Atmos Energy Corporation · NYSE:ATO
Atmos Energy — Q3 2019 Earnings Presentation
30 slides from Atmos Energy's earnings presentation, Aug 8, 2019
Slide 1: Analysts Call to Review Fiscal 2019 Third Quarter Financial Results
Analysts Call to Review Fiscal 2019 Third Quarter Financial Results August 8, 2019 10:00 a.m. Eastern
Slide 2: Fiscal 2019 YTD Highlights
Fiscal 2019 YTD Highlights Solid YTD Financial Performance YTD Diluted EPS of $3.88 10% increase in capital spending to $1.2 billion; 87% allocated to safety and reliability spending 8.2% increase in fiscal 2019 indicated annual dividend to $2.10 per diluted share - 35th consecutive year of
Slide 3: Consolidated Financial Results Fiscal 2019 – Q3
Consolidated Financial Results Fiscal 2019 – Q3 Net Income – Q3 Fiscal 2019 versus Q3 Fiscal 2018 Fiscal 2019 – Q3 Fiscal 2018 – Q3 ($millions, except EPS) Net Diluted Net Diluted Income EPS 1 Income EPS 1 Segment Net Income Distribution $ 32 $ 35 Pipeline & Storage 48 36 Net Income $ 80 $0.68 $ 71
Slide 4: Consolidated Financial Results Fiscal 2019 – YTD
Consolidated Financial Results Fiscal 2019 – YTD Net Income – YTD Fiscal 2019 versus YTD Fiscal 2018 Fiscal 2019 – YTD Fiscal 2018 – YTD ($millions, except EPS) Net Diluted Net Diluted Income EPS 2 Income EPS 2 Segment Net Income Distribution $ 319 $ 429 Pipeline & Storage 134 135 Net Income $ 453 $
Slide 5: Distribution Segment Financial Results
Distribution Segment Financial Results Key Drivers Quarter Ended 6/30 2019 2018 Change Contribution Margin increase: ($millions) $7.1MM – Increase in rates Contribution Margin $ 305.4 $ 304.6 $ 0.8 $2.9MM – Customer growth ($3.8MM) – Lower consumption Operating Expenses O&M increase: Opera
Slide 6: Pipeline & Storage Segment Financial Results
Pipeline & Storage Segment Financial Results Key Drivers Quarter Ended 6/30 2019 2018 Change ($millions) Contribution Margin increase: $16.5MM – Rate increases Contribution Margin $ 149.3 $ 127.1 $ 22.2 $4.5MM – Thru-system activities Operating Expenses O&M increase: Hydro testing and in-l
Slide 7: Capital Spending
Capital Spending 87% Allocated to Safety and Reliability millions $1,200 $1,000 $800 $600 $1,199.2 $1,088.5 $400 $200 $0 YTD FY18 YTD FY19 As of August 7, 2019 7
Slide 8: Capital Spending Mix
Capital Spending Mix Safety & Reliability Investments Support Infrastructure Modernization $millions Fiscal 2019 YTD CapEx $ 551 Repair and replace transmission and distribution pipelines 3% $ 151 Service line replacement 10% $ 106 Fortifications 87% $ 93 Install & replace measurement & regulating e
Slide 9: Fiscal 2019 Financing Recap
Fiscal 2019 Financing Recap $2.1 billion of financing completed through June 30, 2019 $1.1 billion of 30-year debt issuances $600 million 4.3% senior notes issued October 2018 to repay short-term debt $450 million 4.125% senior notes issued March 2019 to refinance $450 million 8.5% notes $
Slide 10: Strong Financial Foundation
Strong Financial Foundation Weighted Average Maturity ~22 Years $750 $800 4.125% $600 4.30% $600 $500 $500 4.15% 3.0% $450 $400 4.125% ($ millions) 5.5% $400 $200 $150 5.95% $200 $125 6.75% 2.13%1 $10 6.67% $0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Slide 11: Strong Financial Foundation: Capitalization and Liquidity Profile
Strong Financial Foundation Capitalization and Liquidity Profile Total Capitalization Liquidity Profile as of June 30, 2019 100% 1% $2,400 7% $409.5 $2,000 $75.0 39% $46.2 ~ $2.0 billion 75% 36% $1,600 7 issues, 3.00% - 6.75% $35.0 Available Liquidity at $1,200 6/30/2019 50% $800 $1,500.0 $400 60% $
Slide 12: Fiscal 2019E Guidance
Fiscal 2019E Guidance FY 2018 Adjusted ($millions, except EPS) FY 2019E* Net Income 2 Distribution $ 305 $ 325 - 335 Pipeline & Storage 139 170 - 180 Total Net Income $ 444 $ 495 - 515 Average Diluted Shares 111.0 117.0 - 118.0 Diluted EPS1 $ 4.00 $ 4.25 - $ 4.35 * Changes in events or other circums
Slide 13: Fiscal 2019E Guidance
Fiscal 2019E Guidance Selected Expenses FY 2018 FY 2019E* ($millions) O&M $ 600 $ 620 - 630 D&A $ 361 $ 385 - 405 Interest $ 107 $ 85 - 95 Income Tax $ 8 $ 135 - 145 Effective Tax Rate 27.3% 21% - 23%** * Changes in events or other circumstances that the Company cannot currently anticipate could mat
Slide 14: Recent Regulatory Developments
Recent Regulatory Developments Approved Annualized Key Rate Activity Operating Income Increases Through 8/7/2019 $110.0MM Completed– FY19 $millions $ 49.2MM – APT GRIP $200 $ 20.4MM – Mid-Tex & West-TX RRMs $ 11.8MM – Louisiana RSCs $180 $ 9.5MM – Mid-Tex DARR * $ 7.0MM – Mississippi SRF/SIR
Slide 15: Distribution Operations – Regulatory Update Mid-Tex Division
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex ATM Cities: Filed 2018 GRIP on June 13, 2019 Requested an annual operating income increase of $6.6 million Requested ROE: 9.80%; ROR: 7.97% Requested capital structure: 40% debt / 60% equity Requested rate base: $3.0 bill
Slide 16: Distribution Operations – Regulatory Update Mid-Tex Division
Distribution Operations – Regulatory Update Mid-Tex Division Mid-Tex ATM Cities: Implemented Statement of Intent (SOI) on June 1, 2019 Authorized an increase in annual operating income of $2.1 million Authorized ROE: 9.8%; ROR of 7.97% Authorized capital structure: 40% debt / 60% equity Au
Slide 17: Distribution Operations – Regulatory Update West Texas Division
Distribution Operations – Regulatory Update West Texas Division West Texas Environs: Implemented 2018 GRIP on June 4, 2019 Authorized an annual operating income increase of $1.0 million Authorized ROE: 9.8%; ROR: 7.97% Authorized capital structure: 40% debt / 60% equity Authorized rate bas
Slide 18: Distribution Operations – Regulatory Update West Texas Division
Distribution Operations – Regulatory Update West Texas Division West Texas Environs: Implemented 2018 SOI on January 1, 2019 Authorized $0.8 million decrease in operating income Authorized ROE: 9.8%; ROR: 7.97% Authorized capital structure: 40% debt / 60% equity Authorized system-wide rate
Slide 19: Distribution Operations – Regulatory Update Louisiana Division
Distribution Operations – Regulatory Update Louisiana Division LGS: Implemented Annual RSC on July 1, 2019 Authorized $7.1 million increase in annual operating income Authorized ROE: 9.8%; ROR: 7.79% Authorized capital structure: 42% debt / 58% equity Authorized rate base of $469.0 million
Slide 20: Distribution Operations – Regulatory Update Mississippi Division
Distribution Operations – Regulatory Update Mississippi Division Mississippi: Filed Annual System Integrity Rider (SIR) on July 1, 2019 Requested a net increase in annual operating income of $8.6 million Requested ROE: 10.60%; ROR: 8.14% Requested actual capital structure: 40% debt / 60% equ
Slide 21: Distribution Operations – 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 31, 2019 Requested an annual operating income increase of $2.9 million Requested ROE of 9.65%; ROR of 7.49% Requested capital structur
Slide 22: Distribution Operations – Regulatory Update Kentucky/Mid-States Division
Distribution Operations – Regulatory Update Kentucky/Mid-States Division Virginia Rate Filing: Filed New SAVE Infrastructure Program on April 1, 2019 Requested an annual operating income increase of $0.1 million Requested ROE: 9.20%; ROR: 7.43% Requested capital structure: 42% debt / 58% equ
Slide 23: Distribution Operations – Regulatory Update Colorado - Kansas Division
Distribution Operations – Regulatory Update Colorado - Kansas Division Kansas: Filed rate case with Annual Mechanism and Integrity Mechanism on June 28, 2019 Requested a $3.7 million increase in annual operating income Requested ROE: 10.25%; ROR: 7.98% Requested capital structure: 40% debt /
Slide 24: Pipeline & Storage – Regulatory Update Atmos Pipeline - Texas
Pipeline & Storage – Regulatory Update Atmos Pipeline - Texas Atmos Pipeline - Texas: Implemented 2018 GRIP on May 7, 2019 Authorized an annual operating income increase of $49.2 million Authorized ROE: 11.50%; ROR: 8.87% Authorized capital structure: 47.4% debt / 52.6% equity Authorized r
Slide 25: Federal Tax Reform – Regulatory Progress
Federal Tax Reform – Regulatory Progress Implement Refund Refund Excess Jurisdiction Note 21% in Regulatory Deferred Taxes Rates Liability Approved Period (Yrs) APT – Base rates 2 Colorado (Includes SSIR) 1 13-51 Kansas 1 Kentucky 1 24-30 Louisiana – LGS 1 23 Louisiana – TransLa 1 28 Mississippi (SI
Slide 26: Key Regulatory Developments – Fiscal 2019 Rate Filing Outlook
Key Regulatory Developments – Fiscal 2019 Rate Filing Outlook Q1 Q2 Q3 Q4 October December January March April June July September Mississippi – Implemented Stable Tennessee – Implemented Annual WTX Cities – Filed Rate Review Mississippi – Filed Stable Rate Rate Filing (SRF) and System Rate Mechanis
Slide 27: 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
Slide 28: Appendix
ATMOS Appendix
Slide 29: Regulatory Summary
Regulatory Summary Effective Date of Authorized Requested Date of Last Rate Operating Operating Rate Base Requested Authorized Requested Authorized Requested Authorized Requested Last Rate Filing Income Income $ millions Rate Base Rate of Rate of Return on Return on Debt/ Debt/ Meters at Jurisdictio
Slide 30: Regulatory Summary (continued)
Regulatory Summary (continued) Date of Authorized Requested Effective Last Rate Operating Operating Rate Base Requested Authorized Requested Authorized Requested Authorized Requested Date of Last Filing Income Income $ millions Rate Base Rate of Rate of Return on Return on Debt/ Debt/ Meters at Juri