Summary
Atmos Energy Corporation (ATO) filed an 8-K on February 19, 2021, to disclose the significant impact of a historic winter weather storm that began on February 11, 2021. The storm caused unprecedented market prices for natural gas, particularly in Texas and Kansas, leading to extraordinary expenses for the company in procuring supply. In response, regulatory bodies in Texas and Kansas have authorized the recording of these extraordinary costs as regulatory assets, which will be subject to future review for reasonableness. This regulatory treatment is intended to mitigate the immediate impact on customers and to facilitate the company's financing of these increased costs. The company estimates its aggregated natural gas purchases during this period to be between $2.5 to $3.5 billion, generally payable by the end of March 2021. Atmos Energy had approximately $3.0 billion in total liquidity as of February 18, 2021, and is evaluating financing alternatives including debt and equity to cover these incremental purchases while aiming to maintain strong investment-grade credit ratings. Despite these events, the company reaffirmed its fiscal 2021 earnings per diluted share guidance of $4.90 to $5.10, indicating confidence in its ability to manage the financial implications through its financing strategy and regulatory asset recognition.
Key Highlights
- 1Historic winter storm from February 11, 2021, led to unprecedented natural gas market prices.
- 2Extraordinary natural gas procurement costs estimated between $2.5 to $3.5 billion.
- 3Texas and Kansas regulatory bodies authorized the recording of these costs as regulatory assets for future recovery.
- 4Atmos Energy had $3.0 billion in total liquidity as of February 18, 2021.
- 5Company is pursuing various financing alternatives (cash, debt, equity) to fund incremental purchases.
- 6Management aims to maintain strong investment-grade credit ratings through financing strategy.
- 7Fiscal 2021 EPS guidance of $4.90 to $5.10 remains unchanged.