Atmos Energy 2014 Annual Report Download - page 21

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e eects of colder weather increased the throughput
for all three operating segments and added about $17.1
million, or 17 cents per diluted share, to scal 2014 consol-
idated net income.
Atmos Pipeline–Texas (APT), our intrastate natural gas
transmission and storage system, transported 714 billion
cubic feet of gas during scal 2014. APT’s system overlays
the prolic Barnett Shale natural gas basin and reaches other
producing and shale-gas areas. Its pipelines span across Texas
with connections to the state’s three major natural gas hubs
at Waha, Katy and Carthage.
APT has been adding capabilities to transport reliable
and aordable gas supplies to serve primarily our Mid-
Tex Division and other local gas distribution customers in
Texas. ese investments also help APT transport natural
gas reliably to new and existing electric power plants and
industrial facilities.
Higher natural gas consumption during scal 2014 also
created more volatility in wholesale gas prices.
Our nonregulated segment was able to take great advan-
tage of the market opportunities caused by the wider spreads
in gas prices. Atmos Energy Marketing—which buys, sells
and arranges transportation for large volumes of natural gas
at competitive prices to major customers in some 20 states
and to our own system—nearly tripled its year-over-year
contributions to scal 2014 consolidated earnings.
Because we assume a return to normal weather in scal
2015, we do not anticipate our nonregulated segment
repeating these results.
FINANCING
To raise additional capital, we sold 9.2 million shares of
our common stock in February 2014 at $44.00 a share. We
used the $390.2 million of net proceeds from the oering to
fund infrastructure improvements, to repay short-term debt
under our commercial paper program and to support other
corporate needs.
In October 2014, we replaced $500 million of maturing
4.95 percent senior notes with $500 million of 4.125 percent
senior notes due October 2044. e issuance will reduce our
weighted average cost of long-term debt and will save about
$8 million annually in interest expense.
We also have taken advantage of historically low interest
rates to lock in Treasury yield components of interest rates
for two planned future renancings for retiring debt. For
our $250 million of 6.35 percent 10-year senior notes
maturing in June 2017, the Treasury component of the
future issue will eectively be xed at 3.367 percent. e
Treasury component for renancing our $450 million of
8.50 percent 10-year senior notes that mature in March 2019
will eectively be xed at 3.857 percent. e renancings
will lower our weighted average cost of debt and will extend
weighted average maturities.
At the end of the scal year on September 30, 2014, our
balance sheet was strong with a debt-to-total-capitalization
ratio of 46.2 percent. We had nearly $1.2 billion in available
liquidity to meet our expected nancial requirements.
Rating agencies have recognized the strengths of our bal-
ance sheet, constructive regulatory outcomes and peer-lead-
ing growth in earnings per share. Our corporate credit
ratings were upgraded during the scal year by Moody’s
Investors Service from Baa1 to A2 and by Standard & Poor’s
from BBB+ to A-.
OUTLOOK
We have issued Atmos Energy’s scal 2015 earnings
guidance to be between $2.90 and $3.05 per diluted share,
excluding net unrealized margins.
Our capital expenditures for scal 2015 through scal
2018 are projected to be between $900 million and $1.1
billion annually. We expect to nance this growth through
$800 million to $1.0 billion of incremental nancing.
In turn, we forecast that the value of our rate base will
increase at a compounded annual growth rate from scal
2012 to scal 2018 of between 9 percent and 10 percent,
with a total value by the end of scal 2018 of between $7.2
billion and $7.4 billion.
Earnings growth of 6 percent to 8 percent, combined
with a dividend yield in the range of 3 percent, should
provide our shareholders an attractive total annual return
between 9 percent and 11 percent.
Signicantly, the approximately $4 billion we plan to
invest in infrastructure improvements during the next four
scal years should have little eect on our customers’ total
bills. With delivered natural gas prices forecast to remain
stable in the range of $5 to $6 per 1,000 cubic feet and
assuming normal weather, our average residential customer’s
monthly bill should remain well below $60.
AMERICA’S SAFEST GAS COMPANY
In this annual report, we discuss the signicant level of
capital expenditures we are making in all the states we serve
to modernize and expand our natural gas transmission and
delivery system. We are a leader in our industry in pursuing
these improvements and are proud of the exceptional eorts
by our employees to achieve these results.
Our goal is to be the safest natural gas company in
America. It is a continuing journey toward that goal, but we
are fully committed and well on our way to achieving that
distinction. It is a goal that will protect and benet our
customers, communities, employees and investors for
decades to come.
Kim R. Cocklin
President and Chief Executive Ocer
November 24, 2014