☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Texas | and | Virginia | 75-1743247 | ||||||||||||||
(State or other jurisdiction of
incorporation or organization) |
(IRS employer
identification no.) |
||||||||||||||||
1800 Three Lincoln Centre | |||||||||||||||||
5430 LBJ Freeway | |||||||||||||||||
Dallas | Texas | 75240 | |||||||||||||||
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | |||||||||
Common stock | No Par Value | ATO | New York Stock Exchange |
Large accelerated filer | þ | Accelerated filer | ¨ | Non-accelerated filer | ¨ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
Class | Shares Outstanding | ||||||||||
Common stock | No Par Value | 135,432,277 |
AEC | Atmos Energy Corporation | ||||
AOCI | Accumulated other comprehensive income | ||||
ARM | Annual Rate Mechanism | ||||
ASC | Accounting Standards Codification | ||||
Bcf | Billion cubic feet | ||||
DARR | Dallas Annual Rate Review | ||||
FASB | Financial Accounting Standards Board | ||||
GAAP | Generally Accepted Accounting Principles | ||||
GRIP | Gas Reliability Infrastructure Program | ||||
GSRS | Gas System Reliability Surcharge | ||||
LIBOR | London Interbank Offered Rate | ||||
Mcf | Thousand cubic feet | ||||
MMcf | Million cubic feet | ||||
Moody’s | Moody’s Investors Services, Inc. | ||||
NTSB | National Transportation Safety Board | ||||
PRP | Pipeline Replacement Program | ||||
RRC | Railroad Commission of Texas | ||||
RRM | Rate Review Mechanism | ||||
RSC | Rate Stabilization Clause | ||||
S&P | Standard & Poor’s Corporation | ||||
SAVE | Steps to Advance Virginia Energy | ||||
SEC | United States Securities and Exchange Commission | ||||
SIP | System Integrity Program | ||||
SIR | System Integrity Rider | ||||
SRF | Stable Rate Filing | ||||
SSIR | System Safety and Integrity Rider | ||||
TCJA | Tax Cuts and Jobs Act of 2017 | ||||
WNA | Weather Normalization Adjustment |
Item 1. | Financial Statements |
Three Months Ended December 31 | |||||||||||
2021 | 2020 | ||||||||||
(Unaudited)
(In thousands, except per share data) |
|||||||||||
Operating revenues | |||||||||||
Distribution segment | $ | 972,422 | $ | 876,650 | |||||||
Pipeline and storage segment | 162,918 | 159,713 | |||||||||
Intersegment eliminations | (122,554) | (121,883) | |||||||||
Total operating revenues | 1,012,786 | 914,480 | |||||||||
Purchased gas cost | |||||||||||
Distribution segment | 496,799 | 411,072 | |||||||||
Pipeline and storage segment | (3,411) | (1,244) | |||||||||
Intersegment eliminations | (122,225) | (121,568) | |||||||||
Total purchased gas cost | 371,163 | 288,260 | |||||||||
Operation and maintenance expense | 159,110 | 138,643 | |||||||||
Depreciation and amortization expense | 127,856 | 115,285 | |||||||||
Taxes, other than income | 78,796 | 73,452 | |||||||||
Operating income | 275,861 | 298,840 | |||||||||
Other non-operating income | 8,702 | 6,072 | |||||||||
Interest charges | 19,851 | 22,010 | |||||||||
Income before income taxes | 264,712 | 282,902 | |||||||||
Income tax expense | 15,503 | 65,224 | |||||||||
Net income
|
$ | 249,209 | $ | 217,678 | |||||||
Basic net income per share | $ | 1.86 | $ | 1.71 | |||||||
Diluted net income per share | $ | 1.86 | $ | 1.71 | |||||||
Cash dividends per share | $ | 0.680 | $ | 0.625 | |||||||
Basic weighted average shares outstanding | 133,682 | 127,034 | |||||||||
Diluted weighted average shares outstanding | 133,689 | 127,034 | |||||||||
Net income | $ | 249,209 | $ | 217,678 | |||||||
Other comprehensive income (loss), net of tax | |||||||||||
Net unrealized holding losses on available-for-sale securities, net of tax of $20 and $18
|
(69) | (63) | |||||||||
Cash flow hedges: | |||||||||||
Amortization and unrealized gain (loss) on interest rate agreements, net of tax of $(13,260) and $17,395
|
(45,878) | 60,184 | |||||||||
Total other comprehensive income (loss) | (45,947) | 60,121 | |||||||||
Total comprehensive income | $ | 203,262 | $ | 277,799 |
Three Months Ended December 31 | |||||||||||
2021 | 2020 | ||||||||||
(Unaudited)
(In thousands) |
|||||||||||
Cash Flows From Operating Activities | |||||||||||
Net income | $ | 249,209 | $ | 217,678 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||||||||
Depreciation and amortization expense | 127,856 | 115,285 | |||||||||
Deferred income taxes | 11,813 | 64,587 | |||||||||
Other | (12,689) | (2,976) | |||||||||
Net assets / liabilities from risk management activities | (8,834) | (816) | |||||||||
Net change in other operating assets and liabilities | (305,531) | (236,689) | |||||||||
Net cash provided by operating activities
|
61,824 | 157,069 | |||||||||
Cash Flows From Investing Activities | |||||||||||
Capital expenditures | (684,180) | (456,809) | |||||||||
Debt and equity securities activities, net | 2,374 | 511 | |||||||||
Other, net | 2,058 | 2,706 | |||||||||
Net cash used in investing activities
|
(679,748) | (453,592) | |||||||||
Cash Flows From Financing Activities | |||||||||||
Net proceeds from equity offering | 261,943 | 216,002 | |||||||||
Issuance of common stock through stock purchase and employee retirement plans | 3,918 | 4,007 | |||||||||
Proceeds from issuance of long-term debt | 596,142 | 597,390 | |||||||||
Cash dividends paid | (90,411) | (79,023) | |||||||||
Debt issuance costs | (6,386) | (5,062) | |||||||||
Net cash provided by financing activities
|
765,206 | 733,314 | |||||||||
Net increase in cash and cash equivalents
|
147,282 | 436,791 | |||||||||
Cash and cash equivalents at beginning of period | 116,723 | 20,808 | |||||||||
Cash and cash equivalents at end of period | $ | 264,005 | $ | 457,599 | |||||||
December 31,
2021 |
September 30,
2021 |
||||||||||
(In thousands) | |||||||||||
Regulatory assets: | |||||||||||
Pension and postretirement benefit costs | $ | 41,327 | $ | 45,922 | |||||||
Infrastructure mechanisms (1)
|
166,560 | 222,795 | |||||||||
Winter Storm Uri incremental costs (2)
|
2,106,840 | 2,100,728 | |||||||||
Deferred gas costs | 84,014 | 66,395 | |||||||||
Regulatory excess deferred taxes | 48,873 | 45,370 | |||||||||
Recoverable loss on reacquired debt | 3,655 | 3,789 | |||||||||
Deferred pipeline record collection costs | 33,748 | 32,099 | |||||||||
Other | 18,222 | 4,343 | |||||||||
$ | 2,503,239 | $ | 2,521,441 | ||||||||
Regulatory liabilities: | |||||||||||
Regulatory excess deferred taxes | $ | 667,882 | $ | 705,084 | |||||||
Regulatory cost of removal obligation | 547,779 | 541,511 | |||||||||
Deferred gas costs | 3,988 | 52,553 | |||||||||
Asset retirement obligation | 18,373 | 18,373 | |||||||||
APT annual adjustment mechanism | 31,815 | 31,110 | |||||||||
Pension and postretirement benefit costs | 54,786 | 56,201 | |||||||||
Other | 20,747 | 19,363 | |||||||||
$ | 1,345,370 | $ | 1,424,195 |
Three Months Ended December 31, 2021 | |||||||||||||||||||||||||||||
Distribution | Pipeline and Storage | Eliminations | Consolidated | ||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Operating revenues from external parties | $ | 971,636 | $ | 41,150 | $ | — | $ | 1,012,786 | |||||||||||||||||||||
Intersegment revenues | 786 | 121,768 | (122,554) | — | |||||||||||||||||||||||||
Total operating revenues | 972,422 | 162,918 | (122,554) | 1,012,786 | |||||||||||||||||||||||||
Purchased gas cost
|
496,799 | (3,411) | (122,225) | 371,163 | |||||||||||||||||||||||||
Operation and maintenance expense | 123,284 | 36,155 | (329) | 159,110 | |||||||||||||||||||||||||
Depreciation and amortization expense | 92,797 | 35,059 | — | 127,856 | |||||||||||||||||||||||||
Taxes, other than income | 69,045 | 9,751 | — | 78,796 | |||||||||||||||||||||||||
Operating income | 190,497 | 85,364 | — | 275,861 | |||||||||||||||||||||||||
Other non-operating income | 1,916 | 6,786 | — | 8,702 | |||||||||||||||||||||||||
Interest charges | 8,548 | 11,303 | — | 19,851 | |||||||||||||||||||||||||
Income before income taxes
|
183,865 | 80,847 | — | 264,712 | |||||||||||||||||||||||||
Income tax expense | 4,294 | 11,209 | — | 15,503 | |||||||||||||||||||||||||
Net income | $ | 179,571 | $ | 69,638 | $ | — | $ | 249,209 | |||||||||||||||||||||
Capital expenditures | $ | 437,382 | $ | 246,798 | $ | — | $ | 684,180 |
Three Months Ended December 31, 2020 | |||||||||||||||||||||||
Distribution | Pipeline and Storage | Eliminations | Consolidated | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Operating revenues from external parties | $ | 875,887 | $ | 38,593 | $ | — | $ | 914,480 | |||||||||||||||
Intersegment revenues | 763 | 121,120 | (121,883) | — | |||||||||||||||||||
Total operating revenues | 876,650 | 159,713 | (121,883) | 914,480 | |||||||||||||||||||
Purchased gas cost
|
411,072 | (1,244) | (121,568) | 288,260 | |||||||||||||||||||
Operation and maintenance expense | 108,802 | 30,156 | (315) | 138,643 | |||||||||||||||||||
Depreciation and amortization expense | 82,870 | 32,415 | — | 115,285 | |||||||||||||||||||
Taxes, other than income | 64,352 | 9,100 | — | 73,452 | |||||||||||||||||||
Operating income | 209,554 | 89,286 | — | 298,840 | |||||||||||||||||||
Other non-operating income | 835 | 5,237 | — | 6,072 | |||||||||||||||||||
Interest charges | 10,712 | 11,298 | — | 22,010 | |||||||||||||||||||
Income before income taxes
|
199,677 | 83,225 | — | 282,902 | |||||||||||||||||||
Income tax expense | 45,985 | 19,239 | — | 65,224 | |||||||||||||||||||
Net income | $ | 153,692 | $ | 63,986 | $ | — | $ | 217,678 | |||||||||||||||
Capital expenditures | $ | 306,016 | $ | 150,793 | $ | — | $ | 456,809 |
December 31, 2021 | |||||||||||||||||||||||
Distribution | Pipeline and Storage | Eliminations | Consolidated | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Property, plant and equipment, net | $ | 11,676,614 | $ | 4,050,177 | $ | — | $ | 15,726,791 | |||||||||||||||
Total assets | $ | 19,778,943 | $ | 4,309,629 | $ | (3,542,788) | $ | 20,545,784 | |||||||||||||||
September 30, 2021 | |||||||||||||||||||||||
Distribution | Pipeline and Storage | Eliminations | Consolidated | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Property, plant and equipment, net | $ | 11,232,649 | $ | 3,831,321 | $ | — | $ | 15,063,970 | |||||||||||||||
Total assets | $ | 18,847,266 | $ | 4,076,844 | $ | (3,315,448) | $ | 19,608,662 | |||||||||||||||
Three Months Ended December 31 | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||
Basic Earnings Per Share
|
|||||||||||||||||||||||
Net income | $ | 249,209 | $ | 217,678 | |||||||||||||||||||
Less: Income allocated to participating securities
|
166 | 151 | |||||||||||||||||||||
Income available to common shareholders
|
$ | 249,043 | $ | 217,527 | |||||||||||||||||||
Basic weighted average shares outstanding
|
133,682 | 127,034 | |||||||||||||||||||||
Net income per share — Basic
|
$ | 1.86 | $ | 1.71 | |||||||||||||||||||
Diluted Earnings Per Share
|
|||||||||||||||||||||||
Income available to common shareholders | $ | 249,043 | $ | 217,527 | |||||||||||||||||||
Effect of dilutive shares
|
— | — | |||||||||||||||||||||
Income available to common shareholders
|
$ | 249,043 | $ | 217,527 | |||||||||||||||||||
Basic weighted average shares outstanding
|
133,682 | 127,034 | |||||||||||||||||||||
Dilutive shares | 7 | — | |||||||||||||||||||||
Diluted weighted average shares outstanding
|
133,689 | 127,034 | |||||||||||||||||||||
Net income per share - Diluted
|
$ | 1.86 | $ | 1.71 |
Three Months Ended December 31, 2021 | Three Months Ended December 31, 2020 | ||||||||||||||||||||||
Distribution | Pipeline and Storage | Distribution | Pipeline and Storage | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Gas sales revenues: | |||||||||||||||||||||||
Residential | $ | 575,841 | $ | — | $ | 591,834 | $ | — | |||||||||||||||
Commercial | 250,761 | — | 208,947 | — | |||||||||||||||||||
Industrial | 48,681 | — | 24,708 | — | |||||||||||||||||||
Public authority and other | 15,192 | — | 13,062 | — | |||||||||||||||||||
Total gas sales revenues | 890,475 | — | 838,551 | — | |||||||||||||||||||
Transportation revenues | 27,869 | 163,859 | 27,767 | 164,761 | |||||||||||||||||||
Miscellaneous revenues | 2,599 | 6,543 | 2,396 | 5,148 | |||||||||||||||||||
Revenues from contracts with customers | 920,943 | 170,402 | 868,714 | 169,909 | |||||||||||||||||||
Alternative revenue program revenues (1)
|
50,986 | (7,484) | 7,441 | (10,196) | |||||||||||||||||||
Other revenues | 493 | — | 495 | — | |||||||||||||||||||
Total operating revenues | $ | 972,422 | $ | 162,918 | $ | 876,650 | $ | 159,713 |
Three Months Ended December 31, 2021 | |||||
(In thousands) | |||||
Beginning balance, September 30, 2021
|
$ | 64,471 | |||
Current period provisions | 6,370 | ||||
Write-offs charged against allowance | (6,429) | ||||
Recoveries of amounts previously written off | 522 | ||||
Ending balance, December 31, 2021
|
$ | 64,934 |
Three Months Ended December 31, 2020 | |||||
(In thousands) | |||||
Beginning balance, September 30, 2020
|
$ | 29,949 | |||
Current period provisions | 6,937 | ||||
Write-offs charged against allowance | (2,288) | ||||
Recoveries of amounts previously written off | 491 | ||||
Ending balance, December 31, 2020
|
$ | 35,089 |
December 31, 2021 | September 30, 2021 | ||||||||||
(In thousands) | |||||||||||
Unsecured 0.625% Senior Notes, due 2023
|
$ | 1,100,000 | $ | 1,100,000 | |||||||
Unsecured 3.00% Senior Notes, due 2027
|
500,000 | 500,000 | |||||||||
Unsecured 2.625% Senior Notes, due 2029
|
300,000 | 300,000 | |||||||||
Unsecured 1.50% Senior Notes, due 2031
|
600,000 | 600,000 | |||||||||
Unsecured 5.95% Senior Notes, due 2034
|
200,000 | 200,000 | |||||||||
Unsecured 5.50% Senior Notes, due 2041
|
400,000 | 400,000 | |||||||||
Unsecured 4.15% Senior Notes, due 2043
|
500,000 | 500,000 | |||||||||
Unsecured 4.125% Senior Notes, due 2044
|
750,000 | 750,000 | |||||||||
Unsecured 4.30% Senior Notes, due 2048
|
600,000 | 600,000 | |||||||||
Unsecured 4.125% Senior Notes, due 2049
|
450,000 | 450,000 | |||||||||
Unsecured 3.375% Senior Notes, due 2049
|
500,000 | 500,000 | |||||||||
Unsecured 2.85% Senior Notes, due 2052
|
600,000 | — | |||||||||
Floating-rate term loan, due April 2022
|
200,000 | 200,000 | |||||||||
Floating-rate Senior Notes, due 2023
|
1,100,000 | 1,100,000 | |||||||||
Medium-term note Series A, 1995-1, 6.67%, due 2025
|
10,000 | 10,000 | |||||||||
Unsecured 6.75% Debentures, due 2028
|
150,000 | 150,000 | |||||||||
Finance lease obligations | 52,873 | 18,739 | |||||||||
Total long-term debt | 8,012,873 | 7,378,739 | |||||||||
Less: | |||||||||||
Original issue discount on unsecured senior notes and debentures | 6,529 | 2,811 | |||||||||
Debt issuance cost | 49,790 | 45,271 | |||||||||
Current maturities | 2,401,377 | 2,400,452 | |||||||||
$ | 5,555,177 | $ | 4,930,205 |
Common stock |
Additional
Paid-in Capital |
Accumulated
Other Comprehensive Income (Loss) |
Retained
Earnings |
Total | |||||||||||||||||||||||||||||||
Number of
Shares |
Stated
Value |
||||||||||||||||||||||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||||||||||||||||||||||
Balance, September 30, 2021
|
132,419,754 | $ | 662 | $ | 5,023,751 | $ | 69,803 | $ | 2,812,673 | $ | 7,906,889 | ||||||||||||||||||||||||
Net income | — | — | — | — | 249,209 | 249,209 | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (45,947) | — | (45,947) | |||||||||||||||||||||||||||||
Cash dividends ($0.68 per share)
|
— | — | — | — | (90,411) | (90,411) | |||||||||||||||||||||||||||||
Common stock issued: | |||||||||||||||||||||||||||||||||||
Public and other stock offerings | 2,730,115 | 13 | 265,848 | — | — | 265,861 | |||||||||||||||||||||||||||||
Stock-based compensation plans | 275,212 | 2 | 3,942 | — | — | 3,944 | |||||||||||||||||||||||||||||
Balance, December 31, 2021 | 135,425,081 | $ | 677 | $ | 5,293,541 | $ | 23,856 | $ | 2,971,471 | $ | 8,289,545 | ||||||||||||||||||||||||
Common stock |
Additional
Paid-in Capital |
Accumulated
Other Comprehensive Income (Loss) |
Retained
Earnings |
Total | |||||||||||||||||||||||||||||||
Number of
Shares |
Stated
Value |
||||||||||||||||||||||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||||||||||||||||||||||
Balance, September 30, 2020
|
125,882,477 | $ | 629 | $ | 4,377,149 | $ | (57,589) | $ | 2,471,014 | $ | 6,791,203 | ||||||||||||||||||||||||
Net income | — | — | — | — | 217,678 | 217,678 | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 60,121 | — | 60,121 | |||||||||||||||||||||||||||||
Cash dividends ($0.625 per share)
|
— | — | — | — | (79,023) | (79,023) | |||||||||||||||||||||||||||||
Common stock issued: | |||||||||||||||||||||||||||||||||||
Public and other stock offerings | 2,126,118 | 11 | 219,998 | — | — | 220,009 | |||||||||||||||||||||||||||||
Stock-based compensation plans | 144,366 | 1 | 3,167 | — | — | 3,168 | |||||||||||||||||||||||||||||
Balance, December 31, 2020 | 128,152,961 | $ | 641 | $ | 4,600,314 | $ | 2,532 | $ | 2,609,669 | $ | 7,213,156 | ||||||||||||||||||||||||
Maturity | Shares Available |
Net Proceeds Available
(In thousands) |
Forward Price | ||||||||||||||||||||
September 30, 2022 | 1,142,291 | $ | 108,348 | $ | 94.85 | ||||||||||||||||||
November 30, 2022 | 1,319,733 | 124,680 | $ | 94.47 | |||||||||||||||||||
June 30, 2023 | 632,416 | 61,657 | $ | 97.49 | |||||||||||||||||||
Total | 3,094,440 | $ | 294,685 | $ | 95.23 |
Available-
for-Sale Securities |
Interest Rate
Agreement Cash Flow Hedges |
Total | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
September 30, 2021 | $ | 47 | $ | 69,756 | $ | 69,803 | |||||||||||||||||
Other comprehensive loss before reclassifications | (69) | (46,622) | (46,691) | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 744 | 744 | ||||||||||||||||||||
Net current-period other comprehensive loss | (69) | (45,878) | (45,947) | ||||||||||||||||||||
December 31, 2021 | $ | (22) | $ | 23,878 | $ | 23,856 |
Available-
for-Sale Securities |
Interest Rate
Agreement Cash Flow Hedges |
Total | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
September 30, 2020 | $ | 238 | $ | (57,827) | $ | (57,589) | |||||||||||||||||
Other comprehensive income (loss) before reclassifications | (63) | 59,042 | 58,979 | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 1,142 | 1,142 | ||||||||||||||||||||
Net current-period other comprehensive income (loss) | (63) | 60,184 | 60,121 | ||||||||||||||||||||
December 31, 2020 | $ | 175 | $ | 2,357 | $ | 2,532 |
Three Months Ended December 31 | |||||||||||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Components of net periodic pension cost: | |||||||||||||||||||||||
Service cost | $ | 4,323 | $ | 4,612 | $ | 2,559 | $ | 4,306 | |||||||||||||||
Interest cost (1)
|
5,063 | 5,028 | 2,683 | 2,660 | |||||||||||||||||||
Expected return on assets (1)
|
(7,383) | (6,978) | (3,312) | (2,614) | |||||||||||||||||||
Amortization of prior service cost (credit) (1)
|
(58) | (58) | (3,309) | 43 | |||||||||||||||||||
Amortization of actuarial (gain) loss (1)
|
1,951 | 3,172 | — | — | |||||||||||||||||||
Net periodic pension cost | $ | 3,896 | $ | 5,776 | $ | (1,379) | $ | 4,395 |
December 31, 2021 | |||||||||||||||||
Balance Sheet Location | Assets | Liabilities | |||||||||||||||
(In thousands) | |||||||||||||||||
Designated As Hedges: | |||||||||||||||||
Interest rate contracts |
Other current assets /
Other current liabilities |
$ | 61,867 | $ | (3,439) | ||||||||||||
Interest rate contracts |
Deferred charges and other assets /
Deferred credits and other liabilities |
67,553 | (16,609) | ||||||||||||||
Total | 129,420 | (20,048) | |||||||||||||||
Not Designated As Hedges: | |||||||||||||||||
Commodity contracts |
Other current assets /
Other current liabilities |
10,342 | (1,572) | ||||||||||||||
Commodity contracts |
Deferred charges and other assets /
Deferred credits and other liabilities |
1,790 | (14) | ||||||||||||||
Total | 12,132 | (1,586) | |||||||||||||||
Gross / Net Financial Instruments | $ | 141,552 | $ | (21,634) | |||||||||||||
September 30, 2021 | |||||||||||||||||
Balance Sheet Location | Assets | Liabilities | |||||||||||||||
(In thousands) | |||||||||||||||||
Designated As Hedges: | |||||||||||||||||
Interest rate contracts |
Deferred charges and other assets /
Deferred credits and other liabilities |
$ | 169,469 | $ | — | ||||||||||||
Total | 169,469 | — | |||||||||||||||
Not Designated As Hedges: | |||||||||||||||||
Commodity contracts |
Other current assets /
Other current liabilities |
55,073 | (5,269) | ||||||||||||||
Commodity contracts |
Deferred charges and other assets /
Deferred credits and other liabilities |
6,144 | — | ||||||||||||||
Total | 61,217 | (5,269) | |||||||||||||||
Gross / Net Financial Instruments | $ | 230,686 | $ | (5,269) | |||||||||||||
Three Months Ended December 31 | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Increase (decrease) in fair value: | |||||||||||||||||||||||
Interest rate agreements | $ | (46,622) | $ | 59,042 | |||||||||||||||||||
Recognition of losses in earnings due to settlements: | |||||||||||||||||||||||
Interest rate agreements | 744 | 1,142 | |||||||||||||||||||||
Total other comprehensive income (loss) from hedging, net of tax
|
$ | (45,878) | $ | 60,184 |
Interest Rate
Agreements |
|||||
(In thousands) | |||||
Next twelve months | $ | (2,976) | |||
Thereafter | (57,994) | ||||
Total | $ | (60,970) |
Quoted
Prices in Active Markets (Level 1) |
Significant
Other
Observable
Inputs
(Level 2)(1)
|
Significant
Other Unobservable Inputs (Level 3) |
Netting and
Cash Collateral |
December 31, 2021 | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Financial instruments | $ | — | $ | 141,552 | $ | — | $ | — | $ | 141,552 | |||||||||||||||||||
Debt and equity securities | |||||||||||||||||||||||||||||
Registered investment companies | 31,805 | — | — | — | 31,805 | ||||||||||||||||||||||||
Bond mutual funds | 34,100 | — | — | — | 34,100 | ||||||||||||||||||||||||
Bonds (2)
|
— | 35,792 | — | — | 35,792 | ||||||||||||||||||||||||
Money market funds | — | 5,064 | — | — | 5,064 | ||||||||||||||||||||||||
Total debt and equity securities | 65,905 | 40,856 | — | — | 106,761 | ||||||||||||||||||||||||
Total assets | $ | 65,905 | $ | 182,408 | $ | — | $ | — | $ | 248,313 | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Financial instruments | $ | — | $ | 21,634 | $ | — | $ | — | $ | 21,634 |
Quoted
Prices in Active Markets (Level 1) |
Significant
Other
Observable
Inputs
(Level 2)(1)
|
Significant
Other Unobservable Inputs (Level 3) |
Netting and
Cash Collateral |
September 30, 2021 | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Financial instruments | $ | — | $ | 230,686 | $ | — | $ | — | $ | 230,686 | |||||||||||||||||||
Debt and equity securities | |||||||||||||||||||||||||||||
Registered investment companies | 35,175 | — | — | — | 35,175 | ||||||||||||||||||||||||
Bond mutual funds | 34,298 | — | — | — | 34,298 | ||||||||||||||||||||||||
Bonds (2)
|
— | 35,655 | — | — | 35,655 | ||||||||||||||||||||||||
Money market funds | — | 2,943 | — | — | 2,943 | ||||||||||||||||||||||||
Total debt and equity securities | 69,473 | 38,598 | — | — | 108,071 | ||||||||||||||||||||||||
Total assets | $ | 69,473 | $ | 269,284 | $ | — | $ | — | $ | 338,757 | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Financial instruments | $ | — | $ | 5,269 | $ | — | $ | — | $ | 5,269 |
December 31, 2021 | September 30, 2021 | ||||||||||
(In thousands) | |||||||||||
Carrying Amount | $ | 7,960,000 | $ | 7,360,000 | |||||||
Fair Value | $ | 8,653,665 | $ | 8,086,136 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Kansas, West Texas | October — May | ||||
Tennessee | October — April | ||||
Kentucky, Mississippi, Mid-Tex | November — April | ||||
Louisiana | December — March | ||||
Virginia | January — December |
Three Months Ended December 31 | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
(In thousands, unless otherwise noted) | |||||||||||||||||
Operating revenues | $ | 972,422 | $ | 876,650 | $ | 95,772 | |||||||||||
Purchased gas cost | 496,799 | 411,072 | 85,727 | ||||||||||||||
Operating expenses | 285,126 | 256,024 | 29,102 | ||||||||||||||
Operating income | 190,497 | 209,554 | (19,057) | ||||||||||||||
Other non-operating income | 1,916 | 835 | 1,081 | ||||||||||||||
Interest charges | 8,548 | 10,712 | (2,164) | ||||||||||||||
Income before income taxes | 183,865 | 199,677 | (15,812) | ||||||||||||||
Income tax expense | 4,294 | 45,985 | (41,691) | ||||||||||||||
Net income | $ | 179,571 | $ | 153,692 | $ | 25,879 | |||||||||||
Consolidated distribution sales volumes — MMcf
|
69,545 | 88,861 | (19,316) | ||||||||||||||
Consolidated distribution transportation volumes — MMcf
|
38,597 | 39,609 | (1,012) | ||||||||||||||
Total consolidated distribution throughput — MMcf
|
108,142 | 128,470 | (20,328) | ||||||||||||||
Consolidated distribution average cost of gas per Mcf sold | $ | 7.14 | $ | 4.63 | $ | 2.51 |
Three Months Ended December 31 | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
(In thousands) | |||||||||||||||||
Mid-Tex | $ | 106,358 | $ | 102,320 | $ | 4,038 | |||||||||||
Kentucky/Mid-States | 25,538 | 24,106 | 1,432 | ||||||||||||||
Louisiana | 21,154 | 23,119 | (1,965) | ||||||||||||||
West Texas | 20,874 | 20,047 | 827 | ||||||||||||||
Mississippi | 24,700 | 24,634 | 66 | ||||||||||||||
Colorado-Kansas | 2,815 | 13,230 | (10,415) | ||||||||||||||
Other | (10,942) | 2,098 | (13,040) | ||||||||||||||
Total | $ | 190,497 | $ | 209,554 | $ | (19,057) |
Rate Action |
Annual Increase in
Operating Income |
|||||||
(In thousands) | ||||||||
Annual formula rate mechanisms | $ | 24,881 | ||||||
Rate case filings | — | |||||||
Other rate activity | — | |||||||
$ | 24,881 | |||||||
Division | Rate Action | Jurisdiction | Operating Income (Loss) Requested | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Colorado-Kansas | Infrastructure Mechanism |
Colorado (1)
|
$ | 2,610 | ||||||||||||||||
Colorado-Kansas | Infrastructure Mechanism |
Kansas (2)
|
1,829 | |||||||||||||||||
Colorado-Kansas | Ad Valorem |
Kansas (3)
|
(370) | |||||||||||||||||
Kentucky/Mid-States | Rate Case |
Kentucky (4)
|
14,394 | |||||||||||||||||
Kentucky/Mid-States | Infrastructure Mechanism | Kentucky | 3,506 | |||||||||||||||||
$ | 21,969 | |||||||||||||||||||
Annual Formula Rate Mechanisms | ||||||||||||||
State | Infrastructure Programs | Formula Rate Mechanisms | ||||||||||||
Colorado | System Safety and Integrity Rider (SSIR) | — | ||||||||||||
Kansas | Gas System Reliability Surcharge (GSRS), System Integrity Program (SIP) | — | ||||||||||||
Kentucky | Pipeline Replacement Program (PRP) | — | ||||||||||||
Louisiana | (1) | Rate Stabilization Clause (RSC) | ||||||||||||
Mississippi | System Integrity Rider (SIR) | Stable Rate Filing (SRF) | ||||||||||||
Tennessee | (1) | Annual Rate Mechanism (ARM) | ||||||||||||
Texas | Gas Reliability Infrastructure Program (GRIP), (1) | Dallas Annual Rate Review (DARR), Rate Review Mechanism (RRM) | ||||||||||||
Virginia | Steps to Advance Virginia Energy (SAVE) | — |
Division | Jurisdiction |
Test Year
Ended |
Increase (Decrease) in
Annual Operating Income |
Effective
Date |
||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
2022 Filings: | ||||||||||||||||||||||||||
Mid-Tex |
Mid-Tex Cities RRM (1)
|
12/31/2020 | $ | 21,673 | 12/01/2021 | |||||||||||||||||||||
West Texas |
West Texas Cities RRM (1)
|
12/31/2020 | 151 | 12/01/2021 | ||||||||||||||||||||||
Mississippi |
Mississippi - SIR (1)
|
10/31/2022 | 8,354 | 11/01/2021 | ||||||||||||||||||||||
Mississippi |
Mississippi - SRF (1)
|
10/31/2022 | (5,624) | 11/01/2021 | ||||||||||||||||||||||
Kentucky/Mid-States | Virginia - SAVE | 09/30/2022 | 327 | 10/01/2021 | ||||||||||||||||||||||
Total 2022 Filings | $ | 24,881 | ||||||||||||||||||||||||
Three Months Ended December 31 | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
(In thousands, unless otherwise noted) | |||||||||||||||||
Mid-Tex / Affiliate transportation revenue | $ | 127,323 | $ | 125,261 | $ | 2,062 | |||||||||||
Third-party transportation revenue | 30,625 | 30,821 | (196) | ||||||||||||||
Other revenue | 4,970 | 3,631 | 1,339 | ||||||||||||||
Total operating revenues | 162,918 | 159,713 | 3,205 | ||||||||||||||
Total purchased gas cost | (3,411) | (1,244) | (2,167) | ||||||||||||||
Operating expenses | 80,965 | 71,671 | 9,294 | ||||||||||||||
Operating income | 85,364 | 89,286 | (3,922) | ||||||||||||||
Other non-operating income | 6,786 | 5,237 | 1,549 | ||||||||||||||
Interest charges | 11,303 | 11,298 | 5 | ||||||||||||||
Income before income taxes | 80,847 | 83,225 | (2,378) | ||||||||||||||
Income tax expense | 11,209 | 19,239 | (8,030) | ||||||||||||||
Net income | $ | 69,638 | $ | 63,986 | $ | 5,652 | |||||||||||
Gross pipeline transportation volumes — MMcf | 181,468 | 204,865 | (23,397) | ||||||||||||||
Consolidated pipeline transportation volumes — MMcf | 136,067 | 144,587 | (8,520) |
December 31, 2021 | September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||||||||
Short-term debt | $ | — | — | % | $ | — | — | % | $ | — | — | % | |||||||||||||||||||||||
Long-term debt(1)
|
7,956,554 | 49.0 | % | 7,330,657 | 48.1 | % | 5,125,033 | 41.5 | % | ||||||||||||||||||||||||||
Shareholders’ equity(2)
|
8,289,545 | 51.0 | % | 7,906,889 | 51.9 | % | 7,213,156 | 58.5 | % | ||||||||||||||||||||||||||
Total | $ | 16,246,099 | 100.0 | % | $ | 15,237,546 | 100.0 | % | $ | 12,338,189 | 100.0 | % |
Three Months Ended December 31 | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
(In thousands) | |||||||||||||||||
Total cash provided by (used in) | |||||||||||||||||
Operating activities | $ | 61,824 | $ | 157,069 | $ | (95,245) | |||||||||||
Investing activities | (679,748) | (453,592) | (226,156) | ||||||||||||||
Financing activities | 765,206 | 733,314 | 31,892 | ||||||||||||||
Change in cash and cash equivalents | 147,282 | 436,791 | (289,509) | ||||||||||||||
Cash and cash equivalents at beginning of period | 116,723 | 20,808 | 95,915 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 264,005 | $ | 457,599 | $ | (193,594) |
Three Months Ended December 31 | |||||||||||
2021 | 2020 | ||||||||||
Shares issued: | |||||||||||
Direct Stock Purchase Plan | 20,983 | 19,918 | |||||||||
1998 Long-Term Incentive Plan | 275,212 | 144,366 | |||||||||
Retirement Savings Plan and Trust | 19,805 | 20,708 | |||||||||
Equity Issuance | 2,689,327 | 2,085,492 | |||||||||
Total shares issued | 3,005,327 | 2,270,484 | |||||||||
S&P | Moody’s | ||||||||||||||||
Senior unsecured long-term debt | A- | A1 | |||||||||||||||
Short-term debt | A-2 | P-1 | |||||||||||||||
Outlook | Negative | Negative | |||||||||||||||
Three Months Ended December 31 | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Fair value of contracts at beginning of period | $ | 225,417 | $ | 78,663 | |||||||||||||||||||
Contracts realized/settled | 22,601 | 1,332 | |||||||||||||||||||||
Fair value of new contracts | 1,184 | 87 | |||||||||||||||||||||
Other changes in value | (129,284) | 68,473 | |||||||||||||||||||||
Fair value of contracts at end of period | 119,918 | 148,555 | |||||||||||||||||||||
Netting of cash collateral | — | — | |||||||||||||||||||||
Cash collateral and fair value of contracts at period end | $ | 119,918 | $ | 148,555 |
Fair Value of Contracts at December 31, 2021 | |||||||||||||||||||||||||||||
Maturity in Years | |||||||||||||||||||||||||||||
Source of Fair Value |
Less
Than 1 |
1-3 | 4-5 |
Greater
Than 5 |
Total
Fair Value |
||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Prices actively quoted | $ | 67,198 | $ | 60,088 | $ | (7,368) | $ | — | $ | 119,918 | |||||||||||||||||||
Prices based on models and other valuation methods | — | — | — | — | — | ||||||||||||||||||||||||
Total Fair Value | $ | 67,198 | $ | 60,088 | $ | (7,368) | $ | — | $ | 119,918 |
Three Months Ended December 31 | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
METERS IN SERVICE, end of period | |||||||||||||||||||||||
Residential | 3,120,873 | 3,077,786 | |||||||||||||||||||||
Commercial | 282,155 | 281,840 | |||||||||||||||||||||
Industrial | 1,653 | 1,673 | |||||||||||||||||||||
Public authority and other | 8,248 | 8,323 | |||||||||||||||||||||
Total meters | 3,412,929 | 3,369,622 | |||||||||||||||||||||
INVENTORY STORAGE BALANCE — Bcf | 70.5 | 58.1 | |||||||||||||||||||||
SALES VOLUMES — MMcf (1)
|
|||||||||||||||||||||||
Gas sales volumes | |||||||||||||||||||||||
Residential | 37,834 | 53,530 | |||||||||||||||||||||
Commercial | 23,008 | 26,687 | |||||||||||||||||||||
Industrial | 7,073 | 6,651 | |||||||||||||||||||||
Public authority and other | 1,630 | 1,993 | |||||||||||||||||||||
Total gas sales volumes | 69,545 | 88,861 | |||||||||||||||||||||
Transportation volumes | 40,315 | 41,285 | |||||||||||||||||||||
Total throughput | 109,860 | 130,146 | |||||||||||||||||||||
Three Months Ended December 31 | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
CUSTOMERS, end of period | |||||||||||||||||||||||
Industrial | 95 | 92 | |||||||||||||||||||||
Other | 202 | 217 | |||||||||||||||||||||
Total | 297 | 309 | |||||||||||||||||||||
INVENTORY STORAGE BALANCE — Bcf | 1.4 | 1.3 | |||||||||||||||||||||
PIPELINE TRANSPORTATION VOLUMES — MMcf (1)
|
181,468 | 204,865 | |||||||||||||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1.
|
Legal Proceedings |
Item 1A.
|
Risk Factors |
Item 6. | Exhibits |
Exhibit
Number |
Description |
Page Number or
Incorporation by Reference to |
|||||||||
3.1 | Restated Articles of Incorporation of Atmos Energy Corporation - Texas (As Amended Effective February 3, 2010) | ||||||||||
3.2 | Restated Articles of Incorporation of Atmos Energy Corporation - Virginia (As Amended Effective February 3, 2010) | ||||||||||
3.3 | Amended and Restated Bylaws of Atmos Energy Corporation (as of February 5, 2019) | ||||||||||
4.1(a) | Officers' Certificate dated October 1, 2021 | ||||||||||
4.1(b) | Global Security for the 2.850% Senior Notes due 2052 | ||||||||||
4.1(c) | Global Security for the 2.850% Senior Notes due 2052 | ||||||||||
4.1(d) | Officers' Certificate dated January 14, 2022 | ||||||||||
4.1(e) | Global Security for the 2.625% Senior Notes due 2029 | ||||||||||
10.1 | |||||||||||
15 | |||||||||||
31 | |||||||||||
32 | |||||||||||
101.INS | XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema | ||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | ||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | ||||||||||
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase | ||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | ||||||||||
104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document |
* | These certifications, which were made pursuant to 18 U.S.C. Section 1350 by the Company’s Chief Executive Officer and Chief Financial Officer, furnished as Exhibit 32 to this Quarterly Report on Form 10-Q, will not be deemed to be filed with the Commission or incorporated by reference into any filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates such certifications by reference. |
ATMOS ENERGY CORPORATION
(Registrant)
|
|||||||||||
By: /s/ CHRISTOPHER T. FORSYTHE
|
|||||||||||
Christopher T. Forsythe
Senior Vice President and Chief Financial Officer
(Duly authorized signatory)
|
/s/ JOHN K. AKERS | ||||||||
John K. Akers | ||||||||
President and | ||||||||
Chief Executive Officer |
/s/ CHRISTOPHER T. FORSYTHE | ||||||||
Christopher T. Forsythe | ||||||||
Senior Vice President and | ||||||||
Chief Financial Officer |
/s/ JOHN K. AKERS | ||||||||
John K. Akers | ||||||||
President and | ||||||||
Chief Executive Officer |
/s/ CHRISTOPHER T. FORSYTHE | ||||||||
Christopher T. Forsythe | ||||||||
Senior Vice President and | ||||||||
Chief Financial Officer |