Spire(SR) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EPS for Fiscal 2025 was $4.44, a 7.5% increase from $4.13 in Fiscal 2024, reflecting growth across all segments driven by infrastructure investments [5][12] - Adjusted earnings for Fiscal 2025 totaled $275.5 million, compared to $247.4 million in the prior year [12][13] - The company invested $922 million in Fiscal 2025, with nearly 90% allocated to utilities [5] Business Line Data and Key Metrics Changes - Gas utilities earned $231 million, up nearly 5% from the previous year, driven by interest recovery in Missouri and new rates in Alabama [13] - Midstream earnings increased to $56 million, up almost $23 million from last year, due to additional capacity and asset optimization [14] - Gas marketing earnings rose to $26 million, an increase of $2.5 million, reflecting a well-positioned business despite higher storage and transportation fees [14] Market Data and Key Metrics Changes - New rates in Missouri became effective in October, and Alabama is undergoing a rate stabilization process [6][18] - The company expects total rate base and capitalization to grow to $10.7 billion by Fiscal Year 2030 from an estimated $8.2 billion at the end of Fiscal 2026 [11] Company Strategy and Development Direction - The company is focused on operational excellence, regulatory engagement, financial discipline, and strategic growth [22] - A pending acquisition of the Piedmont Natural Gas Tennessee business is expected to close in the first quarter of calendar 2026, enhancing operational capabilities [9][10] - The long-term adjusted EPS growth target is set at 5%-7%, supported by a robust capital plan totaling $11.2 billion over ten years [8][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving Fiscal 2026 adjusted EPS guidance of $5.25-$5.45, driven by regulatory outcomes and infrastructure investments [22][23] - The company is committed to maintaining affordability for customers while investing in critical infrastructure [6][15] - Management highlighted the importance of collaboration with stakeholders in Missouri to establish a future test year rate-setting model [7][26] Other Important Information - The Board of Directors approved a dividend increase of 5.1%, bringing the annualized rate to $3.30 per share, marking the 23rd consecutive year of dividend increases [8] - The company is targeting a minimal amount of common equity issuance as part of its financing strategy [10][21] Q&A Session Summary Question: Long-term growth rate and ROEs - Management indicated expectations for continued improvement in earned ROEs, particularly in Missouri, with a future test year rate case planned [25][26] Question: Financing mix and timing - Management confirmed confidence in a balanced mix of debt and equity for financing, with ongoing evaluation of the storage business [31][32] Question: O&M assumptions and integration planning - Management aims to keep O&M expenses below inflation, leveraging best practices during integration activities [33][34] Question: Future test year rate adjustment implications - Management acknowledged potential improvements in earned ROE with the future test year but emphasized caution in making predictions [36] Question: Storage asset sale interest - Management noted strong interest in the storage assets but is still in the evaluation process [37][38] Question: Dividend payout ratios and growth - Management targets dividend growth in line with earnings growth, maintaining a payout ratio of 55%-65% [46] Question: Long-term capital needs and equity outlook - Management anticipates minimal equity needs, estimating $0-$50 million annually to support utility CapEx [47]