Spire Inc. (SR) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong performance in Midstream and Gas Marketing, alongside a strategic acquisition and expansion plans. Despite some concerns over O&M expenses and financing strategies, the reaffirmed guidance and potential positive impacts from the acquisition and rate adjustments in Missouri suggest a positive outlook. The Q&A section shows analysts' confidence in the company's growth, even with some uncertainties, leading to an overall positive sentiment for the stock price over the next two weeks.
Key Financial Performance
Adjusted EPS $4.44, up 7.5% from $4.13 in fiscal 2024, reflecting growth across all segments, driven by infrastructure investments.
Capital Investment $922 million, with close to 90% being spent at the utilities, enhancing the reliability and safety of systems for customers.
Gas Utilities Earnings $231 million, up almost 5% or over $10 million from last year, driven by ISRS recovery in Missouri and new rates in Alabama, partially offset by slightly lower usage in Alabama, higher O&M and depreciation expense.
Midstream Earnings $56 million, up almost $23 million from last year, driven by additional capacity of asset optimization at Spire Storage, partially offset by higher operating costs from higher activity and scale.
Gas Marketing Earnings $26 million, an increase of $2.5 million, reflecting the business being well positioned to create value, partially offset by higher storage and transportation fees.
Other Corporate Costs $38 million, nearly $8 million higher than the prior year, reflecting the absence of the prior year benefit of an interest rate hedge and higher interest expense in the current year.
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Operating Highlights
Adjusted EPS: Came in at $4.44, up 7.5% from $4.13 in fiscal 2024, reflecting growth across all segments driven by infrastructure investments.
Dividend Increase: Spire Board of Directors approved a dividend increase of 5.1%, bringing the annualized rate to $3.30 per share.
Acquisition of Piedmont Natural Gas Tennessee business: Pending acquisition from Duke, expected to close in Q1 2026. Regulatory approvals are progressing, including FERC approval for gas supply contracts.
Market Expansion: With the addition of Tennessee, Spire will operate across states with constructive regulatory frameworks, improving diversification and stability of earnings.
Capital Investments: Invested $922 million in fiscal 2025, with 90% spent on utilities to enhance reliability and safety.
Regulatory Developments: Positive settlement in Missouri rate case with new rates effective in October. New legislation in Missouri allows future test year rate setting, enabling better planning and investments.
Long-term Growth Plan: 10-year capital plan of $11.2 billion, with 70% dedicated to safety and reliability projects and 19% to customer expansion.
Sale of Gas Storage Facilities: Evaluating the sale of gas storage facilities as part of financing for the Piedmont acquisition.
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Risk or Challenges
Regulatory Risks: Pending approval from the Tennessee Public Utility Commission for the acquisition of Piedmont Tennessee business. Future test year rate case in Missouri requires preparation to ensure timely cost recovery.
Operational Costs: Higher utility O&M expenses impacted fiscal 2025 results. Increased operating costs in Midstream segment due to higher activity and scale.
Market Conditions: Gas marketing earnings were partially offset by higher storage and transportation fees. Decline in year-over-year optimization-related earnings in Midstream segment.
Debt and Financing: Need for refinancing maturities and incremental debt of approximately $625 million through fiscal 2028. Evaluation of the sale of natural gas storage assets to fund acquisition.
Customer Affordability: Customer rate increases in Missouri and Alabama have been in line with inflation, but ongoing infrastructure investments may pressure affordability.
Integration Risks: Seamless integration of Piedmont Tennessee business for customers and employees is a priority, requiring effective transition planning.
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Guidance & Outlook
Fiscal 2026 Adjusted EPS Guidance: Spire issued fiscal 2026 adjusted EPS guidance in the range of $5.25 to $5.45, excluding results from the pending acquisition of the Piedmont Tennessee business and including a full year of earnings from natural gas storage facilities.
Fiscal 2027 Adjusted EPS Guidance: Spire provided fiscal 2027 adjusted EPS guidance of $5.65 to $5.85, reflecting a full year of expected earnings contribution from the Piedmont Tennessee business and excluding earnings from Spire Storage due to the expected sale of the assets.
Long-term Adjusted EPS Growth Guidance: Spire reaffirmed its long-term adjusted EPS growth guidance of 5% to 7%, using the fiscal 2027 guidance midpoint of $5.75 as a base.
10-Year Capital Plan: Spire's 10-year capital plan, including expected capital needs in Tennessee, totals $11.2 billion, with 70% dedicated to safety and reliability projects and 19% to customer expansion and new business connections.
Rate Base Growth Projections: By fiscal year 2030, Spire expects its total rate base and capitalization to grow to $10.7 billion from an estimated $8.2 billion at the end of fiscal 2026, driven by its robust capital plan. Compound annual rate base growth is projected at 7% in Missouri and 7.5% in Tennessee, with 6% regulated equity growth in Alabama.
Acquisition of Piedmont Tennessee Business: The acquisition remains on track to close in the first quarter of calendar 2026. Transition planning is underway, with a focus on seamless integration for customers and employees. The acquisition is expected to enhance diversification and stability of earnings.
Financing Plan: Spire is pursuing a permanent capital structure consistent with its current credit ratings, including a balanced mix of debt, equity, and hybrid securities. The company is evaluating the sale of its gas storage facilities as a potential source of funds, with the evaluation process targeted for completion by year-end.
Fiscal 2026 Business Segment Guidance: Gas utilities are expected to generate $285 million to $315 million, driven by new Missouri rates and anticipated ISRS revenues. Gas marketing adjusted earnings are projected at $19 million to $23 million, and midstream adjusted earnings are expected to range between $42 million and $48 million, including a full year of storage and pipeline operations.
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Shareholder Return Plan
Dividend Increase: The Spire Board of Directors approved a dividend increase of 5.1%, bringing the annualized rate to $3.30 per share. This marks the 23rd consecutive year of dividend increases, and Spire has continuously paid a cash dividend since 1946.
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Key Q&A
Q:Can you provide more details on the long-term growth rate and expectations for earned ROEs, particularly in Gas Marketing and Midstream growth?
A:Scott Doyle explained that the company provided two years of guidance due to significant business activities in the next 12 months. Earned returns in Missouri are improving, nearing allowed returns, but will be slightly less in FY '27 compared to FY '26. Alabama's earned returns are close to allowed levels. Midstream is included in the FY '26 guide, but Storage is excluded for FY '27. Marketing is rebased annually and not part of the growth story.
Q:What are your expectations for FFO to debt target (15%-16%) and its trend over time?
A:Adam Woodard stated that the company is currently at the bottom of the threshold ranges but expects steady improvement into the middle of the bands for Moody's and S&P, driven by recoveries in Missouri and deliberate financing strategies in Tennessee.
Q:Has there been any shift in the financing mix and timing since the acquisition announcement?
A:Adam Woodard mentioned no major updates, reaffirming a balanced mix of debt and equity. The company is evaluating the Storage business, with strong interest observed, and plans to make an announcement soon.
Q:What are your O&M assumptions going forward, and are there any integration initiatives between utilities to manage O&M?
A:Scott Doyle stated that O&M is guided below inflation, consistent with historical performance. Integration activities are in early stages, focusing on best practices from both organizations to manage O&M effectively.
Q:Could 2028 fall outside the 5%-7% growth range due to future test year rate adjustments?
A:Scott Doyle and Adam Woodard indicated that while future test year adjustments could bring capital forward, the growth range is based on current knowledge and expectations. They expect some improvement in earned ROE but avoided making definitive statements.
Q:Is the company more confident about selling the Storage business, and when will a decision be announced?
A:Adam Woodard noted strong interest in the Storage assets but stated the evaluation process is ongoing. An announcement is expected by the end of the calendar year.
Q:If Storage is sold, will it impact the long-term balance sheet targets?
A:Adam Woodard stated it is too early to comment, as this is part of the ongoing evaluation process.
Q:What options are being considered to fulfill equity needs if not issuing straight equity?
A:Adam Woodard mentioned options like equity-linked securities, hybrids, and junior subordinated debt as alternatives to straight equity.
Q:What is the split between pipelines and storage within Midstream, and does it differ for earnings or EBITDA?
A:Adam Woodard confirmed a 1/3 pipeline and 2/3 storage split, consistent for both earnings and EBITDA.
Q:Would selling Storage change long-term balance sheet targets?
A:Adam Woodard reiterated that it is too early to comment, as this is part of the evaluation process.
Q:Are all parties aligned on the transition to a forward test year in Missouri?
A:Adam Woodard acknowledged that the transition is a case of first impression, requiring collaboration among all parties to understand filing requirements and processes.
Q:How does the company view dividend payout ratios and growth?
A:Adam Woodard stated that the dividend is expected to grow at the earnings growth rate, targeting a payout ratio of 55%-65%.
Q:What are the long-term equity needs for the company?
A:Adam Woodard mentioned minimal equity needs annually, in the range of $0-$50 million, primarily to support the Utility CapEx program.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or clarity on several topics: 1) The potential impact of selling the Storage business on long-term balance sheet targets, stating it is too early to comment. 2) Specific details on the financing mix and timing, particularly regarding equity-linked securities and hybrids. 3) The implications of future test year rate adjustments on the 5%-7% growth range, offering only general expectations without definitive statements.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Alabama Gulf
FERC
Midstream
Missouri Tennessee
OM
Piedmont Tennessee
RSE mechanism
Slide
Spire end
Storage
Tennessee Gas
Tennessee Spire
Tennessee gas
acquisition Piedmont
addition
approval
asset sale
capital plan
debt
dividend
equity
evaluation
expense
facility
financing plan
interest
midpoint
month
outcome
plan capital
process
rate Alabama
rate base
storage
term
SR Transcript
Spire Inc. (SR) Q2 2026 Earnings Call Transcript
Positive5-6
The earnings call summary highlights several positive factors: a 5% revenue growth and a 9% EPS increase, indicating strong financial performance. The acquisition of Piedmont Natural Gas Tennessee and strategic sales align with market repositioning efforts. Although there are risks associated with acquisitions and dispositions, the overall strategic initiatives and financial results suggest a positive outlook for the stock over the next two weeks.
Spire Inc. (SR) Q1 2026 Earnings Call Transcript
Unknown2-3
The earnings call summary presents a mixed picture. While there are positive aspects such as increased gas marketing earnings and strong interest in asset sales, uncertainties remain. Management's lack of quantitative details on marketing performance and the delay in the storage asset sale process raise concerns. Additionally, potential equity issuance could impact stock price. The overall sentiment is neutral, considering the market cap and absence of strong positive catalysts or negative surprises.
Spire Inc. (SR) Q4 2025 Earnings Call Transcript
Positive11-14
The earnings call summary indicates strong performance in Midstream and Gas Marketing, alongside a strategic acquisition and expansion plans. Despite some concerns over O&M expenses and financing strategies, the reaffirmed guidance and potential positive impacts from the acquisition and rate adjustments in Missouri suggest a positive outlook. The Q&A section shows analysts' confidence in the company's growth, even with some uncertainties, leading to an overall positive sentiment for the stock price over the next two weeks.
Spire Inc. (SR) Q3 2025 Earnings Call Transcript
Unknown8-5
The earnings call presents a mixed outlook. The financial performance shows improvement with positive EPS and revenue growth, yet there are concerns about increased costs and integration risks. The reaffirmation of dividend growth and strategic focus on shareholder value are positives. The Q&A section reveals some uncertainties, particularly regarding future marketing results and operational efficiency. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
SR Slides
SR Report
Frequently Asked Questions
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