Spire Inc: Form 10-Q for the period ended Dec 31, 2024

(Dollars in millions, except per share amounts)

This section analyzes the financial condition and results of operations of Spire Inc. (the “Company”), Spire Missouri Inc., and Spire Alabama Inc. Spire Missouri, Spire Alabama and Spire EnergySouth are wholly owned subsidiaries of the Company. Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth (Spire Gulf and Spire Mississippi) are collectively referred to as the “Utilities.” This section includes management’s view of factors that affect the respective businesses of the Company, Spire Missouri and Spire Alabama, explanations of financial results including changes in earnings and costs from the prior periods, and the effects of such factors on the Company’s, Spire Missouri’s and Spire Alabama’s overall financial condition and liquidity.

Certain matters discussed in this report, excluding historical information, include forward-looking statements. Certain words, such as “may,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “seek,” “target,” and similar words and expressions identify forward-looking statements that involve uncertainties and risks. Future developments may not be in accordance with our current expectations or beliefs and the effect of future developments may not be those anticipated. Among the factors that may cause results or outcomes to differ materially from those contemplated in any forward-looking statement are:

• Weather conditions and catastrophic events, particularly severe weather in U.S. natural gas producing areas;
• Volatility in gas prices, particularly sudden and sustained changes in natural gas prices, including the related impact on margin deposits associated with the use of natural gas derivative instruments, and the impact on our competitive position in relation to suppliers of alternative heating sources, such as electricity;
• Changes in gas supply and pipeline availability, including as a result of decisions by natural gas producers to reduce production or shut in producing natural gas wells and expiration or termination of existing supply and transportation arrangements that are not replaced with contracts with similar terms and pricing, as well as other changes that impact supply for and access to the markets in which our subsidiaries transact business;
• Acquisitions may not achieve their intended results;
• Legislative, regulatory and judicial mandates and decisions, some of which may be retroactive, including those affecting:
• allowed rates of return and recovery of prudent costs,
• incentive regulation,
• industry structure,
• purchased gas adjustment provisions,
• rate design structure and implementation,
• capital structures established for rate-setting purposes,
• regulatory assets,
• non-regulated and affiliate transactions,
• franchise renewals,
• authorization to operate facilities,
• environmental or safety matters, including the potential impact of legislative and regulatory actions related to climate change and pipeline safety and security,
• taxes,
• pension and other postretirement benefit liabilities and funding obligations, or
• accounting standards;
• The results of litigation;
• The availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or (iii) access to the capital markets;
• Retention of, ability to attract, ability to collect from, and conservation efforts of, customers;
• Our ability to comply with all covenants in our indentures and credit facilities, any violations of which, if not cured in a timely manner, could trigger a default of our obligation;
• Energy commodity market conditions;
• Discovery of material weakness in internal controls;
• The disruption, failure or malfunction of our operational and information technology systems, including due to cyberattacks; and
• Employee workforce issues, including but not limited to labor disputes, the inability to attract and retain key talent, and future wage and employee benefit costs, including costs resulting from changes in discount rates and returns on benefit plan assets.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Condensed Consolidated Financial Statements, Spire Missouri’s and Spire Alabama’s Condensed Financial Statements, and the notes thereto.

OVERVIEW

The Company has three reportable segments: Gas Utility, Gas Marketing, and Midstream. Spire’s earnings are derived primarily from its Gas Utility segment, which reflects the regulated activities of the Utilities. Due to the seasonal nature of the Utilities’ business and the volumetric Spire Missouri rate design, earnings of Spire and each of the Utilities are typically concentrated during the heating season of November through April each fiscal year.

Gas Utility – Spire Missouri

Spire Missouri is Missouri’s largest natural gas distribution utility and is regulated by the MoPSC. Spire Missouri serves St. Louis, Kansas City, and other areas throughout the state. Spire Missouri purchases natural gas in the wholesale market from producers and marketers and ships the gas through interstate pipelines into its own distribution facilities for sale to residential, commercial and industrial customers. Spire Missouri also transports gas through its distribution system for certain larger customers who buy their own gas on the wholesale market. Spire Missouri delivers natural gas to customers at rates and in accordance with tariffs authorized by the MoPSC. The earnings of Spire Missouri are primarily generated by the sale of heating energy.

Gas Utility – Spire Alabama

Spire Alabama is the largest natural gas distribution utility in the state of Alabama and is regulated by the APSC. Spire Alabama’s service territory is located in central and northern Alabama. Among the cities served by Spire Alabama are Birmingham, the center of the largest metropolitan area in the state, and Montgomery, the state capital. Spire Alabama purchases natural gas through interstate and intrastate suppliers and distributes the purchased gas through its distribution facilities for sale to residential, commercial, and industrial customers, and other end users of natural gas. Spire Alabama also transports gas through its distribution system for certain large commercial and industrial customers for a transportation fee. For most of these transportation service customers, Spire Alabama also purchases gas on the wholesale market for sale to the customer upon delivery to the Spire Alabama distribution system. All Spire Alabama services are provided to customers at rates and in accordance with tariffs authorized by the APSC.

Gas Utility – Spire EnergySouth

Spire Gulf and Spire Mississippi are utilities engaged in the purchase, retail distribution and sale of natural gas to approximately 100,000 customers in southern Alabama and south-central Mississippi. Spire Gulf is regulated by the APSC, and Spire Mississippi is regulated by the MSPSC.

Gas Marketing

Spire Marketing is engaged in the marketing of natural gas and related activities on a non-regulated basis and is reported in the Gas Marketing segment. Spire Marketing markets natural gas to customers across the U.S. (and into Canada), including customers inside and outside of the Utilities’ service areas. It holds firm transportation and storage contracts in order to effectively manage its transactions with counterparties, which primarily include producers, municipalities, electric and gas utility companies, and large commercial and industrial customers.

Midstream

Spire’s midstream operations consist of Spire Storage West LLC, Spire Storage Salt Plains LLC (jointly, “Spire Storage”), Spire STL Pipeline LLC (“Spire STL Pipeline”), and Spire MoGas Pipeline. Spire MoGas Pipeline (or simply “MoGas”), a 263-mile FERC-regulated natural gas pipeline and a connected 75-mile gas distribution system in Missouri, was acquired by Spire Midstream LLC, a subsidiary of Spire, on January 19, 2024. Spire STL Pipeline owns and operates a FERC-regulated 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Charles County and St. Louis County, Missouri, including MoGas and Spire Missouri’s storage facility, and its operating revenue is derived primarily from Spire Missouri as its foundation shipper. Spire Storage is engaged in the storage of natural gas in both the western and midcontinent regions of the United States. Spire Storage West, located in Wyoming, consists of two storage fields operating under one FERC market-based rate tariff, while Spire Storage Salt Plains, located in Oklahoma, operates under intrastate jurisdiction with authorizations from FERC under Section 311 of the Natural Gas Policy Act to provide certain interstate storage, transportation, and hub services.

Other

Other components of the Company’s consolidated information include Spire’s subsidiaries engaged in the operation of a natural gas liquids pipeline and risk management, among other activities, and unallocated corporate items, including certain debt and associated interest costs.

NON-GAAP MEASURES

Net income, earnings per share and operating income reported by Spire, Spire Missouri and Spire Alabama are determined in accordance with accounting principles generally accepted in the United States of America (GAAP). Spire, Spire Missouri and Spire Alabama also provide the non-GAAP financial measures of adjusted earnings, adjusted earnings per share and contribution margin. Management and the Board of Directors use non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting, to determine incentive compensation and to evaluate financial performance. These non-GAAP operating metrics should not be considered as alternatives to, or more meaningful than, the related GAAP measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are provided on the following pages.

Adjusted Earnings and Adjusted Earnings Per Share

Adjusted earnings and adjusted earnings per share are non-GAAP measures that exclude from net income, as applicable, the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities, the largely non-cash impacts of impairments, and other non-recurring or unusual items such as certain regulatory, legislative or GAAP standard-setting actions. In addition, adjusted earnings per share would exclude the impact, in the fiscal year of issuance, of any shares issued to finance such activities that have yet to be included in adjusted earnings.

The fair value and timing adjustments are made in instances where the accounting treatment differs from what management considers the economic substance of the underlying transaction, including the following:

• Net unrealized gains and losses on energy-related derivatives that are required by GAAP fair value accounting associated with current changes in the fair value of financial and physical transactions prior to their completion and settlement. These unrealized gains and losses result primarily from two sources:

1) changes in the fair values of physical and/or financial derivatives prior to the period of settlement; and

2) ineffective portions of accounting hedges, required to be recorded in earnings prior to settlement, due to differences in commodity price changes between the locations of the forecasted physical purchase or sale transactions and the locations of the underlying hedge instruments;

• Lower of cost or market adjustments to the carrying value of commodity inventories resulting when the net realizable value of the commodity falls below its original cost, to the extent that those commodities are economically hedged; and
• Realized gains and losses resulting from the settlement of economic hedges prior to the sale of the physical commodity.

These adjustments eliminate the impact of timing differences and the impact of current changes in the fair value of financial and physical transactions prior to their completion and settlement. Unrealized gains or losses are recorded in each period until being replaced with the actual gains or losses realized when the associated physical transactions occur. Management believes that excluding the earnings volatility caused by recognizing changes in fair value prior to settlement and other timing differences associated with related purchase and sale transactions provides a useful representation of the economic effects of only the actual settled transactions and their effects on results of operations. While management uses these non-GAAP measures to evaluate all of its businesses, the net effect of these fair value and timing adjustments on the Utilities’ earnings is minimal because gains or losses on their natural gas derivative instruments are deferred pursuant to state regulation.

Contribution Margin

In addition to operating revenues and operating expenses, management also uses the non-GAAP measure of contribution margin when evaluating results of operations. Contribution margin is defined as operating revenues less natural gas costs and gross receipts tax expense. The Utilities pass to their customers (subject to prudence review by, as applicable, the MoPSC, APSC or MSPSC) increases and decreases in the wholesale cost of natural gas in accordance with their PGA clauses or GSA riders. The volatility of the wholesale natural gas market results in fluctuations from period to period in the recorded levels of, among other items, revenues and natural gas cost expense. Nevertheless, increases and decreases in the cost of gas associated with system gas sales volumes and gross receipts tax expense (which are calculated as a percentage of revenues), with the same amount (excluding immaterial timing differences) included in revenues, have no direct effect on operating income. Therefore, management believes that contribution margin is a useful supplemental measure, along with the remaining operating expenses, for assessing the Company’s and the Utilities’ performance.

EARNINGS – THREE MONTHS ENDED December 31, 2024

This section contains discussion and analysis of the results for the three months ended December 31, 2024 compared to the results for the three months ended December 31, 2023, in total and by registrant and segment.

Spire

Net Income and Adjusted Earnings

The following tables reconcile the Company’s adjusted earnings to the most comparable GAAP number, net income.

* Income tax adjustments include amounts calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items.

** Adjusted earnings per share is calculated by replacing consolidated net income with consolidated adjusted earnings in the GAAP diluted earnings per share calculation, which includes reductions for cumulative preferred dividends and participating shares.

Reconciliations of contribution margin to the most directly comparable GAAP measure are shown below.

Select variances for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023 are summarized in the following table and discussed below.

The decrease in interest expense reflects lower effective interest rates on short-term debt that more than offset higher average levels of debt in the current year. Weighted-average short-term interest rates were 4.6% in the current-year quarter versus 5.7% in the prior-year quarter.

Other income decreased $16.9 versus the prior-year quarter. The principal drivers of the decline was a one-time $8.2 pre-tax hedging gain recognized in the prior year quarter, a decline of gas carrying cost credits at Spire Missouri, and unfavorable mark-to-market unrealized losses on non-qualified benefit trusts. Of the reported variance, $1.3 was attributable to the Postretirement Non-Service Costs Transfer (“NSC Transfer”), which has no impact on net income.

The decrease in income taxes reflects the lower current-year pre-tax book income and mix.

Gas Utility

For the quarter ended December 31, 2024, Gas Utility net income and adjusted earnings were higher than the corresponding prior-year period by $2.3 and $2.0, respectively. The quarterly change in net income was driven by the combined improved performance of Spire Alabama and Spire EnergySouth totaling $5.9, partially offset by a $3.6 decrease at Spire Missouri.

The decrease in Gas Utility operating revenues was attributable to the following factors:

The primary driver of the current year decrease in revenue was the $101.3 impact of lower gas cost recoveries across all utilities, driven principally by lower PGA rates at Spire Missouri, combined with lower volumetric usage. These reductions were only partly offset by higher current year ISRS billings and higher off-system sales at Spire Missouri.

The year-over-year increase in Gas Utility contribution margin was attributable to the following factors:

Contribution margin increased $8.4 versus the prior-year quarter. Contribution margin benefited from the $7.0 Spire Missouri ISRS growth and $6.5 of growth from Spire Alabama’s annual rate update and volumetric usage net of weather mitigation. These favorable impacts more than offset the $3.4 negative volumetric impact net of weather mitigation at Spire Missouri.

Reported operation and maintenance (“O&M”) expenses for the three months ended December 31, 2024 were $1.7 lower than the prior-year quarter. Excluding the impact of the NSC Transfer, O&M expenses were $0.6 lower than the prior-year quarter, as lower expense levels for non-payroll operations expense and reduced outside service costs were only partly offset by higher employee benefit costs and bad debt expense.

Taxes, other than income taxes, decreased $3.6, primarily due to lower gross receipt taxes resulting from lower revenues more than offsetting increases in property taxes. Depreciation and amortization expenses for the quarter ended December 31, 2024 were $3.9 higher than the same period in the prior year primarily driven by continued infrastructure capital expenditures across all the Utilities. Interest expense decreased $3.9, with both Spire Missouri and Spire Alabama benefiting from lower average short-term interest rates in the current year. The benefit of gas carrying cost credits at Spire Missouri, included in other income, decreased $3.9 versus the corresponding prior-year quarter.

Gas Marketing

Including $4.0 (after-tax) unfavorable mark-to-market activity, net income decreased $9.0. The $5.0 quarter-over-quarter decrease in adjusted earnings primarily reflects reduced volatility in regional basis differentials combined with higher transportation and storage fees.

Contribution margin decreased $12.8 versus the prior-year quarter, reflecting the $5.3 (pre-tax) unfavorable mark-to-market activity. Excluding this impact, contribution margin decreased $7.5, reflecting the unfavorable drivers noted above. O&M expenses were slightly lower than prior-year levels, the result of lower employee-related costs in the current year.

Midstream

Net income and adjusted earnings for the Company’s Midstream segment for the quarter ended December 31, 2024 versus the prior-year quarter increased $11.1 and $9.6, respectively. The increase was driven by higher Spire Storage earnings, reflecting additional storage capacity and contract renewals at higher rates. Current year results also reflect the January 2024 acquisition of MoGas.

Revenues in the current quarter increased $18.6 versus the prior-year quarter, reflecting the higher rates and activity with storage. O&M expenses were up $2.4 quarter-over-quarter, due primarily to costs associated with the higher storage activity in the current year, combined with the added costs of MoGas.

Other

The Company’s other activities generated a $10.9 loss in the three months ended December 31, 2024. The major contributor to this variance was the $8.2 pre-tax ($6.3 after-tax) interest rate swap gain in the prior year that did not repeat. The remaining variance was mostly a result of higher interest expense in the current year.

Spire Missouri

Revenues for the quarter ended December 31, 2024 were $77.9 lower than the comparable prior-year period. Lower unit gas costs, combined with lower volumes in the western part of Spire Missouri’s territory reduced gas cost recoveries by $85.1. Decreased customer usage (including weather mitigation) reduced revenues by $3.4 versus the prior year quarter. These reduced revenue drivers also resulted in reduced gross receipts taxes of $3.0. These negative impacts were only partly offset by $7.0 incremental ISRS revenues and $5.8 attributable to higher off-system sales in the current-year quarter.

Contribution margin for the three months ended December 31, 2024 increased $4.1 from the same period in the prior year, primarily due to the $7.0 incremental ISRS billings more than offsetting the unfavorable $3.4 weather-mitigated customer usage impact.

Degree days in Spire Missouri’s service areas during the three months ended December 31, 2024 were 18.0% warmer than normal, though were flat with the same period last year. Spire Missouri’s total system volume sold and transported were 450.6 million centum (Latin for “hundred”) cubic feet (CCF) for the quarter, compared with 449.7 million CCF for the same period in the prior year. Total off-system volume sold and transported were 21.9 million CCF for the current-year quarter, compared with 2.2 million CCF a year ago.

O&M expenses for the current-year quarter increased $1.3 versus the prior-year quarter. Excluding the NSC Transfer impact, the increase was $0.9. This increase reflects lowered expense levels for non-payroll operations expense and reductions in outside service costs that were more than offset by higher employee-related costs and higher bad debt expense.

Depreciation and amortization expenses increased $3.6 versus the prior-year quarter due to ongoing capital investments. Taxes, other than income taxes decreased $1.9, driven by lower pass-through gross receipts taxes that were only partly offset by higher real estate and property taxes.

Other income declined by $5.7 versus the prior-year quarter, primarily driven by the decrease in gas carrying cost credits of $3.9 and unfavorable mark-to-market unrealized losses on non-qualified benefit trusts. Interest expense decreased $2.6, primarily reflecting lower average short-term interest rates in the current year.

Resulting net income for the quarter ended December 31, 2024 decreased $3.6 versus the prior-year quarter.

Spire Alabama

Operating revenues for the three months ended December 31, 2024 decreased $21.7 from the same period in the prior year. The decrease in operating revenue was principally due to a $16.2 decrease in gas cost recovery, combined with annual rate update and volumetric usage, net of weather mitigation and lower gross receipts taxes totaling $4.2. Favorable RSE adjustments of $3.7 were also more than offset by a customer refund provision required to bring expected Return on Equity (ROE) within APSC (Alabama Public Service Commission) approved levels.

Contribution margin was $2.6 higher versus the prior-year quarter, driven primarily by a favorable $6.5 annual rate update and volumetric usage, net of weather mitigation partially offset by the customer refund provision discussed above that had a net contribution margin impact of $4.1.

As measured in degree days, temperatures in Spire Alabama’s service area during the three months ended December 31, 2024, were 24.8% warmer than normal, and 10.3% warmer than a year ago. Spire Alabama’s total system volume sold and transported were 259.8 million CCF for the three months ended December 31, 2024, compared with 229.3 million CCF for the same period in the prior year. Total off-system volume sold and transported were 16.7 million CCF for the current-year quarter, compared with 26.4 million CCF off-system volume sold and transported in last year’s third quarter.

Reported O&M expenses for the three months ended December 31, 2024 decreased $2.3 versus the prior-year quarter. After excluding the impact of the NSC Transfer, O&M expenses in the current year quarter were $1.0 lower than the corresponding prior year period. Lower non-payroll operations expenses and reductions of outside service costs were only partly offset by higher employee benefit costs and higher bad debts expense.

Interest expense for the current-year quarter decreased $1.5 versus the prior-year quarter, primarily the result of significantly lower short-term borrowings, combined with lower short-term interest rates.

For the quarter ended December 31, 2024, resulting net income increased $4.6 versus the prior-year quarter.

LIQUIDITY AND CAPITAL RESOURCES

Recent Cash Flows

For the three months ended December 31, 2024, net cash from operating activities improved $11.1 from the corresponding period of fiscal 2024. The key drivers of the favorable change are regulatory timing and fluctuations in working capital items, as discussed below in the Future Cash Requirements section.

For the three months ended December 31, 2024, net cash used in investing activities was $34.9 greater than for the same period in the prior year. Total capital expenditures were $34.1 higher than last year, with a $43.0 spending increase in the Utilities driven by infrastructure upgrades, advanced meter installations, and new business, and a $9.3 spending decrease for Midstream as the Spire Storage West expansion draws to a close.

Lastly, for the three months ended December 31, 2024, net cash provided by financing activities increased $31.3 versus the three months ended December 31, 2023. The increase in short-term borrowings under the commercial paper program this year exceeded the total of the reduction in stock issuances and the increase in dividend payments.

Future Cash Requirements

The Company’s short-term borrowing requirements typically peak during colder months when the Utilities borrow money to cover the lag between when they purchase natural gas and when their customers pay for that gas. Changes in the wholesale cost of natural gas (including cash payments for margin deposits associated with Spire Missouri’s use of natural gas derivative instruments), variations in the timing of collections of gas cost under the Utilities’ PGA clauses and GSA riders, the seasonality of accounts receivable balances, and the utilization of stored gas inventories cause short-term cash requirements to vary during the year and from year to year, and may cause significant variations in the Company’s cash provided by or used in operating activities.

Spire’s material cash requirements as of December 31, 2024, are related to capital expenditures, principal and interest payments on long-term debt, natural gas purchase obligations, and dividends. There were no material changes outside the ordinary course of business from the future cash requirements discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024. Total Company capital expenditures are planned to be $790 for fiscal 2025.

Source of Funds

It is management’s view that the Company, Spire Missouri and Spire Alabama have adequate access to credit and capital markets and will have sufficient liquidity and capital resources, both internal and external, to meet anticipated requirements. Their debt is rated by two rating agencies: Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service (“Moody’s”). As of December 31, 2024, the debt ratings of the Company, Spire Missouri and Spire Alabama (shown in the following table) remain at investment grade with a stable outlook.

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Cash and Cash Equivalents

Bank deposits were used to support working capital needs of the business. Spire had no temporary cash investments as of December 31, 2024.

Short-term Debt

The Company’s short-term cash requirements can be met through the sale of up to $1,500.0 of commercial paper or through the use of Spire’s $1,500.0 revolving credit facility. For information about these resources, see Note 6, Financing, of the Notes to Financial Statements in Item 1 and “Interest Rate Risk” under “Market Risk” below.

Long-term Debt and Equity

Factoring in the current portion of long-term debt, the Company’s long-term consolidated capitalization consisted of 47% equity at December 31, 2024 and 46% equity at September 30, 2024, respectively. At December 31, 2024, Spire had outstanding principal of long-term debt totaling $3,764.1, of which $1,818.0 was issued by Spire Missouri, $750.0 was issued by Spire Alabama, and $216.1 was issued by other subsidiaries.

Effective October 27, 2024, Spire Missouri was authorized by the MoPSC to issue conventional term loans, first mortgage bonds, unsecured debt, preferred stock and common stock in an aggregate amount not to exceed $850.0 any time from that date through December 31, 2027. As of December 31, 2024, approximately $817.7 may still be issued under this authorization. Spire Alabama has no standing authority to issue long-term debt and must petition the APSC for each planned issuance.

Spire has a shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange Commission (SEC) for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and Direct Stock Purchase Plan. There were 211,634 and 218,141 shares at December 31, 2024 and September 30, 2024, respectively, remaining available for issuance under this Form S-3. Spire and Spire Missouri also have a universal shelf registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which expires on May 9, 2025.

For more information about the issuance of common stock under Spire’s “at-the-market” (ATM) equity distribution agreement, see Note 4, Shareholders’ Equity, of the Notes to Financial Statements in Item 1.

ENVIRONMENTAL MATTERS

The Utilities and other Spire subsidiaries own and operate natural gas distribution, transmission and storage facilities, the operations of which are subject to various environmental laws, regulations, and interpretations. While environmental issues resulting from such operations arise in the ordinary course of business, such issues have not materially affected the Company’s, Spire Missouri’s, or Spire Alabama’s financial position and results of operations. As environmental laws, regulations, and interpretations change, however, the Company and the Utilities may be required to incur additional costs. For information relative to environmental matters, see Contingencies in Note 11 of the Notes to Financial Statements in Item 1.

REGULATORY MATTERS

For discussions of regulatory matters for Spire, Spire Missouri, and Spire Alabama, see Note 5, Regulatory Matters, of the Notes to Financial Statements in Item 1.

ACCOUNTING PRONOUNCEMENTS

The Company, Spire Missouri and Spire Alabama have evaluated or are in the process of evaluating the effects that recently issued accounting standards will have on the companies’ financial position or results of operations upon adoption, but none are currently expected to have a significant impact.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources are based upon our financial statements, which have been prepared in accordance with GAAP, which requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Our critical accounting estimates used in the preparation of our financial statements are described in Item 7 of Spire, Spire Missouri, and Spire Alabama’s combined Annual Report on Form 10-K for the fiscal year ended September 30, 2024, and include regulatory accounting, employee benefits and postretirement obligations, impairment of long-lived assets, and income taxes. There were no significant changes to critical accounting estimates during the three months ended December 31, 2024.

For discussion of other significant accounting policies, see Note 1 of the Notes to Financial Statements included in this Form 10-Q as well as Note 1 of the Notes to Financial Statements included in Spire, Spire Missouri, and Spire Alabama’s combined Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

MARKET RISK

There were no material changes in the Company’s commodity price risk or counterparty credit risk as of December 31, 2024, relative to the corresponding information provided in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Spire enters into cash flow hedges through execution of interest rate swap contracts to protect itself against adverse movements in interest rates. At December 31, 2024, the following swaps were outstanding:

The two interest rate swaps entered into during the first quarter of fiscal 2025 are hedging $350.0 of the Company's short-term commercial paper program. As of December 31, 2024, the Company has recorded through accumulated other comprehensive income a cumulative mark-to-market net gain of $16.1 on open swap contracts.

For this discussion, see Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk.

Spire

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Change in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Spire Missouri

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Spire Alabama

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no material changes in the Company’s risk factors from those disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.