Spire Inc. 2021 Form 10-K Summary
Period clarification: The request identifies “2020 Q4,” but the supplied filing is Spire Inc.’s annual Form 10-K for the fiscal year ended September 30, 2021, filed November 22, 2021. The figures below are primarily for fiscal 2021, compared with fiscal 2020; this is not a 2020 quarterly filing.
Business context
Spire is a natural-gas utility holding company with regulated Gas Utility operations in Missouri, Alabama, and Mississippi, plus a non-regulated Gas Marketing business and pipeline and storage operations. It served approximately 1.73 million utility customers. Utility earnings are seasonal and typically concentrated in the November–April heating season.
Key financial results
| Metric | FY2021 | FY2020 |
|---|---|---|
| Operating revenue | $2,235.5 million | $1,855.4 million |
| Operating income | $450.2 million | $206.4 million |
| Net income | $271.7 million | $88.6 million |
| Diluted EPS | $4.96 | $1.44 |
| Net economic earnings, non-GAAP | $266.3 million; $4.86 per diluted share | $207.8 million; $3.76 per diluted share |
| Operating cash flow | $249.8 million | $469.9 million |
| Capital expenditures | $624.8 million | $638.4 million |
Operating margin was approximately 20.1% in FY2021 versus 11.1% in FY2020, calculated as operating income divided by revenue. Consolidated contribution margin, a company-defined non-GAAP measure, was $1,195.2 million versus $1,067.8 million. Management cautions that non-GAAP measures are supplemental, not substitutes for GAAP results.
- FY2020 net income included a $148.6 million pre-tax impairment charge ($117.3 million after tax), primarily related to Spire Storage and two compressed-natural-gas fueling stations. Excluding that after-tax charge, FY2021 net income increased $65.8 million.
- FY2021 results benefited from Winter Storm Uri, including higher utility off-system sales and strong Gas Marketing results. Gas Marketing net income rose to $44.8 million from $7.0 million; Gas Utility net income increased to $237.2 million from $213.6 million.
- Interest expense, net, was $106.6 million versus $105.5 million. Income tax expense increased to $68.5 million from $12.4 million, partly because FY2020 included an impairment-related tax benefit.
- Operating cash flow declined $220.1 million, principally reflecting working-capital movements after Uri, including higher receivables and gas inventories. Cash used in investing activities was $622.0 million; financing provided $379.4 million.
Debt, liquidity, and capital
- At September 30, 2021, principal long-term debt was $3,014.6 million and notes payable were $672.0 million. Cash and cash equivalents were $4.3 million; cash was used to support working capital.
- The company reported a $975 million syndicated revolving credit facility, expiring October 2023, with no borrowings against the facility at fiscal year-end. The facility’s debt-to-capitalization covenant limit was 70%; each borrower was below 60% under the agreement’s definition.
- Ratings remained investment grade with stable outlooks. Consolidated long-term capitalization was 47% equity at year-end, compared with 50% in 2020.
- FY2022 planned capital expenditures were approximately $570 million. Scheduled FY2022 long-term debt principal was $55.8 million; natural-gas purchase and transportation/storage obligations totaled $1,889.0 million, including $759.1 million for FY2022.
- Spire declared common dividends of $2.60 per share for FY2021 and said it expected to continue dividends, but payment remains subject to board discretion and financial conditions.
Material changes, outlook, and principal risks
- Spire STL Pipeline authorization: A federal appeals court vacated the pipeline’s certificate and remanded the matter to FERC. At filing, temporary emergency authorization extended through December 13, 2021; permanent reauthorization and any extension remained pending. The pipeline is important to eastern Missouri gas supply, and its assets had a carrying value above $270 million. A service interruption or impairment could materially affect Spire and customers.
- Missouri rate case: New tariffs implementing a $72.2 million base-rate increase, including rebasing $47.3 million of existing ISRS charges, were filed with a December 10, 2021 effective date. The order also changed treatment of certain overhead capitalization. Spire estimated this could shift $20–$30 million annually from capital to O&M expense and materially reduce net income in 2022 and later periods until addressed in a future rate case; the precise effect and recovery remained uncertain.
- Winter Storm Uri: Spire Missouri invoiced non-compliant marketers $195.8 million for gas costs and tariff penalties; only $3.2 million had been collected by the filing date. Litigation against three major counterparties and MoPSC complaints remained pending. The company considered collection probable, but the outcomes require monitoring.
- Gas Marketing disputes: Uri-related supply failures, force-majeure claims, and pipeline tariff disputes led Spire Marketing to estimate potential liabilities. The estimate could change materially as facts develop or settlements occur; the filing does not provide a clear quantified estimate.
- COVID-19 had caused higher bad-debt expense and certain operating costs, partly offset by lower costs and other effects. Spire Missouri recorded a $6.2 million regulatory asset for deferred pandemic-related costs. Management said the full future effects remained uncertain.
- Other material risks include regulatory cost recovery and rate decisions, weather and climate-related changes in gas demand, gas-supply and pipeline disruptions, commodity-price and collateral needs, credit access, pension funding, cybersecurity, environmental obligations, and counterparty defaults.
- No specific consolidated earnings or EPS guidance is provided in the supplied filing text. Management stated it believed capital-market access and resources were adequate for foreseeable requirements.
Most important facts for investors to verify
- Subsequent FERC decisions on Spire STL Pipeline authorization and the pipeline’s operating status through and beyond the 2021–2022 winter.
- Final implementation and any rehearing or audit outcomes for the Missouri rate order, especially the $20–$30 million estimated annual overhead-capitalization impact and its regulatory recovery.
- Collections, litigation, and regulatory outcomes related to the $195.8 million Missouri OFO invoices, and the ultimate amount of Spire Marketing’s Uri-related liabilities.
- Whether FY2021’s Uri-driven Gas Marketing and off-system sales performance is repeatable; distinguish GAAP earnings from the company’s non-GAAP net economic earnings.
- Funding and refinancing needs against the $570 million FY2022 capital plan, seasonal working-capital requirements, debt maturities, and dividend commitments.
The financial statements received an unqualified audit opinion. Management and the independent auditor reported effective internal control over financial reporting for Spire Inc. as of September 30, 2021.