Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q2 2024 Earnings Presentation
30 slides from Atmos Energy's earnings presentation, May 9, 2024
Slide 1: Analyst Call to Review Fiscal 2024 Second Quarter Financial Results
Analyst Call to Review Fiscal 2024 Second Quarter Financial Results May 9, 2024 10:00 a.m. Eastern
Slide 2: Fiscal Q2 2024 Review
Fiscal Q2 2024 Review As of May 8, 2024 Page 2
Slide 3: Q2 Fiscal 2024 Financial Performance: Fiscal 2024 Highlights
Q2 Fiscal 2024 Financial Performance Fiscal 2024 Highlights • Financial Performance • YTD Diluted EPS of $4.93 • $1.4 billion in capital spending; 81% allocated to safety and reliability spending • Raised fiscal 2024 EPS guidance range to $6.70 to $6.801 from $6.45 to $6.65 • 8.8% increase in fiscal
Slide 4: Consolidated Financial Highlights
Q2 Fiscal 2024 Financial Performance Consolidated Financial Highlights Three Months Ended Six Months Ended March 31 March 31 Segment Net Income ($millions, except EPS) 2024 2023 2024 2023 Distribution $ 343 $ 289 $ 564 $ 483 Pipeline & Storage 89 69 179 147 Net Income $ 432 $ 358 $ 743 $ 630 Diluted
Slide 5: Segment Operating Income Highlights (Three Months)
Q2 Fiscal 2024 Financial Performance Segment Operating Income Highlights Three Months Ended March 31 2024 2023 Change ($millions) Distribution $ 426.2 $ 335.3 $ 90.9 Pipeline & Storage 124.8 87.3 37.5 Operating Income $ 551.0 $ 422.6 $ 128.4 Distribution Key Drivers Pipeline & Storage Key Drivers •
Slide 6: Segment Operating Income Highlights (Six Months)
Q2 Fiscal 2024 Financial Performance Segment Operating Income Highlights Six Months Ended March 31 2024 2023 Change ($millions) Distribution $ 706.7 $ 567.1 $ 139.6 Pipeline & Storage 243.4 176.7 66.7 Operating Income $ 950.1 $ 743.8 $ 206.3 Distribution Key Drivers Pipeline & Storage Key Drivers •
Slide 7: Capital Spending Highlights
Q2 Fiscal 2024 Financial Performance Capital Spending Highlights $millions Fiscal 2024 YTD CapEx Repair and replace transmission and distribution $ 536 pipelines 264 Fortifications 4% 143 Install & replace measurement & regulating equipment 81% 138 Service line replacement 15% 42 Pipeline integrity
Slide 8: Strong Financial Foundation Supports Capital Spending Program
Q2 Fiscal 2024 Financial Performance Strong Financial Foundation Supports Capital Spending Program Capitalization and Liquidity Profile Total Capitalization Liquidity Profile as of 100% 1% March 31, 2024 $5,000 39% 37% 75% $4,000 $262 $890 $3,000 $100 $4.2 billion 50% Available $1,500 Liquidity as $
Slide 9: Financing Highlights
Q2 Fiscal 2024 Financial Performance Financing Highlights • $900 million 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 • Equity needs satisfied through our ATM program • $678.9 mi
Slide 10: Manageable Debt Maturity Schedule Supports Capital Spending Program
Q2 Fiscal 2024 Financial Performance Manageable Debt Maturity Schedule Supports Capital Spending Program Weighted Average Maturity ~17.9 Years $1,100 4.168% $950 3.73% $750 4.125% Total Amount Maturing $600 $600 1.50% 4.30% $500 $500 $500 $500 3.00% 2.625% 4.15% 6.20% $400 $400 5.90% 5.50% $300 5.45
Slide 11: Strong Investment Grade Ratings Support Affordable Customer Bills
Q2 Fiscal 2024 Financial Performance Strong Investment Grade Ratings Support Affordable Customer Bills Strong Investment Weighted Average Cost of Debt Grade Credit Ratings $8,000 5.0% Standard & Moody’s Poor’s 4.5% $7,000 4.2% Senior Unsecured A1 A- 4.1% 4.0% 4.0% 3.8% 4.0% Commercial Paper P-1 A-2
Slide 12: Regulatory Highlights
FY 2024 Financial Performance Regulatory Highlights Approved Annualized Key Rate Activity Operating Income Increases1,2 Through May 8, 2024 $550 $500 • $167.1MM Implemented • $107.2MM – Texas RRMs $450 • $ 27.0MM – APT Rate Case $400 • $ 22.5MM – Mississippi annual filings $350 $353.6 $ millions $30
Slide 13: Financial Outlook: Fiscal 2024E Guidance
Financial Outlook Fiscal 2024E Guidance ($millions, except EPS) FY 2023 FY 2024E1 Distribution $ 580 $ 670 - 690 Pipeline & Storage 306 350 - 360 Total Net Income $ 886 $ 1,020 - 1,050 Average Diluted Shares 145.2 152 – 154 Diluted EPS2 $ 6.10 $ 6.70 - 6.803 Capital Spending $ 2,806 $ ~3,100 1. Chan
Slide 14: Financial Outlook: Selected Expenses
Financial Outlook Fiscal 2024E Guidance Selected Expenses FY 2023 FY 2024E1 ($millions) O&M $ 765 $ 800 - 820 D&A $ 604 $ 670 - 680 Interest $ 137 $ 190 - 196 Income Tax $ 114 $ 165 -180 Effective Tax Rate 11.4% 14% - 16%2 1. Changes in events or other circumstances that the Company cannot currently
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 2024E
Key Regulatory Filings – Fiscal 2024E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October – December January – March April – June July – September Mississippi – Anticipate Stable Rate Filing Mid-Tex and WTX Cities – Filed Rate Review Mid-Tex and WTX Cities – Implemented RRM (SRF) and System Integrity Rid
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 at Jurisdiction Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income Income $mi
Slide 19: Regulatory Summary (continued)
Regulatory Summary (continued) Effective Date of Authorized Requested Requested Authorized Requested Authorized Requested Authorized Requested Date of Last Rate Operating Operating Rate Base Meters at Jurisdiction Rate Base Rate of Rate of Return on Return on Debt/ Equity Debt/Equity Last Rate Filin
Slide 20: Atmos Pipeline - Texas
Atmos Pipeline - Texas • Atmos Pipeline: Filed 2023 GRIP on February 27, 2024 • Requested an increase in annual operating income of $82.4 million excluding the impact of EDIT • Requested ROE: 11.45%; ROR: 8.49% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $4.8 billion
Slide 21: Colorado - Kansas Division
Colorado - Kansas Division • Kansas: Implemented System Integrity Program (SIP) on April 1, 2024 • Approved an increase in annual operating income of $0.7 million • Approved rate base: $19.9 million • Test Year Ending December 31, 2023 • Kansas: Implemented Gas Safety Reliability Surcharge (GSRS) on
Slide 22: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Kentucky: Implemented Annual PRP on October 1, 2023 • Authorized an annual operating income increase of $2.9 million • Authorized ROE: 9.45%; ROR: 6.94% • Authorized capital structure: 45% debt / 55% equity • Authorized rate base: $40.5 million • Virginia: Implemented
Slide 23: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Tennessee: Filed Annual Review Mechanism (ARM) on January 30, 2024 • Requested an annual operating income increase of $19.5 million • Requested ROE: 9.80%; ROR: 7.62% • Requested capital structure: 38% debt / 62% equity • Requested rate base: $554.1 million As of Augus
Slide 24: Louisiana Division
Louisiana Division • Louisiana: Filed Annual Rate Stabilization Clause RSC on April 22, 2024 • Requested an annual operating income increase of $35.6 million • Requested ROE: 9.80%; ROR: 7.43% • Requested capital structure: 42% debt / 58% equity • Requested rate base: $1.2 billion As of August 3, 20
Slide 25: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Filed Rate Review Mechanism RRM on April 1, 2024 • Requested an increase in annual operating income of $133.4 million • Requested ROE: 9.80%; ROR: 7.51% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $7.2 billion • Test year ending Dece
Slide 26: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Filed Dallas Annual Rate Review DARR on January 12, 2024 • Requested an increase in annual operating income of $40.4 million • Requested ROE: 9.80%; ROR: 7.47% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $6.8 billion • Test year endi
Slide 27: Mississippi Division
Mississippi Division • Mississippi: Implemented Annual System Integrity Rider (SIR) on December 1, 2023 • Authorized an increase in annual operating income of $11.0 million • Authorized ROE: 10.34%; ROR: 7.82% • Authorized capital structure: 39% debt / 61% equity • Authorized rate base: $472.7 milli
Slide 28: West Texas Division
West Texas Division • West Texas Cities: Filed Rate Review Mechanism RRM on April 1, 2024 • Requested an increase in annual operating income of $6.7 million • Requested ROE: 9.80%; ROR: 7.51% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $1.1 billion • Test year ending
Slide 29: West Texas Division
West Texas Division • West Texas ALDC: Filed 2023 GRIP on February 23, 2024 • Requested an increase in annual operating income of $7.3 million • Requested ROR: 7.35% • Requested capital structure: 41% debt / 59% equity • Requested rate base: $1.1 billion • Test year ending December 31, 2023 • West T
Slide 30: 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