(Dollars in millions, except per share amounts)
This section analyzes the financial condition and results of operations ofSpire Inc. (the "Company"),Spire Missouri Inc. , andSpire Alabama Inc. SpireMissouri , Spire Alabama andSpire EnergySouth are wholly owned subsidiaries of the Company. SpireMissouri , Spire Alabama and the subsidiaries ofSpire 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, SpireMissouri'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
• Impacts related to the COVID-19 pandemic and uncertainties as to their
continuing duration and severity;
• 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 secure permanent authorization from the
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; 46
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• 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 two reportable segments: Gas Utility and Gas Marketing. 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 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 SpireMissouri isMissouri's largest natural gas distribution utility and is regulated by the MoPSC. SpireMissouri servesSt. Louis ,Kansas City , and other areas throughout the state. SpireMissouri 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. SpireMissouri also transports gas through its distribution system for certain larger customers who buy their own gas on the wholesale market. SpireMissouri 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
SpireAlabama is the largest natural gas distribution utility in the state ofAlabama and is regulated by the APSC. SpireAlabama's service territory is located in central and northernAlabama . Among the cities served by SpireAlabama areBirmingham , the center of the largest metropolitan area in the state, andMontgomery , the state capital. SpireAlabama 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. SpireAlabama also transports gas through its distribution system for certain large commercial and industrial customers for a transportation fee. EffectiveDecember 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 SpireAlabama distribution system. All Spire Alabama services are provided to customers at rates and in accordance with tariffs authorized by the APSC.
Gas Utility -
Spire Gulf and Spire Mississippi are utilities engaged in the purchase, retail distribution and sale of natural gas to approximately 100,000 customers in southernAlabama and south-centralMississippi . Spire Gulf is regulated by the APSC, and Spire Mississippi is regulated by the MSPSC. 47
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Table of Contents 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 throughout theU.S. 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. Other
Other components of the Company's consolidated information include:
• unallocated corporate items, including certain debt and associated interest
costs;
•
("Spire Storage"), described below; and
• Spire's subsidiaries engaged in the operation of a propane pipeline and risk
management, among other activities. Spire STL Pipeline is a wholly owned subsidiary of Spire which owns and operates a 65-mile pipeline connecting theRockies Express Pipeline inScott County, Illinois , to delivery points inSt. Louis County, Missouri , including SpireMissouri's storage facility. The pipeline is under the jurisdiction of theFERC and is currently permitted to deliver natural gas supply into easternMissouri under a temporary certificate authorization. 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 ofthe United States . The facility consists of two storage fields operating under oneFERC market-based rate tariff. COVID-19 The outbreak of coronavirus disease 2019 (COVID-19) has adversely impacted economic activity and conditions worldwide. We are continuing to assess the developments involving our workforce, customers and suppliers, as well as the response of federal and state authorities, our regulators and other business and community leaders. The Company has implemented what we believe to be appropriate procedures and protocols to ensure the safety of our customers, suppliers and employees. Impacts on our results of operations from COVID-19 have been minimal, partly as a result of regulatory recovery mechanisms and approvals. The Company is participating in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provisions allowing for a payroll tax deferral which did not have an impact on our results of operations but deferred the payment of the Company's portion of certain payroll taxes until late in fiscal 2021 and 2022. Although the Company does not currently expect to seek relief under any other CARES Act provisions, we will continue to monitor all pending and future federal, state and local efforts related to the COVID-19 health crisis and assess our need and, as applicable, eligibility for any such relief. NON-GAAP MEASURES Net income, earnings per share and operating income reported by Spire, SpireMissouri and Spire Alabama are determined in accordance with accounting principles generally accepted inthe 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. 48
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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, and 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 acquisitions 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. 49
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EARNINGS - THREE MONTHS ENDED
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.
Per Diluted Common Gas Utility Gas Marketing Other Total Share**
Three Months EndedJune 30, 2022 Net Income (Loss) [GAAP] $ 4.2 $ (5.1 )$ (0.5 ) $ (1.4 ) $ (0.10 ) Adjustments, pre-tax: Fair value and timing adjustments - 7.3 - 7.3 0.14 Income tax adjustments* - (1.8 ) - (1.8 ) (0.03 ) Net Economic Earnings (Loss) [Non-GAAP] $ 4.2 $ 0.4$ (0.5 ) $ 4.1 $ 0.01 Three Months Ended June 30, 2021 Net Income (Loss) [GAAP]$ 12.1 $ (6.6 )$ (0.2 ) $ 5.3 $ 0.03 Adjustments, pre-tax: Fair value and timing adjustments 0.2 1.9 - 2.1 0.04 Income tax adjustments* - (0.5 ) - (0.5 ) (0.01 ) Net Economic Earnings (Loss) [Non-GAAP]$ 12.3 $ (5.2 )$ (0.2 ) $ 6.9 $ 0.06 * 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. ** 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. Note: In the following discussion, all references to earnings (loss) per share and net economic earnings per share refer to earnings (loss) per diluted common share and net economic earnings (loss) per diluted common share. Consolidated Spire had a net loss of$1.4 for the three months endedJune 30, 2022 , compared with net income of$5.3 for the three months endedJune 30, 2021 . Loss per diluted share was$0.10 for the current quarter compared to income of$0.03 per diluted share for the prior-year quarter. The net income decline of$6.7 was primarily driven by a$7.9 reduction in the Gas Utility segment, partly offset by$1.5 improved performance in the Gas Marketing segment. Spire's net economic earnings for the third quarter were$4.1 ($0.01 per diluted share), compared to$6.9 ($0.06 per diluted share) in the prior year, reflecting lower earnings at Gas Utility, partly offset by stronger performance in Gas Marketing. These impacts are described in further detail below. Gas Utility Net economic earnings for the Gas Utility segment decreased$8.1 from the third quarter of the prior fiscal year. The$8.1 decrease reflects a shift in the cadence of regulatory recovery inMissouri to the first two quarters of our fiscal year, an impact of approximately$6.0 , combined with higher depreciation and property taxes tied to our pipeline upgrade investments. 50
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Fiscal 2022 third quarter net economic earnings for the Gas Marketing segment
were
Other
For the three months ended
Operating Revenues and Expenses and Contribution Margin
Reconciliations of the Company's contribution margin to the most directly comparable GAAP measure are shown below.
Gas Utility Gas Marketing Other Eliminations Consolidated Three Months EndedJune 30, 2022 Operating Income (Loss) [GAAP]$ 36.8 $ (6.9 )$ 8.0 $ -$ 37.9 Operation and maintenance expenses 95.0 3.2 8.0 (3.9 ) 102.3 Depreciation and amortization 58.1 0.3 2.0 - 60.4 Taxes, other than income taxes 43.0 0.4 0.7 - 44.1 Less: Gross receipts tax expense (23.2 ) (0.1 ) - - (23.3 ) Contribution Margin [Non-GAAP] 209.7 (3.1 ) 18.7 (3.9 ) 221.4 Natural gas costs 144.5 67.1 - (8.3 ) 203.3 Gross receipts tax expense 23.2 0.1 - - 23.3 Operating Revenues$ 377.4 $ 64.1
Three Months Ended
-$ 33.2 Operation and maintenance expenses 103.2 3.2 9.2 (3.6 ) 112.0 Depreciation and amortization 50.9 0.3 1.9 - 53.1 Taxes, other than income taxes 32.1 0.2 0.3 - 32.6 Less: Gross receipts tax expense (17.9 ) - - - (17.9 ) Contribution Margin [Non-GAAP] 203.9 (5.1 ) 17.8 (3.6 ) 213.0 Natural gas costs 84.9 20.2 - (8.2 ) 96.9 Gross receipts tax expense 17.9 - - - 17.9 Operating Revenues$ 306.7 $ 15.1$ 17.8 $ (11.8 ) $ 327.8 Consolidated Spire reported operating revenues of$448.0 for the three months endedJune 30, 2022 , a$120.2 increase versus the prior-year quarter. The Gas Utility segment experienced a quarter-over-quarter increase of$70.7 in operating revenues, while the Gas Marketing segment reported a$49.0 increase. Spire's contribution margin increased$8.4 , reflecting the increase of$5.8 in the Gas Utility segment combined with increases in Gas marketing and Other of$2.0 and$0.9 , respectively (before intercompany eliminations). Gas Utility operation and maintenance (O&M) expenses of$95.0 for the quarter were$8.2 lower than last year. Gas Utility O&M run-rate was$3.8 lower after adjusting the$4.4 transfer of quarter-over-quarter non-service postretirement benefit costs to other expenses below the operating income line (the "Non-service Cost Transfer"). Depreciation and amortization expenses were up$7.3 primarily due to continuing Gas Utility capital investments. These impacts are described in further detail below. 51
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Table of Contents Gas Utility Operating Revenues - Gas Utility operating revenues for the three months endedJune 30, 2022 , were$377.4 , or$70.7 higher than the same period in the prior year. The increase in Gas Utility operating revenues was attributable to the following factors:
Spire
$
28.3
Spire
22.3
SpireAlabama - RSE adjustments, net
7.6
SpireMissouri and Spire Alabama - Higher gross receipts taxes
5.2
SpireMissouri and Spire Alabama - Off-system sales and capacity release 3.1 All other factors 4.2 Total Variation$ 70.7 The primary driver of revenue growth in the quarter was$28.3 in higher gas cost recoveries in the current year reflecting the higher average gas costs being passed through to customers, a$22.3 increase resulting from volume growth in both the Spire Missouri and Spire Alabama territories, reflecting higher year-over-year demand activity that more than offset the higher average temperatures experienced in the Spire Missouri territory in the current-year quarter versus the prior year. The current year also benefited from$7.6 in net favorable RSE adjustments at Spire Alabama, higher gross receipts taxes reflecting the growth in the underlying billing base, and slightly higher off-system sales and capacity release. Contribution Margin - Gas Utility contribution margin was$209.7 for the three months endedJune 30, 2022 , a$5.8 increase over the same period in the prior year. The increase was attributable to the following factors:
Spire
1.4 Total Variation$ 5.8 Quarter-over-quarter contribution margin growth was primarily driven by the$7.1 increase from the previously mentioned RSE adjustments at Spire Alabama, reflecting favorable adjustments, particularly within the Cost Control Mechanism within the RSE framework. Contribution margin also benefited from slightly higher margins at Spire Missouri net of the regulatory recovery timing shift mentioned previously. These positive impacts were only partly offset by a decrease of$2.7 stemming from volumes net of weather mitigation at SpireAlabama . Operating Expenses - O&M expenses for the three months endedJune 30, 2022 , were$8.2 lower than the prior year. Run-rate expenses decreased$3.8 after removing the$4.4 impact of the Non-service Cost Transfer, largely due to lower employee-related expenses. Taxes, other than income taxes, increased$10.9 , and were driven by the higher pass-through gross receipts taxes mentioned earlier, along with higher property taxes resulting from the continued infrastructure build-out by the utilities. Depreciation and amortization expenses for the fiscal 2022 third quarter were$7.2 higher than the same period in the prior year primarily driven by continued infrastructure capital expenditures across all the Utilities. Gas Marketing Operating Revenues - Operating revenues increased$49.0 versus the prior-year period as higher commodity prices contributed to the growth from the prior-year quarter. Contribution Margin - Gas Marketing contribution margin during the quarter endedJune 30, 2022 , increased$2.0 from the same period in the prior year, due principally to increased storage optimization driven by volatility in forward gas prices that more than offset$5.4 in unfavorable mark-to-market adjustments on open derivative positions. 52
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Table of Contents Interest Charges Consolidated interest charges increased by$2.4 , principally due to higherGas Utilities long-term debt, higher average short-term borrowings and interest rates in the current-year quarter. For the three months endedJune 30, 2022 and 2021, average short-term borrowings were$551.5 and$536.5 , respectively, and the average interest rate on these borrowings was 1.18% and 0.45%, respectively. Other (Expenses) Income Reported consolidated other expenses/income increased by$11.1 , or$6.4 after removing the Non-service Cost Transfer of$4.7 . The$6.4 increase was primarily attributable to unfavorable fair market value adjustments on investment trusts for retiree and employee benefit plans. Income Taxes
Consolidated income tax for the three months ended
SpireMissouri Three Months Ended June 30, 2022 2021 Operating Income [GAAP]$ 12.9 $ 18.4 Operation and maintenance expenses 59.5 64.3 Depreciation and amortization 37.3 31.6 Taxes, other than income taxes 32.3 22.2 Less: Gross receipts tax expense (16.7 ) (12.3 ) Contribution Margin [Non-GAAP] 125.3 124.2 Natural gas costs 94.7 55.6 Gross receipts tax expense 16.7 12.3 Operating Revenues$ 236.7 $ 192.1 Net (Loss) Income$ (8.4 ) $ 3.1 Revenues for the three months endedJune 30, 2022 were$44.6 higher than the prior-year quarter. A key driver was an increase in gas recovery costs totaling$23.2 , primarily the result of cycling higher commodity gas costs that get passed through to customers. Volume/gas usage accounted for$16.4 of the increase in the current-year quarter, as underlying increases in economic activity more than offset the impact of warmer weather. Higher gross receipts taxes contributed a further$4.4 increase.
Contribution margin for the three months ended
Reported O&M expenses for the third quarter decreased$4.8 versus the prior year. Run-rate expenses decreased$1.9 after removing the$2.9 impact of the Non-service Cost Transfer. The decrease was largely due to lower employee-related expenses. Depreciation and amortization combined increased$5.7 versus the prior-year quarter due to ongoing capital investments. Taxes, other than income taxes, increased$10.1 , driven by the higher pass-through gross receipts taxes, higher property taxes resulting from the continued infrastructure build-out by the utilities. 53
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Other expense was higher by$7.1 , with$2.9 due to the Non-service Cost Transfer and most of the remaining$4.2 variance due to unfavorable fair market value adjustments investment trusts for employee and retiree benefit plans. Interest expense increased$2.0 , reflecting higher levels of long-term debt and higher short-term interest rates.
Resulting net loss for the quarter ended
Degree days in Spire Missouri's service areas during the three months endedJune 30, 2022 , were 2.4% colder than normal, but 0.9% warmer than the same period last year. SpireMissouri's total system therms sold and transported were 248.5 million for the quarter, compared with 242.1 million for the same period in the prior year. Total off-system therms sold and transported were 1.1 million for the current quarter, compared with 0.04 million a year ago. SpireAlabama Three Months Ended June 30, 2022 2021 Operating Income [GAAP] $ 20.0$ 13.3 Operation and maintenance expenses 29.2 31.9 Depreciation and amortization 16.9 16.1 Taxes, other than income taxes 8.6 7.9 Less: Gross receipts tax expense (5.5 ) (4.7 ) Contribution Margin [Non-GAAP] 69.2 64.5 Natural gas costs 41.0 24.1 Gross receipts tax expense 5.5 4.7 Operating Revenues $ 115.7$ 93.3 Net Income $ 10.5$ 6.5 Operating revenues for the three months endedJune 30, 2022 , increased$22.4 from the same period in the prior year. The change in operating revenue was principally due to$7.6 net favorable rate adjustments under the RSE mechanism, and a$5.9 increase attributable to favorable weather/usage impacts, and an increase in off-system sales totaling$3.0 . Contribution margin was$4.7 higher versus the prior-year quarter, primarily driven by$7.1 favorable net rate adjustments under the RSE mechanism offset by a$2.7 decrease attributable to weather/usage, after application of weather mitigation. O&M expenses for the three months endedJune 30, 2022 , decreased$2.7 versus the prior-year quarter, or$1.5 after removing the impact of the Non-service Cost Transfer. Lower field operations and administration expenses more than offset modest increases in employee expenses. Depreciation and amortization expenses were up$0.8 , the result of continued investment in infrastructure upgrades.
For the quarter ended
As measured in degree days, temperatures in Spire Alabama's service area during the three months endedJune 30, 2022 , were 21.5% colder than normal and 48.5% colder than a year ago. SpireAlabama's total system therms sold and transported were 225.7 million for the three months endedJune 30, 2022 , compared with 216.8 million for the same period in the prior year. Total off-system therms sold and transported were 27.1 million for the quarter, compared with 6.0 million a year ago. 54
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EARNINGS - nine months ended
Spire
Net Income and Net Economic Earnings
The following tables reconcile the Company's net economic earnings to the most comparable GAAP number, net income.
Per Diluted Common Gas Utility Gas Marketing Other Total Share** Nine Months EndedJune 30, 2022 Net Income (Loss) [GAAP]$ 236.5 $ (0.4 )$ (8.2 ) $ 227.9 $ 4.16 Adjustments, pre-tax: Fair value and timing adjustments - 20.9 - 20.9 0.40 Income tax effect of adjustments* 4.1 (5.2 ) - (1.1 ) (0.02 ) Net Economic Earnings (Loss) [Non-GAAP]$ 240.6 $ 15.3$ (8.2 ) $ 247.7 $ 4.54 Nine Months EndedJune 30, 2021 Net Income (Loss) [GAAP]$ 255.0 $ 33.5$ (6.9 ) $ 281.6 $ 5.23 Adjustments, pre-tax: Missouri regulatory adjustment (9.0 ) - - (9.0 ) (0.18 ) Fair value and timing adjustments 0.3 5.9 - 6.2 0.12 Income tax effect of adjustments* 2.1 (1.5 ) - 0.6 0.01 Net Economic Earnings (Loss) [Non-GAAP]$ 248.4 $ 37.9$ (6.9 ) $ 279.4 $ 5.18 * Income tax effect is calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items and then adding any estimated effects of enacted state or local income tax laws for periods before the related effective date, and for fiscal 2022, include a 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. Note: In the following discussion, all references to earnings (loss) per share and net economic earnings per share refer to earnings (loss) per diluted common share and net economic earnings per diluted common share. Consolidated Spire's net income was$227.9 for the nine months endedJune 30, 2022 , compared with$281.6 for the nine months endedJune 30, 2021 . Basic and diluted earnings per share for the nine months endedJune 30, 2022 , were$4.17 and$4.16 , respectively, compared with basic and diluted earnings per share of$5.24 and$5.23 , respectively, for the nine months endedJune 30, 2021 . The decrease in net income of$53.7 primarily reflects a$33.9 decrease in net income from the Gas Marketing segment and a$18.5 decrease in net income from the Gas Utility segment. 55
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The decrease in the Gas Marketing segment in the current year was due to the more favorable market conditions experienced in the prior year, particularly in the second quarter's month of February that drove volume, higher local/regional basis differentials and higher realized value from storage withdrawals. Results in the current year reflected more normalized market conditions. Gas Marketing net income in the current year was also negatively impacted by unfavorable unrealized fair value mark-to-market adjustments. The Gas Utility segment was lower due to an increase of$20.2 in depreciation and amortization and$11.2 higher taxes, other than income taxes, net of gross receipts taxes. These increases were partially offset by$3.7 of lower operating and maintenance expenses and higher margins. Net economic earnings were$247.7 ($4.54 per diluted share) for the nine months endedJune 30, 2022 , compared to$279.4 ($5.18 per diluted share) for the same period last year, primarily reflecting the lower earnings in the Gas Marketing and Gas Utility segments. These variances are discussed in greater detail below. Gas Utility Gas Utility net income decreased by$18.5 from the first nine months of the prior year. This decrease was driven primarily by the$17.7 reduction at SpireMissouri . SpireMissouri's results for the current year were negatively impacted by timing of ISRS filings,$14.4 higher depreciation expense,$7.3 higher interest expense resulting from higher levels of long-term debt and higher short-term interest rates, the fact that the prior year included a$9.0 ($6.8 after-tax) benefit from theMissouri Supreme Court ruling that partially reversed 2018 rate case pension cost disallowances, combined with the current year being burdened with a$4.1 income tax expense resulting from SpireMissouri's general rate case GR-2021-0108 that had an effective date onDecember 2021 ("2021Missouri rate order"). These negative impacts more than offset the$23.0 increase in contribution margin resulting from the new rates implemented late in the first quarter of 2022. SpireAlabama's net income increased by$1.6 , as$12.6 in net favorable RSE adjustments were offset by a$6.0 reduction in contribution relating to volume/usage and lower off-system sales,$3.8 in higher depreciation expense, higher property taxes and lower miscellaneous income. Net economic earnings in the first nine months of fiscal 2022 were$240.6 , a decrease of$7.8 over the corresponding period in the prior year, primarily the result of the$7.0 decrease at Spire Missouri and a modest$0.8 reduction experienced by theSoutheast Utilities . These impacts are described in further detail below. Gas Marketing The Gas Marketing segment reported a net loss of$0.4 for the nine months endedJune 30, 2022 , versus net income of$33.5 during the same period last year, principally reflecting strong second quarter operating results in the prior year due to Winter Storm Uri. Fiscal 2022 results also reflect less favorable market conditions and basis differentials despite price volatility, offset by favorable resolution of certain customer claims. Gas Marketing also experienced$11.3 in after-tax unfavorable year-over-year derivative fair value mark-to-market valuations. Net economic earnings for the current-year period were$15.3 , a decrease of$22.6 from the same period last year, as net income variance is reduced by adding back the unrealized derivative fair value impact. Other For the nine months endedJune 30, 2022 , net economic loss for Other was$8.2 , versus a loss of$6.9 in the prior-year period. Included in those results were higher interest and corporate costs in the current year. 56
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Operating Revenues and Expenses and Contribution Margin
Reconciliations of the Company's contribution margin to the most directly comparable GAAP measure are shown in the table below:
Gas Utility Gas Marketing Other Eliminations Consolidated Nine Months EndedJune 30, 2022 Operating Income (Loss) [GAAP]$ 361.6 $ (0.4 )$ 17.2 $ -$ 378.4 Operation and maintenance expenses 306.5 9.1 28.0 (11.7 ) 331.9 Depreciation and amortization 169.2 1.0 6.0 - 176.2 Taxes, other than income taxes 150.3 0.8 2.2 - 153.3 Less: Gross receipts tax expense (96.8 ) (0.3 ) - - (97.1 ) Contribution Margin [Non-GAAP] 890.8 10.2 53.4 (11.7 ) 942.7 Natural gas costs 710.7 160.9 - (27.1 ) 844.5 Gross receipts tax expense 96.8 0.3 - - 97.1 Operating Revenues$ 1,698.3 $ 171.4
Nine Months EndedJune 30, 2021 Operating Income [GAAP]$ 366.4 $ 43.2$ 13.9 $ -$ 423.5 Operation and maintenance expenses 310.2 13.6 28.9 (10.1 ) 342.6 Depreciation and amortization 149.0 0.9 5.5 - 155.4 Taxes, other than income taxes 124.0 0.9 1.7 - 126.6 Less: Gross receipts tax expense (81.7 ) (0.1 ) - - (81.8 ) Contribution Margin [Non-GAAP] 867.9 58.5 50.0 (10.1 ) 966.3 Natural gas costs 908.4 14.7 0.1 (26.0 ) 897.2 Gross receipts tax expense 81.7 0.1 - - 81.8 Operating Revenues$ 1,858.0 $ 73.3$ 50.1 $ (36.1 ) $ 1,945.3 Consolidated Spire's operating revenues decreased by$159.7 at the Gas Utility segment, which more than offset the$98.1 increase in the Gas Marketing segment and the$3.3 increase in Other. The Gas Utility variance was largely due to the prior year results including the benefits that resulted from Winter Storm Uri. The Gas Marketing increase was due to current year lower trading activity (trading activities are recorded as revenues net of costs) and higher volumes and pricing, while Other primarily reflects higher revenues at Spire Storage. Spire's contribution margin decreased$23.6 compared with the same nine-month period last year, as the$22.9 increase in the Gas Utility segment was more than offset by the$48.3 reduction at Gas Marketing. The Gas Utility contribution margin increase was primarily driven by the$18.6 increase from Spire Missouri and the$6.6 increase at Spire Alabama, offset slightly by a decline at the utilities ofSpire EnergySouth . The decrease in Gas Marketing reflects very favorable market conditions in the prior year second quarter, combined with unfavorable fair value mark-to-market adjustments in the current year. Higher contribution margins in Other are primarily due to Spire Storage improvement resulting from higher utilization of its storage capacity. Depreciation and amortization expenses were higher in the Gas Utility segment, due to ongoing capital investments in both Spire Missouri and Spire Alabama. Gas Utility O&M expenses were$3.7 lower in the current year. Run-rate O&M expenses in the current year are lower by$7.0 after removing the prior year impact of theMissouri Supreme Court ruling that partially reversed 2018 rate case pension cost disallowances totaling$9.0 , and the year-to-date postretirement Non-service Cost Transfer of$5.7 . These fluctuations are described in more detail below. 57
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Table of Contents Gas Utility Operating Revenues - Gas Utility operating revenues for the nine months endedJune 30, 2022 , were$1,698.3 , or$159.7 lower than the same period last year. The decrease in Gas Utility operating revenues was attributable to the following factors: SpireMissouri - OFO charges $
(195.8 ) Spire Missouri and Spire Alabama - Off-system sales and capacity release
(94.7 ) Spire Missouri and Spire Alabama - Higher PGA/GSA costs (gas cost recovery)
74.7
SpireMissouri - 2021 rate case outcomes
23.0
SpireAlabama - RSE adjustments, net
13.5
Spire Missouri and Spire Alabama - Higher gross receipts taxes 15.2 All other factors 4.4 Total Variation$ (159.7 ) The decrease in revenues was driven primarily by the prior year inclusion of$195.8 of cover charges and OFO penalties to certain wholesale customers at Spire Missouri, and a$94.7 decrease in off-system sales. These negative impacts more than offset the benefits of higher current year gas cost recoveries of$74.7 , Spire Missouri's new rates that resulted from the 2021 rate order, SpireAlabama's favorable RSE adjustments, and higher gross receipts taxes. Contribution Margin - Gas Utility contribution margin was$890.8 for the nine months endedJune 30, 2022 , a$22.9 increase over the same period last year. The increase was attributable to the following factors: Spire Missouri - 2021 rate case outcomes $
23.0
SpireAlabama - Rate adjustment under RSE mechanism, net
12.6
Spire
(8.0 ) SpireMissouri and Spire Alabama - Off-system sales and capacity release (2.8 ) All other factors (1.9 ) Total Variation$ 22.9 The contribution margin increase resulted primarily from the changes resulting from the 2021 Missouri rate order and Spire Alabama RSE adjustment impacts more than offsetting negative volumetric usage and lower off-system sales. Operating Expenses - Gas Utility O&M expenses were$3.7 lower in the current year. Run-rate O&M expenses in the current year are lower by$7.0 after removing theMissouri Supreme Court ruling that partially reversed 2018 rate case pension cost disallowances totaling$9.0 , and the year-to-date postretirement Non-service Cost Transfer of$5.7 . This decrease is primarily due to lower operations and employee-related costs and lower bad debt expense. Depreciation and amortization expenses for the nine months endedJune 30, 2022 , increased$20.2 from the same period last year, the result of continued levels of capital investment. Taxes, other than income taxes, increased$26.3 , and were driven by the higher pass-through gross receipts taxes mentioned earlier, combined with higher property taxes resulting from the continued infrastructure build-out by the utilities. Gas Marketing
Operating Revenues - Gas Marketing operating revenues increased
Contribution Margin - Gas Marketing contribution margin during the nine months endedJune 30, 2022 , decreased$48.3 from the same period last year, driven principally by strong second quarter results in the prior year. During that quarter, particularly the month of February, very favorable weather patterns drove significantly higher regional basis differentials and volume. 58
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Table of Contents Interest Charges Consolidated interest charges during the nine months endedJune 30, 2022 , were$7.0 higher than the same period last year. The increase was primarily driven by higher average short-term interest rates in the current year period, combined with the impact of net long-term debt issuances and higher levels of short-term borrowings. For the nine months endedJune 30, 2022 and 2021, average short-term borrowings were$716.4 and$633.1 , respectively, and the average interest rates on these borrowings were 0.6% and 0.4%, respectively. Other (Expenses) Income Reported consolidated other expenses/income changed by$13.2 , or$7.0 after removing the Non-service Cost Transfer of$6.2 . The$7.0 increase was primarily attributable to unfavorable fair market value adjustments on investment trusts for retiree and employee benefit plans. Income Taxes Consolidated income tax expense during the nine months endedJune 30, 2022 decreased$11.6 versus the prior year. The variance is the result of the lower pre-tax book income in the current year, partly offset by a$4.1 charge resulting from Tax Cuts and Jobs Act reconciliations from the 2021 Missouri rate order that was completed late in the first quarter of this year. SpireMissouri Nine Months Ended June 30, 2022 2021 Operating Income [GAAP]$ 208.5 $ 214.7 Operation and maintenance expenses 190.1 190.0 Depreciation and amortization 107.4 93.0 Taxes, other than income taxes 111.0 86.2 Less: Gross receipts tax expense (70.6 ) (56.1 ) Contribution Margin [Non-GAAP] 546.4 527.8 Natural gas costs 538.8 754.6 Gross receipts tax expense 70.6 56.1 Operating Revenues$ 1,155.8 $ 1,338.5 Net Income$ 135.1 $ 152.8 Prior year operating revenues results included benefits derived from Winter Storm Uri. As a result, current year revenues were$182.7 below the prior year. Key drivers were a reduction in gas recovery costs totaling$131.3 , primarily the result of$195.8 in cover charges and OFO penalties to certain wholesale customers in the prior year only being partly offset by higher commodity costs in the current year. Off-system sales and capacity release in the current-year quarter were$94.9 lower than the prior year, with the second quarter of 2021 benefiting from historically high off-system sales relating to Winter Storm Uri. These negative impacts were partly offset by the$23.0 increase resulting from the rate increases as a result of the 2021 Missouri rate order,$14.5 of higher gross receipts taxes, and a$7.3 increase resulting from higher volume/usage.
Contribution margin for the nine months ended
Reported O&M expenses increased$0.1 versus the prior year. Run-rate expenses decreased$5.2 after removing the$3.7 impact of the year-to-date Non-service Cost Transfer and last year's$9.0 rate case refund ruling by theMissouri Supreme Court . The decrease was largely due to lower employee-related expenses and lower bad debt expenses. Depreciation and amortization increased$14.4 versus the prior-year quarter due to ongoing capital investments. Taxes, other than income taxes, increased$24.8 , driven by the higher pass-through gross receipts taxes mentioned earlier, higher property taxes resulting from the continued infrastructure build-out by the utilities. 59
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Net interest expense for the nine months ended
Resulting net income for the nine months ended
Temperatures in Spire Missouri's service areas during the nine months endedJune 30, 2022 , were 6.1% warmer than the same period last year and 9.2% warmer than normal. The Spire Missouri total system therms sold and transported were 1,469.3 million for the nine months endedJune 30, 2022 , compared with 1,537.8 million for the same period last year. Total off-system therms sold and transported were 17.9 million for the nine months endedJune 30, 2022 , compared with 21.3 million for the same period last year. SpireAlabama Nine Months Ended June 30, 2022 2021 Operating Income [GAAP]$ 129.0 $ 125.0 Operation and maintenance expenses 96.6 98.4 Depreciation and amortization 50.1 46.3 Taxes, other than income taxes 32.1 30.8 Less: Gross receipts tax expense (22.5 ) (21.8 ) Contribution Margin [Non-GAAP] 285.3 278.7 Natural gas costs 138.6 129.0 Gross receipts tax expense 22.5 21.8 Operating Revenues$ 446.4 $ 429.5 Net Income$ 85.1 $ 83.5 Operating revenues for the nine months endedJune 30, 2022 , increased$16.9 from the same period last year. The change was principally driven by$13.5 net favorable RSE adjustments and by higher gas cost recoveries of$10.2 . These benefits were only partly offset by a$7.7 decrease in volumes (net of weather mitigation). Contribution margin increased$6.6 , principally as a result of the RSE adjustments of$12.6 (mentioned above), partly offset by$5.9 lower volume usage and$0.1 related to lower off-system sales. O&M expenses for the nine months endedJune 30, 2022 , decreased$1.8 from the same period last year. Excluding the impact of the year-to-date postretirement Non-service Cost Transfer of$1.7 , O&M expenses were flat with last year. Temperatures in Spire Alabama's service area during the nine months endedJune 30, 2022 , were 6.0% warmer than the same period last year and 11.5% warmer than normal. SpireAlabama's total system therms sold and transported were 809.6 million for the nine months endedJune 30, 2022 , compared with 801.5 million for the same period last year. Off-system sales, and related therms sold totaled 27.2 million, versus 33.1 million in the prior year, which benefited from Winter Storm Uri.
LIQUIDITY AND CAPITAL RESOURCES
Recent Cash Flows Nine Months Ended June 30, Cash Flow Summary 2022 2021
Net cash provided by operating activities
(398.3 ) (461.7 ) Net cash provided by financing activities 212.5 260.8 60
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For the nine months endedJune 30, 2022 , net cash from operating activities decreased$16.1 from the corresponding period of fiscal 2021. Offsetting a decline in net income of$53.7 (discussed above) were changes due principally to high recovery of deferred gas costs this year and fluctuations in working capital items, as discussed below in the Future Cash Requirements section. Those typical variance drivers have been impacted by Spire Missouri's Operational Flow Order and Filing Adjustment Factor put into place last year, as discussed in
Note 4 , Regulatory Matters, of the Notes to Financial Statements in Item 1.
For the nine months endedJune 30, 2022 , net cash used in investing activities was$63.4 less than for the same period in the prior year, primarily as a result of a$60.7 decrease in capital expenditures. The drivers of the lower capital expenditures were a$43.2 spending decline in the Utilities, a$15.4 decline for Spire Storage, and a slight decline at Spire STL Pipeline. Lastly, for the nine months endedJune 30, 2022 , net cash provided by financing activities was down$48.3 versus net cash provided for the nine months endedJune 30, 2021 . Current year long-term debt issuances were$300.0 , or$329.1 lower than a year ago; however, net short-term borrowings were$37.2 in fiscal year 2022, compared with net repayments of short-term debt totaling$187.0 a year ago. Also, issuances of common stock during the first nine months of fiscal 2022 were$51.3 higher than during the prior-year period as a result of sales under the "at-the-market" program discussed below. 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 ofJune 30, 2022 , are related to capital expenditures, principal and interest payments on long-term debt, natural gas purchase obligations, and dividends. Except for Spire Missouri'sDecember 2021 issuance of$300.0 of floating rate bonds due inDecember 2024 , 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 endedSeptember 30, 2021 .Total Company capital expenditures are planned to be$540 for fiscal 2022. 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 ofJune 30, 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
BBB Ba1 Spire Inc. short-term debt A-2 P-2
Spire
Cash and Cash Equivalents
Bank deposits were used to support working capital needs of the business. Spire
had no temporary cash investments as of
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Table of Contents 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 AtJune 30, 2022 , including the current portion but excluding unamortized discounts and debt issuance costs, Spire had long-term debt totaling$3,258.9 , of which$1,648.0 was issued by Spire Missouri,$575.0 was issued by SpireAlabama , and$205.9 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. EffectiveMarch 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 beforeDecember 31, 2024 . As ofJune 30, 2022 , the entire amount remained available under this authorization. SpireAlabama 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 theU.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 164,175 and 159,659 shares atJune 30, 2022 andJuly 31, 2022 , 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 theSEC for the issuance of various equity and debt securities, which expires onMay 9, 2025 . OnFebruary 6, 2019 , Spire entered into an "at-the-market" (ATM) equity distribution agreement, supplemented as ofMay 14, 2019 , pursuant to which the Company may offer and sell, from time to time, shares of its common stock pursuant to Spire's universal shelf registration statement referenced above and a prospectus supplement datedMay 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. OnApril 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 theMay 2025 expiration of the new universal shelf registration statement on Form S-3 filed inMay 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 47% equity at both
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, SpireMissouri'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.
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Table of Contents 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 endedSeptember 30, 2021 , 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 nine months endedJune 30, 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 endedSeptember 30, 2021 . MARKET RISK There were no material changes in the Company's commodity price risk or counterparty credit risk as ofJune 30, 2022 , relative to the corresponding information provided in the Company's Annual Report on Form 10-K for the fiscal year endedSeptember 30, 2021 . 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$6.3 mark-to-market gain in accumulated other comprehensive income on these swaps for nine months endedJune 30, 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$150.0 to protect itself against adverse movements in interest rates on future interest rate payments. The Company recorded an$11.5 mark-to-market gain to accumulated other comprehensive income on these swaps for the nine months endedJune 30, 2022 . In the fourth quarter of 2021, the Company entered into two swap contracts. Both contracts are ten-year interest rate swaps; the first swap has a notional amount of$50.0 with a fixed interest rate of 1.597%, while the second swap has a notional amount of$50.0 with a fixed interest rate of 1.821%. The Company recorded a$3.3 mark-to-market gain to accumulated other comprehensive income on these swaps for the nine months endedJune 30, 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$5.4 mark-to-market gain to accumulated other comprehensive income on this swap for the nine months endedJune 30, 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$150.0 with fixed interest rates ranging from 1.64750% to 1.7460%. The Company recorded an$11.7 mark-to-market gain to accumulated other comprehensive income on these swaps for the nine months endedJune 30, 2022 .
As of
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