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Atmos Energy Corp.$86.25($.04)(.05%)

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 Atmos Energy Corporation Reports Earnings for Fiscal 2017 Second Quarter and Six Months; Reaffirms Fiscal 2017 Guidance
   Wednesday, May 03, 2017 5:02:00 PM ET

Atmos Energy Corporation (ATO ) today reported consolidated results for its fiscal 2017 second quarter and six months ended March 31, 2017.

-- Fiscal 2017 second quarter consolidated net income was $164.7 million, or $1.55 per diluted share, compared with consolidated net income of $141.8 million, or $1.38 per diluted share in the prior-year quarter.

-- Fiscal 2017 second quarter net income from continuing operations was $162.0 million, or $1.52 per diluted share. In the prior-year quarter, net income from continuing operations was $143.0 million, or $1.39 per diluted share, and the net loss from discontinued operations was $1.2 million, or $0.01 per diluted share.

-- The company recognized a net gain on the sale of discontinued operations of $2.7 million, or $0.03 per diluted share in the current-year quarter, upon completion of the sale of Atmos Energy Marketing, LLC in January 2017.

-- The company’s Board of Directors has declared a quarterly dividend of $0.45 per common share. The indicated annual dividend for fiscal 2017 is $1.80, which represents a 7.1 percent increase over fiscal 2016.

For the six months ended March 31, 2017, net income from continuing operations was $276.1 million or $2.61 per diluted share, compared with net income from continuing operations of $244.5 million, or $2.38 per diluted share for the same period last year. Net income from discontinued operations for the six months ended March 31, 2017, was $13.7 million, or $0.13 per diluted share, including the gain on sale, compared with net income from discontinued operations of $0.1 million in the prior-year period.

"Our solid financial performance in the second quarter reflects the continued execution of our growth strategy, coupled with weather mechanisms which effectively insulated us during a period of warmer than normal weather," said Kim Cocklin, chief executive officer of Atmos Energy Corporation. "Our results reflect the significant capital investments we have made in our infrastructure to safely and reliably deliver natural gas to our 3.2 million customers. For fiscal 2017, we remain on track to meet earnings from continuing operations of between $3.45 and $3.65 per diluted share," Cocklin concluded.

Results for the Three Months Ended March 31, 2017

Distribution gross profit, which is defined as operating revenues less purchased gas cost, increased $37.9 million to $449.4 million for the three months ended March 31, 2017, compared with $411.5 million in the prior-year quarter. Gross profit reflects a net $29.5 million increase in rates, primarily in the Mid-Tex, Mississippi and Louisiana Divisions. In addition, customer growth primarily in the Mid-Tex and Tennessee service areas contributed an incremental $2.5 million in gross profit. These increases were partially offset by a net $0.6 million decline in consumption primarily due to weather that was 23 percent warmer than the prior-year quarter, before adjusting for weather normalization mechanisms.

Pipeline and storage gross profit, which is defined as operating revenues less purchased gas cost, increased $10.0 million to $111.2 million for the three months ended March 31, 2017, compared with $101.2 million in the prior-year quarter. This increase is primarily the result of a $10.8 million increase in revenues from the Gas Reliability Infrastructure Program (GRIP) filing approved in 2016.

Continuing operation and maintenance expense for the three months ended March 31, 2017, was $132.2 million, compared with $127.9 million for the prior-year quarter. The $4.3 million quarter-over-quarter increase was primarily driven by higher employee-related costs.

Results for the Six Months Ended March 31, 2017

Distribution gross profit increased $61.9 million to $808.8 million for the six months ended March 31, 2017, compared with $746.9 million in the prior-year period. Gross profit reflects a net $46.6 million increase in rates, primarily in the Mid-Tex, Louisiana and Mississippi Divisions. Customer growth primarily in the Mid-Tex Division contributed an incremental $4.2 million in gross profit. Revenue-related taxes primarily in the Mid-Tex and West Texas Divisions increased gross profit by $3.8 million. Transportation gross profit primarily in the Kentucky/Mid-States and West Texas Divisions increased $2.7 million, period over period. These increases were partially offset by a net $1.0 million decline in consumption primarily due to weather that was 12 percent warmer than the prior-year period, before adjusting for weather normalization mechanisms.

Pipeline and storage gross profit increased $20.6 million to $220.8 million for the six months ended March 31, 2017, compared with $200.2 million in the prior-year period. This increase primarily is attributable to a $21.5 million increase in revenue from the GRIP filings approved in fiscal 2016.

Continuing operation and maintenance expense for the six months ended March 31, 2017, was $257.2 million, compared with $247.7 million for the prior-year period. This $9.5 million increase was primarily driven by higher employee-related costs and increased pipeline maintenance spending.

In January 2017, the company completed the sale of its natural gas marketing business. Net income from discontinued operations was $13.7 million for the six months ended March 31, 2017, compared with $0.1 million in the prior-year period. The increase largely reflects the recognition of a net $6.6 million noncash gain in the first quarter of fiscal 2017 from unwinding hedge accounting for certain of the natural gas marketing business’s financial positions as a result of the sale and the $2.7 million gain recognized on the sale.

Capital expenditures increased $23.4 million to $559.4 million for the six months ended March 31, 2017, compared with $536.0 million in the prior-year period, driven by a planned increase in spending for infrastructure replacements and enhancements.

For the six months ended March 31, 2017, the company generated operating cash flow of $552.0 million, a $99.0 million increase compared with the six months ended March 31, 2016. The year-over-year increase primarily reflects the positive cash effect of successful rate case outcomes achieved in fiscal 2016 and changes in working capital.

The debt capitalization ratio at March 31, 2017 was 45.8 percent, compared with 48.5 percent at September 30, 2016 and 47.8 percent at March 31, 2016. At March 31, 2017, there was $670.6 million of short-term debt outstanding, compared with $829.8 million at September 30, 2016 and $626.9 million at March 31, 2016. Short-term debt balances fluctuate due to the seasonal nature of the natural gas business and the timing of spending year over year.

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 continues to expect fiscal 2017 earnings from continuing operations to be in the range of $3.45 to $3.65 per diluted share. Net income from continuing operations is still expected to be in the range of $365 million to $390 million. Capital expenditures for fiscal 2017 are still expected to range between $1.1 billion and $1.25 billion.

Conference Call to be Webcast May 4, 2017

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2017 second quarter financial results on Thursday, May 4, 2017, at 10:00 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, Mike Haefner, President and Chief Operating 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.

Highlights and Recent Developments

Board Retirement

On February 9, 2017, Atmos Energy announced the retirement of Dr. Thomas C. Meredith from the company’s Board of Directors, effective February 8, 2017.

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, 2016, and in the company’s Quarterly Report on Form 10-Q for the three months ended December 31, 2016. 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 the country’s largest 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.

                                                                                              
Atmos Energy Corporation
Financial Highlights (Unaudited)
                                                                                                                                      
                                                                                                                                      
Statements of Income                                                                                                        Three Months Ended
                                                                                                                                 March 31
------------------------------------------------------
(000s except per share)                                                            2017                                  2016       
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
Gross Profit:
   Distribution segment                                                                        $        449,445                                         $        411,456
   Pipeline and storage segment                                                                         111,247                                                  101,228
   Intersegment eliminations                                                  --                        --  
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
      Gross profit                                                                                      560,692                                                  512,684
Operation and maintenance expense                                                                       132,239                                                  127,857
Depreciation and amortization                                                                            77,667                                                   71,391
Taxes, other than income                                                              65,614                                61,780  
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
   Total operating expenses                                                                             275,520                                                  261,028
Operating income                                                                                        285,172                                                  251,656
Miscellaneous income (expense)                                                                              833                                                     (329 )
Interest charges                                                                      26,944                                27,559  
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
Income from continuing operations before income taxes                                                   259,061                                                  223,768
Income tax expense                                                                    97,049                                80,765  
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
Income from continuing operations                                                                       162,012                                                  143,003
Loss from discontinued operations, net of tax                                                    --                                                   (1,193 )
Gain on sale of discontinued operations, net of tax                                    2,716                        --  
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
   Net Income                                                                                  $        164,728                                         $        141,810  
                                                                            ==================== ==============                      ==================== ============== ====================
Basic and diluted net income per share
  Income per share from continuing operations                                                  $           1.52                                         $           1.39
  Income (loss) per share from discontinued operations                                  0.03                                 (0.01 )
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
  Net income per share - basic and diluted                                                     $           1.55                                         $           1.38  
                                                                            ==================== ==============                      ==================== ============== ====================
Cash dividends per share                                                                       $           0.45                                         $           0.42  
                                                                            ==================== ==============                      ==================== ============== ====================
Basic and diluted weighted average shares outstanding                                105,935                               102,946  
                                                                            ==================== ==============                      ==================== ============== ====================
                                                                                                                                      
                                                                             
                                                                                                                            Three Months Ended
                                                                                                                                 March 31
Summary Net Income (Loss) by Segment (000s)                                        2017                                  2016       
------------------------------------------------------                      -------------------- --------------                      -------------------- -------------- --------------------
Distribution                                                                                   $        131,145                                         $        115,080
Pipeline and storage                                                                  30,867                                27,923  
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
   Net income from continuing operations                                                                162,012                                                  143,003
   Net income from discontinued operations                                             2,716                                (1,193 )
                                                                            -------------------- --------------                      -------------------- -------------- --------------------
      Net Income                                                                               $        164,728                                         $        141,810  
                                                                            ==================== ==============                      ==================== ============== ====================
                                                                                                             
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
                                                                                                                                                     
                                                                                                                                                     
Statements of Income                                                                                                                Six Months Ended
                                                                                                                                        March 31
-----------------------------------------------------
(000s except per share)                                                         2017                                 2016       
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
Gross Profit:
   Distribution                                                                               $   808,755                                                              $        746,908
   Pipeline and Storage                                                                           220,844                                                                       200,203
   Intersegment eliminations                                                       (44 )                                           --  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Gross profit                                                                              1,029,555                                                                       947,111
Operation and maintenance expense                                                                 257,177                                                                       247,685
Depreciation and amortization                                                                     154,625                                                                       142,047
Taxes, other than income                                                       122,663                                 112,994  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
   Total operating expenses                                                                       534,465                                                                       502,726
Operating income                                                                                  495,090                                                                       444,385
Miscellaneous expense                                                                                (161 )                                                                      (1,208 )
Interest charges                                                                57,974                                  57,096  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
Income from continuing operations before income taxes                                             436,955                                                                       386,081
Income tax expense                                                             160,905                                 141,532  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
Income from continuing operations                                                                 276,050                                                                       244,549
Income from discontinued operations, net of tax                                                    10,994                                                                           122
Gain on sale of discontinued operations, net of tax                              2,716                          --  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
   Net Income                                                                                 $   289,760                                           $        244,671  
                                                                           ==================== ========= ====================                      ==================== ============== ====================
Basic and diluted earnings per share
  Income per share from continuing operations                                                 $      2.61                                                              $           2.38
  Income per share from discontinued operations                                   0.13                          --  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
  Net income per share - basic and diluted                                                    $      2.74                                           $           2.38  
                                                                           ==================== ========= ====================                      ==================== ============== ====================
Cash dividends per share                                                                      $      0.90                                           $           0.84  
                                                                           ==================== ========= ====================                      ==================== ============== ====================
Basic and diluted weighted average shares outstanding                          105,610                                 102,837  
                                                                           ==================== ========= ====================                      ==================== ============== ====================
                                                                                                                                                     
                                                                            
                                                                                                                                    Six Months Ended
                                                                                                                                        March 31
Summary Net Income by Segment (000s)                                            2017                                 2016       
-----------------------------------------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
Distribution                                                                                  $   216,509                                                              $        189,016
Pipeline and Storage                                                            59,541                                  55,533  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
   Net income from continuing operations                                                          276,050                                                                       244,549
   Net income from discontinued operations                                      13,710                                     122  
                                                                           -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Net income                                                                              $   289,760                                           $        244,671  
                                                                           ==================== ========= ====================                      ==================== ============== ====================
                                                                                                            
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
                                                                                                                                                    
Condensed Balance Sheets                                                                                March 31,                                            September 30,
--------------------------------------------------------------------
(000s)                                                                                           2017                                2016
                                                                                          -------------------- --------------                      -------------------- ----------
Net property, plant and equipment                                                                            $      8,738,487                                         $  8,268,606
Cash and cash equivalents                                                                                              45,403                                               47,534
Accounts receivable, net                                                                                              336,637                                              215,880
Gas stored underground                                                                                                120,026                                              179,070
Current assets of disposal group classified as held for sale                                                   --                                              151,117
Other current assets                                                                                61,018                            88,085
                                                                                          -------------------- --------------                      -------------------- ----------
   Total current assets                                                                                               563,084                                              681,686
Goodwill                                                                                                              729,673                                              726,962
Noncurrent assets of disposal group classified as held for sale                                                --                                               28,616
Deferred charges and other assets                                                                  330,222                           305,019
                                                                                          -------------------- --------------                      -------------------- ----------
                                                                                                             $     10,361,466                                         $ 10,010,889
                                                                                          ==================== ==============                      ==================== ==========
                                                                                                                                                    
Shareholders’ equity                                                                                         $      3,834,864                                         $  3,463,059
Long-term debt                                                                                   2,314,620                         2,188,779
                                                                                          -------------------- --------------                      -------------------- ----------
   Total capitalization                                                                                             6,149,484                                            5,651,838
Accounts payable and accrued liabilities                                                                              185,212                                              196,485
Current liabilities of disposal group classified as held for sale                                              --                                               72,900
Other current liabilities                                                                                             390,253                                              439,085
Short-term debt                                                                                                       670,607                                              829,811
Current maturities of long-term debt                                                               250,000                           250,000
                                                                                          -------------------- --------------                      -------------------- ----------
   Total current liabilities                                                                                        1,496,072                                            1,788,281
Deferred income taxes                                                                                               1,810,160                                            1,603,056
Noncurrent liabilities of disposal group classified as held for sale                                           --                                                  316
Deferred credits and other liabilities                                                             905,750                           967,398
                                                                                          -------------------- --------------                      -------------------- ----------
                                                                                                             $     10,361,466                                         $ 10,010,889
                                                                                          ==================== ==============                      ==================== ==========
                                                                    
Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
                                                                                         
Condensed Statements of Cash Flows                                                                                                              Six Months Ended
                                                                                                                                                    March 31
------------------------------------------------------------------
(000s)                                                                                      2017              2016       
                                                                                        -------------------- -------- --------------------                      -------------------- -------------- --------------------
Cash flows from operating activities
Net income                                                                                                 $  289,760                                                              $        244,671
Depreciation and amortization                                                                                 154,810                                                                       143,211
Deferred income taxes                                                                                         148,657                                                                       132,456
Gain on sale of discontinued operations                                                                       (12,931 )                                                              --
Discontinued cash flow hedging for natural gas marketing commodity                                            (10,579 )                                                              --
contracts
Other                                                                                                          10,391                                                                         8,771
Changes in assets and liabilities                                                          (28,105 )                                                  (76,154 )
                                                                                        -------------------- -------- --------------------                      -------------------- -------------- --------------------
   Net cash provided by operating activities                                                                  552,003                                                                       452,955
Cash flows from investing activities
Capital expenditures                                                                                         (559,385 )                                                                    (536,004 )
Acquisition                                                                                                   (85,714 )                                                              --
Proceeds from the sale of discontinued operations                                                             133,560                                                                --
Available-for-sale securities activities, net                                                                  (8,918 )                                                                      (2,117 )
Other, net                                                                                   3,787                                   4,597  
                                                                                        -------------------- -------- --------------------                      -------------------- -------------- --------------------
   Net cash used in investing activities                                                                     (516,670 )                                                                    (533,524 )
Cash flows from financing activities
Net increase (decrease) in short-term debt                                                                   (159,204 )                                                                     169,002
Proceeds from issuance of long-term debt, net of discount                                                     125,000                                                                --
Net proceeds from equity offering                                                                              49,400                                                                --
Issuance of common stock through stock purchase and employee                                                   16,984                                                                        17,641
retirement plans
Interest rate agreements cash collateral                                                                       25,670                                                                --
Cash dividends paid                                                                        (95,314 )                                                  (86,809 )
                                                                                        -------------------- -------- --------------------                      -------------------- -------------- --------------------
   Net cash provided by (used in) financing activities                                     (37,464 )                                                   99,834  
                                                                                        -------------------- -------- --------------------                      -------------------- -------------- --------------------
Net increase (decrease) in cash and cash equivalents                                                           (2,131 )                                                                      19,265
Cash and cash equivalents at beginning of period                                            47,534                                  28,653  
                                                                                        -------------------- -------- --------------------                      -------------------- -------------- --------------------
Cash and cash equivalents at end of period                                                                 $   45,403                                           $         47,918  
                                                                                        ==================== ======== ====================                      ==================== ============== ====================
                                                                                                                                                      
                                                                                                                     Three Months Ended                                                                                       Six Months Ended
                                                                                                                          March 31                                                                                                March 31
Statistics                                                                                2017          2016          2017          2016
---------------------------------------------------------------                      -------------------- ---------                      -------------------- --------- -------------------- -------------------- ---------                      -------------------- ---------
Consolidated distribution throughput (MMcf as metered)                                                      137,669                                             157,047                                             248,274                                             261,512
Consolidated pipeline and storage transportation volumes (MMcf)                                             131,151                                             115,040                                             266,127                                             244,199
Distribution meters in service                                                                            3,208,532                                           3,176,716                                           3,208,532                                           3,176,716
Distribution average cost of gas                                                                        $      5.25                                         $      3.87                                         $      5.28                                         $      4.05

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170503006432r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170503006432/en/

SOURCE: Atmos Energy Corporation

Atmos Energy Corporation 
Susan Giles, 972-855-3729


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