SR Spire Inc

Issues fiscal 2024 earnings guidance; reaffirms long-term growth target

ST. LOUIS, Nov. 16, 2023 /PRNewswire/ -- Spire Inc. (NYSE: SR) today reported results for its fiscal year 2023 ended September 30. Highlights include:

• Net income of $217.5 million ($3.85 per share) compared to $220.8 million ($3.95 per share) in fiscal 2022
• Net economic earnings* (NEE) of $228.1 million ($4.05 per share) compared to $216.3 million ($3.86 per share) in the prior year
• Fiscal 2024 NEE per share expected to be $4.25 to $4.45
• Long-term NEE per share growth target remains 5–7%

"In fiscal 2023, we delivered solid financial and operating performance while providing affordable, reliable and safe energy to our customers," said Steve Lindsey, president and chief executive officer of Spire. "We were able to execute on our capital investment plan, including infrastructure upgrades resulting in growth of our gas utilities and the expansion of Spire Storage. In addition, Spire Marketing continued to deliver strong results. Looking forward to 2024 and beyond, we are well positioned and remain focused on continued execution of our strategy driven by growth and operational excellence in our businesses."

For fiscal 2023, Spire reported consolidated net income of $217.5 million ($3.85 per diluted share) compared to $220.8 million ($3.95 per share) in the prior year. On an NEE basis, results improved to $228.1 million ($4.05 per share), compared to $216.3 million ($3.86 per share) a year ago, driven by strong earnings from Gas Marketing. NEE excludes from net income, as applicable, the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities, and the largely non-cash impacts of other non-recurring or unusual items such as impairments and certain regulatory, legislative, or GAAP standard-setting actions.

Gas Utility

The Gas Utility segment includes the regulated distribution operations of five gas utilities across Alabama, Mississippi and Missouri. For fiscal 2023, Gas Utility reported NEE of $200.5 million compared to $202.7 million in the prior year. The slight decrease reflected higher contribution margin that was more than offset by higher operating expenses.

Contribution margin increased $88.1 million, reflecting the impact of new rates at Spire Missouri and Spire Alabama partially offset by the effects of warmer weather.

Operation and maintenance (O&M) expenses increased $48.5 million, or $10.4 million after removing a $9.1 million non-service cost transfer to other income (no earnings impact), approximately $24 million in previously deferred Spire Missouri general overhead costs that were expensed in fiscal 2023, and $5.0 million of bad debt expense. Excluding these items, O&M increased 2.5% reflecting higher operation and customer experience costs, partially offset by lower employee-related expenses.

Taxes other than income taxes increased due to higher gross receipts taxes, along with higher property taxes resulting from continued infrastructure build-out. Similarly, depreciation and amortization expenses were higher due to continued capital investment.

Gas Marketing

The Gas Marketing segment includes the results of Spire Marketing, which provides natural gas marketing services throughout the United States. Fiscal 2023 Gas Marketing NEE, which excludes mark-to-market and other fair value adjustments, was $47.6 million compared to $27.0 million a year ago. The higher earnings were driven by favorable market conditions in the first half of the fiscal year allowing for optimization of storage and transportation positions. 

Midstream

Fiscal 2023 NEE for the Midstream segment, which includes results for Spire STL Pipeline and Spire Storage West, was $14.1 million compared to $11.1 million in the year-ago period. The year-over-year improvement reflected optimization of withdrawal commitments at Spire Storage West, partially offset by higher O&M driven by an increased level of storage activity.

Other

Spire's other activities reported a loss on an NEE basis of $34.1 million in fiscal 2023 compared to a $24.5 million loss in the year-ago period. The increased loss reflected higher interest expense, including higher borrowings and interest rates, combined with higher corporate costs, partly offset by lower income tax expense.

Guidance and Outlook 

Spire expects fiscal 2024 NEE per share to be in a range of $4.25 to $4.45 and the long-term NEE per share growth target remains 5–7% using the fiscal 2024 guidance midpoint of $4.35 per share as a base. Earnings per share growth is driven by an expected 7–8% annual rate base growth at the utilities, reflecting our robust capital investment plan.

Our 10-year capital investment target of $7.2 billion extends through fiscal 2033 and is driven by increasing investment in infrastructure upgrades and new business at the Gas Utilities (97% of capital investment). Capital expenditures for fiscal 2024 are expected to be $765 million, which includes $100 million for the Spire Storage West expansion. 

Due to the seasonal nature of natural gas demand and the timing of regulatory recovery, the Gas Utility segment typically reports a loss in our fiscal fourth quarter ended September 30. Spire reported a consolidated net loss of $31.1 million ($0.66 per share), compared with a net loss of $7.1 million ($0.20 per share) last year. On an NEE basis, the quarterly loss was $37.6 million ($0.78 per share) compared to a loss of $31.4 million ($0.66 per share) in the year-ago period.

Gas Utility

Gas Utility fiscal 2023 fourth quarter reported a loss on an NEE basis of $34.0 million compared to a loss of $37.9 million in the year-ago period. The improvement reflected an increase in contribution margin primarily due to the impact of new rates at Spire Missouri and Spire Alabama. This increase was partially offset by higher O&M reflecting the change in treatment of Spire Missouri general overhead costs that were deferred in the prior-year period. Depreciation and amortization expenses also increased, reflecting increased capital investment.

Gas Marketing

Gas Marketing fiscal 2023 fourth quarter NEE was $2.6 million, down from $11.7 million in the year-ago period which benefited from higher than normal margins on wider basis differentials, particularly in the Southeast U.S.

Midstream

Midstream fiscal 2023 fourth quarter NEE was $2.5 million, up from $1.3 million in the year-ago period, reflecting optimization of withdrawal commitments at Spire Storage West in the current year quarter.

Other

Spire's other activities reported a loss on an NEE basis of $8.7 million in the fourth quarter of fiscal 2023, compared to a $6.5 million loss in the year-ago period. The increased loss reflected higher interest expense, including higher borrowings and interest rates, combined with higher corporate costs.

Conference Call and Webcast

Spire will host a conference call and webcast today to discuss its fiscal 2023 fourth quarter and full-year financial results. To access the call, please dial the applicable number approximately 5-10 minutes prior to the start time.

The call will also be webcast and can be accessed at Investors.SpireEnergy.com under the Events & presentations tab. A replay of the call will be available at 10 a.m. CT (11 a.m. ET) on November 16 until December 15, 2023, by dialing 877-344-7529 (U.S.), 855-669-9658 (Canada), or 412-317-0088 (international). The replay access code is 8894321.

About Spire

At Spire Inc. (NYSE: SR) we believe energy exists to help make people's lives better. It's a simple idea, but one that's at the heart of our company. Every day we serve 1.7 million homes and businesses making us one of the largest publicly traded natural gas companies in the country. We help families and business owners fuel their daily lives through our gas utilities serving Alabama, Mississippi and Missouri. Our natural gas-related businesses include Spire Marketing and Spire Midstream. We are committed to transforming our business through growing organically, investing in infrastructure, and advancing through innovation. Learn more at SpireEnergy.com.

Cautionary Statements on Forward-Looking Information and Non-GAAP Measures

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Spire's future operating results may be affected by various uncertainties and risk factors, many of which are beyond the Company's control, including weather conditions, economic factors, the competitive environment, governmental and regulatory policy and action, and risks associated with acquisitions. More complete descriptions and listings of these uncertainties and risk factors can be found in the Company's annual (Form 10-K) filing with the Securities and Exchange Commission.

This news release includes the non-GAAP financial measures of "net economic earnings," "net economic earnings per share," and "contribution margin." Management also uses these non-GAAP measures internally when evaluating the Company's performance and results of operations. Net economic earnings exclude from net income, as applicable, the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities and the largely non-cash impacts of impairments and other non-recurring or unusual items such as certain regulatory, legislative, or GAAP standard-setting actions. The fair value and timing adjustments, which primarily impact the Gas Marketing segment, include net unrealized gains and losses on energy-related derivatives resulting from the current changes in the fair value of financial and physical transactions prior to their completion and settlement, lower of cost or market inventory adjustments, and realized gains and losses on economic hedges prior to the sale of the physical commodity. Management believes that excluding these items provides a useful representation of the economic impact of actual settled transactions and overall results of ongoing operations. Contribution margin adjusts revenues to remove the costs that are directly passed on to customers and collected through revenues, which are the wholesale cost of natural gas and gross receipts taxes. These internal non-GAAP operating metrics should not be considered as an alternative to, or more meaningful than, GAAP measures such as operating income, net income, or earnings per share.