Atmos Energy : November 2020 Corporate Governance Presentation

Atmos Energy

1. multi-stateregulated natural gas delivery company achieving strong financial growth through infrastructure investment, enhancing the safety and reliability of our system

Delivering clean, safe and economical energy

to over 3 million homes and businesses

FinancialGovernance

Performance

Communities	Safety	Environment
	Is at the center of
	everything we do

CustomersEmployees

November 2020

FISCAL 2020 HIGHLIGHTS

2020 Highlights

		 Transitioned 95% of our employees to a digital working environment
Governance		 Launched a Corporate Responsibility section on our website to provide greater
	transparency around our ESG practices
		 Formalized our corporate communications strategy to further improve
		engagement with all stakeholders
		 Continued to reduce methane emissions by replacing 845 miles of pipe
		 Delivered 5.1 Bcf of RNG and CNG; equivalent to removing 58,000 cars from the
Environmental		road annually

		 Joined Our Nation's Energy Future Coalition (ONE Future)
		 Published updated CRS & Methane Emissions Reports
		 Kicked off our rebranding efforts for Fueling Safe and Thriving Communities
Social		 Contributed $14 million to charitable organization
		 Provided over 226,000 training hours to our employees; approximately 40% were
		delivered virtually

As of November 11, 2020

3

BUSINESS OVERVIEW AND

STRATEGY

Leading Natural Gas Delivery Platform

Eight-state distribution territory

Business Mix

Intrastate pipeline system

Distribution ~66%

Regulated

distribution

68%

RegulatedPipeline & pipeline

Storage29% ~34%

2020 Net Income

Diversified LDC platform in 8 states

• Largest pure-play natural gas LDC with over 3 million customers in 8 states
• ~72,000 miles of distribution and transmission mains
• ~62% of distribution rate base is located in Texas
• Blended allowed ROE of 9.8%
• Constructive regulatory mechanisms reduce lag

Favorably positioned pipeline spans

Texas shale gas supply basins

• ~5,700 miles of intrastate pipeline
• • Spans multiple key shale gas formations
  • Connection to major market hubs
• Five storage facilities with 46 Bcf of working capacity
• Allowed ROE of 11.5%
• Margin derived from tariff-based rates primarily serving Mid-Tex and other LDCs

As of November 11, 2020

5

Safety Driven, Organic Growth Strategy

Constructive Regulatory Mechanisms Support Efficient Conversion of Safety and Reliability Investments into Financial Results

~ $11 - $12 billion in capital						Constructive rate mechanisms
investment through 2025; >80%									6% - 8% Consolidated EPS growth
					that reduce regulatory lag
allocated to safety

				Rate Base	$19.0 - $21.0		Annual Capital Recovery			Adjusted Earnings per Share
$16.0		($billions)		~ 90%		$7.00				$6.30 - $6.70
														$6.00
$12.0		$10.7												$4.90 - $5.10
												$5.00		$4.721
			$9.2
$8.0															$4.00
																	$3.00
$4.0
													Earning on Annual Investments:		$2.00
$0.0													Within 0 - 6 months		$1.00
			2020			2025E
2019						Within 7 - 12 months
																$0.00
		Distribution			Pipeline and Storage				Greater than 12 months
									2020	2021E	2025E

1. Adjusted diluted EPS is a non-GAAP measure defined as diluted EPS before a one-time,non-cash income tax benefit recognized in Q3 2020.

As of November 11, 2020

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Executing Our Strategy

A Pure-Play,High-Growth Natural Gas Delivery Investment Proposition

Attractive pure-play	Diversified asset base	Strong rate base	Strong financial
with constructive	foundation with
total return	regulation	growth	consistent track record

• Earnings are 100% regulated and rate base driven
• 6 - 8% forecasted EPS growth through Fiscal 2025
• Dividend per share grows commensurately with EPS

• Regulated distribution assets in 8 states serving over 3 million customers
• Favorably positioned regulated pipeline spans Texas shale gas supply basins
• Constructive rate mechanisms reduce or eliminate regulatory lag

• Strong forecasted rate base growth through Fiscal 2025
• Capital expenditures of $11-$12 billion through Fiscal 2025; ~88% spent on safety and reliability
• Earning on over 90% of annual capex within 6 months; ~99% within 12 months

• 18 consecutive years of EPS growth; 37 consecutive years of dividend growth
• 8.7% indicated dividend increase for 2021E
• High investment-grade credit ratings (A1, A) with ample liquidity

As of November 11, 2020

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ESG Integral Part of Long-term Strategy

Board of Directors

Corporate Responsibility, Sustainability, & Safety Committee

Strong Corporate Governance





Diverse Board & Senior Leadership Accountable to Shareholders

Providing Value to Customers		Empowering Employees
	Affordable, Reliable, Safe		 Training & Educational Support
	Customer Service Focus	Focus on Safety	 Cohesive & Empowering Culture
		Mitigation of Risk

Respecting the Environment

• Clean Energy Solution
• 50% Methane Reduction by 2035

Supporting Communities

• Employees Live Where They Work
• Community Service

Solid Financial Performance

As of November 11, 2020





Consistent, Visible EPS Growth

Returns Attract Capital Investment

8

Vision, Culture and Principles

Our Vision

Our vision is for Atmos Energy to be the Safest provider of natural gas services. We will be recognized for Exceptional Customer Service, for being a Great Employer and for achieving Superior Financial Results.

Our Strategy

• Operate our business exceptionally well
• Invest in our people and infrastructure
• Enhance our culture

Core Values

• We focus on employees and customers
• We conduct our business with honesty and integrity

	Our Atmospirit Principles
1	Inspire Trust
Connects with people and cares about their well being; Can be
	counted on to do the right thing and do what they say.
	Be at Your Best
2	Reflects, plans and organizes efforts; Comes ready to play, in good
health physically, emotionally and professionally; Is accountable for
	"being here now".
	Bring Out the Best in Others
3	Recognizes what's "good", challenges self and others to be "great";
Seeks diverse views, builds healthy relationships and teams; create
	win/win solutions; Coaches others to be at their best.
	Make a Difference
4	Identifies simple, clear paths to achieve goals and get results;
Delivers on our promise to our customers, communities,
	shareholders and regulators and each other.
	Focus on the Future
5	Focuses on the right things for Atmos Energy and our stakeholders;
Is a pacesetter; Looks for opportunities to build Atmos Energy's
	business and key relationships for the future; Renews self and skills
	to be ready for the future.

As of November 11, 2020

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CORPORATE GOVERNANCE

OVERVIEW

Corporate Governance Highlights

Effective Board

Leadership and

Independent

Oversight

• 11 out of 14 Board members are independent in accordance with NYSE standards
• 29% of the Board is comprised of women and minority members
• Balanced Board tenure
• 43% of the Board has tenure of less than 5 years
• Lead Independent Director with robust role and responsibilities
• Succession planning process in place for the Board and senior management positions
• High degree of Board engagement on strategy and risk oversight matters
• In FY 2020, the Board met 14 times, and each Director attended at least 75% of meetings
• Audit, Executive, Human Resources, Nominating & Corporate Governance Committees are entirely comprised of Independent Directors

Accountable to Our

Shareholders

• Declassified Board
• One share, one vote
• Simple majority vote standard to elect Directors
• No poison pill in force
• Annual advisory vote to approve executive compensation since 2011

As of November 11, 2020

11

Overview of Board of Directors

Board Experience

Years

Board

Indepen-

Women

Public Co

Public Co

Industry

Regulatory/

Strategy/

Finance/

1

and

Safety

Serving

Member

dent

Minorities

Leadership

BOD

Experience

Policy

M&A

Accounting

Kevin

1

Akers

Robert 23

Best

Kim 11

Cocklin

Kelly 4

Compton

Sean 2

Donohue

Rafael 4

Garza

Richard 19

Gordon

Robert 11

Grable

Nancy 16

Quinn

Richard 8

Sampson

Stephen 15

Springer

Diana 2

Walters

Richard 27

Ware II

Frank -

Yoho

Board Leadership & Committees

Audit	Executive	CRS&S	HR	Nom &
Corp Gov

1

As of the Shareholder Meeting on February 3, 2021

Member

Executive Chairman of the Board

Lead Independent Director

Committee Chair

As of November 11, 2020

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OPERATIONAL MANAGEMENT

AND RISK OVERSIGHT

Risk Management and Oversight Framework

Strategic Planning Is a

Dynamic Process

• Regular meetings between operations and finance teams to align objectives, respond to evolving regulations and operating conditions and to refine capital and O&M allocations
• Actively involved Management Committee
• Weekly meetings to ensure strategic alignment across all facets of the business
• Approval of Current Fiscal Year Operating Plan and Five-Year Plan for the Board's consideration

Strong Board of		 Annual Board work session focused solely on strategic planning and leadership
	succession
Directors Involvement in		 Current Fiscal Year Operating Plan and Five-Year Plan presented by the CEO and
Setting and Approving		CFO; Current Fiscal Year Operating Plan formally approved by the Board of Directors
Strategy		 Formal quarterly update on operating and financial performance and key initiatives
		 Informal periodic updates provided as key events arise
Audit Committee Has		 Has Primary Risk Oversight Responsibility
	 Quarterly meetings focused on financial performance and risk mitigation, including
Primary Risk Oversight		periodic cybersecurity updates
Responsibility		 Internal audit reports to the Audit Committee
		 ~40% of internal audit budget focused on key operational risks
Risk Management and		 Identifies, assesses, and addresses material risks which could impact our business
Compliance Committee		objectives
Oversees Risk		 Ensures policies, procedures, and practices are in place for enterprise-wide

Management	management of material risks
 Reports to Management Committee risk exposures and steps to monitor and control
Infrastructure
risks

As of November 11, 2020

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Holistic Approach to Capital Allocation

Demand for Capital

• Pipe replacement
• Compliance/integrity
• Residential and commercial growth
• Industrial growth
• Governmental relocations
• Customer service systems
• Technology
• Facilities & equipment

Planning

• Integrity management
• System planning
• Contractor/equipment
• Coordination with local government plans
• Material availability
• Type (distribution, transmission, storage)
• Project timing and duration
• Operational constraints
• Regulatory filings
• Financing plans
• Advocacy and communications

Capital Allocation

Across Diverse

Portfolio of Projects

• Number:
• • 6,500 projects
• Cost Range:
• • $1,000 -$300M
• Location:
• • 1,400 communities
• Timing:
• • Planned and responsive

Execution

• Design
• Material procurement
• Permitting/right-of-wayacquisition
• Public and customer communications
• Qualified resource coordination
• Contracting and work assignment
• City coordination
• Inspection
• Records capture
• Mapping
• Accounting
• Regulatory filings

As of November 11, 2020

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Focus on Safety

System Safety

Public Safety

Employee Safety

Priorities

• Replacing higher risk pipe materials and equipment
• Enhancing pipeline integrity assessments
• Underground storage integrity
• New technologies
• Pipeline Safety Management System
• Emergency response
• Customer and community education
• Public awareness
• Damage prevention
• State-of-the-arttraining
• Tools and equipment
• Eliminate at-risk behavior
• Incident free

Results

• Reduced inventory of steel service lines by 356,000 since 2012
• Replaced over 5,300 miles of distribution and transmission pipelines since 2012
• Public awareness messages ~ 255 million impressions in 2020
• Excavation damages per 1,000 locates declined by 2.4% in 2020
• Employee-drivensafety culture
• OSHA Recordable Incident Rate has declined by 4% since 2014
• Curriculum has evolved from classroom- based to 80% hands-on training
• • Curriculum for all field positions
  • Supervisor Bootcamp

As of November 11, 2020

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Focus on the Environment

Governance

Gas Supply

Operations

• Founding Partner of EPA's Natural Gas STAR Methane Challenge Program
• Joined ONE Future in 2020
• Voluntary methane emissions reporting through AGA
• Transport ~ 5 BCF of RNG; equivalent to removing ~60,000 cars removed annually
• Sell ~ 5 BCF of CNG; equivalent to removing ~60,000 cars removed annually
• Continue to evaluate new opportunities to expand RNG transportation and CNG sales
• Goal to reduce methane emissions 50% from 2017 to 2035 in our distribution system
• Replace up to 6,000 miles of pipe by 2025
• Continue to reduce emissions from venting, flaring, and storage and compression facilities
• Continue to recycle water used in boring and hydrotesting activities
• 45% of customers use eBill; one of the highest rates in the industry; saves ~2,100 trees annually

Fleet and Facilities

Customers

• 13 LEED certified facilities; 4 more planned
• Evaluating use of fuel cells in facilities
• Continue to reduce emissions from our fleet
• Customer efficiency programs in four jurisdictions
• Continue to evaluate customer tariffs that offer green energy alternatives

As of November 11, 2020

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COMPENSATION PRACTICES

Overview of Compensation Practices

Compensation

Program

Objectives

• Market-competitivebase salary - total compensation should be competitive with peers
• Align interests of Named Executive Officers (NEOs) with those of our shareholders
• Attract and retain highly-qualified senior management

Our Compensation

Practices

• Total compensation package reviewed and updated annually by our HR Committee with assistance from its independent compensation consultant
• NEOs, other corporate officers and employees do not have employment contracts
• NEOs compensation targeted at the 50th percentile of market peers if performance targets are met
• Compensation policies aligned with shareholder value creation and include both potential upside gain and commensurate downside risk
• Tiered stock ownership requirements for NEOs and Directors
• Clawback policy covering all incentive-based compensation
• Double-triggerrequirement applicable to change in control severance
• Limited perquisites

As of November 11, 2020

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Elements of Executive Compensation

Component

Base Salary

Compensation	Annual Incentive
Compensation
Risk-At

Long-Term Incentive

Compensation

Retirement Benefits

Change in Control

Severance Benefits

Description / Considerations

• Fixed compensation, subject to annual review with adjustments made in in response to changes in performance, duties, strategic importance or competitive salary practices
• Annual cash performance award based on fully diluted EPS, the same metric used to measure incentive compensation for all employees
• Option to convert all or portion of award to time-lapse RSUs under LTIP with three- year cliff vesting at 20% premium
• Performance-basedawards payable only if performance goals are met during a three-year performance period based on achievement of three-year cumulative EPS target
• Time-lapseawards also payable, with cliff vesting, at the end of three-year period
• Tax-qualifiedretirement benefits, supplemental retirement and other benefits
• Change in control payments payable only if employment is terminated under certain conditions following change in control
• No excise tax gross-up payments

As of November 11, 2020

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Breakdown of Compensation for NEOs

	FY2020 Compensation Targets
CEO	Other NEOs1

Time-Lapse		Time-Lapse
RSUs, 30%		RSUs, 27%	Base
80% At-Risk	Base
74% At-Risk		Salary, 26%
Compensation	Salary, 20%
Compensation
Performance			Performance
Based RSU,	Annual		Annual
	Based RSU,
30%	Incentive Plan,		Incentive Plan,
	27%
	20%		20%

Compensation Incentives Foster Accountable Value Creation

• Ratio of CEO to median employee compensation - 123:12
• Fixed base salary compensation subject to annual review and changes in performance, duties, strategic importance or competitive salary practices
• Prohibits hedging common stock and pledging of shares by all executive officers and Directors
• Incentive Plans cap the size of any cash awards earned by any single participant during the year

1. 2020 Other NEOs for Atmos Energy include: Kim Cocklin, Christopher Forsythe, Karen Hartsfield, and David Park.
2. As of September 30, 2019

As of November 11, 2020

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FOCUS ON LONG-TERM

SUSTAINABILITY

Long-Term Sustainability

Aligning & Balancing All Stakeholders

Communities

Customers

Employees

Investors

• Keeping the ~1,400 communities we serve safe
• Giving back to the communities through volunteer hours and our Fueling Safe and Thriving Communities program
• Investments foster local economic development and job creation
• Responsible environmental stewardship

• Focus on safety of our customers
• Investment in technology to improve customer interactions
• Sharing the Warmth program
• LIHEAP Program
• Overall customer satisfaction score of 94%

• > 1.5 million Hours of training through the Charles K. Vaughan Center since 2010
• Recent hires were 31% women and 44% minorities
• College tuition support
• Benefits that allow employees to balance work & life

• Long-termfocus
• Consistent earnings & dividend growth
• 100% regulated
• Safety-drivenorganic growth
• Constructive regulatory relationships
• Strong balance sheet
• Strong corporate governance

As of November 11, 2020

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Forward Looking Statements

The matters discussed or incorporated by reference in this presentation 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 presentation 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 presentation, or 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 presentation, including the risks relating to regulatory trends and decisions, our ability to continue to access the credit and capital markets, and the other factors discussed in our reports filed with the Securities and Exchange Commission. 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; the impact of greenhouse gas emissions or other legislation or regulations intended to address climate change; 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; adverse weather conditions; the impact of climate change; the inability to continue to hire, train and retain operational, technical and managerial personnel; increased dependence on technology that may hinder the Company's business if such technologies fail; 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; natural disasters, 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; 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; increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements; the outbreak of COVID-19 and its impact on business and economic conditions. 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.

As of November 11, 2020

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