Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q3 2021 Earnings Presentation
29 slides from Atmos Energy's earnings presentation, Aug 5, 2021
Slide 1: Analyst Call to Review Fiscal 2021 Third Quarter Financial Results
Analyst Call to Review Fiscal 2021 Third Quarter Financial Results August 5, 2021 10:00 a.m. Eastern
Slide 2: Fiscal 2021 YTD Highlights
Fiscal 2021 YTD Highlights Financial Performance YTD Diluted EPS of $4.77 Capital spending of $1.4 billion; 87% allocated to safety and reliability spending Reaffirmed Fiscal 2021 EPS guidance range of $4.90 - $5.10 Expected to be in the higher end of range 8.7% increase in fiscal 2021 i
Slide 3: Consolidated Financial Highlights – Q3 Fiscal 2021
Consolidated Financial Highlights – Q3 Fiscal 2021 Three Months Ended Nine Months Ended June 30 June 30 Segment Net Income 2021 2020 2021 2020 ($millions, except EPS) Distribution $ 53 $ 59 $ 439 $ 376 Pipeline & Storage 49 59 178 160 Net Income $ 102 $ 118 $ 617 $ 536 Nonrecurring One Time Tax Bene
Slide 4: Segment Operating Income Results
Segment Operating Income Results Three Months Ended June 30 2021 2020 Change ($millions) Distribution $ 68.1 $ 62.5 $ 5.6 Pipeline & Storage 65.3 76.5 (11.2) Operating Income $ 133.4 $ 139.0 $ (5.6) Distribution Key Drivers Pipeline & Storage Key Drivers $25.4MM – Net increase due to rate case $
Slide 5: Segment Operating Income Results
Segment Operating Income Results Nine Months Ended June 30 2021 2020 Change ($millions) Distribution $ 580.9 $ 496.3 $ 84.6 Pipeline & Storage 233.1 226.9 6.2 Operating Income $ 814.0 $ 723.2 $ 90.8 Distribution Key Drivers Pipeline & Storage Key Drivers $128.1MM – Net increase due to rate case
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 $ 735 pipelines 1% 164 Service line replacement 12% 116 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 ~13.2 Years* $2,500 $2,200 0.56%** $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 June 30, 2021 100% $3,500 $213 40% $3,000 75% 48% $525 $2,500 $100 7 issues, 3.00% - 6.75% $2,000 ~ $3.2 billion $900 50% Available $1,500 Liquidity at 6/30/21 60% $1,000 25
Slide 11: Fiscal 2021E Guidance
Fiscal 2021E Guidance ($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 $ 695 - 705 D&A $ 430 $ 475 - 485 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: FY2021 Regulatory Accomplishments
FY2021 Regulatory Accomplishments Approved Annualized Key Rate Activity Operating Income Increases Through August 4, 2021 $millions $185.7MM Completed $250 $ 82.6MM – Mid-Tex RRM $ 43.9MM – APT GRIP $53.0 $ 11.1MM – Mid-Tex ATM GRIP1 $200 $ 10.6MM – Mississippi SIR $ 10.3MM – Tennessee A
Slide 14: 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 15: 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 Louisiana – Implemented RSC filing of Implemented RRM filing of $88
Slide 16: Distribution Operations – Colorado-Kansas Division
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 17: Distribution Operations – Kentucky/Mid-States Division
Distribution Operations – Regulatory Update Kentucky/Mid-States Division Kentucky: Filed Annual Pipe Replacement Program (PRP) on July 30, 2021 Requested an annual operating income increase of $3.5 million Requested ROE: 10.35%; ROR: 7.66% Requested capital structure: 43% debt / 57% equity
Slide 18: Distribution Operations – Kentucky/Mid-States Division
Distribution Operations – Regulatory Update Kentucky/Mid-States Division Tennessee: Implemented Annual Review Mechanism (ARM) on June 1, 2021 Authorized an increase in annual operating income of $10.3 million Authorized ROE of 9.80%; ROR of 7.62% Authorized capital structure of 40% debt / 60
Slide 19: Distribution Operations – Louisiana Division
Distribution Operations – Regulatory Update Louisiana Division Louisiana: Implemented Annual Rate Stabilization Clause (RSC) on July 1, 2021 Combined filing for Trans-La and LGS Authorized a decrease in annual operating income of $2.4 million Authorized ROR of 7.30% Authorized system-wide
Slide 20: Distribution Operations – Mid-Tex Division
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 21: Distribution Operations – Mid-Tex Division
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex City of Dallas: Approved Dallas Annual Rate Review (DARR) on June 9, 2021; Rates to be Implemented on September 1, 2021 Authorized an increase in annual operating income of $1.7 million Authorized ROE of 9.80%; ROR of 7.57%
Slide 22: Distribution Operations – Mississippi Division
Distribution Operations – Regulatory Update Mississippi Division Mississippi: Filed Annual Stable Rate Filing (SRF) on July 1, 2021 Requested an annual operating income decrease of $0.7 million Requested ROR: 7.81% Requested rate base: $507.1 million Forward-looking components - PP&E, accu
Slide 23: Distribution Operations – Mississippi Division
Distribution Operations – Regulatory Update Mississippi Division Mississippi: Implemented Annual System Integrity Rider (SIR) on November 1, 2020 Authorized an annual operating income increase of $10.6 million Authorized ROR: 7.81% Authorized rate base: $247.4 million Forward-looking compo
Slide 24: Distribution Operations – West Texas Division
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 – West Texas Division
Distribution Operations – Regulatory Update West Texas Division West Texas ALDC: Implemented 2020 Statement of Intent (SOI) on June 1, 2021 Authorized an annual operating income increase of $5.1 million Authorized ROR: 7.35% Authorized capital structure: 41% debt / 59% equity Authorized ra
Slide 26: Pipeline & Storage – Regulatory Update
Pipeline & Storage – Regulatory Update Atmos Pipeline - Texas Atmos Pipeline: Implemented 2020 GRIP on May 11, 2021 Authorized an annual operating income increase of $43.9 million Authorized ROE: 11.5%; ROR: 8.87% Authorized capital structure: 47% debt / 53% equity Authorized rate base: $2
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