Strategic Portfolio Transformation
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Management is transitioning Spire to a pure-play regulated utility by divesting non-core marketing, storage, and Mississippi assets to eliminate market-based earnings volatility.
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The acquisition of Piedmont Tennessee, now Spire Tennessee, adds over 200 thousand customers in the high-growth Nashville market, serving as a primary long-term growth engine.
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Second quarter earnings growth was primarily driven by new rate implementations in Missouri and Alabama, reflecting recovery on approximately $1 billion of incremental rate base.
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A significant volumetric margin shortfall occurred in Missouri due to an ‘extraordinary’ decoupling of customer usage from heating degree days during an unusually mild winter.
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The company successfully funded the Tennessee acquisition without external equity by utilizing proceeds from asset sales and a balanced mix of debt instruments.
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Operational focus remains on disciplined cost management and customer affordability to mitigate the impact of infrastructure modernization investments on rates.
Regulated Growth Outlook and Guidance Assumptions
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Fiscal 2026 adjusted EPS guidance of $3.90 to $4.10 excludes Spire Tennessee results and discontinued operations, reflecting the immediate impact of Missouri weather headwinds.
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Management reaffirmed fiscal 2027 guidance of $5.40 to $5.60, which assumes a full year of earnings contribution from the newly integrated Tennessee utility.
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The 10-year $11.2 billion capital plan is expected to drive 5% to 7% long-term adjusted EPS growth through consistent rate base expansion.
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A future test-year rate case filing in Missouri is planned for late 2024 to address rate design and weather normalization mechanics.
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The FFO-to-debt target has been lowered to 14% to 15%, reflecting the reduced business risk profile of a fully regulated utility footprint.
Regulatory and Structural Adjustments
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Filed an Accounting Authority Order (AAO) in Missouri seeking to establish a regulatory asset for the margin shortfall caused by weather-driven usage patterns.
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The sale of Spire Mississippi to Delta Utilities was initiated because the 18 thousand-customer business was deemed subscale for Spire’s long-term capital requirements.
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Spire Marketing and Spire Storage are now classified as discontinued operations, removing midstream and marketing segments from future earnings presentations.
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Missouri rate design shifts have increased earnings sensitivity to winter heating season usage, necessitating a re-evaluation of weather normalization mechanisms.
Q&A Session Highlights
Strategy to improve weather normalization mechanisms in Missouri
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