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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    
Commission File Number 1-10042
Atmos Energy Corporation
(Exact name of registrant as specified in its charter)
TexasandVirginia75-1743247
(State or other jurisdiction of
incorporation or organization)
(IRS employer
identification no.)
1800 Three Lincoln Centre
5430 LBJ Freeway
DallasTexas75240
(Address of principal executive offices)(Zip code)
(972934-9227
(Registrant’s telephone number, including area code)
Title of each classTrading SymbolName of each exchange on which registered
Common stockNo Par ValueATONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþAccelerated filer¨Non-accelerated filer¨Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes      No  þ
Number of shares outstanding of each of the issuer’s classes of common stock, as of April 29, 2022.
ClassShares Outstanding
Common stockNo Par Value139,015,012



GLOSSARY OF KEY TERMS
 
AECAtmos Energy Corporation
AOCIAccumulated other comprehensive income
ARMAnnual Rate Mechanism
ASCAccounting Standards Codification
BcfBillion cubic feet
DARRDallas Annual Rate Review
FASBFinancial Accounting Standards Board
GAAPGenerally Accepted Accounting Principles
GRIPGas Reliability Infrastructure Program
GSRSGas System Reliability Surcharge
LIBORLondon Interbank Offered Rate
McfThousand cubic feet
MMcfMillion cubic feet
Moody’sMoody’s Investors Services, Inc.
NTSBNational Transportation Safety Board
PRPPipeline Replacement Program
RRCRailroad Commission of Texas
RRMRate Review Mechanism
RSCRate Stabilization Clause
S&PStandard & Poor’s Corporation
SAVESteps to Advance Virginia Energy
SECUnited States Securities and Exchange Commission
SIPSystem Integrity Program
SIRSystem Integrity Rider
SOFRSecured Overnight Financing Rate
SRFStable Rate Filing
SSIRSystem Safety and Integrity Rider
TCJATax Cuts and Jobs Act of 2017
WNAWeather Normalization Adjustment

2


PART I. FINANCIAL INFORMATION
Item 1.Financial Statements

ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS 
March 31,
2022
September 30,
2021
 (Unaudited)
 (In thousands, except
share data)
ASSETS
Property, plant and equipment$19,019,069 $17,885,098 
Less accumulated depreciation and amortization2,934,096 2,821,128 
Net property, plant and equipment16,084,973 15,063,970 
Current assets
Cash and cash equivalents582,495 116,723 
Accounts receivable, net (See Note 5)565,184 342,967 
Gas stored underground96,295 178,116 
Other current assets (See Note 8)2,285,022 2,200,909 
Total current assets3,528,996 2,838,715 
Goodwill731,257 731,257 
Deferred charges and other assets (See Note 8)925,917 974,720 
$21,271,143 $19,608,662 
CAPITALIZATION AND LIABILITIES
Shareholders’ equity
Common stock, no par value (stated at $0.005 per share); 200,000,000 shares authorized; issued and outstanding: March 31, 2022 — 139,012,029 shares; September 30, 2021 — 132,419,754 shares
$695 $662 
Additional paid-in capital5,634,020 5,023,751 
Accumulated other comprehensive income145,579 69,803 
Retained earnings3,202,937 2,812,673 
Shareholders’ equity8,983,231 7,906,889 
Long-term debt5,757,595 4,930,205 
Total capitalization14,740,826 12,837,094 
Current liabilities
Accounts payable and accrued liabilities354,003 423,222 
Other current liabilities653,009 686,681 
Current maturities of long-term debt2,201,404 2,400,452 
Total current liabilities3,208,416 3,510,355 
Deferred income taxes1,848,626 1,705,809 
Regulatory excess deferred taxes470,918 549,227 
Regulatory cost of removal obligation476,026 468,688 
Deferred credits and other liabilities526,331 537,489 
$21,271,143 $19,608,662 
See accompanying notes to condensed consolidated financial statements.
3


ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 Three Months Ended March 31
 20222021
(Unaudited)
(In thousands, except per
share data)
Operating revenues
Distribution segment$1,610,546 $1,282,674 
Pipeline and storage segment163,747 154,168 
Intersegment eliminations(124,474)(117,769)
Total operating revenues1,649,819 1,319,073 
Purchased gas cost
Distribution segment993,854 691,147 
Pipeline and storage segment1,683 113 
Intersegment eliminations(124,159)(117,451)
Total purchased gas cost871,378 573,809 
Operation and maintenance expense163,352 156,375 
Depreciation and amortization expense133,374 118,636 
Taxes, other than income96,583 88,449 
Operating income385,132 381,804 
Other non-operating income5,213 2,834 
Interest charges28,928 26,096 
Income before income taxes361,417 358,542 
Income tax expense36,418 61,788 
Net income
$324,999 $296,754 
Basic net income per share$2.37 $2.30 
Diluted net income per share$2.37 $2.30 
Cash dividends per share$0.680 $0.625 
Basic weighted average shares outstanding136,834 129,161 
Diluted weighted average shares outstanding137,250 129,164 
Net income$324,999 $296,754 
Other comprehensive income (loss), net of tax
Net unrealized holding losses on available-for-sale securities, net of tax of $47 and $19
(161)(66)
Cash flow hedges:
Amortization and unrealized gain on interest rate agreements, net of tax of $35,228 and $39,887
121,884 138,005 
Total other comprehensive income121,723 137,939 
Total comprehensive income$446,722 $434,693 
See accompanying notes to condensed consolidated financial statements.
4


ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 Six Months Ended March 31
 20222021
(Unaudited)
(In thousands, except per
share data)
Operating revenues
Distribution segment$2,582,968 $2,159,324 
Pipeline and storage segment326,665 313,881 
Intersegment eliminations(247,028)(239,652)
Total operating revenues2,662,605 2,233,553 
Purchased gas cost
Distribution segment1,490,653 1,102,219 
Pipeline and storage segment(1,728)(1,131)
Intersegment eliminations(246,384)(239,019)
Total purchased gas cost1,242,541 862,069 
Operation and maintenance expense322,462 295,018 
Depreciation and amortization expense261,230 233,921 
Taxes, other than income175,379 161,901 
Operating income660,993 680,644 
Other non-operating income13,915 8,906 
Interest charges48,779 48,106 
Income before income taxes626,129 641,444 
Income tax expense51,921 127,012 
Net income$574,208 $514,432 
Basic net income per share$4.24 $4.01 
Diluted net income per share$4.24 $4.01 
Cash dividends per share$1.36 $1.25 
Basic weighted average shares outstanding135,259 128,098 
Diluted weighted average shares outstanding135,470 128,100 
Net income$574,208 $514,432 
Other comprehensive income (loss), net of tax
Net unrealized holding losses on available-for-sale securities, net of tax of $67 and $37
(230)(129)
Cash flow hedges:
Amortization and unrealized gain on interest rate agreements, net of tax of $21,968 and $57,282
76,006 198,189 
Total other comprehensive income75,776 198,060 
Total comprehensive income$649,984 $712,492 
See accompanying notes to condensed consolidated financial statements.
5


ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Six Months Ended March 31
 20222021
(Unaudited)
(In thousands)
Cash Flows From Operating Activities
Net income$574,208 $514,432 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense261,230 233,921 
Deferred income taxes40,122 128,725 
Other(12,812)(938)
Net assets / liabilities from risk management activities(4,172)(1,954)
Net change in Winter Storm Uri long-term regulatory asset (See Note 8) (2,093,534)
Net change in other operating assets and liabilities(218,092)(182,898)
Net cash provided by (used in) operating activities
640,484 (1,402,246)
Cash Flows From Investing Activities
Capital expenditures(1,190,029)(845,728)
Debt and equity securities activities, net3,758 (5,506)
Other, net4,302 5,171 
Net cash used in investing activities
(1,181,969)(846,063)
Cash Flows From Financing Activities
Net proceeds from equity issuances594,320 460,678 
Issuance of common stock through stock purchase and employee retirement plans8,010 8,291 
Proceeds from issuance of long-term debt798,802 2,797,346 
Repayment of long-term debt(200,000) 
Cash dividends paid(183,944)(159,348)
Debt issuance costs(8,196)(14,155)
Other(1,735) 
Net cash provided by financing activities
1,007,257 3,092,812 
Net increase in cash and cash equivalents
465,772 844,503 
Cash and cash equivalents at beginning of period116,723 20,808 
Cash and cash equivalents at end of period$582,495 $865,311 

See accompanying notes to condensed consolidated financial statements.
6


ATMOS ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2022
1.    Nature of Business
Atmos Energy Corporation (“Atmos Energy” or the “Company”) and its subsidiaries are engaged in the regulated natural gas distribution and pipeline and storage businesses. Our distribution business is subject to federal and state regulation and/or regulation by local authorities in each of the states in which our regulated divisions and subsidiaries operate.
Our distribution business delivers natural gas through sales and transportation arrangements to over three million residential, commercial, public authority and industrial customers through our six regulated distribution divisions, which at March 31, 2022, covered service areas located in eight states.
Our pipeline and storage business, which is also subject to federal and state regulations, includes the transportation of natural gas to our Texas and Louisiana distribution systems and the management of our underground storage facilities used to support our distribution business in various states.
    
2.    Unaudited Financial Information
These consolidated interim-period financial statements have been prepared in accordance with accounting principles generally accepted in the United States on the same basis as those used for the Company’s audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. In the opinion of management, all material adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been made to the unaudited consolidated interim-period financial statements. These consolidated interim-period financial statements are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited consolidated financial statements of Atmos Energy Corporation included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. Because of seasonal and other factors, the results of operations for the six-month period ended March 31, 2022 are not indicative of our results of operations for the full 2022 fiscal year, which ends September 30, 2022.
Except as described in Note 6 to the unaudited condensed consolidated financial statements, no events have occurred subsequent to the balance sheet date that would require recognition or disclosure in the unaudited condensed consolidated financial statements.
Significant accounting policies
Our accounting policies are described in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.
During the second quarter of fiscal 2022, we completed our annual goodwill impairment assessment using a qualitative assessment, as permitted under U.S. GAAP. We test for goodwill at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit. Based on the assessment performed, we determined that our goodwill was not impaired.
Recently issued accounting pronouncements
In November 2021, the Financial Accounting Standards Board (FASB) issued guidance which will require disclosure about government assistance in the notes to the financial statements. The amendment requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy, including information about the nature of the transactions and the related accounting policy used to account for the transactions, the line items on the balance sheet and income statement that are affected by the transactions and the significant terms and conditions of the transactions, including commitments and contingencies. The amendment is effective for us beginning October 1, 2022; however, we elected to adopt this amendment during the first quarter of fiscal 2022 as permitted by the guidance. As the guidance is related only to disclosures in the notes to the financial statements, there will be no impact on our financial position, results of operations or cash flows.
In March 2020, the FASB issued optional guidance which will ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the cessation of the London Interbank Offered Rate (LIBOR). The amendments can be elected immediately, as of March 12, 2020, through December 31, 2022. We are currently evaluating if we will apply the optional guidance as we assess the impact of the cessation of LIBOR on our current contracts and hedging relationships and the potential impact on our financial position, results of operations and cash flows.
7


Regulatory assets and liabilities
Accounting principles generally accepted in the United States require cost-based, rate-regulated entities that meet certain criteria to reflect the authorized recovery of costs due to regulatory decisions in their financial statements. As a result, certain costs are permitted to be capitalized rather than expensed because they can be recovered through rates. We record certain costs as regulatory assets when future recovery through customer rates is considered probable. Regulatory liabilities are recorded when it is probable that revenues will be reduced for amounts that will be credited to customers 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.
Significant regulatory assets and liabilities as of March 31, 2022 and September 30, 2021 included the following:
March 31,
2022
September 30,
2021
 (In thousands)
Regulatory assets:
Pension and postretirement benefit costs$37,927 $45,922 
Infrastructure mechanisms (1)
204,915 222,795 
Winter Storm Uri incremental costs (2)
2,106,521 2,100,728 
Deferred gas costs21,366 66,395 
Regulatory excess deferred taxes48,352 45,370 
Recoverable loss on reacquired debt3,521 3,789 
Deferred pipeline record collection costs34,149 32,099 
Other18,794 4,343 
$2,475,545 $2,521,441 
Regulatory liabilities:
Regulatory excess deferred taxes$626,874 $705,084 
Regulatory cost of removal obligation552,100 541,511 
Deferred gas costs83,834 52,553 
Asset retirement obligation18,373 18,373 
APT annual adjustment mechanism27,397 31,110 
Pension and postretirement benefit costs53,370 56,201 
Other27,571 19,363 
$1,389,519 $1,424,195 
 
(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 deferred expenses until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates.
(2)Includes extraordinary gas costs subject to securitization incurred during Winter Storm Uri and permissible carrying costs. See Note 8 to the unaudited condensed consolidated financial statements for further information. This amount is recorded within other current assets and deferred charges and other assets on the condensed consolidated balance sheet as of March 31, 2022.

3.    Segment Information

 We manage and review our consolidated operations through the following reportable segments:

The distribution segment is primarily comprised of our regulated natural gas distribution and related sales operations in eight states.
The pipeline 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.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.
8


Income statements and capital expenditures for the three and six months ended March 31, 2022 and 2021 by segment are presented in the following tables:
 Three Months Ended March 31, 2022
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Operating revenues from external parties$1,609,667 $40,152 $— $1,649,819 
Intersegment revenues879 123,595 (124,474)— 
Total operating revenues1,610,546 163,747 (124,474)1,649,819 
Purchased gas cost
993,854 1,683 (124,159)871,378 
Operation and maintenance expense121,541 42,126 (315)163,352 
Depreciation and amortization expense96,612 36,762  133,374 
Taxes, other than income87,236 9,347  96,583 
Operating income311,303 73,829  385,132 
Other non-operating income549 4,664  5,213 
Interest charges15,157 13,771  28,928 
Income before income taxes
296,695 64,722  361,417 
Income tax expense27,844 8,574  36,418 
Net income$268,851 $56,148 $ $324,999 
Capital expenditures$362,468 $143,381 $ $505,849 

 Three Months Ended March 31, 2021
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Operating revenues from external parties$1,281,826 $37,247 $— $1,319,073 
Intersegment revenues848 116,921 (117,769)— 
Total operating revenues1,282,674 154,168 (117,769)1,319,073 
Purchased gas cost
691,147 113 (117,451)573,809 
Operation and maintenance expense123,990 32,703 (318)156,375 
Depreciation and amortization expense85,667 32,969  118,636 
Taxes, other than income78,615 9,834  88,449 
Operating income303,255 78,549  381,804 
Other non-operating income (expense)(760)3,594  2,834 
Interest charges14,017 12,079  26,096 
Income before income taxes
288,478 70,064  358,542 
Income tax expense56,142 5,646  61,788 
Net income$232,336 $64,418 $ $296,754 
Capital expenditures$296,184 $92,735 $ $388,919 
9


 Six Months Ended March 31, 2022
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Operating revenues from external parties$2,581,303 $81,302 $— $2,662,605 
Intersegment revenues1,665 245,363 (247,028)— 
Total operating revenues2,582,968 326,665 (247,028)2,662,605 
Purchased gas cost
1,490,653 (1,728)(246,384)1,242,541 
Operation and maintenance expense244,825 78,281 (644)322,462 
Depreciation and amortization expense189,409 71,821  261,230 
Taxes, other than income156,281 19,098  175,379 
Operating income501,800 159,193  660,993 
Other non-operating income2,465 11,450  13,915 
Interest charges23,705 25,074  48,779 
Income before income taxes
480,560 145,569  626,129 
Income tax expense32,138 19,783  51,921 
Net income$448,422 $125,786 $ $574,208 
Capital expenditures$799,850 $390,179 $ $1,190,029 
 Six Months Ended March 31, 2021
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Operating revenues from external parties$2,157,713 $75,840 $— $2,233,553 
Intersegment revenues1,611 238,041 (239,652)— 
Total operating revenues2,159,324 313,881 (239,652)2,233,553 
Purchased gas cost
1,102,219 (1,131)(239,019)862,069 
Operation and maintenance expense232,792 62,859 (633)295,018 
Depreciation and amortization expense168,537 65,384  233,921 
Taxes, other than income142,967 18,934  161,901 
Operating income512,809 167,835  680,644 
Other non-operating income75 8,831  8,906 
Interest charges24,729 23,377  48,106 
Income before income taxes
488,155 153,289  641,444 
Income tax expense102,127 24,885  127,012 
Net income$386,028 $128,404 $ $514,432 
Capital expenditures$602,200 $243,528 $ $845,728 
Balance sheet information at March 31, 2022 and September 30, 2021 by segment is presented in the following tables:
 March 31, 2022
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Property, plant and equipment, net$11,960,553 $4,124,420 $ $16,084,973 
Total assets$20,515,446 $4,372,335 $(3,616,638)$21,271,143 
10


 September 30, 2021
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Property, plant and equipment, net$11,232,649 $3,831,321 $ $15,063,970 
Total assets$18,847,266 $4,076,844 $(3,315,448)$19,608,662 

4.    Earnings Per Share
We use the two-class method of computing earnings per share because we have participating securities in the form of non-vested restricted stock units with a nonforfeitable right to dividend equivalents, for which vesting is predicated solely on the passage of time. The calculation of earnings per share using the two-class method excludes income attributable to these participating securities from the numerator and excludes the dilutive impact of those shares from the denominator. Basic weighted average shares outstanding is calculated based upon the weighted average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock awards that have not yet been issued as common stock. Additionally, the weighted average shares outstanding for diluted EPS includes the incremental effects of the forward sale agreements, discussed in Note 7 to the unaudited condensed consolidated financial statements, when the impact is dilutive. Basic and diluted earnings per share for the three and six months ended March 31, 2022 and 2021 are calculated as follows:

 Three Months Ended March 31Six Months Ended March 31
 2022202120222021
 (In thousands, except per share amounts)
Basic Earnings Per Share
Net income$324,999 $296,754 $574,208 $514,432 
Less: Income allocated to participating securities
202 199 379 350 
Income available to common shareholders
$324,797 $296,555 $573,829 $514,082 
Basic weighted average shares outstanding
136,834 129,161 135,259 128,098 
Net income per share — Basic
$2.37 $2.30 $4.24 $4.01 
Diluted Earnings Per Share
Income available to common shareholders$324,797 $296,555 $573,829 $514,082 
Effect of dilutive shares
    
Income available to common shareholders
$324,797 $296,555 $573,829 $514,082 
Basic weighted average shares outstanding
136,834 129,161 135,259 128,098 
Dilutive shares416 3 211 2 
Diluted weighted average shares outstanding
137,250 129,164 135,470 128,100 
Net income per share - Diluted
$2.37 $2.30 $4.24 $4.01 

5.    Revenue and Accounts Receivable
Revenue
Our revenue recognition policy is fully described in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. The following tables disaggregate our revenue from contracts with customers by customer type and segment and provide a reconciliation to total operating revenues, including intersegment revenues, for the three and six months ended March 31, 2022 and 2021.
11


Three Months Ended March 31, 2022Three Months Ended March 31, 2021
DistributionPipeline and StorageDistributionPipeline and Storage
(In thousands)
Gas sales revenues:
Residential$1,090,702 $ $893,720 $ 
Commercial428,330  326,182  
Industrial54,372  31,066  
Public authority and other26,396  20,227  
Total gas sales revenues1,599,800  1,271,195  
Transportation revenues32,801 163,850 30,973 151,565 
Miscellaneous revenues2,680 2,284 3,325 3,878 
Revenues from contracts with customers1,635,281 166,134 1,305,493 155,443 
Alternative revenue program revenues (1)
(25,246)(2,387)(23,313)(1,275)
Other revenues511  494  
Total operating revenues$1,610,546 $163,747 $1,282,674 $154,168 
Six Months Ended March 31, 2022Six Months Ended March 31, 2021
DistributionPipeline and StorageDistributionPipeline and Storage
(In thousands)
Gas sales revenues:
Residential$1,666,543 $ $1,485,554 $ 
Commercial679,091  535,129  
Industrial103,053  55,774  
Public authority and other41,588  33,289  
Total gas sales revenues2,490,275