ATMOS ENERGY CORP

Atmos Energy Corporation is a natural gas-only distributor and an S&P 500 company headquartered in Dallas, incorporated in Texas and Virginia, that safely delivers natural gas through regulated sales and transportation arrangements to approximately 3.4 million ¹ residential, commercial, public authority, and industrial customers in eight states located primarily in the South. The company also operates one of the largest intrastate pipelines in Texas based on miles of pipe. The industry is characterized by regulation at the federal, state, and local levels, with rates established by regulatory authorities intended to be sufficient to cover costs including a reasonable return on invested capital. Key structural forces include the need for significant capital spending to modernize infrastructure, comply with safety regulations, and serve growing communities, as well as the impact of weather patterns and economic conditions on customer demand.

The filing does not name specific primary competitors or provide market share data. The company's stated competitive advantages include its focus on being the safest provider of natural gas services, its operating strategy of modernizing business and infrastructure while reducing regulatory lag, and its rate strategy focused on reducing or eliminating regulatory lag, obtaining adequate returns, and providing stable, predictable margins. The company has formula rate mechanisms in place in four states and infrastructure programs in all of its states, allowing it to begin recovering approximately 95 percent ² of its capital expenditures within six months and substantially all within twelve months. It also has weather-normalization adjustment mechanisms in seven states covering approximately 97 percent ³ of its distribution residential and commercial revenues.

The company generates revenue through regulated natural gas distribution and related sales operations in its distribution segment, and through regulated pipeline and storage operations in its pipeline and storage segment. Revenues are established by regulatory authorities in the states in which the company operates, with rates intended to cover costs including a reasonable return on invested capital. The company transports natural gas for others through its distribution systems. Purchased gas cost adjustment mechanisms provide a dollar-for-dollar offset to increases or decreases in the cost of natural gas, meaning distribution operating income is generally not affected by fluctuations in the cost of gas. The company also manages two asset management plans that serve distribution affiliates, sharing a significant portion of cost savings with customers.

The distribution segment is comprised of regulated natural gas distribution and related sales operations in eight states, operating through six divisions: Mid-Tex, Kentucky/Mid-States, Louisiana, West Texas, Mississippi, and Colorado-Kansas. As of September 30, 2025, the Mid-Tex division served 1,830,387 ⁴ customer meters, Kentucky/Mid-States served 176,494 ⁵ in Kentucky, 163,667 ⁶ in Tennessee, and 23,836 ⁷ in Virginia, Louisiana served 360,589 ⁸, West Texas served 316,036 ⁹, Mississippi served 249,562 ¹⁰, and Colorado-Kansas served 130,890 ¹¹ in Colorado and 140,542 ¹² in Kansas. The segment owns approximately 76,000 ¹³ miles of underground distribution and transmission mains. For fiscal 2025, distribution segment operating revenues were $4,425,397,000 ¹⁴ and net income was $746,781,000 ¹⁵.

The pipeline and storage segment consists primarily of the regulated pipeline and storage operations of the Atmos Pipeline-Texas division and natural gas transmission operations in Louisiana. APT is one of the largest intrastate pipeline operations in Texas, owning approximately 5,700 ¹⁶ miles of gas transmission lines and five underground storage facilities in Texas. The Louisiana operations comprise a 21-mile ¹⁷ pipeline in the New Orleans area. Over 80 percent ¹⁸ of this segment's revenues are derived from APT services. For fiscal 2025, pipeline and storage segment operating revenues were $1,065,300,000 ¹⁹ and net income was $451,973,000 ²⁰.

During fiscal 2025, the company implemented ratemaking regulatory actions resulting in an increase in annual operating income of $333,567,000 ²¹, or $322,846,000 ²² excluding the impact of excess deferred income taxes. Capital expenditures for fiscal 2025 were $3,561,399,000 ²³, with approximately 87 percent ²⁴ invested to improve safety and reliability. The company completed approximately $1,800,000,000 ²⁵ of long-term debt and equity financing during fiscal 2025. As of September 30, 2025, the company had approximately $4,900,000,000 ²⁶ in total liquidity, consisting of $202,687,000 ²⁷ in cash and cash equivalents, $1,558,500,000 ²⁸ in funds available through equity forward sales agreements, and $3,094,400,000 ²⁹ in undrawn capacity under credit facilities. The company also completed a public offering of $650,000,000 ³⁰ of 5.00% senior notes due December 2054 and $500,000,000 ³¹ of 5.20% senior notes due August 2035, and settled 5,931,289 ³² shares sold on a forward basis for net proceeds of $698,462,000 ³³.

For fiscal year 2025, total operating revenues were $4,702,755,000 ³⁴ compared to $4,165,187,000 ³⁵ in fiscal 2024. Net income was $1,198,754,000 ³⁶ or $7.46 ³⁷ per diluted share, compared to net income of $1,042,895,000 ³⁸ or $6.83 ³⁹ per diluted share in the prior year. The year-over-year increase in net income of $155,859,000 ⁴⁰ largely reflects positive rate outcomes driven by safety and reliability spending, and was favorably impacted by $26,200,000 ⁴¹ as a result of Texas legislation related to infrastructure spending. Operating income was $1,559,971,000 ⁴² compared to $1,355,362,000 ⁴³ in the prior year. Cash provided by operating activities was $2,049,456,000 ⁴⁴ compared to $1,733,746,000 ⁴⁵ in the prior year.

The company anticipates making significant capital expenditures for the foreseeable future to modernize its distribution and transmission system, comply with safety rules and regulations, and prepare to serve growing communities. Between fiscal years 2026 and 2030, the company anticipates spending approximately $26,000,000,000 ⁴⁶, with more than 80 percent ⁴⁷ dedicated to safety and reliability spending. The magnitude and allocation of these expenditures may be affected by factors such as new policy and regulations, population growth, and increased labor and materials costs. The company has the ability to begin recovering approximately 95 percent ⁴⁸ of its capital expenditures within six months and substantially all within twelve months through annual formula rate mechanisms and infrastructure programs.

The company's rate strategy focuses on reducing or eliminating regulatory lag, obtaining adequate returns, and providing stable, predictable margins. As of September 30, 2025, the company had ratemaking efforts in progress seeking a total increase in annual operating income of $231,050,000 ⁴⁹. These include a rate case in Kansas seeking $15,977,000 ⁵⁰, an infrastructure mechanism in Kansas seeking $1,949,000 ⁵¹, an infrastructure mechanism in Virginia seeking $550,000 ⁵², an infrastructure mechanism in Kentucky seeking $7,246,000 ⁵³, a formula rate mechanism in Mid-Tex Cities seeking $165,027,000 ⁵⁴, and a rate case in Mississippi seeking $40,301,000 ⁵⁵. The company is continuing to seek improvements in rate design to address cost variations and pursue tariffs that reduce regulatory lag.

The filing does not provide specific margin trajectory, cost structure evolution, or efficiency targets beyond the general discussion of rate outcomes and cost drivers.

The company's operations are capital-intensive, requiring significant capital expenditures on a long-term basis. The company had 5,487 ⁵⁶ employees as of September 30, 2025. The company performs succession planning annually to develop and sustain a strong bench of talent. The company's supply arrangements consist of both base load and peaking quantities contracted from suppliers on a firm basis with various terms at market prices. The company estimates its peak-day availability of natural gas supply to be approximately 5.4 Bcf ⁵⁷.

The company has a shelf registration statement on file with the SEC allowing issuance of up to $8,000,000,000 ⁵⁸ in common stock and/or debt securities, with $5,200,000,000 ⁵⁹ of securities remaining available for issuance as of the date of the report. The company also has an at-the-market equity sales program allowing issuance of common stock up to an aggregate offering price of $1,700,000,000 ⁶⁰, with $828,500,000 ⁶¹ of equity available for issuance as of the date of the report. As of September 30, 2025, the company had $1,558,500,000 ⁶² in available proceeds from outstanding forward sale agreements. Cash dividends paid per share were $3.48 ⁶³ for fiscal 2025, an 8.1 percent ⁶⁴ increase from the prior year.

The company's operations are subject to risks including the concentration of approximately 75 percent ⁶⁵ of its consolidated operations in the State of Texas, which exposes results to economic conditions, weather patterns, and regulatory decisions in Texas. The company faces potential increased federal, state, and local regulation of the safety of its operations, including compliance with PHMSA regulations for more than 81,000 ⁶⁶ miles of distribution and transmission lines. The company also faces risks from adverse weather conditions, though weather-normalized rates cover approximately 97 percent ⁶⁷ of distribution residential and commercial revenues. The company's growth may be limited by the capital-intensive nature of its business and its dependence on continued access to credit and capital markets.

The company faces risks from potential legislation to reduce or eliminate greenhouse gas emissions or fossil fuels, which could increase operating costs and adversely affect financial results. The company also faces risks from climate change, which may result in more frequent and severe weather events, increased costs to repair damaged facilities, and potential impacts on the cost of gas. The company's pension and other postretirement benefit plans are subject to investment and interest rate risk that could negatively impact financial condition. The company also faces risks from the failure of technology and cyber-attacks that could disrupt business operations and information technology systems.

The company faces significant regulatory risk as approximately 75 percent ⁶⁸ of its consolidated operations are located in Texas, making results sensitive to economic conditions, weather patterns, and regulatory decisions in that state. The company is subject to safety and financial regulatory oversight from various federal, state, and local authorities in eight states, and regulatory lag could increase if authorities modify or terminate rate mechanisms. The company may incur significant costs from pipeline integrity programs required by PHMSA for more than 81,000 ⁶⁹ miles of distribution and transmission lines, and while believed recoverable, full recovery is not assured. The company's operations involve hazards such as leaks, explosions, and fire, and while it maintains liability insurance with a self-insured retention of $1,000,000 ⁷⁰ per incident, losses not fully covered could adversely affect results. The company is exposed to commodity price risk, though generally insulated through purchased gas cost mechanisms, and interest rate risk, as increases could adversely affect financial results if not recovered in rates.

Management's message emphasizes the company's vision to be the safest provider of natural gas services and its commitment to significant levels of capital spending to modernize the natural gas distribution system and operating costs to deliver natural gas safely and reliably. The company's operating strategy is focused on modernizing business and infrastructure while reducing regulatory lag, supporting continued investment in safety, innovation, environmental sustainability, and communities. Management states that between fiscal years 2026 and 2030, the company anticipates spending approximately $26,000,000,000 ⁷¹, with more than 80 percent ⁷² dedicated to safety and reliability spending. The company's rate strategy focuses on reducing or eliminating regulatory lag, obtaining adequate returns, and providing stable, predictable margins. Management notes that the execution of the capital spending program, the ability to recover these expenditures timely, and the ability to access capital markets are the primary drivers affecting financial performance.