Atmos Energy reported solid third-quarter earnings per share from continued operations of $0.42, compared with $0.32 in the year-ago quarter. Management reaffirmed its fiscal 2013 EPS forecast range of $2.45-$2.55 per share. The company will pay a $1.40 per share dividend in fiscal 2013, a 1.4% increase from 2012.
Natural gas distribution gross profit rose sharply, up $44 million or 23%. Roughly 65% of the increase was expected, as recent rate design changes in Texas shifted fiscal-year margins into the second half of the year. Under the new regulation, customers will now have a higher base charge offset by a decline in the usage charge, leaving full-year margins intact. For the fourth quarter, management expects the impact of rate design changes in the range of $25-$30 million. The distribution unit also benefited from cooler weather. Transmission and storage continues to benefit from favorable regulatory Gas Reliability Infrastructure Program, or GRIP, filings, driving unit profit 10.2%. GRIP allows for real-time returns on approved capital costs.
Operating expenses rose 13.7% in the quarter, 2% fiscal year to date, as additional investments increased costs. Constructive regulatory jurisdictions should continue to support solid growth for Atmos’ regulated operations, particularly in Texas with favorable GRIP regulation and Texas Rule 8.209, which encourages distribution spending for system safety and reliability infrastructure investments.
Management reaffirmed its 8.0%-8.5% rate base growth and 6%-8% annual earnings growth target through fiscal year 2016. The company is on track to complete $770 million- $790 million of capital expenditures in 2013 with current fiscal year-to-date expenditures of $582 million.