Atmos Energy (ATO) - 2025 Q3 - Quarterly Report

GLOSSARY OF KEY TERMS Defines key terminology used throughout the financial report PART I. FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and accompanying detailed notes Item 1. Financial Statements Presents the unaudited condensed consolidated balance sheets, statements of income, and cash flows Condensed Consolidated Balance Sheets Details the company's assets, liabilities, and shareholders' equity at two distinct points in time Condensed Consolidated Balance Sheets (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net property, plant and equipment | $24,378,143 | $22,204,367 | +$2,173,776 | | Total current assets | $1,551,972 | $1,132,314 | +$419,658 | | Total assets | $27,712,527 | $25,194,465 | +$2,518,062 | | Shareholders' equity | $13,385,838 | $12,157,669 | +$1,228,169 | | Long-term debt, net | $8,907,983 | $7,783,646 | +$1,124,337 | | Total capitalization | $22,366,430 | $20,018,186 | +$2,348,244 | | Total current liabilities | $1,130,450 | $1,205,875 | -$75,425 | Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30) Summarizes revenues, expenses, and profits for the three-month period ending June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Total operating revenues | $838,774 | $701,549 | +$137,225 | | Operating income | $252,067 | $220,267 | +$31,800 | | Net income | $186,429 | $165,564 | +$20,865 | | Basic net income per share | $1.17 | $1.08 | +$0.09 | | Diluted net income per share | $1.16 | $1.08 | +$0.08 | | Cash dividends per share | $0.870 | $0.805 | +$0.065 | Condensed Consolidated Statements of Comprehensive Income (Nine Months Ended June 30) Summarizes revenues, expenses, and profits for the nine-month period ending June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Total operating revenues | $3,965,275 | $3,507,243 | +$458,032 | | Operating income | $1,340,486 | $1,170,362 | +$170,124 | | Net income | $1,023,863 | $908,879 | +$114,984 | | Basic net income per share | $6.47 | $6.00 | +$0.47 | | Diluted net income per share | $6.40 | $6.00 | +$0.40 | | Cash dividends per share | $2.610 | $2.415 | +$0.195 | Condensed Consolidated Statements of Cash Flows Reports cash inflows and outflows from operating, investing, and financing activities for the nine-month periods Condensed Consolidated Statements of Cash Flows (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $1,701,332 | $1,403,064 | +$298,268 | | Net cash used in investing activities | $(2,593,666) | $(2,119,094) | $(474,572) | | Net cash provided by financing activities | $1,297,079 | $1,376,044 | $(78,965) | | Net increase in cash and cash equivalents and restricted cash and cash equivalents | $404,745 | $660,014 | $(255,269) | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Provides detailed disclosures supporting the condensed consolidated financial statements Note 1. Nature of Business Describes the company's regulated natural gas distribution and pipeline and storage operations - Atmos Energy Corporation is engaged in the regulated natural gas distribution and pipeline and storage businesses[19] - The distribution business delivers natural gas to over 3.3 million residential, commercial, public authority, and industrial customers across eight states[20] - The pipeline and storage business includes natural gas transportation to Texas and Louisiana distribution systems and management of underground storage facilities[21] Note 2. Summary of Significant Accounting Policies Outlines the key accounting principles and policies applied in the financial statements - The consolidated interim-period financial statements are prepared in accordance with GAAP, consistent with the Company's audited consolidated financial statements in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024[22] - No material changes to significant accounting policies occurred during the nine months ended June 30, 2025[23] - The annual goodwill impairment assessment was completed in the second quarter of fiscal 2025, and no impairment was determined[24] - New FASB guidance on segment disclosure requirements, income tax disclosures, and expense captions are being evaluated for impact[26][27][28] Note 3. Regulation Details the accounting for regulatory assets and liabilities arising from the ratemaking process - The company records regulatory assets when future recovery of costs through customer rates is probable and regulatory liabilities when revenues will be reduced for amounts credited to customers[29] - During the first nine months of fiscal 2025, $4.1 million of Winter Storm Uri incremental costs were recovered, with $6.3 million remaining as a current asset[33] Regulatory Assets and Liabilities (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Total Regulatory Assets | $442,252 | $579,390 | $(137,138) | | Total Regulatory Liabilities | $1,218,790 | $1,227,882 | $(9,092) | Note 4. Segment Information Presents financial information for the company's two reportable segments: Distribution and Pipeline and Storage - The company manages operations through two reportable segments: Distribution (regulated natural gas distribution in eight states) and Pipeline and Storage (regulated pipeline and storage operations, primarily Atmos Pipeline-Texas)[35] Segment Net Income (Nine Months Ended June 30, 2025 vs. 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Distribution | $691,337 | $629,978 | +$61,359 | | Pipeline and Storage | $332,526 | $278,901 | +$53,625 | | Consolidated | $1,023,863 | $908,879 | +$114,984 | Segment Capital Expenditures (Nine Months Ended June 30, 2025 vs. 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Distribution | $1,889,954 | $1,659,217 | +$230,737 | | Pipeline and Storage | $707,833 | $469,920 | +$237,913 | | Consolidated | $2,597,787 | $2,129,137 | +$468,650 | Segment Total Assets (June 30, 2025 vs. September 30, 2024) | Segment | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Distribution | $26,806,555 | $24,328,877 | +$2,477,678 | | Pipeline and Storage | $6,705,835 | $6,181,558 | +$524,277 | | Consolidated | $27,712,527 | $25,194,465 | +$2,518,062 | Note 5. Earnings Per Share Explains the calculation of basic and diluted earnings per share using the two-class method - The company uses the two-class method for EPS calculation due to participating securities (non-vested restricted stock units with nonforfeitable dividend rights)[38] - Basic weighted average shares outstanding increased to 158,245 thousand in 2025 from 151,459 thousand in 2024, and diluted weighted average shares outstanding increased to 159,798 thousand from 151,497 thousand[39] Basic and Diluted EPS (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Basic net income per share | $6.47 | $6.00 | +$0.47 | | Diluted net income per share | $6.40 | $6.00 | +$0.40 | Note 6. Revenue and Accounts Receivable Provides a breakdown of operating revenues by segment and details on accounts receivable - Alternative revenue programs, including weather-normalization adjustment mechanisms in the distribution segment and a revenue-sharing mechanism in the pipeline and storage segment, help mitigate revenue volatility[42] - A Mississippi Public Service Commission decision in December 2023 resulted in a $13.9 million reduction to bad debt expense in Q1 fiscal 2024, related to the recovery of uncollectible accounts[44] Total Operating Revenues by Segment (Nine Months Ended June 30, 2025 vs. 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Distribution | $3,758,995 | $3,327,730 | +$431,265 | | Pipeline and Storage | $786,777 | $685,336 | +$101,441 | Allowance for Uncollectible Accounts (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Ending balance | $46,360 | $37,056 | +$9,304 | Note 7. Debt Details the company's long-term debt, credit facilities, and compliance with debt covenants - Completed a public offering of $650 million of 5.00% senior notes due December 2054 on October 1, 2024, yielding $639.4 million in net proceeds[47] - Completed a public offering of $500 million of 5.20% senior notes due August 2035 on June 26, 2025, yielding $493.9 million in net proceeds[48] - Maintains a $1.5 billion commercial paper program and $3.1 billion in committed revolving credit facilities, with no outstanding borrowings as of June 30, 2025[49][50][51][52][53][54] - The company was in compliance with all debt covenants as of June 30, 2025, with a total-debt-to-total-capitalization ratio of 41% against a maximum of 70%[55][56] Long-term Debt, Net (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Total long-term debt, net | $8,907,983 | $7,783,646 | +$1,124,337 | Note 8. Shareholders' Equity Summarizes changes in shareholders' equity, including stock issuances and forward sale agreements - During the nine months ended June 30, 2025, the company executed forward sales of 5,967,768 shares for $871.5 million and settled 4,907,436 shares for net proceeds of $568.6 million under its ATM equity sales program[62] - As of June 30, 2025, $5.8 billion of securities were available under the shelf registration statement, and $828.5 million of equity was available under the ATM program[60][62] - As of June 30, 2025, the company had $1.7 billion in available proceeds from outstanding forward sale agreements[62][63] Shareholders' Equity (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | $13,385,838 | $12,157,669 | +$1,228,169 | Note 9. Securitization Describes securitized bonds issued to recover extraordinary costs from Winter Storm Uri - Atmos Energy Kansas Securitization I, LLC (AEK) issued $95 million of Securitized Utility Tariff Bonds in June 2023 to recover Winter Storm Uri costs; AEK's assets are separate from Atmos Energy's obligations[66] - In March 2023, the Texas Natural Gas Securitization Finance Corporation issued $3.5 billion in customer rate relief bonds, which are obligations of the Finance Corporation and not Atmos Energy[69] Securitized Long-term Debt (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | | :--- | :--- | :--- | | Carrying value | $81,000 | $85,100 | | Fair value | $82,300 | $87,800 | Note 10. Interim Pension and Other Postretirement Benefit Plan Information Provides an update on the net periodic costs for pension and other postretirement benefit plans - Most pension and other postretirement benefit costs are recoverable through tariff rates or capitalized as regulatory assets or liabilities[70][72] Net Periodic Pension Cost (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Pension Benefits | $6,304 | $9,038 | $(2,734) | | Other Benefits | $(12,366) | $(12,270) | $(96) | Note 11. Commitments and Contingencies Discloses legal proceedings, environmental matters, purchase commitments, and other contingencies - The company is subject to various legal and regulatory proceedings, including NTSB investigations into natural gas incidents in Jackson, Mississippi (Jan 2024) and Avondale, Louisiana (Dec 2024), both resulting in fatalities[73][74][75] - Management believes the final outcome of litigation and environmental matters will not have a material adverse effect on the company's financial condition, results of operations, or cash flows[76] - A new service center lease entered in Q3 fiscal 2025 is expected to add $23.1 million to future lease payments[79] Purchase Commitments (as of June 30, 2025) | Contract Type | Volume (Bcf) | Timeframe | Weighted Average Price | | :--- | :--- | :--- | :--- | | Indexed contracts | 88.8 | Within one year | N/A | | Indexed contracts | 123.7 | Two to three years | N/A | | Fixed price contracts | 10.7 | Within one year | $3.12 per Mcf | Note 12. Income Taxes Details the company's effective tax rate and deferred tax liabilities - Effective tax rates differ from the 21% federal statutory rate primarily due to amortization of excess deferred federal income tax liabilities, tax credits, state income taxes, and other permanent book-to-tax differences[81] - Regulatory excess net deferred tax liability of $159.0 million is being returned to customers over various periods[82] Effective Tax Rates (Three and Nine Months Ended June 30, 2025 vs. 2024) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | 19.2% | 16.8% | | Nine Months Ended June 30 | 19.1% | 15.6% | Note 13. Financial Instruments Describes the use of derivative instruments to manage commodity price and interest rate risks - The company uses financial instruments to mitigate commodity price risk (physical storage, fixed-price forward contracts, OTC swap/option contracts) and interest rate risk (forward starting interest rate swaps)[84][85][87] - Approximately 24.0 Bcf of winter flowing gas requirements for the 2024-2025 heating season were hedged using financial instruments not designated as accounting hedges[86] - Net (gain) loss on settled interest rate agreements reclassified from AOCI into interest charges was $(5.1) million for the three months and $(15.4) million for the nine months ended June 30, 2025[93] - As of June 30, 2025, the company had $383.0 million of net realized gains in AOCI associated with interest rate agreements, with amortization periods extending through fiscal 2055[95][96] Fair Value of Financial Instruments (Assets) (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Gross / Net Financial Instruments (Assets) | $133,000 | $96,288 | +$36,712 | Note 14. Fair Value Measurements Explains the methodology for measuring the fair value of financial assets and liabilities - Fair value measurements are categorized into a three-level hierarchy based on the observability of inputs (Level 1: quoted prices in active markets, Level 2: other observable inputs, Level 3: unobservable inputs)[100] Total Assets Accounted for at Fair Value (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total assets | $245,516 | $206,882 | +$38,634 | Long-term Debt (excluding finance leases) (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 (in thousands) | Sept 30, 2024 (in thousands) | | :--- | :--- | :--- | | Carrying Amount | $8,935,000 | $7,785,000 | | Fair Value | $8,115,633 | $7,337,936 | Note 15. Concentration of Credit Risk Addresses the company's exposure to credit risk from its financial instruments and customers - There were no material changes in the company's concentration of credit risk during the nine months ended June 30, 2025[105] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Presents the independent auditor's review report on the interim financial statements - Ernst & Young LLP reviewed the condensed consolidated interim financial statements for the three and nine months ended June 30, 2025 and 2024[108] - No material modifications are needed for the condensed consolidated interim financial statements to conform with U.S. GAAP[108] - The information in the condensed consolidated balance sheet as of September 30, 2024, is fairly stated in relation to the audited consolidated balance sheet[109] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Provides management's perspective on the company's financial performance, condition, and outlook Introduction and Cautionary Statement Introduces the MD&A and provides a safe harbor statement regarding forward-looking information - The report contains "forward-looking statements" subject to risks and uncertainties that could cause actual results to differ materially[113] - Key risks include regulatory decisions, increased oversight, safety regulations, natural gas hazards, supply availability, competition, workforce issues, natural disasters, cyber-attacks, climate change, capital intensity, market access, commodity price volatility, and concentration of operations in Texas[113] Overview Describes the company's core business, strategic vision, and capital expenditure plans - Atmos Energy operates regulated natural gas distribution and pipeline and storage businesses, serving over 3.3 million customers in eight states[114] - The company manages two reportable segments: Distribution (regulated natural gas distribution) and Pipeline and Storage (regulated pipeline and storage operations, primarily Atmos Pipeline-Texas)[115] - Anticipates spending approximately $24 billion in capital expenditures between fiscal years 2025 and 2029, with more than 80% dedicated to safety and reliability[117] - The ability to recover expenditures timely through rate designs and mechanisms is a primary driver of financial performance[116] CRITICAL ACCOUNTING ESTIMATES AND POLICIES Highlights significant accounting policies that require management's most difficult and subjective judgments - Financial statements require estimates and judgments for items including allowance for doubtful accounts, legal and environmental accruals, pension and postretirement obligations, deferred income taxes, and goodwill valuation[118] - There were no significant changes to critical accounting policies during the nine months ended June 30, 2025[119] RESULTS OF OPERATIONS Analyzes the company's operating results for the recent periods, focusing on key drivers and segment performance Executive Summary Provides a high-level summary of financial results and key operational achievements - The 13% year-over-year increase in net income largely reflects positive rate outcomes driven by safety and reliability spending, partially offset by higher bad debt, depreciation, property tax, and certain operating expenses[121] - During the nine months ended June 30, 2025, regulatory actions were implemented or approved, resulting in a $321.8 million increase in annual operating income[122] - Ratemaking efforts in progress as of June 30, 2025, seek a total increase in annual operating income of $248.7 million[122] - Capital expenditures for the nine months ended June 30, 2025, were $2,597.8 million, with approximately 86% invested in safety and reliability[123] Net Income and EPS (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net income | $1,023.9 million | $908.9 million | +$115.0 million | | Diluted net income per share | $6.40 | $6.00 | +$0.40 | Distribution Segment Discusses the financial performance and ratemaking activities of the Distribution segment - Approximately 97% of residential and commercial revenues are covered by weather normalization adjustments (WNA) to mitigate the effects of weather on revenue[129] - The company generally passes the cost of gas through to customers without markup under purchased gas cost adjustment mechanisms[130] Three Months Ended June 30, 2025 compared with Three Months Ended June 30, 2024 Analyzes the quarterly performance of the Distribution segment - Operating income increased by 14.9%, driven by a $33.4 million increase in rate adjustments (primarily Mid-Tex Division) and a $7.2 million increase from residential customer growth and increased industrial load[133] - Offsetting factors included a $19.2 million increase in depreciation expense and property taxes, a $4.9 million increase in employee-related costs, and a $7.5 million increase in system monitoring and compliance activities[137] Distribution Segment Operating Income (Three Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Operating income | $95,466 | $83,122 | +$12,344 | Nine Months Ended June 30, 2025 compared with Nine Months Ended June 30, 2024 Analyzes the nine-month performance of the Distribution segment - Operating income increased by 13.4%, driven by a $170.5 million increase in rate adjustments (primarily Mid-Tex Division) and a $21.6 million increase from residential customer growth and industrial load[142] - Offsetting factors included a $59.9 million increase in depreciation expense and property taxes, a $31.6 million increase in employee-related costs, a $16.7 million increase in system monitoring and compliance activities, and a $12.9 million increase in bad debt expense[142] Distribution Segment Operating Income (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Operating income | $895,232 | $789,793 | +$105,439 | Recent Ratemaking Developments Details recent regulatory filings and outcomes for the Distribution segment - During the first nine months of fiscal 2025, regulatory actions resulted in a $244.6 million increase in annual operating income ($232.5 million excluding EDIT impact)[140][141] - As of June 30, 2025, ratemaking efforts in progress sought $248.7 million in increased annual operating income across various divisions and jurisdictions[143] Annual Formula Rate Mechanisms Approved (Nine Months Ended June 30, 2025) | Division | Jurisdiction | Increase in Annual Operating Income (in thousands) | | :--- | :--- | :--- | | Mid-Tex | Mid-Tex Cities RRM | $112,144 | | Mississippi | Mississippi - SIR | $23,995 | | Mid-Tex | DARR | $25,916 | | Total | | $180,214 | Rate Case Filings Completed (Nine Months Ended June 30, 2025) | Division | State | Increase in Annual Operating Income (in thousands) | | :--- | :--- | :--- | | West Texas Systemwide | Texas | $30,615 | | Kentucky/Mid-States | Kentucky | $33,654 | | Total | | $64,269 | Pipeline and Storage Segment Discusses the financial performance and ratemaking activities of the Pipeline and Storage segment - APT made a GRIP filing on February 26, 2025, for a $77.2 million increase in operating income, which was approved by the RRC on June 17, 2025[155] - The demand fee for the Louisiana natural gas transmission pipeline increases 5% annually and is approved until September 30, 2027[156] Three Months Ended June 30, 2025 compared with Three Months Ended June 30, 2024 Analyzes the quarterly performance of the Pipeline and Storage segment - Operating income increased by 14.2%, driven by a $17.4 million increase from rate adjustments (GRIP filings, SSIR) and a $4.2 million increase from higher capacity contracted by tariff-based customers[158] - Offsetting factors included an $8.1 million increase due to timing of activities (pipeline inspection, storage/compression maintenance), a $6.4 million increase in depreciation expense and property taxes, and a $4.7 million increase in SSIR-related expenses[160] Pipeline and Storage Segment Operating Income (Three Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Operating income | $156,601 | $137,145 | +$19,456 | Nine Months Ended June 30, 2025 compared with Nine Months Ended June 30, 2024 Analyzes the nine-month performance of the Pipeline and Storage segment - Operating income increased by 17.0%, primarily due to a $65.7 million increase from rate adjustments (GRIP filings, SSIR, December 2023 rate case) and a $12.5 million increase from higher capacity contracted by tariff-based customers[165] - Offsetting factors included a $19.7 million increase in depreciation expense and property taxes and a $14.2 million increase in SSIR-related expenses[165] Pipeline and Storage Segment Operating Income (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Operating income | $445,254 | $380,569 | +$64,685 | Liquidity and Capital Resources Discusses the company's sources and uses of cash, capital structure, and financing activities - Total liquidity as of June 30, 2025, was approximately $5.5 billion, consisting of $709.4 million in cash, $1,684.4 million from equity forward sales agreements, and $3,094.4 million in undrawn credit facilities[124] - The company has a shelf registration statement allowing issuance of up to $8.0 billion in common stock and/or debt securities, with $5.8 billion available as of June 30, 2025[163] - An at-the-market (ATM) equity sales program allows for issuance of up to $1.7 billion in common stock, with $828.5 million available as of June 30, 2025[164] - Liquidity sources are expected to be sufficient to fund working capital needs and capital expenditure program for the remainder of fiscal year 2025[166] Cash Flows Analyzes the changes in cash flows from operating, investing, and financing activities - Operating cash flow increased by $298.3 million primarily due to the positive effects of successful rate case outcomes achieved in fiscal 2024[170] - Cash used for investing activities increased by $474.6 million due to increased capital spending in both distribution ($230.7 million) and pipeline and storage ($237.9 million) segments[172] - Financing activities provided $1,297.1 million of cash in 2025, including $1.7 billion in net proceeds from long-term debt and equity issuances, compared to $1,376.0 million in 2024[173][174][175] Cash Flow Summary (Nine Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Operating activities | $1,701,332 | $1,403,064 | +$298,268 | | Investing activities | $(2,593,666) | $(2,119,094) | $(474,572) | | Financing activities | $1,297,079 | $1,376,044 | $(78,965) | Credit Ratings Presents the company's current credit ratings from major rating agencies - On April 2, 2025, Moody's reaffirmed its short-term credit rating, downgraded the long-term credit rating to A2, and placed ratings under stable outlook[178] - All current debt ratings are considered investment grade[178] Current Credit Ratings (as of August 6, 2025) | Rating Agency | Senior Unsecured Long-Term Debt | Short-Term Debt | Outlook | | :--- | :--- | :--- | :--- | | S&P | A- | A-2 | Stable | | Moody's | A2 | P-1 | Stable | Debt Covenants Confirms the company's compliance with its debt covenants - The company was in compliance with all debt covenants as of June 30, 2025[181] - The total-debt-to-total-capitalization ratio was 41% at June 30, 2025, well within the 70% covenant limit[55] Contractual Obligations and Commercial Commitments States that there have been no significant changes to contractual obligations - No significant changes in contractual obligations and commercial commitments occurred during the nine months ended June 30, 2025, other than those detailed in Note 11[182] Risk Management Activities Describes the company's strategies for managing commodity price and interest rate risks - The company uses physical storage, fixed physical contracts, and fixed financial contracts to reduce exposure to unusually large winter-period gas price increases[183] - Interest rate risk is managed by periodically entering into financial instruments to effectively fix the Treasury yield component of interest cost associated with anticipated financings[183] - The fair value of financial instruments at June 30, 2025, was $132.3 million[184] ONE BIG BEAUTIFUL BILL ACT Discusses the potential impact of recent tax legislation - The "One Big Beautiful Bill Act" was signed into law on July 4, 2025[185] - The Act extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime[185] - The company does not anticipate a material impact on its results of operations from this Act[185] OPERATING STATISTICS AND OTHER INFORMATION Provides key operational data for the Distribution and Pipeline and Storage segments Distribution Segment Operating Statistics (June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Total meters in service | 3,391,806 | 3,357,983 | +33,823 | | Total gas sales volumes (MMcf) (9 months) | 256,085 | 252,116 | +3,969 | | Total throughput (MMcf) (9 months) | 380,130 | 377,555 | +2,575 | Pipeline and Storage Segment Operating Statistics (June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Total customers | 292 | 288 | +4 | | Pipeline transportation volumes (MMcf) (9 months) | 678,457 | 622,747 | +55,710 | RECENT ACCOUNTING DEVELOPMENTS Refers to the notes to financial statements for information on recent accounting pronouncements - Recent accounting developments are detailed in Note 2 to the condensed consolidated financial statements[187] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that there have been no material changes in the company's market risk disclosures - There were no material changes in the company's quantitative and qualitative disclosures about market risk during the nine months ended June 30, 2025[188] Item 4. Controls and Procedures Confirms the effectiveness of disclosure controls and procedures and internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[189] - No material changes in internal control over financial reporting occurred during the third quarter of the fiscal year ended September 30, 2025[190] PART II. OTHER INFORMATION Contains other required disclosures, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings Provides an update on the status of material legal proceedings - No material changes in legal proceedings occurred during the nine months ended June 30, 2025, except as noted in Note 11[192] - Management believes the final outcome of legal matters will not have a material adverse effect on the company's financial condition, results of operations, or cash flows[192] Item 1A. Risk Factors States that there have been no material changes to previously disclosed risk factors - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended September 30, 2024[193] Item 5. Other Information Discloses information regarding director and officer trading plans - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[194] Item 6. Exhibits Lists the exhibits filed with the quarterly report - The section lists various exhibits filed, including corporate governance documents (Restated Articles of Incorporation, Amended and Restated Bylaws), debt securities (Officers' Certificate, Global Security), and regulatory certifications (Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certifications, XBRL documents)[196] SIGNATURE Provides the official signature authorizing the report filing - The report was signed on behalf of Atmos Energy Corporation by Christopher T. Forsythe, Senior Vice President and Chief Financial Officer, on August 6, 2025[200]