UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

Current Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934

August 8, 2018
Date of Report (Date of earliest event reported)

ATMOS ENERGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)



TEXAS AND VIRGINIA
1-10042
75-1743247
---------------------------------
------------------------
----------------------
(State or Other Jurisdiction
(Commission File
(I.R.S. Employer
of Incorporation)
Number)
Identification No.)

1800 THREE LINCOLN CENTRE,
 
5430 LBJ FREEWAY, DALLAS, TEXAS
75240
----------------------------------------------------
-----------------
(Address of Principal Executive Offices)
(Zip Code)

(972) 934-9227
------------------------------
(Registrant's Telephone Number, Including Area Code)

Not Applicable
---------------------------
(Former Name or Former Address, if Changed Since Last Report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



1



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Item 2.02.
Results of Operations and Financial Condition.

On Wednesday, August 8, 2018 , Atmos Energy Corporation (the “Company”) issued a news release in which it reported the Company’s financial results for the 2018 fiscal year third quarter, which ended June 30, 2018 , and that certain of its officers would discuss such financial results in a conference call on Thursday, August 9, 2018 at 10 a.m. Eastern Time. In the release, the Company also announced that the call would be webcast live and that slides for the webcast would be available on its website for all interested parties.

A copy of the news release is furnished as Exhibit 99.1. The information furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Item 9.01.
Financial Statements and Exhibits.

(d)    Exhibits
 
 
 
 
 
 
 
Exhibit Number
Description
 
 
99.1
  
 
 
 
 
 















2



SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
ATMOS ENERGY CORPORATION
 
 
             (Registrant)
 
 
 
 
 
 
DATE:
August 8, 2018
By:   /s/ CHRISTOPHER T. FORSYTHE                        
 
 
       Christopher T. Forsythe
 
 
       Senior Vice President and
 
 
       Chief Financial Officer
 
 
 
 
 
 



































3



Exhibit 99.1
G528915G02G72A15.JPG
 
 
 
News Release
Analysts and Media Contact:
Jennifer Hills (972) 855-3729

Atmos Energy Corporation Reports Earnings for Fiscal 2018 Third Quarter and Nine Months; Reaffirms Fiscal 2018 Guidance
DALLAS ( August 8, 2018 ) - Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fiscal 2018 third quarter and nine months ended June 30, 2018 .

Fiscal 2018 third quarter consolidated net income was $71.2 million , or $0.64 per diluted share, compared with consolidated net income of $70.8 million , or $0.67 per diluted share in the prior-year quarter.

The company's Board of Directors has declared a quarterly dividend of $0.485 per common share. The indicated annual dividend for fiscal 2018 is $1.94, which represents a 7.8% increase over fiscal 2017.

For the  nine months ended June 30, 2018 , consolidated net income was  $564.3 million  or  $5.09  per diluted share, compared with consolidated net income of  $360.6 million , or  $3.40  per diluted share for the same period last year. Adjusted income from continuing operations for the  nine months ended June 30, 2018 , which excludes a one-time income tax benefit related to the Tax Cuts and Jobs Act of 2017 (the TCJA) of $165.5 million , or $1.49 per diluted share, was  $398.8 million , or  $3.60  per diluted share, compared with adjusted net income from continuing operations of  $346.9 million , or $3.27 per diluted share in the prior-year period.

“The dedication of our employees coupled with the exceptional customer service they provide to our 3.2 million customers continue to drive our progress toward becoming the safest provider of natural gas services,” said Mike Haefner, chief executive officer of Atmos Energy Corporation.  “Ongoing capital investments that enhance the safety and reliability of our system remain the core of our growth strategy, and continue to drive our financial results. We remain on track to meet our fiscal 2018 earnings guidance range of between $3.85 and $4.05 per diluted share,” Haefner concluded.



1



Results for the Three Months Ended June 30, 2018
Operating income decreased $17.7 million to $123.0 million for the three months ended June 30, 2018 , from $140.7 million in the prior-year quarter. The decrease primarily reflects the lower statutory tax rate in revenues due to the TCJA and higher operating expenses in the current-year quarter, including higher depreciation expense and ad valorem taxes due to increased infrastructure investments, partially offset by positive rate outcomes in both the distribution and pipeline and storage segments.
Distribution contribution margin increased $8.3 million to $304.6 million for the three months ended June 30, 2018 , compared with $296.3 million in the prior-year quarter. Contribution margin reflects a net $11.2 million increase in rates, primarily in the Mid-Tex and Kentucky/Mid-States Divisions. Transportation contribution margin increased $2.7 million quarter over quarter primarily due to the addition of new industrial customers. An increase in customers, primarily in the Mid-Tex Division, contributed an additional $2.1 million compared to the prior-year quarter. These increases were partially offset by a decrease of $12.4 million as a result of incorporating the lower statutory tax rate in revenues due to the TCJA.
Pipeline and storage contribution margin increased $11.1 million to $127.1 million for the three months ended June 30, 2018 , compared with $116.0 million in the prior-year quarter. This increase is attributable to a $23.7 million 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, partially offset by a decrease of $8.0 million as a result of including the lower statutory tax rate in revenues due to the TCJA.
Continuing operation and maintenance expense for the three months ended June 30, 2018 , was $145.1 million , compared with $128.7 million for the prior-year quarter. This $16.4 million increase was primarily driven by increased maintenance expenses in both the distribution and pipeline and storage segments and higher employee-related expenses in the current-year quarter.

Results for the Nine Months Ended June 30, 2018
Operating income decreased $2.3 million to $633.5 million for the nine months ended June 30, 2018 , compared to $635.8 million in the prior-year period, which primarily reflects reduced revenues as a result of implementing the TCJA and higher operating expenses in the current-year period, including higher depreciation expense and ad valorem taxes due to increased infrastructure investments, partially offset by positive rate outcomes and higher transportation margins in both the distribution and pipeline and storage segments and stronger customer consumption in the distribution business.
Distribution contribution margin increased $68.9 million to $1,173.9 million for the nine months ended June 30, 2018 , compared with $1,105.0 million in the prior-year period. Contribution margin reflects a net $64.4 million increase in rates, primarily in the Mid-Tex, Kentucky/Mid-States, West Texas and Mississippi Divisions. In addition, net consumption increased $14.2 million, primarily due to weather that was 36 percent colder than the prior-year period. Transportation contribution margin increased $8.6 million period over period primarily due to the addition of new industrial customers. Customer growth, primarily in the Mid-Tex Division, contributed an additional $5.8 million compared to the prior-year period. These increases were partially offset by a decrease of $38.7 million as a result of incorporating the lower statutory tax rate in revenues due to the TCJA.

2



Pipeline and storage contribution margin increased $36.2 million to $373.1 million for the nine months ended June 30, 2018 , compared with $336.9 million in the prior-year period. This increase is primarily attributable to a $54.0 million increase in revenue from the Atmos Pipeline–Texas rate case and the GRIP filings approved in December 2017 and May 2018, partially offset by a decrease of $16.1 million as a result of including the lower statutory tax rate in revenues due to the TCJA.
Continuing operation and maintenance expense for the nine months ended June 30, 2018 was $435.7 million , compared with $385.9 million in the prior-year period. This increase was primarily driven by expenses incurred as a result of a planned outage experienced in the Mid-Tex Division in March 2018, increased maintenance activities in the distribution segment in the current year and higher employee-related expenses.
Capital expenditures increased $276.4 million to $1,088.5 million for the nine months ended June 30, 2018 , compared with $812.1 million in the prior-year period, due to continued spending for infrastructure replacements and enhancements.
For the nine months ended June 30, 2018 , the company generated operating cash flow of $1,035.3 million , a $289.7 million increase compared with the nine months ended June 30, 2017 . The period-over-period increase primarily reflects successful rate case outcomes achieved in fiscal 2017 and changes in working capital, primarily as a result of the timing of gas cost recoveries under purchased gas cost mechanisms and increased customer consumption and transportation margins.
The equity capitalization ratio at June 30, 2018 was 59.0% , compared with 52.6% at September 30, 2017 . On November 28, 2017, Atmos Energy completed the public offering of 4,558,404 shares of common stock for gross proceeds of approximately $400 million. Atmos Energy used the net proceeds of $395.1 million from this offering to repay short-term debt under its commercial paper program, to fund capital spending primarily to enhance the safety and reliability of its system, and for general corporate purposes.
Outlook
The leadership of Atmos Energy remains focused on enhancing system safety and reliability through infrastructure investment while delivering shareholder value and consistent earnings growth. Atmos Energy expects fiscal 2018 earnings to be in the previously announced range of $3.85 to $4.05 per diluted share, excluding the one-time, non-cash income tax benefit. Capital expenditures for fiscal 2018 are expected to be approximately $1.4 billion.

Conference Call to be Webcast August 9, 2018
Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2018 third quarter financial results on Thursday, August 9, 2018 , at 10:00 a.m. Eastern Time. The domestic telephone number is 877-485-3107 and the international telephone number is 201-689-8427. Mike Haefner, President and Chief Executive Officer and Chris Forsythe, Senior Vice President and Chief Financial Officer will participate in the conference call. The conference call will be webcast live on the Atmos Energy website at www.atmosenergy.com . A playback of the call will be available on the website later that day.
This news release should be read in conjunction with the attached unaudited financial information.

3



Forward-Looking Statements
The matters discussed in this news release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this news release or in any of the company's other documents or oral presentations, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “objective,” “plan,” “projection,” “seek,” “strategy” or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this news release, including the risks and uncertainties relating to regulatory trends and decisions, the company's ability to continue to access the credit and capital markets and the other factors discussed in the company's reports filed with the Securities and Exchange Commission. These factors include the risks and uncertainties discussed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2017 .
Although the company believes these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. The company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures
The historical financial information in this news release utilizes certain financial measures that are not presented in accordance with generally accepted accounting principles (GAAP). Specifically, the company uses contribution margin, defined as operating revenues less purchased gas cost, to discuss and analyze its financial performance. Its operations are affected by the cost of natural gas, which is passed through to its customers without markup and includes commodity price, transportation, storage, injection and withdrawal fees, along with hedging settlements. These costs are reflected in the income statement as purchased gas cost. Therefore, increases in the cost of gas are offset by a corresponding increase in revenues.  Accordingly, the company believes contribution margin is a more useful and relevant measure to analyze its financial performance than operating revenues. The term contribution margin is not intended to represent operating income, the most comparable GAAP financial measure, as an indicator of operating performance, and is not necessarily comparable to similarly titled measures reported by other companies.
In addition, the enactment of the TCJA required the company to remeasure its deferred tax assets and liabilities at its new federal statutory income tax rate as of December 31, 2017, which resulted in the recognition of a non-cash income tax benefit of $165.5 million during the nine months ended June 30, 2018 . Due to the non-recurring nature of this benefit, the company believes that income from continuing operations and diluted earnings per share from continuing operations before the one-time, non-cash income tax benefit, provides a more useful and relevant measure to analyze its financial performance than income from continuing operations and consolidated diluted earnings per share from continuing operations. Accordingly, the discussion and analysis of the company's financial performanc

4



e will reference adjusted income from continuing operations and diluted earnings per share, which is calculated as follows:
 
 
 
 
 
 
 
Nine Months Ended June 30
 
2018
 
2017
 
Change
 
(In thousands, except per share data)
Income from continuing operations
$
564,317

 
$
346,858

 
$
217,459

TCJA non-cash income tax benefit
165,522

 

 
165,522

Adjusted income from continuing operations
$
398,795

 
$
346,858

 
$
51,937

 
 
 
 
 
 
Consolidated diluted EPS from continuing operations
$
5.09

 
$
3.27

 
$
1.82

Diluted EPS from TCJA non-cash income tax benefit
1.49

 

 
1.49

Adjusted diluted EPS from continuing operations
$
3.60

 
$
3.27

 
$
0.33


About Atmos Energy
Atmos Energy Corporation, headquartered in Dallas, is the country's largest fully-regulated, natural-gas-only distributor, serving over three million natural gas distribution customers in over 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy also manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas. For more information, visit www.atmosenergy.com .

 


5



Atmos Energy Corporation
Financial Highlights (Unaudited)

 
 
 
 
 
Statements of Income
 
Three Months Ended 
 June 30
(000s except per share)
 
2018
 
2017
Operating revenues
 
 
 
 
Distribution segment
 
$
535,488

 
$
494,060

Pipeline and storage segment
 
127,633

 
117,283

Intersegment eliminations
 
(100,876
)
 
(84,842
)
 
 
562,245

 
526,501

Purchased gas cost
 
 
 
 
Distribution segment
 
230,887

 
197,767

Pipeline and storage segment
 
561

 
1,251

Intersegment eliminations
 
(100,562
)
 
(84,842
)
 
 
130,886

 
114,176

Contribution margin
 
431,359

 
412,325

Operation and maintenance expense
 
145,075

 
128,690

Depreciation and amortization
 
90,671

 
80,023

Taxes, other than income
 
72,620

 
62,948

Total operating expenses
 
308,366

 
271,661

Operating income
 
122,993

 
140,664

Miscellaneous expense
 
(2,003
)
 
(289
)
Interest charges
 
23,349

 
28,498

Income before income taxes
 
97,641

 
111,877

Income tax expense
 
26,448

 
41,069

Net income
 
$
71,193

 
$
70,808

 
 
 
 
 
Basic and diluted net income per share
 
$
0.64

 
$
0.67

Cash dividends per share
 
$
0.485

 
$
0.450

Basic and diluted weighted average shares outstanding
 
111,851

 
106,364

 
 
 
 
 
 
 
Three Months Ended 
 June 30
Summary Net Income by Segment (000s)
 
2018
 
2017
Distribution
 
$
35,344

 
$
36,514

Pipeline and storage
 
35,849

 
34,294

Net income
 
$
71,193

 
$
70,808







6



Atmos Energy Corporation
Financial Highlights, continued (Unaudited)

 
 
 
 
 
Statements of Income
 
Nine Months Ended 
 June 30
(000s except per share)
 
2018
 
2017
Operating revenues
 
 
 
 
Distribution segment
 
$
2,595,571

 
$
2,211,257

Pipeline and storage segment
 
375,051

 
339,207

Intersegment eliminations
 
(299,776
)
 
(255,609
)
 
 
2,670,846

 
2,294,855

Purchased gas cost
 
 
 
 
Distribution segment
 
1,421,698

 
1,106,209

Pipeline and storage segment
 
1,906

 
2,331

Intersegment eliminations
 
(298,841
)
 
(255,565
)
 
 
1,124,763

 
852,975

Contribution margin
 
1,546,083

 
1,441,880

Operation and maintenance expense
 
435,715

 
385,867

Depreciation and amortization
 
268,426

 
234,648

Taxes, other than income
 
208,400

 
185,611

Total operating expenses
 
912,541

 
806,126

Operating income
 
633,542

 
635,754

Miscellaneous expense
 
(4,291
)
 
(450
)
Interest charges
 
82,162

 
86,472

Income from continuing operations before income taxes
 
547,089

 
548,832

Income tax expense (benefit)
 
(17,228
)
 
201,974

Income from continuing operations
 
564,317

 
346,858

Income from discontinued operations, net of tax
 

 
10,994

Gain on sale of discontinued operations, net of tax
 

 
2,716

Net income
 
$
564,317

 
$
360,568

Basic and diluted earnings per share
 
 
 
 
Income per share from continuing operations
 
$
5.09

 
$
3.27

Income per share from discontinued operations
 

 
0.13

Net income per share - basic and diluted
 
$
5.09

 
$
3.40

Cash dividends per share
 
$
1.455

 
$
1.350

Basic and diluted weighted average shares outstanding
 
110,707

 
105,862

 
 
 
 
 
 
 
Nine Months Ended 
 June 30
Summary Net Income by Segment (000s)
 
2018
 
2017
Distribution
 
$
429,686

 
$
253,023

Pipeline and storage
 
134,631

 
93,835

Net income from continuing operations
 
564,317

 
346,858

Net income from discontinued operations
 

 
13,710

Net income
 
$
564,317

 
$
360,568






7



Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Balance Sheets
 
June 30,
 
September 30,
(000s)
 
2018
 
2017
Net property, plant and equipment
 
$
10,071,860

 
$
9,259,182

Cash and cash equivalents
 
20,930

 
26,409

Accounts receivable, net
 
253,546

 
222,263

Gas stored underground
 
126,010

 
184,653

Other current assets
 
52,369

 
106,321

Total current assets
 
452,855

 
539,646

Goodwill
 
730,132

 
730,132

Deferred charges and other assets
 
252,777

 
220,636

 
 
$
11,507,624

 
$
10,749,596

 
 
 
 
 
Shareholders' equity
 
$
4,759,552

 
$
3,898,666

Long-term debt
 
2,618,315

 
3,067,045

Total capitalization
 
7,377,867

 
6,965,711

Accounts payable and accrued liabilities
 
198,172

 
233,050

Other current liabilities
 
573,012

 
332,648

Short-term debt
 
244,777

 
447,745

Current maturities of long-term debt
 
450,000

 

Total current liabilities
 
1,465,961

 
1,013,443

Deferred income taxes
 
1,133,622

 
1,878,699

Regulatory excess deferred taxes
 
733,509

 

Deferred credits and other liabilities
 
796,665

 
891,743

 
 
$
11,507,624

 
$
10,749,596


8



Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Statements of Cash Flows
 
Nine Months Ended 
 June 30
(000s)
 
2018
 
2017
Cash flows from operating activities
 
 
 
 
Net income
 
$
564,317

 
$
360,568

Depreciation and amortization
 
268,426

 
234,833

Deferred income taxes
 
139,852

 
188,256

One-time income tax benefit
 
(165,522
)
 

Gain on sale of discontinued operations
 

 
(12,931
)
Discontinued cash flow hedging for natural gas marketing commodity contracts
 

 
(10,579
)
Other
 
18,007

 
14,892

Changes in assets and liabilities
 
210,216

 
(29,478
)
Net cash provided by operating activities
 
1,035,296

 
745,561

Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(1,088,472
)
 
(812,148
)
Acquisition
 

 
(86,128
)
Proceeds from the sale of discontinued operations
 
3,000

 
140,253

Available-for-sale securities activities, net
 
(7,857
)
 
(14,329
)
Use tax refund
 

 
18,562

Other, net
 
6,105

 
6,435

Net cash used in investing activities
 
(1,087,224
)
 
(747,355
)
Cash flows from financing activities
 
 
 
 
Net decrease in short-term debt
 
(202,968
)
 
(571,238
)
Proceeds from issuance of long-term debt, net of premium/discount
 

 
884,911

Net proceeds from equity offering
 
395,092

 
98,755

Issuance of common stock through stock purchase and employee retirement plans
 
15,850

 
22,673

Settlement of interest rate agreements
 

 
(36,996
)
Interest rate agreements cash collateral
 

 
25,670

Repayment of long-term debt
 

 
(250,000
)
Cash dividends paid
 
(160,007
)
 
(143,075
)
Debt issuance costs
 

 
(6,663
)
Other
 
(1,518
)
 

Net cash provided by financing activities
 
46,449

 
24,037

Net increase (decrease) in cash and cash equivalents
 
(5,479
)
 
22,243

Cash and cash equivalents at beginning of period
 
26,409

 
47,534

Cash and cash equivalents at end of period
 
$
20,930

 
$
69,777

 
 
 
Three Months Ended 
 June 30
 
Nine Months Ended 
 June 30
Statistics
 
2018
 
2017
 
2018
 
2017
Consolidated distribution throughput (MMcf as metered)
 
82,448

 
76,281

 
386,783

 
324,555

Consolidated pipeline and storage transportation volumes (MMcf)
 
180,371

 
159,023

 
484,456

 
425,150

Distribution meters in service
 
3,249,780

 
3,213,853

 
3,249,780

 
3,213,853

Distribution average cost of gas
 
$
4.68

 
$
4.60

 
$
5.27

 
$
5.14

###

9