SR - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Spire Fiscal 2024 Second Quarter Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Megan McPhail, Managing Director of Investor Relations. Please go ahead.

Megan McPhail

Good morning and welcome to Spire's Fiscal 2024 Second Quarter Earnings Call. We issued an earnings news release this morning. And you may access it on our website at spireenergy.com, under Newsroom. There's a slide presentation that accompanies our webcast.

You may download it either from the webcast site; or from the -- our website, under investors and then Events & Presentations.

me use ] of let harbor our begin, and statement non-GAAP we [ cover quickly safe Before earnings measures. responses of Litigation including within call, to contain may Today's forward-looking the meaning Act the Reform Securities Private of XXXX. questions, statements

in filings upon different are uncertainties factors These we the contribution operations. are and than with will slide cause and those forward-looking evaluating may there non-GAAP by or earnings performance counterparts of outlined be both our risk discussing net presentation. contained assumptions, quarterly uncertainties to and when based Explanations anticipated. our our margin, are reasonable in and measures our economic In Although and results measures news comments, management of that both future which GAAP statements various and these are release to results reconciliations performance annual our and SEC. their be used risks are

is Vice Vice Also the CEO; room to today Treasurer. With and over and CFO. is Steve in President COO; call will I that, Executive and President Steve call Rasche, Woodard, Adam and the Steve today President Lindsey. Steve? On Vice Lindsey, Executive President the Doyle, turn Scott and

Steven Lindsey

of joining update morning, us performance quarter Megan. and you recent Thanks, a outlook. review And developments everyone. an Thank our on today good for second for and

will results more items, moment. higher expense. due significantly a and to year earnings a Let's start a our interest few share per Missouri $X.XX of share economic in The fiscal key with $X.XX compared Steve and warmer-than-normal was driven net per our quarterly lower NEE including quarter results. reported This in year-over-year in usage morning, second to of decrease we by detail ago. Scott weather discuss

of and infrastructure continue dedication and in execute our enhances customers to portfolio focus a our over our to and drive extensive of energy. Our on human we businesses natural consistent strategy. future. execute working with And connected further and announced with will to our economics continuous ensures governance, value. Further, communities we in Cook results and newest throughout resources, businesses, month, to long Board our Board. territory of term. gas strategy And experience ability her Alabama we value communities business the election invest Sheri our safe serve. strong presence and be grow addition as vital Her to improvement and leadership Her reliable background in her our we Having along and last involvement deliver Directors' we oversight to with service remain our I the the in diverse to reflect serve provide the look our forward our finance, to as closely commitment on

will of Before Americans gas use and that and affordable, is part I wrap sustainable safe. because I like role plays it important to to energy as businesses natural natural Approximately reliable future. America's play the up, highlight and would continue XXX million gas

to for year country, of across gas and homes clothes Together, the to gas enhance continue cooking over $X,XXX compared average per drying to of to capital Association, billions American including the each that on save according using heating, gas utilities fact, natural distribution use In dollars natural Spire, and invest the year households Gas transmission electricity. systems. natural

safety, natural for deploying work to technology increased done that efficiency we reliability we've and gas As customers. To up. sum have proud led in infrastructure the can an modernizing important industry, of be and

businesses. and a company a term over of success our the execute the Spire long growth We strategy. with well-positioned growth half as year robust strong are plan is investment second performance support fiscal well gas-related 'XX our positioned the for capital on and proven our utilities in we to of and and

and team and in strategy experienced to that, management lead us to I'll Scott. employees now in have We over the the that you, turn ability our call successfully confidence future. With into the of

Scott Doyle

by everyone. I'd natural maintaining Steve. grateful gas winter I our to customers you, season. on service the proud morning, to like part and employees reliable continued hard good And through be begin our thanking for their the and and of a safe am Spire heating team. Thank work extremely to focus

now Turning on to update the Gas segment. Utility an

commitment focused to energy and gas critical operational a systems driving including Our deliver as affordable was resource we to an the energy unwavering our this and and on remained excellence. positioned of commitment and for throughout and efficiencies on when well need. to depend streamlining who continued our strong natural reliable operations system modernization We safe, processes organization, maintaining visible customers were communities

regulatory an system updated are front, expected new Alabama, our service our Missouri Service for to In Last effective month. September we annual our recovery result capital that later pleased $XX.X the effective staff filing to approved rate-setting working with week, XXXX the in in XXXX, ISRS, $XX.X of upgrade were public the revenue recent through Public were the Missouri in rider. the outcome recovery during February be revenues On semiannual Rates alongside Commission made annualized bringing infrastructure million commission for our constructive were January million. X this the ISRS rates of process. investments

are Alabama may our you As using recall, rates a set budget. in forecasted

approved new these in benefited and from benefits quarter each of regulatory mechanisms revenues. Alabama ISRS results have reflect in Our state, we rates as Missouri previously second earnings constructive the

usage be effective. During mechanism accurate as Alabama temperatures I'm were and continues warmer efforts rates, temperatures the all weather normal. incorporate with XX% our the patterns quarter, than territories; result normalization of say, PSC Alabama into in to across to approximately warm we our Alabama glad a experienced the more service customer of to

XX% the fluctuations our the was quarter Missouri mitigated. the than throughout -- for partially weather being warmer territory, resulted However, adjustment And or weather-related quarter in year. last effective class lost normal. in margins in quarter WNAR customer were weather the our temperatures service in severe residential service normalization during than Overall, rider the only less

normal. February and months combined, nearly warmer However, than XX% the of were March

extremely lower degree working the more saw periods weather During recover days days of of to better with in would these warm the periods imply. We temperatures. what by to usage months, future. normal PSC the forward Missouri weather-related significant lost look to than These followed how to margin staff evaluate fluctuations cause in can we be

does to reminder: on and for The our quarter in weather-sensitive and the information industrial usage WNAR Slides XX a not commercial, include customer less customer apply further As the transportation and year-to-date. XX classes. weather and appendix

costs During or quarter, approximately costs slightly O&M were than higher $X.X second last increased. million the increasing quarter, also year's interest And X%.

year. year-to-date, However, remain O&M our last below expenses

are focused me laser you navigating these we on headwinds. Let assure

We controlling O&M our increases further going our forward, the XXXX. will On utility believe that, financial performance continue cost enable control side, expenses. to we to fiscal O&M improve

and are We improve organization. to efficiencies working costs across the reduce

structure be reduced cost have technology enhancements that occurred We are elements targeting years. that based or will occur in coming of can on in our the

ensure efficiently our we aligned of and our are investment to shared supportive addition, working services programs. capital are In

and to Slide update Moving our on capital X an investment plan.

We Gas on and focused to on continued utilities. and X% primarily more CapEx capital our which invest our Utility year-to-date, an significant upgrading to $XXX businesses. utilities. was million, totaled modernizing amounts CapEx at homes connecting distribution emphasis of $XXX with Fiscal infrastructure Year-over-year, our increased million, gas gas our

in benefiting install fiscal XXX,XXX. expansion year-to-date, totaled advanced we service to Storage Spire the this our advanced territory. over Investment year-to-date, Midstream XXX,XXX fiscal installed $XX continue have of from West. meters And bringing technology residential of total We million across to for largely customers segment customers meters, for our number the

Looking investment ahead, capital fiscal unchanged. expected segment the 'XX remains Gas Utility year the at

to in target million $XX support of more and However, capital expansion we million Rasche to Steve storage this 'XX are detail $XXX call now discuss financial investment update. increasing over our project by provide total a project. I to will fiscal the year our in hand

Steven Rasche

Thanks, Scott. everyone. And morning, good

our Midstream Let's start with segment.

and in fiscal the updated we the are as the 'XX. performance January of know, of with acquisition this system as Spire we We've supporting As pleased our our And our plan this in progress completion winter. Omega Storage solid well of and year MoGas you expansion at closed both also targeted West, integration year.

points. few a are Here key

years that well our the with to were and open we've years. higher online initial During for in contract re-contracting 'XX we X of our and in estimates capacity rates Consistent 'XX. to the and terms current quarter, been market with the for X coming we U.S., the Western completed in lock is season the consistent above fiscal able seeing activities demand

We million and expanded maintenance and target. line construction by original enhancing $XX also Storage factors, these especially with and sector Spire 'XX. the full year reflecting drilling from increased the on year expected that increase and total West our and our labor, of is for high improved higher by a million the capabilities; injection million, costs, to the perspective: $XXX overall. Combining of driven increased total by wells; put across in the impact and falling earnings demand The project, project million electrical, $XX energy power $XX the targeted million to expansion 'XX. the costs MoGas returns investment supply, this fiscal Midstream $XX fiscal increase heating was in in withdrawal investment scope equipment for This have including our the to market To year of the of

net our earnings down we year. of to fiscal from results. second million, quarter $XXX turning $X.X reported economic Earlier million Now today, last

at segments. Looking the

of year. earnings million, of had an million $X Utility Gas $XXX last from Our increase

and prior and partial conditions part As Alabama rates mitigation to did weather in positioned year, large in and Scott and the January, this effective did Gas usage as and Marketing tough touched highly mitigation expect segments cold in year. the favorable Midstream from value. had those we Missouri. to market comps benefit from we recur very only higher Both earlier, on, were in not We snap capture offset well just were guided lower both by

in lower of higher net as was provides were the just and decline basis, value expense. On back we the a by equity also higher December and the As margins, forward compared higher lower, on settled of key year Gas marketing, overall. margins MoGas net $X.XX costs detail quarter lastly, of mentioned, earnings of as touched higher and year, $X.XX And Alabama in on. Utility fair $X.X X the the is this half and And Marketing share sale Midstream of million a share were this a that results. result we in year. our most net in per Midstream in highlights: of I that million offset second to the $XX.X of were interest the just Gas in I component, with seeing March. Slide conversion economic the For addition And as captured reflected count Hitting mitigation, weather share volumetric value attributed to that of impact Plains. of anticipate lower unit higher adjustments, last per couple of showing up reported result Salt corporate a value, Missouri. was variances.

O&M and by Gas for increased operations higher lower costs the actually half our higher was operational utility to $XXX,XXX spend by are point And I third-party costs by of drivers. expenses. long-term year. costs at Utility quarter. million, mostly offset maintenance million, Looking Marketing and echo first and costs. would fiscal our short-term moved expenses expense down Midstream interest underlying and up this also $X were driven business consistent that, as higher interest by year, $X.X with employee-related last the the rates compared

from our confident share outlook. long-term X%, 'XX of year per starting growth net midpoint economic We range. fiscal of the to our guidance X% Turning earnings our in remain to target

in billion. driven Despite $X.XX key share. component net year of XX-year year, of our investments, range the first we reaffirming a Our 'XX the growth the fiscal our utility per are $X.X our economic earnings faced target by CapEx rate of headwinds to is of base $X.XX half

for year. segment our the to our We reflect and business rest the targets expectations half first of are updating results

for reflect $X the the We higher of the management. the lowering by expect the interest during million, some Utility winter. moved $X earnings of and are Midstream raised corporate expense. range million headwinds to Gas value $X also Gas storage million the the up And increased in we by earlier our by year. first reflect for on offset We've new by stronger-than-expected rates million half range We've as Marketing of we discussed to costs created $XX pull-through by range to the cost

Slide to XX. Moving

needs financing Our is complete. this now X-year financing unchanged last largely year's plan from quarter, and are

the short-term quarter. Inc., units a the Spire side, $XX program completed $XXX would at tied And the we loan financing modest very May. And our forward equity funded fully consolidated equity in activity. our placement on through remaining largely XX% to we sale ATM plan this $XXX XXXX. and XX% future that And this settlement settlements placed equity to will our continue a in I early note long-term a we with On refinancing debt both and target needs repaid is needs leaves million conversion. This FFO-to-debt million loan a also be million long-term also are January, debt in largely basis. And satisfied. forward note by to in

summary. in So

our are you your positioned continue later growing of at well ready for and we and Spire. continued interest seeing to customers, to questions. in this now for performance Financial AGA forward communities take Forum We to strong investors. Thank overall you the many month. Operator, And we're delivering look

Operator

Instructions] Please is note this being [Operator event recorded.

The first from JPMorgan. Richard comes question Sunderland with

Richard Sunderland

me? hear you Can

Unknown Executive

We can.

Richard Sunderland

weather, you revisions? Great. across the where I the given the I start. is new, to I'm stands curious to also currently are A half the on old it headwind looking thumb kind you range bottom maybe as couple business of trending then these fair, in in think, my given weather And range? the weather guess, a that well. of that's ones math, where putting on of segment decline this FFO-to-debt X% the guidance of it's and headwinds, so

Steven Rasche

you Yes. forward. start Rich, let I on that. logic with that a put range. we can't And have Yes, argue the me

at at a look rates a units, you the in the any in say total. if bright sides And as think about is you a it's and year. it the get next that, that expect that And to the that -- last to to that of would of And would if little that, next then year appendix forward headwinds, weather, I to play the XX%. information provide rebound material, degradation as it point corporate. normalize this weather and more is what bit the granular we year, we is a the presentation, it half did, interest what which mitigation beauty weather we've that would to and look lot about you and with, in we of there's in If dealt at individual on we would Missouri weather cloud year, utility show bit little business the of think the essentially had

think if rest confident like that then does model very year the as you track. of forward, on this you year, about we're So but Adam? that look rebase what how this going to still we're

Adam Woodard

Yes, pull-through. Rich. -- think to question FFO-to-debt, our weather good And on I that connecting that

those range, on that -- while flow flow, know, that you cash we 'XX. negatively progress we're do so the lower steady impacted to do -- volume have volumes now expect given As growth after year-end trajectory, that volumes cash that we very our to we that count for we has -- target -- still see happen

bright completely here the see do recovered and the of shortly. almost we completely here recovered deferred be side, quarter gas end the On at hope to costs

Richard Sunderland

this around. Got think unpacked And how impact weather to the want it, of Very showing but color you it. all in this is got then helpful in I terms script up. did revisit

relative think to now greater then days that where results the I'm difference sides mentioning XQ? usage quarter. between about results degree impacts were effectively And what your [ actually -- and days showing are. there's Is were light XQ ] really the to extreme a You fluctuations. impacting but both just the on this the is up ] your [ weather degree trying

could of kind XQ, help you that XQ would helpful. parse be If versus

Scott Doyle

just little response year. last Doyle, start were last tie we Scott at is this X% than to were with and the back quarter yes. were -- with warmer we quarter help Maybe that can this a Maybe -- bit. I the year. quarter, Richard, the We

dialogue the much you there's we that on correlation. warmer do the just to case tells and you place. have certainly mechanism. to show so pattern we so improve that real normal. weather, so work The what saw, with HDDs off as months. March months that takes timing to well, as get the we than into mechanism mechanism, good been across which relative not balance, variable if that place of work to forum of no that usage with consistent same do, as When look really -- advance had at place, this those that, is February, can weather the take closely the that be but more it last at are enhance was same will analyzing for us That's to more look need with that better those we've year, were quarter, that to much deeply and we was in period, to staff. there And in the so work so look X mitigation is What rate And -- us staff we is weather that some to that what for significantly PSC dig is would data, during time for correlated customer

Richard Sunderland

that if also just a then outlook impacts rate now couple one And I could. know commentary had, I with -- you results. guess, on growth We've last and one, rate interest Understood. some the reiterated here. of quarters I

curious you're outlook for latest your Just -- interest on a to kind and basis relative now plan market given your here. rates of assuming forward the what then and backdrop

Adam Woodard

Yes, -- great I no, Rich, question.

We rate as a tack. continued interest obviously forecasts have moving to the take well. And higher-for-longer are

we're of seeing I rate-based. interest think than balance-based lot is a rather interest more extra the expense

again actual interest back stubbornly of having probably the of long than That's volumetric kind to of going pull-through. -- a more rate the actual impacts So -- it's there forecasts. kind our

Richard Sunderland

it leave I'll Well, it. Got there.

Operator

question from Pourreza next Shar comes Guggenheim. with The

Jamieson Ward

Ward Jamieson It's Shar. on for

good more to I have a weather. the some the had, but bit So wanted delve a -- questions that little ones I on Richard there just into did of had couple I

a adjustments days to and making of Missouri mentioned avenue rate of mechanism go amount be and case a -- the will so proper degree in mitigation. there's that correlation about lack to You between the

it be to just is a order you're needs to, that been of the they other to requires that they're where properly done and rate them it how of cause the onto be that? of to there the in at. you we there way not studied? about wondering, modeling expect work a solution in jurisdictions -- I connecting and kind case Is Or Like in it when timing is think out sort Just has are get should to case, them to a you bit be Just up. And more for waiting to this identified? that in have? a next way sense would why see see working filed guess, would maybe of that of asking something just to trying to the something of tack kind that of get mechanism sort the we're I'm mind figure we the match really follow-up we just is new might but might be a then take effect. case, about when question a

Scott Doyle

Scott for question. Jamieson, you again. Thank Doyle your

question your I this that its is the in require normal weather correlate particular was see not doesn't it answer that weather more to if modeling think pattern? pattern -- an pattern weather in the norms and a -- Just something there's to was recall -- the study, it opportunity this does perhaps within this simple a unique follow more that mechanism. to little just the

PSC we as rate but our we the looking of capital date we case need rate we to at program reduce filed deeper so the do sooner As to to take have now. significant of underway lag our be regulatory timing us that expect case: And by a investment as using your have with the of than just dive result about XXXX, ISRS right mechanism, associated that May work answer a question we to staff, alongside that. In that, a the must-file

Jamieson Ward

Perfect, very the Really clear. color. appreciate

Operator

Jeffrey question Christopher with next Our Mizuho Instructions] comes from [Operator Securities.

Christopher Jeffrey

and to was Steve looks about. the the in turning the storage storage guidance rates new like there the particular. for Maybe Midstream was raised It like talking

the Are room should fees in curious after spare 'XX. current we are And how now? think for those Just right at should rates the the there more kind kind those of capacity expected think Any we about -- how about any expansion locked is rated there? of capacity in at expansion.

Steven Rasche

All right, Chris, this is Steve.

shot that. a at Let me take

You number something, missed had I just there. If of a me, things yes. ping

team about how pretty have to X.X 'XX. so the that in storage this couple the to, as injection into of for season should are Midstream the you higher wells We've If we Midstream re-contracting but we the open a opportunities and you of better cavern are years, in for the for you a but currently operations our [ to in years ways, for winter start new let's half the call, ]. over reason by that why actually of just the get it is overall on time, what And we the were that, now and [ X.X that that over and April And of our over use the started the remarks, that our job, capacity rates. we that in the operate the scale the season to for that And next many think get then with remember come online through a Midstream the guidance describing the step years. in in completed Absolutely. but the optimize -- look kind of left This gets season gave business back right the rates now. of you year And and for mentioned the you step-up the is Storage actual broadly, to the monetization the They're that you overall, the expansion that at dynamics the Midstream business. driven as cavern volatility, we [ standard to storage we in we how Midstream ] this work are estimated. bring support kind We way does and kind expect ] into not customers, of that kind we in of terms over segment we to But the we that online. commodity prepared think And to X mid-XXs the range, volatility optimize? is think contracting then if that year, business you for the we're West charge 'XX right a as [ of where part continue ]. That's step-up spring. rates comfortable going X feel the see should contracts broadly, about we of can really the get 'XX. Will business of the well the next had finish we is preview the capacity between that where given and/or least, business broad at and if are Spire for that next see reason falls is takes only that pleased time. are, market is look will how market the the next expect It but we for and of which space. segment extremely about the years; physical online, to our as in is an the And got above category. the are injection of

to operated I -- of we through in contracts a we're the a from that our of couple while. contract fixed X some for value, at being next able years, as we terms under good standpoint, in position middle storage fact, getting of the very average right and capturing it the so will in think the is go while In have years, legacy roll

that's Salt but additional one, down well. very team of And if about, are in. next that the last once West. our West rubber winter, your and sure we that and a the other making expansion And thought to a was that, because opportunities. be, for Spire operationalized are road might Storage growth something now the the start winter actually have to there. good the anything Spire bit this a laser path complete that [indiscernible], has to X.X performing really years. question model is the over our the get juncture, get do wouldn't we then expansion you And when I in probably focus that, right current lock lastly, be facility, focused about It's tell meets the step will we MoGas, think can for I we opportunities complete next want and through some think focus. you little frankly, we we'll integration everything breath take looking where at at Plains those we but But Storage see

Christopher Jeffrey

Great. That's one then half me, I just kind super for expectation of in of maybe for second improvement. And kind guidance last just of for kind amount of implies to reiterated year's year, the helpful. of a half, If that compare the second 'XX. terms just the compare of decent last

kind kind of In wondering. context are expecting improvement? of Just the you year-over-year, what that trend to of be driver that of

Steven Rasche

in prepared don't of fiscal time. utility recur been this the over as those of segment, segment pretty last any costs year, broad so We in-line let think how from in and and you should his lot are marketing had corporate our some me -- on pretty quarter Scott last costs other cost remarks, because side, Midstream a are obviously outsized expect in in-line and focus get one-off we've the corporate yes. what if the the the in a drivers that's clear we the year, the and question. on both movers in -- a It's lower. I last a Yes. remember, our year. expect to And cost we and lot focused perspective, mentioned that overall we be keep can a to O&M you And I see

last down but customers' costs else this when you going going compare to than will of and bit continue think or then that of rest year. And will tailwinds on also deferred expect structure that The have debt maybe into to to an on get uplift and long balances the market are that we have will does be lower tailwind. anybody is one have now gas last. And versus right gas mitigate the were of should doing that that's quite this -- same and needs recovered. view a I short-term of although successfully. largely it's headwinds those costs, the this sure bills. year the we meet support we're little a history our should way can -- And which Now growth. bit we we of our create able the versus we you longer, that It for be when we'll doing compare year. And flow that the turn higher have that And our deferred make getting mentioned, be recovered a last in we all year that as through, to lost that a utility balances cost cost Adam with as the shouldn't be probably you process, they you they this that see secondly, another April so ongoing the in actual and

Operator

concludes like any the would McPhail our to for remarks. This question-and-answer session. back Megan I to over conference closing turn

Megan McPhail

good and We talking on Have joining for us call the you to a you forward in coming the to weeks, day. today; AGA. look today. Thank later at

Operator

attending for The Thank has presentation. concluded. you conference today's now

may You disconnect. now

Spire (SR) 1 May 242024 Q2 Earnings call transcript