Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

The following discussion should be read in conjunction with the condensed consolidated financial statements in this Quarterly Report on Form 10-Q and Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended September 30, 2025.

Cautionary Statement for the Purposes of the Safe Harbor under the Private Securities Litigation Reform Act of 1995

The statements contained in this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this Report are forward-looking statements made in good faith by us and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this Report, or any other of our documents or oral presentations, the words “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “objective”, “plan”, “projection”, “seek”, “strategy”, or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements relating to our strategy, operations, markets, services, rates, recovery of costs, availability of gas supply, and other factors. These risks and uncertainties include the following: federal, state, and local regulatory and political trends and decisions, including the impact of rate proceedings before various state regulatory commissions; increased federal regulatory oversight and potential penalties; possible increased federal, state, and local regulation of the safety of our operations; possible significant costs and liabilities resulting from pipeline integrity and other similar programs and related repairs; the inherent hazards and risks involved in distributing, transporting, and storing natural gas; the availability and accessibility of contracted gas supplies, interstate pipeline, and/or storage services; increased competition from energy suppliers and alternative forms of energy; failure to attract and retain a qualified workforce; natural disasters, adverse weather, terrorist activities, or other events and other risks and uncertainties discussed herein, all of which are difficult to predict and many of which are beyond our control; failure of technology that affects the Company's business operations; the threat of cyber-attacks or acts of cyber-terrorism that could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee, or Company information; the impact of new cybersecurity compliance requirements; adverse weather conditions; the impact of legislation to reduce or eliminate greenhouse gas emissions or fossil fuels; the impact of climate change; the capital-intensive nature of our business; our ability to continue to access the credit and capital markets to execute our business strategy; market risks beyond our control affecting our risk management activities, including commodity price volatility, counterparty performance or creditworthiness, and interest rate risk; the concentration of our operations in Texas; the impact of adverse economic conditions on our customers; changes in the availability and price of natural gas; and increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements. Accordingly, while we believe these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. Further, we undertake no obligation to update or revise any of our forward-looking statements whether as a result of new information, future events or otherwise.

OVERVIEW

Atmos Energy and our subsidiaries are engaged in the regulated natural gas distribution and pipeline and storage businesses. We distribute natural gas through sales and transportation arrangements to approximately 3.4 million residential, commercial, public authority, and industrial customers throughout our six distribution divisions, which at June 30, 2026 covered service areas located in eight states. In addition, we transport natural gas for others through our distribution and pipeline systems.

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.

Our vision is to be the safest provider of natural gas services. Our commitment to this vision requires significant levels of capital spending to modernize our natural gas distribution system and operating costs to deliver natural gas safely and reliably and in full compliance with the various safety regulations impacting our business. We have the ability to begin recovering a significant portion of our expenditures timely through rate designs and mechanisms that reduce or eliminate regulatory lag and separate the recovery of our approved rate from customer usage patterns. The execution of our capital spending program, the ability to recover these expenditures timely, and our ability to access the capital markets to satisfy our financing needs are the primary drivers that affect our financial performance.

We anticipate making significant capital expenditures for the foreseeable future to modernize our distribution and transmission system, to comply with the safety rules and regulations issued by the regulatory authorities responsible for the service areas in which we operate, and to prepare to serve the growing needs of the communities we serve. Between fiscal years 2026 and 2030, we anticipate spending approximately $26 billion, with more than 80 percent dedicated to safety and reliability spending. The magnitude and allocation of these expenditures may be affected by factors such as new policy and regulations, population growth, and increased labor and materials costs. Although we believe these costs are ultimately recoverable through our rates based on the regulatory frameworks currently available to us, full recovery is not assured.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Our condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States. Preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosures of contingent assets and liabilities. We based our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from such estimates.

Our critical accounting policies used in the preparation of our consolidated financial statements are described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 and include the following:

• Regulation

• Pension and other postretirement plans

Our critical accounting policies are reviewed periodically by the Audit Committee of our Board of Directors. There were no significant changes to these critical accounting policies during the nine months ended June 30, 2026.

RESULTS OF OPERATIONS

Executive Summary

During the nine months ended June 30, 2026, we recorded net income of $1,227.6 million, or $7.33 per diluted share, compared to net income of $1,023.9 million, or $6.40 per diluted share for the nine months ended June 30, 2025.

The 20 percent year-over-year increase in net income largely reflects positive rate outcomes driven by safety and reliability spending. Additionally, our results for the nine months ended June 30, 2026 were favorably impacted by $132.4 million as a result of Texas legislation that became effective during the third quarter of fiscal 2025 related to infrastructure spending. These increases were partially offset by increased depreciation and property tax expenses, higher spending on safety and compliance related activities, and increased employee-related costs.

During the nine months ended June 30, 2026, we implemented ratemaking regulatory actions which resulted in an increase in annual operating income of $355.0 million. Additionally, as of June 30, 2026, we had ratemaking efforts in progress seeking a total increase in annual operating income of $373.4 million.

Capital expenditures for the nine months ended June 30, 2026 were $3,076.3 million. Over 85 percent was invested to improve the safety and reliability of our distribution and transportation systems, with a significant portion of this investment incurred under regulatory mechanisms that reduce lag to six months or less.

During the nine months ended June 30, 2026, we completed approximately $2.2 billion of long-term debt and equity financing. As of June 30, 2026, our equity capitalization was 59.8 percent. As of June 30, 2026, we had approximately $4.6 billion in total liquidity, consisting of $521.0 million in cash and cash equivalents, $936.8 million in funds available through equity forward sales agreements and $3,094.4 million in undrawn capacity under our credit facilities.

The following discusses the results of operations for each of our operating segments.

Distribution Segment

The distribution segment is comprised of our regulated natural gas distribution and related sales operations in eight states. The primary factors that impact the results of this segment are our ability to earn our authorized rates of return, competitive factors in the energy industry, and economic conditions in our service areas.

Our ability to earn our authorized rates of return is based primarily on our ability to improve the rate design in our various ratemaking jurisdictions to minimize regulatory lag and, ultimately, separate the recovery of our approved rates from customer usage patterns. Improving rate design is a long-term process and is further complicated by the fact that we operate in multiple rate jurisdictions. Under our current rate design, approximately 70 percent of our distribution segment revenues are earned through the first six months of the fiscal year. Additionally, we currently recover approximately 50 percent of our distribution segment revenue, excluding gas costs, through the base customer charge, which partially separates the recovery of our approved rate from customer usage patterns.

Seasonal weather patterns can also affect our distribution operations. However, the effect of weather that is above or below normal is substantially offset through weather normalization adjustments, known as WNA, which have been approved by state regulatory commissions for approximately 97 percent of our residential and commercial revenues in the following states for the following time periods:

Kansas, West Texas			October — May
Tennessee			October — April
Kentucky, Mississippi, Mid-Tex			November — April
Louisiana			December — March
Virginia			January — December

Our distribution operations are also affected by the cost of natural gas. We are generally able to pass the cost of gas through to our customers without markup under purchased gas cost adjustment mechanisms; therefore, increases in the cost of gas are offset by a corresponding increase in revenues. Revenues in our Texas and Mississippi service areas include franchise fees and gross receipts taxes, which are calculated as a percentage of revenue (inclusive of gas costs). Therefore, the amount of these taxes included in revenues is influenced by the cost of gas and the level of gas sales volumes. We record the associated tax expense as a component of taxes, other than income.

The cost of gas typically does not have a direct impact on our operating income because these costs are recovered through our purchased gas cost adjustment mechanisms. However, higher gas costs may adversely impact our accounts receivable collections, resulting in higher bad debt expense. This risk is currently mitigated by rate design that allows us to collect from our customers the gas cost portion of our bad debt expense on approximately 89 percent of our residential and commercial revenues. Additionally, higher gas costs may require us to increase borrowings under our credit facilities, resulting in higher interest expense. Finally, higher gas costs, as well as competitive factors in the industry and general economic conditions may cause customers to conserve or, in the case of industrial consumers, to use alternative energy sources.

Three Months Ended June 30, 2026 compared with Three Months Ended June 30, 2025

Financial and operational highlights for our distribution segment for the three months ended June 30, 2026 and 2025 are presented below.

			Three Months Ended June 30
			2026						2025						Change
			(In thousands, unless otherwise noted)
Operating revenues			$	774,658					$	767,132					$	7,526
Purchased gas cost			237,072						255,883						(18,811)
Operating expenses			428,505						415,783						12,722
Operating income			109,081						95,466						13,615
Other non-operating income			8,732						7,017						1,715
Interest charges			12,870						22,271						(9,401)
Income before income taxes			104,943						80,212						24,731
Income tax expense			15,558						9,731						5,827
Net income			$	89,385					$	70,481					$	18,904
Consolidated distribution sales volumes — MMcf			37,376						41,008						(3,632)
Consolidated distribution transportation volumes — MMcf			35,767						34,346						1,421
Total consolidated distribution throughput — MMcf			73,143						75,354						(2,211)
Consolidated distribution average cost of gas per Mcf sold			$	6.34					$	6.24					$	0.10

Operating income for our distribution segment increased 14.3 percent. Key drivers for the change in operating income include:

• a $21.0 million increase in rate adjustments, primarily in our Mid-Tex Division.

• a $3.9 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load.

Partially offset by:

• a $9.4 million increase in employee-related costs primarily due to an increase in headcount and labor costs to support company growth.

• a $20.0 million increase in depreciation expense and property taxes associated with increased capital investments.

Additionally, our distribution segment's income before income taxes for the three months ended June 30, 2026 was favorably impacted by $26.7 million as a result of Texas legislation that became effective during the third quarter of fiscal 2025 related to infrastructure spending. This amount is reflected in the respective line items in which the costs are incurred, including operating expenses of $17.8 million and interest charges.

The following table shows our operating income by distribution division, in order of total rate base, for the three months ended June 30, 2026 and 2025. The presentation of our distribution operating income is included for financial reporting purposes and may not be appropriate for ratemaking purposes.

			Three Months Ended June 30
			2026						2025						Change
			(In thousands)
Mid-Tex			$	74,313					$	48,244					$	26,069
Kentucky/Mid-States			15,366						15,221						145
Louisiana			13,760						18,747						(4,987)
West Texas			5,212						5,320						(108)
Mississippi			1,803						6,967						(5,164)
Colorado-Kansas			2,762						2,041						721
Other			(4,135)						(1,074)						(3,061)
Total			$	109,081					$	95,466					$	13,615

Nine Months Ended June 30, 2026 compared with Nine Months Ended June 30, 2025

Financial and operational highlights for our distribution segment for the nine months ended June 30, 2026 and 2025 are presented below.

			Nine Months Ended June 30
			2026						2025						Change
			(In thousands, unless otherwise noted)
Operating revenues			$	3,911,164					$	3,758,995					$	152,169
Purchased gas cost			1,605,020						1,647,490						(42,470)
Operating expenses			1,281,917						1,216,273						65,644
Operating income			1,024,227						895,232						128,995
Other non-operating income			24,555						30,545						(5,990)
Interest charges			66,445						86,607						(20,162)
Income before income taxes			982,337						839,170						143,167
Income tax expense			186,414						147,833						38,581
Net income			$	795,923					$	691,337					$	104,586
Consolidated distribution sales volumes — MMcf			229,995						256,085						(26,090)
Consolidated distribution transportation volumes — MMcf			114,761						118,306						(3,545)
Total consolidated distribution throughput — MMcf			344,756						374,391						(29,635)
Consolidated distribution average cost of gas per Mcf sold			$	6.98					$	6.43					$	0.55

Operating income for our distribution segment increased 14.4 percent. Key drivers for the change in operating income include:

• a $151.7 million increase in rate adjustments, primarily in our Mid-Tex Division.

• a $14.7 million increase in consumption, net of WNA.

• a $13.7 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load.

• an $8.2 million decrease in refunds of excess deferred taxes to customers.

Partially offset by:

• a $69.2 million increase in depreciation expense and property taxes associated with increased capital investments.

• an $11.7 million increase in system monitoring, line locating, and other compliance-related activities.

• a $9.3 million increase in employee-related costs primarily due to an increase in headcount and labor costs to support company growth.

Additionally, our distribution segment's income before income taxes for the nine months ended June 30, 2026 was favorably impacted by $70.8 million as a result of Texas legislation that became effective during the third quarter of fiscal 2025 related to infrastructure spending. This amount is reflected in the respective line items in which the costs are incurred, including operating expenses of $46.8 million and interest charges.

			Nine Months Ended June 30
			2026						2025						Change
			(In thousands)
Mid-Tex			$	628,079					$	490,330					$	137,749
Kentucky/Mid-States			107,228						101,484						5,744
Louisiana			92,973						91,132						1,841
West Texas			98,002						73,556						24,446
Mississippi			68,989						92,233						(23,244)
Colorado-Kansas			37,227						39,821						(2,594)
Other			(8,271)						6,676						(14,947)
Total			$	1,024,227					$	895,232					$	128,995

Recent Ratemaking Developments

The amounts described in the following sections represent the operating income that was requested or received in each rate filing, which may not necessarily reflect the stated amount referenced in the final order, as certain operating costs may have changed as a result of a commission’s or other governmental authority’s final ruling. During the first nine months of fiscal 2026, we implemented regulatory proceedings, resulting in a $242.8 million increase in annual operating income as summarized below. Our ratemaking outcomes include the refund (return) of excess deferred income taxes (EDIT) resulting from previously enacted tax reform legislation and do not reflect the true economic benefit of the outcomes because they do not include the corresponding income tax benefit.

Rate Action						Annual Increase (Decrease) in Operating Income						EDIT Impact						Annual Increase (Decrease) in Operating Income Excluding EDIT
						(In thousands)
Annual formula rate mechanisms						$	253,620					$	—					$	253,620
Rate case filings						(10,873)						(4,009)						(14,882)
Other rate activity						81						—						81
						$	242,828					$	(4,009)					$	238,819

The following ratemaking efforts seeking $373.4 million in increased annual operating income were in progress as of June 30, 2026:

Division						Rate Action						Jurisdiction						Operating Income Requested
																		(In thousands)
Colorado-Kansas						Rate Case						Colorado (1)						$	17,556
Kentucky/Mid-States						Infrastructure Mechanism						Virginia						646
Louisiana						Formula Rate Mechanism						Louisiana (2)						30,845
Mid-Tex						Formula Rate Mechanism						Mid-Tex Cities						273,213
Mississippi						Formula Rate Mechanism						Mississippi						37,816
West Texas						Formula Rate Mechanism						West Texas Cities						13,371
																		$	373,447

(1) On June 10, 2026, the Colorado Public Utilities Commission approved an operating income increase of $10.8 million effective July 1, 2026.

(2) The Company implemented $30.3 million in operating income increase, subject to refund, with rates effective July 1, 2026, and anticipates receiving final commission approval during the fourth quarter of fiscal 2026.

Annual Formula Rate Mechanisms

As an instrument to reduce regulatory lag, formula rate mechanisms allow us to refresh our rates on an annual basis without filing a formal rate case. However, these filings still involve discovery by the appropriate regulatory authorities prior to the final determination of rates under these mechanisms. We currently have formula rate mechanisms in our Louisiana, Mississippi, and Tennessee operations and in substantially all the service areas in our Texas divisions. Additionally, we have specific infrastructure programs in substantially all of our distribution divisions with tariffs in place to permit the investment associated with these programs to have their surcharge rate adjusted annually to recover approved capital costs incurred in a prior test-year period. The following table summarizes our annual formula rate mechanisms by state:

						Annual Formula Rate Mechanisms
State						Infrastructure Programs						Formula Rate Mechanisms
Colorado						System Safety and Integrity Rider (SSIR)						—
Kansas						Gas System Reliability Surcharge (GSRS), System Integrity Program (SIP)						—
Kentucky						Pipeline Replacement Program (PRP)						—
Louisiana						(1)						Rate Stabilization Clause (RSC)
Mississippi						System Integrity Plan (SIP)						Stable Rate Filing (SRF)
Tennessee						(1)						Annual Rate Mechanism (ARM)
Texas						Gas Reliability Infrastructure Program (GRIP), (1)						Dallas Annual Rate Review (DARR), Rate Review Mechanism (RRM)
Virginia						Steps to Advance Virginia Energy (SAVE)						—

(1) Infrastructure mechanisms in Texas, Louisiana, and Tennessee allow for the deferral of all expenses associated with capital expenditures incurred pursuant to these rules, which primarily consists of interest, depreciation, and other taxes (Texas and Tennessee only), until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates.

The following annual formula rate mechanisms were implemented during the nine months ended June 30, 2026:

Division						Jurisdiction						Test Year Ended						Increase in Annual Operating Income						EDIT Impact						Increase in Annual Operating Income Excluding EDIT						Effective Date
																		(In thousands)
2026 Filings:
Mid-Tex						Environs						12/31/2025						$	15,635					—						$	15,635					06/05/2026
Mid-Tex						ATM Cities						12/31/2025						28,200						—						28,200						06/05/2026
West Texas						Amarillo, Lubbock, Dalhart and Channing						12/31/2025						14,687						—						14,687						06/05/2026
West Texas						Environs						12/31/2025						4,325						—						4,325						06/05/2026
Kentucky/Mid-States						Tennessee ARM						09/30/2025						11,861						—						11,861						06/01/2026
Mid-Tex						DARR						09/30/2025						32,050						—						32,050						06/01/2026
Colorado-Kansas						Kansas SIP						12/31/2025						777						—						777						04/01/2026
Colorado-Kansas						Colorado SSIR						12/31/2026						409						—						409						01/01/2026
Colorado-Kansas						Kansas GSRS						06/30/2025						1,949						—						1,949						12/04/2025
Kentucky/Mid-States						Kentucky PRP						09/30/2026						4,670						—						4,670						10/02/2025
Kentucky/Mid-States						Virginia - SAVE						09/30/2026						549						—						549						10/01/2025
Mid-Tex						Mid-Tex Cities RRM						12/31/2024						138,508						—						138,508						10/01/2025
Total 2026 Filings																		$	253,620					$	—					$	253,620

Rate Case Filings

A rate case is a formal request from Atmos Energy to a regulatory authority to increase rates that are charged to our customers. Rate cases may also be initiated when the regulatory authorities request us to justify our rates. This process is referred to as a “show cause” action. Adequate rates are intended to provide for recovery of the Company’s costs as well as a fair rate of return and ensure that we continue to deliver reliable, reasonably priced natural gas service safely to our customers. The following table summarizes the rate cases completed in our distribution segment during the nine months ended June 30, 2026.

Division						State						Increase (Decrease) in Annual Operating Income						EDIT Impact						Increase (Decrease) in Annual Operating Income Excluding EDIT						Effective Date
												(In thousands)
2026 Rate Case Filings:
Colorado-Kansas						Kansas						$	12,330					$	(3,998)					$	8,332					03/01/2026
Mississippi General Rate Case						Mississippi						(23,203)						(11)						(23,214)						12/01/2025
Total 2026 Rate Case Filings												$	(10,873)					$	(4,009)					$	(14,882)

Pipeline and Storage Segment

Our pipeline and storage segment consists of the regulated pipeline and storage operations of our Atmos Pipeline–Texas Division (APT) and our natural gas transmission operations in Louisiana. APT is an intrastate pipeline in Texas with a heavy concentration in the established natural gas producing areas of central, northern, and eastern Texas, extending into or near the major producing areas of the Barnett Shale, the Texas Gulf Coast, and the Permian Basin of West Texas. APT provides transportation and storage services to our Mid-Tex Division, other third-party local distribution companies, industrial, and electric generation customers, as well as marketers and producers. Over 80 percent of this segment’s revenues are derived from these APT services. These revenues are subject to traditional ratemaking governed by the Texas Railroad Commission (RRC). As part of its pipeline operations, APT owns and operates five underground storage facilities in Texas.

Our natural gas transmission operations in Louisiana are comprised of a 21-mile pipeline located in the New Orleans, Louisiana area that is primarily used to aggregate gas supply for our distribution division in Louisiana under a long-term contract and, on a more limited basis, to third parties. The demand fee charged to our Louisiana distribution division for these services is subject to regulatory approval by the Louisiana Public Service Commission. We also manage two asset management plans, which have been approved by applicable state regulatory commissions. Generally, these asset management plans require us to share with our distribution customers a significant portion of the cost savings earned from these arrangements.

Our pipeline and storage segment is impacted by seasonal weather patterns, competitive factors in the energy industry, and economic conditions in our Texas and Louisiana service areas. Natural gas prices do not directly impact the results of this segment as revenues are derived from the transportation and storage of natural gas. However, natural gas prices and demand for natural gas could influence the level of drilling activity in the supply areas that we serve, which may influence the level of throughput we may be able to transport on our pipelines. Further, natural gas price differences between the various hubs that we serve in Texas could influence the volumes of gas transported for shippers through our Texas pipeline system and rates for such transportation.

The results of APT are also significantly impacted by the natural gas requirements of its local distribution company customers. Additionally, its operations may be impacted by the timing of when costs and expenses are incurred and when these costs and expenses are recovered through its tariffs.

APT annually uses GRIP to recover capital costs incurred in the prior calendar year. On February 13, 2026, APT made a GRIP filing that covered changes in net property, plant and equipment investments from January 1, 2025 through December 31, 2025 with a requested increase in operating income of $112.2 million. On May 12, 2026, the RRC approved the Company's GRIP filing.

The demand fee our Louisiana natural gas transmission pipeline charges to our Louisiana distribution division increases five percent annually and has been approved by the Louisiana Public Service Commission until September 30, 2027.

Three Months Ended June 30, 2026 compared with Three Months Ended June 30, 2025

Financial and operational highlights for our pipeline and storage segment for the three months ended June 30, 2026 and 2025 are presented below.

			Three Months Ended June 30
			2026						2025						Change
			(In thousands, unless otherwise noted)
Mid-Tex / Affiliate transportation revenue			$	243,511					$	207,944					$	35,567
Third-party transportation revenue			81,735						60,422						21,313
Other revenue			7,807						4,022						3,785
Total operating revenues			333,053						272,388						60,665
Total purchased gas cost			(452)						(1,548)						1,096
Operating expenses			122,172						117,335						4,837
Operating income			211,333						156,601						54,732
Other non-operating income			7,281						13,083						(5,802)
Interest charges			20,274						19,266						1,008
Income before income taxes			198,340						150,418						47,922
Income tax expense			45,036						34,470						10,566
Net income			$	153,304					$	115,948					$	37,356
Gross pipeline transportation volumes — MMcf			216,439						216,416						23
Consolidated pipeline transportation volumes — MMcf			184,526						184,105						421

Operating income for our pipeline and storage segment increased 34.9 percent. Key drivers for the change in operating income include:

• a $35.1 million increase primarily due to rate adjustments from the GRIP filings approved in June 2025 and May 2026.

• a $4.3 million increase due to higher capacity contracted by tariff-based customers due to their increased peak day demand.

• an $18.1 million increase in APT's through-system activities primarily associated with increased spreads.

Partially offset by:

• an $8.4 million increase in depreciation expense and property taxes associated with increased capital investments.

Additionally, our pipeline and storage segment's income before income taxes for the three months ended June 30, 2026 was favorably impacted by $12.1 million as a result of Texas legislation that became effective during the third quarter of fiscal 2025 related to infrastructure spending. This amount is reflected in the respective line items in which the costs are incurred, including operating expenses of $8.6 million and interest charges.

Nine Months Ended June 30, 2026 compared with Nine Months Ended June 30, 2025

Financial and operational highlights for our pipeline and storage segment for the nine months ended June 30, 2026 and 2025 are presented below.

			Nine Months Ended June 30
			2026						2025						Change
			(In thousands, unless otherwise noted)
Mid-Tex / Affiliate transportation revenue			$	680,779					$	602,105					$	78,674
Third-party transportation revenue			214,871						174,061						40,810
Other revenue			13,325						10,611						2,714
Total operating revenues			908,975						786,777						122,198
Total purchased gas cost			1,836						(638)						2,474
Operating expenses			331,384						342,161						(10,777)
Operating income			575,755						445,254						130,501
Other non-operating income			31,205						38,361						(7,156)
Interest charges			48,843						57,869						(9,026)
Income before income taxes			558,117						425,746						132,371
Income tax expense			126,488						93,220						33,268
Net income			$	431,629					$	332,526					$	99,103
Gross pipeline transportation volumes — MMcf			681,829						678,457						3,372
Consolidated pipeline transportation volumes — MMcf			526,249						507,870						18,379

Operating income for our pipeline and storage segment increased 29.3 percent. Key drivers for the change in operating income include:

• a $75.7 million increase primarily due to rate adjustments from the GRIP filings approved in June 2025 and May 2026.

• a $12.1 million increase due to higher capacity contracted by tariff-based customers due to their increased peak day demand.

• a $33.8 million increase in APT's through-system activities primarily associated with increased spreads.

Partially offset by:

• a $20.7 million increase in depreciation expense and property taxes associated with increased capital investments.

Additionally, our pipeline and storage segment's income before income taxes for the nine months ended June 30, 2026 was favorably impacted by $61.6 million as a result of Texas legislation that became effective during the third quarter of fiscal 2025 related to infrastructure spending. This amount is reflected in the respective line items in which the costs are incurred, including operating expenses of $41.7 million and interest charges.

Liquidity and Capital Resources

The liquidity required to fund our working capital, capital expenditures, and other cash needs is provided from a combination of internally generated cash flows and external debt and equity financing. Additionally, we have a $1.5 billion commercial paper program and four committed revolving credit facilities with $3.1 billion in total availability from third-party lenders. The commercial paper program and credit facilities 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. Additionally, we have various uncommitted trade credit lines with our gas suppliers that we utilize to purchase natural gas on a monthly basis.

We have a shelf registration statement on file with the Securities and Exchange Commission (SEC) that allows us to issue up to $8.0 billion in common stock and/or debt securities, which expires December 3, 2027. As of June 30, 2026, $4.5 billion of securities were available for issuance under this shelf registration statement.

We also have an at-the-market (ATM) equity sales program under which we may issue and sell shares of our common stock up to an aggregate offering price of $1.7 billion (including shares of common stock that may be sold pursuant to forward sale agreements entered into in connection with the ATM equity sales program), which expires December 3, 2027. As of June 30, 2026, $506.5 million of equity was available for issuance under our existing ATM equity sales program. Additionally, as of June 30, 2026, we had $936.8 million in available proceeds from outstanding forward sale agreements. Additional details are summarized in Note 8 to the condensed consolidated financial statements.

The liquidity provided by these sources is expected to be sufficient to fund the Company's working capital needs and capital expenditure program for the remainder of fiscal year 2026. Additionally, we expect to continue to be able to obtain financing upon reasonable terms as necessary.

The following table presents our capitalization inclusive of short-term debt and the current portion of long-term debt as of June 30, 2026, September 30, 2025 and June 30, 2025:

			June 30, 2026												September 30, 2025												June 30, 2025
			(In thousands, except percentages)
Short-term debt			$	—					—		%				$	—					—		%				$	—					—		%
Long-term debt (1)			10,251,258						40.2		%				8,918,944						39.7		%				8,919,726						40.0		%
Shareholders’ equity			15,258,058						59.8		%				13,558,890						60.3		%				13,385,838						60.0		%
Total			$	25,509,316					100.0		%				$	22,477,834					100.0		%				$	22,305,564					100.0		%

(1) Inclusive of our finance leases, but exclusive of AEK's securitized long-term debt.

Cash Flows

Our internally generated funds may change in the future due to a number of factors, some of which we cannot control. These factors include regulatory changes, the price for our services, demand for such products and services, margin requirements resulting from significant changes in commodity prices, operational risks, and other factors.

Cash flows from operating, investing, and financing activities for the nine months ended June 30, 2026 and 2025 are presented below.

			Nine Months Ended June 30
			2026						2025						Change
			(In thousands)
Total cash provided by (used in)
Operating activities			$	1,671,466					$	1,701,332					$	(29,866)
Investing activities			(3,076,132)						(2,593,666)						(482,466)
Financing activities			1,726,672						1,297,079						429,593
Change in cash and cash equivalents and restricted cash and cash equivalents			322,006						404,745						(82,739)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period			203,803						308,856						(105,053)
Cash and cash equivalents and restricted cash and cash equivalents at end of period			$	525,809					$	713,601					$	(187,792)

Cash flows from operating activities

For the nine months ended June 30, 2026, we generated cash flow from operating activities of $1,671.5 million compared with $1,701.3 million for the nine months ended June 30, 2025. Operating cash flow decreased by $29.9 million primarily due to the timing of gas cost recoveries.

Cash flows from investing activities

Our capital expenditures are primarily used to improve the safety and reliability of our distribution and transmission system through pipeline replacement and system modernization and to enhance and expand our system to meet customer needs.

Over the last three fiscal years, over 85 percent of our capital spending has been committed to improving the safety and reliability of our system.

For the nine months ended June 30, 2026, cash used for investing activities was $3,076.1 million compared to $2,593.7 million for the nine months ended June 30, 2025. Capital spending increased $478.5 million primarily as a result of increased system modernization.

Cash flows from financing activities

For the nine months ended June 30, 2026, our financing activities provided $1,726.7 million of cash compared with $1,297.1 million of cash provided by financing activities in the prior-year period.

In the nine months ended June 30, 2026, we received approximately $2.2 billion in net proceeds from the issuance of long-term debt and equity. On October 1, 2025, We completed a public offering of $600 million of 5.45% senior notes due January 2056, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $590.0 million. On June 18, 2026, we completed a public offering of $700 million of 4.75% senior notes due January 2032, and received the net proceeds from the offering, after the underwriting discount and offering expenses, of $694.0 million. Additionally, during the nine months ended June 30, 2026, we settled 7,084,863 shares that had been sold on a forward basis for net proceeds of $941.7 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes. Cash dividends increased due to a 14.9 percent increase in our dividend rate and an increase in shares outstanding.

In the nine months ended June 30, 2025, we received approximately $1.7 billion in net proceeds from the issuance of long-term debt and equity. We completed a public offering of $650 million of 5.00% senior notes due December 2054, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $639.4 million. We also completed a public offering of $500 million of 5.20% senior notes due August 2035, and received net proceeds from the offering, after the underwriting discount and offering expenses of $493.9 million. Additionally, during the nine months ended June 30, 2025, we settled 4,907,436 shares that had been sold on a forward basis for net proceeds of $568.6 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes. Cash dividends increased due to an 8.1 percent increase in our dividend rate and an increase in shares outstanding.

The following table summarizes our share issuances for the nine months ended June 30, 2026 and 2025:

			Nine Months Ended June 30
			2026						2025
Shares issued:
Direct Stock Purchase Plan			32,965						37,069
1998 Long-Term Incentive Plan			261,132						275,498
Retirement Savings Plan and Trust			38,905						42,163
Equity Issuance			7,084,863						4,907,436
Total shares issued			7,417,865						5,262,166

Credit Ratings

Our credit ratings directly affect our ability to obtain short-term and long-term financing, in addition to the cost of such financing. In determining our credit ratings, the rating agencies consider a number of quantitative factors, including but not limited to, debt to total capitalization, operating cash flow relative to outstanding debt, operating cash flow coverage of interest, and pension liabilities. In addition, the rating agencies consider qualitative factors such as consistency of our earnings over time, the quality of our management and business strategy, the risks associated with our businesses, and the regulatory structures that govern our rates in the states where we operate.

Our debt is rated by two rating agencies: Standard & Poor’s Corporation (S&P) and Moody’s Investors Service (Moody’s). Currently, our outlook and debt ratings, which are all considered investment grade, are as follows:

			S&P									Moody’s
Senior unsecured long-term debt			A-									A2
Short-term debt			A-2									P-1
Outlook			Stable									Stable

A significant degradation in our operating performance or a significant reduction in our liquidity caused by more limited access to the private and public credit markets as a result of deteriorating global or national financial and credit conditions could

trigger a negative change in our ratings outlook or even a reduction in our credit ratings by the two credit rating agencies. This would mean more limited access to the private and public credit markets and an increase in the costs of such borrowings.

A credit rating is not a recommendation to buy, sell, or hold securities. The highest investment grade credit rating is AAA for S&P and Aaa for Moody’s. The lowest investment grade credit rating is BBB- for S&P and Baa3 for Moody’s. Our credit ratings may be revised or withdrawn at any time by the rating agencies, and each rating should be evaluated independently of any other rating. There can be no assurance that a rating will remain in effect for any given period of time or that a rating will not be lowered, or withdrawn entirely, by a rating agency if, in its judgment, circumstances so warrant.

Debt Covenants

We were in compliance with all of our debt covenants as of June 30, 2026. Our debt covenants are described in greater detail in Note 7 to the condensed consolidated financial statements.

Contractual Obligations and Commercial Commitments

Except as noted in Note 11 to the condensed consolidated financial statements, there were no significant changes in our contractual obligations and commercial commitments during the nine months ended June 30, 2026.

Risk Management Activities

In our distribution and pipeline and storage segments, we use a combination of physical storage, fixed physical contracts, and fixed financial contracts to reduce our exposure to unusually large winter-period gas price increases. Additionally, we manage interest rate risk by periodically entering into financial instruments to effectively fix the Treasury yield component of the interest cost associated with anticipated financings.

The following table shows the components of the change in fair value of our financial instruments for the three and nine months ended June 30, 2026 and 2025:

			Three Months Ended June 30												Nine Months Ended June 30
			2026						2025						2026						2025
			(In thousands)
Fair value of contracts at beginning of period			$	2,608					$	122,648					$	3,412					$	88,651
Contracts realized/settled			31						265						1,389						(10,536)
Fair value of new contracts			5,248						3,528						5,290						3,485
Other changes in value			(3,859)						5,885						(6,063)						50,726
Fair value of contracts at end of period			4,028						132,326						4,028						132,326
Netting of cash collateral			—						—						—						—
Cash collateral and fair value of contracts at period end			$	4,028					$	132,326					$	4,028					$	132,326

The fair value of our financial instruments at June 30, 2026 is presented below by time period and fair value source:

			Fair Value of Contracts at June 30, 2026
			Maturity in Years
Source of Fair Value			Less Than 1						1-3						4-5						Greater Than 5						Total Fair Value
			(In thousands)
Prices actively quoted			$	1,002					$	3,026					$	—					$	—					$	4,028
Prices based on models and other valuation methods			—						—						—						—						—
Total Fair Value			$	1,002					$	3,026					$	—					$	—					$	4,028

OPERATING STATISTICS AND OTHER INFORMATION

The following tables present certain operating statistics for our distribution and pipeline and storage segments for the three and nine months ended June 30, 2026 and 2025.

Distribution Sales and Statistical Data

			Three Months Ended June 30												Nine Months Ended June 30
			2026						2025						2026						2025
METERS IN SERVICE, end of period
Residential			3,164,048						3,129,847						3,164,048						3,129,847
Commercial			253,574						254,871						253,574						254,871
Industrial			1,465						1,462						1,465						1,462
Public authority and other			5,514						5,626						5,514						5,626
Total meters			3,424,601						3,391,806						3,424,601						3,391,806
INVENTORY STORAGE BALANCE — Bcf			72.6						59.5						72.6						59.5
SALES VOLUMES — MMcf (1)
Gas sales volumes
Residential			14,832						17,333						125,148						143,248
Commercial			15,697						16,781						81,738						87,188
Industrial			6,237						5,934						19,859						20,277
Public authority and other			610						960						3,250						5,372
Total gas sales volumes			37,376						41,008						229,995						256,085
Transportation volumes			37,679						36,220						120,500						124,045
Total throughput			75,055						77,228						350,495						380,130

Pipeline and Storage Operations Sales and Statistical Data

			Three Months Ended June 30												Nine Months Ended June 30
			2026						2025						2026						2025
CUSTOMERS, end of period
Industrial			92						91						92						91
Other			212						201						212						201
Total			304						292						304						292
INVENTORY STORAGE BALANCE — Bcf			1.5						1.5						1.5						1.5
PIPELINE TRANSPORTATION VOLUMES — MMcf (1)			216,439						216,416						681,829						678,457

Note to preceding tables:

(1)Sales and transportation volumes reflect segment operations, including intercompany sales and transportation amounts.

RECENT ACCOUNTING DEVELOPMENTS

Recent accounting developments, if any, and their impact on our financial position, results of operations and cash flows are described in Note 2 to the condensed consolidated financial statements.