Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q3 2023 Earnings Presentation
34 slides from Atmos Energy's earnings presentation, Aug 3, 2023
Slide 1: Analyst Call to Review Fiscal 2023 Third Quarter Financial Results
Analyst Call to Review Fiscal 2023 Third Quarter Financial Results August 3, 2023 10:00 a.m. Eastern
Slide 2: Fiscal Q3 2023 Review
Fiscal Q3 2023 Review As of August 3, 2023 Page 2
Slide 3: Q3 Fiscal 2023 Financial Performance: Fiscal 2023 Highlights
Q3 Fiscal 2023 Financial Performance Fiscal 2023 Highlights • Financial Performance • YTD Diluted EPS of $5.33 • $2.1 billion in capital spending; 86% allocated to safety and reliability spending • Reaffirmed fiscal 2023 EPS guidance range of $6.00 to $6.10 • 8.8% increase in fiscal 2023 annual divi
Slide 4: Consolidated Financial Highlights
Q3 Fiscal 2023 Financial Performance Consolidated Financial Highlights Three Months Ended Nine Months Ended June 30 June 30 Segment Net Income 2023 2022 2023 2022 ($millions, except EPS) Distribution $ 60 $ 58 $ 542 $ 506 Pipeline & Storage 78 71 225 197 Net Income $ 138 $ 129 $ 767 $ 703 Diluted EP
Slide 5: Segment Operating Income Highlights (Three Months)
Q3 Fiscal 2023 Financial Performance Segment Operating Income Highlights Three Months Ended June 30 2023 2022 Change ($millions) Distribution $ 71.7 $ 66.1 $ 5.6 Pipeline & Storage 97.6 88.5 9.1 Operating Income $ 169.3 $ 154.6 $ 14.7 Distribution Key Drivers Pipeline & Storage Key Drivers • $29.1MM
Slide 6: Segment Operating Income Highlights (Nine Months)
Q3 Fiscal 2023 Financial Performance Segment Operating Income Highlights Nine Months Ended June 30 2023 2022 Change ($millions) Distribution $ 638.8 $ 567.9 $ 70.9 Pipeline & Storage 274.3 247.7 26.6 Operating Income $ 913.1 $ 815.6 $ 97.5 Distribution Key Drivers Pipeline & Storage Key Drivers • $1
Slide 7: Capital Spending Highlights
Q3 Fiscal 2023 Financial Performance Capital Spending Highlights $millions Fiscal 2023 YTD CapEx Repair and replace transmission and $ 935 distribution pipelines 207 Fortifications 1% 203 Pipeline integrity management projects 13% 197 Service line replacement 86% Install & replace measurement & regu
Slide 8: Strong Financial Foundation Supports Capital Spending Program
Q3 Fiscal 2023 Financial Performance Strong Financial Foundation Supports Capital Spending Program Capitalization and Liquidity Profile Liquidity Profile as of Total Capitalization1 June 30, 2023 100% ($millions) 1% $3,500 $56 38% $3,000 75% 45% $589 $2,500 $100 $2,000 $900 $3.1 billion 50% Availabl
Slide 9: Financing Highlights
Q3 Fiscal 2023 Financial Performance Financing Highlights • $800 million of long-term debt financing issued YTD • $500 million 5.75% 30-year senior notes issued in October 20221 • $300 million 5.45% 10-year senior notes issued in October 2022 • Equity needs satisfied through our ATM program • $485.7
Slide 10: Manageable Debt Maturity Schedule Supports Capital Spending Program
Q3 Fiscal 2023 Financial Performance Manageable Debt Maturity Schedule Supports Capital Spending Program Weighted Average Maturity ~18.3 Years $1,100 4.168% $950 3.73% $750 4.125% $600 $600 1.5% 4.30% $500 $500 $500 3.00% 2.625% 4.15% $400 5.50% $300 5.45% $200 $150 5.95% 6.75% $10 6.67% 2023 2024 2
Slide 11: Strong Investment Grade Ratings Support Affordable Customer Bills
Q3 Fiscal 2023 Financial Performance Strong Investment Grade Ratings Support Affordable Customer Bills Strong Investment Weighted Average Cost of Debt1 Grade Credit Ratings $7,000 5.0 Standard & 4.7 Moody’s Poor’s 4.5 4.2 $6,000 4.0 Senior Unsecured A1 A- 4.0 3.8 4.0 Commercial Paper P-1 A-2 $5,000
Slide 12: Regulatory Highlights
FY 2023 Financial Performance Regulatory Highlights Approved Annualized Key Rate Activity Operating Income Increases Through August 3, 2023 • $263.1MM Completed $450 • $ 84.9MM – APT GRIP • $ 81.4MM – Mid-Tex Cities RRM $400 $263.0 • $ 18.8MM – Mid-Tex GRIPs • $ 17.3MM – Mid-Tex DARR $350 • $ 14.5MM
Slide 13: Financial Outlook: Fiscal 2023E Guidance
Financial Outlook Fiscal 2023E Guidance ($millions, except EPS) FY 2022 FY 2023E1 Distribution $ 522 $ 570 - 590 Pipeline & Storage 252 285 - 295 Total Net Income $ 774 $ 855 - 885 Average Diluted Shares 138.1 144 - 146 Diluted EPS2 $ 5.60 $ 6.00 - 6.10 Capital Spending $ 2,444 $ ~2,800 1. Changes i
Slide 14: Financial Outlook: Fiscal 2023E Guidance, Selected Expenses
Financial Outlook Fiscal 2023E Guidance Selected Expenses FY 2022 FY 2023E1 ($millions) O&M $ 710 $ 760 - 780 D&A $ 536 $ 600 - 610 Interest $ 103 $ 123 - 129 Income Tax $ 78 $ 105 - 120 Effective Tax Rate 9.1% 11% - 13%2 1. Changes in events or other circumstances that the Company cannot currently
Slide 15: Regulatory Information
Regulatory Information As of August 3, 2023 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 2023E
Key Regulatory Filings – Fiscal 2023E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October – December January – March April – June July – September Mid-Tex and WTX Cities – Implemented RRM Atmos Pipeline – Texas (APT) – Implemented Mississippi – Filed (SRF) in June 2023; new filing of $88.3MM; $88.7MM net
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 Jurisdiction (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income Income $m
Slide 19: 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 Jurisdiction Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income I
Slide 20: Atmos Pipeline - Texas
Atmos Pipeline - Texas • Atmos Pipeline: Filed 2023 Statement of Intent (SOI) on May 19, 2023 • Requested an increase in annual operating income of $107.4 million • Requested ROE: 13.5%; ROR: 9.73% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $4.3 billion • Test year e
Slide 21: Colorado - Kansas Division
Colorado - Kansas Division • Kansas: Implemented 2022 General Rate Case on May 9, 2023 • Authorized an increase in annual operating income of $2.0 million • Authorized rate base: $295.1 million • Test year ended March 31, 2022 • Kansas: Implemented System Integrity Program (SIP) on April 1, 2023 • A
Slide 22: Colorado - Kansas Division
Colorado - Kansas Division • Colorado: Implemented 2022 General Rate Case on May 14, 2023 • Authorized an increase in annual operating income of $0.9 million • Authorized ROE: 9.3% to 9.6%; ROR: 7.00% • Authorized capital structure: 42% to 45% debt / 55% to 58% equity • Authorized rate base: $229.6
Slide 23: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Kentucky: Implemented Annual PRP on October 2, 2022 • Authorized an annual operating income increase of $1.6 million • Authorized ROE: 9.45%; ROR: 6.94% • Authorized capital structure: 45% debt / 55% equity • Authorized rate base: $14.4 million • Virginia: Implemented
Slide 24: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Virginia: Filed SAVE Infrastructure Program on June 1, 2023 • Requested an annual operating income increase of $0.7 million • Requested ROE: 9.20%; ROR: 7.43% • Requested capital structure: 42% debt / 58% equity • Requested rate base: $16.4 million • Virginia: Filed Ge
Slide 25: Louisiana Division
Louisiana Division • Louisiana: Implemented Annual Rate Stabilization Clause (RSC) on July 1, 2023 • Authorized an increase in annual operating income of $14.5 million • Authorized ROR: 7.30% • Authorized rate base: $1.1 billion • Test year ending December 31, 2022 • The Louisiana RSC agreement is s
Slide 26: Mid-Tex Division
Mid-Tex Division • Mid-Tex Environs: Implemented 2022 GRIP on June 1, 2023 • Authorized an increase in annual operating income of $6.0 million • Authorized ROE: 9.80%; ROR: 7.97% • Authorized capital structure: 40% debt / 60% equity • Authorized rate base: $5.9 billion • Test year ending December 31
Slide 27: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Filed Rate Review Mechanism (RRM) on March 31, 2023 • Requested an increase in annual operating income of $113.8 million • Requested ROE: 9.80%; ROR: 7.44% • Requested capital structure: 41% debt / 59% equity • Requested rate base: $6.1 billion • Test year ending D
Slide 28: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Implemented Rate Review Mechanism (RRM) on October 1, 2022 • Authorized an increase in annual operating income of $81.4 million • Authorized ROE: 9.80%; ROR: 7.28% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $5.2 billion • Test yea
Slide 29: Mississippi Division
Mississippi Division • Mississippi: Filed Annual System Integrity Rider (SIR) on March 1, 2023 • Requested an increase in annual operating income of $11.0 million • Requested ROR: 7.82% • Requested rate base: $472.7 million • Forward-looking components - PP&E, accumulated depreciation, accumulated d
Slide 30: Mississippi Division
Mississippi Division • Mississippi: Implemented Annual System Integrity Rider (SIR) on November 1, 2022 • Authorized an increase in annual operating income of $8.6 million • Authorized ROR: 7.53% • Authorized rate base: $390.3 million • Forward-looking components - PP&E, accumulated depreciation, ac
Slide 31: West Texas Division
West Texas Division • West Texas Environs: Implemented 2022 GRIP on June 1, 2023 • Authorized an increase in annual operating income of $1.3 million • Authorized ROE: 9.80%; ROR: 7.97% • Authorized capital structure: 40% debt / 60% equity • Authorized rate base: $958.2 million • Test year ending Dec
Slide 32: West Texas Division
West Texas Division • West Texas Cities: Filed Rate Review Mechanism (RRM) on March 31, 2023 • Requested an increase in annual operating income of $10.1 million • Requested ROE: 9.80%; ROR: 7.44% • Requested capital structure: 41% debt / 59% equity • Requested rate base: $965.9 million • Test year e
Slide 33: West Texas Division
West Texas Division • West Texas Cities: Implemented Rate Review Mechanism (RRM) on October 1, 2022 • Authorized an increase in annual operating income of $7.3 million • Authorized ROE: 9.80%; ROR: 7.28% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $855.3 million • T
Slide 34: 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