News Column

Atmos Energy Corporation Reports Earnings for the Fiscal 2014 Third Quarter and Nine Months; Reaffirms Fiscal 2014 Guidance

August 22, 2014



By a News Reporter-Staff News Editor at Energy Weekly News -- Atmos Energy Corporation (NYSE: ATO) reported consolidated results for its fiscal 2014 third quarter and nine months ended June 30, 2014.

Fiscal 2014 third quarter consolidated net income, excluding net unrealized margins, was $46.1 million, or $0.45 per diluted share, compared with consolidated net income, excluding net unrealized margins and a gain on sale, of $39.4 million, or $0.42 per diluted share in the prior-year quarter.

Fiscal 2014 third quarter consolidated net income was $45.7 million, or $0.45 per diluted share, after including unrealized net losses of $0.4 million, or $0.00 per diluted share. Net income was $38.8 million, or $0.42 per diluted share in the prior-year quarter, after including unrealized net losses of $5.9 million, or $(0.06) per diluted share and the gain on sale.

The prior-year quarter included a net gain on the sale of the Georgia assets of $5.3 million, or $0.06 per diluted share.

The company's Board of Directors has declared a quarterly dividend of 37 cents per common share. The indicated annual dividend for fiscal 2014 is $1.48, which represents a 5.7 percent increase over fiscal 2013.

For the nine months ended June 30, 2014, consolidated net income was $266.1 million, or $2.76 per diluted share, compared with net income of $235.7 million, or $2.57 per diluted share for the same period last year. Results from nonregulated operations include unrealized net gains of $7.0 million, or $0.07 per diluted share for the nine months ended June 30, 2014, compared with unrealized net gains of $9.7 million, or $0.11 per diluted share for the prior-year period. For the current nine-month period, regulated operations contributed $238.5 million of net income, or $2.47 per diluted share, and nonregulated operations contributed net income of $27.6 million, or $0.29 per diluted share. The prior-year nine-month period included $12.5 million, or $0.14 per diluted share from discontinued operations.

"While we continue to focus on providing safe and reliable service to our customers, the predictable and stable nature of our regulated operations offers strong earnings growth," said Kim Cocklin, president and chief executive officer of Atmos Energy Corporation. "As we enter the final quarter of our fiscal year, we remain on track to meet our earnings guidance of between $2.80 and $2.90 per diluted share in fiscal 2014," Cocklin concluded. Results for the Quarter Ended June 30, 2014 Natural gas distribution gross profit increased $18.2 million to $257.7 million for the fiscal 2014 third quarter, compared with $239.5 million in the prior-year quarter, excluding discontinued operations. Gross profit reflects a net $9.2 million increase in rates, primarily in the Mid-Tex and West Texas Divisions. Additionally, revenue-related taxes increased $6.7 million, primarily due to higher revenues in the Mid-Tex and West Texas Divisions, offset by a corresponding $10.9 million increase in the related tax expense.

Regulated transmission and storage gross profit increased $13.2 million to $87.2 million for the quarter ended June 30, 2014, compared with $74.0 million for the same quarter last year. This increase is primarily the result of a $12.2 million increase in revenues from the Gas Reliability Infrastructure Program (GRIP) filing that became effective in May 2014.

Nonregulated gross profit increased $11.5 million to $14.8 million for the fiscal 2014 third quarter, compared with $3.3 million for the prior-year quarter, as a result of a $2.5 million increase in realized margins, combined with a $9.0 million increase in unrealized margins. Realized margins for gas delivery, storage and transportation services increased $1.8 million quarter over quarter, primarily due to a $0.02/Mcf increase in per-unit margins partially offset by a two percent decrease in consolidated sales volumes.

Consolidated operation and maintenance expense for the quarter ended June 30, 2014, was $125.6 million, compared with $121.3 million for the prior-year period, excluding discontinued operations. The $4.3 million increase resulted primarily from increased levels of pipeline and right-of-way maintenance activities to improve the safety and reliability of the overall system. Results for the Nine Months Ended June 30, 2014 Natural gas distribution gross profit, excluding discontinued operations, increased $75.9 million to $942.0 million for the nine months ended June 30, 2014, compared with $866.1 million in the prior-year period. Gross profit reflects a net $24.5 million increase in rates, primarily in the Mid-Tex, Kentucky/Mid-States and Louisiana Divisions. Additionally, gross profit increased $12.9 million from colder weather, primarily in the Mid-Tex and West Texas Divisions. Finally, revenue-related taxes increased $24.5 million, primarily due to higher revenues in the Mid-Tex and West Texas Divisions, offset by a corresponding $25.2 million increase in the related tax expense.

Regulated transmission and storage gross profit increased $35.5 million to $232.1 million for the nine months ended June 30, 2014, compared with $196.6 million during the same period last year. This increase is primarily the result of a $26.3 million increase in revenues from the GRIP filings approved in fiscal years 2014 and 2013. Additionally, increased transportation volumes and basis spreads, due to colder weather experienced across Texas, increased gross profit by $4.7 million.

Nonregulated gross profit increased $21.0 million to $71.0 million for the nine months ended June 30, 2014, compared with $50.0 million for the prior-year period, as a result of a $25.3 million increase in realized margins, offset by a $4.4 million decrease in unrealized margins. Realized margins for gas delivery, storage and transportation services increased $1.5 million period over period, primarily due to an 11 percent increase in consolidated sales volumes. Additionally, other realized margins increased $23.8 million from the prior-year period, primarily due to increased margins earned by accelerating physical withdrawals into the fiscal second quarter from future periods to capture gross profit in a volatile natural gas market, caused by strong market demand due to significantly colder weather.

Consolidated operation and maintenance expense, excluding discontinued operations, for the nine months ended June 30, 2014, was $366.0 million, compared with $338.9 million for the prior-year period. The $27.1 million increase resulted primarily from higher employee-related costs and pipeline maintenance activities.

The debt capitalization ratio at June 30, 2014 was 44.1 percent, compared with 52.2 percent at September 30, 2013 and 50.1 percent at June 30, 2013. At June 30, 2014, there was no short-term debt outstanding, compared with $368.0 million at September 30, 2013 and $142.0 million at June 30, 2013.

For the nine months ended June 30, 2014, the company generated operating cash flow of $630.2 million, a $120.6 million increase compared with the nine months ended June 30, 2013. The increase primarily reflects higher operating results from colder weather and rate increases combined with the timing of customer collections and vendor payments.

Capital expenditures decreased to $552.6 million for the nine months ended June 30, 2014, compared with $582.5 million in the prior-year period. The $29.9 million decrease is largely due to a $51.5 million decrease in spending in the regulated transmission and storage segment primarily associated with the completion of the Line WX expansion project, partially offset by a $22.0 million increase in spending in the natural gas distribution segment due to increased spending under infrastructure replacement programs. Outlook The leadership of Atmos Energy remains focused on enhancing system safety and reliability through infrastructure investment, while delivering shareholder value and consistent earnings growth. Atmos Energy continues to expect fiscal 2014 earnings to be in the range of $2.80 to $2.90 per diluted share, excluding unrealized margins. Total capital expenditures for fiscal 2014 are expected to continue to range between $830 million and $850 million. Conference Call to be Webcast August 7, 2014Atmos Energy will host a conference call with financial analysts to discuss the financial results for the fiscal 2014 third quarter and first nine months on Thursday, August 7, 2014, at 10:00 a.m. Eastern. The telephone number is 877-485-3107 and the international telephone number is 201-689-8427. The conference call will be webcast live on the Atmos Energy website at www.atmosenergy.com. A playback of the call will be available on the website later that day. Kim Cocklin, president and chief executive officer, and Bret Eckert, senior vice president and chief financial officer, will participate in the conference call.

Keywords for this news article include: Oil & Gas, Natural Gas, Energy Companies, Atmos Energy Corporation.

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Source: Energy Weekly News


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