Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q3 2022 Earnings Presentation
33 slides from Atmos Energy's earnings presentation, Aug 4, 2022
Slide 1: Analyst Call to Review Fiscal 2022 Third Quarter Financial Results
Analyst Call to Review Fiscal 2022 Third Quarter Financial Results August 4, 2022 10:00 a.m. Eastern
Slide 2: Fiscal Q3 2022 Review
=aTMOS energy. Fiscal Q3 2022 Review
Slide 3: Fiscal 2022 Highlights
Q3 Fiscal 2022 Financial Performance Fiscal 2022 Highlights • Financial Performance • YTD Diluted EPS of $5.12 • $1.7 billion in capital spending; 87% allocated to safety and reliability spending • 8.8% increase in fiscal 2022 annual dividend to $2.72 per diluted share • 38th consecutive year of ris
Slide 4: Consolidated Financial Highlights
Q3 Fiscal 2022 Financial Performance Consolidated Financial Highlights Three Months Ended Nine Months Ended June 30 June 30 Segment Net Income 2022 2021 2022 2021 ($millions, except EPS) Distribution $ 58 $ 53 $ 506 $ 439 Pipeline & Storage 71 49 197 178 Net Income $ 129 $ 102 $ 703 $ 617 Diluted EP
Slide 5: Segment Operating Income Highlights, Three Months Ended
Q3 Fiscal 2022 Financial Performance Segment Operating Income Highlights Three Months Ended 2022 2021 Change June 30 ($millions) Distribution $ 66.1 $ 68.1 $ (2.0) Pipeline & Storage 88.5 65.3 23.2 Operating Income $ 154.6 $ 133.4 $ 21.2 Distribution Key Drivers Pipeline & Storage Key Drivers • $30.
Slide 6: Segment Operating Income Highlights, Nine Months Ended
Q3 Fiscal 2022 Financial Performance Segment Operating Income Highlights Nine Months Ended 2022 2021 Change June 30 ($millions) Distribution $ 567.9 $ 580.9 $ (13.0) Pipeline & Storage 247.7 233.1 14.6 Operating Income $ 815.6 $ 814.0 $ 1.6 Distribution Key Drivers Pipeline & Storage Key Drivers • $
Slide 7: Capital Spending Highlights
Q3 Fiscal 2022 Financial Performance Capital Spending Highlights $millions Fiscal 2022 YTD CapEx Repair and replace transmission and $ 790 distribution pipelines Install & replace measurement & regulating 193 equipment 1% 183 Pipeline integrity management projects 12% 175 Service line replacement 87
Slide 8: Strong Financial Foundation Supports Capital Spending Program
Q3 Fiscal 2022 Financial Performance Strong Financial Foundation Supports Capital Spending Program Capitalization and Liquidity Profile Total Capitalization1 Liquidity Profile as of 100% June 30, 2022 $3,750 $328 75% 46% 48% $701 $2,500 $3.5 billion $100 Available 50% $900 Liquidity as of 6/30/22 $1
Slide 9: Financing Highlights
Q3 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
Q3 Fiscal 2022 Financial Performance Manageable Debt Maturity Schedule Supports Capital Spending Program Weighted Average Maturity ~18.8 Years1 2 $2,200 1.348% $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
Q3 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 August 3, 2022 • $174.9MM Completed $300 • $ 78.8MM – APT GRIP • $ 21.7MM – Mid-Tex RRM $250 • $ 18.5MM – Mid-Tex GRIPs $128.9 • $ 17.7MM – Louisiana RSC3 • $ 13.2MM – Mid-
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: 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 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 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 – Mid-Tex Dallas – Approved Dallas Implemented RRM filing of $59.0MM; Colorado and Kansas – Implemented Annual Rate Review (DARR) of Ka
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: Implemented 2021 GRIP on May 18, 2022 • Authorized an annual operating income increase of $78.8 million • Authorized ROE: 11.5%; ROR: 8.87% • Authorized capital structure: 47% debt / 53% equity • Authorized rate base: $3.4 billion • Test year ended December 3
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 • Kentucky: Filed Annual PRP on July 29, 2022 • Requested an annual operating income increase of $1.9 million • Requested ROE: 10.95%; ROR: 7.75% • Requested capital structure: 45% debt / 55% equity • Requested rate base: $16.0 million • Virginia: Filed SAVE Infrastructu
Slide 23: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Kentucky: Implemented General Rate Case on May 20, 2022 • Authorized an annual operating income increase of $13.3 million; $5.9 million net of excess deferred income tax amortization • Authorized ROE: 9.23%; ROR: 6.82% • Authorized capital structure: 45% debt / 55% equ
Slide 24: Louisiana Division
Louisiana Division • Louisiana: Implemented Annual Rate Stabilization Clause RSC on July 1, 2022 • Authorized an increase in annual operating income of $7.3 million; $17.7 million net of excess deferred income tax amortization • Authorized ROR: 7.30% • Authorized rate base: $942.4 million • Test yea
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 Environs: Implemented 2021 GRIP on June 10, 2022 • Authorized an increase in annual operating income of $5.6 million • Authorized ROE: 9.80%; ROR: 7.97% • Authorized capital structure: 40% debt / 60% equity • Authorized rate base: $5.1 billion • Test year ending December 3
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 July 1, 2022 • Requested an increase in annual operating income of $10.0 million • Requested ROR: 7.80% • Requested rate base: $390.1 million • Forward-looking components - PP&E, accumulated depreciation, accumulated de
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: Implemented 2021 GRIP on June 11, 2022 • Authorized an increase in annual operating income of $1.2 million • Authorized ROE: 9.80%; ROR: 7.97% • Authorized capital structure: 40% debt / 60% equity • Authorized rate base: $855.2 million • Test year ending De
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