Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q1 2021 Earnings Presentation
25 slides from Atmos Energy's earnings presentation, Feb 3, 2021
Slide 1: Analyst Call to Review Fiscal 2021 First Quarter Financial Results
Analyst Call to Review Fiscal 2021 First Quarter Financial Results February 3, 2021 9:00 a.m. Eastern
Slide 2: Q1 Fiscal 2021 Highlights
Q1 Fiscal 2021 Highlights Financial Performance Diluted EPS of $1.71 Capital spending of $456.8 million; 87% allocated to safety and reliability spending Reaffirmed Fiscal 2021 EPS guidance range of $4.90 - $5.10 8.7% increase in fiscal 2021 indicated annual dividend to $2.50 per diluted s
Slide 3: Consolidated Financial Highlights – Q1 Fiscal 2021
Consolidated Financial Highlights – Q1 Fiscal 2021 Three Months Ended December 31 Segment Net Income 2020 2019 ($millions, except EPS) Distribution $ 154 $ 130 Pipeline & Storage 64 49 Net Income $ 218 $ 179 Diluted EPS1 $ 1.71 $ 1.47 Capital Expenditures $ 456.8 $ 529.2 1. Since Atmos Energy has no
Slide 4: Segment Operating Income Results
Segment Operating Income Results Three Months Ended December 31 2020 2019 Change ($millions) Distribution $ 209.5 $ 180.3 $ 29.2 Pipeline & Storage 89.3 72.5 16.8 Operating Income $ 298.8 $ 252.8 $ 46.0 Distribution Key Drivers Pipeline & Storage Key Drivers $37.0MM – Increase in rates $13.3MM –
Slide 5: Capital Spending Mix
Capital Spending Mix Safety & Reliability Investments Support Infrastructure Modernization $millions Fiscal 2021 Q1 CapEx Repair and replace transmission and distribution $ 246 pipelines 1% 50 Service line replacement 12% 41 Pipeline integrity management projects 87% Install & replace measurement &
Slide 6: Fiscal 2021 Q1 Financing Recap
Fiscal 2021 Q1 Financing Recap $600 million of long-term debt financing issued 1.50% 10-year senior notes issued in October 2020 Equity needs satisfied through our ATM program $122 million of equity priced in Q1 fiscal 2021 $216 million in settled equity forward arrangements $247 million
Slide 7: Strong Financial Foundation
Strong Financial Foundation Weighted Average Maturity ~19 Years $1,200 $950 $1,000 3.73% $750 $800 4.125% ($ millions) $600 $600 1.5% 4.3% $600 $500 $500 3.0% 4.15% $400 5.5% $400 $300 2.625% $200 $200 2.29% $150 5.95% $200 6.75% $10 6.67% $0 As of February 2, 2021 7
Slide 8: Strong Financial Foundation: Debt Cost and Credit Metrics
Strong Financial Foundation Improved Weighted Average Cost of Long-Term Debt Credit Metrics Remain Strong Net Long-Term Debt Interest Rate % $5,500 6.0 Strong Investment 5.2 $5,000 5.2 Grade Credit Ratings 4.7 5.0 $4,500 Standard & 4.2 Moody’s 4.0 Poor’s $4,000 4.0 7 issues, 3.00% - 6.75% $3,500 • S
Slide 9: Strong Financial Foundation Further Enhanced
Strong Financial Foundation Further Enhanced Capitalization and Liquidity Profile Total Capitalization Liquidity Profile as of December 31, 2020 100% $3,200 $2,800 $246.8 42% 40% 75% $2,400 $457.6 7 issues, 3.00% - 6.75% $2,000 $700.0 ~ $2.9 billion Available 50% $1,600 Liquidity at 12/31/20 $1,200
Slide 10: Fiscal 2021E Guidance
Fiscal 2021E Guidance ($millions, except EPS) FY 2020 FY 2021E1 Distribution $ 395 $ 425 - 440 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 11: Fiscal 2021E Guidance: Selected Expenses
Fiscal 2021E Guidance Selected Expenses FY 2020 FY 2021E1 ($millions) O&M $ 630 $ 660 - 690 D&A $ 430 $ 470 - 480 Interest $ 84 $ 75 - 85 Adjusted Income Tax $ 1662 $ 175 - 185 Adjusted Effective Tax Rate 22.2%3 20% - 23%4 1. Changes in events or other circumstances that the Company cannot currently
Slide 12: Key Class Takeaways
Volume by Customer Key Class Takeaways Fiscal 2021 Budget Base Charge as a % of Revenue(1) Residential 65% Commercial 44% Industrial 24% Transport/Other 22% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Total 58% Oct – Mar Apr – Sep ~70% of Total Year Revenue ~30% of Total Year Revenue FY21 Estima
Slide 13: COVID-19 Key Financial Factors
COVID-19 Key Financial Factors 58% of distribution revenue1 is included in base charge >80% of APT revenues earned from LDC customers via Revenue demand charge 25% of APT through system revenue retained through Rider Rev Bad Debt Expense Regulatory asset treatment in 6 states2 Regulatory a
Slide 14: Regulatory Approaches to COVID-19
Regulatory Approaches to COVID-19 State Status Colorado Order received 9/3/20 Authorized deferral of incremental bad debt expense Order received 7/9/20 Authorized deferral of incremental bad debt expenses and foregone Kansas fee revenue that may arise from customer protections Kentucky Order receive
Slide 15: FY2021 Regulatory Accomplishments
FY2021 Regulatory Accomplishments Approved Annualized Key Rate Activity Operating Income Increases Through February 2, 2021 $millions $109.8MM Implemented $180 $ 82.6MM – Mid-Tex RRM $160 $ 10.6MM – Mississippi SIR $ 5.9MM – Mississippi SRF $140 $ 5.6MM – West TX RRM $ 2.4MM – Colorado S
Slide 16: 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 17: 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 – Completed Colorado – Implemented SSIR filing of Mid-Tex and WTX Cities – Anticipate Mississippi – Anticipate Stable Rate Rate Review Mechanis
Slide 18: Distribution Operations – Regulatory Update: Colorado-Kansas
Distribution Operations – Regulatory Update Colorado - Kansas Division Kansas: Implemented Gas Safety Reliability Surcharge (GSRS) filing on January 26, 2021 Authorized an annual operating income increase of $1.7 million Authorized ROE: 9.10%; ROR: 7.03% Authorized capital structure: 44% deb
Slide 19: Distribution Operations – Regulatory Update: Kentucky/Mid-States
Distribution Operations – Regulatory Update Kentucky/Mid-States Division Tennessee ARM Filing: Filed Annual Review Mechanism (ARM) on February 1, 2021 Requested an increase in annual operating income of $7.7 million Requested ROE of 9.80%; ROR of 7.62% Requested capital structure of 40% debt
Slide 20: Distribution Operations – Regulatory Update: Mid-Tex
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex City of Dallas: Filed Dallas Annual Rate Review (DARR) on January 15, 2021 Requested an increase in annual operating income of $15.9 million Requested ROE of 9.80%; ROR of 7.57% Requested capital structure of 41% debt / 59%
Slide 21: Distribution Operations – Regulatory Update: Mississippi
Distribution Operations – Regulatory Update Mississippi Division Mississippi: Implemented Annual Stable Rate Filing (SRF) on November 1, 2020 Authorized an annual operating income increase of $5.9 million Authorized ROR: 7.81% Authorized rate base: $474.2 million Forward-looking components
Slide 22: Distribution Operations – Regulatory Update: West Texas
Distribution Operations – Regulatory Update West Texas Division West Texas ALDC: Filed 2020 Statement of Intent (SOI) on September 30, 2020 Requested an annual operating income increase of $8.4 million Requested ROE: 10.50%; ROR: 7.94% Requested capital structure: 41% debt / 59% equity Req
Slide 23: 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 24: 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 25: 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