8-K: Spire Inc. Reports Third Quarter Fiscal 2024 Results, Lowers Full-Year Earnings Guidance

Spire Inc. announced its third quarter fiscal 2024 results, showing a net loss but improved performance across segments, while also lowering its full-year earnings guidance.

Summary

• Spire Inc. reported a net loss of $12.6 million, or ($0.28) per diluted share, for the third quarter of fiscal year 2024, which is an improvement compared to a net loss of $21.6 million, or ($0.48) per share, in the same period last year.
• On a net economic earnings (NEE) basis, the company experienced a loss of $4.3 million, or ($0.14) per share, compared to a loss of $18.6 million, or ($0.42) per share, a year ago.
• The company has lowered its fiscal 2024 net economic earnings guidance range to $4.15-$4.25 per share, down from the previous range of $4.25-$4.45 per share.
• The Gas Utility segment reported a net economic loss of $11.0 million, an improvement from a loss of $12.3 million last year, due to new rates in Spire Alabama and Spire Missouri.
• The Gas Marketing segment reported net economic earnings of $1.0 million, compared to a loss of $2.5 million in the prior year, driven by improved transportation margins.
• The Midstream segment saw a significant increase in net economic earnings to $13.9 million, up from $3.6 million last year, due to new storage capacity and the inclusion of MoGas and Salt Plains.
• Spire launched a customer affordability initiative during the quarter, which is expected to lower costs and improve operational efficiency, with benefits anticipated in 2025 and 2026.
• The company's 10-year capital investment target is $7.3 billion through fiscal 2033, focused on infrastructure upgrades and new business in the Gas Utility segment.
• Capital expenditures for fiscal 2024 have increased from $800 million to $830 million due to increased deployment of advanced meters.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While there are improvements in some areas, the lowered earnings guidance and net loss for the quarter temper the positive aspects. The customer affordability initiative is a positive step, but its benefits are not immediate.

Positives

• The company's net loss improved year-over-year, indicating better financial performance.
• Net economic earnings also showed improvement compared to the same quarter last year.
• The Midstream segment experienced a substantial increase in earnings due to new storage capacity and acquisitions.
• The customer affordability initiative is expected to reduce costs and improve efficiency in the coming years.
• The Gas Utility segment showed improvement due to new rates and increased usage.
• Gas Marketing earnings increased due to improved transportation margins.

Negatives

• Spire reported a net loss of $12.6 million for the quarter.
• The company lowered its full-year net economic earnings guidance.
• The Gas Utility segment still reported a net economic loss for the quarter.
• The company experienced higher depreciation and bad debt expenses.
• The company experienced higher interest expenses.

Risks

• The company's future operating results may be affected by various uncertainties and risk factors, including weather conditions, economic factors, and governmental and regulatory policy.
• Lower than expected Spire Missouri margin and higher interest impacted the results.
• The company is facing higher interest and bad debt expenses.
• The benefits of the customer affordability initiative are not expected to be fully realized until 2025 and 2026.

Future Outlook

Spire remains confident in its ability to grow long-term NEE per share by 5-7% driven by expected 7-8% annual utility rate base growth. The company expects most of the benefits from the customer affordability initiative to be realized in 2025 and 2026.

Management Comments

• Our results improved for the third quarter across all segments, and we maintained strong operational performance, said Steve Lindsey, president and chief executive officer of Spire.
• We remain confident in our ability to grow our business and serve our customers and communities with safe, reliable and affordable energy.

Industry Context

The results reflect the challenges faced by natural gas companies due to weather fluctuations and economic conditions. The company's focus on infrastructure upgrades and customer affordability aligns with industry trends towards long-term sustainability and operational efficiency.

Comparison to Industry Standards

• Spire's performance in the Midstream segment, with a significant increase in earnings, is notable compared to other natural gas companies that may not have such a strong presence in storage and transportation.
• The company's lowered earnings guidance reflects the impact of a warm winter and higher interest expenses, which are common challenges in the utility sector.
• The customer affordability initiative is a proactive step that could differentiate Spire from competitors by addressing customer concerns about rising energy costs.
• The 10-year capital investment plan of $7.3 billion is a significant commitment to infrastructure upgrades, which is in line with industry trends towards modernizing utility networks.

Stakeholder Impact

• Shareholders will be impacted by the lowered earnings guidance and the net loss for the quarter.
• Customers may benefit from the customer affordability initiative in the long term.
• Employees may be affected by the workforce reductions as part of the customer affordability initiative.
• Creditors will be impacted by the company's financial performance and debt levels.

Next Steps

• Spire will continue to implement its customer affordability initiative.
• The company will focus on its 10-year capital investment plan.
• Spire will host a conference call and webcast to discuss the results.

Key Dates

Keywords

Net Economic Earnings, Gas Utility, Midstream, Gas Marketing, Customer Affordability, Capital Investment, Earnings Guidance, Natural Gas, Spire Inc.