Atmos Energy ATO · USD

Segment InformationAs of September 30, 2025, we manage and review our consolidated operations through the following two reportable segments: •The distribution segment is comprised of our regulated natural gas distribution and related sales operations in eight states.•The pipeline 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.Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers. Although our distribution segment operations are geographically dispersed, they are aggregated and reported as a single segment as each natural gas distribution division has similar economic characteristics. In addition, because the pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana have similar economic characteristics, they have been aggregated and reported as a single segment.The accounting policies of the segments are the same as those described in the summary of significant accounting policies. We evaluate performance based on net income or loss of the respective operating units. We allocate interest and pension expense to the pipeline and storage segment; however, there is no debt or pension liability recorded on the pipeline and storage segment balance sheet. All material intercompany transactions have been eliminated; however, we have not eliminated intercompany profits when such amounts are probable of recovery under the affiliates’ rate regulation process. Income taxes are allocated to each segment as if each segment’s income taxes were calculated on a separate return basis.Our Chief Operating Decision Maker (CODM), the Chief Executive Officer, evaluates performance for each reportable segment based on net income, which is used to help inform the allocation of resources as part of the Company's process for budgeting and monitoring financial performance.Income statement information and capital expenditures by segment are shown in the following tables.

Revenue and Accounts ReceivableThe following tables disaggregates our revenue from contracts with customers by customer type and segment and provides a reconciliation to total operating revenues, including intersegment revenues, for the periods presented. Year Ended September 30, 2025DistributionPipeline and Storage(In thousands)Gas sales revenues:Residential$2,877,456 $— Commercial1,145,710 — Industrial122,284 — Public authority and other51,354 — Total gas sales revenues4,196,804 — Transportation revenues151,876 1,119,015 Miscellaneous revenues13,123 12,749 Revenues from contracts with customers4,361,803 1,131,764 Alternative revenue program revenues49,215 (66,464)Other revenues14,379 — Total operating revenues$4,425,397 $1,065,300 Year Ended September 30, 2024DistributionPipeline and StorageGas sales revenues:Residential$2,542,438 $— Commercial1,006,593 — Industrial100,363 — Public authority and other51,337 — Total gas sales revenues3,700,731 — Transportation revenues134,600 982,795 Miscellaneous revenues11,836 15,892 Revenues from contracts with customers3,847,167 998,687 Alternative revenue program revenues52,401 (60,658)Other revenues15,573 — Total operating revenues$3,915,141 $938,029 Year Ended September 30, 2023DistributionPipeline and StorageGas sales revenues:Residential$2,606,658 $— Commercial1,100,773 — Industrial151,538 — Public authority and other61,345 — Total gas sales revenues3,920,314 — Transportation revenues121,420 811,968 Miscellaneous revenues10,044 12,180 Revenues from contracts with customers4,051,778 824,148 Alternative revenue program revenues43,139 (38,974)Other revenues4,773 — Total operating revenues$4,099,690 $785,174 We have alternative revenue programs in each of our segments. In our distribution segment, we have weather-normalization adjustment mechanisms that serve to mitigate the effects of weather on our revenue. In our pipeline and storage segment, APT has a regulatory mechanism that requires that we share with its tariffed customers 75% of the difference between the total non-tariffed revenues earned during a test period and a revenue benchmark established by the RRC. Other revenues includes AEK revenues (see Note 10 to the consolidated financial statements) and other miscellaneous revenues.Accounts receivable and allowance for uncollectible accountsRollforwards of our allowance for uncollectible accounts for the years ended September 30, 2025, 2024, and 2023 are presented in the table below.

Commitments and ContingenciesLitigation and Environmental MattersIn the normal course of business, we are subject to various legal and regulatory proceedings. For such matters, we record liabilities when they are considered probable and estimable, based on currently available facts, our historical experience, and our estimates of the ultimate outcome or resolution of the liability in the future. While the outcome of these proceedings is uncertain and a loss in excess of the amount we have accrued is possible though not reasonably estimable, it is the opinion of management that any amounts exceeding the accruals will not have a material adverse impact on our financial position, results of operations or cash flows.The National Transportation Safety Board (NTSB) issued a Preliminary Report on February 14, 2024 relating to its investigation of two incidents that occurred in Jackson, Mississippi on January 24 and 27, 2024 that resulted in one fatality. Atmos Energy is working closely with the NTSB and other state and federal regulators to help determine causal factors.The NTSB issued a Preliminary Report on December 30, 2024 relating to its investigation of an incident that occurred in Avondale, Louisiana on December 2, 2024 that resulted in one fatality. Atmos Energy is working closely with the NTSB and other state and federal regulators to help determine causal factors.We are a party to various other litigation and environmental-related matters or claims that have arisen in the ordinary course of our business. While the results of such litigation and response actions to such environmental-related matters or claims cannot be predicted with certainty, we continue to believe the final outcome of such litigation and matters or claims will not have a material adverse effect on our financial condition, results of operations, or cash flows.Purchase CommitmentsOur distribution divisions maintain supply contracts with several vendors that generally cover a period of up to one year. Commitments for estimated base gas volumes are established under these contracts on a monthly basis at contractually negotiated prices. Commitments for incremental daily purchases are made as necessary during the month in accordance with the terms of the individual contract.

DebtLong-term debtLong-term debt at September 30, 2025 and 2024 consisted of the following:20252024 (In thousands)Unsecured 3.00% Senior Notes, due June 2027$500,000 $500,000 Unsecured 2.625% Senior Notes, due September 2029500,000 500,000 Unsecured 1.50% Senior Notes, due January 2031600,000 600,000 Unsecured 5.45% Senior Notes, due October 2032300,000 300,000 Unsecured 5.90% Senior Notes, due November 2033725,000 725,000 Unsecured 5.95% Senior Notes, due October 2034200,000 200,000 Unsecured 5.20% Senior Notes, due August 2035500,000 — Unsecured 5.50% Senior Notes, due June 2041400,000 400,000 Unsecured 4.15% Senior Notes, due January 2043500,000 500,000 Unsecured 4.125% Senior Notes, due October 2044750,000 750,000 Unsecured 4.30% Senior Notes, due October 2048600,000 600,000 Unsecured 4.125% Senior Notes, due March 2049450,000 450,000 Unsecured 3.375% Senior Notes, due September 2049500,000 500,000 Unsecured 2.85% Senior Notes, due February 2052600,000 600,000 Unsecured 5.75% Senior Notes, due October 2052500,000 500,000 Unsecured 6.20% Senior Notes, due November 2053500,000 500,000 Unsecured 5.00% Senior Notes, due December 2054650,000 — Medium term Series A notes, 1995-1, 6.67%, due December 202510,000 10,000 Unsecured 6.75% Debentures, due July 2028150,000 150,000 Finance lease obligations (see Note 7)47,234 48,890 Total long-term debt8,982,234 7,833,890 Less:Net original issue premium on unsecured senior notes and debentures(1,332)(9,071)Debt issuance cost64,622 57,664 Current maturities11,775 1,651 $8,907,169 $7,783,646 Maturities of long-term debt, excluding our finance lease obligations, at September 30, 2025 were as follows by fiscal years (in thousands):2026$10,000 2027500,000 2028150,000 2029500,000 2030— Thereafter7,775,000 $8,935,000 On October 1, 2025, we completed a public offering of $600 million of 5.45% senior notes due January 2056, with an effective interest rate of 4.85%, after giving effect to the estimated offering costs and settlement of our interest rate swaps. The net proceeds from the offering, after the underwriting discount and estimated offering expenses, of $589.8 million were used for general corporate purposes. In September 2025, we settled the designated interest rate swaps associated with the offering and received $122.9 million.On June 26, 2025, we completed a public offering of $500 million of 5.20% senior notes due August 2035, with an effective interest rate of 5.35%, after giving effect to the offering costs.

Income TaxesIncome Tax ExpenseReconciliations of the provision for income taxes computed at the statutory rate of 21 percent to the reported provisions for income taxes from continuing operations for 2025, 2024, and 2023 are set forth below:202520242023 (In thousands)%(In thousands)%(In thousands)%U.S federal statutory tax rate$310,387 21.0 %$259,513 21.0 %$209,925 21.0 %State and local income taxes, net of federal income tax effect (1)24,254 1.6 %27,367 2.2 %19,853 2.0 %Changes in valuation allowances— — %1,106 0.1 %— — %Changes in unrecognized tax benefits2,004 0.1 %926 0.1 %5,302 0.5 %Nontaxable or nondeductible items741 0.1 %2,464 0.2 %1,000 0.1 %Amortization of excess deferred taxes(60,727)(4.1)%(100,270)(8.1)%(123,953)(12.4)%Other, net2,621 0.2 %1,775 0.1 %1,652 0.2 %Income tax expense$279,280 18.9 %$192,881 15.6 %$113,779 11.4 %(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include Texas and Louisiana.Deferred income taxes reflect the tax effect of differences between the basis of assets and liabilities for book and tax purposes. The tax effect of temporary differences that gave rise to significant components of the deferred tax liabilities and deferred tax assets at September 30, 2025 and 2024 are presented below:20252024 (In thousands)Deferred tax assets:Employee benefit plans$34,202 $41,184 Net operating loss carryforwards473,642 484,816 Charitable and other credit carryforwards14,200 12,301 Regulatory excess deferred tax31,387 46,330 Lease asset72,973 63,747 Other31,145 34,934 Total deferred tax assets657,549 683,312 Valuation allowance(1,365)(1,457)Net deferred tax assets656,184 681,855 Deferred tax liabilities:Difference in net book value and net tax value of assets(3,200,535)(2,914,854)Gas cost adjustments(43,819)(49,443)Winter Storm Uri regulatory asset(17,993)(20,846)Lease liability(66,831)(57,177)Rate deferral adjustment(64,640)(50,571)Interest rate agreements(135,640)(134,536)Other(45,073)(47,770)Total deferred tax liabilities(3,574,531)(3,275,197)Net deferred tax liabilities$(2,918,347)$(2,593,342)At September 30, 2025, we had $435.3 million (tax effected) of federal net operating loss carryforwards. The federal net operating loss carryforwards are available to offset future taxable income and have no expiration date. The Company has $11.8 million (tax effected) charitable contribution carryforwards to offset future taxable income as of September 30, 2025. The Company also has $38.

LeasesWe utilize operating leases for office and warehouse space, tower space, vehicles, and heavy equipment used in our operations. We also have finance leases for certain build-to-suit service centers. The following table presents our weighted average remaining lease term for our leases.September 30, 2025September 30, 2024Weighted average remaining lease term (years)Finance leases15.716.7Operating leases8.89.9The following table represents our weighted average discount rate:September 30, 2025September 30, 2024Weighted average discount rateFinance leases4.0 %4.0 %Operating leases4.5 %4.1 %Lease costs for the years ended September 30, 2025, 2024, and 2023 are presented in the table below. These costs include both amounts recognized in expense and amounts capitalized. For the years ended September 30, 2025, 2024, and 2023 we did not have material short-term lease costs or variable lease costs. Year Ended September 30202520242023(In thousands)Finance lease cost$4,467 $4,523 $4,499 Operating lease cost56,695 48,421 44,090 Total lease cost$61,162 $52,944 $48,589 Our ROU assets and lease liabilities are presented as follows on the consolidated balance sheets:Balance Sheet ClassificationSeptember 30, 2025September 30, 2024(In thousands)AssetsFinance leasesNet property, plant and equipment$42,064 $44,748 Operating leasesDeferred charges and other assets293,934 249,556 Total right-of-use assets$335,998 $294,304 LiabilitiesCurrentFinance leasesCurrent maturities of long-term debt$1,775 $1,651 Operating leasesOther current liabilities45,010 34,340 NoncurrentFinance leasesLong-term debt45,459 47,239 Operating leasesDeferred credits and other liabilities262,549 224,498 Total lease liabilities$354,793 $307,728 Three service center leases are expected to commence in fiscal 2026 that impact our future lease payments. The total future lease payments for these leases is $116.5 million. We also entered into one service center lease during the first quarter of fiscal 2026 that is expected to commence in fiscal 2027. The total future lease payments for this lease is $33.1 million. These amounts are not included in the tables below.Other pertinent information related to leases was as follows. During the years ended September 30, 2025, 2024, and 2023 amounts paid in cash for our finance leases were not material.

We continuously assess our risk of cyber threats to adapt quickly to the ever-changing challenges and risks surrounding cybersecurity. Atmos Energy has implemented policies, procedures, and controls to identify, protect, detect, and respond to cyberattacks or acts of online terrorism. Atmos Energy is also subject to the U.S. Department of Homeland Security Transportation Security Administration (TSA) security directive for our natural gas pipeline monitoring and control systems.The potential impact of cybersecurity risks on our business operations, results of operations, or financial condition is discussed in the “Technology and Cybersecurity Risks” section of Item 1A “Risk Factors.” We have not had any material cybersecurity breaches or incidents and have not incurred any material expenses, penalties, or settlement costs related to any cybersecurity breaches or incidents. However, measures that we take to identify, protect, detect, and respond from cybersecurity breaches or incidents may be insufficient or become ineffective, and there are no assurances that cybersecurity breaches or incidents will not impact our business operations and strategy, results of operations, and financial condition in the future.The following describes our risk management and strategy and corporate governance as it pertains to cybersecurity.Risk Management and StrategyAtmos Energy’s cybersecurity program leverages the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) in its design of controls intended to reduce the risk and potential impact of cybersecurity incidents. This comprehensive approach encompasses continuous monitoring, risk assessments, a cybersecurity incident response plan, and regular evaluations to align our practices with industry standards. Additionally, we actively engage in cybersecurity risk management practices and continually improve procedures and practices to support the continued safe and reliable delivery of natural gas to our customers. The identification and management of cybersecurity risk is a component of our Integrated Risk Management process, which applies adaptive process improvement to help us respond to the changing cybersecurity landscape. Additionally, we use third parties to enhance our collective capability to monitor, detect, and respond to cybersecurity incidents.

RegulationOur distribution and pipeline and storage operations are subject to regulation with respect to rates, service, maintenance of accounting records, and various other matters by the respective regulatory authorities in the states in which we operate, which creates regulatory assets and liabilities that are recovered from or refunded to customers over time through the ratemaking process. Substantially all of our regulatory assets are recorded as a component of other current assets and deferred charges and other assets and our regulatory liabilities are recorded as a component of other current liabilities and deferred credits and other liabilities. Deferred gas costs are recorded either in other current assets or liabilities and the long-term portion of regulatory excess deferred taxes and regulatory cost of removal obligation are reported separately. Significant regulatory assets and liabilities as of September 30, 2025 and 2024 included the following: September 30 20252024 (In thousands)Regulatory assets:Pension and postretirement benefit costs$262 $11,243 Infrastructure mechanisms (1)314,047 246,734 Winter Storm Uri incremental costs5,841 10,373 Deferred gas costs140,626 159,762 Regulatory excess deferred taxes (2)49,793 51,380 Recoverable loss on reacquired debt2,903 3,070 Deferred pipeline record collection costs39,035 41,742 System Safety and Integrity Riders (3)43,625 38,632 Other12,597 16,454 $608,729 $579,390 Regulatory liabilities:Regulatory excess deferred taxes (2)$190,274 $257,001 Regulatory cost of removal obligation641,019 607,032 Deferred gas costs6,879 9,142 APT annual adjustment mechanism99,393 73,119 Pension and postretirement benefit costs291,351 247,250 Other40,732 34,338 $1,269,648 $1,227,882 (1)Infrastructure mechanisms in Texas, Louisiana, and Tennessee allow for the deferral of all eligible expenses associated with capital expenditures incurred pursuant to these rules, including the recording of interest on the deferred expenses until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recovered through base rates.(2)Regulatory excess deferred taxes represent changes in our net deferred tax liability related to our cost of service ratemaking due to the enactment of the Tax Cuts and Jobs Act of 2017 (the "TCJA"), a Kansas legislative change enacted in fiscal 2020, and a Louisiana legislative change enacted in fiscal 2025.