Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q2 2021 Earnings Presentation
29 slides from Atmos Energy's earnings presentation, May 6, 2021
Slide 1: Analyst Call to Review Fiscal 2021 Second Quarter Financial Results
Analyst Call to Review Fiscal 2021 Second Quarter Financial Results May 6, 2021 10:00 a.m. Eastern
Slide 2: Fiscal 2021 YTD Highlights
Fiscal 2021 YTD Highlights Financial Performance YTD Diluted EPS of $4.01 Capital spending of $845.7 million; 87% allocated to safety and reliability spending Reaffirmed Fiscal 2021 EPS guidance range of $4.90 - $5.10 8.7% increase in fiscal 2021 indicated annual dividend to $2.50 per dilu
Slide 3: Consolidated Financial Highlights – Q2 Fiscal 2021
Consolidated Financial Highlights – Q2 Fiscal 2021 Three Months Ended Six Months Ended March 31 March 31 Segment Net Income 2021 2020 2021 2020 ($millions, except EPS) Distribution $ 232 $ 187 $ 386 $ 317 Pipeline & Storage 65 53 128 101 Net Income $ 297 $ 240 $ 514 $ 418 Diluted EPS1 $ 2.30 $ 1.95
Slide 4: Segment Operating Income Results
Segment Operating Income Results Three Months Ended March 31 2021 2020 Change ($millions) Distribution $ 303.3 $ 253.5 $ 49.8 Pipeline & Storage 78.5 77.9 0.6 Operating Income $ 381.8 $ 331.4 $ 50.4 Distribution Key Drivers Pipeline & Storage Key Drivers $65.8MM – Increase in rates $14.0MM – Inc
Slide 5: Segment Operating Income Results
Segment Operating Income Results Six Months Ended March 31 2021 2020 Change ($millions) Distribution $ 512.8 $ 433.8 $ 79.0 Pipeline & Storage 167.8 150.4 17.4 Operating Income $ 680.6 $ 584.2 $ 96.4 Distribution Key Drivers Pipeline & Storage Key Drivers $102.7MM – Increase in rates $27.3MM – I
Slide 6: Capital Spending Mix
Capital Spending Mix Safety & Reliability Investments Support Infrastructure Modernization $millions Fiscal 2021 YTD CapEx Repair and replace transmission and distribution $ 458 pipelines 1% 100 Service line replacement 12% 70 Pipeline integrity management projects 87% Install & replace measurement
Slide 7: Fiscal 2021 YTD Financing Recap
Fiscal 2021 YTD Financing Recap $2.8 billion of long-term debt financing issued $2.2 billion 2-year senior notes issued in March 2021 to finance Winter Storm Uri costs • $1.1 billion 0.625% • $1.1 billion Libor + 0.38% $600 million 1.50% 10-year senior notes issued in October 2020 Equity nee
Slide 8: Strong Financial Foundation
Strong Financial Foundation Weighted Average Maturity ~13.5 Years* $2,500 $2,200 0.60%** $2,000 $1,500 ($ millions) $950 $1,000 3.73% $750 4.125% $600 $600 $500 1.5% $500 4.3% 3.0% $400 4.15% $500 $300 5.5% $200 2.625% $150 $200 2.29% 5.95% 6.75% $10 6.67% $0 * Excluding the $2.2 billion of incremen
Slide 9: Strong Financial Foundation: Cost of Debt and Credit Metrics
Strong Financial Foundation Improved Weighted Average Cost of Long-Term Debt Credit Metrics Remain Strong Net Long-Term Debt Interest Rate % $7,500 5.2 5.2 5.5 Strong Investment $7,000 4.7 5.0 Grade Credit Ratings $6,500 4.2 4.5 $6,000 Standard & Moody’s Poor’s $5,500 4.0 $5,000 7 issues, 3.00% - 6.
Slide 10: Strong Financial Foundation Further Enhanced
Strong Financial Foundation Further Enhanced Capitalization and Liquidity Profile Total Capitalization Liquidity Profile as of March 31, 2021 100% $3,500 $116 40% $3,000 $865 75% 48% $2,500 $100 7 issues, 3.00% - 6.75% $2,000 $900 ~ $3.5 billion 50% Available $1,500 Liquidity at 3/31/21 60% $1,000 2
Slide 11: Fiscal 2021E Guidance
Fiscal 2021E Guidance ($millions, except EPS) FY 2020 FY 2021E1 Distribution $ 395 $ 430 - 445 Pipeline & Storage 206 205 - 220 Total Net Income $ 601 $ 635 - 665 Average Diluted Shares 122.9 129.0 - 131.5 Adjusted Diluted EPS2 $ 4.723 $ 4.90 - $ 5.10 Capital Spending $ 1,936 $ 2,000 - $ 2,200 1. Ch
Slide 12: Fiscal 2021E Guidance
Fiscal 2021E Guidance Selected Expenses FY 2020 FY 2021E1 ($millions) O&M $ 630 $ 660 - 690 D&A $ 430 $ 470 - 480 Interest $ 84 $ 75 - 85 Adjusted Income Tax $ 1662 $ 150 - 160 Adjusted Effective Tax Rate 22.2%3 18% - 20%4 1. Changes in events or other circumstances that the Company cannot currently
Slide 13: Volume by Customer: Key Class Takeaways
Volume by Customer Key Class Takeaways Fiscal 2021 Budget Base Charge as a % of Revenue(1) Residential 65% Commercial 44% Industrial 24% Transport/Other 22% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Total 58% Oct – Mar Apr – Sep ~70% of Total Year Revenue ~30% of Total Year Revenue FY21 Estima
Slide 14: COVID-19 Key Financial Factors
COVID-19 Key Financial Factors 58% of distribution revenue1 is included in base charge >80% of APT revenues earned from LDC customers via Revenue demand charge 25% of APT through system revenue retained through Rider Rev Bad Debt Expense Regulatory asset treatment in 6 states2 Regulatory a
Slide 15: FY2021 Regulatory Accomplishments
FY2021 Regulatory Accomplishments Approved Annualized Key Rate Activity Operating Income Increases Through May 5, 2021 $millions $109.8MM Implemented $300 $ 82.6MM – Mid-Tex RRM $ 10.6MM – Mississippi SIR $250 $ 5.9MM – Mississippi SRF $ 5.6MM – West TX RRM $ 2.4MM – Colorado SSIR $200
Slide 16: Regulatory Mechanisms To Support Recovery
Regulatory Mechanisms To Support Recovery Annual Revenue and Revenue Stability and Lag Other Lag Mechanisms Mechanisms Recovery of Pension and Annual Rate Bad Debt in Certain Jurisdiction Infrastructure Retirement WNA Stabilization GCA COVID-19 Cost Trackers Costs Colorado Kansas Kentucky Tennessee
Slide 17: Key Regulatory Filings – Fiscal 2021E
Key Regulatory Filings – Fiscal 2021E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October December January March April June July September Mid-Tex and WTX Cities – Colorado – Implemented SSIR filing of Mid-Tex and WTX Cities – Filed Rate Mississippi – Anticipate Stable Rate implemented RRM of $88.2 milli
Slide 18: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update Colorado - Kansas Division Kansas: Implemented Gas Safety Reliability Surcharge (GSRS) filing on February 1, 2021 Authorized an annual operating income increase of $1.7 million Authorized ROE: 9.10%; ROR: 7.03% Authorized capital structure: 44% deb
Slide 19: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update Kentucky/Mid-States Division Tennessee: Filed Annual Review Mechanism (ARM) on February 1, 2021 Requested an increase in annual operating income of $7.7 million Requested ROE of 9.80%; ROR of 7.62% Requested capital structure of 40% debt / 60% equi
Slide 20: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update Louisiana Division Louisiana: Filed Annual Rate Stabilization Clause (RSC) on March 31, 2021 Combined filing for Trans-La and LGS Requested an increase in annual operating income of $11.8 million Requested ROR of 7.30% Requested system-wide rate
Slide 21: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex Cities: Filed 2020 Annual Rate Review Mechanism (RRM) on April 1, 2021 Requested an increase in annual operating income of $29.7 million Requested ROE of 9.80%; ROR of 7.36% Requested capital structure of 42% debt / 58% equ
Slide 22: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex City of Dallas: Filed Dallas Annual Rate Review (DARR) on January 15, 2021 Requested an increase in annual operating income of $15.9 million Requested ROE of 9.80%; ROR of 7.57% Requested capital structure of 41% debt / 59%
Slide 23: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update Mississippi Division Mississippi: Filed Annual System Integrity Rider (SIR) on March 1, 2021 Requested an annual operating income increase of $8.6 million Requested ROR: 7.81% Requested rate base: $325.8 million Forward-looking components - PP&E,
Slide 24: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update West Texas Division West Texas Cities: Filed 2020 Annual Rate Review Mechanism (RRM) on April 1, 2021 Requested an annual operating income increase of $0.9 million Requested ROE: 9.80%; ROR: 7.36% Requested capital structure: 42% debt / 58% equity
Slide 25: Distribution Operations – Regulatory Update
Distribution Operations – Regulatory Update West Texas Division West Texas ALDC: Filed 2020 Statement of Intent (SOI) on September 30, 2020* Requested an annual operating income increase of $8.4 million Requested ROE: 10.50%; ROR: 7.94% Requested capital structure: 41% debt / 59% equity Re
Slide 26: Pipeline & Storage – Regulatory Update
Pipeline & Storage – Regulatory Update Atmos Pipeline - Texas Atmos Pipeline: Filed 2020 GRIP on February 12, 2021 Requested an annual operating income increase of $44.0 million Requested ROE: 11.5%; ROR: 8.87% Requested capital structure: 47% debt / 53% equity Requested rate base: $2.9 bi
Slide 27: 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 Jurisdictions (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income Income $
Slide 28: 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 Jurisdictions (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Inc
Slide 29: 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