Atmos Energy (ATO) Q4 1998 earnings summary

Executive summary

• Record FY1998 net income of $55.3M and diluted EPS of $1.84, up from $23.8M and $0.81 in FY1997; reported results included a $2.2M after-tax asset-sale gain.

• Total shareholder return was 19.2% in FY1998, exceeding the Dow Jones Industrial Average and S&P 500 returns for the period.

• Warmer winter weather pressured revenues, while lower operating costs and stronger Texas irrigation sales supported earnings.

Financial highlights

• Operating revenue fell 6.5% to $848.2M; gross profit rose 0.7% to $331.8M YoY.

• Operating income increased to $81.1M from $52.3M, and net income rose to $55.3M from $23.8M.

• Cash from operations was $91.7M; capital expenditures were $135.0M and cash dividends paid were $31.8M.

• Adjusted for the $2.2M asset-sale gain, FY1998 net income was $53.0M, or $1.77 diluted EPS; FY1997 excluding non-recurring charges was $39.3M, or $1.34.

Outlook and guidance

• Strategy targets annual net income growth, continued acquisitions, strong utility execution, and non-utility contributions near 20% of net income.

• FY1999 capital expenditure budget was $86.8M; planned funding sources include internally generated cash and financing activities.

• Target debt-to-capitalization range was 50–52% over the next two years, versus 56.1% at FY1998 year-end.

• Management estimated United Cities merger savings of approximately $375M over 10 years, subject to cost recovery and operating efficiencies.