Atmos Energy Corporation (NYSE:ATO), a Texas-based natural gas distributor, has entered into an underwriting agreement to offer $325 million in additional Senior Notes, the company disclosed in a recent SEC filing. The notes, issued at 5.900% and due in 2033, are to be sold in a public offering with BNP Paribas (OTC:BNPQY) Securities Corp., J.P. Morgan Securities LLC, and Wells Fargo Securities, LLC acting as the representatives of the underwriters.
The offering, which was registered under the Securities Act of 1933, is an additional issuance of Atmos Energy's existing $400 million 5.900% Senior Notes due in 2033. The company anticipates net proceeds of approximately $338.9 million after underwriting discounts and estimated offering expenses, excluding accrued interest payments.
The transaction is scheduled to close today, subject to customary closing conditions. The proceeds from the offering are expected to be used for general corporate purposes, which may include repaying debt, funding capital expenditures, or other business investments.
The notes will be issued under an indenture dated March 26, 2009, between Atmos Energy and U.S. Bank Trust Company, National Association, as trustee. An Officers’ Certificate, to be dated today, will establish the terms of the Notes and will be delivered to the Trustee pursuant to the indenture.
Atmos Energy's SEC filing also included legal opinions related to the Registration Statement as exhibits, along with the form of the Officers’ Certificate and the Underwriting Agreement. The company's filing provides a detailed view of the financial maneuver, underscoring the ongoing capital management strategies employed by the firm in the natural gas distribution sector.
This move comes as part of Atmos Energy's broader financial strategy, indicating a proactive approach to capital allocation and debt management. Investors and market watchers will be observing the impact of this offering on the company's financial structure and future investment capabilities.
In other recent news, Atmos Energy has been making headlines with significant developments. Wells Fargo upgraded Atmos Energy's stock from Equal Weight to Overweight, citing robust customer growth and a strong presence in Texas. The upgrade also noted the company's solid balance sheet, with a funds from operations to debt ratio greater than 20% and a debt to EBITDA ratio of less than 4X.
On the other hand, Mizuho Securities raised its price target for Atmos Energy shares to $138 from $133, following the company's strong Q2 fiscal year 2024 performance. Atmos Energy reported earnings of $2.85 per share, surpassing the market estimate of $2.77 per share. This led to an update in the company's guidance for fiscal year 2024, now expecting earnings to be between $6.70 and $6.80 per share.
Moreover, Atmos Energy reported a net income of $743 million for the fiscal 2024 second quarter and increased its earnings per share guidance for fiscal 2024 to a range of $6.70 to $6.80. The company added over 56,000 new customers, primarily in Texas, and increased its capital spending guidance to approximately $3.1 billion. These recent developments highlight Atmos Energy's strong market position and financial performance.
InvestingPro Insights
As Atmos Energy Corporation (NYSE:ATO) reinforces its financial structure through the issuance of additional Senior Notes, the company's stability and commitment to shareholder value are reflected in its consistent dividend performance. With InvestingPro Tips highlighting that Atmos Energy has raised its dividend for 31 consecutive years and maintained dividend payments for 42 consecutive years, investors can appreciate the company's dedication to providing regular shareholder returns. Moreover, the company's liquid assets surpassing short-term obligations is a reassuring sign of financial health.
Looking at real-time metrics from InvestingPro, Atmos Energy's market capitalization stands at $17.68 billion, with a P/E ratio of 17.48. The company's revenue for the last twelve months as of Q2 2024 is reported at $4.056 billion, despite a revenue decline of 11.13% during the same period. Nevertheless, the quarterly revenue growth shows a positive uptick of 6.9%, suggesting a potential rebound. This data may be particularly relevant for investors considering the company's future earnings potential in light of the recent capital raise.
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