SR

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2026, for Spire Inc. and its subsidiaries, Spire Missouri Inc. and Spire Alabama Inc. Spire is a regulated energy company primarily engaged in the distribution of natural gas. The reporting period was defined by significant strategic restructuring: the acquisition of Piedmont Natural Gas Company's Tennessee business (Spire Tennessee) for approximately $2.5 billion, and the divestiture of Spire Marketing and Spire Storage, which are now classified as discontinued operations. Spire Mississippi is currently classified as held for sale.

Key Financial Metrics (Nine Months Ended June 30, 2026)

Material Changes vs. Prior Period

• Revenue Growth: Operating revenues increased $192.0 million (9.9%) year-over-year, driven primarily by the inclusion of Spire Tennessee operations ($44.8 million) and the implementation of a new rate case in Missouri ($145.1 million impact on contribution margin).
• Profitability: Net income surged $276.9 million, largely due to a $254.6 million after-tax gain on the sale of Spire Marketing and Spire Storage (Discontinued Operations). Net income from continuing operations increased modestly by $14.7 million.
• Debt and Capitalization: Long-term debt increased significantly to fund the Tennessee acquisition. The company issued $900 million in junior subordinated notes, $825 million in senior notes (Spire Tennessee), and $400 million in senior notes (Spire Inc.). A $800 million delayed draw term loan was utilized and subsequently repaid using divestiture proceeds.
• Equity Changes: The company redeemed all outstanding 5.90% Series A Preferred Stock in February 2026, incurring an $8.0 million redemption cost recorded against retained earnings.

Guidance, Outlook, and Risks

• Strategic Outlook: Management expects the Tennessee acquisition to increase scale and regulatory diversity. The company has repositioned to focus on regulated natural gas utility operations, having exited the marketing and storage businesses.
• Pending Transactions: The sale of Spire Mississippi for $75.0 million is expected to close in the first fiscal quarter of 2027, subject to regulatory approval. Failure to close could result in a $7.5 million reverse termination fee.
• Regulatory Environment: Spire Alabama and Spire Gulf are operating under Rate Stabilization and Equalization (RSE) mechanisms. Renewal of these mechanisms is pending an evidentiary hearing scheduled for August 2026. Spire Tennessee operates under an Annual Review Mechanism (ARM) with a 4% cap on base rate increases for the initial three years.
• Risks: Key risks include the successful integration of the Tennessee acquisition, volatility in natural gas prices, weather conditions affecting demand, and the ability to recover costs through regulatory proceedings. The company also faces potential environmental liabilities related to former manufactured gas plants (MGP).

Investor Verification Checklist

• Discontinued Operations Impact: Verify the sustainability of earnings by analyzing "Continuing Operations" metrics ($262.8M net income) separately from the one-time gains on divestitures ($325.6M net income from discontinued ops).
• Debt Service Capacity: Review the impact of the increased debt load ($6.04 billion total long-term debt) on interest coverage ratios and future cash flows, particularly given the higher interest rates on new issuances.
• Regulatory Approvals: Monitor the status of the Spire Mississippi sale closing conditions and the renewal of the RSE mechanism in Alabama, which could impact future rate structures.
• Integration Costs: Assess the magnitude of transaction and transition costs associated with the Tennessee acquisition, which totaled approximately $65.3 million pre-tax for the nine-month period.
• Weather Sensitivity: Note that the quarter ended June 30, 2026, was significantly warmer than normal (36.1% warmer in Missouri, 36.0% in Alabama), which typically suppresses utility earnings in the second quarter.