Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q3 2020 Earnings Presentation
32 slides from Atmos Energy's earnings presentation, Aug 9, 2020
Slide 1: Analyst Call to Review Fiscal 2020 Third Quarter Financial Results
Analyst Call to Review Fiscal 2020 Third Quarter Financial Results August 6, 2020 10:00 a.m. Eastern
Slide 2: Fiscal 2020 YTD Highlights
Fiscal 2020 YTD Highlights Financial Performance YTD Adjusted Diluted EPS of $4.20 17% increase in capital spending to $1.4 billion; 88% allocated to safety and reliability spending Fiscal 2020 Adjusted EPS expected to range from $4.58 - $4.73 9.5% increase in fiscal 2020 indicated annual
Slide 3: COVID-19 Summary
COVID-19 Summary Safety Community Support Business Impact Employees are performing their Arranging financial support for Considered an essential regular job responsibilities with customers experiencing business in all eight states more than 95% working financial hardship through Obtained inc
Slide 4: Re-Opening Progress by State
Re–Opening Progress by State Colorado Stay at Home Order expired on April 26th Mississippi Stay at Home Order expired on April 27th Retail, manufacturing and restaurants at Office-based businesses at full capacity 50% capacity Retail and restaurants at 50% capacity School reopenings dete
Slide 5: Consolidated Financial Results - Fiscal 2020
Consolidated Financial Results - Fiscal 2020 QTD YTD Three Months Ended Nine Months Ended Segment Net Income June 30, June 30, June 30, June 30, ($millions, except EPS) 2020 2019 2020 2019 Distribution $ 59 $ 32 $ 376 $ 319 Pipeline & Storage 59 48 160 134 Net Income $ 118 $ 80 $ 536 $ 453 Nonrecurr
Slide 6: Segment Operating Income Results
Segment Operating Income Results Three Months Ended June 30 2020 2019 Change ($millions) Distribution $ 62.5 $ 48.7 $ 13.8 Pipeline & Storage 76.5 73.5 3.0 Operating Income $ 139.0 $ 122.2 $ 16.8 Distribution Key Drivers Pipeline & Storage Key Drivers $14.8MM – Increase in rates $13.3MM – Increa
Slide 7: Segment Operating Income Results
Segment Operating Income Results Nine Months Ended June 30 2020 2019 Change ($millions) Distribution $ 496.3 $ 447.1 $ 49.2 Pipeline & Storage 226.9 209.2 17.7 Operating Income $ 723.2 $ 656.3 $ 66.9 Distribution Key Drivers Pipeline & Storage Key Drivers $70.8MM – Increase in rates $40.0MM – In
Slide 8: Capital Spending: 88% Spent On Safety and Reliability
Capital Spending 88% Spent On Safety and Reliability $1,405.7 $1,199.2 YTD June 2019 YTD June 2020 $ millions As of August 5, 2020 8
Slide 9: Capital Spending Mix
Capital Spending Mix Safety & Reliability Investments Support Infrastructure Modernization $millions Fiscal 2020 YTD CapEx Repair and replace transmission and distribution $ 714 pipelines 2% 202 Service line replacement 10% 118 Pipeline integrity management projects 88% Install & replace measurement
Slide 10: Fiscal 2020 YTD Financing Recap
Fiscal 2020 YTD Financing Recap $1.0 billion of long-term debt financing issued through June 30, 2020 $800 million in long-term debt issued in October 2019 • $300 million 2.625% 10-year senior notes • $500 million 3.375% 30-year senior notes $200 million term loan issued in April 2020 Equity
Slide 11: Strong Financial Foundation Further Enhanced
Strong Financial Foundation Further Enhanced Capitalization and Liquidity Profile Total Capitalization Liquidity Profile as of June 30, 2020 100% $3,200 5% $2,800 $547.2 41% 36% $2,400 75% $208.1 ~ $2.9 billion $2,000 Available $700.0 $1,600 Liquidity at 50% 6/30/20 7 issues, 3.00% - 6.75% $1,200 $8
Slide 12: COVID-19 Key Financial Factors
COVID-19 Key Financial Factors ~85% of distribution revenues earned through June 30, 2020 59% of distribution revenue1 is included in base charge Revenue >80% of APT revenues earned from LDC customers via demand charge 25% of APT through system revenue retained through Rider Rev Bad Debt Exp
Slide 13: Sales Volumes by Customer Class
Volume by Customer Key Class Takeaways Q3 Volume by Customer Class Base Charge as a % of Revenue(1) -11.1% Residential 68% 40,000 Sales Volumes MMcf 30,000 Commercial 43% 6.8% -18.3% 20,000 Industrial 23% -16.3% 10,000 Transport/Other 20% 0 Residential Commercial Industrial Transport and 2020 2019 o
Slide 14: Regulatory Approaches to COVID-19
Regulatory Approaches to COVID-19 State Status Colorado Joint Petition filed with CPUC on April 7, 2020 for deferral of COVID related expenses Order received 7/9/20 Authorized deferral of incremental bad debt expenses and foregone Kansas fee revenue that may arise from customer protections Kentucky
Slide 15: Fiscal 2020E Guidance
Fiscal 2020E Guidance ($millions, except EPS) FY 2019 FY 2020E1 Distribution $ 329 $ 380 - 395 Pipeline & Storage 182 180 - 195 Total Net Income $ 511 $ 560 - 590 Average Diluted Shares 117.5 122.3 - 124.7 Diluted EPS2 $ 4.35 $ 4.58 - $ 4.733 Capital Spending $ 1,693 $ 1,850 - $ 1,950 1. Changes in
Slide 16: Fiscal 2020E Guidance
Fiscal 2020E Guidance Selected Expenses FY 2019 FY 2020E1 ($millions) O&M $ 630 $ 615 - 630 D&A $ 391 $ 425 - 435 Interest $ 103 $ 75 - 85 Income Tax $ 139 $ 145 - 1652 Effective Tax Rate 21.4% 20% - 23%3 1. Changes in events or other circumstances that the Company cannot currently anticipate could
Slide 17: FY2020 Regulatory Accomplishments
FY2020 Regulatory Accomplishments Approved Annualized Key Rate Activity Operating Income Increases Through August 5, 2020 $millions $145.5MM Completed – FY20 $300 $ 49.3MM – APT GRIP $ 34.4MM – Mid-Tex RRM $250 $ 15.5MM – Mid-Tex GRIPs* $ 14.8MM – Louisiana RSC $140.5 $ 7.6MM – Mississip
Slide 18: Key Regulatory Filings - Fiscal 2020E
Key Regulatory Filings – Fiscal 2020E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October December January March April June July September Mississippi – Implemented Stable Mid-Tex(Dallas) – Filed Dallas Kansas – Implemented rate case of Mississippi – Filed Stable Rate Rate Filing (SRF) and System Annual
Slide 19: Pipeline & Storage - Regulatory Update: Atmos Pipeline - Texas
Pipeline & Storage – Regulatory Update Atmos Pipeline - Texas Atmos Pipeline - Texas: Implemented 2019 GRIP on May 20, 2020 Authorized an annual operating income increase of $49.3 million Authorized ROE: 11.50%; ROR: 8.87% Authorized capital structure: 47% debt / 53% equity Authorized rate
Slide 20: Regulatory Update: Colorado-Kansas Division
Distribution Operations – Regulatory Update Colorado - Kansas Division Kansas: Implemented rate case on April 1, 2020 Authorized a $0.2 million decrease in annual operating income Authorized ROE: 9.10%; ROR: 7.03% Authorized capital structure: 44% debt / 56% equity Rate base value: $242.3
Slide 21: Regulatory Update: Kentucky/Mid-States Division
Distribution Operations – Regulatory Update Kentucky/Mid-States Division Kentucky PRP Rate Filing: Filed annual Pipe Replacement Program (PRP) filing on July 27, 2020 Requested an annual operating income increase of $3.0 million Requested ROE of 9.65%; ROR of 7.49% Requested capital structur
Slide 22: Regulatory Update: Kentucky/Mid-States Division
Distribution Operations – Regulatory Update Kentucky/Mid-States Division Virginia Rate Filing: Implemented New SAVE Infrastructure Program on October 1, 2019 Authorized an annual operating income increase of $0.1 million Authorized ROE: 9.20%; ROR: 7.43% Authorized capital structure: 42% deb
Slide 23: Regulatory Update: Louisiana Division
Distribution Operations – Regulatory Update Louisiana Division Louisiana: Implemented Annual Rate Stabilization Clause (RSC) on July 1, 2020 Combined filing for Trans-La and LGS Authorized an increase in annual operating income of $14.8 million Authorized ROE of 9.80%; ROR of 7.57% Authori
Slide 24: Regulatory Update: Mid-Tex Division
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex Cities: Filed 2019 Annual Rate Review Mechanism (RRM) on March 31, 2020 Requested an increase in annual operating income of $94.1 million Requested ROE of 9.80%; ROR of 7.56% Requested capital structure of 41% debt / 59% eq
Slide 25: Regulatory Update: Mid-Tex Division
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex Environs: Approved 2019 GRIP on May 20, 2020; Rates to be Implemented on September 1, 2020 Authorized an increase in annual operating income of $4.4 million Authorized ROE of 9.80%; ROR of 7.97% Authorized capital structure
Slide 26: Regulatory Update: Mississippi Division
Distribution Operations – Regulatory Update Mississippi Division Mississippi: Filed Annual Stable Rate Filing (SRF) on July 1, 2020 Requested an annual operating income increase of $8.4 million Requested ROR: 7.81% Requested rate base: $475.9 million Forward-looking components - PP&E, accu
Slide 27: Regulatory Update: Mississippi Division
Distribution Operations – Regulatory Update Mississippi Division Mississippi: Implemented Annual Stable Rate Filing (SRF) on November 1, 2019 Authorized an annual operating income increase of $6.9 million Authorized ROR: 7.81% Authorized rate base: $448.5 million Forward-looking components
Slide 28: Regulatory Update: West Texas Division
Distribution Operations – Regulatory Update West Texas Division West Texas Cities: Filed 2019 Annual Rate Review Mechanism (RRM) on March 31, 2020 Requested an annual operating income increase of $7.1 million Requested ROE: 9.80%; ROR: 7.56% Requested capital structure: 41% debt / 59% equity
Slide 29: Regulatory Update: West Texas Division
Distribution Operations – Regulatory Update West Texas Division West Texas Triangle: Implemented 2019 Statement of Intent (SOI) on April 21, 2020 Authorized an annual operating income decrease of $0.8 million Authorized ROE: 9.80%; ROR: 7.71% Authorized capital structure: 40% debt / 60% equi
Slide 30: 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 31: 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 32: 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