Atmos Energy Corporation Reports Earnings for Fiscal 2018 First Quarter; Raises Fiscal 2018 Guidance

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results
for its first quarter ended December 31, 2017.

• Fiscal 2018 first quarter consolidated net income was $314.1 million,
  or $2.89 per diluted share, compared with consolidated net income of
  $125.0 million, or $1.19 per diluted share in the prior-year quarter.
• Adjusted net income from continuing operations was $152.2 million, or
  $1.40 per diluted share after excluding a one-time income tax benefit
  of $161.9 million, or $1.49 per diluted share, related to the Tax Cuts
  and Jobs Act of 2017 (the TCJA) due to the revaluation of the
  Company's net deferred tax liabilities. Net income from continuing
  operations was $114.0 million, or $1.08 per diluted share for the same
  period last year.
• Fiscal 2018 earnings guidance was increased to $3.85 to $4.05 per
  diluted share from $3.75 to $3.95 per diluted share. Capital
  expenditures are expected to remain in the previously announced range
  of $1.3 billion to $1.4 billion in fiscal 2018.
• The company's Board of Directors has declared a quarterly dividend of
  $0.485 per common share. The indicated annual dividend for fiscal 2018
  is $1.94, which represents a 7.8 percent increase over fiscal 2017.

“Executing on our strategy of infrastructure investment continues to
deliver solid results,” said Mike Haefner, President and Chief Executive
Officer of Atmos Energy Corporation. “Additionally, we believe that the
impact of tax reform will be good for our customers and the lower tax
rate will result in over $100 million of annual savings to customer
bills. We are working with regulators in each of our jurisdictions to
return this benefit. Our strategy remains unchanged and looking forward,
we remain well positioned to continue delivering annual earnings growth
in the 6 percent to 8 percent range,” Haefner concluded.

Results for the Three Months Ended December 31, 2017

Distribution gross profit increased $37.7 million to $397.0 million for
the three months ended December 31, 2017, compared with $359.3 million
in the prior-year period. Gross profit reflects a net $25.6 million
increase in rates, primarily in our Texas, Mississippi and
Kentucky/Mid-States Divisions. In addition, net consumption increased
$5.7 million, primarily due to weather that was 20 percent colder than
the prior-year quarter.

Pipeline and storage gross profit increased $16.0 million to $125.6
million for the three months ended December 31, 2017, compared with
$109.6 million in the prior-year quarter. This increase is primarily
attributable to a $13.9 million increase in revenue from the Atmos
Pipeline–Texas rate case and the Gas Reliability Infrastructure Program
(GRIP) filing approved in December 2017.

Consolidated operation and maintenance expense for the three months
ended December 31, 2017, was $129.6 million, compared with $124.9
million in the prior-year quarter. This increase was primarily driven by
higher maintenance activities in the company's distribution segment and
higher employee-related costs in the current year.

Excluding the one-time income tax benefit, the effective tax rate for
the three months ended December 31, 2017 decreased to 26.8%, compared to
35.9% in the prior-year quarter. The decrease primarily reflects the
lower statutory federal income tax rate due to enactment of the TCJA.
The lower effective tax rate reduced tax expense by approximately $16
million.

Capital expenditures increased $85.2 million to $383.2 million for the
three months ended December 31, 2017, compared with $298.0 million in
the prior-year quarter, due to a planned increase in spending for
infrastructure replacements and enhancements.

For the three months ended December 31, 2017, the company generated
operating cash flow of $173.2 million, a $56.3 million increase compared
with the three months ended December 31, 2016. The quarter-over-quarter
increase primarily reflects the positive cash effect of successful rate
case outcomes achieved in fiscal 2017, as well as higher recoveries of
deferred gas cost due to higher distribution sales volumes in the
current quarter compared to the prior-year quarter.

The equity capitalization ratio at December 31, 2017 was 57.3%, compared
with 52.6% at September 30, 2017. On November 28, 2017, Atmos Energy
completed the public offering of 4,558,404 shares of common stock for
gross proceeds of approximately $400 million. Atmos Energy used the net
proceeds of $395.1 million from this offering to repay short-term debt
under its commercial paper program, to fund capital spending primarily
to enhance the safety and reliability of its system and for general
corporate purposes.

Outlook

The leadership of Atmos Energy remains focused on enhancing system
safety and reliability through infrastructure investment while
delivering shareholder value and consistent earnings growth. Atmos
Energy now expects fiscal 2018 earnings to be in the range of $3.85 to
$4.05 per diluted share, excluding the one-time, non-cash income tax
benefit recognized during the first quarter. The increase primarily
reflects the accounting effects from implementing the TCJA. Capital
expenditures for fiscal 2018 are expected to remain in the previously
announced range of $1.3 billion to $1.4 billion.

Conference Call to be Webcast February 7, 2018

Atmos Energy will host a conference call with financial analysts to
discuss the fiscal 2018 first quarter financial results on Wednesday,
February 7, 2018, at 8:00 a.m. Eastern Time. The domestic telephone
number is 877-485-3107 and the international telephone number is
201-689-8427. Mike Haefner, President and Chief Executive Officer and
Chris Forsythe, Senior Vice President and Chief Financial Officer will
participate in the conference call. The conference call will be webcast
live on the Atmos Energy website at www.atmosenergy.com.
A playback of the call will be available on the website later that day.

This news release should be read in conjunction with the attached
unaudited financial information.

Forward-Looking Statements

The matters discussed in this news release 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
news release are forward-looking statements made in good faith by the
company 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 news release or in any of the company's other
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 discussed in this news release, including
the risks and uncertainties relating to regulatory trends and decisions,
the company's ability to continue to access the credit and capital
markets and the other factors discussed in the company's reports filed
with the Securities and Exchange Commission. These factors include the
risks and uncertainties discussed in the company's Annual Report on Form
10-K for the fiscal year ended September 30, 2017. Although the company
believes 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. The company undertakes
no obligation to update or revise forward-looking statements, whether as
a result of new information, future events or otherwise.

Non-GAAP Financial Measures

The historical financial information in this news release utilizes
certain financial measures that are not presented in accordance with
generally accepted accounting principles (GAAP). Specifically, the
company uses gross profit, defined as operating revenues less purchased
gas cost, to discuss and analyze its financial performance. Its
operations are affected by the cost of natural gas, which is passed
through to its customers without markup and includes commodity price,
transportation, storage, injection and withdrawal fees, along with
hedging settlements. These costs are reflected in the income statement
as purchased gas cost. Therefore, increases in the cost of gas are
offset by a corresponding increase in revenues. Accordingly, the company
believes gross profit is a more useful and relevant measure to analyze
its financial performance than operating revenues.

In addition, the enactment of the TCJA required the company to remeasure
its deferred tax assets and liabilities at its new federal statutory
income tax rate as of December 31, 2017, which resulted in the
recognition of a one-time, non-cash income tax benefit of $161.9 million
during the three months ended December 31, 2017. Due to the
non-recurring nature of this benefit, the company believes that income
from continuing operations and diluted earnings per share from
continuing operations before the one-time, non-cash income tax benefit,
provides a more useful and relevant measure to analyze its financial
performance than income from continuing operations and consolidated
diluted earnings per share from continuing operations. Accordingly, the
discussion and analysis of the company's financial performance will
reference adjusted income from continuing operations and diluted
earnings per share, which is calculated as follows:

About Atmos Energy

Atmos Energy Corporation, headquartered in Dallas, is the country's
largest fully-regulated, natural-gas-only distributor, serving over
three million natural gas distribution customers in over 1,400
communities in eight states from the Blue Ridge Mountains in the East to
the Rocky Mountains in the West. Atmos Energy also manages company-owned
natural gas pipeline and storage assets, including one of the largest
intrastate natural gas pipeline systems in Texas. For more information,
visit www.atmosenergy.com.

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