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Atmos Energy (ATO) Q4 Earnings Beat, Revenues Lag Estimates

Zacks

Atmos Energy Corporation ATO posted fourth-quarter fiscal 2018 earnings of 41 cents per share, which surpassed the Zacks Consensus Estimate of 37 cents by 10.8%. Earnings also surpassed the prior-year earnings by 20.6%.

Total Revenues

The company generated total revenues of $445 million, which lagged the Zacks Consensus Estimate of $642 million by 30.8%. The top line also lagged the prior-year revenues of $465 million by 4.3%.

Atmos Energy Corporation Price, Consensus and EPS Surprise

Atmos Energy Corporation Price, Consensus and EPS Surprise | Atmos Energy Corporation Quote


Segment Revenues

Distribution: Revenues at the segment decreased 6.9% year over year to $407.5 million in the reported quarter from $437.9 million in the prior-year quarter. Distribution contribution margin decreased $5.4 million to $269.3 million from $274.7 million in the prior-year quarter. The decline in margin was due to a decrease of $12.6 million as a result of incorporating the lower statutory tax rate, which was reflected in its revenues due to the Tax Cut and Jobs Act (TCJA).

Pipeline and Storage: Revenues at the segment increased 12.6% to $132.7 million from $117.8 million in the year-ago quarter. Contribution margin increased $15.0 million to $132.6 million from $117.6 million in the prior-year quarter. This improvement is attributable to an increase in rates.

Inter-segment elimination had an impact of $95.4 million in the reported quarter compared with $90.9 million in the year-ago quarter.

Highlights of the Release

Total operating expenses in the reported quarter increased 4% to $312 million from the year-ago quarter due to increase in operation and maintenance expenses, depreciation and amortization costs, as well as taxes (excluding income expenditures).

Operating income in the reported quarter was down 2.4% year over year to $89.5 million. The decrease primarily reflects the lower statutory tax rate in revenues due to the TCJA and higher operating expenses in the reported quarter.

The company incurred interest expenses of $24.5 million, down 27.3% from the year-ago period.

Capital expenditures in the fiscal year were $1.47 billion, of which nearly 85% was related to system safety and reliability investments.

Financial Highlights

As of Sep 30, 2018, Atmos Energy had cash and cash equivalents of $13.7 million compared with $26.4 million on Sep 30, 2017.

Its long-term debt was $2.49 billion as of Sep 30, 2018, down from $3.07 billion on Sep 30, 2017.

The company’s cash flow from operating activities in fiscal 2018 was $1.13 billion, up from $0.87 billion recorded in the prior fiscal year.

Guidance

Atmos Energy expects its fiscal 2019 earnings in the range of $4.20-$4.35 per diluted share. Capital expenditures are expected in the range of $1.65-$1.75 billion in fiscal 2019.

Zacks Rank

Atmos Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

ONEOK Inc OKE posted third-quarter 2018 operating earnings of 75 cents per share, which beat the Zacks Consensus Estimate of 71 cents by 5.63%.

ONE Gas, Inc. OGS posted third-quarter 2018 operating earnings of 31 cents per share, beating the Zacks Consensus Estimate of 28 cents by 10.7%.

Sempra Energy’s SRE third-quarter 2018 adjusted earnings per share came in at $1.23, beating the Zacks Consensus Estimate of $1.13 by 8.8%.

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