SPIRE INC (SR)·Q2 2025 Earnings Summary

Executive Summary

• Q2 FY25 adjusted EPS was $3.60 (+4% YoY), GAAP diluted EPS $3.51; operating revenue declined 6.8% YoY to $1.05B on lower gas cost pass-throughs. Utility and Midstream outperformed, partially offset by slightly lower Marketing; run-rate O&M remained tightly managed .
• Versus Street, SR modestly missed on EPS and revenue: adjusted EPS $3.60 vs $3.67 consensus (–$0.07) and revenue $1.051B vs $1.236B consensus (–$0.185B). Management reaffirmed FY25 adjusted EPS guidance of $4.40–$4.60 and raised FY25 capex by $50M to $840M, citing Midstream strength and utility investments .
• Key drivers: Missouri ISRS revenues and usage (net of weather mitigation) and Alabama rate updates boosted Utility; Midstream benefited from added storage capacity, higher contract rates and optimization; Marketing lagged amid reduced basis volatility. Weather mechanism ineffectiveness in Missouri drove ~$9M lower residential margins; management is pursuing fixes in the rate case .
• Corporate developments: Scott Doyle appointed CEO (Apr 25); quarterly dividend declared $0.785 (payable Jul 2). Near-term catalysts include Missouri rate case (including weather mechanism reform), completion of Spire Storage West expansion by summer, and funding of $150M first mortgage bonds (May 1) .

What Went Well and What Went Wrong

• What Went Well

  • Utility execution: Contribution margin rose with higher Missouri ISRS revenues and usage (net of mitigation); Alabama margins rose under the annual rate update; run-rate O&M lower YoY excluding pension/bad debt .
  • Midstream strength: Adjusted earnings up to $15.8M from $3.8M YoY on added capacity, higher renewal rates, and optimization at Spire Storage; returns exceeding expectations despite higher capital costs .
  • Guidance confidence and financing: FY25 EPS guidance reaffirmed; capex outlook raised to $840M; settled ~$43M of forward equity and priced $150M Missouri first mortgage bonds; FFO/debt target remains 15–16% .

• What Went Wrong

  • Weather mechanism ineffectiveness: Missouri weather mitigation adjustment did not align revenues with usage, reducing residential margins by $(9)M; volumetric margins were +$7M but below expectations .
  • Marketing softness: Adjusted earnings down slightly YoY (Q2: $14.8M vs $15.5M) on reduced basis differential volatility, consistent with Q1 commentary on lower market opportunities .
  • Higher corporate interest: Other/Corporate reported a larger adjusted loss (–$11.4M vs –$10.7M YoY) driven by higher balances (partly offset by lower short-term rates) .

Financial Results

Headline performance by quarter (oldest → newest):

Q2 YoY and vs estimates (consensus from S&P Global):

• YoY: Adjusted EPS up 4.3% ($3.60 vs $3.45) and GAAP EPS down 2% ($3.51 vs $3.58); operating revenue down 6.8% ($1.051B vs $1.129B) .
• Versus consensus: Adjusted EPS $3.60 vs $3.674* (–$0.07); Revenue $1.051B vs $1.2357B* (–$0.185B) (9 EPS estimates; 6 revenue estimates). Values retrieved from S&P Global.

Segment adjusted earnings (non-GAAP)

Operating P&L KPIs (Q2)

Margins (S&P Global)

• Values marked with * retrieved from S&P Global.

Additional items and cash flow (YTD through Q2):

• Six-month adjusted EPS $4.95 vs $4.96 last year; Net income $290.6M vs $289.4M; CFO $453.8M vs $559.4M; capex $(479.2)M vs $(409.3)M .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We remain focused on safely delivering reliable energy... while advancing key infrastructure investments... We continue to expect our fiscal 2025 earnings to be in the range of $4.40 to $4.60 per share.” — Scott Doyle, CEO .
• “We’re lowering the Gas Utility range by $11M... anticipate approximately $9M of lower [residential] margins... raising Marketing by $4M and Midstream by $8M.” — Adam Woodard, CFO .
• “We are increasing our fiscal 2025 capital investment target by $50 million to $840 million... final components [of storage] placed in service by the end of this summer.” — Scott Doyle .
• “In April, we priced $150 million of Spire Missouri first mortgage bonds... our FFO to debt target remains at 15% to 16%.” — Adam Woodard .

Q&A Highlights

• Weather mechanism and rate case: Management emphasized that correcting the Missouri weather mitigation mechanism is “front and center” and proposed options include decoupling and updating the time horizon; collaborative resolution expected via case process .
• Segment guide reset: Utility lowered primarily due to weather-related margin shortfall; Midstream uplift includes some optimization (not fully structural); Marketing trending to plan despite lower volatility .
• Returns on storage expansion: Higher capital costs did not change return expectations; project continues to exceed targeted returns .
• Settlement timing: Too early to pre-judge; settlement possible before or after hearings; procedural schedule guides the path .

Estimates Context

• Q2 FY25 vs S&P Global consensus: Adjusted/Primary EPS $3.60 vs $3.67403*; Revenue $1,051.3M vs $1,235.7M*; 9 EPS and 6 revenue estimates. Actuals from company press release and 8-K .
• Implications: Expect some modest downward adjustments to Utility near-term due to weather mechanism ineffectiveness, partially offset by upward revisions to Midstream run-rate given capacity and pricing tailwinds called out by management .
• Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Q2 showed solid execution: Utility and Midstream drove adjusted EPS growth; O&M discipline intact; however, Missouri weather mechanism under-recovered, causing a modest EPS/revenue miss vs consensus .
• Reaffirmed FY25 EPS and a raised capex plan underscore confidence in regulated and contracted growth; Midstream outlook moved higher on capacity/rate momentum .
• The Missouri rate case (hearings Aug 4) is the principal catalyst; reforms to weather mitigation and constructive outcomes on ROE/equity layer could restore earnings trajectory and reduce weather volatility risk .
• Near-term mix shift: Midstream outperformance and Marketing stability partially offset Utility weather headwinds, reducing overall volatility; storage expansion completion by summer can add incremental contribution .
• Balance sheet plan remains intact with measured equity via ATM/forwards and upcoming debt issuance; FFO/debt 15–16% target maintained, supporting dividend stability (22nd consecutive annual increase) .
• New CEO continuity message (“strategy remains unchanged”) plus cost initiatives and ISRS cadence support medium-term confidence while rate case outcomes drive the delta .

Footnotes and sources:

• Company 8-K and press release for Q2 FY25, including P&L, segment data, cash flow, guidance and contribution margin .
• Q2 FY25 earnings call transcript remarks and Q&A .
• Prior quarters: Q1 FY25 8-K and call for comps and trends ; FY24 results and Q4 call for baseline .
• Other relevant Q2 press releases: dividend declaration and CEO appointment .
• Consensus EPS and revenue for Q2 FY25 (S&P Global); margin metrics (S&P Global). Values marked with * retrieved from S&P Global.