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2012 Financial News | 2011 Financial News | 2010 Financial News 2008 Financial NewsAtmos Energy Corporation Reports Earnings for Fiscal 2008; Analysts and Media Contact:
For the three months ended September 30, 2008, net income was $1.6 million, or $0.02 per diluted share, compared with a net loss of $5.9 million, or ($0.07) per diluted share, for the same period last year. Regulated operations reported a seasonal net loss of $14.7 million, or ($0.16) per diluted share, during the fiscal 2008 fourth quarter, compared with a seasonal net loss of $13.7 million, or ($0.15) per diluted share, in the prior-year period. Nonregulated operations contributed $16.3 million of net income during the fourth quarter of fiscal 2008, or $0.18 per diluted share, compared with $7.8 million of net income, or $0.08 per diluted share, in the prior-year quarter. Results for nonregulated operations for the prior-year quarter included an after-tax charge of $2.0 million, or $0.02 per diluted share, to write off costs associated with a nonregulated natural gas gathering project. Unrealized margins contributed $0.11 and $0.12 of net income per diluted share for the three months ended September 30, 2008 and 2007. “We are extremely pleased with the financial results achieved in fiscal 2008,” said Robert W. Best, chairman and chief executive officer of Atmos Energy Corporation. “Regulated operations contributed 74 percent of our consolidated net income and experienced a year-over-year boost in earnings per share of more than 20 percent. We remain committed to enhancing the stability and predictability of our regulated earnings by making incremental improvements to rate design and making prudent, strategic investments in rate base. Our nonregulated operations contributed the remaining 26 percent of consolidated net income, reflecting the tenacity of this business in an environment of weakened natural gas market volatility and economic downturn. “Looking forward to fiscal 2009 and beyond, we remain focused on continuing to achieve annual earnings growth per share in the 4 percent to 6 percent range, on average,” Best said. Results for the Year Ended September 30, 2008 Natural gas distribution gross profit increased to $1.0 billion for the year ended September 30, 2008, compared with $952.7 million in the same period last year, before intersegment eliminations. The $53.4 million year-over-year increase primarily reflects a net $40.7 million increase in rates and a $7.5 million accrual recorded during the fiscal 2007 fourth quarter for estimated unrecoverable gas costs that did not recur in the current year. Regulated transmission and storage gross profit increased $32.7 million to $195.9 million for the year ended September 30, 2008, compared with $163.2 million in the prior year, before intersegment eliminations. The 20 percent increase primarily reflects higher revenues resulting from the company’s 2006 and 2007 filings under the Texas Gas Reliability Infrastructure Program (GRIP). Regulated transmission and storage gross profit also benefited from continued favorable market conditions in the Barnett Shale gas producing region in Texas, resulting in an 18 percent increase in consolidated throughput and higher per-unit margins. Natural gas marketing gross profit decreased $11.3 million to $93.0 million for the year ended September 30, 2008, compared with $104.3 million in the prior year, before intersegment eliminations. The decrease primarily reflects a $35.0 million decrease in Atmos Energy Marketing’s (AEM) realized storage and trading activities resulting from a less-volatile natural gas market as well as AEM’s decision to defer physical storage withdrawals and reset its associated financial positions to forward months to increase the potential gross profit in future periods. Delivered gas margins increased $16.6 million as a result of capturing favorable basis gains coupled with a 5 percent increase in consolidated sales volumes. AEM’s unrealized margins increased $7.1 million during the 2008 fiscal year compared with the prior year, principally due to a narrowing of the spreads between current cash prices and forward natural gas prices. Pipeline, storage and other gross profit decreased $4.3 million to $28.3 million for the year ended September 30, 2008, compared with $32.6 million in the prior year, before intersegment eliminations. The decrease was largely due to lower realized margins from storage and asset optimization activities in a less-volatile natural gas market, which created fewer opportunities to capitalize on price fluctuations. Consolidated operation and maintenance expense for the year ended September 30, 2008, was $500.2 million, compared with $463.4 million last year. The $36.8 million increase primarily reflects higher pipeline maintenance, odorization, fuel and administrative costs. Additionally, the prior-year expense included the favorable effect of the Louisiana Public Service Commission’s decision to permit the recovery of $4.3 million of Hurricane-Katrina-related expenses from customers. Continued effective collection efforts during fiscal 2008 partially offset the increase in consolidated operation and maintenance expense. Bad debt expense decreased $4.0 million to $15.7 million, from $19.7 million last year, despite a 12 percent year-over-year increase in gas costs. Interest charges for the year ended September 30, 2008, were $137.9 million, compared with $145.2 million in the prior year. The $7.3 million year-over-year decrease primarily was due to lower average short-term debt balances experienced in the current period. This favorable variance was partially offset by a $6.3 million decrease in interest income principally associated with lower average cash balances in the current fiscal year. Interest income is reported as a component of miscellaneous income. Operating expenses for the year ended September 30, 2007, included a $6.3 million noncash charge associated with the write-off of approximately $3.0 million of costs related to a nonregulated natural gas gathering project and about $3.3 million of obsolete software costs. The capitalization ratio at September 30, 2008, was 54.6 percent, compared with 53.7 percent at September 30, 2007. Short-term debt of $350.5 million was comprised of $330.5 million of borrowings under the company’s existing lines of credit and $20.0 million of commercial paper. Short-term debt was $150.6 million at September 30, 2007, representing amounts outstanding under the company’s commercial paper program. Operating cash flow for the year ended September 30, 2008, was $370.9 million, compared with $547.1 million during fiscal 2007. The $176.2 million decrease primarily reflects the unfavorable timing of gas cost collections, an increase in cash required to collateralize risk management accounts as of September 30, 2008, and changes in various other working capital items. Capital expenditures increased to $472.3 million for the year ended September 30, 2008, from $392.4 million for the same period last year. The $79.9 million increase principally reflects spending in the Mid-Tex Division for the replacement of mains and regulatory compliance, the company’s new automated metering initiative in its natural gas distribution business and spending associated with two nonregulated growth projects. Results for the 2008 Fourth Quarter Ended September 30, 2008 Natural gas distribution gross profit increased $22.2 million to $175.4 million for the three months ended September 30, 2008, compared with $153.2 million in the same period last year, before intersegment eliminations. The increase primarily reflects a net $9.1 million increase in rates and the aforementioned $7.5 million accrual for estimated unrecoverable gas costs that did not recur in the current period. Regulated transmission and storage gross profit increased $12.5 million to $53.1 million for the three months ended September 30, 2008, compared with $40.6 million for the prior-year quarter. This increase primarily reflects higher revenues resulting from the company’s 2006 and 2007 filings under the Texas Gas Reliability Infrastructure Program (GRIP). Regulated transmission and storage gross profit also benefited from continued favorable market conditions in the Barnett Shale gas producing area, resulting in the realization of higher per-unit margins and a 14 percent increase in consolidated throughput. Natural gas marketing gross profit increased $14.7 million to $33.4 million for the three months ended September 30, 2008, compared to $18.7 million for the same period one year ago, before intersegment eliminations. The increase primarily reflects increased storage and trading margins as AEM realized a portion of the storage withdrawal gains that it captured earlier in the fiscal year after deferring storage withdrawals and resetting financial positions to forward months. Delivered gas margins increased $5.3 million largely due to AEM’s ability to earn higher per-unit margins from volatility attributable to weather-related events, which more than offset a 14 percent decrease in consolidated sales volumes. AEM’s unrealized margins decreased $4.6 million during the current quarter, compared with the prior-year quarter, principally due to a widening of the spreads between current cash prices and forward natural gas prices. Pipeline, storage and other gross profit increased $3.7 million to $9.5 million for the three months ended September 30, 2008, from $5.8 million for the three months ended September 30, 2007, before intersegment eliminations. The increase primarily reflects higher unrealized margins. Consolidated operation and maintenance expense for the three months ended September 30, 2008, was $141.2 million, compared with $121.0 million for the three months ended September 30, 2007. The $20.2 million increase primarily reflects higher pipeline maintenance, employee and other administrative costs. Bad debt expense for the quarter was essentially flat compared with the prior-year quarter. Operating expenses for the three months ended September 30, 2007, included a $3.0 million noncash charge associated with the write-off of costs related to a nonregulated natural gas gathering project. Outlook The leadership of Atmos Energy remains focused on enhancing shareholder value by delivering consistent earnings growth. In October 2008, Atmos Energy announced that it expected fiscal 2009 earnings to be in the range of $2.05 to $2.15 per diluted share, excluding any material mark-to-market impact. Net income from regulated operations is expected to be in the range of $140 million to $145 million, and net income from nonregulated operations is expected to be in the range of $47 million to $52 million. Capital expenditures for fiscal 2009 are expected to range from $510 million to $525 million. Operation and maintenance expense is expected to range from $480 million to $490 million in fiscal 2009. The average number of shares outstanding in fiscal 2009 is expected to be between 91 million and 92 million. However, the mark-to-market impact on the nonregulated marketing company’s physical storage inventory at September 30, 2009, and changes in events or other circumstances that the company cannot currently anticipate or predict, including adverse credit market conditions, could result in earnings for fiscal 2009 that are significantly above or below this outlook. Factors that could cause such changes are described below in Forward-Looking Statements and in other company documents on file with the Securities and Exchange Commission. Atmos Energy believes it has sufficient liquidity to support its operating and capital spending plans. Amounts available to the company under existing and new credit facilities coupled with operating cash flow should provide the necessary liquidity to fund the company’s common stock dividend, working capital needs and capital expenditures for fiscal 2009. Conference Call to be Webcast November 12, 2008 Atmos Energy will host a conference call with financial analysts to discuss the financial results for the 2008 fiscal year on Wednesday, November 12, 2008, at 8 a.m. ET. The telephone number is 800-218-8862. The conference call will be webcast live on the Atmos Energy Web site at www.atmosenergy.com. A slide presentation and a playback of the call will be available on the Web site later that day. Atmos Energy officers who will participate in the conference call include: Bob Best, chairman and chief executive officer; Kim Cocklin, president and chief operating officer; Pat Reddy, senior vice president and chief financial officer; Mark Johnson, senior vice president, nonregulated operations; Fred Meisenheimer, vice president and controller; Laurie Sherwood, vice president, corporate development, and treasurer; and Susan Giles, vice president, investor relations. Other Highlights and Recent Developments Election of New Director Appointment of President and Chief Operating Officer $212.5 Million Revolving Credit Facility This news release should be read in conjunction with the attached unaudited financial information. Forward-Looking Statements The matters discussed in this news release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this news release or in any of the company’s other documents or oral presentations, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “objective,” “plan,” “projection,” “seek,” “strategy” or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this news release, including the risks and uncertainties relating to regulatory trends and decisions, the company’s ability to continue to access the capital markets and the other factors discussed in the company’s filings with the Securities and Exchange Commission. These factors include the risks and uncertainties discussed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, and in the company’s Quarterly Report on Form 10-Q for the three and nine months ended June 30, 2008. Although the company believes these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. The company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. About Atmos Energy Atmos Energy Corporation, headquartered in Dallas, is the country's largest natural-gas-only distributor, serving about 3.2 million natural gas distribution customers in more than 1,600 communities in 12 states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy also provides natural gas marketing and procurement services to industrial, commercial and municipal customers primarily in the Midwest and Southeast and manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas. Atmos Energy is a Fortune 500 company. For more information, visit www.atmosenergy.com. Atmos Energy Corporation
Financial Highlights (Unaudited)
Year Ended
Statements of Income September 30 Percentage
----------------------------------
(000s except per share) 2008 2007 Change
----------- ----------- -----------
Gross Profit:
Natural gas distribution
segment $1,006,066 $ 952,684 6%
Regulated transmission and
storage segment 195,917 163,229 20%
Natural gas marketing segment 93,021 104,311 (11)%
Pipeline, storage and other
segment 28,313 32,608 (13)%
Intersegment eliminations (1,991) (2,750) 28%
----------- ----------- -----------
Gross profit 1,321,326 1,250,082 6%
Operation and maintenance expense 500,234 463,373 8%
Depreciation and amortization 200,442 198,863 1%
Taxes, other than income 192,755 182,866 5%
Impairment of long-lived assets -- 6,344 (100)%
----------- ----------- -----------
Total operating expenses 893,431 851,446 5%
Operating income 427,895 398,636 7%
Miscellaneous income 2,731 9,184 (70)%
Interest charges 137,922 145,236 (5)%
----------- ----------- -----------
Income before income taxes 292,704 262,584 11%
Income tax expense 112,373 94,092 19%
----------- ----------- -----------
Net income $ 180,331 $ 168,492 7%
=========== =========== ===========
Basic net income per share $ 2.02 $ 1.94
Diluted net income per share $ 2.00 $ 1.92
Cash dividends per share $ 1.30 $ 1.28
Weighted average shares
outstanding:
Basic 89,385 86,975
Diluted 90,272 87,745
Year Ended
September 30 Percentage
Summary Net Income by Segment (000s) 2008 2007 Change
---------------------------------------- -------- -------- -----------
Natural gas distribution $ 92,648 $ 73,283 26%
Regulated transmission and storage 41,425 34,590 20%
Natural gas marketing 29,989 45,769 (34)%
Pipeline, storage and other 16,269 14,850 10%
-------- -------- -----------
Consolidated net income $180,331 $168,492 7%
======== ======== ===========
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
Three Months Ended
Statements of Income September 30 Percentage
--------------------------------------
(000s except per share) 2008 2007 Change
--------- --------- -----------
Gross Profit:
Natural gas distribution segment $175,414 $153,227 14%
Regulated transmission and storage
segment 53,145 40,582 31%
Natural gas marketing segment 33,357 18,700 78%
Pipeline, storage and other
segment 9,457 5,807 63%
Intersegment eliminations (301) (528) 43%
--------- --------- -----------
Gross profit 271,072 217,788 24%
Operation and maintenance expense 141,170 121,000 17%
Depreciation and amortization 52,783 49,828 6%
Taxes, other than income 39,585 33,172 19%
Impairment of long-lived assets -- 3,055 (100)%
--------- --------- -----------
Total operating expenses 233,538 207,055 13%
Operating income 37,534 10,733 250%
Miscellaneous income (loss) (243) 1,501 (116)%
Interest charges 34,119 35,963 (5)%
--------- --------- -----------
Income (loss) before income taxes 3,172 (23,729) 113%
Income tax expense (benefit) 1,590 (17,815) 109%
--------- --------- -----------
Net income (loss) $ 1,582 $ (5,914) 127%
========= ========= ===========
Basic net income (loss) per share $ 0.02 $ (0.07)
Diluted net income (loss) per share $ 0.02 $ (0.07)
Cash dividends per share $ .325 $ .320
Weighted average shares outstanding:
Basic 89,883 88,581
Diluted 90,761 88,581
Three Months Ended
September 30 Percentage
Summary Net Income (Loss) by Segment
(000s) 2008 2007 Change
-------------------------------------- --------- --------- -----------
Natural gas distribution $(20,794) $(19,181) (8)%
Regulated transmission and storage 6,089 5,504 11%
Natural gas marketing 10,424 5,401 93%
Pipeline, storage and other 5,863 2,362 148%
--------- --------- -----------
Consolidated net income (loss) $ 1,582 $ (5,914) 127%
========= ========= ===========
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
September September
Condensed Balance Sheets 30, 30,
------------------------------------------------
(000s) 2008 2007
---------- ----------
Net property, plant and equipment $4,136,859 $3,836,836
Cash and cash equivalents 46,717 60,725
Accounts receivable, net 477,151 380,133
Gas stored underground 576,617 515,128
Other current assets 184,619 111,189
---------- ----------
Total current assets 1,285,104 1,067,175
Goodwill and intangible assets 739,086 737,692
Deferred charges and other assets 225,650 253,494
---------- ----------
$6,386,699 $5,895,197
========== ==========
Shareholders' equity $2,052,492 $1,965,754
Long-term debt 2,119,792 2,126,315
---------- ----------
Total capitalization 4,172,284 4,092,069
Accounts payable and accrued liabilities 395,388 355,255
Other current liabilities 460,372 408,273
Short-term debt 350,542 150,599
Current maturities of long-term debt 785 3,831
---------- ----------
Total current liabilities 1,207,087 917,958
Deferred income taxes 441,302 370,569
Deferred credits and other liabilities 566,026 514,601
---------- ----------
$6,386,699 $5,895,197
========== ==========
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
Condensed Statements of Cash Flows Year Ended September 30
---------------------------------------------
(000s) 2008 2007
------------ -----------
Cash flows from operating activities
Net income $ 180,331 $ 168,492
Impairment of long-lived assets -- 6,344
Depreciation and amortization 200,589 199,055
Deferred income taxes 97,940 62,121
Changes in assets and liabilities (127,132) 89,813
Other 19,205 21,270
------------ -----------
Net cash provided by operating activities 370,933 547,095
Cash flows from investing activities
Capital expenditures (472,273) (392,435)
Other, net (10,736) (10,436)
------------ -----------
Net cash used in investing activities (483,009) (402,871)
Cash flows from financing activities
Net increase (decrease) in short-term debt 200,174 (213,242)
Net proceeds from long-term debt offering -- 247,217
Settlement of Treasury lock agreement -- 4,750
Repayment of long-term debt (10,284) (303,185)
Cash dividends paid (117,288) (111,664)
Net proceeds from equity offering -- 191,913
Issuance of common stock 25,466 24,897
------------ -----------
Net cash provided by (used in) financing
activities 98,068 (159,314)
------------ -----------
Net decrease in cash and cash equivalents (14,008) (15,090)
Cash and cash equivalents at beginning of
period 60,725 75,815
------------ -----------
Cash and cash equivalents at end of period $ 46,717 $ 60,725
============ ===========
Three Months Ended Year Ended
September 30 September 30
Statistics 2008 2007 2008 2007
------------------------------ --------- --------- --------- ---------
Consolidated natural gas
distribution throughput (MMcf
as metered) 62,057 60,789 429,354 427,869
Consolidated regulated
transmission and storage
transportation volumes (MMcf) 165,784 146,046 595,542 505,493
Consolidated natural gas
marketing sales volumes
(MMcf) 91,041 106,343 389,392 370,668
Natural gas distribution
meters in service 3,191,779 3,187,127 3,191,779 3,187,127
Natural gas distribution
average cost of gas $11.39 $7.29 $9.05 $8.09
Natural gas marketing net
physical position (Bcf) 8.0 12.3 8.0 12.3
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