Spire Inc. Earnings Call Highlights Growth Amid Headwinds

Spire Inc ((SR)) has held its Q2 earnings call. Read on for the main highlights of the call.

Spire Inc.’s latest earnings call struck an overall positive tone, showcasing strong operational execution, a transformative Tennessee acquisition funded without equity, and double‑digit earnings growth, even as an unusually mild Missouri winter and higher financing costs created near‑term headwinds for the gas utility’s 2026 outlook.

Transformative Tennessee Acquisition Completed Without Equity

Spire closed its Piedmont Tennessee acquisition on March 31, adding over 200,000 customers in Greater Nashville and more than 200 employees under an 18‑month transition services agreement. The $2.5 billion‑plus deal was financed entirely without issuing common stock, relying on $900 million of junior subordinated notes, $825 million of Tennessee senior notes, and an $800 million term loan bridge.

Second Quarter Delivers Strong Adjusted Earnings Growth

Continuing‑operations adjusted earnings climbed to $224 million, or $3.76 per share, versus $189 million, or $3.17 per share a year earlier, an increase of about $35 million. That translates into roughly 18.6% year‑over‑year EPS growth, underscoring resilient underlying performance despite weather volatility and higher interest costs.

Gas Utility Segment Posts More Than 20% Earnings Gain

Gas Utility earnings rose to $235 million, up about $40 million year‑over‑year, a gain described as exceeding 20%. Management credited new rates in Missouri and Alabama and recovery on roughly $1 billion of incremental Missouri rate base placed in service, highlighting the earnings power of recent infrastructure investments.

Portfolio Simplification Sharpens Regulated Focus

Spire has moved aggressively to simplify and de‑risk its portfolio, closing the sale of Spire Marketing on April 30 and reaching agreements to sell Spire Storage and Spire Mississippi. These exits remove market‑based earnings exposure and concentrate the business on regulated gas utilities, which management argues should enhance earnings visibility and lower overall risk.

Capital Plan Supports Rate Base and Equity Growth

The company invested $386 million of capital in the first half of fiscal 2026 and expects full‑year CapEx of $797 million, within a 10‑year capital plan totaling $11.2 billion. That pipeline of projects is expected to support approximate rate base growth of 7% in Missouri and 7.5% in Tennessee, along with around 6% annual regulated equity growth in Alabama and the Gulf region.

Financing Actions and Reset Credit Metrics

Beyond the Tennessee financing, Spire issued $400 million of senior notes at the parent level in February to support its capital program and refinancing needs. With the divestitures shifting it toward a more purely regulated profile, the company lowered its funds‑from‑operations‑to‑debt target range to 14%–15%, aligning credit metrics with its new risk mix.

Regulatory Win Bolsters Missouri Cash Flow

The Missouri Public Service Commission approved a $16.5 million increase in Spire’s Infrastructure System Replacement Surcharge, effective in March. This surcharge adjustment improves cash flow and supports timely recovery of infrastructure spending, helping offset some of the earnings pressure from weather‑driven usage shortfalls.

Mild Winter Drives Missouri Usage and Margin Shortfall

An unusually mild and uneven winter in Missouri left heating degree days 11.5% below normal and residential usage per degree day 7% below 2024 levels, with January usage roughly 28% below the base year used for normalization. This weather‑related demand weakness caused a significant volumetric margin shortfall, forcing management to trim full‑year Gas Utility earnings guidance.

Lower Near‑Term Gas Utility Earnings Guidance

Spire now expects Gas Utility adjusted earnings of $275 million to $295 million for fiscal 2026, reduced primarily due to the weather‑driven volumetric margin hit in Missouri. Management emphasized that most of the impact is already reflected year‑to‑date, suggesting the remainder of fiscal 2026 is unlikely to see a major additional weather drag.

Higher Interest, Corporate Costs and Depreciation Weigh on Results

Interest expense ticked higher versus last year, reflecting greater long‑term debt balances and the timing of financing activities, while Other activities recorded an adjusted loss of about $11 million, roughly $5 million worse year‑over‑year. For 2026, the Corporate & Other loss is now expected between $40 million and $46 million, with added pressure from depreciation, taxes other than income taxes, and overhead allocations following divestitures.

Missouri Rate Design Heightens Seasonal Earnings Sensitivity

Recent Missouri rate design changes and updated amortization schedules have shifted more margin into the winter heating season, increasing Spire’s intra‑year earnings sensitivity to weather and usage patterns. While these changes can strengthen peak‑season returns in normal winters, they also magnify earnings volatility when temperatures are unusually mild, as seen this year.

AAO Recovery and Divestiture Approvals Add Timing Risk

Spire has filed for an accounting authority order in Missouri to recover the volumetric margin shortfall, with a hearing set for early September, but the ultimate timing and wording of any order will determine how much, if any, hits 2026 earnings. Meanwhile, pending regulatory approvals for the sales of Spire Storage and Spire Mississippi introduce additional execution and timing risk to the portfolio simplification plan.

Forward Guidance Anchored by 5%–7% EPS Growth

Looking ahead, Spire reaffirmed fiscal 2026 continuing‑operations adjusted EPS guidance of $3.90 to $4.10 per share and fiscal 2027 adjusted EPS of $5.40 to $5.60, anchored to a long‑term 5%–7% growth target off a 2027 midpoint of $5.75. The 2026 outlook excludes Marketing, Storage, Mississippi and Tennessee, while 2027 reflects a full year of Tennessee and assumes continued execution of the $11.2 billion capital plan and associated financing steps.

Spire’s earnings call painted a picture of a gas utility leaning into regulated growth, capital discipline and balance sheet management while absorbing a difficult Missouri winter and higher financing costs. For investors, the story is one of solid underlying fundamentals and a clearer regulated footprint, tempered by short‑term weather risk and regulatory timing that will bear close watching over the next few quarters.