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Atmos Energy (ATO) Q3 Earnings Miss, Revenues Improve Y/Y

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Atmos Energy Corporation (ATO - Free Report) posted third-quarter fiscal 2018 earnings of 64 cents per share, which missed the Zacks Consensus Estimate of 68 cents by 5.9%. Earnings also declined 4.5% from the prior-year quarter figure.

Total Revenues

Total revenues of $562.2 million lagged the Zacks Consensus Estimate of $637 million by 11.7%. However, total revenues improved 6.8% from $526.5 million in the prior-year quarter.

Segment Revenues

Distribution: Revenues for the segment increased 8.4% year over year to $535.5 million in the reported quarter from $494 million in the prior-year quarter. Distribution contribution margin increased to $304.6 million from $296.3 million in the year-ago quarter, driven by the increase in rates in the Mid-Tex and Kentucky/Mid-States Divisions.

Pipeline and Storage: Revenues for the segment increased 8.8% year over year to $127.6 million from $117.3 million. Contribution margin for this segment rose year over year to $127.1 million. The upside was on account of increase in rates due to the Atmos Pipeline–Texas rate case and the Gas Reliability Infrastructure Program (GRIP) filings approved in December 2017 and May 2018, respectively.

Quarterly Highlights

Total operating expenses in the reported quarter increased 13.5% to $308.4 million from the year-ago quarter due to increase in operation and maintenance expenses, depreciation and amortization expenses as well as taxes, other than income expenditures.

Operating income in the reported quarter was down 12.6% year over year to $123 million. The decrease primarily reflects the lower statutory tax rate in revenues due to the TCJA and higher operating expenses in the reported quarter including higher depreciation expenses, and ad valorem taxes due to increased infrastructure investments.

The company incurred interest expenses of $23.3 million, down 18.1% from the year-ago period.

The company's board of directors declared a quarterly dividend of 48.5 cents per common share. The indicated annual dividend for fiscal 2018 is $1.94, thereby representing a 7.8% increase from fiscal 2017.

Atmos Energy Corporation Price, Consensus and EPS Surprise

 

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

Financial Highlights

As of Jun 30, 2018, Atmos Energy had cash and cash equivalents of $20.9 million compared with $26.4 million as of Sep 30, 2017.

Long-term debt was $2.62 billion as of Jun 30, 2018, down from $3.07 billion as of Sep 30, 2017.

The company’s cash flow from operating activities for the nine months ended Jun 30, 2018, was $1.04 billion, up from $0.75 billion recorded in the prior fiscal.

Guidance

Atmos Energy has re-affirmed its fiscal 2018 guidance and continues to expect earnings per share in the range of $3.85-$4.05, excluding the one-time, non-cash income tax benefit. Capital expenditures for fiscal 2018 are still expected to be approximately $1.4 billion.

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.

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Sempra Energy’s (SRE - Free Report) second-quarter 2018 adjusted earnings per share came in at $1.35, beating the Zacks Consensus Estimate of $1.17 by 15.4%. Earnings also improved 22.7% from the prior-year quarter
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