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

November 7, 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))



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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, November 7, 2018 , Atmos Energy Corporation (the “Company”) issued a news release in which it reported the Company’s financial results for the fourth quarter and full 2018 fiscal year, which ended September 30, 2018 , and that certain of its officers would discuss such financial results in a conference call on Thursday, November 8, 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
  
 
 
 
 
 















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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:
November 7, 2018
By:   /s/ CHRISTOPHER T. FORSYTHE                        
 
 
       Christopher T. Forsythe
 
 
       Senior Vice President and
 
 
       Chief Financial Officer
 
 
 
 
 
 



































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

Atmos Energy Corporation Reports Earnings for Fiscal 2018 ; Initiates Fiscal 2019 Guidance; Raises Dividend 8.2 Percent
DALLAS ( November 7, 2018 ) - Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its 2018 fiscal year and fourth quarter ended September 30, 2018 .

Fiscal 2018 consolidated net income was  $603.1 million  or  $5.43  per diluted share, compared with consolidated net income of  $396.4 million , or  $3.73  per diluted share for the same period last year.

Adjusted income from continuing operations for fiscal 2018 , which excludes a one-time income tax benefit related to the Tax Cuts and Jobs Act of 2017 (the TCJA) of $158.8 million , or $1.43 per diluted share, was  $444.3 million , or  $4.00  per diluted share, compared with adjusted income from continuing operations of  $382.7 million , or $3.60 per diluted share in the prior year.

Capital expenditures were  $1.47 billion  for the year ended  September 30, 2018 , with approximately 85 percent of that spending related to system safety and reliability investments.    

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

The company's Board of Directors has declared a quarterly dividend of $0.525 per common share. The indicated annual dividend for fiscal 2019 is $2.10, which represents an 8.2% increase over fiscal 2018.

Fiscal 2018 fourth quarter adjusted income from continuing operations was $45.5 million , or $0.41 per diluted share, compared with adjusted income from continuing operations of $35.9 million , or $0.34 per diluted share in the prior-year quarter.

“We delivered another year of solid results as we invested nearly $1.5 billion to continue to improve the safety and reliability of our system,” said Mike Haefner, President and Chief Executive Officer of Atmos Energy Corporation. “I am proud of the work our employees do every day to deliver value to our customers, communities,

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and investors. The continued execution of our strategy has allowed us to increase the investment in our infrastructure while delivering an attractive return to shareholders. We remain well-positioned to continue delivering annual earnings per share growth in the six to eight percent range,” Haefner concluded.

Results for the Fiscal Year Ended September 30, 2018
Operating income decreased $4.4 million to $723.1 million for the year ended September 30, 2018 , compared to $727.5 million in the prior year. Positive rate outcomes, higher transportation margins and stronger customer consumption were more than offset by reduced revenues as a result of the partial implementation of the TCJA and higher operating expenses.
Distribution contribution margin increased $63.5 million to $1,443.2 million for the year ended September 30, 2018 , compared with $1,379.7 million in the prior year. Contribution margin reflects a net $70.7 million increase in rates. In addition, net consumption increased $12.2 million, primarily due to weather that was 36 percent colder than the prior-year period. Transportation contribution margin increased $8.9 million year over year primarily due to the addition of new industrial customers. Customer growth, primarily in the Mid-Tex Division, contributed an additional $8.4 million compared to the prior-year period. These increases were partially offset by a decrease of $51.3 million as a result of incorporating the lower statutory tax rate in revenues due to the TCJA.
Pipeline and storage contribution margin increased $51.2 million to $505.7 million for the year ended September 30, 2018 , compared with $454.5 million in the prior year. This increase is primarily attributable to a $74.3 million increase in revenue from the Atmos Pipeline–Texas rate case completed in fiscal 2017 and two Gas Reliability Infrastructure Program (GRIP) filings implemented in fiscal 2018, partially offset by a decrease of $24.1 million as a result of the partial implementation of the TCJA.
Continuing operation and maintenance expense for the year ended September 30, 2018 was $599.6 million , compared with $546.8 million in the prior year. 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 $330.5 million to $1,467.6 million for the year ended September 30, 2018 , compared with $1,137.1 million in the prior year, due to continued spending for infrastructure replacements and enhancements.
For the year ended September 30, 2018 , the company generated operating cash flow of $1,124.7 million , a $257.6 million increase compared with the year ended September 30, 2017 . The period-over-period increase primarily reflects successful rate case outcomes achieved in fiscal 2017 due to increases in safety spending and changes in working capital, primarily as a result of the timing of gas cost recoveries under purchased gas cost mechanisms.
The equity capitalization ratio at September 30, 2018 was 56.7% , 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

2



debt under its commercial paper program, to fund capital spending and for general corporate purposes.

Results for the Quarter Ended September 30, 2018
Operating income decreased $2.2 million to $89.6 million for the three months ended September 30, 2018 , from $91.8 million in the prior-year quarter. Positive rate outcomes were more than offset by reduced revenues as a result of the partial implementation of the TCJA as well as higher operating expenses.
Distribution contribution margin decreased $5.4 million to $269.3 million for the three months ended September 30, 2018 , compared with $274.7 million in the prior-year quarter. Contribution margin reflects a net $6.3 million increase in rates. An increase in customers, primarily in the Mid-Tex Division, contributed an additional $2.6 million compared to the prior-year quarter. These increases were partially offset by a decrease of $12.6 million as a result of incorporating the lower statutory tax rate reflected in revenues due to the TCJA.
Pipeline and storage contribution margin increased $15.0 million to $132.6 million for the three months ended September 30, 2018 , compared with $117.6 million in the prior-year quarter. This increase is attributable to a $20.3 million increase in rates, due to the Atmos Pipeline–Texas rate case completed in fiscal 2017 and two GRIP filings approved in fiscal 2018, partially offset by a decrease of $8.0 million as a result of the partial implementation of the TCJA.
Continuing operation and maintenance expense for the three months ended September 30, 2018 , was $163.9 million , compared with $160.9 million for the prior-year quarter. This $3.0 million increase was primarily driven by higher administrative and employee-related expenses in the current-year quarter.
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 2019 earnings to be in the range of $4.20 to $4.35 per diluted share. Capital expenditures for fiscal 2019 are expected to range between $1.65 billion and $1.75 billion.

Conference Call to be Webcast November 8, 2018
Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2018 financial results on Thursday, November 8, 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.






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Highlights and Recent Developments
On November 7, 2018, Atmos Energy announced that Kevin Akers, Senior Vice President, Safety and Enterprise Services, had been promoted to Executive Vice President, effective immediately.
On November 1, 2018, Atmos Energy announced that Sean Donohue and Diana J. Walters had been elected to our board of directors, effective November 1, 2018, with each of their terms expiring at the 2019 annual meeting of shareholders on February 6, 2019.
On October 4, 2018, Atmos Energy completed a public offering of $600 million of 4.30% senior notes due 2048, receiving net proceeds from the offering of approximately $591 million after all offering-related expenses.
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 Item 1A of the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and in subsequent filings with the Securities and Exchange Commission.
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

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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 during the year ended September 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 in order to allow investors to better analyze the company's core results and allow the information to be presented on a comparative basis to the prior year. Accordingly, the discussion and analysis of the company's financial performance will reference adjusted income from continuing operations and diluted earnings per share, which is calculated as follows:
 
Three Months Ended September 30
 
2018
 
2017
 
Change
 
(In thousands, except per share data)
Income from continuing operations
$
38,747

 
$
35,853

 
$
2,894

TCJA non-cash income tax expense
6,740

 

 
6,740

Adjusted income from continuing operations
$
45,487

 
$
35,853

 
$
9,634

 
 
 
 
 
 
Consolidated diluted EPS from continuing operations
$
0.35

 
$
0.34

 
$
0.01

Diluted EPS from TCJA non-cash income tax expense
0.06

 

 
0.06

Adjusted diluted EPS from continuing operations
$
0.41

 
$
0.34

 
$
0.07

 
Year Ended September 30
 
2018
 
2017
 
Change
 
(In thousands, except per share data)
Income from continuing operations
$
603,064

 
$
382,711

 
$
220,353

TCJA non-cash income tax benefit
(158,782
)
 

 
(158,782
)
Adjusted income from continuing operations
$
444,282

 
$
382,711

 
$
61,571

 
 
 
 
 
 
Consolidated diluted EPS from continuing operations
$
5.43

 
$
3.60

 
$
1.83

Diluted EPS from TCJA non-cash income tax benefit
(1.43
)
 

 
(1.43
)
Adjusted diluted EPS from continuing operations
$
4.00

 
$
3.60

 
$
0.40


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 .
This news release should be read in conjunction with the attached unaudited financial information.

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Atmos Energy Corporation
Financial Highlights (Unaudited)

 
 
 
 
 
Statements of Income
 
Year Ended 
 September 30
(000s except per share)
 
2018
 
2017
Operating revenues
 
 
 
 
Distribution segment
 
$
3,003,047

 
$
2,649,175

Pipeline and storage segment
 
507,713

 
457,030

Intersegment eliminations
 
(395,214
)
 
(346,470
)
 
 
3,115,546

 
2,759,735

Purchased gas cost
 
 
 
 
Distribution segment
 
1,559,836

 
1,269,456

Pipeline and storage segment
 
1,978

 
2,506

Intersegment eliminations
 
(393,966
)
 
(346,426
)
 
 
1,167,848

 
925,536

Contribution margin
 
1,947,698

 
1,834,199

Operation and maintenance expense
 
599,595

 
546,798

Depreciation and amortization
 
361,083

 
319,448

Taxes, other than income
 
263,886

 
240,407

Total operating expenses
 
1,224,564

 
1,106,653

Operating income
 
723,134

 
727,546

Miscellaneous expense
 
(5,344
)
 
(3,270
)
Interest charges
 
106,646

 
120,182

Income from continuing operations before income taxes
 
611,144

 
604,094

Income tax expense
 
8,080

 
221,383

Income from continuing operations
 
603,064

 
382,711

Income from discontinued operations, net of tax
 

 
10,994

Gain on sale of discontinued operations, net of tax
 

 
2,716

Net income
 
$
603,064

 
$
396,421

Basic and diluted earnings per share
 
 
 
 
Income per share from continuing operations
 
$
5.43

 
$
3.60

Income per share from discontinued operations
 

 
0.13

Net income per share - basic and diluted
 
$
5.43

 
$
3.73

Cash dividends per share
 
$
1.94

 
$
1.80

Basic and diluted weighted average shares outstanding
 
111,012

 
106,100

 
 
 
 
 
 
 
Year Ended 
 September 30
Summary Net Income by Segment (000s)
 
2018
 
2017
Distribution
 
$
442,966

 
$
268,369

Pipeline and storage
 
160,098

 
114,342

Net income from continuing operations
 
603,064

 
382,711

Net income from discontinued operations
 

 
13,710

Net income
 
$
603,064

 
$
396,421







6




Atmos Energy Corporation
Financial Highlights, continued (Unaudited)

 
 
 
 
 
Statements of Income
 
Three Months Ended 
 September 30
(000s except per share)
 
2018
 
2017
Operating revenues
 
 
 
 
Distribution segment
 
$
407,476

 
$
437,918

Pipeline and storage segment
 
132,662

 
117,823

Intersegment eliminations
 
(95,438
)
 
(90,861
)
 
 
444,700

 
464,880

Purchased gas cost
 
 
 
 
Distribution segment
 
138,138

 
163,247

Pipeline and storage segment
 
72

 
175

Intersegment eliminations
 
(95,125
)
 
(90,861
)
 
 
43,085

 
72,561

Contribution margin
 
401,615

 
392,319

Operation and maintenance expense
 
163,880

 
160,931

Depreciation and amortization
 
92,657

 
84,800

Taxes, other than income
 
55,486

 
54,796

Total operating expenses
 
312,023

 
300,527

Operating income
 
89,592

 
91,792

Miscellaneous expense
 
(1,053
)
 
(2,820
)
Interest charges
 
24,484

 
33,710

Income before income taxes
 
64,055

 
55,262

Income tax expense
 
25,308

 
19,409

Net income
 
$
38,747

 
$
35,853

 
 
 
 
 
Basic and diluted net income per share
 
$
0.35

 
$
0.34

Cash dividends per share
 
$
0.485

 
$
0.450

Basic and diluted weighted average shares outstanding
 
111,926

 
106,814

 
 
 
 
 
 
 
Three Months Ended 
 September 30
Summary Net Income by Segment (000s)
 
2018
 
2017
Distribution
 
$
13,280

 
$
15,346

Pipeline and storage
 
25,467

 
20,507

Net income
 
$
38,747

 
$
35,853














7




Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Balance Sheets
 
September 30,
 
September 30,
(000s)
 
2018
 
2017
Net property, plant and equipment
 
$
10,371,147

 
$
9,259,182

Cash and cash equivalents
 
13,771

 
26,409

Accounts receivable, net
 
253,295

 
222,263

Gas stored underground
 
165,732

 
184,653

Other current assets
 
46,055

 
106,321

Total current assets
 
478,853

 
539,646

Goodwill
 
730,419

 
730,132

Deferred charges and other assets
 
294,018

 
220,636

 
 
$
11,874,437

 
$
10,749,596

 
 
 
 
 
Shareholders' equity
 
$
4,769,951

 
$
3,898,666

Long-term debt
 
2,493,665

 
3,067,045

Total capitalization
 
7,263,616

 
6,965,711

Accounts payable and accrued liabilities
 
217,283

 
233,050

Other current liabilities
 
547,068

 
332,648

Short-term debt
 
575,780

 
447,745

Current maturities of long-term debt
 
575,000

 

Total current liabilities
 
1,915,131

 
1,013,443

Deferred income taxes
 
1,154,067

 
1,878,699

Regulatory excess deferred taxes
 
739,670

 

Deferred credits and other liabilities
 
801,953

 
891,743

 
 
$
11,874,437

 
$
10,749,596


8



Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Statements of Cash Flows
 
Year Ended 
 September 30
(000s)
 
2018
 
2017
Cash flows from operating activities
 
 
 
 
Net income
 
$
603,064

 
$
396,421

Depreciation and amortization
 
361,083

 
319,633

Deferred income taxes
 
158,271

 
227,183

One-time income tax benefit
 
(158,782
)
 

Gain on sale of discontinued operations
 

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

 
(10,579
)
Other
 
26,165

 
20,630

Changes in assets and liabilities
 
134,861

 
(73,267
)
Net cash provided by operating activities
 
1,124,662

 
867,090

Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(1,467,591
)
 
(1,137,089
)
Acquisition
 

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

 
140,253

Available-for-sale securities activities, net
 
(8,325
)
 
(12,473
)
Use tax refund
 
790

 
29,790

Other, net
 
8,560

 
9,341

Net cash used in investing activities
 
(1,463,566
)
 
(1,056,306
)
Cash flows from financing activities
 
 
 
 
Net increase (decrease) in short-term debt
 
128,035

 
(382,066
)
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
 
19,563

 
26,523

Settlement of interest rate agreements
 

 
(36,996
)
Interest rate agreements cash collateral
 

 
25,670

Repayment of long-term debt
 

 
(250,000
)
Cash dividends paid
 
(214,906
)
 
(191,931
)
Debt issuance costs
 

 
(6,775
)
Other
 
(1,518
)
 

Net cash provided by financing activities
 
326,266

 
168,091

Net decrease in cash and cash equivalents
 
(12,638
)
 
(21,125
)
Cash and cash equivalents at beginning of period
 
26,409

 
47,534

Cash and cash equivalents at end of period
 
$
13,771

 
$
26,409

 
 
 
Three Months Ended 
 September 30
 
Year Ended 
 September 30
Statistics
 
2018
 
2017
 
2018
 
2017
Consolidated distribution throughput (MMcf as metered)
 
64,600

 
63,810

 
451,383

 
388,365

Consolidated pipeline and storage transportation volumes (MMcf)
 
179,444

 
171,029

 
663,900

 
596,179

Distribution meters in service
 
3,256,336

 
3,221,405

 
3,256,336

 
3,221,405

Distribution average cost of gas
 
$
4.44

 
$
5.16

 
$
5.19

 
$
5.14

###

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