Spire Inc. Q3 FY2025 earnings call

• Recognized employees' dedication in responding to tornadoes in St. Louis. - Announced acquisition of Piedmont Natural Gas Tennessee business from Duke Energy, strategic and accretive. - In Missouri, a unanimous stipulation and agreement for a $210 million annual revenue increase was filed, and PSC approved a $19 million ISRS revenue increase. - In Alabama, welcomed new PSC President and thanked outgoing one. - Reaffirmed long-term EPS growth target of 5% to 7% supported by $7.4 billion capital investment plan. - Year-to-date CapEx totaled $700 million, with capital investment target for FY '25 increased to $875 million. - Expect to file for regulatory approval of Tennessee acquisition within 45 days of announcement and close in Q1 2026.

During the third quarter, Spire reported adjusted earnings of $4.1 million, an increase of over $8 million compared to the prior year. The Gas Utility segment had an adjusted loss of $10 million in Q3, $1 million better than the prior year, reflecting higher contribution margin at Spire Missouri due to increased ISRS revenues but partially offset by lower usage net of weather mitigation. The Gas Marketing segment saw earnings higher by over $4 million. The Midstream segment had strong earnings growth driven by additional capacity and asset optimization at Spire Storage, though partially offset by higher operating costs. Other corporate costs were slightly lower primarily due to higher returns on nonqualified benefit plans, partially offset by higher interest expense.

• Reaffirmed full-year adjusted EPS guidance of $4.40 to $4.60 per share. - Long-term adjusted EPS growth target of 5% to 7% remains. - Anticipates adjusted earnings at Utility segment to be meaningfully higher in 2026 with new rates in Missouri. - Expect to exclude net income related to Tennessee acquisition from 2026 adjusted earnings and adjusted EPS.

• Uncertainties in regulatory outcomes that may impact financial performance. - Integration risks associated with the acquisition of Piedmont Natural Gas Tennessee business. - Impact of weather on volumetric revenues.

Q: I'm curious about the FFO to debt targets you previously outlined of 15% to 16%. Is that still the right framework to think about going forward?

A: Those definitely are still the right targets to keep in mind, probably a little bit through the transition period of the acquisition, probably a little bit slower to get to those targets, but that's still what we're aiming for.

Q: In the Midstream results, how much of that is the expansion of Storage reflected in the full quarter? And maybe kind of just going forward, should we think of this quarter as a reasonable run rate for the business?

A: On the Midstream segment, in particular, we did see very strong year-over-year growth, obviously, with Storage coming on. About 90% of the increase in Storage year-over-year was attributable in Midstream is attributable to Storage. That would cut on a net income basis, 75% to 25% Storage to pipeline.

Q: Just curious more on the pipeline side, just maybe given some trends we're seeing in Missouri comments from the electric utilities there in terms of load growth, is Spire seeing any opportunities just in terms of capacity on various pipelines?

A: As we see what's taking place in Missouri, particularly around the IRPs associated with the electric businesses, those are creating some opportunities for us that are in future years. Our ability to serve them is good and low CapEx needs associated with serving those needs at this time.

Q: Just curious more on the marketing results, 4Q outlook?

A: The -- I think they were very well positioned coming into this quarter. It tends to be a little quieter quarter as we get into the summer. Really no comment on what we see going into the fourth quarter, but we feel pretty good about the operations of that business and what they're doing and hitting the -- hitting the targets that we've outlined for year-end.

Q: Maybe if you guys can discuss the year-over-year changes in margins at the Storage business that might be driving revenue up for you guys?

A: A lot of that's just the expansion that's coming online there. And we are seeing similar as we talked about last quarter, not only a realization of that expansion, but also some additional optimization on top of that. But that's really the story. We do include some more specific information in the Q as it will be filed shortly.

Q: Unidentified Analyst: I just wanted to be clear here. Does your long-term 5% to 7% growth rate include the impacts of the recent Missouri rate case settlement and future test year legislation that's been enacted?

A: The 5% to 7% is really keyed off of our capital deployment. I think there's a realization on the fact that we had been behind on our recovery in Missouri. And so there would certainly be some catch-up there that would be in addition to the 5% to 7%. But the 5% to 7% really keys off of our rate base -- long-term rate base growth.

Q: On the O&M, you guys have done a great job. And I'm just kind of curious how you see that line evolving going forward?

A: Our target is to be at or below the rate of inflation in any given year. And just really maybe the headline for us year-to-date is we are below 1% year-to-date on O&M. In the quarter, there was a comparison there from this quarter versus last quarter. There was a onetime benefit in the quarter last year and a onetime expense in the quarter of this year that traded against us along with some other things. But all in, we feel good about where we're headed on O&M story.