Atmos Energy (ATO) Q4 2001 earnings summary

Executive summary

• FY01 net income rose 56.2% to $56.1M; diluted EPS increased 28.9% to $1.47, or 44% excluding the prior-year 12¢/share gain from propane-asset sales.

• The July LGS acquisition added ~279,000 customers and made the utility the largest pure gas distributor in Louisiana and fifth-largest nationally.

• Record cold, gas-price spikes and customer delinquencies challenged operations; colder weather added $2.7M, or 7¢/diluted share, to FY01 results.

Financial highlights

• Operating revenue was $1,442.3M, up 69.6%; gross profit was $374.7M, up 15.0%, and operating income was $130.3M versus $85.3M.

• Net income was $56.1M versus $35.9M; diluted EPS was $1.47 versus $1.14. Prior-year EPS included a one-time 12¢/share propane-asset sale gain.

• Net cash from operations was $83.0M; investing used $468.1M, including $363.4M for acquisitions and $113.1M in capital expenditures.

Outlook and guidance

• Long-term EPS growth target was 5%–7% annually, including acquisitions; Atmos Energy Holdings was expected to grow earnings 10%–15% annually and contribute one-quarter to one-third of future earnings.

• Mississippi Valley Gas acquisition was expected to close by FY02-end, subject to regulatory approvals, and be accretive in its first full year, excluding one-time transaction charges.

• FY02–FY04 weather insurance for Texas and Louisiana covers weather at least 7% warmer than normal, with potential payouts up to $20M annually; FY02 weather protection and normalized rates were expected to cover nearly three-quarters of the rate base.

• Gas supply outlook for winter 2001–02 was favorable; prices were not expected to return to the prior winter’s peak, though average prices could remain above historical levels.