Atmos Energy Reports Earnings for Fiscal 2021 Third Quarter

Source: www.gulfoilandgas.com 8/4/2021, Location: North America

Atmos Energy Corporation reported consolidated results for its third fiscal quarter ended June 30, 2021.

Highlights
- Earnings per diluted share was $4.77 for the nine months ended June 30, 2021; $0.78 per diluted share for the third fiscal quarter.
- Consolidated net income was $616.8 million for the nine months ended June 30, 2021; $102.4 million for the third fiscal quarter.
- Capital expenditures totaled $1,358.0 million for the nine months ended June 30, 2021, with approximately 87 percent of capital spending related to system safety and reliability investments.

Outlook
- Earnings per diluted share for fiscal 2021 is expected to be in the higher end of the previously announced range of $4.90 to $5.10.
- Capital expenditures are expected to be in the range of $2.0 billion to $2.2 billion in fiscal 2021.
- The company's Board of Directors has declared a quarterly dividend of $0.625 per common share. The indicated annual dividend for fiscal 2021 is $2.50, which represents an 8.7% increase over fiscal 2020.

“With strong visibility into the remainder of the year, we continue to believe fiscal 2021 earnings will be at the higher end of our earnings guidance range of $4.90 to $5.10 per diluted share,” said Kevin Akers, President and Chief Executive Officer of Atmos Energy, “and our capital expenditures are expected to be in the range of $2.0 billion to $2.2 billion for this fiscal year.”

Results for the Three Months Ended June 30, 2021
Consolidated operating income decreased $5.6 million to $133.4 million for the three months ended June 30, 2021, from $139.0 million in the prior-year quarter. Rate case outcomes in both segments were more than offset by increased depreciation and property tax expenses, timing of system maintenance, the refund of excess deferred income taxes to customers and increased bad debt expense in our distribution segment.

Distribution operating income increased $5.6 million to $68.1 million for the three months ended June 30, 2021, compared with $62.5 million in the prior-year quarter. The increase primarily reflects a net $25.4 million increase in rates, an $8.9 million increase in weather and consumption, partially offset by a $12.7 million increase in bad debt expense, a $9.3 million increase in depreciation and property tax expenses associated with increased capital investments, a $3.2 million increase in pipeline maintenance and other activities and a $2.6 million increase in employee related costs.

Pipeline and storage operating income decreased $11.3 million to $65.3 million for the three months ended June 30, 2021, compared with $76.5 million in the prior-year quarter. This decrease is primarily attributable to a $14.4 million increase in rates that was more than offset by a $10.0 million decrease due to the refund of excess deferred income taxes to customers, an $8.4 million increase in system maintenance expenses primarily due to timing, a $3.4 million increase in depreciation and property tax expenses due to increased capital investments, and a $1.7 million decrease in through system revenues.

Results for the Nine Months Ended June 30, 2021
Consolidated operating income increased $90.7 million to $814.0 million for the nine months ended June 30, 2021, compared to $723.3 million in the prior year, which primarily reflects rate outcomes in both segments and customer growth in our distribution segment, partially offset by higher bad debt expense and lower service order revenue in our distribution segment, lower through system revenue in our pipeline and storage segment and increased depreciation and property tax expenses.

Distribution operating income increased $84.6 million to $580.9 million for the nine months ended June 30, 2021, compared with $496.3 million in the prior year. The increase reflects a net $128.1 million increase in rates and customer growth of $15.0 million, partially offset by a $31.3 million increase in depreciation and property tax expenses associated with increased capital investments, increased bad debt expense of $21.5 million and an $8.6 million decrease in service order revenues.

Pipeline and storage operating income increased $6.2 million to $233.1 million for the nine months ended June 30, 2021, compared with $226.9 million in the prior year. This increase is primarily attributable to a $41.9 million increase from our GRIP filings approved in fiscal 2020 and 2021, partially offset by a $14.9 million increase in depreciation and property tax expenses due to increased capital investments, a $16.6 million decrease due to the refund of excess deferred income taxes to customers and a $6.5 million decrease in through system revenues.

Capital expenditures decreased $47.7 million to $1,358.0 million for the nine months ended June 30, 2021, compared with $1,405.7 million in the prior year, primarily as a result of timing of spending.

For the nine months ended June 30, 2021, the company generated negative operating cash flow of $1,158.5 million, a $2,054.0 million decrease compared with the nine months ended June 30, 2020. The year-over-year decrease is primarily the result of gas costs incurred during Winter Storm Uri.

Our equity capitalization ratio at June 30, 2021 was 51.5%, compared with 60.0% at September 30, 2020, due to the issuance of $600 million of 1.50% senior notes in October 2020 and a $2.2 billion debt issuance in March 2021 in order to finance gas costs incurred during Winter Storm Uri. Excluding the $2.2 billion of incremental financing, our equity capitalization ratio would have been 60.2% at June 30, 2021.


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