Spire(US:SR)2025-11-14 19:24Customer Base and Service Areas - Spire Missouri serves approximately 1.2 million customers, while Spire Alabama serves over 0.4 million customers, making them the largest natural gas distributors in their respective states[27][28]. - The annual average number of customers for Spire Missouri and Spire Alabama in fiscal 2025 was 1,213,375 and 429,628, respectively[35]. Revenue Sources and Financial Performance - For fiscal year 2025, Spire's total operating revenues from the Gas Utility segment were primarily derived from residential customers (66%), followed by commercial and industrial customers (23%)[34]. - Spire Missouri and Spire Alabama's operating revenues for fiscal 2025 are approximately 92% and 81% from residential, commercial, and industrial customers, respectively[38]. - In fiscal 2025, transportation customers contributed about 2% of operating revenues for Spire Missouri and 16% for Spire Alabama[39]. - Operating revenues for the year ended September 30, 2025, totaled $2,476.4 million, a decrease of $116.6 million compared to $2,593.0 million in 2024[180]. - The decrease in Gas Utility operating revenues for fiscal 2025 was primarily due to a $285.5 million reduction in gas cost recoveries across all utilities[184]. - Operating revenues for the twelve months ended September 30, 2025, decreased by $193.3 million compared to the prior year, primarily due to lower gas cost recoveries of $239.8 million[195]. Natural Gas Sales and Transportation - The total volume of natural gas sold and transported by Spire in 2025 was 3,275.2 million CCF, an increase from 3,089.5 million CCF in 2024[35]. - Spire Missouri purchased 36.5 Bcf of natural gas through the Enable MRT system and 27.6 Bcf through the Southern Star system in fiscal 2025[43]. - Spire Alabama purchased approximately 55.3 Bcf of natural gas from SNG and 8.9 Bcf from Transco in fiscal 2025[48]. - The peak day send out for Spire Missouri East was 0.95 Bcf on January 21, 2025, while Spire Alabama's peak was 0.6 Bcf on the same day[44][49]. Regulatory Environment and Compliance - Utilities are regulated by state public service commissions, impacting their ability to charge rates, recover costs, and maintain profitability[71]. - The Infrastructure System Replacement Surcharge (ISRS) allows expedited recovery of infrastructure investments, but any disallowance of costs could affect revenue timing and cash flows[73]. - The Rate Stabilization and Equalization (RSE) mechanism requires annual rate reviews, with existing terms continuing beyond September 30, 2025, unless modified[74]. - Compliance with federal safety regulations may impose significant costs and liabilities, requiring ongoing assessments and potential capital expenditures[76]. - Environmental laws may necessitate significant expenditures and increase operating costs, with potential fines for non-compliance[80]. - Delays in cost recovery due to regulatory processes can adversely affect the Utilities' liquidity[81]. Competition and Market Risks - The principal competition for Spire comes from local electric companies and other fuel suppliers, with a growing trend towards renewable energy sources[37]. - Increased competition may hinder the Utilities' ability to retain or acquire customers, adversely affecting business and financial performance[94]. - Spire's natural gas storage business faces competition from pipelines and independent storage providers, which could reduce demand and drive rates down[96]. Financial Metrics and Adjustments - Adjusted earnings and adjusted earnings per share are used to evaluate financial performance, excluding impacts from fair value accounting and non-recurring items[167]. - The contribution margin for the year ended September 30, 2025, was $1,455.2 million, an increase of $93.7 million from $1,361.5 million in 2024, indicating a growth of 6.9%[180]. - Interest expense increased by $5.4 million due to costs associated with the bridge facility for the Piedmont Tennessee acquisition, although overall interest expense declined by $2.4 million year-over-year[181]. - The weighted-average short-term interest rates decreased from 5.7% in the prior year to 4.5% in the current year, contributing to lower interest expenses[181]. Acquisitions and Growth Strategies - The company is pursuing an acquisition of Piedmont Natural Gas for approximately $2.48 billion, subject to regulatory approvals, which carries integration and approval risks[127]. - The acquisition of Piedmont Natural Gas's Tennessee business is valued at $2.48 billion, aimed at expanding Spire's regulated utility footprint and increasing scale[171]. - The transaction is expected to close in Q1 2026, pending regulatory approvals, including from the Tennessee Public Utility Commission[173]. - Spire plans to finance the acquisition through a mix of debt, equity, and potential sales of natural gas storage facilities[172]. Employee and Operational Insights - Spire's workforce consisted of 3,497 employees as of September 30, 2025, with ongoing initiatives to improve safety and employee well-being[20][21]. - The company has a comprehensive enterprise risk management process to address significant risks, including cybersecurity threats[136]. - Spire's cybersecurity program is overseen by the Board of Directors, with regular updates on developments and risks[137]. Dividend and Stock Performance - Spire has maintained continuous common stock dividends since 1946, dependent on its subsidiaries' ability to generate sufficient net income and cash flows[108]. - Spire's common stock has continuously paid dividends since 1946, marking 22 consecutive years of increasing dividends as of 2025[153]. - As of September 30, 2025, Spire Missouri had $1,999.8 million available to pay dividends, free from restrictions[161]. - Spire's cumulative total return increased from $100.00 in 2020 to $190.57 by 2025, reflecting strong performance relative to the S&P 500 Utilities Index[155]. Economic and Environmental Factors - Warmer-than-normal weather and climate change could adversely affect the Utilities' heating energy sales, impacting financial results[98]. - The Utilities have mechanisms like Weather Normalization Adjustment riders to recover fixed costs during winter months, but these do not fully mitigate the impact of warmer weather[99]. - Economic downturns could lead to decreased energy consumption and increased bad debt expenses, adversely impacting revenues and cash flows[131]. Risks and Liabilities - The company faces risks from operational factors, including the availability of contracted gas supplies and pipeline capacity, which could adversely impact financial results[90]. - Spire's financial condition may be adversely affected by unexpected losses from litigation or business risks, despite having insurance and indemnification strategies[128]. - Changes in income tax policy could impact the Company's financial condition, particularly regarding the utilization of net operating losses (NOLs)[82]. - Rising interest rates could decrease the fair values of reporting units, leading to potential future impairments[124]. - The company has pension and postretirement benefit plans that are subject to investment and interest rate risks, potentially impacting financial condition and requiring accelerated funding[122].