Spire Inc. Form 10-Q Summary
Period clarification: The filing covers the quarter and nine months ended June 30, 2023, not 2022 Q3 as stated in the request metadata. Financial statements are unaudited.
Business context and reporting period
Spire is a natural gas utility and infrastructure company. Its reportable segments are Gas Utility, Gas Marketing, and Midstream; utility earnings are typically concentrated in the November–April heating season. The filing presents consolidated Spire results and separate results for Spire Missouri and Spire Alabama.
Key financial results
| Spire consolidated | Three months ended June 30, 2023 | Prior-year quarter | Nine months ended June 30, 2023 | Prior-year period |
|---|---|---|---|---|
| Operating revenue | $418.5 million | $448.0 million | $2,355.9 million | $1,884.3 million |
| Operating income | $12.0 million | $37.9 million | $422.5 million | $378.4 million |
| Net income (loss) | $(21.6) million | $(1.4) million | $248.6 million | $227.9 million |
| Diluted earnings (loss) per share | $(0.48) | $(0.10) | $4.51 | $4.16 |
| Contribution margin (non-GAAP) | $222.7 million | $221.4 million | $1,063.8 million | $942.7 million |
- Quarterly revenue declined about 7%, while the net loss widened. Operating income fell by $25.9 million. Higher interest expense, lower Gas Utility results, and lower Gas Marketing revenue contributed to the quarter’s weaker reported earnings.
- Nine-month revenue increased about 25%, primarily reflecting higher gas-cost recoveries and rate changes. Net income rose about 9%; non-GAAP net economic earnings increased to $265.7 million from $247.7 million.
- Quarterly Gas Utility contribution margin was down $2.5 million year over year; nine-month contribution margin increased $68.6 million. The company notes gas-cost pass-throughs generally increase revenue and gas expense together and do not directly drive operating income.
Cash flow, debt, and liquidity
- For the nine months, operating cash flow was $404.1 million, versus $204.6 million; investing cash outflow was $516.4 million, versus $398.3 million; financing cash inflow was $116.8 million, versus $212.5 million.
- Capital expenditures were $483.3 million, up from $402.5 million. The company reported a $37.0 million acquisition of the Spire Storage Salt Plains facility.
- At June 30, 2023, consolidated cash and cash equivalents were $5.3 million. Balance-sheet current assets were $861.2 million and current liabilities were $1,530.4 million.
- Balance-sheet debt included $3,553.3 million of long-term debt, $406.6 million of current long-term debt, and $557.6 million of notes payable. Short-term borrowings carried a 5.5% weighted-average rate at quarter-end. Spire’s revolving credit facility is $1.3 billion; there were no borrowings against that facility at June 30.
- Spire issued $400 million of Spire Missouri first mortgage bonds and $150 million of Spire Inc. senior notes during the period. Management stated debt ratings remained investment grade, with Moody’s negative outlook for Spire Alabama.
Material changes and management commentary
- Quarterly interest expense increased $17.4 million year over year; management cited substantially higher short-term rates and higher debt levels. Nine-month interest expense rose $52.1 million.
- Gas Marketing’s nine-month results benefited from market conditions and regional basis differentials that supported storage and transportation optimization. Its quarterly results were weaker, reflecting market conditions and higher storage and demand fees.
- Spire Alabama’s nine-month net income fell to $70.5 million from $85.1 million. Management attributed the decline primarily to unfavorable usage and higher interest expense. A $8.2 million timing impact from cost-control-measure benefit recognition was expected to reverse in fiscal Q4 2023.
- Spire Missouri’s nine-month net income increased to $145.6 million from $135.1 million, supported by rate-case impacts; higher operating and interest costs partly offset the improvement.
- Management planned fiscal 2023 capital expenditures of $700 million and said it expected adequate access to capital to meet anticipated needs. The filing provides no explicit consolidated earnings guidance.
Outlook, risks, and contingencies
- In May 2023, Spire agreed to acquire MoGas Pipeline and Omega Pipeline for $175 million, subject to customary adjustments and FTC review. The FTC issued a Second Request; the company expected a closing around year-end, subject to approval.
- A Missouri regulatory proceeding concerning Spire STL Pipeline costs remained contested, including an EDF proposal for a $27.7 million disallowance. The parties reached an agreement in principle, with a settlement stipulation anticipated and subject to MoPSC approval. Separate audits of gas costs, including Winter Storm Uri impacts, were ongoing.
- The FERC’s permanent certificates authorizing continued operation of the Spire STL Pipeline were final and unappealable, according to the filing.
- Spire Marketing faced commercial disputes connected to Winter Storm Uri. Management recorded estimated potential liabilities, but final settlements could materially differ from current estimates.
- Environmental remediation liabilities at former manufactured-gas sites were described as immaterial based on current estimates; future costs remain uncertain and could be higher or lower.
- Key disclosed risks include severe weather, gas-price volatility and supply availability, regulatory and litigation outcomes, access to capital, pension costs, customer collections, cyber and operational-system disruption, and workforce issues. The company reported no material change in previously disclosed risk factors.
Important facts for investors to verify
- Whether the Missouri pipeline-cost settlement was filed and approved, and its final financial and customer-assistance terms.
- The outcome of Missouri’s pending gas-cost audits and any potential disallowances related to Winter Storm Uri.
- FTC review and closing terms for the proposed MoGas and Omega acquisition.
- How Spire funds its capital program and manages debt maturities, interest expense, and short-term borrowing costs.
- Whether the expected Spire Alabama RSE timing reversal occurred in fiscal Q4 2023, and whether the $700 million capital-expenditure plan was achieved.