SPIRE INC
For the period ended Mar 31, 2024. Filed May 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 1, 2024
SR$88.81-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-01.
0001437749-24-002776
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0001437749-24-014087
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 140 current paragraphs.
60 unchanged; 37 reworded; 29 added; 7 removed; 0 previous and 14 current paragraphs rearranged.
Tables are not compared: 42 previous and 49 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Other income increased $0.3 versus the prior-year quarter as favorable mark-to-market valuations on unqualified retirement and investment trusts more than offset declining inventory carrying cost credits at Spire Missouri.
Current report
The primary driver of the current year increase in revenue was the $38.6 incremental impact of the Spire Alabama customer charge reset, in combination with off-system sales growth at Spire Missouri, favorable RSE adjustments at Spire Alabama, and higher current year ISRS billings at Spire Missouri. These favorable impacts were partly offset by the impacts of weather in Spire Missouri’s territory. Lower weather-driven volumes in Spire Missouri reduced gas cost recoveries by $28.6 and customer usage by $8.6 in the current-year quarter.
Current report
O&M expenses for the three months ended March 31, 2024, were $2.3 higher than the prior-year quarter. The Gas Utility segment O&M increase reflects higher employee and benefit costs in the current-year quarter. These unfavorable impacts were only partly offset by ongoing current-year efficiency initiatives that have lowered expense levels for non-payroll operations expense and reduced outside service costs.
Current report
The $6.3 quarter-over-quarter decline in net economic earnings primarily reflects favorable market conditions in the prior year that did not recur this year. Current year market conditions reflect the abundance of natural gas supplies and warmer weather, which reduced commodity and basis volatility. Net income's inclusion of $27.0 (after-tax) favorable mark-to-market activity more than offset the decline in business conditions.
Current report
Revenues in the current quarter decreased $14.6. Contribution margin increased $28.1 versus the prior-year quarter, reflecting the $35.9 (pre-tax) favorable mark-to-market activity. Excluding this impact, contribution margin declined $7.8, reflecting the lower current-year asset optimization opportunities outlined above. O&M expenses were relatively stable versus the prior year, with a $0.5 quarter-over-quarter increase.
Current report
Revenues in the current quarter increased $5.0 versus the prior-year quarter, and O&M expenses increased by $3.2 quarter-over-quarter, due primarily to timing of expenses and current-year quarter including the impacts of the Spire Storage Salt Plains and Spire MoGas acquisitions.
Current report
The Company’s other activities generated a $10.7 loss in the three months ended March 31, 2024, in line with prior-year quarter results, as higher interest expense in the current year was offset by lower corporate costs.
Current report
Revenues for the quarter ended March 31, 2024 were $24.5 lower than the comparable prior-year period. Lower weather-driven volumes reduced gas cost recoveries by $28.6 and customer usage by $8.6 in the current-year quarter. These negative impacts were only partly offset by an increase of $7.8 attributable to higher off-system sales and $5.4 incremental ISRS revenues in the current-year quarter.
Current report
Contribution margin for the three months ended March 31, 2024 decreased $0.9 from the same period in the prior year, as ISRS billings and slightly higher margins on off-system sales and miscellaneous revenues were more than offset by the $8.6 usage decline primarily attributable to the warmer weather.
Current report
O&M expenses for the current-year quarter increased $1.2 versus the prior-year quarter. The increase reflects higher employee and benefit costs in the current-year quarter. These unfavorable impacts were only partly offset by ongoing current-year efficiency initiatives that have lowered expense levels for non-payroll operations expense and reductions in outside service costs, combined with lower bad expense.
Current report
Other income declined by 0.2 versus the prior-year quarter, as favorable mark-to-market valuations on unqualified retirement trusts were more than offset by the decrease in inventory carrying cost credits of $1.5. Interest expense increased $3.1, primarily reflecting higher average short-term debt levels and higher short-term interest rates in the current year.
Current report
O&M expenses for the three months ended March 31, 2024 increased $0.9 versus the prior-year quarter as lower non-employee operating expenses and reductions of outside service costs were offset by higher benefit costs and higher bad debt expense.
Current report
EARNINGS–** six months ended March 31, 2024**
Current report
Spire
Current report
The increase in interest expense reflects higher average interest rates and higher average balances on long-term debt versus the prior year. Further, weighted-average short-term interest rates were 5.8% in the current-year period versus 4.7% in the prior-year period.
Current report
The change in income taxes is materially consistent with the change in pre-tax book income combined with a slight increase in the effective tax rate, as certain benefits in the prior year did not recur.
Current report
Gas Utility
Current report
Contribution margin increased $41.2 versus the prior year. The $22.9 increase attributable to the implementation of the 2022 Missouri rate case order, $10.3 favorable RSE adjustment at Spire Alabama, $9.8 growth resulting from the reset of the Spire Alabama per customer usage charge (net of weather adjustment) and $5.6 increase in ISRS combined to more than offset the $13.6 negative volume usage impact (net of weather mitigation) experienced by Spire Missouri in the current year.
Current report
The $24.8 year-over-year decline in net economic earnings primarily reflects very favorable market conditions in the prior year that did not recur this year. Net income's inclusion of $25.3 (after-tax) favorable mark-to-market activity more than offset the decline in business conditions.
Current report
Other
Current report
Spire Missouri
Current report
Degree days in Spire Missouri’s service areas during thesix months ended March 31, 2024, were 16.7% warmer than normal, and 9.2% warmer than the same period last year. Spire Missouri’s total system volume sold and transported were 1,090.4 million CCF for the current-year period, compared with 1,215.9 million CCF for the prior-year period. Total off-system volume sold and transported were 23.8 million CCF for the current-year, compared with 3.9 million CCF a year ago.
Current report
Depreciation and amortization expenses increased $7.4 versus the prior-year period due to ongoing capital investments. Taxes, other than income taxes, increased $0.7, as higher property taxes in the current year were mostly offset by lower pass-through gross receipts taxes.
Current report
Resulting net income for the six months ended March 31, 2024 increased $2.8 versus the prior-year comparable period.
Current report
Spire Alabama
Current report
Operating revenues for the six months ended March 31, 2024 increased $30.9 from the same period in the prior year. The increase in operating revenue was principally due to the $21.8 impact of the current year customer usage charge reset net of weather adjustments, combined with favorable RSE adjustments of $10.4. These favorable impacts were only partly offset by a $1.7 decrease in gas cost recovery.
Current report
Contribution margin was $19.1 higher versus the prior-year comparable period, primarily driven by $10.3 favorable net rate adjustments under the RSE mechanism and $9.8 relating to the customer usage charge reset (net of weather adjustments). This increase was slightly offset by a $0.8 decrease attributable to lower off-system sales.
Current report
For the six months ended March 31, 2024, resulting net income increased $12.6 versus the prior-year period.
Current report
For more information about the issuance of common stock, including Spire's “at-the-market” (ATM) equity distribution agreement and the settlement of equity units, see Note 4, Shareholders’ Equity, of the Notes to Financial Statements in Item 1.
Removed paragraphs (7)
Previous report
Certain information is presented by reportable segment, as described below. Effective during the first quarter of fiscal 2023, the Company changed its reportable segments to reflect changes in the way its chief operating decision maker evaluates the performance of its operations, develops strategy and allocates capital resources. Specifically, Midstream, which was formerly included in Other, is now reported separately. The Company’s historical segment disclosures have been recast to be consistent with the current presentation.
Previous report
Gas Marketing
Previous report
Midstream
Previous report
Gas Marketing
Previous report
The quarter-over-quarter decline in net economic earnings primarily reflects very favorable market conditions in the prior year that allowed the business to leverage regional basis differentials to optimize storage and transportation positions. Current year market conditions returned to a more normalized business environment of less commodity and basis volatility. Net income reflected the same variance drivers, as well as unfavorable mark-to-market activity.
Previous report
Midstream
Previous report
Under Spire’s “at-the-market” (ATM) equity distribution agreement and as authorized by its board of directors, the Company may offer and sell, from time to time, shares of its common stock (including shares of common stock that may be sold pursuant to forward sale agreements entered into in connection with the ATM equity distribution agreement). Specifically in the first quarter of fiscal 2024, on December 11, 2023, 1,744,549 shares were settled, generating $112.2 of net proceeds. On January 25, 2024, Spire’s board approved a new authorization for the sale of additional shares with an aggregate offering price of up to $200.0 through January 2027.
Reworded paragraphs (37)
Previous wording
Spire’s midstream operations consist of Spire Storage West LLC, Spire Storage Salt Plains LLC (jointly, “Spire Storage”) and Spire STL Pipeline LLC (“Spire STL Pipeline”). Spire STL Pipeline is a wholly owned subsidiary of Spire which owns and operates a FERC-regulated 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri, including Spire Missouri’s storage facility. Spire STL Pipeline’s operating revenue is derived primarily from Spire Missouri as its foundation shipper. Spire Storage is engaged in the storage of natural gas in both the western and midcontinent regions of the United States. Spire Storage West, located in Wyoming, consists of two storage fields operating under one FERC market-based rate tariff, while Spire Storage Salt Plains, acquired on April 1, 2023 and located in Oklahoma, operates under intrastate jurisdiction with authorizations from FERC under Section 311 of the Natural Gas Policy Act to provide certain interstate storage, transportation, and hub services.
Current wording
Spire’s midstream operations consist of Spire Storage West LLC, Spire Storage Salt Plains LLC (jointly, “Spire Storage”), Spire STL Pipeline LLC (“Spire STL Pipeline”), Spire MoGas Pipeline. Spire STL Pipeline owns and operates a FERC-regulated 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri, including Spire Missouri’s storage facility, and its operating revenue is derived primarily from Spire Missouri as its foundation shipper. Spire MoGas Pipeline (or simply “MoGas”), a 263-mile FERC-regulated natural gas pipeline and a connected 75-mile gas distribution system in Missouri, was acquired by Spire Midstream LLC, a subsidiary of Spire, on January 19, 2024. Spire Storage is engaged in the storage of natural gas in both the western and midcontinent regions of the United States. Spire Storage West, located in Wyoming, consists of two storage fields operating under one FERC market-based rate tariff, while Spire Storage Salt Plains, acquired on April 1, 2023 and located in Oklahoma, operates under intrastate jurisdiction with authorizations from FERC under Section 311 of the Natural Gas Policy Act to provide certain interstate storage, transportation, and hub services.
Previous wording
The increase in interest expense reflects the significant increase in short-term interest rates and higher long-term debt levels versus the prior year. Current year weighted-average short-term debt levels decreased slightly versus the comparative prior year amount, but weighted-average short-term interest rates were 5.7% in the current-year quarter, versus 4.4% in the prior-year quarter.
Current wording
The increase in interest expense reflects the increase in interest rates on both short-term and long-term debt. Weighted-average short-term interest rates were 5.8% in the current-year quarter versus 5.0% in the prior-year quarter.
Previous wording
The change in income taxes is consistent with the change in pre-tax book income.
Current wording
The increase in income taxes reflects the increase in pre-tax book income and mix.
Previous wording
The decrease in Gas Utility operating revenues was attributable to the following factors:
Current wording
The increase in Gas Utility operating revenues was attributable to the following factors:
Previous wording
Contribution margin increased $22.8 versus the prior-year quarter. The $22.5 increase attributable to the implementation of the 2022 Missouri rate case order, the $3.9 favorable RSE adjustment at Spire Alabama, combined with the $1.7 increase at Spire EnergySouth more than offset the $5.5 negative volume usage impact (net of weather mitigation) experienced in the current year quarter.
Current wording
Contribution margin increased $18.4 versus the prior-year quarter. Contribution margin benefited from the $10.3 increase attributable to the implementation of the Spire Alabama customer charge reset, the $6.4 favorable RSE adjustment at Spire Alabama, and $5.4 Spire Missouri ISRS growth, combined with the $3.4 increase at Spire EnergySouth. These positive impacts more than offset the $8.6 negative volume usage impact (net of weather mitigation) experienced by Spire Missouri in the current-year quarter.
Previous wording
Taxes, other than income taxes, increased $1.7, primarily due to higher property and real estate taxes. Depreciation and amortization expenses for the quarter ended December 31, 2023 were $4.5 higher than the same period in the prior year primarily driven by continued infrastructure capital expenditures across all the Utilities. Interest expense increased $6.9 to $39.0 primarily due to higher rates. The benefit of carrying cost credits increased $1.7 quarter over quarter.
Current wording
Taxes, other than income taxes, increased $0.3, primarily due to higher property and real estate taxes. Depreciation and amortization expenses for the quarter ended March 31, 2024 were $5.2 higher than the same period in the prior year primarily driven by continued infrastructure capital expenditures across all the Utilities. Interest expense increased $2.8 to $38.3 primarily due to higher rates. The benefit of carrying cost credits decreased $1.5 quarter over quarter.
Previous wording
Degree days in Spire Missouri’s service areas during the three months ended December 31, 2023, were 18.7% warmer than normal, and 18.0% warmer than the same period last year. Spire Missouri’s total system volume sold and transported were 449.7 millioncentum (Latin for “hundred”) cubic feet (CCF) for the quarter, compared with 559.4 million CCF for the same period in the prior year. Total off-system volume sold and transported were 2.2 million CCF for the current-year quarter, compared with 2.7 million CCF a year ago.
Current wording
Degree days in Spire Missouri’s service areas during the three months ended March 31, 2024, were 15.2% warmer than normal, and 2.1% warmer than the same period last year. Spire Missouri’s total system volume sold and transported were 640.7 millioncentum (Latin for “hundred”) cubic feet (CCF) for the quarter, compared with 657.8 million CCF for the same period in the prior year. Total off-system volume sold and transported were 21.6 million CCF for the current-year quarter, compared with 1.2 million CCF a year ago.
Previous wording
Depreciation and amortization expenses increased $3.5 versus the prior-year quarter due to ongoing capital investments. Taxes, other than income taxes, increased $2.1, driven by higher property taxes and pass-through gross receipts taxes.
Current wording
Depreciation and amortization expenses increased $3.9 versus the prior-year quarter due to ongoing capital investments. Taxes, other than income taxes, decreased $1.4, primarily driven by lower pass-through gross receipts taxes.
Previous wording
Resulting net income for the quarter ended December 31, 2023 increased $9.7 versus the prior-year quarter.
Current wording
Resulting net income for the quarter ended March 31, 2024 decreased $6.9 versus the prior-year quarter.
Previous wording
Operating revenues for the three months ended December 31, 2023 decreased $10.3 from the same period in the prior year. The change in operating revenue was principally due to unfavorable weather/usage impacts of $16.8. For the quarter, these unfavorable impacts were only partly offset by favorable RSE adjustments of $4.0 and a $2.7 increase attributable to gas cost recovery.
Current wording
Operating revenues for the three months ended March 31, 2024 increased $41.2 from the same period in the prior year. The increase in operating revenue was principally due to the $38.6 impact of the current year customer usage charge reset, combined with favorable RSE adjustments of $6.4. These favorable impacts were only partly offset by a $4.4 decrease in gas cost recovery.
Previous wording
Contribution margin was $3.2 higher versus the prior-year quarter primarily driven by $3.9 favorable net rate adjustments under the RSE mechanism. This increase was slightly offset by a $0.5 decrease attributable to usage (net of weather mitigation).
Current wording
Contribution margin was $15.9 higher versus the prior-year quarter, driven by the customer usage charge reset benefit of $10.3 and $6.4 favorable net rate adjustments under the RSE mechanism. This increase was slightly offset by a $0.9 decrease attributable to lower off-system sales.
Previous wording
As measured in degree days, temperatures in Spire Alabama’s service area during the three months ended December 31, 2023, were 14.4% warmer than normal and 9.5% warmer than a year ago. Spire Alabama’s total system volume sold and transported were 229.3 million CCF for the three months ended December 31, 2023, compared with 252.1 million CCF for the same period in the prior year. Total off-system volume sold and transported were 26.4 million CCF for the quarter, compared with 14.6 million CCF off-system volume sold and transported in last year’s first quarter.
Current wording
As measured in degree days, temperatures in Spire Alabama’s service area during the three months ended March 31, 2024, were 9.5% warmer than normal, but 25.0% colder than a year ago. Spire Alabama’s total system volume sold and transported were 322.7 million CCF for the three months ended March 31, 2024, compared with 295.6 million CCF for the same period in the prior year. Total off-system volume sold and transported were 7.4 million CCF for the current-year quarter, compared with 13.4 million CCF off-system volume sold and transported in last year’s second quarter.
Previous wording
For the quarter ended December 31, 2023, resulting net income increased $1.9 versus the prior-year quarter.
Current wording
For the quarter ended March 31, 2024, resulting net income increased $10.7 versus the prior-year quarter.
Previous wording
After removing the impact of the Non-Service Cost Postretirement Benefit Transfer (“NSC Transfer”) of $0.1, other income increased $11.4. Of this increase, $8.2 was the result of a gain realized on an interest rate swap contract after management determined the anticipated issuance of certain debt was no longer probable of occurring, resulting in the discontinuation of hedge accounting. The remaining variance was primarily attributable to inventory carrying cost credits at Spire Missouri, combined with favorable mark-to-market valuations on unqualified retirement trusts.
Current wording
Other income increased $11.8. Of this increase, $8.2 was the result of a gain realized on an interest rate swap contract after management determined the anticipated issuance of certain debt was no longer probable of occurring, resulting in the discontinuation of hedge accounting. The remaining variance was primarily attributable to inventory carrying cost credits at Spire Missouri, combined with favorable mark-to-market valuations on unqualified retirement and investment trusts.
Previous wording
For the quarter ended December 31, 2023, Gas Utility net income was $12.6 higher than the prior-year period, reflecting stronger financial performance across all utilities. Net economic earnings in the current year was $12.9 higher than the prior year, which tracks the net income trend. These results are described in further detail below.
Current wording
For the six months ended March 31, 2024, Gas Utility net income was $17.4 higher than the prior-year period, primarily reflecting stronger financial performance across the Southeast utilities, and to a lesser extent, growth at Spire Missouri. Net economic earnings in the current year was $17.0 higher than the prior year, which tracks the net income trend. These results are described in further detail below.
Previous wording
The primary driver of the current year drop in revenue was lower usage due to weather. Warmer weather across our utility footprint in the current year negatively impacted both gas cost recoveries and customer usage, particularly for Spire Missouri. Spire Missouri realized $23.2 lower gas cost recoveries in the current year, as the current year lower volumes more than offset the higher PGA rates being charged to customers. Both Spire Missouri and Spire Alabama also experienced lower volumetric usage totaling $21.8 in the current year quarter. These unfavorable impacts were only partly offset by a $22.5 increase from Spire Missouri reflecting the final quarterly impact of implementing the 2022 rate order, and $4.0 of favorable RSE adjustments at Spire Alabama.
Current wording
The current year is benefiting from a $22.9 increase from Spire Missouri reflecting the final quarterly impact of implementing the 2022 rate order, $21.8 incremental revenues resulting from the reset of the Spire Alabama per customer usage charge (net of weather adjustment), favorable Spire Alabama RSE adjustments totaling $10.4, and increases in off-system sales and ISRS of $6.9 and $5.6, respectively, at Spire Missouri. These benefits were mostly offset due to weather impacts. Warmer weather across our utility footprint in the current year negatively impacted both gas cost recoveries and customer usage, particularly for Spire Missouri. Spire Missouri realized $51.8 lower gas cost recoveries in the current year, as the current year lower volumes more than offset the higher PGA rates being charged to customers. Spire Missouri also experienced lower volumetric usage totaling $13.6 in the current-year quarter.
Previous wording
O&M expenses for the three months ended December 31, 2023, were $3.2 lower than the prior year. Run-rate expenses decreased $3.3 after removing the $0.1 impact of the NSC Transfer. The Gas Utility segment O&M decrease reflects lower expense levels for employee-related costs, non-payroll operations expense, and efficiencies in customer care expense. These favorable benefits were only partly offset by higher insurance expense.
Current wording
O&M expenses for the six months ended March 31, 2024 were $0.9 lower than the prior year. The Gas Utility segment O&M decrease reflects lower operations expense, and reductions in outside service costs. These favorable benefits were only partly offset by higher employee-related costs.
Previous wording
Revenues in the current quarter decreased $37.8 and contribution margin decreased $28.4 versus the prior-year quarter, reflecting the lower current-year asset optimization opportunities outlined above. Operating expenses decreased by $1.9 quarter-over-quarter, due primarily lower employee-related costs.
Current wording
Revenues in the current year decreased $52.4 and contribution margin decreased $34.0 (after removing the $33.7 pre-tax favorable mark-to-market activity) versus the prior-year period, reflecting the lower current-year asset optimization opportunities outlined above. Operating expenses decreased by $1.4 year-over-year, due primarily lower employee-related costs.
Previous wording
Net income and net economic earnings for the Company’s Midstream segment for the quarter ended December 31. 2023 versus the prior-year quarter decreased $2.9 and $1.4, respectively. Of the reduction in net income and net economic earnings, $1.2 was attributable to Spire Storage West, which benefited from more favorable market conditions in the prior year when it was able to optimize storage operations and commitments. Net income was also impacted by $1.5 (after-tax) in acquisition transaction expenses incurred in the current year relating to the announced acquisition of the MoGas and Omega pipelines.
Current wording
Net income and net economic earnings for the Company’s Midstream segment for the six months ended March 31, 2024 versus the prior-year period decreased $3.3 and $1.8, respectively. The benefits of the Spire Storage Salt Plains and MoGas acquisitions were more than offset by the $4.0 reduction in net income and net economic earnings at Spire Storage West, which benefited from more favorable market conditions in the prior year when it was able to optimize storage operations and commitments. Net income was also impacted by $1.5 (after-tax) in acquisition transaction expenses incurred in the current year relating to the acquisition of MoGas.
Previous wording
Revenues in the current quarter decreased $0.3 versus the prior-year quarter, reflecting lower Spire Storage West revenues attributable primarily to the previously mentioned more favorable market conditions in the prior year. Operating expenses increased by $2.8 quarter-over-quarter, due primarily to operating expenses associated with Spire Storage Salt Plains and transaction costs related to MoGas and Omega.
Current wording
Revenues in the current year increased $4.7 versus the prior-year period, due primarily to the acquisitions of Spire Storage Salt Plains and MoGas offsetting lower Spire Storage West revenues attributable primarily to the previously mentioned more favorable market conditions in the prior year. O&M expenses increased by $6.0 year-over-year, due primarily to operating expenses associated with the before-mentioned acquisitions, combined with transaction costs related to MoGas.
Previous wording
The Company’s other activities generated a $2.7 loss in the three months ended December 31, 2023, $4.6 lower than the prior-year quarter. The improved results were driven by the current year $8.2 gain realized on an interest rate swap contract after management determined the anticipated issuance of certain debt was no longer probable of occurring, resulting in the discontinuation of hedge accounting. This gain more than offset higher corporate costs in the current year.
Current wording
The Company’s other activities generated a $13.4 loss in the six months ended March 31, 2024, $4.6 lower than the prior-year period. The improved results were driven by the current-year $8.2 gain realized on an interest rate swap contract after management determined the anticipated issuance of certain debt was no longer probable of occurring, resulting in the discontinuation of hedge accounting. This gain more than offset higher interest expense and slightly higher corporate costs in the current year.
Previous wording
Revenues for the quarter ended December 31, 2023 were $5.8 lower than the comparable prior-year period. A key driver was a decrease in gas recovery (PGA) totaling $23.2. Higher rates in the current year quarter were more than offset by lower volumetric usage. This lower volume usage decreased revenues versus the prior year by $5.0. These negative impacts were only partly offset by an increase of $22.5 attributable to the impact of the 2022 rate order (new rates became effective the last week of December 2022).
Current wording
Revenues for the six months ended March 31, 2024 were $30.3 lower than the comparable prior-year period. A key driver was a decrease in gas recovery (PGA) totaling $51.8. Higher rates in the current year were more than offset by lower volumetric usage. This lower volume usage decreased revenues versus the prior year by $13.6. These negative impacts were only partly offset by an increase of $22.9 attributable to the impact of the 2022 rate order (new rates became effective the last week of December 2022) and higher off-system sales and ISRS of $6.9 and $5.6, respectively.
Previous wording
Contribution margin for the three months ended December 31, 2023 increased $17.9 from the same period in the prior year. The previously mentioned timing of the 2022 rate case implementation generated $22.5 incremental contribution that was only partly offset by the $5.0 impact of lower volumes.
Current wording
Contribution margin for the six months ended March 31, 2024 increased $17.0 from the same period in the prior year. The previously mentioned timing of the 2022 rate case implementation generated $22.9 incremental contribution combined with $5.6 higher ISRSA more than offset the $13.6 impact of lower volumes.
Previous wording
Reported O&M expenses for the current-year quarter decreased $2.2 versus the prior year. Run-rate expenses decreased $2.1 after removing the $0.1 impact of the NSC Transfer. The reduction of current year O&M was driven by non-payroll operations expense, lower customer experience expense and outside services. These lower expenditure levels in the current year were only partly offset by higher insurance expense.
Current wording
Reported O&M expenses for the current-year quarter decreased $1.0 versus the prior year. The reduction of current year O&M was driven by non-payroll operations expense, lower outside services costs, and lower bad debt expense. These lower expenditure levels in the current year were only partly offset by higher employee related expenses and higher benefit claims expense.
Previous wording
Other income improved by $2.1 after removing the $0.1 impact due to the NSC Transfer. This variance is primarily attributable to increased inventory carrying cost credits of $1.7, and, to a lesser extent, favorable mark-to-market valuations on unqualified retirement trusts. Interest expense increased $5.9, reflecting higher short-term interest rates in the current year and the $400 in long-term debt that was issued in the prior-year second quarter.
Current wording
Other income improved by $2.0. This variance is primarily attributable to favorable mark-to-market valuations on unqualified retirement trusts. Interest expense increased $9.0, reflecting higher short-term interest rates in the current year and the $400 in long-term debt that was issued in the prior-year second quarter.
Previous wording
O&M expenses for the three months ended December 31, 2023 decreased $0.9 versus the prior-year quarter, $1.0 after removing the NSC Transfer variance versus the prior-year quarter. The decrease was primarily due to lower employee-related costs and lower non-employee operating expenses, only partly offset by higher insurance expense.
Current wording
O&M expenses for the six months ended March 31, 2024 were flat versus the comparable prior-year period, as lower employee-related costs and lower non-employee operating expenses, were offset by higher insurance and bad debt expense.
Previous wording
Depreciation and amortization expenses were up $0.9, the result of continued investment in infrastructure upgrades. Interest expense for the current-year quarter increased $1.0 versus the prior-year quarter, primarily the result of higher short-term interest rates.
Current wording
Depreciation and amortization expenses were up $2.1, the result of continued investment in infrastructure upgrades. Interest expense for the current-year period increased $0.3 versus the prior-year period, primarily the result of higher short-term interest rates.
Previous wording
For thethree months ended December 31, 2023, net cash from operating activities improved$240.8 from the corresponding period of fiscal 2023. The key drivers of the favorable change are regulatory timing and fluctuations in working capital items, as discussed below in the Future Cash Requirements section, particularly prior-year swings in accounts payable and regulatory assets and liabilities.
Current wording
For thesix months ended March 31, 2024, net cash from operating activities improved$379.5 from the corresponding period of fiscal 2023. The key drivers of the favorable change are regulatory timing and fluctuations in working capital items, as discussed below in the Future Cash Requirements section, particularly the prior-year decreases in accounts payable and inventories and the current-year decrease in net regulatory assets.
Previous wording
For the three months ended December 31, 2023, net cash used in investing activities was $73.5 greater than for the same period in the prior year. Total capital expenditures were $71.7 higher than last year, with a $28.6 spending increase in the Utilities and a $43.8 increase for Midstream (Spire Storage West expansion).
Current wording
For the six months ended March 31, 2024, net cash used in investing activities was $243.2 greater than for the same period in the prior year. Payments for business acquisitions (net of cash acquired) were $177.4 for MoGas this year and $37.1 for Spire Storage Salt Plains last year. Total capital expenditures were $101.5 higher than last year, with a $22.2 spending increase in the Utilities and an $81.0 increase for Midstream (Spire Storage West expansion).
Previous wording
Lastly, for the three months ended December 31, 2023, net cash provided by financing activities decreased $166.3 versus the three months ended December 31, 2022 as lower debt issuances were only partially offset by increased equity issuances. In the first quarter of fiscal 2024, there were no issuances of long-term debt and only a $92.0 increase in short-term debt outstanding, but in last year’s first quarter, $205.0 of long-term debt was issued and short-term debt outstanding increased $189.5. Cash from the issuance of common stock in the current-year period included the $112.2 settlement of forward sales under its ATM program, described in Note 4 of the Notes to Financial Statements in Item 1.
Current wording
Lastly, for the six months ended March 31, 2024, net cash provided by financing activities decreased $116.4 versus the six months ended March 31, 2023. In the first half of fiscal 2024, there was a $151.1 reduction of debt, while debt increased $247.3 in the first half of fiscal 2023. The relative cash outflow of those changes was only partially offset by the increase in stock issuance this year. Cash from the issuance of common stock in the current-year period included the $112.2 settlement of forward sales under its ATM program and the $175 settlement of equity units, described in Note 4 of the Notes to Financial Statements in Item 1.
Previous wording
Spire’s material cash requirements as of December 31, 2023, are related to capital expenditures, business acquisitions, principal and interest payments on long-term debt, natural gas purchase obligations, and dividends. There were no material changes outside the ordinary course of business from the future cash requirements discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Total Company capital expenditures are planned to be $765 for fiscal 2024.
Current wording
Spire’s material cash requirements as of March 31, 2024, are related to capital expenditures, principal and interest payments on long-term debt, natural gas purchase obligations, and dividends. There were no material changes outside the ordinary course of business from the future cash requirements discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Total Company capital expenditures are planned to be $800 for fiscal 2024.
Previous wording
The Company’s short-term cash requirements can be met through the sale of up to $1,300.0 of commercial paper or through the use of Spire’s $1,300.0 revolving credit facility. For information about short-term borrowings, see Note 6 of the Notes to Financial Statements in Item 1.
Current wording
The Company’s short-term cash requirements can be met through the sale of up to $1,300.0 of commercial paper or through the use of Spire’s $1,300.0 revolving credit facility. For information about short-term borrowings, see Note 6, Financing, of the Notes to Financial Statements in Item 1.
Previous wording
At December 31, 2023, Spire had outstanding principal of long-term debt totaling $3,726.1, of which $1,798.0 was issued by Spire Missouri, $750.0 was issued by Spire Alabama, and $223.1 was issued by other subsidiaries. For information about long-term debt issued this fiscal year, see Note 6 of the Notes to Financial Statements in Item 1.
Current wording
At March 31, 2024, Spire had outstanding principal of long-term debt totaling $3,751.1, of which $1,798.0 was issued by Spire Missouri, $750.0 was issued by Spire Alabama, and $223.1 was issued by other subsidiaries. For information about long-term debt issued this fiscal year, see Note 6, Financing, of the Notes to Financial Statements in Item 1.
Previous wording
Spire has a shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange Commission (SEC) for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and Direct Stock Purchase Plan. There were 237,408 and 231,788 shares at December 31, 2023 and January 29, 2024, respectively, remaining available for issuance under this Form S-3. Spire and Spire Missouri also have a universal shelf registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which expires on May 9, 2025.
Current wording
Spire has a shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange Commission (SEC) for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and Direct Stock Purchase Plan. There were 230,971 and 225,054 shares at March 31, 2024 and April 28, 2024, respectively, remaining available for issuance under this Form S-3. Spire and Spire Missouri also have a universal shelf registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which expires on May 9, 2025.
Previous wording
Including the current portion of long-term debt, the Company’s long-term consolidated capitalization consisted of 45%and 44% equity at December 31, 2023 and September 30, 2023, respectively.
Current wording
Including the current portion of long-term debt, the Company’s long-term consolidated capitalization consisted of 48%and 44% equity at March 31, 2024 and September 30, 2023, respectively.
Previous wording
Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources are based upon our financial statements, which have been prepared in accordance with GAAP, which requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Our critical accounting estimates used in the preparation of our financial statements are described in Item 7 of Spire, Spire Missouri, and Spire Alabama’s combined Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and include regulatory accounting, employee benefits and postretirement obligations, impairment of long-lived assets, and income taxes. There were no significant changes to critical accounting estimates during the three months ended December 31, 2023.
Current wording
Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources are based upon our financial statements, which have been prepared in accordance with GAAP, which requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Our critical accounting estimates used in the preparation of our financial statements are described in Item 7 of Spire, Spire Missouri, and Spire Alabama’s combined Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and include regulatory accounting, employee benefits and postretirement obligations, impairment of long-lived assets, and income taxes. There were no significant changes to critical accounting estimates during the six months ended March 31, 2024.
Previous wording
As of December 31, 2023, the Company has recorded through accumulated other comprehensive income a cumulative mark-to-market net gain of $20.7 on open swap contracts.
Current wording
As of March 31, 2024, the Company has recorded through accumulated other comprehensive income a cumulative mark-to-market net gain of $29.0 on open swap contracts.
Rearranged current paragraphs (14)
Current report — wording carried from elsewhere
For the quarter ended March 31, 2024, Gas Utility net income was $4.8 higher than the corresponding prior-year period, reflecting strong financial performance of the Southeast Utilities, which more than offset the $6.9 decrease at Spire Missouri. Net economic earnings in the current year were $4.1 higher than the prior year, which tracks the net income trend. These results are described in further detail below.
Current report — wording carried from elsewhere
Net income and net economic earnings for the Company’s Midstream segment for the quarter ended March 31, 2024 versus the prior-year quarter decreased $0.4. This reduction in net income and net economic earnings was driven by a decrease of $3.1 attributable to Spire Storage West, which benefited from more favorable market conditions in the prior year when it was able to optimize storage operations and commitments. This decrease was mostly offset by the incremental earnings related to the Spire Storage Salt Plains (April 2023) and Spire MoGas (January 2024) acquisitions.
Current report — wording carried from elsewhere
Depreciation and amortization expenses were up $1.2, the result of continued investment in infrastructure upgrades. Interest expense for the current-year quarter decreased $0.7 versus the prior-year quarter, primarily the result of lower short-term borrowings more than offsetting higher short-term interest rates.
Current report — wording carried from elsewhere
This section contains discussion and analysis of the results for the six months ended March 31, 2024 compared to the results for the six months ended March 31, 2023, in total and by registrant and segment.
Current report — wording carried from elsewhere
Net Income and Net Economic Earnings
Current report — wording carried from elsewhere
The following tables reconcile the Company’s net economic earnings to the most comparable GAAP number, net income.
Current report — wording carried from elsewhere
Income tax adjustments include amounts calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items.
Current report — wording carried from elsewhere
** Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted earnings per share calculation, which includes reductions for cumulative preferred dividends and participating shares.
Current report — wording carried from elsewhere
Reconciliations of contribution margin to the most directly comparable GAAP measure are shown below.
Current report — wording carried from elsewhere
Select variances for the six months ended March 31, 2024 compared to the six months ended March 31, 2023 are summarized in the following table and discussed below.
Current report — wording carried from elsewhere
The $0.4 increase in Gas Utility operating revenues was attributable to the following factors:
Current report — wording carried from elsewhere
The year-over-year increase in Gas Utility contribution margin was attributable to the following factors:
Current report — wording carried from elsewhere
Taxes, other than income taxes, increased $2.0, primarily due to higher property and real estate taxes. Depreciation and amortization expenses for the six months ended March 31, 2024 were $9.7 higher than the same period in the prior year primarily driven by continued infrastructure capital expenditures across all the Utilities. Interest expense increased $9.7 to $77.3 reflecting higher average net debt levels and slightly higher short-term interest rates. Other income increased $2.3 in the current year, primarily the result of favorable mark-to-market valuations on unqualified retirement trusts.
Current report — wording carried from elsewhere
As measured in degree days, temperatures in Spire Alabama’s service area during thesix months ended March 31, 2024, were 10.6% warmer than normal, but 15.3% colder than a year ago. Spire Alabama’s total system volume sold and transported were 552.0 million CCF for thesix months ended March 31, 2024, compared with 547.7 million CCF for the same period in the prior year. Total off-system volume sold and transported were 33.9 million CCF for the current year, compared with 28.0 million CCF off-system volume sold and transported in last year’s comparable period.