Spire(US:SR)2023-08-02 18:20Financial Data and Key Metrics Changes - The company reported a loss of $0.42 per share for the quarter, significantly below last year's results and expectations, reflecting lower demand and the impact of milder weather [16][21] - Interest expense increased by $17 million year-over-year, driven by higher long-term debt balances and elevated short-term interest rates [23][24] - EBITDA increased by 15%, with cash flow remaining strong [96] Business Line Data and Key Metrics Changes - Gas Utilities reported a loss of $12.3 million, impacted by mild weather and higher costs, compared to earnings of $4 million in the prior year [35][94] - Midstream margins were slightly up on a net economic earnings basis, excluding the results from the newly acquired Salt Plains storage facility [9] - Gas Marketing margins decreased by $3.2 million due to unfavorable market conditions and increased demand charges [39] Market Data and Key Metrics Changes - The weather was 18% warmer than normal across service areas, leading to lower usage that was only partially offset by weather mitigation mechanisms [6] - Revenues were down nearly 7% due to lower market and commodity costs, with contribution margins also lower by $5 million [38] Company Strategy and Development Direction - The company’s strategy focuses on highly contracted utility supply assets that provide steady earnings and long-term growth opportunities in natural gas [17] - The company plans to continue its midstream strategy through expansion and acquisition of storage facilities and pipeline systems [77] - The expected total spend over the next 10 years remains $7 billion, with over 80% of utility spend recovered with minimal lag [92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a rebound for fiscal year '24 as interest rates moderate and cost structure management progresses [77] - The company is well-positioned to recover pre-2023 deferrals by the end of the calendar year, which, combined with lower commodity costs, positions it favorably for the upcoming winter [79] - Management acknowledged that interest rates are expected to remain high for a while, which will continue to be a headwind [28][72] Other Important Information - The company announced the acquisition of MoGas and Omega Pipeline Systems for $175 million, which is expected to be accretive in the long term [36][48] - The integration of Spire Salt Plains, a storage facility acquired for $37 million, is proceeding as planned [36] Q&A Session Summary Question: Inquiry about offsets and guidance - Management confirmed that the original guidance remains the base for the long-term earnings target, and they are exercising all controls possible for the remainder of the year [27] Question: Discussion on MoGas and Omega acquisition financing - The company plans to finance the acquisition on a balanced basis and has already moved forward with some equity plans [29] Question: Clarification on interest expense headwinds - Management acknowledged that interest rates are expected to be higher for longer, which will be factored into future planning [28][72] Question: Update on RNG projects - The company continues to work on additional RNG projects and expects to provide updates soon [66] Question: Discussion on CCM benefits and timing - Management explained that the lower CCM benefit is due to a change in recognition timing and will be addressed in future quarters [62][64]