8-K: Spire Inc. Reports Fiscal Year 2024 First Quarter Results, Affirms Full-Year Guidance

Spire Inc. reported a decrease in net income and net economic earnings for the first quarter of fiscal year 2024, while affirming its full-year earnings guidance.

Summary

• Spire Inc. announced its financial results for the first quarter of fiscal year 2024, ending December 31.
• Net income was reported at $85.1 million, or $1.52 per share, down from $91.0 million, or $1.66 per share, in the same quarter of the previous year.
• Net economic earnings (NEE) were $82.7 million, or $1.47 per share, compared to $85.1 million, or $1.55 per share, in the prior year.
• The Gas Utility segment showed growth, with NEE increasing to $75.8 million from $62.9 million year-over-year.
• However, the Gas Marketing and Midstream segments experienced a decrease in NEE due to a return to more normal market conditions.
• Spire affirmed its fiscal year 2024 NEE guidance of $4.25 to $4.45 per share.
• The company's 10-year capital investment target is $7.2 billion through fiscal 2033, with $765 million planned for fiscal 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company experienced a decrease in earnings compared to the previous year, the Gas Utility segment showed strong growth, and the company reaffirmed its full-year guidance. The company's focus on long-term capital investment and infrastructure upgrades is also a positive sign.

Positives

• The Gas Utility segment demonstrated strong growth, with a significant increase in net economic earnings.
• Spire affirmed its full-year net economic earnings guidance, indicating confidence in future performance.
• The company is making substantial capital investments in infrastructure upgrades and new business, with a 10-year target of $7.2 billion.
• The acquisition of MoGas and Omega pipeline businesses is expected to bolster reliability for customers.
• The company has a strong commitment to delivering safe, reliable, and affordable energy to customers.

Negatives

• Net income and net economic earnings decreased compared to the same quarter of the previous year.
• The Gas Marketing and Midstream segments experienced a decline in net economic earnings due to a return to more normal market conditions.
• Interest expense increased by $6.9 million to $39.0 million due to higher rates.
• Depreciation and amortization expense increased by $4.5 million from last year, reflecting increased capital investment.

Risks

• The company's future operating results may be affected by various uncertainties and risk factors, including weather conditions, economic factors, and the competitive environment.
• Governmental and regulatory policy and action could impact the company's performance.
• Risks associated with acquisitions could also affect the company's results.
• The Gas Marketing and Midstream segments are susceptible to market fluctuations.

Future Outlook

Spire continues to expect fiscal 2024 NEE to be in a range of $4.25 to $4.45 per share and anticipates long-term NEE per share growth of 5-7% driven by expected 7-8% annual utility rate base growth.

Management Comments

• Steve Lindsey, president and chief executive officer of Spire, stated that the company delivered solid operational and financial results driven by growth in the Gas Utility segment.
• He also highlighted the company's commitment to delivering safe, reliable, and affordable energy to customers during extreme cold weather.
• Management remains focused on execution of their growth strategy and operational excellence.

Industry Context

The results reflect the typical volatility in the natural gas market, with the Gas Marketing and Midstream segments experiencing a return to more normal market conditions after a period of favorable conditions. The growth in the Gas Utility segment highlights the stability of regulated utility operations compared to the more volatile marketing and midstream businesses. The company's focus on infrastructure investment aligns with the broader industry trend of modernizing and expanding gas distribution networks.

Comparison to Industry Standards

• Spire's Gas Utility segment's performance is in line with other regulated gas utilities, showing steady growth due to rate increases and infrastructure investments.
• The decline in the Gas Marketing and Midstream segments is consistent with the broader industry trend of reduced volatility in natural gas prices compared to the previous year, impacting trading and storage operations.
• Companies like Atmos Energy (ATO) and ONE Gas (OGS) also focus on regulated gas distribution and are comparable to Spire's Gas Utility segment, while companies like Kinder Morgan (KMI) and Energy Transfer (ET) are more focused on midstream operations and are comparable to Spire's Midstream segment.
• Spire's capital investment plan is similar to other utilities that are focused on modernizing their infrastructure and expanding their service areas.

Management Changes

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income and net economic earnings, but reassured by the reaffirmed full-year guidance.
• Employees are expected to continue their commitment to delivering safe, reliable, and affordable energy.
• Customers will benefit from the company's investments in infrastructure and reliability.
• Suppliers and creditors will be impacted by the company's capital investment plans and financial performance.

Next Steps

• Spire will continue to execute its growth strategy and focus on operational excellence.
• The company will proceed with its $7.2 billion capital investment plan through fiscal 2033.
• Spire will continue to invest in infrastructure upgrades and new business in the Gas Utility segment.
• The company will host a conference call and webcast to discuss its fiscal 2024 first quarter financial results.

Key Dates

Keywords

Spire, Net Economic Earnings, Gas Utility, Gas Marketing, Midstream, Capital Investment, Financial Results, Earnings, Natural Gas, Infrastructure