# Spire Inc: Form 10-Q for the period ended Dec 31, 2022

- Company: [Spire Inc](/companies/sr.md) (CIK 1126956)
- Form: 10-Q
- Filed: 2023-02-01
- Accepted by EDGAR: Feb 1, 2023, 10:00 ET
- Period: 2022-12-31
- Accession: 0001437749-23-002213
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1126956/000143774923002213/spre20221231_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1126956/000143774923002213/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-10-01 to 2022-12-31 | $814.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2022-10-01 to 2022-12-31 | $150.2m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2022-10-01 to 2022-12-31 | $91.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-10-01 to 2022-12-31 | $1660000.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-10-01 to 2022-12-31 | $1.66 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-10-01 to 2022-12-31 | 52,600,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2022-10-01 to 2022-12-31 | −$170.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2022-10-01 to 2022-12-31 | $154.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2022-10-01 to 2022-12-31 | $36.3m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2022-12-31 | $4.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-12-31 | $1.63bn | us-gaap:AssetsCurrent |
| Total assets | at 2022-12-31 | $10.33bn | us-gaap:Assets |
| Current liabilities | at 2022-12-31 | $2.40bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2022-12-31 | $3.16bn | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2022-12-31 | $1.23bn | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2022-12-31 | $2.86bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 44,695 characters.

#### (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 (including as a result of a failure of the Spire STL Pipeline to retain its permanent Certificate of Public Convenience and Necessity from the FERC due to the pending rehearing request of the FERC's December 15, 2022 order granting such certificate or any subsequent appeal of that order or as a result of any related regulatory uncertainty), 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

Certain information is presented by reportable segment, as described below. Effective during the first quarter of fiscal 2023, the Company changed its reportable segments to reflect changes in the way its chief operating decision maker evaluates the performance of its operations, develops strategy and allocates capital resources. Specifically, Midstream, which was formerly included in Other is now reported separately. The Company's historical segment disclosures have been recast to be consistent with the current presentation.

The Company has three reportable segments: Gas Utility, Gas Marketing, and Midstream. Nearly all of Spire’s earnings are derived 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. Effective December 1, 2020, 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 STL Pipeline LLC (“Spire STL Pipeline”) and Spire Storage West LLC (“Spire Storage”). Spire STL Pipeline is a wholly owned subsidiary of Spire which owns and operates a FERC-regulated 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri, including Spire Missouri’s storage facility. Spire STL Pipeline’s operating revenue is derived primarily from Spire Missouri as its foundation shipper. Spire Storage is engaged in the storage of natural gas in the western region of the United States. The facility consists of two storage fields operating under one FERC market-based rate tariff.

#### Other

Other components of the Company’s consolidated information include Spire’s subsidiaries engaged in the operation of a propane 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 net economic earnings, net economic 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.

### Net Economic Earnings and Net Economic Earnings Per Share

Net economic earnings and net economic earnings per share are non-GAAP measures that exclude from net income 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, net economic 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 net economic 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, 2022**

This section contains discussion and analysis of the results for the three months ended December 31, 2022 compared to the results for the three months ended December 31, 2021.

### Overview

The Company reported net income growth of $35.3 and net economic earnings growth of $22.5, reflecting strong results for the Gas Marketing segment and solid growth in the Midstream segment, offset in part by lower earnings at the Gas Utility segment.

Spire Missouri initiated a rate case in April 2022 to address ongoing issues from the 2021 rate case, particularly the treatment of deferred overhead costs. All parties reached a Full Unanimous Stipulation and Agreement to resolve all issues in the case, which was filed with the MoPSC on November 4, 2022. On November 18, 2022, the Stipulation was approved, including authorization of $78.0 in new base rate revenue and recovery of deferred overheads. New base rates became effective on December 26, 2022. Spire Alabama and Spire Gulf submitted their annual RSE rate filings with the APSC in October 2022, and following regulatory review, adjusted rates became effective January 1, 2023.

In the Midstream segment, the FERC, after conducting a review over the last 18 months following the DC Circuit court remand, reissued a permanent Certificate of Public Convenience and Necessity for the Spire STL Pipeline, although the FERC order granting that permanent certificate is subject to rehearing or potential appeal. At Spire Storage, expansion plans remain on track and on budget as the construction season came to a close during the quarter.

The following sections present and discuss the financial metrics in total and by registrant and segment.

### Spire

### Net Income and Net Economic Earnings

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

| Three Months Ended December 31, 2022 | Gas Utility | Gas Marketing | Midstream | Other | Total | Per Diluted Common Share\*\* |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Net Income (Loss) \[GAAP\]** | $62.9 | $31.6 | $3.8 | $(7.3) | $91.0 | $1.66 |
| Adjustments, pre-tax: |  |  |  |  |  |  |
| Fair value and timing adjustments | — | (7.8) | — | — | (7.8) | (0.15) |
| Income tax adjustments\* | — | 1.9 | — | — | 1.9 | 0.04 |
| **Net Economic Earnings (Loss) \[Non-GAAP\]** | $62.9 | $25.7 | $3.8 | $(7.3) | $85.1 | $1.55 |
| **Three Months Ended December 31, 2021** |  |  |  |  |  |  |
| **Net Income (Loss) \[GAAP\]** | $63.1 | $(2.3) | $2.5 | $(7.6) | $55.7 | $1.01 |
| Adjustments, pre-tax: |  |  |  |  |  |  |
| Fair value and timing adjustments | — | 3.7 | — | — | 3.7 | 0.07 |
| Income tax adjustments\* | 4.1 | (0.9) | — | — | 3.2 | 0.06 |
| **Net Economic Earnings (Loss) \[Non-GAAP\]** | $67.2 | $0.5 | $2.5 | $(7.6) | $62.6 | $1.14 |

\* 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, and for fiscal 2022, include a $4.1 Spire Missouri regulatory adjustment.

\*\* Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic 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.

| Three Months Ended December 31, 2022 | Gas Utility | Gas Marketing | Midstream | Other | Eliminations | Consolidated |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Operating Income (Loss) \[GAAP\]** | $101.9 | $41.4 | $7.1 | $(0.2) | $— | $150.2 |
| Operation and maintenance expenses | 119.9 | 6.3 | 5.8 | 4.0 | (3.9) | 132.1 |
| Depreciation and amortization | 59.7 | 0.3 | 1.9 | 0.2 | — | 62.1 |
| Taxes, other than income taxes | 49.9 | 0.1 | 0.4 | — | — | 50.4 |
| Less: Gross receipts tax expense | (30.4) | — | — | — | — | (30.4) |
| **Contribution Margin \[Non-GAAP\]** | **301.0** | **48.1** | **15.2** | **4.0** | (3.9) | **364.4** |
| Natural gas costs | 401.6 | 26.0 | — | — | (8.4) | 419.2 |
| Gross receipts tax expense | 30.4 | — | — | — | — | 30.4 |
| **Operating Revenues** | $733.0 | $74.1 | $15.2 | $4.0 | $(12.3) | $814.0 |
| **Three Months Ended December 31, 2021** |  |  |  |  |  |  |
| **Operating Income (Loss) \[GAAP\]** | $94.4 | $(3.1) | $4.6 | $(0.6) | $— | $95.3 |
| Operation and maintenance expenses | 107.3 | 2.7 | 5.8 | 4.2 | (3.6) | 116.4 |
| Depreciation and amortization | 54.6 | 0.3 | 1.9 | 0.1 | — | 56.9 |
| Taxes, other than income taxes | 37.0 | — | 0.6 | — | — | 37.6 |
| Less: Gross receipts tax expense | (21.7) | (0.2) | — | — | — | (21.9) |
| **Contribution Margin \[Non-GAAP\]** | **271.6** | **(0.3)** | **12.9** | **3.7** | **(3.6)** | **284.3** |
| Natural gas costs | 210.2 | 48.0 | — | — | (9.0) | 249.2 |
| Gross receipts tax expense | 21.7 | 0.2 | — | — | — | 21.9 |
| **Operating Revenues** | $503.5 | $47.9 | $12.9 | $3.7 | $(12.6) | $555.4 |

51

Select variances for the quarter ended December 31, 2022 compared to the quarter ended December 31, 2021 are summarized in the following table and discussed below.

| Variances: Fiscal 2023 Versus Fiscal 2022 | Gas Utility | Gas Marketing | Midstream | Other, Net of Eliminations | Consolidated |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net Income | $(0.2) | $33.9 | $1.3 | $0.3 | $35.3 |
| Net Economic Earnings \[Non-GAAP\] | (4.3) | 25.2 | 1.3 | 0.3 | 22.5 |
| Operating Revenues | 229.5 | 26.2 | 2.3 | 0.6 | 258.6 |
| Contribution Margin \[Non-GAAP\] | 29.4 | 48.4 | 2.3 | — | 80.1 |
| Operating Expenses | 222.0 | (18.3) | (0.2) | 0.2 | 203.7 |
| Interest Expense |  |  |  |  | 15.0 |
| Other Income |  |  |  |  | (1.4) |
| Income Tax |  |  |  |  | 3.2 |

The increase in interest expense reflects the significant increase in short-term interest rates and higher debt levels versus the prior year. Current year weighted-average short-term debt increased over $260, driven by higher gas costs, and weighted-average short-term interest rates were 4.4% in the current-year quarter, versus 0.4% in the prior-year quarter.

The change in other income was primarily the result of the Non-Service Cost Postretirement Benefit Transfer (“NSC Transfer”) of $2.0. Removing this impact, other income increased $0.6, primarily the result of inventory carrying cost revenue and slightly favorable mark-to-market valuations on unqualified retirement trusts at Spire Missouri.

The change in income taxes is consistent with the change in pre-tax book income, after removing the $4.1 Spire Missouri regulatory charge that was recorded in the prior year.

#### Gas Utility

For the quarter ended December 31, 2022, Gas Utility net income was flat with the prior-year quarter as the $3.0 decrease experienced by Spire Alabama was mostly offset by the growth at Spire Missouri. Net economic earnings in the current year was $4.3 lower than the prior year, which tracks the net income trend after removing the Spire Missouri $4.1 GAAP regulatory adjustment in the prior-year quarter. These results are described in further detail below.

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

|  |  |
| --- | ---: |
| Spire Missouri and Spire Alabama – Higher PGA/GSA costs (gas cost recovery) | $175.1 |
| Spire Missouri – 2021 rate order | 18.4 |
| Spire Missouri and Spire Alabama – Volumetric usage (net of weather mitigation) | 12.3 |
| Spire EnergySouth – GSA (gas cost recovery) and volume | 10.4 |
| Spire Alabama – RSE adjustments, net | 1.5 |
| All other factors | 11.8 |
| Total Variation | $229.5 |

The primary driver of revenue growth in the quarter was $175.1 in higher gas cost recoveries in the current year reflecting the higher average gas costs being passed through to customers, and a $18.4 increase from Spire Missouri resulting from the current-year full quarter impact of the 2021 rate order, versus only one week in the fiscal 2022 first quarter. The current-year quarter also benefited from higher volumetric usage (net of weather mitigation) totaling $22.7 across our entire Utility footprint.

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

|  |  |
| --- | ---: |
| Spire Missouri – 2021 rate order | $18.4 |
| Spire Missouri – Volumetric usage (net of weather mitigation) | 6.6 |
| Spire Alabama – RSE adjustments, net | 1.4 |
| All other factors | 3.0 |
| Total Variation | $29.4 |

Quarter-over-quarter contribution margin growth was primarily driven by the $18.4 increase from the Spire Missouri 2021 rate increase, Spire Missouri volumetric impacts of $6.6, and $1.4 in adjustments at Spire Alabama, reflecting favorable rate adjustments within the RSE framework.

O&M expenses for the three months ended December 31, 2022, were $12.6 higher than the prior year. Run-rate expenses increased $14.6 after removing the $2.0 impact of the NSC Transfer. The Gas Utility segment O&M increase reflects approximately $6 due to the change in treatment of Spire Missouri general overheads that were being deferred in the prior-year quarter. The increase also reflects higher non-employee operations expense of $4.9 and higher bad debts expense of $2.6, only partly offset by marginally lower employee-related expenses.

Taxes, other than income taxes, increased $12.9, and were driven by $8.7 in higher pass-through gross receipts taxes, along with higher property taxes resulting from the continued infrastructure build-out by the Utilities. Depreciation and amortization expenses for the fiscal 2023 first quarter were $5.1 higher than the same period in the prior year primarily driven by continued infrastructure capital expenditures across all the Utilities.

#### Gas Marketing

Both net income and net economic earnings reflect the strong operating results experienced in the current-year quarter, driven by favorable market conditions that allowed the business to take advantage of regional basis differentials to optimize storage and transportation positions, only slightly offset by higher O&M costs associated with the increased revenues and margin.

#### Midstream

Net income and net economic earnings for the Company’s Midstream segment increased $1.3 for the quarter ended December 31, 2022 versus the prior-year quarter. Of this increase, $1.0 was attributable to Spire Storage, reflecting optimized operational and withdrawal commitments. Spire STL Pipeline results, which were slightly favorable to prior year, accounted for the remaining $0.3 growth. The $2.3 increase in revenues and contribution margin reflect the previously mentioned asset optimization at Spire Storage. Operating expenses across the segment were flat versus the prior-year quarter.

#### Other

The Company’s other activities generated a $7.3 loss in the quarter ended December 31, 2022, in line with the $7.6 loss recorded in the prior year corresponding quarter.

### Spire Missouri

|  | Three Months Ended December 31, 2022 | 2021 |
| --- | ---: | ---: |
| **Operating Income \[GAAP\]** | $72.4 | $65.4 |
| Operation and maintenance expenses | 77.1 | 66.3 |
| Depreciation and amortization | 38.6 | 34.2 |
| Taxes, other than income taxes | 36.4 | 25.7 |
| Less: Gross receipts tax expense | (22.1) | (14.9) |
| **Contribution Margin \[Non-GAAP\]** | **202.4** | **176.7** |
| Natural gas costs | 316.7 | 156.3 |
| Gross receipts tax expense | 22.1 | 14.9 |
| **Operating Revenues** | $541.2 | $347.9 |
| **Net Income** | $47.3 | $45.3 |

Revenues for the three months ended December 31, 2022 were $193.3 higher than the prior-year quarter. A key driver was an increase in gas recovery costs totaling $159.9. Further, $18.4 of the increase was attributable to fiscal 2023 results including the 2021 rate order impact for the entire quarter, versus only one week in the fiscal 2022 quarter. Higher gross receipts taxes contributed a $7.2 increase, while volume/gas usage (including weather mitigation) accounted for $6.6 of the revenue increase in the current-year quarter.

Contribution margin for the three months ended December 31, 2022, increased $25.7 from the same period in the prior year, largely the result of the previously mentioned timing of the 2021 rate case implementation generating $18.4 incremental contribution, combined with favorable volumetric impacts of $6.6.

Reported O&M expenses for the first quarter increased $10.8 versus the prior year. Run-rate expenses increased $12.7 after removing the $1.9 impact of the NSC Transfer. The increase was largely due to $6.0 of general overheads that were previously deferred and were not reflected in rates collected during the current-year quarter. The increase also reflects higher non-employee operations expense of $5.0 and higher bad debts expense of $1.6, only partly offset by $0.8 lower employee-related expenses.

Depreciation and amortization expenses increased $4.4 versus the prior-year quarter due to ongoing capital investments. Taxes, other than income taxes, increased $10.7, driven by the higher pass-through gross receipts taxes of $7.2, combined with higher property taxes resulting from the continued infrastructure build-out.

Other income was higher by $1.0, after removing the $1.9 expense due to the NSC Transfer, with the remaining variance primarily attributable to increased inventory carrying cost revenue and slightly favorable mark-to-market valuations on unqualified retirement trusts. Interest expense increased $7.5, primarily reflecting higher short-term interest rates in the current year.

Resulting net income for the quarter ended December 31, 2022, represents a $2.0 increase in results versus the prior-year quarter.

Degree days in Spire Missouri’s service areas during the three months ended December 31, 2022, were 1.0% warmer than normal, but 32.3% colder than the same period last year. Spire Missouri’s total system volume sold and transported were 559.4 million *centum* (Latin for “hundred”) cubic feet (CCF) for the quarter, compared with 431.0 million CCF for the same period in the prior year. Total off-system volume sold and transported were 2.7 million CCF for the current quarter, compared with 2.1 million CCF a year ago.

### Spire Alabama

|  | Three Months Ended December 31, 2022 | 2021 |
| --- | ---: | ---: |
| **Operating Income \[GAAP\]** | $20.3 | $21.1 |
| Operation and maintenance expenses | 35.1 | 34.5 |
| Depreciation and amortization | 17.0 | 16.5 |
| Taxes, other than income taxes | 10.6 | 9.0 |
| Less: Gross receipts tax expense | (6.8) | (5.7) |
| **Contribution Margin \[Non-GAAP\]** | **76.2** | **75.4** |
| Natural gas costs | 69.4 | 45.5 |
| Gross receipts tax expense | 6.8 | 5.7 |
| **Operating Revenues** | $152.4 | $126.6 |
| **Net Income** | $9.2 | $12.2 |

Operating revenues for the three months ended December 31, 2022, increased $25.8 from the same period in the prior year. The change in operating revenue was principally due to $15.2 higher gas recovery costs, a $5.7 increase attributable to favorable weather/usage impacts, an increase in off-system sales totaling $2.0, and net favorable regulatory adjustments of $1.5 under the RSE framework.

Contribution margin was $0.8 higher versus the prior-year quarter, primarily driven by $1.4 favorable net rate adjustments under the RSE mechanism, slightly offset by weather/usage variance after weather mitigation.

O&M expenses for the three months ended December 31, 2022, increased $0.6 versus the prior-year quarter, with no NSC Transfer impact variance versus the prior-year quarter. The increase was due to higher bad debts expense of $0.7 and higher non-employee operating expenses of $0.3, only partly offset by $0.4 employee-related expenses.

Depreciation and amortization expenses were up $0.5, the result of continued investment in infrastructure upgrades. Interest expense for the current quarter increased $3.2 versus the prior-year quarter, the result of significantly higher short-term interest rates and to a lesser extent, higher levels of long-term debt.

For the quarter ended December 31, 2022, resulting net income decreased $3.0 versus the prior-year quarter.

As measured in degree days, temperatures in Spire Alabama’s service area during the three months ended December 31, 2022, were 8.1% warmer than normal and 6.8% warmer than a year ago. Spire Alabama’s total system volume sold and transported were 252.1 million CCF for the three months ended December 31, 2022, compared with 252.8 million CCF for the same period in the prior year. Total off-system volume sold and transported were 14.6 million CCF for the quarter, compared with 0.1 million CCF a year ago.

### LIQUIDITY AND CAPITAL RESOURCES

### Recent Cash Flows

| Cash Flow Summary | Three Months Ended December 31, 2022 | 2021 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(170.8) | $(229.9) |
| Net cash used in investing activities | (151.7) | (143.1) |
| Net cash provided by financing activities | 321.0 | 376.9 |

55

For the three months ended December 31, 2022, net cash from operating activities improved $59.1 from the corresponding period of fiscal 2022. The key drivers to the favorable change are the $35.3 increase in net income (discussed above), coupled with changes related to regulatory timing and fluctuation in working capital items (as discussed below in the Future Cash Requirements section).

For the three months ended December 31, 2022, net cash used in investing activities was $8.6 greater than for the same period in the prior year, primarily as a result of a $9.1 increase in capital expenditures. The drivers of the higher capital expenditures were a $5.1 spending increase in the Utilities, and a $5.0 increase for Spire Storage, partially offset by a $2.1 spending decline at Spire STL Pipeline.

Lastly, for the three months ended December 31, 2022, net cash provided by financing activities was down $55.9 versus net cash provided for the three months ended December 31, 2021. Current year long-term debt issuances were $205.0, or $95.0 lower than a year ago, while repayments of long-term debt in the current period declined $24.6 compared to the prior year first quarter. In addition, net short-term borrowings were $189.5 in fiscal year 2023, compared with net borrowings totaling $174.0 a year ago, or an increase of $15.5.

### 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 storage 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, 2022, are related to capital expenditures, principal and interest payments on long-term debt, natural gas purchase obligations, and dividends. Except for Spire Alabama's and Spire Gulf's October 2022 issuance of a total of $205.0 of fixed-rate debt due in October of 2029, 2032, and 2037, 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, 2022. Total Company capital expenditures are planned to be $700 for fiscal 2023.

### Source of Funds

It is management’s view that the Company, Spire Missouri and Spire Alabama have adequate access to capital markets and will have sufficient 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, 2022, the debt ratings of the Company, Spire Missouri and Spire Alabama (shown in the following table) remain at investment grade with a stable outlook (other than Moody’s negative outlook for Spire Missouri debt).

|  |  |  |
| --- | --- | --- |
|  | **S&P** | Moody’s |
| Spire Inc. senior unsecured long-term debt | BBB+ | Baa2 |
| Spire Inc. preferred stock | BBB | Ba1 |
| Spire Inc. short-term debt | A-2 | P-2 |
| Spire Missouri senior secured long-term debt | A | A1 |
| Spire Alabama senior unsecured long-term debt | A- | A2 |

#### 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, 2022.

#### Short-term Debt

The Company’s short-term cash requirements can be met through the sale of up to $1,300.0 of commercial paper or through the use of Spire’s $1,300.0 revolving credit facility. For information about short-term borrowings, see Note 5 of the Notes to Financial Statements in Item 1.

#### Long-term Debt and Equity

At December 31, 2022, including the current portion but excluding unamortized discounts and debt issuance costs, Spire had long-term debt totaling $3,432.7, of which $1,648.0 was issued by Spire Missouri, $750.0 was issued by Spire Alabama, and $229.7 was issued by other subsidiaries. For information about long-term debt issued this fiscal year, see Note 5 of the Notes to Financial Statements in Item 1.

Effective March 5, 2022, 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 of up to $800.0 for financings placed any time before December 31, 2024. Under this authorization through January 2023, Spire Missouri has issued $40.4 of common stock and a $250.0 term loan. 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 152,835 and 147,763 shares at December 31, 2022 and January 27, 2023, 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.

On February 6, 2019, Spire entered into an “at-the-market” (ATM) equity distribution agreement, supplemented as of May 14, 2019, pursuant to which the Company may offer and sell, from time to time, shares of its common stock pursuant to Spire’s previous universal shelf registration statement and a prospectus supplement dated May 14, 2019. Under this program, a total of 626,249 shares with an aggregate offering price of $47.8 were issued in fiscal 2019 and 2020, and 354,000 shares with an aggregate offering price of $23.5 were issued in the second quarter of fiscal 2022. On April 28, 2022, Spire’s board approved a new authorization for the sale of additional shares with an aggregate offering price of up to $200.0 before the expiration of the new universal shelf registration statement referenced in the paragraph above and a prospectus supplement dated May 9, 2022, under which a total of 365,625 shares with an aggregate offering price of $27.7 were issued in the third quarter of fiscal 2022.

Including the current portion of long-term debt, the Company’s long-term consolidated capitalization consisted of 46% equity at both December 31, 2022 and September 30, 2022.

### 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 10 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 4, 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, 2022, 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, 2022.

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, 2022.

### MARKET RISK

There were no material changes in the Company’s commodity price risk or counterparty credit risk as of December 31, 2022, relative to the corresponding information provided in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022. In the second fiscal quarter of 2020, the Company entered into multiple ten-year interest rate swaps with fixed interest rates ranging from 0.934% to 1.2975% for a total notional amount of $75.0 to protect itself against adverse movements in interest rates on future interest rate payments. The Company recorded a $0.4 mark-to-market loss in accumulated other comprehensive income on these swaps for three months ended December 31, 2022. In the third quarter of 2021 the Company entered into multiple ten-year interest rate swaps with fixed interest rates ranging from 2.008% to 2.1075% for a total notional amount of $125.0 to protect itself against adverse movements in interest rates on future interest rate payments. The Company recorded a $0.9 mark-to-market loss to accumulated other comprehensive income on these swaps for the three months ended December 31, 2022.

In the fourth quarter of 2021, the Company entered into two swap contracts, settling the one contract in the fiscal fourth quarter of 2022. The remaining outstanding contract is a ten-year interest rate swap that has a notional amount of $50.0 with a fixed interest rate of 1.597%. The Company recorded a $0.3 mark-to-market loss to accumulated other comprehensive income on these swaps for the three months ended December 31, 2022.

In the first quarter of fiscal 2022, the Company entered into a ten-year interest rate swap contract with a notional amount of $50.0 with a fixed interest rate of 1.4918%. The Company recorded a $0.2 mark-to-market loss to accumulated other comprehensive income on this swap for the three months ended December 31, 2022.

In the second quarter of fiscal 2022, the Company entered into multiple ten-year interest rate swap contracts with a cumulative total notional amount of $125.0 with fixed interest rates ranging from 1.64750% to 1.7460%. The Company recorded an $0.4 mark-to-market loss to accumulated other comprehensive income on these swaps for the three months ended December 31, 2022.

In the fiscal first quarter of 2023, the Company entered into two swap contracts. Both contracts are ten-year interest rate swap contracts; the first swap has a notional amount of $50.o with a fixed interest rate of 3.448%, while the second swap has a notional amount of $50.0 with a fixed interest rate of 3.431%. The Company recorded a $0.8 mark-to-market loss to accumulated other comprehensive income on these swaps for the three months ended December 31, 2022.

As of December 31, 2022, the Company has recorded through accumulated other comprehensive income a cumulative mark-to-market net asset of $60.6 on open swaps.

## Market risk

As filed, 141 characters.

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

## Controls and procedures

As filed, 2,810 characters.

#### 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, 2022, 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, 2022, 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, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 190 characters.

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, 2022.

Filed Feb 1, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-002213. Last ingested by Listed: Nov 2, 2026, 19:16 ET. No prices; not investment advice.