Spire Reports FY24 First Quarter Results
- None.
- None.
Insights
The reported financial results from Spire Inc. reveal a nuanced picture of the company's performance in the first quarter of fiscal 2024. A decrease in net income and net economic earnings (NEE) year-over-year indicates a shift in market dynamics, particularly affecting the Gas Marketing and Midstream segments. The decline in these segments is attributed to a normalization of market conditions after an exceptionally favorable prior year, which may signal a reversion to mean performance levels. However, the Gas Utility segment's growth, driven by recent rate implementations, is a positive sign of underlying operational strength.
Investors should note the increased operational expenses, such as depreciation and amortization and interest expenses, which reflect higher capital investments and potentially higher debt costs. These factors could impact future profitability and cash flow. The reaffirmed NEE guidance suggests management confidence in the company's growth trajectory, supported by a substantial capital investment plan aimed at infrastructure upgrades and expansion in the Gas Utility segment. This long-term strategy could bolster the company's market position and financial stability, though it requires careful monitoring of execution and market response.
Analyzing Spire Inc.'s market position, the company's focus on growing its Gas Utility segment through infrastructure investments is noteworthy. The utility industry is typically characterized by stable, regulated returns, which can be attractive during periods of market volatility. The company's 7–8% expected annual utility rate base growth suggests a strong pipeline of projects that could enhance service reliability and customer satisfaction.
However, the Gas Marketing and Midstream segments' sensitivity to market conditions presents a risk, as evidenced by the earnings decrease in these areas. The normalization of market conditions could indicate a more competitive environment moving forward, which may require strategic adjustments. The acquisition of MoGas and Omega pipeline businesses could be a strategic move to bolster the Midstream segment and enhance overall business resilience. Stakeholders should watch how these acquisitions integrate into the existing operations and contribute to the company's performance.
From an economic perspective, Spire Inc.'s financial results reflect broader economic trends, such as fluctuating energy prices and interest rates. The increased interest expense is indicative of a rising rate environment, which could affect the cost of capital and, consequently, the company's investment strategy. The utility sector's capital-intensive nature means that such economic shifts can have significant implications for long-term financial planning.
The company's reaffirmed NEE guidance amidst these economic conditions suggests that Spire Inc. anticipates continued robust demand for its services, which may be underpinned by economic growth in its service territories. The strategic investments in infrastructure and new business ventures within the Gas Utility segment are aligned with expectations of long-term demographic and economic expansion, potentially leading to increased energy consumption. However, macroeconomic headwinds, including inflationary pressures and supply chain disruptions, could pose challenges to the company's cost management and project timelines.
- Net income of
$85 $1 $91.0 million ($1 - Net economic earnings* (NEE) of
$82 $1 $85.1 million ($1 - Affirmed fiscal 2024 NEE expectation of
$4.25 –$4.45 per share
"During the first quarter, we delivered solid operational and financial results driven by growth in the Gas Utility segment. When extreme cold weather recently covered our entire service territory, our dedicated employees demonstrated their strong commitment to delivering safe, reliable and affordable energy to customers," said Steve Lindsey, president and chief executive officer of Spire. "We remain focused on execution of our growth strategy and operational excellence in our businesses. In January, we enhanced our leadership team with the addition of Scott Doyle as chief operating officer and further bolstered reliability for customers with the acquisition of the MoGas and Omega pipeline businesses."
First Quarter Results | Three Months Ended December 31, | |||||||||||||||
(Millions) | (Per Diluted Common Share) | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Economic Earnings (Loss)* by Segment | ||||||||||||||||
Gas Utility | $ | 75.8 | $ | 62.9 | ||||||||||||
Gas Marketing | 7.2 | 25.7 | ||||||||||||||
Midstream | 2.4 | 3.8 | ||||||||||||||
Other | (2.7) | (7.3) | ||||||||||||||
Total | $ | 82.7 | $ | 85.1 | $ | 1.47 | $ | 1.55 | ||||||||
Fair value and timing adjustments, pre-tax | 5.2 | 7.8 | 0.10 | 0.15 | ||||||||||||
Acquisition activities, pre-tax | (1.9) | — | (0.03) | — | ||||||||||||
Income tax adjustments | (0.9) | (1.9) | (0.02) | (0.04) | ||||||||||||
Net Income | $ | 85.1 | $ | 91.0 | $ | 1.52 | $ | 1.66 | ||||||||
Weighted Average Diluted Shares Outstanding | 53.6 | 52.6 | ||||||||||||||
*Non-GAAP, see "Net Economic Earnings and Reconciliation to GAAP." |
For fiscal 2024 first quarter, Spire reported consolidated net income of
NEE excludes from net income, as applicable, the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities, and the largely non-cash impacts of other non-recurring or unusual items such as impairments and certain regulatory, legislative, or GAAP standard-setting actions.
Gas Utility
The Gas Utility segment includes the regulated distribution operations of five gas utilities across
Contribution margin increased
Operation and maintenance expense of
Depreciation and amortization expense increased
Gas Marketing
The Gas Marketing segment reflects the results of Spire Marketing, which provides natural gas marketing services throughout
Midstream
NEE for the Midstream segment, which includes Spire STL Pipeline, Spire Storage West and Spire Storage Salt Plains, was
Other
Spire's other activities reported a loss on an NEE basis of
Guidance and Outlook
Spire continues to expect fiscal 2024 NEE to be in a range of
Our 10-year
Conference Call and Webcast
Spire will host a conference call and webcast today to discuss its fiscal 2024 first quarter financial results. To access the call, please dial the applicable number approximately 5–10 minutes in advance.
Date and Time: | Thursday, February 1 | |||
9 a.m. CT (10 a.m. ET) | ||||
Phone Numbers: | 844-824-3832 | |||
International: | 412-317-5142 |
The webcast can be accessed at Investors.SpireEnergy.com under Events & Presentations. A replay of the call will be available at 10 a.m. CT (11 a.m. ET) on February 1 until March 1, 2024, by dialing 877-344-7529 (
About Spire
At Spire Inc. (NYSE: SR) we believe energy exists to help make people's lives better. It's a simple idea, but one that's at the heart of our company. Every day we serve 1.7 million homes and businesses making us one of the largest publicly traded natural gas companies in the country. We help families and business owners fuel their daily lives through our gas utilities serving
Forward-Looking Information and Non-GAAP Measures
This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Spire's future operating results may be affected by various uncertainties and risk factors, many of which are beyond the Company's control, including weather conditions, economic factors, the competitive environment, governmental and regulatory policy and action, and risks associated with acquisitions. More complete descriptions and listings of these uncertainties and risk factors can be found in the Company's annual (Form 10-K) and quarterly (Form 10-Q) filings with the Securities and Exchange Commission.
This news release includes the non-GAAP financial measures of "net economic earnings," "net economic earnings per share," and "contribution margin." Management also uses these non-GAAP measures internally when evaluating the Company's performance and results of operations. Net economic earnings exclude from net income, as applicable, the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities and the largely non-cash impacts of impairments and other non-recurring or unusual items such as certain regulatory, legislative, or GAAP standard-setting actions. The fair value and timing adjustments, which primarily impact the Gas Marketing segment, include net unrealized gains and losses on energy-related derivatives resulting from the current changes in the fair value of financial and physical transactions prior to their completion and settlement, lower of cost or market inventory adjustments, and realized gains and losses on economic hedges prior to the sale of the physical commodity. Management believes that excluding these items provides a useful representation of the economic impact of actual settled transactions and overall results of ongoing operations. Contribution margin adjusts revenues to remove the costs that are directly passed on to customers and collected through revenues, which are the wholesale cost of natural gas and gross receipts taxes. These internal non-GAAP operating metrics should not be considered as an alternative to, or more meaningful than, GAAP measures such as operating income, net income, or earnings per share.
Condensed Consolidated Statements of Income – Unaudited | |||||||
(In Millions, except per share amounts) | Three Months Ended December 31, | ||||||
2023 | 2022 | ||||||
Operating Revenues | $ | 756.6 | $ | 814.0 | |||
Operating Expenses: | |||||||
Natural gas | 367.0 | 419.2 | |||||
Operation and maintenance | 130.7 | 132.1 | |||||
Depreciation and amortization | 67.0 | 62.1 | |||||
Taxes, other than income taxes | 52.7 | 50.4 | |||||
Total Operating Expenses | 617.4 | 663.8 | |||||
Operating Income | 139.2 | 150.2 | |||||
Interest Expense, Net | 50.6 | 43.6 | |||||
Other Income, Net | 17.5 | 6.0 | |||||
Income Before Income Taxes | 106.1 | 112.6 | |||||
Income Tax Expense | 21.0 | 21.6 | |||||
Net Income | 85.1 | 91.0 | |||||
Provision for preferred dividends | 3.7 | 3.7 | |||||
Income allocated to participating securities | 0.1 | 0.1 | |||||
Net Income Available to Common Shareholders | $ | 81.3 | $ | 87.2 | |||
Weighted Average Number of Shares Outstanding: | |||||||
Basic | 53.5 | 52.4 | |||||
Diluted | 53.6 | 52.6 | |||||
Basic Earnings Per Common Share | $ | 1.52 | $ | 1.66 | |||
Diluted Earnings Per Common Share | $ | 1.52 | $ | 1.66 | |||
Dividends Declared Per Common Share | $ | 0.755 | $ | 0.72 | |||
Condensed Consolidated Balance Sheets – Unaudited | |||||||||||
(In Millions) | December 31, | September 30, | December 31, | ||||||||
2023 | 2023 | 2022 | |||||||||
ASSETS | |||||||||||
Utility Plant | $ | 8,345.0 | $ | 8,210.1 | $ | 7,769.4 | |||||
Less: Accumulated depreciation and amortization | 2,467.3 | 2,431.2 | 2,326.5 | ||||||||
Net Utility Plant | 5,877.7 | 5,778.9 | 5,442.9 | ||||||||
Non-utility Property | 687.1 | 628.5 | 508.9 | ||||||||
Other Investments | 105.5 | 102.6 | 93.5 | ||||||||
Total Other Property and Investments | 792.6 | 731.1 | 602.4 | ||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | 4.8 | 5.6 | 4.8 | ||||||||
Accounts receivable, net | 544.0 | 288.5 | 779.6 | ||||||||
Inventories | 276.6 | 279.5 | 372.7 | ||||||||
Other | 394.5 | 503.3 | 472.6 | ||||||||
Total Current Assets | 1,219.9 | 1,076.9 | 1,629.7 | ||||||||
Deferred Charges and Other Assets | 2,741.5 | 2,726.7 | 2,652.7 | ||||||||
Total Assets | $ | 10,631.7 | $ | 10,313.6 | $ | 10,327.7 | |||||
CAPITALIZATION AND LIABILITIES | |||||||||||
Capitalization: | |||||||||||
Preferred stock | $ | 242.0 | $ | 242.0 | $ | 242.0 | |||||
Common stock and paid-in capital | 1,782.4 | 1,669.7 | 1,624.3 | ||||||||
Retained earnings | 997.3 | 958.0 | 953.0 | ||||||||
Accumulated other comprehensive income | 29.1 | 47.6 | 44.8 | ||||||||
Total Shareholders' Equity | 3,050.8 | 2,917.3 | 2,864.1 | ||||||||
Temporary equity | 14.8 | 16.5 | 16.2 | ||||||||
Long-term debt (less current portion) | 3,247.8 | 3,554.0 | 3,156.3 | ||||||||
Total Capitalization | 6,313.4 | 6,487.8 | 6,036.6 | ||||||||
Current Liabilities: | |||||||||||
Current portion of long-term debt | 457.0 | 156.6 | 256.6 | ||||||||
Notes payable | 1,047.5 | 955.5 | 1,227.0 | ||||||||
Accounts payable | 293.8 | 253.1 | 506.8 | ||||||||
Accrued liabilities and other | 412.2 | 390.2 | 414.3 | ||||||||
Total Current Liabilities | 2,210.5 | 1,755.4 | 2,404.7 | ||||||||
Deferred Credits and Other Liabilities: | |||||||||||
Deferred income taxes | 760.6 | 743.7 | 699.4 | ||||||||
Pension and postretirement benefit costs | 135.5 | 137.3 | 159.3 | ||||||||
Asset retirement obligations | 583.6 | 577.4 | 526.2 | ||||||||
Regulatory liabilities | 487.2 | 472.4 | 344.9 | ||||||||
Other | 140.9 | 139.6 | 156.6 | ||||||||
Total Deferred Credits and Other Liabilities | 2,107.8 | 2,070.4 | 1,886.4 | ||||||||
Total Capitalization and Liabilities | $ | 10,631.7 | $ | 10,313.6 | $ | 10,327.7 | |||||
Condensed Consolidated Statements of Cash Flows – Unaudited | |||||||
(In Millions) | Three Months Ended December 31, | ||||||
2023 | 2022 | ||||||
Operating Activities: | |||||||
Net Income | $ | 85.1 | $ | 91.0 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 67.0 | 62.1 | |||||
Deferred income taxes and investment tax credits | 21.0 | 21.6 | |||||
Changes in assets and liabilities | (104.3) | (348.9) | |||||
Other | 1.2 | 3.4 | |||||
Net cash provided by (used in) operating activities | 70.0 | (170.8) | |||||
Investing Activities: | |||||||
Capital expenditures | (226.5) | (154.8) | |||||
Other | 1.3 | 3.1 | |||||
Net cash used in investing activities | (225.2) | (151.7) | |||||
Financing Activities: | |||||||
Issuance of long-term debt | — | 205.0 | |||||
Repayment of long-term debt | (6.6) | (31.2) | |||||
Issuance of short-term debt, net | 92.0 | 189.5 | |||||
Issuance of common stock | 113.2 | 0.4 | |||||
Dividends paid on common stock | (38.8) | (36.3) | |||||
Dividends paid on preferred stock | (3.7) | (3.7) | |||||
Other | (1.4) | (2.7) | |||||
Net cash provided by financing activities | 154.7 | 321.0 | |||||
Net Decrease in Cash, Cash Equivalents, and Restricted Cash | (0.5) | (1.5) | |||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 25.8 | 20.5 | |||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 25.3 | $ | 19.0 | |||
Net Economic Earnings and Reconciliation to GAAP | |||||||||||||||||||||||
(In Millions, except per share amounts) | Gas Utility | Gas | Midstream | Other | Total | Per Diluted | |||||||||||||||||
Three Months Ended December 31, 2023 | |||||||||||||||||||||||
Net Income (Loss) [GAAP] | $ | 75.5 | $ | 11.4 | $ | 0.9 | $ | (2.7) | $ | 85.1 | $ | 1.52 | |||||||||||
Adjustments, pre-tax: | |||||||||||||||||||||||
Fair value and timing adjustments | 0.4 | (5.6) | — | — | (5.2) | (0.10) | |||||||||||||||||
Acquisition activities | — | — | 1.9 | — | 1.9 | 0.03 | |||||||||||||||||
Income tax adjustments (1) | (0.1) | 1.4 | (0.4) | — | 0.9 | 0.02 | |||||||||||||||||
Net Economic Earnings (Loss) [Non-GAAP] | $ | 75.8 | $ | 7.2 | $ | 2.4 | $ | (2.7) | $ | 82.7 | $ | 1.47 | |||||||||||
Three Months Ended December 31, 2022 | |||||||||||||||||||||||
Net Income (Loss) [GAAP] | $ | 62.9 | $ | 31.6 | $ | 3.8 | $ | (7.3) | $ | 91.0 | $ | 1.66 | |||||||||||
Adjustments, pre-tax: | |||||||||||||||||||||||
Fair value and timing adjustments | — | (7.8) | — | — | (7.8) | (0.15) | |||||||||||||||||
Income tax adjustments (1) | — | 1.9 | — | — | 1.9 | 0.04 | |||||||||||||||||
Net Economic Earnings (Loss) [Non-GAAP] | $ | 62.9 | $ | 25.7 | $ | 3.8 | $ | (7.3) | $ | 85.1 | $ | 1.55 | |||||||||||
(1) Income tax adjustments include amounts calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items. |
(2) Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted EPS calculation, which includes reductions for cumulative preferred dividends and participating shares. |
Contribution Margin and Reconciliation to GAAP | |||||||||||||||||||||||
(In Millions) | Gas Utility | Gas | Midstream | Other | Eliminations | Consolidated | |||||||||||||||||
Three Months Ended December 31, 2023 | |||||||||||||||||||||||
Operating Income (Loss) [GAAP] | $ | 122.3 | $ | 14.7 | $ | 3.3 | $ | (1.1) | $ | — | $ | 139.2 | |||||||||||
Operation and maintenance expenses | 116.7 | 4.4 | 8.6 | 5.0 | (4.0) | 130.7 | |||||||||||||||||
Depreciation and amortization | 64.2 | 0.4 | 2.3 | 0.1 | — | 67.0 | |||||||||||||||||
Taxes, other than income taxes | 51.6 | 0.3 | 0.7 | 0.1 | — | 52.7 | |||||||||||||||||
Less: Gross receipts tax expense | (31.0) | (0.1) | — | — | — | (31.1) | |||||||||||||||||
Contribution Margin [Non-GAAP] | 323.8 | 19.7 | 14.9 | 4.1 | (4.0) | 358.5 | |||||||||||||||||
Natural gas costs | 360.4 | 16.5 | — | — | (9.9) | 367.0 | |||||||||||||||||
Gross receipts tax expense | 31.0 | 0.1 | — | — | — | 31.1 | |||||||||||||||||
Operating Revenues | $ | 715.2 | $ | 36.3 | $ | 14.9 | $ | 4.1 | $ | (13.9) | $ | 756.6 | |||||||||||
Three Months Ended December 31, 2022 | |||||||||||||||||||||||
Operating Income (Loss) [GAAP] | $ | 101.9 | $ | 41.4 | $ | 7.1 | $ | (0.2) | $ | — | $ | 150.2 | |||||||||||
Operation and maintenance expenses | 119.9 | 6.3 | 5.8 | 4.0 | (3.9) | 132.1 | |||||||||||||||||
Depreciation and amortization | 59.7 | 0.3 | 1.9 | 0.2 | — | 62.1 | |||||||||||||||||
Taxes, other than income taxes | 49.9 | 0.1 | 0.4 | — | — | 50.4 | |||||||||||||||||
Less: Gross receipts tax expense | (30.4) | — | — | — | — | (30.4) | |||||||||||||||||
Contribution Margin [Non-GAAP] | 301.0 | 48.1 | 15.2 | 4.0 | (3.9) | 364.4 | |||||||||||||||||
Natural gas costs | 401.6 | 26.0 | — | — | (8.4) | 419.2 | |||||||||||||||||
Gross receipts tax expense | 30.4 | — | — | — | — | 30.4 | |||||||||||||||||
Operating Revenues | $ | 733.0 | $ | 74.1 | $ | 15.2 | $ | 4.0 | $ | (12.3) | $ | 814.0 | |||||||||||
Investor Contact:
Megan L. McPhail
314-309-6563
Megan.McPhail@SpireEnergy.com
Media Contact:
Jason Merrill
314-342-3300
Jason.Merrill@SpireEnergy.com
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SOURCE Spire Inc.
FAQ
What were Spire Inc.'s Q1 fiscal 2024 net income and earnings per share?
How did the Gas Utility segment perform in Q1 fiscal 2024?
What is Spire Inc.'s fiscal 2024 NEE expectation?
What is Spire Inc.'s 10-year capital investment target?
