ATMOS ENERGY CORP

Previous wording

•Thedistribution segmentis primarily comprised of our regulated natural gas distribution and related sales operations in eight states.

Current wording

•Thedistribution segmentis comprised of our regulated natural gas distribution and related sales operations in eight states.

Previous wording

•Thepipeline and storage segment is comprised primarily of the pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana.

Current wording

•Thepipeline and storage segment is comprised primarily of the regulated pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana.

Previous wording

Our critical accounting policies are reviewed periodically by the Audit Committee of our Board of Directors. There were no significant changes to these critical accounting policies during the six months ended March 31, 2024.

Current wording

Our critical accounting policies are reviewed periodically by the Audit Committee of our Board of Directors. There were no significant changes to these critical accounting policies during the nine months ended June 30, 2024.

Previous wording

During the six months ended March 31, 2024, we recorded net income of $743.3 million, or $4.93 per diluted share, compared to net income of $629.5 million, or $4.40 per diluted share for the six months ended March 31, 2023.

Current wording

During the nine months ended June 30, 2024, we recorded net income of $908.9 million, or $6.00 per diluted share, compared to net income of $767.3 million, or $5.33 per diluted share for the nine months ended June 30, 2023.

Previous wording

The 18 percent year-over-year increase in net income largely reflects positive rate outcomes driven by safety and reliability spending and lower bad debt expense. Additionally, our fiscal 2024 year to date results were favorably impacted by $14.7 million as a result of legislation that became effective during the first quarter of fiscal 2024 to reduce property tax expenses in Texas. These increases were partially offset by increased depreciation expense and higher interest expense.

Current wording

The 18 percent year-over-year increase in net income largely reflects positive rate outcomes driven by safety and reliability spending and lower bad debt expense. Additionally, our fiscal 2024 year to date results were favorably impacted by $17.9 million as a result of legislation that became effective during the first quarter of fiscal 2024 to reduce property tax expenses in Texas. These increases were partially offset by increased depreciation expense and higher interest expense.

Previous wording

During the six months ended March 31, 2024, we implemented, or received approval to implement, ratemaking regulatory actions which resulted in an increase in annual operating income of $165.4 million. Additionally, as of March 31, 2024, we had ratemaking efforts in progress seeking a total increase in annual operating income of $178.8 million.

Current wording

During the nine months ended June 30, 2024, we implemented, or received approval to implement, ratemaking regulatory actions which resulted in an increase in annual operating income of $340.6 million. Additionally, as of June 30, 2024, we had ratemaking efforts in progress seeking a total increase in annual operating income of $176.5 million.

Previous wording

Capital expenditures for the six months ended March 31, 2024 were $1,415.5 million. Approximately 81 percent was invested to improve the safety and reliability of our distribution and transportation systems, with a significant portion of this investment incurred under regulatory mechanisms that reduce lag to six months or less.

Current wording

Capital expenditures for the nine months ended June 30, 2024 were $2,129.1 million. Approximately 82 percent was invested to improve the safety and reliability of our distribution and transportation systems, with a significant portion of this investment incurred under regulatory mechanisms that reduce lag to six months or less.

Previous wording

During the six months ended March 31, 2024, we completed approximately $1.2 billion of long-term debt and equity financing. As of March 31, 2024, our equity capitalization was 60.9 percent. As of March 31, 2024, we had approximately $4.2 billion in total liquidity, consisting of $262.5 million in cash and cash equivalents, $889.7 million in funds available through equity forward sales agreements and $3,094.4 million in undrawn capacity under our credit facilities.

Current wording

During the nine months ended June 30, 2024, we completed approximately $2.0 billion of long-term debt and equity financing. As of June 30, 2024, our equity capitalization was 61.0 percent. As of June 30, 2024, we had approximately $4.3 billion in total liquidity, consisting of $674.6 million in cash and cash equivalents, $550.7 million in funds available through equity forward sales agreements and $3,094.4 million in undrawn capacity under our credit facilities.

Previous wording

The distribution segment is primarily comprised of our regulated natural gas distribution and related sales operations in eight states. The primary factors that impact the results of this segment are our ability to earn our authorized rates of return, competitive factors in the energy industry and economic conditions in our service areas.

Current wording

The distribution segment is comprised of our regulated natural gas distribution and related sales operations in eight states. The primary factors that impact the results of this segment are our ability to earn our authorized rates of return, competitive factors in the energy industry and economic conditions in our service areas.

Previous wording

•a $90.6 million increase in rate adjustments, primarily in our Mid-Tex Division.

Current wording

•a $30.6 million increase in rate adjustments, primarily in our Mid-Tex Division.

Previous wording

•a $6.5 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load.

Current wording

•a $5.3 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load.

Previous wording

•a $16.1 million increase in other operation and maintenance expense primarily due to higher employee-related and other administrative costs.

Current wording

•a $14.8 million increase in operation and maintenance expense primarily due to higher employee-related and other administrative costs.

Previous wording

•a $155.2 million increase in rate adjustments, primarily in our Mid-Tex Division.

Current wording

•a $185.8 million increase in rate adjustments, primarily in our Mid-Tex Division.

Previous wording

•a $12.4 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load.

Current wording

•a $17.8 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load.

Previous wording

•a $13.3 million decrease in bad debt expense, as discussed in Note 6 to the condensed consolidated financial statements.

Current wording

•an $11.6 million decrease in bad debt expense, as discussed in Note 6 to the condensed consolidated financial statements.

Previous wording

•an $8.1 million increase due to lower line locate spending and timing of other activities.

Current wording

•an $8.5 million increase due to lower line locate spending and timing of other activities.

Previous wording

Interest charges increased $27.1 million primarily due to the issuance of long-term debt during the first quarter of fiscal 2024. The increase in interest charges is also due to the amortization of the Texas regulatory asset that is discussed in Note 3 to the condensed consolidated financial statements. However, this increase is offset by a corresponding increase in revenue resulting in no impact to net income.

Current wording

Interest charges increased $33.5 million primarily due to the issuance of long-term debt during fiscal 2024. The increase in interest charges is also due to the amortization of the Texas regulatory asset that is discussed in Note 3 to the condensed consolidated financial statements. However, this increase is offset by a corresponding increase in revenue resulting in no impact to net income.

Previous wording

The following table shows our operating income by distribution division, in order of total rate base, for the six months ended March 31, 2024 and 2023. The presentation of our distribution operating income is included for financial reporting purposes and may not be appropriate for ratemaking purposes.

Current wording

The following table shows our operating income by distribution division, in order of total rate base, for the nine months ended June 30, 2024 and 2023. The presentation of our distribution operating income is included for financial reporting purposes and may not be appropriate for ratemaking purposes.

Previous wording

The amounts described in the following sections represent the operating income that was requested or received in each rate filing, which may not necessarily reflect the stated amount referenced in the final order, as certain operating costs may have changed as a result of a commission’s or other governmental authority’s final ruling. During the first six months of fiscal 2024, we implemented, or received approval to implement, regulatory proceedings, resulting in a $138.4 million increase in annual operating income as summarized below. Our ratemaking outcomes include the refund (return) of excess deferred income taxes (EDIT) resulting from previously enacted tax reform legislation and do not reflect the true economic benefit of the outcomes because they do not include the corresponding income tax benefit. Excluding these amounts, our total rate outcomes for ratemaking activities for the six months ended March 31, 2024 were $137.1 million.

Current wording

The amounts described in the following sections represent the operating income that was requested or received in each rate filing, which may not necessarily reflect the stated amount referenced in the final order, as certain operating costs may have changed as a result of a commission’s or other governmental authority’s final ruling. During the first nine months of fiscal 2024, we implemented, or received approval to implement, regulatory proceedings, resulting in a $231.1 million increase in annual operating income as summarized below. Our ratemaking outcomes include the refund (return) of excess deferred income taxes (EDIT) resulting from previously enacted tax reform legislation and do not reflect the true economic benefit of the outcomes because they do not include the corresponding income tax benefit. Excluding these amounts, our total rate outcomes for ratemaking activities for the nine months ended June 30, 2024 were $210.7 million.

Previous wording

The following ratemaking efforts seeking $96.4 million in increased annual operating income were in progress as of March 31, 2024:

Current wording

The following ratemaking efforts seeking $176.5 million in increased annual operating income were in progress as of June 30, 2024:

Previous wording

The following annual formula rate mechanisms were approved during the six months ended March 31, 2024:

Current wording

The following annual formula rate mechanisms were approved during the nine months ended June 30, 2024:

Previous wording

A rate case is a formal request from Atmos Energy to a regulatory authority to increase rates that are charged to our customers. Rate cases may also be initiated when the regulatory authorities request us to justify our rates. This process is referred to as a “show cause” action. Adequate rates are intended to provide for recovery of the Company’s costs as well as a fair rate of return and ensure that we continue to deliver reliable, reasonably priced natural gas service safely to our customers. The following table summarizes the rate cases completed in our distribution segment during the six months ended March 31, 2024.

Current wording

A rate case is a formal request from Atmos Energy to a regulatory authority to increase rates that are charged to our customers. Rate cases may also be initiated when the regulatory authorities request us to justify our rates. This process is referred to as a “show cause” action. Adequate rates are intended to provide for recovery of the Company’s costs as well as a fair rate of return and ensure that we continue to deliver reliable, reasonably priced natural gas service safely to our customers. The following table summarizes the rate cases completed in our distribution segment during the nine months ended June 30, 2024.

Previous wording

The following table summarizes other ratemaking activity during the six months ended March 31, 2024.

Current wording

The following table summarizes other ratemaking activity during the nine months ended June 30, 2024.

Previous wording

Our pipeline and storage segment consists of the pipeline and storage operations of our Atmos Pipeline–Texas Division (APT) and our natural gas transmission operations in Louisiana. APT is one of the largest intrastate pipeline operations in Texas with a heavy concentration in the established natural gas producing areas of central, northern and eastern Texas, extending into or near the major producing areas of the Barnett Shale, the Texas Gulf Coast and the Permian Basin of West Texas. APT provides transportation and storage services to our Mid-Tex Division, other third-party local distribution companies, industrial and electric generation customers, as well as marketers and producers. Over 80 percent of this segment’s revenues are derived from these APT services. As part of its pipeline operations, APT owns and operates five underground storage facilities in Texas.

Current wording

Our pipeline and storage segment consists of the regulated pipeline and storage operations of our Atmos Pipeline–Texas Division (APT) and our natural gas transmission operations in Louisiana. APT is one of the largest intrastate pipeline operations in Texas with a heavy concentration in the established natural gas producing areas of central, northern and eastern Texas, extending into or near the major producing areas of the Barnett Shale, the Texas Gulf Coast and the Permian Basin of West Texas. APT provides transportation and storage services to our Mid-Tex Division, other third-party local distribution companies, industrial and electric generation customers, as well as marketers and producers. Over 80 percent of this segment’s revenues are derived from these APT services. These revenues are subject to traditional ratemaking governed by the Texas Railroad Commission (RRC). As part of its pipeline operations, APT owns and operates five underground storage facilities in Texas.

Previous wording

APT annually uses GRIP to recover capital costs incurred in the prior calendar year. On February 27, 2024, APT made a GRIP filing that covered changes in net property, plant and equipment investments from January 1, 2023 through December 31, 2023 with a requested increase in operating income of $82.4 million.

Current wording

APT annually uses GRIP to recover capital costs incurred in the prior calendar year. On February 27, 2024, APT made a GRIP filing that covered changes in net property, plant and equipment investments from January 1, 2023 through December 31, 2023 with a requested increase in operating income of $82.4 million. On May 14, 2024, the RRC approved the Company's GRIP filing.

Previous wording

•a $36.5 million increase primarily due to rate adjustments from the GRIP filing approved in May 2023 and the rate case approved in December 2023.

Current wording

•a $16.0 million increase primarily due to rate adjustments from the GRIP filing approved in May 2024 and the rate case approved in December 2023.

Previous wording

•a $7.1 million increase in APT's through-system activities primarily associated with increased spreads.

Current wording

•an $11.0 million increase in APT's through-system activities primarily associated with increased spreads.

Previous wording

•a $17.0 million increase primarily due to rate adjustments from the rate case completed in December 2023.

Current wording

•a $52.4 million increase primarily due to rate adjustments from the GRIP filings approved in May 2023 and 2024, and the rate case approved in December 2023.

Previous wording

•a $7.9 million net increase in APT's through-system activities primarily associated with increased spreads.

Current wording

•an $18.5 million net increase in APT's through-system activities primarily associated with increased spreads.

Previous wording

We have a shelf registration statement on file with the Securities and Exchange Commission (SEC) that allows us to issue up to $5.0 billion in common stock and/or debt securities, which expires March 31, 2026. As of March 31, 2024, $3.1 billion of securities were available for issuance under this shelf registration statement.

Current wording

We have a shelf registration statement on file with the Securities and Exchange Commission (SEC) that allows us to issue up to $5.0 billion in common stock and/or debt securities, which expires March 31, 2026. As of June 30, 2024, $1.8 billion of securities were available for issuance under this shelf registration statement.

Previous wording

We also have an at-the-market (ATM) equity sales program under which we may issue and sell shares of our common stock up to an aggregate offering price of $1.0 billion through March 31, 2026 (including shares of common stock that may be sold pursuant to forward sale agreements entered into in connection with the ATM equity sales program), which expires March 31, 2026. As of March 31, 2024, $81.6 million of equity was available for issuance under our existing ATM equity sales program. On May 8, 2024, we plan to file a new ATM equity sales program under which we may issue and sell shares of our common stock up to an aggregate offering price of $1.0 billion (including shares of common stock that may be sold pursuant to forward sale agreements entered into in connection with the ATM equity sales program). Additionally, as of March 31, 2024, we had $889.7 million in available proceeds from outstanding forward sale agreements. Additional details are summarized in Note 8 to the condensed consolidated financial statements.

Current wording

On May 8, 2024, we filed a prospectus supplement under the shelf registration statement relating to an at-the-market (ATM) equity sales program under which we may issue and sell shares of our common stock up to an aggregate offering price of $1.0 billion through March 31, 2026 (including shares of common stock that may be sold pursuant to forward sale agreements entered into in connection with the ATM equity sales program), which expires March 31, 2026. This ATM equity sales program replaced our previous ATM equity sales program, filed on March 31, 2023. As of June 30, 2024, $845.7 million of equity was available for issuance under our existing ATM equity sales program. Additionally, as of June 30, 2024, we had

Previous wording

Cash flows from operating, investing and financing activities for the six months ended March 31, 2024 and 2023 are presented below.

Current wording

Cash flows from operating, investing and financing activities for the nine months ended June 30, 2024 and 2023 are presented below.

Previous wording

For the six months ended March 31, 2024, we generated cash flow from operating activities of $991.9 million compared with $2,892.7 million for the six months ended March 31, 2023. Operating cash flow decreased $1,900.8 million primarily due to the receipt of $2.02 billion in the second quarter of fiscal 2023 related to Texas securitization activities.

Current wording

For the nine months ended June 30, 2024, we generated cash flow from operating activities of $1,403.1 million compared with $3,221.5 million for the nine months ended June 30, 2023. Operating cash flow decreased $1,818.4 million primarily due to the receipt of $2.02 billion in the second quarter of fiscal 2023 related to Texas securitization activities.

Previous wording

Our capital expenditures are primarily used to improve the safety and reliability of our distribution and transmission system through pipeline replacement and system modernization and to enhance and expand our system to meet customer needs. Over the last three fiscal years, approximately 87 percent of our capital spending has been committed to improving the safety and reliability of our system.

Current wording

Our capital expenditures are primarily used to improve the safety and reliability of our distribution and transmission system through pipeline replacement and system modernization and to enhance and expand our system to meet customer needs.

Previous wording

For the six months ended March 31, 2024, cash used for investing activities was $1,409.3 million compared to $1,410.4 million for the six months ended March 31, 2023. Capital spending in our distribution segment increased $203.6 million, primarily as a result of increased system modernization and customer growth spending. Capital spending in our pipeline and storage segment decreased $203.4 million primarily due to timing of spending for pipeline system safety and reliability in Texas.

Current wording

For the nine months ended June 30, 2024, cash used for investing activities was $2,119.1 million compared to $2,077.3 million for the nine months ended June 30, 2023. Capital spending in our distribution segment increased $278.1 million, primarily as a result of increased system modernization and customer growth spending. Capital spending in our pipeline and storage segment decreased $232.5 million primarily due to timing of spending for pipeline system safety and reliability in Texas.

Previous wording

For the six months ended March 31, 2024, our financing activities provided $661.9 million of cash compared with $1,438.7 million of cash used by financing activities in the prior-year period.

Current wording

For the nine months ended June 30, 2024, our financing activities provided $1,376.0 million of cash compared with $1,137.6 million of cash used by financing activities in the prior-year period.

Previous wording

In the six months ended March 31, 2024, we received approximately $1.2 billion in net proceeds from the issuance of long-term debt and equity. We completed a public offering of $500 million of 6.20% senior notes due October 2053 and $400 million of 5.90% senior notes due October 2033, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $889.4 million. Additionally, during the six months ended March 31, 2024, we settled 2,144,558 shares that had been sold on a forward basis for net proceeds of $254.0 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes. Cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares outstanding.

Current wording

In the nine months ended June 30, 2024, we received approximately $2.0 billion in net proceeds from the issuance of long-term debt and equity. We completed a public offering of $500 million of 6.20% senior notes due October 2053 and $400 million of 5.90% senior notes due October 2033, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $889.4 million. We also completed a public offering of $325 million of 5.90% senior notes due October 2033, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $339.7 million. Additionally, during the nine months ended June 30, 2024, we settled 6,401,469 shares that had been sold on a forward basis for net proceeds of $750.0 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes. Cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares outstanding.

Previous wording

In the six months ended March 31, 2023, we repaid $2.2 billion in long-term debt, and we received approximately $1.2 billion in net proceeds from the issuance of long-term debt and equity. We completed a public offering of $500 million of 5.75% senior notes due October 2052 and $300 million of 5.45% senior notes due October 2032, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $789.4 million. Additionally, during the six months ended March 31, 2023, we settled 3,394,919 shares that had been sold on a forward basis for net proceeds of $359.7 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes. Cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares outstanding.

Current wording

In the nine months ended June 30, 2023, we repaid $2.2 billion in long-term debt, and we received approximately $1.5 billion in net proceeds from the issuance of long-term debt and equity. We completed a public offering of $500 million of 5.75% senior notes due October 2052 and $300 million of 5.45% senior notes due October 2032, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $789.4 million. Additionally, during the nine months ended June 30, 2023, we settled 6,116,848 shares that had been sold on a forward basis for net proceeds of $671.6 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes. Cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares outstanding. Finally, AEK issued $95 million in securitized long-term debt.

Previous wording

The following table summarizes our share issuances for the six months ended March 31, 2024 and 2023:

Current wording

The following table summarizes our share issuances for the nine months ended June 30, 2024 and 2023:

Previous wording

Except as noted in Note 11 to the condensed consolidated financial statements, there were no significant changes in our contractual obligations and commercial commitments during the six months ended March 31, 2024.

Current wording

Except as noted in Note 11 to the condensed consolidated financial statements, there were no significant changes in our contractual obligations and commercial commitments during the nine months ended June 30, 2024.