Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q4 2024 Earnings Presentation
37 slides from Atmos Energy's earnings presentation, Nov 7, 2024
Slide 1: Analyst Call to Review Fiscal 2024 Financial Results & Fiscal 2025-2029 Outlook
Analyst Call to Review Fiscal 2024 Financial Results & Fiscal 2025 – 2029 Outlook November 7, 2024 10:00 a.m. Eastern
Slide 2: Fiscal 2024 Review
Fiscal 2024 Review As of November 6, 2024 Page 2
Slide 3: Fiscal 2024 Highlights
Fiscal 2024 Financial Performance Fiscal 2024 Highlights • Financial Performance • YTD Diluted EPS of $6.831; 22nd consecutive year of EPS growth • $2.9 billion in capital spending; 83% allocated to safety and reliability spending • 8.8% increase in fiscal 2024 annual dividend to $3.22 per diluted s
Slide 4: Consolidated Financial Highlights
Fiscal 2024 Financial Performance Consolidated Financial Highlights Three Months Ended Twelve Months Ended September 30 September 30 Segment Net Income 2024 2023 2024 2023 ($millions, except EPS) Distribution $ 41 $ 38 $ 671 $ 580 Pipeline & Storage 93 81 372 306 Net Income $ 134 $ 119 $ 1,043 $ 886
Slide 5: Segment Operating Income Highlights (Three Months)
Fiscal 2024 Financial Performance Segment Operating Income Highlights Three Months Ended September 30 2024 2023 Change ($millions) Distribution $ 64.6 $ 53.9 $ 10.7 Pipeline & Storage 120.4 100.2 20.2 Operating Income $ 185.0 $ 154.1 $ 30.9 Distribution Key Drivers Pipeline & Storage Key Drivers • $
Slide 6: Segment Operating Income Highlights (Twelve Months)
Fiscal 2024 Financial Performance Segment Operating Income Highlights Twelve Months Ended September 30 2024 2023 Change ($millions) Distribution $ 854.5 $ 692.6 $ 161.9 Pipeline & Storage 500.9 374.5 126.4 Operating Income $ 1,355.4 $ 1,067.1 $ 288.3 Distribution Key Drivers Pipeline & Storage Key D
Slide 7: Capital Spending Highlights
Fiscal 2024 Financial Performance Capital Spending Highlights $millions Fiscal 2024 YTD Capital Spending Repair and replace transmission and distribution $ 1,261 pipelines 449 Fortifications 3% 308 Service line replacement 14% 83% Install & replace measurement & regulating 257 equipment 101 Pipeline
Slide 8: Financing Highlights
Fiscal 2024 Financial Performance Financing Highlights • $1.2 billion of long-term debt financing issued • $500 million 6.20% 30-year senior notes issued in October 20231 • $400 million 5.90% 10-year senior notes issued in October 20232 • $325 million 5.90% 10-year senior notes issued in June 20243
Slide 9: Strong Financial Foundation Supports Capital Spending Program
Fiscal 2024 Financial Performance Strong Financial Foundation Supports Capital Spending Program Capitalization and Liquidity Profile Liquidity Profile as of Total Capitalization September 30, 2024 100% 1% $5,000 $307 39% 37% $4,000 75% $1,381 $4.8 billion Available $3,000 $100 Liquidity as 50% of 9/
Slide 10: Manageable Debt Maturity Schedule Supports Capital Spending Program
Fiscal 2024 Financial Performance Manageable Debt Maturity Schedule Supports Capital Spending Program Weighted Average Maturity ~18.07 Years1 $1,100 4.168% $950 3.73% $750 $725 Total Amount Maturing 4.125% 5.90% $650 $600 $600 5.00% 1.50% 4.30% $500 $500 $500 $500 3.00% 2.625% 4.15% 6.20% $400 5.50%
Slide 11: Strong Investment Grade Ratings Support Affordable Customer Bills
Fiscal 2024 Financial Performance Strong Investment Grade Ratings Support Affordable Customer Bills Strong Investment Weighted Average Cost of Debt Grade Credit Ratings Standard & $10,000 5.0% Moody’s Poor’s $9,000 4.5% Senior Unsecured A1 A- 4.1% 4.1% 4.0% 4.0% $8,000 3.8% 4.0% Commercial Paper P-1
Slide 12: Fiscal 2025-2029 Financial Outlook
Fiscal 2025-2029 Financial Outlook As of November 6, 2024 Page 12
Slide 13: Leading Natural Gas Delivery Platform
Leading Natural Gas Delivery Platform Eight-state distribution territory Business Mix Intrastate pipeline system ~37% Pipeline & Storage ~63% Distribution 2025 Estimated Net Income Favorably positioned pipeline spans Diversified LDC platform in 8 states Texas shale gas supply basins • Largest pure-p
Slide 14: Safety Driven, Organic Growth Strategy
Safety Driven, Organic Growth Strategy Constructive Regulatory Mechanisms Support Efficient Conversion of Safety and Reliability Investments into Financial Results ~ $24 billion in capital investment Constructive rate mechanisms 6% - 8% Consolidated EPS through 2029; >86% allocated to that reduce re
Slide 15: Constructive Regulation Focused on Safety and Reliability
Constructive Regulation Focused on Safety and Reliability ~90% of Annual Capital Spend Begins to Earn Within Six Months Regulatory Mechanisms Recovery Method Service Territory Detail CapEx Deferral/ Rate Base1 Annual General 2025E Jurisdiction Infrastructure Forward- Meters (000s) % of Filing Case (
Slide 16: Financial Outlook: Five Year Plan Key Themes
Financial Outlook FY 2025 Five Year Plan Key Themes • Plan drives 6.0% - 8.0% annual EPS growth through FY 2029 • FY 2025 Guidance of $7.05 - $7.25; Midpoint of range implies 7.4% Earnings and growth from normalized FY24 results Dividends Per • FY 2029 guidance of $9.15 - $9.55 Share • $3.48 Indicat
Slide 17: Fiscal 2025E Guidance
Financial Outlook Fiscal 2025E Guidance ($millions, except EPS) FY 2024 FY 2025E1 Distribution $ 671 $ 700 - 720 Pipeline & Storage 372 420 - 430 Total Net Income $ 1,043 $ 1,120 - 1,150 Average Diluted Shares 152.7 159 - 161 Diluted EPS2 $ 6.833 $ 7.05 - 7.25 Capital Spending $ 2,937 $ ~3,700 1. Ch
Slide 18: Fiscal 2025E Guidance: Selected Expenses
Financial Outlook Fiscal 2025E Guidance Selected Expenses FY 2024 FY 2025E1 ($millions) O&M, excluding bad debt expense $ 815 $ 840 - 860 D&A $ 670 $ 740 - 750 Interest $ 191 $ 180 - 190 Income Tax $ 193 $ 265 -280 Effective Tax Rate 15.6% 18% - 20%2 1. Changes in events or other circumstances that
Slide 19: Capital Spending Focused on System Modernization and Growth
Financial Outlook Capital Spending Focused on System Modernization and Growth Consolidated 2025E Capital Expenditures of ~$3.7 billion $7,000 $6,000 $5,000 $4,000 $ millions $3,000 $2,000 $1,000 $0 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025E FY2026E FY2027E FY2028E FY2029E
Slide 20: Capital Spending Drives Rate Base Growth
Financial Outlook Capital Spending Drives Rate Base Growth Enhancing System Safety and Reliability1 $40,000 $36.0B- $38.0B $35,000 $30,000 $25,000 $ millions $20,000 $18.8B $16.6B $15,000 $10,000 $5,000 $0 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025E FY2026E FY2027E FY2028E
Slide 21: Sustainable Financial Performance Supports Sustained Dividend Increases
Financial Outlook Sustainable Financial Performance Supports Sustained Dividend Increases 41 Consecutive Years* of Dividend Increases $3.50 $3.48E $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 • Indicated dividend increase of 8.1% for Fiscal 2025 *Fiscal year Note: Amounts are adjusted for mergers and a
Slide 22: Residential use of natural gas remains competitive
Financial Outlook Residential use of natural gas remains competitive Average Monthly Customer Bill Key Assumptions $120 • Normal weather and $110 consumption $100 • ~$24 billion of CAPEX spending through 2029 $80 • Commodity pricing $80 $72 • FY 25-29: $2.00 to $3.00 • Delivery cost/Securitization $
Slide 23: Natural Gas Price Advantage Over Electricity
Financial Outlook Natural Gas Price Advantage Over Electricity Electricity1 vs Natural Gas2 - kWh Equivalent 15 14.70 14.56 14.22 14.38 13.47 12.66 12.38 11.51 10 6.78 6.05 5.42 5 4.51 3.71 3.49 3.41 3.26 0 Colorado Kansas Kentucky Louisiana Mississippi Tennessee Texas Virginia Electric Natural Gas
Slide 24: Residential Natural Gas Bills Remain the Lowest Monthly Utility Bill
Financial Outlook Residential Natural Gas Bills Remain the Lowest Monthly Utility Bill Water2 Cable & Internet3 $121 $118 CO KS KY TN LA Natural Gas1 $72 Electric4 Mobile Phone5 $155 $141 1. FY2024 Atmos Energy enterprise-wide average monthly residential bill 2. Bluefield Research November 2023 3. D
Slide 25: Regulatory Information
Regulatory Information As of November 6, 2024 Page 25
Slide 26: Regulatory Highlights
FY 2024 Financial Performance Regulatory Highlights Approved Annualized Key Rate Activity Operating Income Increases1,2 Through November 6, 2024 $600 $550 • $148.5MM Implemented $500 • $116.6MM – Texas RRMs $450 • $ 27.8MM – Mississippi Annual Filings $400 $350 • $77.3MM In-Progress $ millions $300
Slide 27: 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 Kansas Kentucky Tennessee Virginia
Slide 28: Key Regulatory Filings – Fiscal 2025E
Key Regulatory Filings – Fiscal 2025E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October – December January – March April – June July – September Mid-Tex Dallas – Anticipate filing Dallas Mid-Tex Cities – Anticipate filing Rate Mississippi – Anticipate Stable Rate Filing Mid-Tex and WTX Cities – Impleme
Slide 29: 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 Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income Income $milli
Slide 30: 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 Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income I
Slide 31: Atmos Pipeline - Texas
Atmos Pipeline - Texas • Atmos Pipeline: Implemented 2024 System Safety & Integrity (SSI) Rider on November 1, 2024 • New annual mechanism approved in the 2023 SOI • Allows for the recovery of certain system safety and integrity costs incurred each year • Costs above a benchmark are deferred onto th
Slide 32: Colorado - Kansas Division
Colorado - Kansas Division • Kansas: Filed Gas Safety Reliability Surcharge (GSRS) on August 19, 2024 • Requested an increase in annual operating income of $2.0 million • Requested rate base: $38.9 million • Test Year October 2023 through June 2024 • Colorado: Filed System Safety & Integrity Rider (
Slide 33: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Kentucky: Implemented Annual PRP on October 2, 2024 • Authorized an annual operating income increase of $3.4 million • Authorized ROE: 9.45%; ROR: 6.94% • Authorized capital structure: 45% debt / 55% equity • Authorized rate base: $69.3 million • Implemented subject to
Slide 34: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Implemented Rate Review Mechanism RRM on October 1, 2024 • Authorized an increase in annual operating income of $112.1 million • Authorized ROE: 9.80%; ROR: 7.41% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $7.1 billion • Test year
Slide 35: Mississippi Division
Mississippi Division • Mississippi: Implemented Annual System Integrity Rider (SIR) on November 4, 2024 • Authorized an increase in annual operating income of $24.0 million • Authorized ROR: 7.8% • Authorized rate base: $629.7 million • Forward-looking components - PP&E, accumulated depreciation, ac
Slide 36: West Texas Division
West Texas Division • West Texas Cities: Implemented Rate Review Mechanism RRM on October 1, 2024 • Authorized an increase in annual operating income of $4.4 million • Authorized ROE: 9.80%; ROR: 7.41% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $1.1 billion • Test
Slide 37: 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