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Form 8-K ATMOS ENERGY CORP For: May 06

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May 6, 2015 5:07 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 8-K
 
 
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
May 6, 2015
Date of Report (Date of earliest event reported)
 
 
ATMOS ENERGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
 
 
 
 
TEXAS AND VIRGINIA
 
1-10042
 
75-1743247
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
1800 THREE LINCOLN CENTRE,
 
 
5430 LBJ FREEWAY, DALLAS, TEXAS
 
75240
(Address of Principal Executive Offices)
 
(Zip Code)
(972) 934-9227
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02. Results of Operations and Financial Condition.
On Wednesday, May 6, 2015, Atmos Energy Corporation (the “Company”) issued a news release in which it reported the Company’s financial results for the second quarter of the 2015 fiscal year, which will end September 30, 2015, and stated that certain of its officers would discuss such financial results in a conference call on Thursday, May 7, 2015 at 10:00 a.m. Eastern Time. In the release, the Company also announced that the call would be webcast live and that slides for the webcast would be available on its website for all interested parties.
A copy of the news release is furnished as Exhibit 99.1. The information furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Item 9.01. Financial Statements and Exhibits.
 
(d)
Exhibits
 
 
 
 
Exhibit Number
Description
 
 
99.1
  
News Release dated May 6, 2015 (furnished under Item 2.02)





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
ATMOS ENERGY CORPORATION
 
 
 
 
(Registrant)
 
 
 
 
 
DATE:
May 6, 2015
 
 
By:
/s/ LOUIS P. GREGORY
 
 
 
 
 
Louis P. Gregory
 
 
 
 
 
Senior Vice President, General Counsel
 
 
 
 
 
and Corporate Secretary




INDEX TO EXHIBITS
 
 
 
 
 
 
Exhibit Number
  
Description
 
 
 
99.1
  
News Release dated May 6, 2015 (furnished under Item 2.02)






Exhibit 99.1
 
News Release      
Analysts and Media Contact:
Susan Giles (972) 855-3729

Atmos Energy Corporation Reports Earnings for the Fiscal 2015
Second Quarter and Six Months; Reaffirms Fiscal 2015 Guidance

DALLAS (May 6, 2015)—Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fiscal 2015 second quarter and six months ended March 31, 2015.

•
Fiscal 2015 second quarter consolidated net income, excluding net unrealized margins, was $138.5 million, or $1.36 per diluted share, compared with consolidated net income, excluding net unrealized margins, of $132.4 million, or $1.37 per diluted share in the prior-year quarter.

•
Fiscal 2015 second quarter consolidated net income was $137.7 million, or $1.35 per diluted share, after including unrealized net losses of $(0.8) million, or $(0.01) per diluted share. Net income was $133.4 million, or $1.38 per diluted share in the prior-year quarter, after including unrealized net gains of $1.0 million, or $0.01 per diluted share.

•
The company's Board of Directors has declared a quarterly dividend of 39 cents per common share. The indicated annual dividend for fiscal 2015 is $1.56, which represents a 5.4 percent increase over fiscal 2014.

For the six months ended March 31, 2015, consolidated net income was $235.3 million, or $2.31 per diluted share, compared with net income of $220.4 million, or $2.34 per diluted share for the same period last year. Results from nonregulated operations include noncash, unrealized net gains of $4.0 million, or $0.04 per diluted share for the six months ended March 31, 2015, compared with unrealized net gains of $7.4 million, or $0.08 per diluted share for the prior-year period. For the current six-month period, regulated operations contributed $223.0 million of net income, or $2.19 per diluted share, and nonregulated operations contributed net income of $12.3 million, or $0.12 per diluted share.

"Our financial performance reflects the results of infrastructure investments made to enhance the safety and reliability of our system, which is the foundation of our growth strategy," said Kim Cocklin, president and chief executive officer of Atmos Energy Corporation. “Our well executed regulatory strategy has produced predictable and stable earnings from our regulated operations. We remain on track to deliver our previously stated fiscal 2015 earnings guidance range of between $2.90 and $3.05 per diluted share,” Cocklin concluded.


1


Results for the Quarter Ended March 31, 2015
Regulated distribution gross profit increased $21.0 million to $406.2 million for the fiscal 2015 second quarter, compared with $385.2 million in the prior-year quarter. Gross profit reflects a net $26.1 million increase in rates, primarily in the Mid-Tex, Mississippi and West Texas Divisions. This increase was partially offset by a $5.9 million decline in weather-related consumption. Although weather was 15 percent colder than normal during the quarter, it was four percent warmer than the prior-year quarter, before adjusting for weather normalization mechanisms.
Regulated pipeline gross profit increased $18.1 million to $91.7 million for the quarter ended March 31, 2015, compared with $73.6 million for the same quarter last year. This increase is primarily the result of a $15.3 million increase in revenues from the Gas Reliability Infrastructure Program (GRIP) filings approved in 2014 and 2015.
Nonregulated gross profit decreased $14.7 million to $22.9 million for the fiscal 2015 second quarter, compared with $37.6 million for the prior-year quarter, as a result of an $11.7 million decrease in realized margins, combined with a $3.0 million decrease in unrealized margins. Realized margins decreased $16.8 million quarter over quarter, as less volatile market conditions created fewer opportunities to capture incremental gross profit compared to the prior-year quarter. In the prior-year quarter, market conditions were more volatile as a result of significantly colder than normal weather. These conditions created opportunities to accelerate physical withdrawals that had been planned for later in the fiscal year to capture incremental gross profit. Realized margins for gas delivery, storage and transportation services increased $5.1 million quarter over quarter, primarily due to a $0.06/Mcf increase in per-unit margins partially offset by a 12 percent decrease in consolidated sales volumes.
Consolidated operation and maintenance expense for the quarter ended March 31, 2015, was $133.5 million, compared with $124.7 million for the prior-year quarter. The $8.8 million increase resulted primarily from increased pipeline maintenance spending and increased legal expenses, partially offset by a reduction in employee-related costs.


Results for the Six Months Ended March 31, 2015

Regulated distribution gross profit increased $45.6 million to $730.0 million for the six months ended March 31, 2015, compared with $684.4 million in the prior-year quarter. Gross profit reflects a net $45.4 million period-over-period increase in rates, primarily in the Mid-Tex, West Texas and Kentucky/Mid-States Divisions. Additionally, gross profit increased $3.3 million from higher transportation revenues and $2.2 million from higher revenue-related taxes. Gross profit decreased $7.9 million from weather-related consumption. Although weather was 10 percent colder than normal during the six months ended March 31, 2015, it was eight percent warmer than the prior-year period, before adjusting for weather normalization mechanisms.

Regulated pipeline gross profit increased $30.3 million to $175.3 million for the six months ended March 31, 2015, compared with $145.0 million during the same period last year. This increase is primarily the result of a $27.8 million increase in revenues from the GRIP filings approved in 2014 and 2015.

Nonregulated gross profit decreased $17.3 million to $38.9 million for the six months ended March 31, 2015, compared with $56.2 million for the prior-year period, as a result of an $11.5 million decrease in realized margins, combined with a $5.8 million decrease in unrealized margins. Realized margins

2


decreased $14.7 million due to significantly lower market volatility in the current period compared to the prior-year period, as discussed above. Realized margins for gas delivery, storage and transportation services increased $3.2 million period over period, primarily due to a $0.02/Mcf increase in per-unit margins partially offset by an eight percent decrease in consolidated sales volumes.

Consolidated operation and maintenance expense for the six months ended March 31, 2015, was $252.0 million, compared with $240.4 million for the prior-year period. The $11.6 million increase resulted primarily from increased pipeline maintenance spending and increased legal expenses, partially offset by a reduction in employee-related costs.

Capital expenditures increased to $441.6 million for the six months ended March 31, 2015, compared with $359.0 million in the prior-year period. The $82.6 million increase is largely due to a $45.2 million increase in spending in the regulated distribution segment, primarily reflecting the timing of spending combined with a planned increase in safety and reliability investment in fiscal 2015. Additionally, spending in the regulated pipeline segment increased $37.2 million in the current-year period primarily due to the enhancement and fortification of two storage fields to further ensure the reliability of gas service to the Mid-Tex Division.

For the six months ended March 31, 2015, the company generated operating cash flow of $540.8 million, a $49.9 million increase compared with the six months ended March 31, 2014. The increase primarily reflects the timing of gas cost recoveries under purchased gas cost mechanisms.

The debt capitalization ratio at March 31, 2015 was 46.1 percent, compared with 46.2 percent at September 30, 2014 and 44.0 percent at March 31, 2014. At March 31, 2015, there was $225.0 million of short-term debt outstanding, compared with $196.7 million at September 30, 2014 with no short-term debt outstanding at March 31, 2014.


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 2015 earnings to be in the range of $2.90 to $3.05 per diluted share, excluding unrealized margins. Capital expenditures for fiscal 2015 are expected to continue to range between $900 million and $1 billion.


Conference Call to be Webcast May 7, 2015

Atmos Energy will host a conference call with financial analysts to discuss the financial results for the fiscal 2015 second quarter on Thursday, May 7, 2015, 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.
                                
This news release should be read in conjunction with the attached unaudited financial information.



3



Forward-Looking Statements
The matters discussed in this news release 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 historical fact included in this news release are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this news release or in any of the company’s other documents or oral presentations, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “objective,” “plan,” “projection,” “seek,” “strategy” or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this news release, including the risks and uncertainties relating to regulatory trends and decisions, the company’s ability to continue to access the capital markets and the other factors discussed in the company’s reports filed with the Securities and Exchange Commission. These factors include the risks and uncertainties discussed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014, and the company's Quarterly Report on Form 10-Q for the three and six months ended March 31, 2015. Although the company believes these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. The company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.


About Atmos Energy

Atmos Energy Corporation, headquartered in Dallas, is one of the country’s largest natural-gas-only distributors, serving over three million natural gas distribution customers in over 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy also manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas and provides natural gas marketing and procurement services to industrial, commercial and municipal customers primarily in the Midwest and Southeast. For more information, visit www.atmosenergy.com.

4


Atmos Energy Corporation
Financial Highlights (Unaudited)
 
Consolidated Statements of Income
 
Three Months Ended 
 March 31
(000s except per share)
 
2015
 
2014
Gross Profit:
 
 
 
 
Regulated distribution segment
 
$
406,235

 
$
385,188

Regulated pipeline segment
 
91,730

 
73,615

Nonregulated segment
 
22,906

 
37,589

Intersegment eliminations
 
(133
)
 
(115
)
Gross profit
 
520,738

 
496,277

Operation and maintenance expense
 
133,460

 
124,675

Depreciation and amortization
 
68,022

 
61,307

Taxes, other than income
 
69,046

 
60,215

Total operating expenses
 
270,528

 
246,197

Operating income
 
250,210

 
250,080

Miscellaneous expense
 
(1,561
)
 
(1,516
)
Interest charges
 
27,447

 
31,601

Income before income taxes
 
221,202

 
216,963

Income tax expense
 
83,518

 
83,596

Net income
 
$
137,684

 
$
133,367

Basic net income per share
 
$
1.35

 
$
1.38

Diluted net income per share
 
$
1.35

 
$
1.38

Cash dividends per share
 
$
0.39

 
$
0.37

Weighted average shares outstanding:
 
 
 
 
Basic
 
101,746

 
96,174

Diluted
 
101,746

 
96,176

 
 
 
Three Months Ended 
 March 31
Summary Net Income (Loss) by Segment (000s)
 
2015
 
2014
Regulated distribution
 
$
101,853

 
$
88,743

Regulated pipeline
 
27,682

 
24,109

Nonregulated
 
8,955

 
19,518

Unrealized margins, net of tax
 
(806
)
 
997

Consolidated net income
 
$
137,684

 
$
133,367






5


Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
 
 
 
 
 
Consolidated Statements of Income
 
Six Months Ended 
 March 31
(000s except per share)
 
2015
 
2014
Gross Profit:
 
 
 
 
Regulated distribution segment
 
$
730,047

 
$
684,359

Regulated pipeline segment
 
175,297

 
144,956

Nonregulated segment
 
38,945

 
56,155

Intersegment eliminations
 
(266
)
 
(236
)
Gross profit
 
944,023

 
885,234

Operation and maintenance expense
 
252,042

 
240,432

Depreciation and amortization
 
135,615

 
121,776

Taxes, other than income
 
118,431

 
102,226

Total operating expenses
 
506,088

 
464,434

Operating income
 
437,935

 
420,800

Miscellaneous expense
 
(3,268
)
 
(3,648
)
Interest charges
 
57,211

 
63,716

Income before income taxes
 
377,456

 
353,436

Income tax expense
 
142,177

 
133,053

Net income
 
$
235,279

 
$
220,383

Basic net income per share
 
$
2.31

 
$
2.34

Diluted net income per share
 
$
2.31

 
$
2.34

Cash dividends per share
 
$
0.78

 
$
0.74

Weighted average shares outstanding:
 
 
 
 
Basic
 
101,667

 
94,013

Diluted
 
101,667

 
94,015



 
 
 
 
 
 
 
Six Months Ended 
 March 31
Summary Net Income (Loss) by Segment (000s)
 
2015
 
2014
Regulated distribution
 
$
173,240

 
$
151,500

Regulated pipeline
 
49,717

 
43,555

Nonregulated
 
8,371

 
17,884

Unrealized margins, net of tax
 
3,951

 
7,444

Consolidated net income
 
$
235,279

 
$
220,383



6


Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Consolidated Balance Sheets
 
March 31,
 
September 30,
(000s)
 
2015
 
2014
Net property, plant and equipment
 
$
7,026,078

 
$
6,725,906

Cash and cash equivalents
 
95,525

 
42,258

Accounts receivable, net
 
511,830

 
343,400

Gas stored underground
 
143,154

 
278,917

Other current assets
 
67,128

 
111,265

Total current assets
 
817,637

 
775,840

Goodwill
 
742,029

 
742,029

Deferred charges and other assets
 
340,900

 
350,929

 
 
$
8,926,644

 
$
8,594,704

Shareholders’ equity
 
$
3,139,694

 
$
3,086,232

Long-term debt
 
2,455,217

 
2,455,986

Total capitalization
 
5,594,911

 
5,542,218

Accounts payable and accrued liabilities
 
295,589

 
308,086

Other current liabilities
 
497,927

 
405,869

Short-term debt
 
224,986

 
196,695

Total current liabilities
 
1,018,502

 
910,650

Deferred income taxes
 
1,338,755

 
1,286,616

Deferred credits and other liabilities
 
974,476

 
855,220

 
 
$
8,926,644

 
$
8,594,704



7


Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Consolidated Statements of Cash Flows
 
Six Months Ended 
 March 31
(000s)
 
2015
 
2014
Cash flows from operating activities
 
 
 
 
Net income
 
$
235,279

 
$
220,383

Depreciation and amortization
 
135,615

 
121,776

Deferred income taxes
 
131,292

 
119,710

Other
 
10,898

 
11,187

Changes in assets and liabilities
 
27,764

 
17,925

Net cash provided by operating activities
 
540,848

 
490,981

Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(441,644
)
 
(359,009
)
Other, net
 
(1,346
)
 
(4,904
)
Net cash used in investing activities
 
(442,990
)
 
(363,913
)
Cash flows from financing activities
 
 
 
 
Net increase (decrease) in short-term debt
 
21,839

 
(369,012
)
Net proceeds from issuance of long-term debt
 
493,538

 
—

Settlement of interest rate agreements
 
13,364

 
—

Repayment of long-term debt
 
(500,000
)
 
—

Cash dividends paid
 
(78,074
)
 
(71,380
)
Repurchase of equity awards
 
(7,985
)
 
(6,317
)
Net proceeds from equity offering
 
—

 
390,205

Issuance of common stock
 
12,727

 
(23
)
Net cash used in financing activities
 
(44,591
)
 
(56,527
)
Net increase in cash and cash equivalents
 
53,267

 
70,541

Cash and cash equivalents at beginning of period
 
42,258

 
66,199

Cash and cash equivalents at end of period
 
$
95,525

 
$
136,740

 
 
 
Three Months Ended 
 March 31
 
Six Months Ended 
 March 31
Statistics
 
2015
 
2014
 
2015
 
2014
Consolidated regulated distribution throughput (MMcf as metered)
 
183,014

 
191,487

 
306,448

 
321,972

Consolidated regulated pipeline volumes (MMcf)
 
126,371

 
115,830

 
247,005

 
234,604

Consolidated nonregulated delivered gas sales volumes (MMcf)
 
105,401

 
119,967

 
196,331

 
212,604

Regulated distribution meters in service
 
3,136,441

 
3,037,571

 
3,136,441

 
3,037,571

Regulated distribution average cost of gas
 
$
5.08

 
$
6.00

 
$
5.44

 
$
5.82

Nonregulated net physical position (Bcf)
 
17.0

 
1.9

 
17.0

 
1.9


###

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