Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q2 2023 Earnings Presentation
32 slides from Atmos Energy's earnings presentation, May 4, 2023
Slide 1: Analyst Call to Review Fiscal 2023 Second Quarter Financial Results
Analyst Call to Review Fiscal 2023 Second Quarter Financial Results May 4, 2023 10:00 a.m. Eastern
Slide 2: Fiscal Q2 2023 Review
=aTMOS energy. Fiscal Q2 2023 Review
Slide 3: Q2 Fiscal 2023 Financial Performance: Fiscal 2023 Highlights
Q2 Fiscal 2023 Financial Performance Fiscal 2023 Highlights • Financial Performance • YTD Diluted EPS of $4.40 • $1.4 billion in capital spending; 86% allocated to safety and reliability spending • Tightened fiscal 2023 EPS guidance range to $6.00 to $6.10 from $5.90 to $6.10 • 8.8% increase in fisc
Slide 4: Consolidated Financial Highlights
Q2 Fiscal 2023 Financial Performance Consolidated Financial Highlights Three Months Ended Six Months Ended March 31 March 31 Segment Net Income 2023 2022 2023 2022 ($millions, except EPS) Distribution $ 289 $ 269 $ 483 $ 448 Pipeline & Storage 69 56 147 126 Net Income $ 358 $ 325 $ 630 $ 574 Diluted
Slide 5: Segment Operating Income Highlights, Three Months Ended
Q2 Fiscal 2023 Financial Performance Segment Operating Income Highlights Three Months Ended 2023 2022 Change March 31 ($millions) Distribution $ 335.3 $ 311.3 $ 24.0 Pipeline & Storage 87.3 73.8 13.5 Operating Income $ 422.6 $ 385.1 $ 37.5 Distribution Key Drivers Pipeline & Storage Key Drivers • $5
Slide 6: Segment Operating Income Highlights, Six Months Ended
Q2 Fiscal 2023 Financial Performance Segment Operating Income Highlights Six Months Ended 2023 2022 Change March 31 ($millions) Distribution $ 567.1 $ 501.8 $ 65.3 Pipeline & Storage 176.7 159.2 17.5 Operating Income $ 743.8 $ 661.0 $ 82.8 Distribution Key Drivers Pipeline & Storage Key Drivers • $1
Slide 7: Capital Spending Highlights
Q2 Fiscal 2023 Financial Performance Capital Spending Highlights $millions Fiscal 2023 YTD CapEx Repair and replace transmission and $ 626 distribution pipelines 163 Pipeline integrity management projects 2% 135 Fortifications 12% 125 Install & replace measurement & regulating 86% equipment 124 Serv
Slide 8: Strong Financial Foundation Supports Capital Spending Program
Q2 Fiscal 2023 Financial Performance Strong Financial Foundation Supports Capital Spending Program Capitalization and Liquidity Profile Liquidity Profile as of Total Capitalization1 March 31, 2023 100% ($millions) 1% $3,500 $95 $3,000 39% 75% 45% $673 $2,500 $100 $2,000 $900 $3.3 billion 50% Availab
Slide 9: Financing Highlights
Q2 Fiscal 2023 Financial Performance Financing Highlights • $800 million of long-term debt financing issued YTD • $500 million 5.75% 30-year senior notes issued in October 20221 • $300 million 5.45% 10-year senior notes issued in October 2022 • Equity needs satisfied through our ATM program • $257 m
Slide 10: Manageable Debt Maturity Schedule Supports Capital Spending Program
Q2 Fiscal 2023 Financial Performance Manageable Debt Maturity Schedule Supports Capital Spending Program Weighted Average Maturity ~18.5 Years $1,100 4.168% $950 3.73% $750 4.125% $600 $600 1.5% 4.30% $500 $500 $500 3.00% 2.625% 4.15% $400 5.50% $300 5.45% $200 $150 5.95% 6.75% $10 6.67% 2023 2024 2
Slide 11: Strong Investment Grade Ratings Support Affordable Customer Bills
Q2 Fiscal 2023 Financial Performance Strong Investment Grade Ratings Support Affordable Customer Bills Strong Investment Weighted Average Cost of Debt1 Grade Credit Ratings $7,000 5.0 Standard & 4.7 Moody’s Poor’s 4.5 4.2 $6,000 Senior Unsecured A1 A- 4.0 3.9 3.8 4.0 Commercial Paper P-1 A-2 $5,000
Slide 12: Regulatory Highlights
FY 2023 Financial Performance Regulatory Highlights Approved Annualized Key Rate Activity Operating Income Increases Through May 3, 2023 • $116.0MM Completed $450 • $ 81.4MM – Mid-Tex Cities RRM $400 • $ 12.2MM – Mississippi SRF • $ 8.6MM – Mississippi SIR $350 • $ 7.3MM – West Texas Cities RRM • $
Slide 13: Financial Outlook: Fiscal 2023E Guidance
Financial Outlook Fiscal 2023E Guidance ($millions, except EPS) FY 2022 FY 20231 Distribution $ 522 $ 570 - 590 Pipeline & Storage 252 285 - 295 Total Net Income $ 774 $ 855 - 885 Average Diluted Shares 138.1 144 - 146 Diluted EPS2 $ 5.60 $ 6.00 - 6.10 Capital Spending $ 2,444 $ ~2,700 1. Changes in
Slide 14: Financial Outlook: Selected Expenses
Financial Outlook Fiscal 2023E Guidance Selected Expenses FY 2022 FY 2023E1 ($millions) O&M $ 710 $ 760 - 780 D&A $ 536 $ 600 - 610 Interest $ 103 $ 123 - 129 Income Tax $ 78 $ 105 -120 Effective Tax Rate 9.1% 11% - 13%2 1. Changes in events or other circumstances that the Company cannot currently a
Slide 15: Regulatory Information
Regulatory Information Page 15
Slide 16: Regulatory Mechanisms To Support Recovery
Regulatory Mechanisms To Support Recovery Annual Revenue and Lag Revenue Stability and Lag Mechanisms Mechanisms Pension and Annual Rate Bad Debt in Jurisdiction Infrastructure Retirement Cost WNA Stabilization GCA Trackers Colorado x x Kansas x x x x Kentucky x x x Tennessee x x x x x Virginia x x
Slide 17: Key Regulatory Filings – Fiscal 2023E
Key Regulatory Filings – Fiscal 2023E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October – December January – March April – June July – September Mid-Tex and WTX Cities – Implemented RRM Mississippi – Anticipate Stable Rate Filing filing of $88.3MM; $88.7MM net of excess Colorado – Implemented SSIR fili
Slide 18: Regulatory Summary
Regulatory Summary Effective Date of Authorized Requested Authorized Requested Authorized Requested Authorized Requested Requested Date of Last Rate Operating Operating Rate Base Debt/ Meters Jurisdiction (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income Income $m
Slide 19: Regulatory Summary (continued)
Regulatory Summary (continued) Effective Date of Authorized Requested Authorized Requested Authorized Requested Authorized Requested Requested Date of Last Rate Operating Operating Rate Base Debt/ Meters Jurisdiction (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Inco
Slide 20: Atmos Pipeline - Texas
Atmos Pipeline - Texas • Atmos Pipeline: Filed 2022 GRIP on February 10, 2023 • Requested an increase in annual operating income of $84.9 million • Requested ROE: 11.5%; ROR: 8.87% • Requested capital structure: 47% debt / 53% equity • Requested rate base: $4.1 billion • Test year ended December 31,
Slide 21: Colorado - Kansas Division
Colorado - Kansas Division • Kansas: Implemented System Integrity Program (SIP) on April 1, 2023 • Authorized an increase in annual operating income of $0.8 million • Authorized ROE: 9.10%; ROR: 7.03% • Authorized capital structure: 44% debt / 56% equity • Authorized rate base: $13.3 million • Color
Slide 22: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Kentucky: Implemented Annual PRP on October 2, 2022 • Authorized an annual operating income increase of $1.9 million • Authorized ROE: 10.95%; ROR: 7.75% • Authorized capital structure: 45% debt / 55% equity • Authorized rate base: $16.0 million • Subject to refund • V
Slide 23: Louisiana Division
Louisiana Division • Louisiana: Filed Annual Rate Stabilization Clause RSC on March 31, 2023 • Requested an increase in annual operating income of $16.5 million • Requested ROR: 7.30% • Requested rate base: $1.1 billion • Test year ending December 31, 2022 As of May 3, 2023 Page 23
Slide 24: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Filed Rate Review Mechanism RRM on March 31, 2023 • Requested an increase in annual operating income of $113.8 million • Requested ROE: 9.80%; ROR: 7.44% • Requested capital structure: 41% debt / 59% equity • Requested rate base: $6.1 billion • Test year ending Dec
Slide 25: Mid-Tex Division
Mid-Tex Division • Mid-Tex ATM Cities: Filed 2022 GRIP on February 24, 2023 • 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: $5.9 billion • Test year ending December 31,
Slide 26: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Implemented Rate Review Mechanism RRM on October 1, 2022 • Authorized an increase in annual operating income of $81.4 million • Authorized ROE: 9.80%; ROR: 7.28% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $5.2 billion • Test year
Slide 27: Mississippi Division
Mississippi Division • Mississippi: Filed Annual System Integrity Rider (SIR) on March 1, 2023 • Requested an increase in annual operating income of $9.8 million • Requested ROR: 7.53% • Requested rate base: $473.0 million • Forward-looking components - PP&E, accumulated depreciation, accumulated de
Slide 28: Mississippi Division
Mississippi Division • Mississippi: Implemented Annual System Integrity Rider (SIR) on November 1, 2022 • Authorized an increase in annual operating income of $8.6 million • Authorized ROR: 7.53% • Authorized rate base: $390.3 million • Forward-looking components - PP&E, accumulated depreciation, ac
Slide 29: West Texas Division
West Texas Division • West Texas Cities: Filed Rate Review Mechanism RRM on March 31, 2023 • Requested an increase in annual operating income of $10.1 million • Requested ROE: 9.80%; ROR: 7.44% • Requested capital structure: 41% debt / 59% equity • Requested rate base: $965.9 million • Test year end
Slide 30: West Texas Division
West Texas Division • West Texas Environs: Filed 2022 GRIP on February 24, 2023 • Requested an increase in annual operating income of $1.3 million • Requested ROE: 9.80%; ROR: 7.97% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $958.2 million • Test year ending December
Slide 31: West Texas Division
West Texas Division • West Texas Cities: Implemented Rate Review Mechanism RRM on October 1, 2022 • Requested an increase in annual operating income of $7.3 million • Requested ROE: 9.80%; ROR: 7.28% • Requested capital structure: 42% debt / 58% equity • Requested rate base: $855.3 million • Test ye
Slide 32: 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