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01/11 04:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
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.
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.
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.
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.
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.
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.
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.
The earnings call presents a mixed picture: strong financial metrics (EPS growth, segment earnings) are offset by uncertainties (regulatory risks, supply chain issues). The Q&A reveals management's optimism but lacks clarity on critical issues. The absence of a shareholder return plan further tempers positive sentiment. Considering the market cap, the stock is likely to remain stable, reflecting a neutral sentiment.
The earnings call reveals strong financial performance with increased earnings per share and capital investment, particularly in utility and midstream segments. Despite some concerns over weather-related margin impacts and vague management responses on future rate cases, the positive growth in earnings and investment plans outweigh these issues. With a market cap of approximately $3.47 billion, the stock is likely to react positively, albeit moderately, to these developments. The absence of share repurchase or dividend programs slightly tempers the sentiment, but overall, the outlook remains positive.
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