Financial Results May 4, 2017 10:00 a.m. Eastern Consolidated - PowerPoint PPT Presentation

Analysts Call to Review Fiscal 2017 Second Quarter Financial Results May 4, 2017 10:00 a.m. Eastern

Consolidated Financial Results – Fiscal 2017 Q2 Q2 Fiscal 2017 Net Income versus Q2 Fiscal 2016 Net Income Average Natural Q2 Fiscal 2017 Net Income Diluted Pipeline & Gas ($ millions, except EPS) Distribution Storage Marketing TOTAL Shares EPS * $ 131 $ 31 $ 3 $ 165 105.9 $ 1.55 Net Income (Less) Net Income-Discontinued Operations (3) (3) 105.9 $ (0.03) $ 131 $ 31 $ 0 $ 162 105.9 $ 1.52 Net Income from Continuing Operations Average Q2 Fiscal 2016 Net Income Diluted Pipeline Natural Gas Distribution & Storage Marketing TOTAL Shares EPS * ($ millions, except EPS) $ 115 $ 28 $ (1) $ 142 102.9 $ 1.38 Net Income (Loss) 1 1 102.9 $ 0.01 (Less) Net Loss-Discontinued Operations $ 115 $ 28 $ 0 $ 143 102.9 $ 1.39 Net Income from Continuing Operations * Since Atmos Energy has non-vested share-based payments with a nonforfeitable right to dividends, there is a requirement to use the two-class method of computing earnings per share. As a result, EPS cannot be calculated directly from the income statement. 2 As of May 3, 2017

Consolidated Financial Results – Fiscal YTD YTD Fiscal 2017 Net Income versus YTD Fiscal 2016 Net Income Average Natural Fiscal YTD 2017 Net Income Diluted Pipeline & Gas ($ millions, except EPS) Distribution Storage Marketing TOTAL Shares EPS * $ 216 $ 60 $ 14 $ 290 105.6 $ 2.74 Net Income (Less) Net Income - Discontinued Operations (14) (14) 105.6 $ (0.13) $ 216 $ 60 $ 0 $ 276 105.6 $ 2.61 Net Income from Continuing Operations Average Natural Fiscal YTD 2016 Net Income Diluted Pipeline & Gas Distribution Storage Marketing TOTAL Shares EPS * ($ millions, except EPS) $ 189 $ 56 $ 0 $ 245 102.8 $ 2.38 Net Income 0 0 102.8 $ 0.00 (Less) Net Income - Discontinued Operations $ 189 $ 56 $ 0 $ 245 102.8 $ 2.38 Net Income from Continuing Operations * Since Atmos Energy has non-vested share-based payments with a nonforfeitable right to dividends, there is a requirement to use the two-class method of computing earnings per share. As a result, EPS cannot be calculated directly from the income statement. 3 As of May 3, 2017

Segment Financial Results – Fiscal 2017 Q2 Distribution Quarter Ended 3/31 Key Drivers 2017 2016 Change QTD ($ millions)  $37.9M gross profit increase: Gross Profit* $ 449.4 $ 411.5 $ 37.9  $29.5M net increase in rates  $2.5M increase from customer growth  $0.6M net decrease in consumption Operating Expenses  $3.6M increase in O&M, primarily due to an increase in employee-related Operation & Maintenance 103.7 100.1 3.6 costs and line-locate activities, partially offset by lower legal Depreciation & Amortization 61.3 58.0 3.3 expenses Taxes, other than Income 57.6 55.0 2.6 YTD  $61.9M gross profit increase: Operating Income $ 226.8 $ 198.4 $ 28.4  $46.6M net increase in rates  $4.2M increase from customer growth  $3.8M increase in revenue-related Six Months Ended 3/31 taxes  $2.7M increase in transportation 2017 2016 Change revenue ($ millions)  $1.0M net decrease in consumption Gross Profit* $ 808.8 $ 746.9 $ 61.9  $4.1M increase in O&M, primarily due to an increase in employee-related Operating Expenses costs and higher levels of line-locate and pipeline integrity activities Operation & Maintenance 196.4 192.3 4.1  $6.9M increase in D&A from increased capital investments Depreciation & Amortization 122.5 115.6 6.9  $7.7M increase in other taxes Taxes, other than Income 108.2 100.5 7.7 primarily due to:  $5.3M increase in ad valorem taxes Operating Income $ 381.7 $ 338.5 $ 43.2 due to increased capital investments  $2.0M increase in revenue-related tax expense * Gross Profit is defined as operating revenues less purchased gas cost 4 As of May 3, 2017

Segment Financial Results – Fiscal 2017 Q2 Pipeline & Storage Quarter Ended 3/31 Key Drivers 2017 2016 Change ($ millions) QTD Gross Profit* $ 111.2 $ 101.2 $ 10.0  $10.0M increase in gross profit Operating Expenses primarily due to a $10.8M increase in rates from the Operation & Maintenance 28.5 27.7 0.8 approved GRIP filing in fiscal 2016 Depreciation & Amortization 16.3 13.4 2.9  $2.9M increase in D&A due to increased capital investments Taxes, other than Income 8.0 6.8 1.2 Operating Income $ 58.4 $ 53.3 $ 5.1 Six Months Ended 3/31 YTD 2017 2016 Change ($ millions)  $20.6M increase in gross profit primarily due to a $21.5M Gross Profit* $ 220.8 $ 200.2 $ 20.6 increase in rates from the Operating Expenses approved GRIP filing in fiscal 2016 Operation & Maintenance 60.8 55.3 5.5  $5.5M increase in O&M expense primarily due to an Depreciation & Amortization 32.1 26.5 5.6 increased level of pipeline maintenance activities Taxes, other than Income 14.5 12.5 2.0  $5.6M increase in D&A due to Operating Income $ 113.4 $ 105.9 $ 7.5 increased capital investments * Gross Profit is defined as operating revenues less purchased gas cost 5 As of May 3, 2017

Capital Spending Mix Safety & Reliability Investments Enable Modernization of Infrastructure FISC SCAL AL 2017 017 YTD CAPEX X $ millions $ 237 Repair and replace transmission and distribution pipelines $ 57 Service line replacement $ 54 Fortification 77% 10% $ 48 Install & replace measurement & regulating equipment $ 20 Enhance storage and compression capabilities 13% $ 12 Pipeline integrity management projects $ 428 Total Safety and Reliability Spending $ 5 559 Tota tal l Capita ital Spendin ing Safety and Reliability Customer Expansion Other 6 As of May 3, 2017

Key Regulatory Developments - Fiscal 2017 Annualized Increases from Implemented Rate Activity $40.0 Key Rate Activity $35.0 ~ $ 30 Million Fiscal 2017 YTD $30.0  $9.0M - Mississippi SRF/SGR/SIR ($ millions)  $5.0M - Kentucky PRP $25.0  $4.6M - Tennessee ARM Reconciliation $20.0  $4.4M - Louisiana-TransLa RSC  $4.3M - West Texas Cities RRM $15.0  $1.4M - Colorado SSIR $10.0 $5.0 $0.0 7 As of May 3, 2017

Key Regulatory Developments - Fiscal 2017  Louisiana – TransLa: Implemented annual Rate Stabilization Clause (RSC) on April 1, 2017, providing for a net increase in annual operating income of $4.4 million, subject to refund  Authorized ROE of 9.80 percent; requested overall return of 7.50 percent  Requested capital structure: 47 percent debt / 53 percent equity  Requested rate base: $156 million  Serves about 74,000 customers  Test year ended September 30, 2016  Louisiana – LGS: Filed annual Rate Stabilization Clause (RSC) on March 31, 2017, requesting a net increase in annual operating income of $6.2 million  Authorized ROE of 9.80 percent; requested overall return of 7.43 percent  Requested capital structure: 47 percent debt / 53 percent equity  Requested rate base: $385 million  Serves about 276,000 customers  Test year ended December 31, 2016 8 As of May 3, 2017

Key Regulatory Developments - Fiscal 2017  West Texas Cities : Settled annual Rate Review Mechanism (RRM) authorizing an increase in annual operating income of $4.3 million, effective March 15, 2017  Authorized ROE of 10.50 percent; requested overall return of 8.45 percent  Requested capital structure: 45 percent debt / 55 percent equity  Requested system-wide rate base: $450 million  Serves about 136,000 customers  Test year ended September 30, 2016  Mississippi: Filed annual System Integrity Rider (SIR) on March 1, 2017, requesting a net increase in annual operating income of $7.6 million  Authorized ROE of 9.73 percent; authorized overall return of 7.85 percent  Authorized actual capital structure: 47.5 percent debt / 52.5 percent equity  Requested rate base: $48.7 million  Serves about 251,000 customers  Forward-looking components - PP&E, accumulated depreciation, accumulated deferred income taxes, depreciation and ad valorem taxes from November 2017 - October 2018 9 As of May 3, 2017