ATMOS ENERGY CORP [ATO] Filings

10-Q 1 ato-20240630.htm 10-Q ato-20240630

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 June 30, 2024


☐			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)

Texas

and

Virginia

75-1743247

(State or other jurisdiction of
incorporation or organization)

(IRS employer
identification no.)

1800 Three Lincoln Centre

5430 LBJ Freeway

Dallas

Texas

75240

(Address of principal executive offices)

(Zip code)

(972) 934-9227

(Registrant’s telephone number, including area code)


Title of each class		Trading Symbol	Name of each exchange on which registered
Common stock	No Par Value	ATO	New 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 filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging 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 August 2, 2024.


Class		Shares Outstanding
Common stock	No Par Value	155,232,827

GLOSSARY OF KEY TERMS





AEC			Atmos Energy Corporation
AEK			Atmos Energy Kansas Securitization I, LLC
AOCI			Accumulated other comprehensive income
ARM			Annual Rate Mechanism

ASC			Accounting Standards Codification
Bcf			Billion cubic feet

DARR			Dallas Annual Rate Review

FASB			Financial Accounting Standards Board

GAAP			Generally Accepted Accounting Principles
GRIP			Gas Reliability Infrastructure Program
GSRS			Gas System Reliability Surcharge
KCC			Kansas Corporation Commission

Mcf			Thousand cubic feet
MMcf			Million cubic feet
Moody’s			Moody’s Investors Services, Inc.

PRP			Pipeline Replacement Program
Rider SSI			APT System Safety and Integrity Rider
RRC			Railroad Commission of Texas
RRM			Rate Review Mechanism
RSC			Rate Stabilization Clause
S&P			Standard & Poor’s Corporation
SAVE			Steps to Advance Virginia Energy
SEC			United States Securities and Exchange Commission
Securitized Utility Tariff Bonds			Series 2023-A Senior Secured Securitized Utility Tariff Bonds
Securitized Utility Tariff Property			As defined in the financing order issued by the KCC in October 2022
SIP			System Integrity Program
SIR			System Integrity Rider
SOFR			Secured Overnight Financing Rate
SRF			Stable Rate Filing
SSIR			System Safety and Integrity Rider
TCJA			Tax Cuts and Jobs Act of 2017
WNA			Weather Normalization Adjustment

PART I. FINANCIAL INFORMATION


Item 1.			Financial Statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2024		September 30, 2023
	(Unaudited)
	(In thousands, except share data)
ASSETS
Property, plant and equipment	$	24,979,631	$	22,898,374
Less accumulated depreciation and amortization	3,557,513		3,291,791
Net property, plant and equipment	21,422,118		19,606,583
Current assets
Cash and cash equivalents	674,620		15,404
Restricted cash and cash equivalents	4,642		3,844
Cash and cash equivalents and restricted cash and cash equivalents	679,262		19,248
Accounts receivable, net	391,551		328,654
Gas stored underground	157,912		245,830
Other current assets	479,840		292,036
Total current assets	1,708,565		885,768
Securitized intangible asset, net (See Note 9)	84,998		92,202
Goodwill	731,257		731,257
Deferred charges and other assets	944,313		1,201,158
	$	24,891,251	$	22,516,968
CAPITALIZATION AND LIABILITIES
Shareholders’ equity
Common stock, no par value (stated at $0.005 per share); 200,000,000 shares authorized; issued and outstanding: June 30, 2024 — 155,229,024 shares; September 30, 2023 — 148,492,783 shares	$	776	$	742
Additional paid-in capital	7,463,334		6,684,120
Accumulated other comprehensive income	510,132		518,528
Retained earnings	4,208,834		3,666,674
Shareholders’ equity	12,183,076		10,870,064
Long-term debt, net	7,785,196		6,554,133
Securitized long-term debt (See Note 9)	81,261		85,078
Total capitalization	20,049,533		17,509,275
Current liabilities
Accounts payable and accrued liabilities	319,361		336,083
Other current liabilities	655,944		763,086
Short-term debt	—		241,933
Current maturities of long-term debt	1,620		1,568
Current maturities of securitized long-term debt (See Note 9)	8,001		9,922
Total current liabilities	984,926		1,352,592
Deferred income taxes	2,549,829		2,304,974
Regulatory excess deferred taxes	195,505		253,212
Regulatory cost of removal obligation	515,629		497,017

Deferred credits and other liabilities	595,829		599,898
	$	24,891,251	$	22,516,968

See accompanying notes to condensed consolidated financial statements.

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended June 30
	2024		2023
	(Unaudited) (In thousands, except per share data)
Operating revenues
Distribution segment	$	633,211	$	616,067
Pipeline and storage segment	250,680		208,225
Intersegment eliminations	(182,342)		(161,559)
Total operating revenues	701,549		662,733

Purchased gas cost
Distribution segment	179,510		206,048
Pipeline and storage segment	(19)		(194)
Intersegment eliminations	(182,084)		(161,304)
Total purchased gas cost	(2,593)		44,550

Operation and maintenance expense	211,309		195,049
Depreciation and amortization expense	166,827		150,726
Taxes, other than income	105,739		103,155
Operating income	220,267		169,253
Other non-operating income	19,898		16,170
Interest charges	41,160		31,334
Income before income taxes	199,005		154,089
Income tax expense	33,441		16,282



Net income	$	165,564	$	137,807
Basic net income per share	$	1.08	$	0.94
Diluted net income per share	$	1.08	$	0.94
Cash dividends per share	$	0.805	$	0.740
Basic weighted average shares outstanding	153,309		146,051
Diluted weighted average shares outstanding	153,396		146,067

Net income	$	165,564	$	137,807
Other comprehensive income (loss), net of tax
Net unrealized holding losses on available-for-sale securities, net of tax of $(1) and $(35)	(4)		(121)
Cash flow hedges:
Amortization and unrealized gains on interest rate agreements, net of tax of $4,173 and $12,580	14,436		43,527
Total other comprehensive income	14,432		43,406
Total comprehensive income	$	179,996	$	181,213

See accompanying notes to condensed consolidated financial statements.

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	Nine Months Ended June 30
	2024		2023
	(Unaudited) (In thousands, except per share data)
Operating revenues
Distribution segment	$	3,327,730	$	3,556,703
Pipeline and storage segment	685,336		579,278
Intersegment eliminations	(505,823)		(448,266)
Total operating revenues	3,507,243		3,687,715

Purchased gas cost
Distribution segment	1,464,815		1,896,986
Pipeline and storage segment	825		(431)
Intersegment eliminations	(505,069)		(447,545)
Total purchased gas cost	960,571		1,449,010

Operation and maintenance expense	577,553		574,781
Depreciation and amortization expense	496,522		445,063
Taxes, other than income	302,235		305,784
Operating income	1,170,362		913,077
Other non-operating income	54,471		54,767
Interest charges	148,477		105,464
Income before income taxes	1,076,356		862,380
Income tax expense	167,477		95,042



Net income	$	908,879	$	767,338
Basic net income per share	$	6.00	$	5.33
Diluted net income per share	$	6.00	$	5.33
Cash dividends per share	$	2.415	$	2.220
Basic weighted average shares outstanding	151,459		143,938
Diluted weighted average shares outstanding	151,497		143,998

Net income	$	908,879	$	767,338
Other comprehensive income (loss), net of tax
Net unrealized holding gains on available-for-sale securities, net of tax of $70 and $29	242		100
Cash flow hedges:
Amortization and unrealized gains (losses) on interest rate agreements, net of tax of $(2,496) and $10,171	(8,638)		35,191
Total other comprehensive income (loss)	(8,396)		35,291
Total comprehensive income	$	900,483	$	802,629

See accompanying notes to condensed consolidated financial statements.

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended June 30
	2024		2023
	(Unaudited) (In thousands)
Cash Flows From Operating Activities
Net income	$	908,879	$	767,338
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense	496,522		445,063

Deferred income taxes	138,658		75,407



Other	(39,418)		(38,360)
Net assets / liabilities from risk management activities	2,292		(1,545)
Net change in Winter Storm Uri current regulatory asset	—		2,021,889
Net change in other operating assets and liabilities	(103,869)		(48,284)
Net cash provided by operating activities	1,403,064		3,221,508
Cash Flows From Investing Activities
Capital expenditures	(2,129,137)		(2,083,486)


Debt and equity securities activities, net	(1,701)		(7,302)

Other, net	11,744		13,469
Net cash used in investing activities	(2,119,094)		(2,077,319)
Cash Flows From Financing Activities
Net decrease in short-term debt	(241,933)		(184,967)
Net proceeds from equity issuances	749,987		671,630
Issuance of common stock through stock purchase and employee retirement plans	11,390		11,660
Proceeds from issuance of long-term debt	1,240,204		797,258

Proceeds from issuance of securitized long-term debt by AEK	—		95,000
Proceeds from term loan	—		2,020,000
Repayment of term loan	—		(2,020,000)
Repayment of long-term debt	—		(2,200,000)
Repayment of securitized long-term debt by AEK	(5,738)		—
Cash dividends paid	(366,719)		(319,074)
Debt issuance costs	(11,147)		(7,864)
Securitized debt issuance costs	—		(1,273)


Net cash provided by (used in) financing activities	1,376,044		(1,137,630)
Net increase in cash and cash equivalents and restricted cash and cash equivalents	660,014		6,559
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	19,248		51,554
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	679,262	$	58,113

See accompanying notes to condensed consolidated financial statements.

ATMOS ENERGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

June 30, 2024

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 3.3 million residential, commercial, public authority and industrial customers through our six regulated distribution divisions, which at June 30, 2024, 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. Summary of Significant Accounting Policies

Basis of Presentation

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, 2023. 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, 2023. Because of seasonal and other factors, the results of operations for the nine-month period ended June 30, 2024 are not indicative of our results of operations for the full 2024 fiscal year, which ends September 30, 2024.

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, 2023.

During the second quarter of fiscal 2024, 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.

No events have occurred subsequent to the balance sheet date that would require recognition or disclosure in the condensed consolidated financial statements.

Recently issued accounting pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued guidance which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others. The amendment is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments should be applied retrospectively. This amendment will be effective for our Form 10-K for fiscal 2025 and our Form 10-Q for the first quarter of fiscal 2026. We are currently evaluating the impact this may have on our financial statement disclosures.

In December 2023, the FASB issued guidance which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendment is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. This amendment will be effective for our Form 10-K for fiscal 2026. We are currently evaluating the impact this amendment may have on our financial statement disclosures.

3. Regulation

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.

Regulatory assets and liabilities as of June 30, 2024 and September 30, 2023 included the following:


	June 30, 2024		September 30, 2023
	(In thousands)
Regulatory assets:
Pension and postretirement benefit costs	$	14,033	$	20,629
Infrastructure mechanisms (1)	209,609		229,996
Winter Storm Uri incremental costs	12,549		32,115

Deferred gas costs	68,296		148,297
Regulatory excess deferred taxes (2)	50,462		47,549
Recoverable loss on reacquired debt	3,112		3,238
Deferred pipeline record collection costs	42,454		54,008
APT annual System Safety and Integrity Rider	35,721		—


Other	15,288		19,096
	$	451,524	$	554,928
Regulatory liabilities:
Regulatory excess deferred taxes (2)	$	283,073	$	384,513

Regulatory cost of removal obligation	605,449		582,867
Deferred gas costs	20,188		23,093

APT annual adjustment mechanism	48,544		49,894
Pension and postretirement benefit costs	199,838		215,913
Other	30,280		28,054
	$	1,187,372	$	1,284,334

(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)Regulatory excess deferred taxes represent changes in our net deferred tax liability related to our cost of service ratemaking due to the enactment of Tax Cuts and Jobs Act of 2017 (the "TCJA") and a Kansas legislative change enacted in fiscal 2020. See Note 12 to the condensed consolidated financial statements for further information.

Securitization

Kansas

See Note 9 to the condensed consolidated financial statements for securitization and other information related to Atmos Energy Kansas Securitization I, LLC (AEK).

Texas

In March 2023, the Texas Natural Gas Securitization Finance Corporation (the Finance Corporation), with the authority of the Texas Public Finance Authority (TPFA), issued $3.5 billion in customer rate relief bonds with varying scheduled final maturities from 12 to 18 years. The bonds are obligations of the Finance Corporation, payable from the customer rate relief charges and other bond collateral, and are not an obligation of Atmos Energy. We began collecting the customer rate relief

charges on October 1, 2023, and any such property collected is solely owned by the Finance Corporation and not available to pay creditors of Atmos Energy.

Additionally, we deferred $32.4 million in carrying costs incurred after September 1, 2022. Effective October 1, 2023, we began recovering a portion of these carrying costs. We have recorded $6.1 million and $21.2 million as a current asset in other current assets as of June 30, 2024 and September 30, 2023. We anticipate recovering the remaining $6.4 million in future regulatory filings and have recorded this amount as a long-term asset in deferred charges and other assets as of June 30, 2024.

4. Segment Information

We manage and review our consolidated operations through the following 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.

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, 2023.

Income statements and capital expenditures for the three and nine months ended June 30, 2024 and 2023 by segment are presented in the following tables:


	Three Months Ended June 30, 2024
	Distribution		Pipeline and Storage		Eliminations		Consolidated
	(In thousands)
Operating revenues from external parties	$	632,446	$	69,103	$	—	$	701,549
Intersegment revenues	765		181,577		(182,342)		—
Total operating revenues	633,211		250,680		(182,342)		701,549
Purchased gas cost	179,510		(19)		(182,084)		(2,593)
Operation and maintenance expense	153,140		58,427		(258)		211,309
Depreciation and amortization expense	122,912		43,915		—		166,827
Taxes, other than income	94,527		11,212		—		105,739
Operating income	83,122		137,145		—		220,267
Other non-operating income	11,452		8,446		—		19,898
Interest charges	22,550		18,610		—		41,160
Income before income taxes	72,024		126,981		—		199,005
Income tax expense	6,175		27,266		—		33,441
Net income	$	65,849	$	99,715	$	—	$	165,564
Capital expenditures	$	587,062	$	126,549	$	—	$	713,611


	Three Months Ended June 30, 2023
	Distribution		Pipeline and Storage		Eliminations		Consolidated
	(In thousands)
Operating revenues from external parties	$	615,259	$	47,474	$	—	$	662,733
Intersegment revenues	808		160,751		(161,559)		—
Total operating revenues	616,067		208,225		(161,559)		662,733
Purchased gas cost	206,048		(194)		(161,304)		44,550
Operation and maintenance expense	138,351		56,953		(255)		195,049
Depreciation and amortization expense	107,809		42,917		—		150,726
Taxes, other than income	92,180		10,975		—		103,155
Operating income	71,679		97,574		—		169,253
Other non-operating income	6,695		9,475		—		16,170
Interest charges	16,146		15,188		—		31,334
Income before income taxes	62,228		91,861		—		154,089
Income tax expense	2,589		13,693		—		16,282
Net income	$	59,639	$	78,168	$	—	$	137,807
Capital expenditures	$	512,585	$	155,552	$	—	$	668,137



	Nine Months Ended June 30, 2024
	Distribution		Pipeline and Storage		Eliminations		Consolidated
	(In thousands)
Operating revenues from external parties	$	3,325,459	$	181,784	$	—	$	3,507,243
Intersegment revenues	2,271		503,552		(505,823)		—
Total operating revenues	3,327,730		685,336		(505,823)		3,507,243
Purchased gas cost	1,464,815		825		(505,069)		960,571
Operation and maintenance expense	435,711		142,596		(754)		577,553
Depreciation and amortization expense	363,981		132,541		—		496,522
Taxes, other than income	273,430		28,805		—		302,235
Operating income	789,793		380,569		—		1,170,362
Other non-operating income	26,650		27,821		—		54,471
Interest charges	93,915		54,562		—		148,477
Income before income taxes	722,528		353,828		—		1,076,356
Income tax expense	92,550		74,927		—		167,477
Net income	$	629,978	$	278,901	$	—	$	908,879
Capital expenditures	$	1,659,217	$	469,920	$	—	$	2,129,137



	Nine Months Ended June 30, 2023
	Distribution		Pipeline and Storage		Eliminations		Consolidated
	(In thousands)
Operating revenues from external parties	$	3,554,389	$	133,326	$	—	$	3,687,715
Intersegment revenues	2,314		445,952		(448,266)		—
Total operating revenues	3,556,703		579,278		(448,266)		3,687,715
Purchased gas cost	1,896,986		(431)		(447,545)		1,449,010
Operation and maintenance expense	426,173		149,329		(721)		574,781
Depreciation and amortization expense	319,783		125,280		—		445,063
Taxes, other than income	275,002		30,782		—		305,784
Operating income	638,759		274,318		—		913,077
Other non-operating income	20,934		33,833		—		54,767
Interest charges	60,405		45,059		—		105,464
Income before income taxes	599,288		263,092		—		862,380
Income tax expense	56,707		38,335		—		95,042
Net income	$	542,581	$	224,757	$	—	$	767,338
Capital expenditures	$	1,381,118	$	702,368	$	—	$	2,083,486

Balance sheet information at June 30, 2024 and September 30, 2023 by segment is presented in the following tables:


	June 30, 2024
	Distribution		Pipeline and Storage		Eliminations		Consolidated
	(In thousands)
Net property, plant and equipment	$	15,855,074	$	5,567,044	$	—	$	21,422,118
Total assets	$	24,067,602	$	5,901,759	$	(5,078,110)	$	24,891,251


	September 30, 2023
	Distribution		Pipeline and Storage		Eliminations		Consolidated
	(In thousands)
Net property, plant and equipment	$	14,402,578	$	5,204,005	$	—	$	19,606,583
Total assets	$	21,716,467	$	5,504,972	$	(4,704,471)	$	22,516,968

5. 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 8 to the condensed consolidated financial statements, when the impact is dilutive.

Basic and diluted earnings per share for the three and nine months ended June 30, 2024 and 2023 are calculated as follows:


	Three Months Ended June 30				Nine Months Ended June 30
	2024		2023		2024		2023
	(In thousands, except per share amounts)
Basic Earnings Per Share
Net income	$	165,564	$	137,807	$	908,879	$	767,338
Less: Income allocated to participating securities	87		83		490		482
Income available to common shareholders	$	165,477	$	137,724	$	908,389	$	766,856
Basic weighted average shares outstanding	153,309		146,051		151,459		143,938
Net income per share — Basic	$	1.08	$	0.94	$	6.00	$	5.33
Diluted Earnings Per Share
Income available to common shareholders	$	165,477	$	137,724	$	908,389	$	766,856
Effect of dilutive shares	—		—		—		—
Income available to common shareholders	$	165,477	$	137,724	$	908,389	$	766,856
Basic weighted average shares outstanding	153,309		146,051		151,459		143,938
Dilutive shares	87		16		38		60
Diluted weighted average shares outstanding	153,396		146,067		151,497		143,998
Net income per share — Diluted	$	1.08	$	0.94	$	6.00	$	5.33

6. 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, 2023. 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 nine months ended June 30, 2024 and 2023.


	Three Months Ended June 30, 2024				Three Months Ended June 30, 2023
	Distribution		Pipeline and Storage		Distribution		Pipeline and Storage
	(In thousands)
Gas sales revenues:
Residential	$	384,957	$	—	$	380,099	$	—
Commercial	169,508		—		165,930		—
Industrial	21,160		—		23,533		—
Public authority and other	8,177		—		8,562		—
Total gas sales revenues	583,802		—		578,124		—
Transportation revenues	30,773		260,779		27,988		212,322
Miscellaneous revenues	2,681		7,592		2,706		4,397
Revenues from contracts with customers	617,256		268,371		608,818		216,719
Alternative revenue program revenues	11,997		(17,691)		6,772		(8,494)
Other revenues	3,958		—		477		—
Total operating revenues	$	633,211	$	250,680	$	616,067	$	208,225



	Nine Months Ended June 30, 2024				Nine Months Ended June 30, 2023
	Distribution		Pipeline and Storage		Distribution		Pipeline and Storage
	(In thousands)
Gas sales revenues:
Residential	$	2,177,935	$	—	$	2,276,240	$	—
Commercial	851,462		—		953,409		—
Industrial	79,810		—		127,792		—
Public authority and other	43,881		—		54,074		—
Total gas sales revenues	3,153,088		—		3,411,515		—
Transportation revenues	102,147		699,243		93,661		597,822
Miscellaneous revenues	9,048		12,796		7,650		8,271
Revenues from contracts with customers	3,264,283		712,039		3,512,826		606,093
Alternative revenue program revenues	51,713		(26,703)		42,360		(26,815)
Other revenues	11,734		—		1,517		—
Total operating revenues	$	3,327,730	$	685,336	$	3,556,703	$	579,278

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. With the completion of APT's most recent rate case in December 2023, the revenue benchmark was increased from $69.4 million to $106.9 million. Other revenues includes AEK revenues (see Note 9 to the condensed consolidated financial statements) and other miscellaneous revenues.

Accounts receivable and allowance for uncollectible accounts

Accounts receivable arise from natural gas sales to residential, commercial, industrial, public authority and other customers. Our accounts receivable balance includes unbilled amounts which represent a customer’s consumption of gas from the date of the last cycle billing through the last day of the month. Our policy related to the accounting for our accounts receivable and allowance for uncollectible accounts 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, 2023. During the nine months ended June 30, 2024, there were no material changes to this policy. Rollforwards of our allowance for uncollectible accounts for the three and nine months ended June 30, 2024 and 2023 are presented in the table below. The allowance excludes the gas cost portion of customers’ bills for approximately 88 percent of our customers as we have the ability to collect these gas costs through our gas cost recovery mechanisms in most of our jurisdictions.

In December 2023, the Mississippi Public Service Commission approved the recovery of uncollectible accounts through our purchased gas cost mechanism over a two-year period rather than through our annual filing mechanism over a one-year period. As a result of this decision, we recorded a $13.9 million reduction to bad debt expense during the first quarter of fiscal 2024. Of this amount, $9.7 million represents future recovery of customer receivables previously written off since April 2022 but not yet recovered through our rates. This amount increased our deferred gas cost regulatory asset. The remaining $4.2 million reduction represents a reversal of our allowance for uncollectible accounts for customer balances that have not yet been written off.


	Three Months Ended June 30, 2024
	(In thousands)
Beginning balance, March 31, 2024	$	42,705
Current period provisions	3,575
Write-offs charged against allowance	(4,407)
Recoveries of amounts previously written off	286

Ending balance, June 30, 2024	$	42,159


	Three Months Ended June 30, 2023
	(In thousands)
Beginning balance, March 31, 2023	$	52,751
Current period provisions	1,758
Write-offs charged against allowance	(5,902)
Recoveries of amounts previously written off	294
Ending balance, June 30, 2023	$	48,901



	Nine Months Ended June 30, 2024
	(In thousands)
Beginning balance, September 30, 2023	$	40,840
Current period provisions	23,122
Write-offs charged against allowance	(19,023)
Recoveries of amounts previously written off	1,412
Mississippi recovery of uncollectible accounts	(4,192)
Ending balance, June 30, 2024	$	42,159



	Nine Months Ended June 30, 2023
	(In thousands)
Beginning balance, September 30, 2022	$	49,993
Current period provisions	22,000
Write-offs charged against allowance	(24,656)
Recoveries of amounts previously written off	1,564
Ending balance, June 30, 2023	$	48,901

7. Debt

The nature and terms of our debt instruments and credit facilities are described in detail in Note 8 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Other than as described below, there were no material changes in the terms of our debt instruments during the nine months ended June 30, 2024.

Long-term debt at June 30, 2024 and September 30, 2023 consisted of the following:


	June 30, 2024		September 30, 2023
	(In thousands)
Unsecured 3.00% Senior Notes, due June 2027	$	500,000	$	500,000
Unsecured 2.625% Senior Notes, due September 2029	500,000		500,000
Unsecured 1.50% Senior Notes, due January 2031	600,000		600,000
Unsecured 5.45% Senior Notes, due October 2032	300,000		300,000
Unsecured 5.90% Senior Notes, due October 2033	725,000		—
Unsecured 5.95% Senior Notes, due October 2034	200,000		200,000
Unsecured 5.50% Senior Notes, due June 2041	400,000		400,000
Unsecured 4.15% Senior Notes, due January 2043	500,000		500,000
Unsecured 4.125% Senior Notes, due October 2044	750,000		750,000
Unsecured 4.30% Senior Notes, due October 2048	600,000		600,000
Unsecured 4.125% Senior Notes, due March 2049	450,000		450,000
Unsecured 3.375% Senior Notes, due September 2049	500,000		500,000
Unsecured 2.85% Senior Notes, due February 2052	600,000		600,000
Unsecured 5.75% Senior Notes, due October 2052	500,000		500,000
Unsecured 6.20% Senior Notes, due October 2053	500,000		—
Medium-term note Series A, 1995-1, 6.67%, due December 2025	10,000		10,000
Unsecured 6.75% Debentures, due July 2028	150,000		150,000
Finance lease obligations	49,283		50,393
Total long-term debt	7,834,283		6,610,393
Less:
Original issue (premium) discount on unsecured senior notes and debentures	(9,418)		6,104
Debt issuance cost	56,885		48,588
Current maturities of long-term debt	1,620		1,568
Total long-term debt, net	$	7,785,196	$	6,554,133

On October 10, 2023, we completed a public offering of $500 million of 6.20% senior notes due October 2053, with an effective interest rate of 5.56%, after giving effect to the offering costs and settlement of our interest rate swaps, and $400 million of 5.90% senior notes due October 2033, with an effective interest rate of 4.35%, after giving effect to the offering costs and settlement of our interest rate swaps. The net proceeds from the offering, after the underwriting discount and offering expenses, of $889.4 million were used for general corporate purposes.

On June 21, 2024, we completed a public offering of $325 million of 5.90% senior notes due October 2033, with an effective interest rate of 5.17%, after giving effect to the estimated offering costs. The net proceeds from the offering, after the underwriting discount and offering expenses as of June 30, 2024, of $339.7 million were used for general corporate purposes.

Short-term debt

We utilize short-term debt to provide cost-effective, short-term financing until it can be replaced with a balance of long-term debt and equity financing that achieves the Company’s desired capital structure. Our short-term borrowing requirements are driven primarily by construction work in progress and the seasonal nature of the natural gas business.

Our short-term borrowing requirements are satisfied through a combination of a $1.5 billion commercial paper program and four committed revolving credit facilities with third-party lenders that provide $3.1 billion of total working capital funding.

Our commercial paper program is supported by a five-year unsecured $1.5 billion credit facility that was replaced on March 28, 2024, with a new five-year senior unsecured $1.5 billion credit facility that expires on March 28, 2029. This new facility bears interest at a base rate or at a Term SOFR-based rate for the applicable interest period, plus a margin ranging from

zero percent to 0.25 percent for base rate advances or a margin ranging from 0.75 percent to 1.25 percent for Term SOFR-based advances, based on the Company’s credit ratings. Additionally, the facility contains a $250 million accordion feature, which provides the opportunity to increase the total committed loan to $1.75 billion. At June 30, 2024, there were no amounts outstanding under our commercial paper program. At September 30, 2023, there was $241.9 million outstanding under our commercial paper program.

We also had a $900 million three-year unsecured revolving credit facility, which was replaced on March 28, 2024, with a new $1.5 billion three-year senior unsecured credit facility, which expires March 28, 2027 and is used to provide additional working capital funding. This new facility bears interest at a base rate or at a Term SOFR-based rate for the applicable interest period, plus a margin ranging from zero percent to 0.25 percent for base rate advances or a margin ranging from 0.75 percent to 1.25 percent for Term SOFR-based advances, based on the Company's credit ratings. Additionally, the facility contains a $250 million accordion feature, which provides the opportunity to increase the total committed loan to $1.75 billion. At June 30, 2024 and September 30, 2023, there were no borrowings outstanding under this facility.

Additionally, we have a $50 million 364-day unsecured facility, which was renewed April 1, 2024 and is used to provide working capital funding. There were no borrowings outstanding under this facility as of June 30, 2024 and September 30, 2023.

Finally, we have a $50 million 364-day unsecured revolving credit facility, which was renewed March 31, 2024 and is used to issue letters of credit and to provide working capital funding. At June 30, 2024, there were no borrowings outstanding under this facility; however, outstanding letters of credit reduced the total amount available to us to $44.4 million.

Debt covenants

The availability of funds under these credit facilities is subject to conditions specified in the respective credit agreements, all of which we currently satisfy. These conditions include our compliance with financial covenants and the continued accuracy of representations and warranties contained in these agreements. We are required by the financial covenants in each of these facilities to maintain, at the end of each fiscal quarter, a ratio of total-debt-to-total-capitalization of no greater than 70 percent. At June 30, 2024, our total-debt-to-total-capitalization ratio, as defined in the agreements, was 40 percent. In addition, both the interest margin and the fee that we pay on unused amounts under certain of these facilities are subject to adjustment depending upon our credit ratings.

These credit facilities and our public indentures contain usual and customary covenants for our business, including covenants substantially limiting liens, substantial asset sales and mergers. Additionally, our public debt indentures relating to our senior notes and debentures, as well as certain of our revolving credit agreements, each contain a default provision that is triggered if outstanding indebtedness arising out of any other credit agreements in amounts ranging from in excess of $15 million to in excess of $100 million becomes due by acceleration or if not paid at maturity. We were in compliance with all of our debt covenants as of June 30, 2024. If we were unable to comply with our debt covenants, we would likely be required to repay our outstanding balances on demand, provide additional collateral or take other corrective actions.

8. Shareholders' Equity

The following tables present a reconciliation of changes in stockholders' equity for the three and nine months ended June 30, 2024 and 2023.


	Common stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Number of Shares	Stated Value
	(In thousands, except share and per share data)
Balance, September 30, 2023	148,492,783	$	742	$	6,684,120	$	518,528	$	3,666,674	$	10,870,064
Net income	—	—		—		—		311,292		311,292
Other comprehensive loss	—	—		—		(49,936)		—		(49,936)


Cash dividends ($0.805 per share)	—	—		—		—		(119,898)		(119,898)

Common stock issued:
Public and other stock offerings	2,177,864	11		257,757		—		—		257,768
Stock-based compensation plans	163,750	1		3,918		—		—		3,919
Balance, December 31, 2023	150,834,397	754		6,945,795		468,592		3,858,068		11,273,209
Net income	—	—		—		—		432,023		432,023
Other comprehensive income	—	—		—		27,108		—		27,108


Cash dividends ($0.805 per share)	—	—		—		—		(121,667)		(121,667)

Common stock issued:
Public and other stock offerings	34,687	—		4,025		—		—		4,025
Stock-based compensation plans	5,468	—		3,941		—		—		3,941
Balance, March 31, 2024	150,874,552	754		6,953,761		495,700		4,168,424		11,618,639
Net income	—	—		—		—		165,564		165,564
Other comprehensive income	—	—		—		14,432		—		14,432


Cash dividends ($0.805 per share)	—	—		—		—		(125,154)		(125,154)

Common stock issued:
Public and other stock offerings	4,288,217	22		499,562		—		—		499,584
Stock-based compensation plans	66,255	—		10,011		—		—		10,011
Balance, June 30, 2024	155,229,024	$	776	$	7,463,334	$	510,132	$	4,208,834	$	12,183,076


	Common stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Number of Shares	Stated Value
	(In thousands, except share and per share data)
Balance, September 30, 2022	140,896,598	$	704	$	5,838,118	$	369,112	$	3,211,157	$	9,419,091
Net income	—	—		—		—		271,860		271,860
Other comprehensive income	—	—		—		22,218		—		22,218


Cash dividends ($0.74 per share)	—	—		—		—		(104,552)		(104,552)

Common stock issued:
Public and other stock offerings	2,147,210	11		223,768		—		—		223,779
Stock-based compensation plans	111,953	1		3,877		—		—		3,878
Balance, December 31, 2022	143,155,761	716		6,065,763		391,330		3,378,465		9,836,274
Net income	—	—		—		—		357,671		357,671
Other comprehensive loss	—	—		—		(30,333)		—		(30,333)


Cash dividends ($0.74 per share)	—	—		—		—		(106,173)		(106,173)

Common stock issued:
Public and other stock offerings	1,316,930	6		143,808		—		—		143,814
Stock-based compensation plans	11,959	—		3,952