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Atmos Energy Corp.$86.22($.03)(.03%)

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 Atmos Energy Corporation Reports Earnings for Fiscal 2015 and Initiates Fiscal 2016 Guidance; Raises Dividend 7.7 Percent
   Wednesday, November 04, 2015 5:02:00 PM ET

Atmos Energy Corporation (ATO ) today reported consolidated results for its 2015 fiscal year and fourth quarter ended September 30, 2015.

-- Fiscal 2015 consolidated net income, excluding net unrealized margins, was $316.5 million, or $3.10 per diluted share, compared with consolidated net income of $284.0 million, or $2.90 per diluted share in the prior year, excluding net unrealized margins.

-- Fiscal 2015 net income was $315.1 million, or $3.09 per diluted share, after including noncash, unrealized net losses of $1.5 million, or $(0.01) per diluted share. Net income was $289.8 million, or $2.96 per diluted share in the prior year, after including unrealized net gains of $5.8 million or $0.06 per diluted share.

-- Natural gas distribution customers benefited from weather-normalized rates, which returned approximately $19.5 million in savings on customer bills, as a result of weather that was eight percent colder than normal in fiscal 2015.

-- Capital expenditures were $975.1 million for the year ended September 30, 2015, with over 80 percent of that spending related to system safety and reliability investments.

-- Atmos Energy expects fiscal 2016 earnings to be in the range of $3.20 to $3.40 per diluted share, excluding net unrealized margins. Capital expenditures are expected to be in the range of $1.0 billion to $1.1 billion in fiscal 2016.

-- The company’s Board of Directors has declared a quarterly dividend of $0.42 per common share. The indicated annual dividend for fiscal 2016 is $1.68, which represents a 7.7 percent increase.

For the quarter ended September 30, 2015, consolidated net income, excluding unrealized margins was $30.1 million, or $0.29 per diluted share, compared with net income of $24.9 million, or $0.24 per diluted share for the same quarter last year. Noncash, unrealized net losses from nonregulated operations were $6.6 million, or $(0.06) per diluted share for the three months ended September 30, 2015, and $1.2 million, or $(0.01) per diluted share for the prior-year quarter.

"Our business strategy continues to yield solid results," said Kim Cocklin, chief executive officer of Atmos Energy Corporation. "Our 2015 financial performance reflects the continued capital investments we have made in our infrastructure to provide safe and reliable gas service to our customers. These investments, along with timely recovery, will position us well for fiscal 2016 and beyond. We remain confident in the fundamental strength of our business to continue delivering annual earnings per share growth in the six to eight percent range," Cocklin concluded.

Results for the Fiscal Year Ended September 30, 2015

Regulated distribution gross profit increased $61.1 million to $1,237.6 million for the year ended September 30, 2015, compared with $1,176.5 million in the prior-year period. Gross profit reflects a net $70.6 million increase in rates, primarily in the Mid-Tex, West Texas and Kentucky/Mid-States Divisions. Additionally, gross profit increased $4.5 million from higher transportation revenue, while it decreased $10.5 million due to warmer weather. Although weather was eight percent colder than normal during fiscal 2015, it was 10 percent warmer than the prior year, before adjusting for weather normalization mechanisms.

Regulated pipeline gross profit increased $51.6 million to $370.1 million for the year ended September 30, 2015, compared with $318.5 million in the prior fiscal year. This increase primarily reflects a $47.0 million increase in revenue from the Gas Reliability Infrastructure Program (GRIP) filings approved in fiscal 2014 and 2015.

Nonregulated gross profit decreased $15.1 million to $72.9 million for the year ended September 30, 2015, compared with $88.0 million for the prior-year period. Realized margins for gas delivery, storage and transportation services increased $8.3 million year over year, primarily due to a $0.03/Mcf increase in per-unit margins, partially offset by a seven percent decrease in consolidated sales volumes. This increase was more than offset by an $11.4 million decrease in other realized margins primarily related to lower natural gas price volatility in the current year. Finally, unrealized margins decreased $12.0 million.

Consolidated operation and maintenance expense for the year ended September 30, 2015 was $541.9 million, compared with $505.2 million for the prior year. The $36.7 million increase resulted primarily from increased pipeline maintenance spending and higher employee-related expenses.

Depreciation and amortization increased $20.8 million to $274.8 million during the year ended September 30, 2015, compared with $254.0 million for the prior year primarily due to incremental capital investments made in fiscal 2014.

Capital expenditures increased to $975.1 million for the year ended September 30, 2015, compared with $835.3 million in the prior year. The $139.8 million increase is largely due to a $96.9 million increase in spending in the regulated distribution segment, primarily due to a planned increase in safety and reliability investment in fiscal 2015. Additionally, capital spending in the regulated pipeline segment increased $43.4 million in the current year to further ensure the reliability of gas service to the Mid-Tex Division and other regulated distribution customers.

For the year ended September 30, 2015, the company generated operating cash flow of $836.5 million, a $96.5 million increase compared with the year ended September 30, 2014. The year-over-year increase primarily reflects constructive rate adjustments achieved in the prior and current years and lower gas prices during the current-year storage injection season.

The debt capitalization ratio at September 30, 2015 was 47.7 percent, compared with 46.2 percent at September 30, 2014. At September 30, 2015, there was $457.9 million of short-term debt outstanding, compared with $196.7 million at September 30, 2014. Short-term debt levels in the prior year were lower as a result of higher cash balances following the completion of the February 2014 equity offering.

Results for the 2015 Fiscal Fourth Quarter Ended September 30, 2015

Regulated distribution gross profit increased $6.0 million to $240.5 million for the fiscal 2015 fourth quarter, compared with $234.5 million in the prior-year quarter. Gross profit reflects a net $9.1 million increase in rates, primarily in the Mid-Tex and West Texas Divisions.

Regulated pipeline gross profit increased $11.5 million to $97.8 million for the quarter ended September 30, 2015, compared with $86.3 million for the same quarter last year. This increase is primarily the result of a $9.5 million increase to rates under the GRIP filing that became effective in fiscal 2015.

Nonregulated gross profit decreased $0.9 million to $16.1 million for the fourth quarter of fiscal 2015, compared with $17.0 million for the prior-year quarter. Realized margins for gas delivery, storage and transportation services increased $2.3 million quarter over quarter, primarily due to a $0.04/Mcf increase in per-unit margins, partially offset by a four percent decrease in consolidated sales volumes. Additionally, other realized margins increased $5.7 million, primarily related to more favorable financial settlements in the current-year quarter compared to the prior-year quarter. Unrealized margins were $8.9 million lower than the prior-year quarter.

Consolidated operation and maintenance expense for the three months ended September 30, 2015 was $157.4 million, compared with $139.2 million for the prior-year quarter. The $18.2 million quarter-over-quarter increase resulted primarily from increased pipeline maintenance spending and higher employee-related expenses.

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 2016 earnings to be in the range of $3.20 to $3.40 per diluted share, excluding unrealized margins. Net income from regulated operations is expected to be in the range of $315 million to $335 million, while net income from nonregulated operations is expected to be in the range of $14 million to $19 million. Capital expenditures for fiscal 2016 are expected to range between $1.0 billion and $1.1 billion.

Conference Call to be Webcast November 5, 2015

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2015 financial results and outline the assumptions supporting the fiscal 2016 guidance on Thursday, November 5, 2015, at 10 a.m. Eastern Time. The domestic telephone number is 877-485-3107 and the international telephone number is 201-689-8427. Kim Cocklin, chief executive officer and Bret Eckert, 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.

Highlights and Recent Developments

Election of Director

Effective November 4, 2015, Michael E. Haefner, president and chief operating officer, was elected to the board of directors of the company, with his term expiring at the 2016 annual meeting of shareholders on February 3, 2016.

Senior Management Promotions

On September 28, 2015, Atmos Energy announced the promotion of Michael E. Haefner, from executive vice president to president and chief operating officer, effective October 1, 2015. Additionally, Marvin L. Sweetin, senior vice president of utility operations, was promoted to the newly-created position of senior vice president of safety and enterprise services, effective October 1, 2015.

Credit Facility Replaced

On September 25, 2015, Atmos Energy replaced its existing $1.25 billion revolving credit agreement, which was set to expire on August 22, 2019, with a new $1.25 billion revolving credit agreement (Credit Facility) with substantially the same terms. The Credit Facility also retains a $250 million accordion feature that would allow an increase in commitments up to $1.5 billion. The Credit Facility has an expiration date of September 25, 2020, with the company having the option to twice extend the five-year term for one additional year.

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

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 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, 2014 and in the company’s Quarterly Report on Form 10-Q for the three and nine months ended June 30, 2015. 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.

About Atmos Energy

Atmos Energy Corporation, headquartered in Dallas, is one of the country’s largest natural-gas-only distributors, 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 and provides natural gas marketing and procurement services to industrial, commercial and municipal customers primarily in the Midwest and Southeast. For more information, visit www.atmosenergy.com.

                                          
Atmos Energy Corporation
Financial Highlights (Unaudited)
                                                                                                     
Statements of Income                                                                                                                                     Year Ended
                                                                                                                                                        September 30
------------------------------------
(000s except per share)                                                                                             2015                                     2014
                                                                                                    ------------------------------------                                          --------------------------------------
Gross Profit:
     Regulated distribution segment                                                                    $ 1,237,577                                                                     $ 1,176,515
     Regulated pipeline segment                                                                            370,112                                                                         318,459
     Nonregulated segment                                                                                   72,860                                                                          87,955
     Intersegment eliminations                                                                                (532 )                                                                          (503 )
                                                                                                    -----------------------------------                                           -------------------------------------
          Gross profit                                                                                   1,680,017                                                                       1,582,426
Operation and maintenance expense                                                                          541,868                                                                         505,154
Depreciation and amortization                                                                              274,796                                                                         253,987
Taxes, other than income                                                                                   231,958                                                      211,936  
                                                                                                    -----------------------------------                                           -------------------------------------
     Total operating expenses                                                                            1,048,622                                                                         971,077
Operating income                                                                                           631,395                                                                         611,349
Miscellaneous expense                                                                                       (4,389 )                                                                        (5,235 )
Interest charges                                                                                           116,241                                                      129,295  
                                                                                                    -----------------------------------                                           -------------------------------------
Income before income taxes                                                                                 510,765                                                                         476,819
Income tax expense                                                                                         195,690                                                      187,002  
                                                                                                    -----------------------------------                                           -------------------------------------
Net income                                                                                             $   315,075                                                  $   289,817  
                                                                                                    ==== ========= ====================                                           ====== ========= ====================
Basic earnings per share                                                                               $      3.09                                                                     $      2.96
Diluted earnings per share                                                                             $      3.09                                                                     $      2.96
Cash dividends per share                                                                               $      1.56                                                                     $      1.48
Weighted average shares outstanding:
     Basic                                                                                                 101,892                                                                          97,606
     Diluted                                                                                               101,892                                                                          97,608
                                                                                                                                                                                   
                                                 
                                                                                                                                                        Year Ended
                                                                                                                                                       September 30
Summary Net Income (Loss) by Segment (000s)                                                                              2015                             2014
-------------------------------------------                                                                ------------------------------                                             -----------------------
Regulated distribution                                                                                       $ 204,813                                                                  $              171,585
Regulated pipeline                                                                                              94,662                                                                                  86,191
Nonregulated                                                                                                    17,064                                                                                  26,209
Unrealized margins, net of tax                                                                                  (1,464 )                                                                                 5,832
                                                                                                           --------------------------------                                           -------------------------
                                                                                                             $ 315,075                                               $              289,817
     Consolidated net income
                                                                                                           === ======= ====================                                           === ====================
                                                                                                                                                                                           
                                          
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
                                                                                                     
Statements of Income                                                                                                                              Three Months Ended
                                                                                                                                                     September 30
------------------------------------
(000s except per share)                                                                                           2015                                   2014
                                                                                                    ---------------------------------                                          ------------------------------------
Gross Profit:
     Regulated distribution segment                                                                   $ 240,511                                                                     $ 234,491
     Regulated pipeline segment                                                                          97,807                                                                        86,314
     Nonregulated segment                                                                                16,136                                                                        16,987
     Intersegment eliminations                                                                             (133 )                                                                        (133 )
                                                                                                    --------------------------------                                           -----------------------------------
           Gross profit                                                                                 354,321                                                                       337,659
Operation and maintenance expense                                                                       157,379                                                                       139,163
Depreciation and amortization                                                                            70,737                                                                        68,256
Taxes, other than income                                                                                 50,352                                                     46,296  
                                                                                                    --------------------------------                                           -----------------------------------
     Total operating expenses                                                                           278,468                                                                       253,715
Operating income                                                                                         75,853                                                                        83,944
Miscellaneous expense                                                                                    (1,755 )                                                                      (1,213 )
Interest charges                                                                                         31,075                                                     33,739  
                                                                                                    --------------------------------                                           -----------------------------------
Income before income taxes                                                                               43,023                                                                        48,992
Income tax expense                                                                                       19,508                                                     25,279  
                                                                                                    --------------------------------                                           -----------------------------------
Net income                                                                                            $  23,515                                                  $  23,713  
                                                                                                    === ======= ====================                                           ====== ======= ====================
Basic earnings per share                                                                              $    0.23                                                                     $    0.23
Diluted earnings per share                                                                            $    0.23                                                                     $    0.23
Cash dividends per share                                                                              $   0.390                                                                     $   0.370
Weighted average shares outstanding:
     Basic                                                                                              102,234                                                                       101,247
     Diluted                                                                                            102,234                                                                       101,247
                                                                                                                                                                                
                                                 
                                                                                                                                                         Three Months Ended
                                                                                                                                                            September 30
Summary Net Income (Loss) by Segment (000s)                                                                              2015                                  2014
-------------------------------------------                                                                --------------------------------                                          ------------------------------------
Regulated distribution                                                                                       $  9,109                                                                  $      1,556
Regulated pipeline                                                                                             16,377                                                                        17,698
Nonregulated                                                                                                    4,674                                                                         5,666
Unrealized margins, net of tax                                                                                 (6,645 )                                                                      (1,207 )
                                                                                                           -------------------------------                                           -----------------------------------
     Consolidated net income                                                                                 $ 23,515                                               $     23,713  
                                                                                                           === ====== ====================                                           === ========== ====================
                                                                                                                                                                                          
                                                                    
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
                                                                                                                                                                     
Condensed Balance Sheets                                                                                   September 30,                                                 September 30,
----------------------------------------
(000s)                                                                                                         2015                                                          2014
                                                                                                        ------------------                                          ----------------------
Net property, plant and equipment                                                                             $ 7,430,580                                                    $  6,725,906
Cash and cash equivalents                                                                                          28,653                                                          42,258
Accounts receivable, net                                                                                          295,160                                                         343,400
Gas stored underground                                                                                            236,603                                                         278,917
Other current assets                                                                                               70,569                                                         111,265
                                                                                                        ------------------                                          ----------------------
     Total current assets                                                                                         630,985                                                         775,840
Goodwill                                                                                                          742,702                                                         742,029
Deferred charges and other assets                                                                                 288,678                                                         350,929
                                                                                                        ------------------                                          ----------------------
                                                                                                              $ 9,092,945                                                    $  8,594,704
                                                                                                        ======= =========                                           ========== ==========
                                                                                                                                                                     
Shareholders’ equity                                                                                          $ 3,194,797                                                    $  3,086,232
Long-term debt                                                                                                  2,455,388                                                       2,455,986
                                                                                                        ------------------                                          ----------------------
     Total capitalization                                                                                       5,650,185                                                       5,542,218
Accounts payable and accrued liabilities                                                                          238,942                                                         308,086
Other current liabilities                                                                                         457,954                                                         405,869
Short-term debt                                                                                                   457,927                                                         196,695
Current maturities of long-term debt                                                                       --                                                  --
                                                                                                        ------------------                                          ----------------------
     Total current liabilities                                                                                  1,154,823                                                         910,650
Deferred income taxes                                                                                           1,411,315                                                       1,286,616
Deferred credits and other liabilities                                                                            876,622                                                         855,220
                                                                                                        ------------------                                          ----------------------
                                                                                                              $ 9,092,945                                                    $  8,594,704
                                                                                                        ======= =========                                           ========== ==========
                                                      
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
                                                                                                                 
Condensed Statements of Cash Flows                                                                                                                                   Year Ended
                                                                                                                                                                    September 30
------------------------------------------------
(000s)                                                                                                                          2015                                     2014
                                                                                                                -------------------------------------                                          -------------------------------------
Cash flows from operating activities
Net income                                                                                                            $ 315,075                                                                      $ 289,817
Depreciation and amortization                                                                                           274,796                                                                        253,987
Deferred income taxes                                                                                                   192,886                                                                        189,952
Other                                                                                                                    33,772                                                                         35,481
Changes in assets and liabilities                                                                                        19,990                                                     (29,251 )
                                                                                                                ------------------------------------                                           ------------------------------------
     Net cash provided by operating activities                                                                          836,519                                                                        739,986
Cash flows from investing activities
Capital expenditures                                                                                                   (975,132 )                                                                     (835,251 )
Other, net                                                                                                                  377                                                      (2,325 )
                                                                                                                ------------------------------------                                           ------------------------------------
     Net cash used in investing activities                                                                             (974,755 )                                                                     (837,576 )
Cash flows from financing activities
Net increase (decrease) in short-term debt                                                                              254,780                                                                       (165,865 )
Net proceeds from issuance of long-term debt                                                                            493,538                                                                 --
Net proceeds from equity offering                                                                                --                                                                        390,205
Settlement of Treasury lock agreements                                                                                   13,364                                                                 --
Repayment of long-term debt                                                                                            (500,000 )                                                               --
Cash dividends paid                                                                                                    (160,018 )                                                                     (146,248 )
Repurchase of equity awards                                                                                              (7,985 )                                                                       (8,717 )
Issuance of common stock                                                                                                 30,952                                                       4,274  
                                                                                                                ------------------------------------                                           ------------------------------------
     Net cash provided by financing activities                                                                          124,631                                                      73,649  
                                                                                                                ------------------------------------                                           ------------------------------------
Net decrease in cash and cash equivalents                                                                               (13,605 )                                                                      (23,941 )
Cash and cash equivalents at beginning of period                                                                         42,258                                                      66,199  
                                                                                                                ------------------------------------                                           ------------------------------------
Cash and cash equivalents at end of period                                                                            $  28,653                                                   $  42,258  
                                                                                                                ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                
                                                                                                                                    
                                                                                                                                                  Three Months Ended                                                                                                Year Ended
                                                                                                                                                     September 30                                                                                                  September 30
Statistics                                                                                                                     2015          2014                                                2015                2014
------------------------------------------------------------                                                                --------                                            --------                                            --------                                            --------------------
Consolidated distribution throughput (MMcf as metered)                                                                         56,614                                              57,493                                             429,322                                                         451,803
Consolidated pipeline transportation volumes (MMcf)                                                                           146,240                                             130,777                                             528,068                                                         493,360
Consolidated nonregulated delivered gas sales volumes (MMcf)                                                                   79,167                                              82,763                                             351,427                                                         377,441
Regulated distribution meters in service                                                                                    3,151,312                                           3,115,069                                           3,151,312                                                       3,115,069
Regulated distribution average cost of gas                                                                                     $ 4.64                                              $ 6.10                                              $ 5.20                                                    $       5.94
Nonregulated net physical position (Bcf)                                                                                         14.6                                                 9.3                                                14.6                                                             9.3
                                                                                                                                                                                                                                                                                         

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SOURCE: Atmos Energy Corporation

Atmos Energy Corporation 
Susan Giles, 972-855-3729


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