Spire(SR) - 2024 Q2 - Quarterly Results

Executive Summary Q2 FY24 Highlights Spire's Q2 FY24 consolidated net economic earnings per share decreased to $3.45 from $3.70 YoY, while net income increased to $204.3 million ($3.58 per share) from $179.2 million ($3.33 per share), with full-year NEE guidance reaffirmed Q2 FY24 Key Financial Highlights | Metric | Q2 FY24 | Q2 FY23 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | Net Economic Earnings (NEE) per share | $3.45 | $3.70 | ($0.25) | | Net Income per share | $3.58 | $3.33 | $0.25 | | Net Income (Millions) | $204.3 | $179.2 | $25.1 | | Net Economic Earnings (Millions) | $196.6 | $199.2 | ($2.6) | - Spire reaffirmed its fiscal 2024 net economic earnings guidance range of $4.25–$4.45 per share[4] - The CEO expressed confidence in meeting the full-year earnings target despite a warmer winter and higher interest costs, emphasizing progress on capital expenditure and growth strategy[2] Financial Performance Overview Second Quarter Financial Results Consolidated Q2 FY24 net economic earnings slightly decreased to $196.6 million ($3.45 per share) from $199.2 million ($3.70 per share) YoY, while GAAP net income increased to $204.3 million ($3.58 per share) from $179.2 million ($3.33 per share), impacted by higher weighted-average shares outstanding Second Quarter Financial Results (Millions, except per share) | Metric | 2024 | 2023 | Change (YoY) | | :-------------------------------- | :----- | :----- | :----------- | | Net Economic Earnings (Total) | $196.6 | $199.2 | ($2.6) | | Net Economic Earnings per Share | $3.45 | $3.70 | ($0.25) | | Net Income (Total) | $204.3 | $179.2 | $25.1 | | Net Income per Share | $3.58 | $3.33 | $0.25 | | Weighted Average Diluted Shares Outstanding | 55.9 | 52.6 | 3.3 | - Higher weighted-average shares outstanding resulted from the issuance of 2.7 million shares in March 2024 and 1.7 million shares in December 2023[5] Year-to-Date Financial Results For the first six months of FY24, consolidated net income increased to $289.4 million ($5.14 per diluted share) from $270.2 million ($4.99 per diluted share) YoY, but net economic earnings decreased to $279.3 million ($4.96 per share) from $284.3 million ($5.26 per share) due to reduced commodity volatility Year-to-Date Financial Results (Millions, except per share) | Metric | 2024 | 2023 | Change (YoY) | | :-------------------------------- | :----- | :----- | :----------- | | Net Economic Earnings (Total) | $279.3 | $284.3 | ($5.0) | | Net Economic Earnings per Share | $4.96 | $5.26 | ($0.30) | | Net Income (Total) | $289.4 | $270.2 | $19.2 | | Net Income per Share | $5.14 | $4.99 | $0.15 | | Weighted Average Diluted Shares Outstanding | 54.7 | 52.6 | 2.1 | - The decrease in YTD NEE was primarily due to reduced commodity and basis volatility in the current year for the Gas Marketing and Midstream segments, compared to very favorable market conditions in the prior year[13] Segment Performance Analysis Gas Utility Segment Q2 Performance The Gas Utility segment reported an increase in Q2 FY24 NEE to $188.0 million from $183.9 million YoY, driven by higher earnings at Spire Alabama due to new rates and increased usage, partially offset by lower Spire Missouri earnings from weather-driven usage Gas Utility Segment Q2 NEE (Millions) | Metric | Q2 FY24 | Q2 FY23 | Change (YoY) | | :----- | :------ | :------ | :----------- | | NEE | $188.0 | $183.9 | $4.1 | - Contribution margin increased by $18.4 million, primarily due to new rates in Spire Alabama, Spire Missouri ISRS revenues, and increased Spire Alabama usage, partially offset by lower Spire Missouri weather-driven usage[8] - Operation and maintenance expense increased by $2.3 million to $121.6 million due to higher employee-related costs, while depreciation and amortization expense increased by $5.2 million, and interest expense increased by $2.8 million to $38.3 million[9] YTD Performance For the first six months of FY24, Gas Utility NEE rose to $263.8 million from $246.8 million YoY, reflecting strong performance across all utilities, with contribution margin increasing by $41.2 million Gas Utility Segment YTD NEE (Millions) | Metric | YTD FY24 | YTD FY23 | Change (YoY) | | :----- | :------- | :------- | :----------- | | NEE | $263.8 | $246.8 | $17.0 | - Contribution margin increased by $41.2 million, driven by rate benefits at Spire Missouri and Spire Alabama, ISRS revenues, and higher Spire Alabama usage, partially offset by lower Spire Missouri weather-driven usage[15] - Operation and maintenance expense decreased by $0.9 million to $238.3 million, while depreciation and amortization expense increased by $9.7 million, and interest expense also increased by $9.7 million[15][16] Gas Marketing Segment Q2 Performance Gas Marketing NEE for Q2 FY24 decreased to $15.5 million from $21.8 million YoY, primarily due to the non-recurrence of exceptionally favorable market conditions from the prior year Gas Marketing Segment Q2 NEE (Millions) | Metric | Q2 FY24 | Q2 FY23 | Change (YoY) | | :----- | :------ | :------ | :----------- | | NEE | $15.5 | $21.8 | ($6.3) | - The decrease was primarily due to the non-recurrence of very favorable market conditions experienced in the prior year[10] YTD Performance Gas Marketing NEE for the first six months of FY24 was $22.7 million, a significant decrease from $47.5 million in the prior year, primarily due to the non-recurrence of very favorable market conditions experienced in the previous year Gas Marketing Segment YTD NEE (Millions) | Metric | YTD FY24 | YTD FY23 | Change (YoY) | | :----- | :------- | :------- | :----------- | | NEE | $22.7 | $47.5 | ($24.8) | - The substantial year-over-year decrease is attributed to the absence of the very favorable market conditions that characterized the prior year[17] Midstream Segment Q2 Performance The Midstream segment reported Q2 FY24 NEE of $3.8 million, down from $4.2 million YoY, attributed to the non-recurrence of very favorable market conditions from the prior year, though some value from this winter is expected to be recognized later in FY24, with results including earnings from recent acquisitions Midstream Segment Q2 NEE (Millions) | Metric | Q2 FY24 | Q2 FY23 | Change (YoY) | | :----- | :------ | :------ | :----------- | | NEE | $3.8 | $4.2 | ($0.4) | - The decrease reflects solid results compared to very favorable market conditions in the prior year that did not recur[11] - Results include earnings from the acquisitions of MoGas and Salt Plains over the last twelve months[11] YTD Performance Midstream NEE for the first six months of FY24 was $6.2 million, a decrease from $8.0 million YoY, reflecting solid results compared to the very favorable market conditions of the prior year that did not recur, with acquisitions of MoGas and Salt Plains contributing to earnings Midstream Segment YTD NEE (Millions) | Metric | YTD FY24 | YTD FY23 | Change (YoY) | | :----- | :------- | :------- | :----------- | | NEE | $6.2 | $8.0 | ($1.8) | - The year-over-year decrease is due to the non-recurrence of very favorable market conditions from the prior year[18] - Earnings from MoGas and Salt Plains acquisitions are included in the results[18] Other Activities Q2 Performance Spire's other activities reported an NEE loss of $10.7 million in Q2 FY24, consistent with the prior year, as lower corporate costs were offset by higher interest expense Other Activities Q2 NEE Loss (Millions) | Metric | Q2 FY24 | Q2 FY23 | Change (YoY) | | :----- | :------ | :------ | :----------- | | NEE | ($10.7) | ($10.7) | $0.0 | YTD Performance For the first six months of FY24, other activities reported an NEE loss of $13.4 million, an improvement from an $18.0 million loss YoY, reflecting the settlement of an interest rate hedge, partially offset by higher corporate costs and interest expense Other Activities YTD NEE Loss (Millions) | Metric | YTD FY24 | YTD FY23 | Change (YoY) | | :----- | :------- | :------- | :----------- | | NEE | ($13.4) | ($18.0) | $4.6 | - The improvement in NEE loss was due to the settlement of an interest rate hedge in the current period, partially offset by higher corporate costs and interest expense[19] Guidance and Outlook Fiscal 2024 Guidance and Long-Term Growth Spire reaffirmed its fiscal 2024 NEE guidance range of $4.25–$4.45 per share and maintains confidence in achieving long-term NEE per share growth of 5–7%, driven by expected 7–8% annual utility rate base growth - Fiscal 2024 NEE guidance range reaffirmed at $4.25–$4.45 per share[20] - Long-term NEE per share growth target of 5–7%, driven by expected 7–8% annual utility rate base growth[20] Capital Investment Plan Spire's 10-year capital investment target through fiscal 2033 is $7.3 billion, primarily for infrastructure upgrades and new business in the Gas Utility segment, with expected capital expenditures for fiscal 2024 increased from $765 million to $800 million - 10-year capital investment target through fiscal 2033 is $7.3 billion, primarily for infrastructure upgrades and new business in the Gas Utility segment[21] - Expected capital expenditures for fiscal 2024 increased from $765 million to $800 million[21] Company Information Conference Call Details Spire hosted a conference call and webcast on May 1, 2024, at 8 a.m. CT (9 a.m. ET) to discuss Q2 FY24 results, with replay information available until June 1, 2024 - Conference call and webcast held on Wednesday, May 1, 2024, at 8 a.m. CT (9 a.m. ET)[22][23] - Replay of the call available from May 1 until June 1, 2024, via phone and webcast[23] About Spire Inc. Spire Inc. (NYSE: SR) is one of the largest publicly traded natural gas companies in the U.S., serving 1.7 million homes and businesses across Alabama, Mississippi, and Missouri, with a commitment to organic growth, infrastructure investment, and innovation - Spire Inc. serves 1.7 million homes and businesses, making it one of the largest publicly traded natural gas companies in the U.S[24] - Operations include gas utilities serving Alabama, Mississippi, and Missouri, along with Spire Marketing and Spire Midstream businesses[24] - Committed to transforming its business through organic growth, infrastructure investment, and innovation[24] Legal and Non-GAAP Disclosures Forward-Looking Information This section highlights that the news release contains forward-looking statements subject to various uncertainties and risk factors, including weather, economic conditions, competition, and regulatory actions, with more detailed risks available in SEC filings (Form 10-K and 10-Q) - The news release contains forward-looking statements subject to various uncertainties and risk factors beyond the Company's control[25] - Key risk factors include weather conditions, economic factors, competitive environment, governmental and regulatory policy, and risks associated with acquisitions[25] - More complete descriptions of uncertainties and risk factors are available in the Company's annual (Form 10-K) and quarterly (Form 10-Q) filings with the SEC[25] Non-GAAP Measures Explanation This section defines "net economic earnings" (NEE) and "contribution margin," explaining that management uses these non-GAAP measures to evaluate performance by excluding certain volatile or non-recurring items, and they should not replace GAAP metrics - Net economic earnings (NEE) exclude impacts of fair value accounting and timing adjustments, acquisition/divestiture/restructuring activities, and non-cash/unusual items from net income[6][26] - Contribution margin adjusts revenues by removing wholesale cost of natural gas and gross receipts taxes, which are directly passed on to customers[26] - These non-GAAP metrics are used internally by management to evaluate performance and should not be considered an alternative to GAAP measures[26] Consolidated Financial Statements Condensed Consolidated Statements of Income This table presents the unaudited condensed consolidated statements of income for the three and six months ended March 31, 2024, and 2023, showing key figures such as operating revenues, operating expenses, operating income, net income, and diluted earnings per common share Condensed Consolidated Statements of Income – Unaudited (In Millions, except per share amounts) | (In Millions, except per share amounts) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Operating Revenues | $1,128.5 | $1,123.4 | $1,885.1 | $1,937.4 | | Total Operating Expenses | $829.9 | $863.1 | $1,447.3 | $1,526.9 | | Operating Income | $298.6 | $260.3 | $437.8 | $410.5 | | Interest Expense, Net | $52.2 | $47.2 | $102.8 | $90.8 | | Income Before Income Taxes | $253.7 | $220.1 | $359.8 | $332.7 | | Income Tax Expense | $49.4 | $40.9 | $70.4 | $62.5 | | Net Income | $204.3 | $179.2 | $289.4 | $270.2 | | Net Income Available to Common Shareholders | $200.3 | $175.1 | $281.6 | $262.3 | | Diluted Earnings Per Common Share | $3.58 | $3.33 | $5.14 | $4.99 | | Dividends Declared Per Common Share | $0.755 | $0.72 | $1.51 | $1.44 | Condensed Consolidated Balance Sheets This table provides the unaudited condensed consolidated balance sheets as of March 31, 2024, September 30, 2023, and March 31, 2023, detailing assets, capitalization, and liabilities Condensed Consolidated Balance Sheets – Unaudited (In Millions) | (In Millions) | March 31, 2024 | September 30, 2023 | March 31, 2023 | | :-------------------------------- | :------------- | :----------------- | :------------- | | ASSETS | | | | | Net Utility Plant | $5,971.0 | $5,778.9 | $5,533.9 | | Total Other Property and Investments | $991.5 | $731.1 | $651.7 | | Total Current Assets | $1,005.7 | $1,076.9 | $1,111.6 | | Deferred Charges and Other Assets | $2,743.2 | $2,726.7 | $2,751.8 | | Total Assets | $10,711.4 | $10,313.6 | $10,049.0 | | CAPITALIZATION AND LIABILITIES | | | | | Total Shareholders' Equity | $3,390.3 | $2,917.3 | $2,986.5 | | Long-term debt (less current portion) | $3,421.4 | $3,554.0 | $3,702.5 | | Total Capitalization | $6,822.0 | $6,487.8 | $6,707.8 | | Total Current Liabilities | $1,650.3 | $1,755.4 | $1,406.9 | | Total Deferred Credits and Other Liabilities | $2,239.1 | $2,070.4 | $1,934.3 | | Total Capitalization and Liabilities | $10,711.4 | $10,313.6 | $10,049.0 | Condensed Consolidated Statements of Cash Flows This table presents the unaudited condensed consolidated statements of cash flows for the six months ended March 31, 2024, and 2023, outlining cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows – Unaudited (In Millions) | (In Millions) | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :---------------------------------------- | :------------------------------ | :------------------------------ | | Net Income | $289.4 | $270.2 | | Net cash provided by operating activities | $559.4 | $179.9 | | Net cash used in investing activities | ($583.9) | ($340.7) | | Net cash provided by financing activities | $45.1 | $161.5 | | Net Increase in Cash, Cash Equivalents, and Restricted Cash | $20.6 | $0.7 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $46.4 | $21.2 | Non-GAAP Reconciliations Net Economic Earnings (NEE) Reconciliation to GAAP This section provides a detailed reconciliation of Net Economic Earnings (Non-GAAP) to Net Income (GAAP) for both the three and six months ended March 31, 2024, and 2023, broken down by segment, showing adjustments for fair value and timing, acquisition activities, and income taxes Net Economic Earnings and Reconciliation to GAAP (In Millions, except per share amounts) | (In Millions, except per share amounts) | Gas Utility | Gas Marketing | Midstream | Other | Total | Per Diluted Common Share | | :-------------------------------------- | :---------- | :------------ | :-------- | :---- | :---- | :----------------------- | | Three Months Ended March 31, 2024 | | | | | | | | Net Income (Loss) [GAAP] | $188.3 | $22.9 | $3.8 | ($10.7) | $204.3 | $3.58 | | Adjustments, pre-tax: | | | | | | | | Fair value and timing adjustments | ($0.4) | ($9.8) | — | — | ($10.2) | ($0.17) | | Income tax adjustments | $0.1 | $2.4 | — | — | $2.5 | $0.04 | | Net Economic Earnings (Loss) [Non-GAAP] | $188.0 | $15.5 | $3.8 | ($10.7) | $196.6 | $3.45 | | Three Months Ended March 31, 2023 | | | | | | | | Net Income (Loss) [GAAP] | $183.5 | $2.2 | $4.2 | ($10.7) | $179.2 | $3.33 | | Adjustments, pre-tax: | | | | | | | | Fair value and timing adjustments | $0.5 | $26.1 | — | — | $26.6 | $0.50 | | Income tax adjustments | ($0.1) | ($6.5) | — | — | ($6.6) | ($0.13) | | Net Economic Earnings (Loss) [Non-GAAP] | $183.9 | $21.8 | $4.2 | ($10.7) | $199.2 | $3.70 | | Six Months Ended March 31, 2024 | | | | | | | | Net Income (Loss) [GAAP] | $263.8 | $34.3 | $4.7 | ($13.4) | $289.4 | $5.14 | | Adjustments, pre-tax: | | | | | | | | Fair value and timing adjustments | — | ($15.4) | — | — | ($15.4) | ($0.27) | | Acquisition activities | — | — | $1.9 | — | $1.9 | $0.03 | | Income tax adjustments | — | $3.8 | ($0.4) | — | $3.4 | $0.06 | | Net Economic Earnings (Loss) [Non-GAAP] | $263.8 | $22.7 | $6.2 | ($13.4) | $279.3 | $4.96 | | Six Months Ended March 31, 2023 | | | | | | | | Net Income (Loss) [GAAP] | $246.4 | $33.8 | $8.0 | ($18.0) | $270.2 | $4.99 | | Adjustments, pre-tax: | | | | | | | | Fair value and timing adjustments | $0.5 | $18.3 | — | — | $18.8 | $0.36 | | Income tax adjustments | ($0.1) | ($4.6) | — | — | ($4.7) | ($0.09) | | Net Economic Earnings (Loss) [Non-GAAP] | $246.8 | $47.5 | $8.0 | ($18.0) | $284.3 | $5.26 | Contribution Margin Reconciliation to GAAP This section provides a detailed reconciliation of Contribution Margin (Non-GAAP) to Operating Income (GAAP) for both the three and six months ended March 31, 2024, and 2023, broken down by segment, illustrating adjustments for various expenses and taxes Contribution Margin and Reconciliation to GAAP (In Millions) | (In Millions) | Gas Utility | Gas Marketing | Midstream | Other | Eliminations | Consolidated | | :-------------------------------------- | :---------- | :------------ | :-------- | :---- | :----------- | :----------- | | Three Months Ended March 31, 2024 | | | | | | | | Operating Income (Loss) [GAAP] | $261.8 | $30.0 | $7.4 | ($0.6) | — | $298.6 | | Operation and maintenance expenses | $121.6 | $6.2 | $9.4 | $4.7 | ($4.1) | $137.8 | | Depreciation and amortization | $65.4 | $0.4 | $3.0 | $0.1 | — | $68.9 | | Taxes, other than income taxes | $80.7 | $0.5 | $1.1 | ($0.1) | $0.2 | $82.4 | | Less: Gross receipts tax expense | ($59.9) | ($0.1) | — | — | — | ($60.0) | | Contribution Margin [Non GAAP] | $469.6 | $37.0 | $20.9 | $4.1 | ($3.9) | $527.7 | | Three Months Ended March 31, 2023 | | | | | | | | Operating Income (Loss) [GAAP] | $251.3 | $2.4 | $7.5 | ($0.9) | — | $260.3 | | Operation and maintenance expenses | $119.3 | $5.7 | $6.2 | $4.9 | ($4.0) | $132.1 | | Depreciation and amortization | $60.2 | $0.4 | $2.0 | — | — | $62.6 | | Taxes, other than income taxes | $80.4 | $0.6 | $0.8 | $0.1 | — | $81.9 | | Less: Gross receipts tax expense | ($60.0) | ($0.2) | — | — | — | ($60.2) | | Contribution Margin [Non GAAP] | $451.2 | $8.9 | $16.5 | $4.1 | ($4.0) | $476.7 | | Six Months Ended March 31, 2024 | | | | | | | | Operating Income (Loss) [GAAP] | $384.1 | $44.7 | $10.7 | ($1.7) | — | $437.8 | | Operation and maintenance expenses | $238.3 | $10.6 | $18.0 | $9.7 | ($8.1) | $268.5 | | Depreciation and amortization | $129.6 | $0.8 | $5.3 | $0.2 | — | $135.9 | | Taxes, other than income taxes | $132.3 | $0.8 | $1.8 | — | $0.2 | $135.1 | | Less: Gross receipts tax expense | ($90.9) | ($0.2) | — | — | — | ($91.1) | | Contribution Margin [Non GAAP] | $793.4 | $56.7 | $35.8 | $8.2 | ($7.9) | $886.2 | | Six Months Ended March 31, 2023 | | | | | | | | Operating Income (Loss) [GAAP] | $353.2 | $43.8 | $14.6 | ($1.1) | — | $410.5 | | Operation and maintenance expenses | $239.2 | $12.0 | $12.0 | $8.9 | ($7.9) | $264.2 | | Depreciation and amortization | $119.9 | $0.7 | $3.9 | $0.2 | — | $124.7 | | Taxes, other than income taxes | $130.3 | $0.7 | $1.2 | $0.1 | — | $132.3 | | Less: Gross receipts tax expense | ($90.4) | ($0.2) | — | — | — | ($90.6) | | Contribution Margin [Non GAAP] | $752.2 | $57.0 | $31.7 | $8.1 | ($7.9) | $841.1 |