10-QPeriod: Q2 FY2024

ATMOS ENERGY CORP Quarterly Report for Q2 Ended Mar 31, 2024

Filed May 8, 2024For Securities:ATO

Summary

Atmos Energy Corporation (ATO) reported a strong third quarter for its fiscal year 2024, with net income of $432.0 million, or $2.85 per diluted share, a significant increase from $357.7 million, or $2.48 per diluted share, in the same period last year. This growth was primarily driven by positive rate outcomes from investments in safety and reliability, coupled with lower bad debt expenses. The company continues to execute its substantial capital expenditure program, with $645.9 million invested during the quarter, predominantly in its distribution segment to enhance infrastructure. For the six-month period, net income rose to $743.3 million ($4.93 per diluted share) from $629.5 million ($4.40 per diluted share) in the prior year, also benefiting from rate adjustments and reduced bad debt. The company's liquidity remains robust, supported by strong operating cash flows, access to credit facilities, and equity financing. Atmos Energy is actively managing regulatory processes to ensure timely recovery of its investments, a key factor in its ongoing financial performance.

Financial Highlights

46 data points
Beta

Revenue

$1.65B

62.1% Gross Margin

Net Income

$432.02M

26.2% Net Margin

EPS (Diluted)

$2.85

Total Assets

$24.00B

Cash & Equivalents

$263.77M

Free Cash Flow

$746.59M

Financial Statements
Beta
Revenue$1.65B
Cost of Revenue$624.29M
Gross Profit$1.02B
Operating Income$550.99M
Interest Expense$55.44M
Net Income$432.02M
EPS (Basic)$2.85
EPS (Diluted)$2.85
Shares Outstanding (Basic)151.27M
Shares Outstanding (Diluted)151.30M

Key Highlights

  • 1Net income for the three months ended March 31, 2024, increased to $432.0 million ($2.85/share) from $357.7 million ($2.48/share) in the prior year.
  • 2For the six months ended March 31, 2024, net income grew to $743.3 million ($4.93/share) from $629.5 million ($4.40/share) in the prior year.
  • 3Operating income in the Distribution segment increased by 27.1% for the three months and 24.6% for the six months, driven by rate adjustments and customer growth.
  • 4Operating income in the Pipeline and Storage segment saw robust growth, up 42.9% for the three months and 37.7% for the six months, primarily due to rate adjustments and improved through-system activities.
  • 5Capital expenditures for the six months totaled $1.415 billion, with approximately 81% allocated to improving safety and reliability of distribution and transportation systems.
  • 6The company raised approximately $1.2 billion in long-term debt and equity financing during the first six months of fiscal 2024.
  • 7Total debt-to-total-capitalization ratio remained healthy at 40% as of March 31, 2024, well within covenant limits.

Frequently Asked Questions

The primary drivers for the increase in net income were positive rate outcomes from regulatory proceedings, particularly those related to safety and reliability investments, and a reduction in bad debt expense. Additionally, the company benefited from lower purchased gas costs in the distribution segment compared to the prior year.

Atmos Energy funds its capital expenditures through a combination of internally generated cash flows and external financing, including debt and equity. For the six months ended March 31, 2024, the company completed approximately $1.2 billion in long-term debt and equity financing and has significant liquidity available through credit facilities and forward equity sale agreements.

Atmos Energy continues to focus on regulatory mechanisms that reduce lag time for cost recovery, such as infrastructure programs and formula rate mechanisms. The company implemented or received approval for regulatory actions that increased annual operating income by $138.4 million during the first six months of fiscal 2024, and has further proceedings in progress seeking additional increases.

Atmos Energy maintains a healthy capital structure, with a total debt-to-total-capitalization ratio of 40% as of March 31, 2024, which is well within its debt covenants. The company actively manages its financing to achieve its desired capital structure, utilizing a mix of long-term debt and equity.