Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q1 2020 Earnings Presentation
22 slides from Atmos Energy's earnings presentation, Feb 5, 2020
Slide 1: Analyst Call to Review Fiscal 2020 First Quarter Financial Results
Analyst Call to Review Fiscal 2020 First Quarter Financial Results February 5, 2020 9:00 a.m. Eastern
Slide 2: Q1 Fiscal 2020 Highlights
Q1 Fiscal 2020 Highlights ▪ Financial Performance ✓ Diluted EPS of $1.47 ✓ 27% increase in capital spending to $529 million; 86% allocated to safety and reliability spending ✓ Reaffirmed Fiscal 2020 EPS guidance range of $4.58 - $4.73 ✓ 9.5% increase in fiscal 2020 indicated annual dividend to $2.30
Slide 3: Consolidated Financial Results Fiscal 2020 – Q1
Consolidated Financial Results Fiscal 2020 – Q1 Net Income – Q1 Fiscal 2020 versus Q1 Fiscal 2019 Fiscal 2020 – Q1 Fiscal 2019 – Q1 ($millions, except EPS) Net Diluted Net Diluted Income EPS* Income EPS* Segment Net Income Distribution $ 130 $ 115 Pipeline & Storage 49 43 Net Income $ 179 $1.47 $ 15
Slide 4: Segment Operating Income Results
Segment Operating Income Results Quarter Ended 12/31 2019 2018 Change ($millions) Distribution 180.3 169.4 10.9 Pipeline & Storage 72.5 67.0 5.5 Operating Income $ 252.8 $ 236.4 $ 16.4 Distribution Key Drivers Pipeline & Storage Key Drivers ▪ $27.0MM – Increase in rates ▪ $13.7MM – Increase in rates
Slide 5: Capital Spending Mix
Capital Spending Mix Safety & Reliability Investments Support Infrastructure Modernization $millions Fiscal 2020 Q1 CapEx $ 244 Repair and replace transmission and distribution pipelines 4% $ 71 Service line replacement $ 52 Pipeline integrity management projects 10% 86% $ 36 Install & replace measu
Slide 6: Capital Spending
Capital Spending 86% Spent On Safety and Reliability millions $500 $400 $300 $529.2 $200 $416.4 $100 $0 Q1 FY19 Q1 FY20 As of February 4, 2020 6
Slide 7: Fiscal 2020 Q1 Financing Recap
Fiscal 2020 Q1 Financing Recap ▪ $1.1 billion of long-term financing issued through December 31, 2019 ✓ $800 million in long-term debt issued in October 2019 ✓ $300 million 2.625% 10-year senior notes ✓ $500 million 3.375% 30-year senior notes ✓ $259 million in settled equity forward arrangements ▪
Slide 8: Strong Financial Foundation: Capitalization and Liquidity Profile
Strong Financial Foundation Capitalization and Liquidity Profile Total Capitalization Liquidity Profile as of December 31, 2019 100% $2,400 ~ $2.0 billion 5% Available $2,000 $239.6 Liquidity at 41% 36% 12/31/2019 75% $189.3 7 issues, 3.00% - 6.75% $1,600 $35.0 $1,200 50% $800 $1,500.0 59% 59% 25% $
Slide 9: Improved Weighted Average Cost of Long-Term Debt
Strong Financial Foundation Improved Weighted Average Cost of Long-Term Debt Credit Metrics Remain Strong Net Long-Term Debt Interest Rate % $4,500 7 6.2 $4,000 5.9 5.9 6 Strong Investment-Grade Credit Ratings $3,500 4.9 5.2 CFO (Pre-WC) / Adj Debt - ~25% 4.6 5 Standard & $3,000 4.3 Moody’s Poor’s (
Slide 10: Weighted Average Maturity ~22 Years
Strong Financial Foundation Weighted Average Maturity ~22 Years $950 $1,000 3.73% $750 $800 4.125% $600 4.30% $600 $500 $500 ($ millions) 3.0% 4.15% $300 $400 2.625% 5.5% $400 $150 6.75% $200 5.95% $200 $10 6.67% $0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Slide 11: Fiscal 2020E Guidance
Fiscal 2020E Guidance ($millions, except EPS) FY 2019 FY 2020E2 Distribution $ 329 $ 385 - 400 Pipeline & Storage 182 175 - 190 Total Net Income $ 511 $ 560 - 590 Average Diluted Shares 117.5 122.3 - 124.7 Diluted EPS1 $ 4.35 $ 4.58 - $ 4.73 Capital Spending $ 1,693 $ $1,850 - $1,950 1 Since Atmos E
Slide 12: Fiscal 2020E Guidance: Selected Expenses
Fiscal 2020E Guidance Selected Expenses FY 2019 FY 2020E1 ($millions) O&M $ 630 $ 620 - 650 D&A $ 391 $ 425 - 435 Interest $ 103 $ 75 - 85 Income Tax $ 139 $ 145 - 160 Effective Tax Rate 21.4% 20% - 22%2 1 Changes in events or other circumstances that the Company cannot currently anticipate could ma
Slide 13: FY2020 Regulatory Accomplishments
FY2020 Regulatory Accomplishments Approved Annualized Key Rate Activity Operating Income Increases Through 2/4/2020 ▪ $59.2MM Completed– FY20 $millions ✓$ 34.4MM – Mid-Tex RRMs $120 ✓$ 7.6MM – Mississippi SIR ✓$ 6.9MM – Mississippi SRF ✓$ 4.9MM – West TX RRM $100 ✓$ 2.9MM – Kentucky PRP ✓$ 2.1MM – C
Slide 14: Distribution Operations – Regulatory Update: Mid-Tex Division
Distribution Operations – Regulatory Update Mid-Tex Division ▪ Mid-Tex City of Dallas: Filed Dallas Annual Rate Review (DARR) on January 15, 2020 ✓ Requested an increase in annual operating income of $17.1 million ✓ Requested return on equity (ROE) of 9.8%; overall rate of return (ROR) of 7.83% ✓ Re
Slide 15: Distribution Operations – Regulatory Update: West Texas Division
Distribution Operations – Regulatory Update West Texas Division ▪ West Texas Cities: Implemented 2018 Annual Rate Review Mechanism (RRM) on October 1, 2019 ✓ Authorized an annual operating income increase of $4.9 million ✓ Authorized ROE: 9.8%; ROR: 7.83% ✓ Authorized capital structure: 42% debt / 5
Slide 16: Distribution Operations – Regulatory Update: Mississippi Division
Distribution Operations – Regulatory Update Mississippi Division ▪ Mississippi: Implemented Annual System Integrity Rider (SIR) on November 1, 2019 ✓ Authorized an annual operating income increase of $7.6 million ✓ Authorized ROR: 7.81% ✓ Authorized rate base: $185.8 million ✓ Serves approximately 2
Slide 17: Distribution Operations – Regulatory Update: Kentucky/Mid-States Division
Distribution Operations – Regulatory Update Kentucky/Mid-States Division ▪ Kentucky PRP Rate Filing: Implemented annual Pipe Replacement Program (PRP) filing on October 1, 2019 ✓ Authorized an annual operating income increase of $2.9 million ✓ Authorized ROE of 9.65%; ROR of 7.49% ✓ Authorized capit
Slide 18: Distribution Operations – Regulatory Update: Colorado-Kansas Division
Distribution Operations – Regulatory Update Colorado - Kansas Division ▪ Colorado: Implemented System Safety and Integrity Rider (SSIR) on January 1, 2020 ✓ Authorized a $2.1 million increase in annual operating income ✓ Authorized ROE: 9.45%; ROR: 7.55% ✓ Authorized capital structure: 44% debt / 56
Slide 19: Key Regulatory Filings – Fiscal 2020E
Key Regulatory Filings – Fiscal 2020E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October December January March April June July September Mississippi – Implemented Stable Mid-Tex(Dallas) – Filed Dallas Mid-Tex and WTX Cities – Mississippi – Anticipate Stable Rate Filing (SRF) and System Annual Rate Revi
Slide 20: Regulatory Summary
Regulatory Summary Effective Date of Authorized Requested Date of Last Rate Operating Operating Rate Base Requested Authorized Requested Authorized Requested Authorized Requested Last Rate Filing Income Income $ millions Rate Base Rate of Rate of Return on Return on Debt/ Debt/ Meters at Jurisdictio
Slide 21: Regulatory Summary (continued)
Regulatory Summary (continued) Date of Authorized Requested Effective Last Rate Operating Operating Rate Base Requested Authorized Requested Authorized Requested Authorized Requested Date of Last Filing Income Income $ millions Rate Base Rate of Rate of Return on Return on Debt/ Debt/ Meters at Juri
Slide 22: Forward Looking Statements
Forward Looking Statements The matters discussed or incorporated by reference in this presentation 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