Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q2 2022 Earnings Presentation
33 slides from Atmos Energy's earnings presentation, May 5, 2022
Slide 1: Analyst Call to Review Fiscal 2022 Second Quarter Financial Results
Analyst Call to Review Fiscal 2022 Second Quarter Financial Results May 5, 2022 10:00 a.m. Eastern
Slide 2: Fiscal Q2 2022 Review
Fiscal Q2 2022 Review As of May 4, 2022 Page 2
Slide 3: Q2 Fiscal 2022 Financial Performance: Fiscal 2022 Highlights
Q2 Fiscal 2022 Financial Performance Fiscal 2022 Highlights • Financial Performance • YTD Diluted EPS of $4.24 • $1.2 billion in capital spending; 87% allocated to safety and reliability spending • 8.8% increase in fiscal 2022 annual dividend to $2.72 per diluted share • 38th consecutive year of ris
Slide 4: Consolidated Financial Highlights
Q2 Fiscal 2022 Financial Performance Consolidated Financial Highlights Three Months Ended Six Months Ended March 31 March 31 Segment Net Income 2022 2021 2022 2021 ($millions, except EPS) Distribution $ 269 $ 232 $ 448 $ 386 Pipeline & Storage 56 65 126 128 Net Income $ 325 $ 297 $ 574 $ 514 Diluted
Slide 5: Segment Operating Income Highlights, Three Months
Q2 Fiscal 2022 Financial Performance Segment Operating Income Highlights Three Months Ended 2022 2021 Change March 31 ($millions) Distribution $ 311.3 $ 303.3 $ 8.0 Pipeline & Storage 73.8 78.5 (4.7) Operating Income $ 385.1 $ 381.8 $ 3.3 Distribution Key Drivers Pipeline & Storage Key Drivers • $60
Slide 6: Segment Operating Income Highlights, Six Months
Q2 Fiscal 2022 Financial Performance Segment Operating Income Highlights Six Months Ended 2022 2021 Change March 31 ($millions) Distribution $ 501.8 $ 512.8 $ (11.0) Pipeline & Storage 159.2 167.8 (8.6) Operating Income $ 661.0 $ 680.6 $ (19.6) Distribution Key Drivers Pipeline & Storage Key Drivers
Slide 7: Capital Spending Highlights
Q2 Fiscal 2022 Financial Performance Capital Spending Highlights $millions Fiscal 2022 YTD CapEx Repair and replace transmission and $ 541 distribution pipelines 142 Pipeline integrity management projects 1% Install & replace measurement & regulating 136 equipment 12% 115 Service line replacement 87
Slide 8: Strong Financial Foundation Supports Capital Spending Program
Q2 Fiscal 2022 Financial Performance Strong Financial Foundation Supports Capital Spending Program Capitalization and Liquidity Profile Total Capitalization1 Liquidity Profile as of 100% March 31, 2022 $3,750 47% $451 75% 48% $582 $2,500 $3.5 billion $100 Available 50% $900 Liquidity as of 3/31/22 $
Slide 9: Financing Highlights
Q2 Fiscal 2022 Financial Performance Financing Highlights • $800 million of long-term debt financing issued YTD • $600 million 2.85% 30-year senior notes issued in October 2021 • $200 million 2.625% senior notes issued in January 2022 due September 2029 • Equity needs satisfied through our ATM progr
Slide 10: Manageable Debt Maturity Schedule Supports Capital Spending Program
Q2 Fiscal 2022 Financial Performance Manageable Debt Maturity Schedule Supports Capital Spending Program Weighted Average Maturity ~19.1 Years1 2 $2,200 0.824% $950 3.73% $750 4.125% $600 $600 $600 $500 $500 1.5% $500 4.30% 2.85% 3.00% 2.625% $400 4.15% 5.50% $200 $150 5.95% 6.75% $10 6.67% 2023 202
Slide 11: Strong Investment Grade Ratings Support Affordable Customer Bills
Q2 Fiscal 2022 Financial Performance Strong Investment Grade Ratings Support Affordable Customer Bills Strong Investment Declining Weighted Average Cost of Debt1 Grade Credit Ratings $6,000 6.0 Standard & Moody’s 5.2 Poor’s $5,000 4.7 5.0 Senior A1 A- 4.2 Unsecured 4.0 $4,000 3.8 4.0 Commercial P-1
Slide 12: Regulatory Highlights
FY 2022 Financial Performance Regulatory Highlights Approved Annualized Key Rate Activity Operating Income Increases1,2 Through May 4, 2022 • $29.6MM Completed $300 • $ 21.7MM – Mid-Tex RRM • $ 8.4MM – Mississippi SIR $250 • $ 2.6MM – Colorado SSIR • $ 1.8MM – Kansas GSRS • $ 0.6MM – Kansas SIP $200
Slide 13: Financial Outlook: Fiscal 2022E Guidance
Financial Outlook Fiscal 2022E Guidance ($millions, except EPS) FY 2021 FY 2022E1 Distribution $ 446 $ 505 - 520 Pipeline & Storage 220 245 - 255 Total Net Income $ 666 $ 750 - 775 Average Diluted Shares 129.8 136.0 - 138.5 Diluted EPS2 $ 5.12 $ 5.50 - 5.60 Capital Spending $ 1,970 $ 2,400 - 2,500 1
Slide 14: Financial Outlook: Fiscal 2022E Guidance, Selected Expenses
Financial Outlook Fiscal 2022E Guidance Selected Expenses FY 2021 FY 2022E1 ($millions) O&M $ 679 $ 690 - 710 D&A $ 478 $ 530 - 540 Interest $ 84 $ 100 - 105 Income Tax $ 154 $ 70 - 80 Effective Tax Rate 18.8% 7% - 9%2 1. Changes in events or other circumstances that the Company cannot currently ant
Slide 15: Regulatory Information
Regulatory Information As of May 4, 2022 Page 15
Slide 16: Regulatory Mechanisms To Support Recovery
Regulatory Mechanisms To Support Recovery Annual Revenue and Lag Revenue Stability and Lag Other Mechanisms Mechanisms Pension and Recovery of Annual Rate Bad Debt Jurisdiction Infrastructure Retirement Cost WNA Certain Stabilization in GCA Trackers COVID-19 Costs Colorado x x Kansas x x x x x Kentu
Slide 17: Key Regulatory Filings – Fiscal 2022E
Key Regulatory Filings – Fiscal 2022E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October – December January – March April – June July – September Mid-Tex and WTX Cities – Mississippi – Anticipate Stable Rate Implemented RRM filing of $59.0MM; Colorado and Kansas – Implemented Kansas – Implemented SIP of
Slide 18: Regulatory Summary
Regulatory Summary Authorized Requested Authorized Effective Date of Last Requested Authorized Requested Authorized Requested Requested Operating Operating Rate Base Debt/ Meters Jurisdiction Date of Last Rate Filing (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Income Income $millio
Slide 19: Regulatory Summary (continued)
Regulatory Summary (continued) Authorized Requested Authorized Effective Date of Last Requested Authorized Requested Authorized Requested Requested Operating Operating Rate Base Debt/ Meters Jurisdiction Date of Last Rate Filing (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Income In
Slide 20: Atmos Pipeline - Texas
Atmos Pipeline - Texas • Atmos Pipeline: Filed 2021 GRIP on February 11, 2022 • Requested an annual operating income increase of $78.8 million • Requested ROE: 11.5%; ROR: 8.87% • Requested capital structure: 47% debt / 53% equity • Requested rate base: $3.4 billion • Test year ended December 31, 20
Slide 21: Colorado - Kansas Division
Colorado - Kansas Division • Kansas: Implemented System Integrity Program (SIP) on April 1, 2022 • Authorized an increase in annual operating income of $0.6 million • Authorized ROE: 9.10%; ROR: 7.03% • Authorized capital structure: 44% debt / 56% equity • Authorized rate base: $5.9 million • Kansas
Slide 22: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Tennessee: Filed Annual Review Mechanism (ARM) on February 1, 2022 • Requested an annual operating income increase of $3.7 million • Requested ROE: 9.80%; ROR: 7.53% • Requested capital structure: 39% debt / 61% equity • Requested rate base: $453.9 million • Kentucky:
Slide 23: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Virginia: Implemented SAVE Infrastructure Program on October 1, 2021 • Authorized an annual operating income increase of $0.3 million • Authorized ROE: 9.20%; ROR: 7.43% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $7.5 million As of Ma
Slide 24: Louisiana Division
Louisiana Division • Louisiana: Filed Annual Rate Stabilization Clause RSC on March 31, 2022 • Requested an increase in annual operating income of $17.7 million • Requested ROR: 7.30% • Requested rate base: $942.4 million • Test year ending December 31, 2021 As of May 4, 2022 Page 24
Slide 25: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Filed Rate Review Mechanism RRM on April 1, 2022 • Requested an increase in annual operating income of $92.6 million • Requested ROE: 9.80%; ROR: 7.33% • Requested capital structure: 41% debt / 59% equity • Requested rate base: $5.2 billion • Test year ending Decem
Slide 26: Mid-Tex Division
Mid-Tex Division • Mid-Tex ATM Cities: Filed 2021 GRIP on February 25, 2022 • Requested an increase in annual operating income of $12.8 million • Requested ROE: 9.80%; ROR: 7.97% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $5.1 billion • Test year ending December 31,
Slide 27: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Implemented 2020 Annual Rate Review Mechanism (RRM) on December 1, 2021 • Authorized an increase in annual operating income of $55.5 million; $21.7 million net of excess deferred income tax amortization • Authorized ROE of 9.80%; ROR of 7.36% • Authorized capital s
Slide 28: Mississippi Division
Mississippi Division • Mississippi: Filed Annual System Integrity Rider (SIR) on March 1, 2022 • Requested an increase in annual operating income of $10.2 million • Requested ROR: 7.81% • Requested rate base: $391.8 million • Forward-looking components - PP&E, accumulated depreciation, accumulated d
Slide 29: Mississippi Division
Mississippi Division • Mississippi: Implemented Annual System Integrity Rider (SIR) on November 1, 2021 • Authorized an increase in annual operating income of $10.5 million; $8.4 million net of excess deferred income tax amortization • Authorized ROR: 7.81% • Authorized rate base: $323.7 million • F
Slide 30: West Texas Division
West Texas Division • West Texas Cities: Filed Rate Review Mechanism RRM on April 1, 2022 • Requested an increase in annual operating income of $8.2 million • Requested ROE: 9.80%; ROR: 7.33% • Requested capital structure: 41% debt / 59% equity • Requested rate base: $856.0 million • Test year endin
Slide 31: West Texas Division
West Texas Division • West Texas Environs: Filed 2021 GRIP on February 25, 2022 • Requested an increase in annual operating income of $1.2 million • Requested ROE: 9.80%; ROR: 7.97% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $855.2 million • Test year ending December
Slide 32: West Texas Division
West Texas Division • West Texas Cities: Implemented 2020 Annual Rate Review Mechanism (RRM) on December 1, 2021 • Authorized annual operating income increase of $3.5 million; $0.2 million net of excess deferred income tax amortization • Authorized ROE: 9.80%; ROR: 7.36% • Authorized capital structu
Slide 33: 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