Atmos Energy (ATO) Q4 2004 earnings summary

Executive summary

• FY 2004 net income rose to $86.2 million from $71.7 million; operating income increased to $193.7 million from $187.8 million. TXU Gas acquisition closed Oct. 1, after year-end.

• Growth reflected stronger natural gas marketing results and a full year of Mississippi Valley Gas operations; utility earnings faced warmer weather and weaker irrigation sales.

Financial highlights

• Revenue $2,920.0 million vs. $2,799.9 million; gross profit $562.2 million vs. $535.0 million; operating expenses $368.5 million vs. $347.1 million.

• Net income $86.2 million vs. $71.7 million; diluted EPS $1.58 vs. $1.54. FY 2003 included a $7.8 million after-tax cumulative accounting charge; FY 2004 included a $5.9 million pretax propane-interest sale gain.

• Operating cash flow was $270.7 million vs. $49.5 million; capital expenditures were $190.3 million vs. $159.4 million.

• Q4 FY 2004 net loss was $6.4 million, or $0.11 per diluted share; revenue was $492.9 million and operating income $3.3 million.

Outlook and guidance

• FY 2005 capital expenditures expected at $250–260 million, including approximately $80 million for Mid-Tex.

• Target capitalization ratio of 53–55% within 3–5 years after TXU Gas, supported by operating cash flow, equity issuance and lower annual maintenance and capital spending.

• Mid-Tex winter gas demand estimated at 113.0 Bcf under normal weather; existing and anticipated purchase agreements and storage were expected to cover up to 154.2 Bcf.

• TXU Gas pro forma FY 2004 results: revenue $4,174.5 million, net income $118.7 million and diluted EPS $1.68, assuming acquisition and financing from fiscal-year start.