Atmos Energy (ATO) Q4 1999 earnings summary

Executive summary

• FY1999 net income fell 67.9% to $17.7m and diluted EPS fell to $0.58 from $1.84, reflecting unusually warm weather, heavy West Texas rainfall, higher operating costs and a litigation settlement.

• Management emphasized long-term growth through stronger utility execution, non-utility expansion, retail services and acquisitions; rate filings and weather-mitigation rate designs were central near-term priorities.

Financial highlights

• Operating revenue was $690.2m, down 18.6% YoY; gross profit was $299.8m, down from $331.8m.

• Operating income was $54.2m versus $112.9m; net income was $17.7m versus $55.3m.

• Operating cash flow was $84.7m versus $91.7m; capital expenditures were $110.4m versus $135.0m.

• Total assets increased 7.8% to $1.23bn; total capitalization was $755.1m, down 1.9%.

Outlook and guidance

• FY2000 capital expenditures were budgeted at ~$75m, with lower spending enabled by completion of major technology and process initiatives; longer-term annual capex target was $75m–$80m.

• New rates in Kentucky, West Texas and Amarillo were expected during FY2000; pending filings sought $28.4m of additional annual revenue, with outcomes uncertain.

• Management expected the Missouri gas-system acquisition to close by mid-2000, subject to regulatory approvals; the $32m cash purchase was expected to add 48,000 customers.

• FY2000 quarterly dividend increased 3.6% to $0.285 per share, or $1.14 indicated annually; this marked the 12th consecutive annual increase.