Quarterly / Earnings Reports | Financial Results | Capital Markets | Capital Expenditure

Atmos Energy Ups Spending Over Last Year

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Atmos Energy Corporation has reported consolidated results for its fiscal 2015 second quarter and six months ended March 31, 2015. 

Outlook

The leadership of Atmos Energy remains focused on enhancing system safety and reliability through infrastructure investment, while delivering shareholder value and consistent earnings growth. Atmos Energy continues to expect fiscal 2015 earnings to be in the range of $2.90 to $3.05 per diluted share, excluding unrealized margins. Capital expenditures for fiscal 2015 are expected to continue to range between $900 million and $1 billion.

Kim Cocklin, president and chief executive officer of Atmos Energy Corporation said: "Our financial performance reflects the results of infrastructure investments made to enhance the safety and reliability of our system, which is the foundation of our growth strategy. Our well executed regulatory strategy has produced predictable and stable earnings from our regulated operations. We remain on track to deliver our previously stated fiscal 2015 earnings guidance range of between $2.90 and $3.05 per diluted share.”

Results for the Quarter Ended March 31, 2015

Regulated distribution gross profit increased $21.0 million to $406.2 million for the fiscal 2015 second quarter, compared with $385.2 million in the prior-year quarter. Gross profit reflects a net $26.1 million increase in rates, primarily in the Mid-Tex, Mississippi and West Texas Divisions. This increase was partially offset by a $5.9 million decline in weather-related consumption. Although weather was 15 percent colder than normal during the quarter, it was four percent warmer than the prior-year quarter, before adjusting for weather normalization mechanisms.

Regulated pipeline gross profit increased $18.1 million to $91.7 million for the quarter ended March 31, 2015, compared with $73.6 million for the same quarter last year. This increase is primarily the result of a $15.3 million increase in revenues from the Gas Reliability Infrastructure Program (GRIP) filings approved in 2014 and 2015.

Nonregulated gross profit decreased $14.7 million to $22.9 million for the fiscal 2015 second quarter, compared with $37.6 million for the prior-year quarter, as a result of an $11.7 million decrease in realized margins, combined with a $3.0 million decrease in unrealized margins. Realized margins decreased $16.8 million quarter over quarter, as less volatile market conditions created fewer opportunities to capture incremental gross profit compared to the prior-year quarter. In the prior-year quarter, market conditions were more volatile as a result of significantly colder than normal weather. These conditions created opportunities to accelerate physical withdrawals that had been planned for later in the fiscal year to capture incremental gross profit. Realized margins for gas delivery, storage and transportation services increased $5.1 million quarter over quarter, primarily due to a $0.06/Mcf increase in per-unit margins partially offset by a 12 percent decrease in consolidated sales volumes.

Consolidated operation and maintenance expense for the quarter ended March 31, 2015, was $133.5 million, compared with $124.7 million for the prior-year quarter. The $8.8 million increase resulted primarily from increased pipeline maintenance spending and increased legal expenses, partially offset by a reduction in employee-related costs.

Results for the Six Months Ended March 31, 2015

Regulated distribution gross profit increased $45.6 million to $730.0 million for the six months ended March 31, 2015, compared with $684.4 million in the prior-year quarter. Gross profit reflects a net $45.4 million period-over-period increase in rates, primarily in the Mid-Tex, West Texas and Kentucky/Mid-States Divisions. Additionally, gross profit increased $3.3 million from higher transportation revenues and $2.2 million from higher revenue-related taxes. Gross profit decreased $7.9 million from weather-related consumption. Although weather was 10 percent colder than normal during the six months ended March 31, 2015, it was eight percent warmer than the prior-year period, before adjusting for weather normalization mechanisms.

Regulated pipeline gross profit increased $30.3 million to $175.3 million for the six months ended March 31, 2015, compared with $145.0 million during the same period last year. This increase is primarily the result of a $27.8 million increase in revenues from the GRIP filings approved in 2014 and 2015.

Nonregulated gross profit decreased $17.3 million to $38.9 million for the six months ended March 31, 2015, compared with $56.2 million for the prior-year period, as a result of an $11.5 million decrease in realized margins, combined with a $5.8 million decrease in unrealized margins. Realized margins decreased $14.7 million due to significantly lower market volatility in the current period compared to the prior-year period, as discussed above. Realized margins for gas delivery, storage and transportation services increased $3.2 million period over period, primarily due to a $0.02/Mcf increase in per-unit margins partially offset by an eight percent decrease in consolidated sales volumes.

Consolidated operation and maintenance expense for the six months ended March 31, 2015, was $252.0 million, compared with $240.4 million for the prior-year period. The $11.6 million increase resulted primarily from increased pipeline maintenance spending and increased legal expenses, partially offset by a reduction in employee-related costs.

Capital expenditures increased to $441.6 million for the six months ended March 31, 2015, compared with $359.0 million in the prior-year period. The $82.6 million increase is largely due to a $45.2 million increase in spending in the regulated distribution segment, primarily reflecting the timing of spending combined with a planned increase in safety and reliability investment in fiscal 2015. Additionally, spending in the regulated pipeline segment increased $37.2 million in the current-year period primarily due to the enhancement and fortification of two storage fields to further ensure the reliability of gas service to the Mid-Tex Division.

For the six months ended March 31, 2015, the company generated operating cash flow of $540.8 million, a $49.9 million increase compared with the six months ended March 31, 2014. The increase primarily reflects the timing of gas cost recoveries under purchased gas cost mechanisms.

The debt capitalization ratio at March 31, 2015 was 46.1 percent, compared with 46.2 percent at September 30, 2014 and 44.0 percent at March 31, 2014. At March 31, 2015, there was $225.0 million of short-term debt outstanding, compared with $196.7 million at September 30, 2014 with no short-term debt outstanding at March 31, 2014.