructure. The company also successfully raised approximately $722 million through a combination of debt and equity financing, which helped maintain its target capital structure and strong liquidity position.

The company's Board of Directors approved an 8.7% increase in the quarterly dividend for fiscal year 2021. This increase reflects the company's sustained financial performance and its commitment to delivering value to shareholders.

Atmos Energy continues to operate essential services with significant remote work arrangements for employees. While the pandemic has led to temporary suspensions of customer disconnections and late fees, impacting service order revenues and increasing bad debt expense, the company is working with customers on flexible payment options. The company's ratemaking mechanisms and investments in infrastructure are helping to mitigate some of the financial impacts.