(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 any appeal related to the FERC’s December 15,
2022 order granting such certificate 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; 46
——————————————————————————–
Table of Contents
• 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. Spire's earnings are derived primarily from its Gas Utility segment, which reflects the regulated activities of the Utilities. Due to the seasonal nature of the Utilities' business and the volumetric Spire Missouri rate design, earnings of Spire and each of the Utilities are typically concentrated during the heating season of November through April each fiscal year.
Gas Utility – Spire Missouri
Spire Missouri is Missouri's largest natural gas distribution utility and is regulated by the MoPSC. Spire Missouri serves St. Louis, Kansas City, and other areas throughout the state. Spire Missouri purchases natural gas in the wholesale market from producers and marketers and ships the gas through interstate pipelines into its own distribution facilities for sale to residential, commercial and industrial customers. Spire Missouri also transports gas through its distribution system for certain larger customers who buy their own gas on the wholesale market. Spire Missouri delivers natural gas to customers at rates and in accordance with tariffs authorized by the MoPSC. The earnings of Spire Missouri are primarily generated by the sale of heating energy.
Gas Utility – Spire Alabama
Spire Alabama is the largest natural gas distribution utility in the state of Alabama and is regulated by the APSC. Spire Alabama's service territory is located in central and northern Alabama. Among the cities served by Spire Alabama are Birmingham, the center of the largest metropolitan area in the state, and Montgomery, the state capital. Spire Alabama purchases natural gas through interstate and intrastate suppliers and distributes the purchased gas through its distribution facilities for sale to residential, commercial, and industrial customers, and other end users of natural gas. Spire Alabama also transports gas through its distribution system for certain large commercial and industrial customers for a transportation fee. 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. 47
——————————————————————————–
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 to customers across the U.S. (and into Canada), including customers inside and outside of the Utilities' service areas. It holds firm transportation and storage contracts in order to effectively manage its transactions with counterparties, which primarily include producers, municipalities, electric and gas utility companies, and large commercial and industrial customers. Midstream Spire's midstream operations consist of Spire Storage West LLC, Spire Storage Salt Plains LLC (jointly, "Spire Storage") and Spire STL Pipeline LLC ("Spire STL Pipeline"). 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 both the western and midcontinent regions of the United States. The storage facility located in Wyoming consists of two storage fields operating under one FERC market-based rate tariff, while the storage facility located in Oklahoma, acquired on April 1, 2023, operates under intrastate jurisdiction with authorizations from FERC under Section 311 of the Natural Gas Policy Act to provide certain interstate storage, transportation, and hub services. Other Other components of the Company's consolidated information include Spire's subsidiaries engaged in the operation of a 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, as applicable, the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities, the largely non-cash impacts of impairments, and other non-recurring or unusual items such as certain regulatory, legislative or GAAP standard-setting actions. In addition, 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. 48
——————————————————————————–
Table of Contents
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
——————————————————————————–
Table of Contents
EARNINGS – THREE MONTHS ENDED March 31, 2023
This section contains discussion and analysis of the results for the three
months ended March 31, 2023 compared to the results for the three months ended
March 31, 2022, in total and by registrant and segment.
Spire
Net Income and Net Economic Earnings
The Company reported net income growth of $5.6 and net economic earnings growth
of $18.2, reflecting improved results across all segments in the quarter.
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 Midstream Other Total Share** Three Months Ended March 31, 2023 Net Income (Loss) [GAAP] $ 183.5 $ 2.2 $ 4.2 $ (10.7 ) $ 179.2 $ 3.33 Adjustments, pre-tax: Fair value and timing adjustments 0.5 26.1 - - 26.6 0.50 Income tax adjustments* (0.1 ) (6.5 ) - - (6.6 ) (0.13 ) Net Economic Earnings (Loss) [Non-GAAP] $ 183.9 $ 21.8 $
4.2 $ (10.7 ) $ 199.2 $ 3.70
Three Months Ended March 31, 2022 Net Income (Loss) [GAAP] $ 169.2 $ 7.0 $ 3.0 $ (5.6 ) $ 173.6 $ 3.27 Adjustments, pre-tax: Fair value and timing adjustments - 9.9 - - 9.9 0.20 Income tax adjustments* - (2.5 ) - - (2.5 ) (0.05 ) Net Economic Earnings (Loss) [Non-GAAP] $ 169.2 $ 14.4 $ 3.0 $ (5.6 ) $ 181.0 $ 3.42 * 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. 50
——————————————————————————–
Table of Contents
Reconciliations of contribution margin to the most directly comparable GAAP
measure are shown below.
Gas Utility Gas Marketing Midstream Other Eliminations Consolidated Three Months Ended March 31, 2023 Operating Income (Loss) [GAAP] $ 251.3 $ 2.4 $ 7.5 $ (0.9 ) $ - $ 260.3 Operation and maintenance expenses 119.3 5.7 6.2 4.9 (4.0 ) 132.1 Depreciation and amortization 60.2 0.4 2.0 - - 62.6 Taxes, other than income taxes 80.4 0.6 0.8 0.1 - 81.9 Less: Gross receipts tax expense (60.0 ) (0.2 ) - - - (60.2 ) Contribution Margin [Non-GAAP] 451.2 8.9 16.5 4.1 (4.0 ) 476.7 Natural gas costs 543.3 51.5 - - (8.3 ) 586.5 Gross receipts tax expense 60.0 0.2 - - - 60.2 Operating Revenues $ 1,054.5 $ 60.6 $ 16.5 $ 4.1 $ (12.3 ) $ 1,123.4 Three Months Ended March 31, 2022 Operating Income [GAAP] $ 230.4 $ 9.6 $ 5.2 $ - $ - $ 245.2 Operation and maintenance expenses 104.2 3.2 5.8 4.2 (4.2 ) 113.2 Depreciation and amortization 56.5 0.4 1.9 0.1 - 58.9 Taxes, other than income taxes 70.3 0.4 0.9 - - 71.6 Less: Gross receipts tax expense (51.9 ) - - - - (51.9 ) Contribution Margin [Non-GAAP] 409.5 13.6 13.8 4.3 (4.2 ) 437.0 Natural gas costs 356.0 45.8 - - (9.8 ) 392.0 Gross receipts tax expense 51.9 - - - - 51.9 Operating Revenues $ 817.4 $ 59.4 $ 13.8 $ 4.3 $ (14.0 ) $ 880.9 51
——————————————————————————–
Table of Contents
Select variances for the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022 are summarized in the following table and discussed below. Gas Gas Other, Net of Variances: Fiscal 2023 Versus Fiscal 2022 Utility Marketing Midstream Eliminations Consolidated Net Income $ 14.3 $ (4.8 ) $ 1.2 $ (5.1 ) $ 5.6 Net Economic Earnings [Non-GAAP] 14.7 7.4 1.2 (5.1 ) 18.2 Operating Revenues 237.1 1.2 2.7 1.5 242.5 Contribution Margin [Non-GAAP] 41.7 (4.7 ) 2.7 (0.0 ) 39.7 Operation and Maintenance Expenses 15.1 2.5 0.4 0.9 18.9 Interest Expense 19.7 Other Income 10.4 Income Tax 0.2 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, driven by timing of gas cost recoveries, and weighted-average short-term interest rates were 5.03% in the current-year quarter, versus 0.56% in the prior-year quarter.
After removing the impact of the Non-Service Cost Postretirement Benefit
Transfer (“NSC Transfer”) of $2.8, other income increased $7.6. This increase
was primarily the result of favorable inventory carrying cost credits and
mark-to-market valuations on unqualified retirement trusts at Spire Missouri.
The change in income taxes reflects slightly favorable income mix. Removing this impact, the change in income taxes is in line with the change in pre-tax book income. Gas Utility For the quarter ended March 31, 2023, Gas Utility net income was $14.3 higher than the prior-year period, driven by $13.9 growth at Spire Missouri. Net economic earnings in the current year was $14.7 higher than the prior year, which tracks the net income trend. 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 rates (gas cost
recovery)
$
219.2
Spire Missouri - 2022 rate order
36.2
Spire Alabama - RSE adjustments, net
7.9
Spire EnergySouth
3.1
Spire Missouri and Spire Alabama - Volumetric usage (net of weather mitigation) (32.6 ) All other factors 3.3 Total Variation $ 237.1 The primary driver of revenue growth was $219.2 in higher gas cost recoveries in the current year reflecting the higher average gas costs being passed through to customers, and a $36.2 increase from Spire Missouri resulting from the impact of implementing the 2022 rate order. The current-year quarter also benefited from Spire Alabama's favorable RSE adjustments of $7.9 and an increase of $3.1 at Spire EnergySouth. These favorable impacts were partly offset by lower volumetric usage (net of weather mitigation) totaling $32.6 across Spire Missouri and Spire Alabama. 52
——————————————————————————–
Table of Contents
The year-over-year increase in Gas Utility contribution margin was attributable
to the following factors:
Spire Missouri - 2022 rate order $
36.2
Spire Alabama - RSE adjustments, net
6.4
Spire EnergySouth
3.2
Spire Missouri and Spire Alabama - Volumetric usage (net of weather mitigation) (5.0 ) All other factors 0.9 Total Variation $ 41.7 Contribution margin growth versus the prior year was primarily driven by the previously mentioned $36.2 increase from the impact of the Spire Missouri 2022 rate order, $6.4 from favorable rate adjustments within the RSE framework at Spire Alabama, and gains of $3.2 at Spire EnergySouth. O&M expenses for the three months ended March 31, 2023, were $15.1 higher than the prior year. Run-rate expenses increased $12.4 after removing the $2.7 impact of the NSC Transfer. The Gas Utility segment O&M increase reflects approximately $6.0 due to the change in treatment of Spire Missouri general overheads that were being deferred in the prior-year period, higher non-employee operations expense of $5.8 and higher bad debts expense of $2.9. These unfavorable impacts were only partly offset by lower employee-related expenses and favorable insurance expense.
Taxes, other than income taxes, increased $10.1, and were driven by $8.1 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 quarter ended March
31, 2023 were $3.7 higher than the same period in the prior year primarily
driven by continued infrastructure capital expenditures across all the
Utilities.
Gas Marketing 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 from associated higher employee-related costs. Net income reflected these same variance drivers, as well as the unfavorable quarter-over-quarter mark-to-market activity on open derivative contracts. Midstream
Net income and net economic earnings for the Company’s Midstream segment
increased $1.2 for the quarter ended March 31, 2023 versus the prior-year
quarter, primarily attributable to Spire Storage, reflecting optimized
operational and withdrawal commitments. The $2.7 increase in revenues and
contribution margin reflect the optimization activity at Spire Storage.
Operating expenses across the segment were in line with the prior-year quarter.
Other The Company's other activities generated a $10.7 loss in the three months ended March 31, 2023, $5.1 higher than the prior-year quarter. The larger current-year loss was driven by $3.8 higher interest expense in the current year, reflecting both higher borrowings and interest rates, combined with higher corporate costs. 53
——————————————————————————–
Table of Contents Spire Missouri Three Months Ended March 31, 2023 2022 Operating Income [GAAP] $ 147.5 $ 130.2 Operation and maintenance expenses 77.4 64.3 Depreciation and amortization 39.2 35.9 Taxes, other than income taxes 61.2 53.0 Less: Gross receipts tax expense (45.6 ) (39.0 ) Contribution Margin [Non-GAAP] 279.7 244.4 Natural gas costs 465.7 287.8 Gross receipts tax expense 45.6 39.0 Operating Revenues $ 791.0 $ 571.2 Net Income $ 112.1 $ 98.2 Revenues for the quarter ended March 31, 2023 were $219.8 higher than the comparable prior-year period. A key driver was an increase in gas recovery costs totaling $184.0. Further, $36.2 of the increase was attributable to fiscal 2023 results including the impact of the implementation of the 2022 rate order. Higher gross receipts taxes contributed a $6.6 increase. These revenue growth drivers were only partially offset by lower off-system sales of $6.8.
Contribution margin for the three months ended March 31, 2023, increased
$35.3 from the same period in the prior year, largely as a result of the
previously mentioned timing of the 2022 rate case implementation generating
$36.2 incremental contribution.
Reported O&M expenses for the current-year quarter increased $13.1 versus the prior year. Run-rate expenses increased $10.8 after removing the $2.3 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. The increase also reflects higher non-employee operations expense of $4.8 and higher bad debts expense of $2.7, partly offset by lower employee-related expenses and favorable insurance expense. Depreciation and amortization expenses increased $3.3 versus the prior-year quarter due to ongoing capital investments. Taxes, other than income taxes, increased $8.2, driven by the higher pass-through gross receipts taxes of $6.6, combined with higher property taxes resulting from the continued infrastructure build-out.
Other income improved by $6.0 after removing the $2.3 impact due to the NSC
Transfer. This variance is primarily attributable to increased inventory
carrying cost credits and, to a lesser extent, mark-to-market valuations on
unqualified retirement trusts. Interest expense increased $10.4, reflecting
higher short-term interest rates in the current year and the $400 in long-term
debt that was issued early in the current-year second quarter.
Resulting net income for the quarter ended March 31, 2023 represents a $13.9
increase in results versus the prior-year quarter.
Degree days in Spire Missouri's service areas during the three months ended March 31, 2023, were 13.7% warmer than normal, and 14.4% warmer than the same period last year. Spire Missouri's total system volume sold and transported were 657.8 million centum (Latin for "hundred") cubic feet (CCF) for the quarter, compared with 765.5 million CCF for the same period in the prior year. Total off-system volume sold and transported were 1.2 million CCF for the current-year quarter, compared with 14.4 million CCF a year ago. 54
——————————————————————————–
Table of Contents Spire Alabama Three Months Ended March 31, 2023 2022 Operating Income [GAAP] $ 88.9 $ 87.9 Operation and maintenance expenses 34.5 32.9 Depreciation and amortization 17.0 16.7 Taxes, other than income taxes 16.1 14.5 Less: Gross receipts tax expense (12.6 ) (11.3 ) Contribution Margin [Non-GAAP] 143.9 140.7 Natural gas costs 61.8 52.1 Gross receipts tax expense 12.6 11.3 Operating Revenues $ 218.3 $ 204.1 Net Income $ 60.0 $ 62.4 Operating revenues for the three months ended March 31, 2023 increased $14.2 from the same period in the prior year. The change in operating revenue was principally due to $35.2 higher gas recovery costs, and net favorable regulatory adjustments of $7.9 under the RSE framework, and an increase in off-system sales totaling $1.1. These favorable impacts were only partly offset by the $31.0 decrease attributable to unfavorable weather/usage impacts. Contribution margin was $3.2 higher versus the prior-year quarter, primarily driven by $6.4 favorable net rate adjustments under the RSE mechanism, slightly offset by $3.4 unfavorable weather/usage variance after weather mitigation. O&M expenses for the three months ended March 31, 2023 increased $1.6 versus the prior-year quarter, $1.4 after removing the NSC Transfer variance versus the prior-year quarter. The increase was primarily due to higher non-employee operating expenses that were only partly offset by lower employee-related expenses. Depreciation and amortization expenses were up $0.3, the result of continued investment in infrastructure upgrades. Interest expense for the current-year quarter increased $4.3 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 March 31, 2023, resulting net income decreased $2.4 versus
the prior-year quarter.
As measured in degree days, temperatures in Spire Alabama's service area during the three months ended March 31, 2023, were 26.3% warmer than normal and 12.4% warmer than a year ago. Spire Alabama's total system volume sold and transported were 295.6 million CCF for the three months ended March 31, 2023, compared with 319.7 million CCF for the same period in the prior year. Total off-system volume sold and transported were 13.4 million CCF for the quarter, compared with nominal off-system volume sold and transported in last year's second quarter.
EARNINGS – SIX MONTHS ENDED March 31, 2023
This section contains discussion and analysis of the results for the six months ended March 31, 2023 compared to the results for the six months ended March 31, 2022, in total and by registrant and segment. Spire
Net Income and Net Economic Earnings
The Company reported net income growth of $40.9 and net economic earnings growth
of $40.7, reflecting improved results across all segments.
The following tables reconcile the Company’s net economic earnings to the most
comparable GAAP number, net income.
55
——————————————————————————–
Table of Contents Per Diluted Common Gas Utility Gas Marketing Midstream Other Total Share** Six Months Ended March 31, 2023 Net Income (Loss) [GAAP] $ 246.4 $ 33.8 $ 8.0 $ (18.0 ) $ 270.2 $ 4.99 Adjustments, pre-tax: Fair value and timing adjustments 0.5 18.3 - - 18.8 0.36 Income tax effect of adjustments* (0.1 ) (4.6 ) - - (4.7 ) (0.09 ) Net Economic Earnings (Loss) [Non-GAAP] $ 246.8 $ 47.5 $
8.0 $ (18.0 ) $ 284.3 $ 5.26
Six Months Ended March 31, 2022 Net Income (Loss) [GAAP] $ 232.3 $ 4.7 $ 5.5 $ (13.2 ) $ 229.3 $ 4.28 Adjustments, pre-tax: Fair value and timing adjustments - 13.6 - - 13.6 0.27 Income tax effect of adjustments* 4.1 (3.4 ) - - 0.7 0.01 Net Economic Earnings (Loss) [Non-GAAP] $ 236.4 $ 14.9 $ 5.5 $ (13.2 ) $ 243.6 $ 4.56 * 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. Gas Utility Gas Marketing Midstream Other Eliminations Consolidated Six Months Ended March 31, 2023 Operating Income (Loss) [GAAP] $ 353.2 $ 43.8 $ 14.6 $ (1.1 ) $ - $ 410.5 Operation and maintenance expenses 239.2 12.0 12.0 8.9 (7.9 ) 264.2 Depreciation and amortization 119.9 0.7 3.9 0.2 - 124.7 Taxes, other than income taxes 130.3 0.7 1.2 0.1 - 132.3 Less: Gross receipts tax expense (90.4 ) (0.2 ) - - - (90.6 ) Contribution Margin [Non-GAAP] 752.2 57.0 31.7 8.1 (7.9 ) 841.1 Natural gas costs 944.9 77.5 - - (16.7 ) 1,005.7 Gross receipts tax expense 90.4 0.2 - - - 90.6 Operating Revenues $ 1,787.5 $ 134.7 $ 31.7 $ 8.1 $ (24.6 ) $ 1,937.4 Six Months Ended March 31, 2022 Operating Income (Loss) [GAAP] $ 324.8 $ 6.5 $ 9.8 $ (0.6 ) $ - $ 340.5 Operation and maintenance expenses 211.5 5.9 11.6 8.4 (7.8 ) 229.6 Depreciation and amortization 111.1 0.7 3.8 0.2 - 115.8 Taxes, other than income taxes 107.3 0.4 1.5 - - 109.2 Less: Gross receipts tax expense (73.6 ) (0.2 ) - - - (73.8 ) Contribution Margin [Non-GAAP] 681.1 13.3 26.7 8.0 (7.8 ) 721.3 Natural gas costs 566.2 93.8 - - (18.8 ) 641.2 Gross receipts tax expense 73.6 0.2 - - - 73.8 Operating Revenues $ 1,320.9 $ 107.3 $ 26.7 $ 8.0 $ (26.6 ) $ 1,436.3 56
——————————————————————————–
Table of Contents Select variances for the six months ended March 31, 2023 compared to the six months ended March 31, 2022 are summarized in the following table and discussed below. Gas Gas Other, Net of Variances: Fiscal 2023 Versus Fiscal 2022 Utility Marketing Midstream Eliminations Consolidated Net Income $ 14.1 $ 29.1 $ 2.5 $ (4.8 ) $ 40.9 Net Economic Earnings [Non-GAAP] 10.4 32.6 2.5 (4.8 ) 40.7 Operating Revenues 466.6 27.4 5.0 2.1 501.1 Contribution Margin [Non-GAAP] 71.1 43.7 5.0 - 119.8 Operation and Maintenance Expenses 27.7 6.1 0.4 0.4 34.6 Interest Expense 34.7 Other Income 9.0 Income Tax 3.4 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 $230, driven by timing of gas cost recoveries, and weighted-average short-term interest rates were 4.7% in the current year, versus 0.5% in the prior year.
The change in other income was $8.2 after removing the impact of the NSC
Transfer of $0.8. This increase was primarily the result of increased inventory
carrying-cost credits, along with favorable mark-to-market valuations on
unqualified retirement trusts at Spire Missouri.
After removing the $4.1 Spire Missouri regulatory charge that was recorded in
the prior year, the change in income taxes is consistent with the change in
pre-tax book income.
Gas Utility For the six months ended March 31, 2023, Gas Utility net income was $14.1 higher than the prior-year period, as the $5.4 decrease experienced by Spire Alabama was more than offset by the $15.9 and $3.6 growth at Spire Missouri and Spire EnergySouth, respectively. Net economic earnings in the current year was $10.4 higher than the prior year, which tracks the net income trend after removing the Spire Missouri $4.1 GAAP regulatory adjustment in the prior-year period. 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 rates (gas cost
recovery)
$
394.3
Spire Missouri - 2021 and 2022 rate case outcomes
54.6
Spire Missouri and Spire Alabama - Higher gross receipts taxes
16.2
Spire EnergySouth
13.5
Spire Alabama - RSE adjustments, net
9.4
Spire Alabama - Volumetric usage (net of weather mitigation) (25.3 ) All other factors 3.9 Total Variation $ 466.6 The primary driver of revenue growth in the current year-to-date results was $394.3 in higher gas cost recoveries at the utilities of Spire Missouri and Spire Alabama in the current year, reflecting higher average gas costs being passed through to customers. The current year also benefited from a $54.6 increase at Spire Missouri resulting from the current-year impacts of implementing the 2022 and 2021 rate orders. The current year-to-date results also benefited from higher gross receipts taxes of $16.2 at Spire Missouri and Spire Alabama, growth of $13.5 at Spire EnergySouth, and $9.4 at Spire Alabama, reflecting favorable rate adjustments within the RSE framework. These favorable impacts were only partly offset by an unfavorable volumetric usage impact (net of weather mitigation) totaling $25.3 at Spire Alabama. 57
——————————————————————————–
Table of Contents
The year-over-year increase in Gas Utility contribution margin was attributable
to the following factors:
Spire Missouri - 2021 and 2022 rate case outcomes $ 54.6 Spire Alabama - Rate adjustment under RSE mechanism, net 7.8 Spire EnergySouth 6.1 All other factors 2.6 Total Variation $ 71.1 Year-to-date contribution margin growth was primarily driven by the $54.6 increase from the Spire Missouri 2022 and 2021 rate order implementations, $7.8 from favorable rate adjustments within the RSE framework at Spire Alabama, and a $6.1 increase at Spire EnergySouth. O&M expenses for the six months ended March 31, 2023, were $27.7 higher than the prior year. Run-rate expenses increased $27.0 after removing the $0.7 impact of the NSC Transfer. The Gas Utility segment O&M increase reflects higher non-employee operations expense of $12.1, approximately $12 due to the change in treatment of Spire Missouri general overheads that were being deferred in the prior-year period, and higher bad debts expense of $5.5. These impacts were only partly offset by favorable insurance expense and lower employee-related expenses. Taxes, other than income taxes, increased $23.0, and were driven by $16.8 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 first half of fiscal 2023 were $8.8 higher than the same period in the prior year primarily driven by continued infrastructure capital expenditures across all the Utilities.
Gas Marketing
Net income and net economic earnings reflect the strong operating results
experienced in the current-year, 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 higher employee-related expenses.
Midstream Net income and net economic earnings for the Company's Midstream segment increased $2.5 for the year-to-date ended March 31, 2023 versus the prior-year period. Of this increase, $2.4 was attributable to Spire Storage, reflecting optimized operational and withdrawal commitments. The $5.0 increase in revenues and contribution margin reflect the optimization activity at Spire Storage. Operating expenses across the segment were in-line with the prior-year-to-date period. Other The Company's other activities generated a $18.0 loss in the six months ended March 31, 2023, $4.8 higher than the prior-year corresponding period. The larger current-year loss was driven by $7.2 higher interest expense, reflecting both higher borrowings and interest rates, and higher corporate costs, offset partly by lower income tax expense. 58
——————————————————————————–
Table of Contents Spire Missouri Six Months Ended March 31, 2023 2022 Operating Income [GAAP] $ 219.9 $ 195.6 Operation and maintenance expenses 154.5 130.6 Depreciation and amortization 77.8 70.1 Taxes, other than income taxes 97.6 78.7 Less: Gross receipts tax expense (67.7 ) (53.9 ) Contribution Margin [Non-GAAP] 482.1 421.1 Natural gas costs 782.4 444.1 Gross receipts tax expense 67.7 53.9 Operating Revenues $ 1,332.2 $ 919.1 Net Income $ 159.4 $ 143.5 Revenues for the six months ended March 31, 2023 were $413.1 higher than the comparable prior-year period. A key driver was an increase in gas recovery costs totaling $343.9. Further, $54.6 of the increase was attributable to fiscal 2023 results including the cumulative impacts of the implementation of the 2022 and 2021 rate orders. Higher gross receipts taxes contributed a $13.8 increase, and volume (net of weather mitigation) contributing $5.0 growth. These revenues growth drivers were only partially offset by lower off-system sales of $6.3. Contribution margin for the six months ended March 31, 2023 increased $61.0 from the same period in the prior year, largely as a result of the previously mentioned timing of the 2022 and 2021 rate case implementations generating $54.6 incremental contribution, combined with favorable volumetric impacts of $5.0. Reported O&M expenses for the current year-to-date period increased $23.9 versus the prior year. Run-rate expenses increased $23.5 after removing the $0.4 impact of the NSC Transfer. The increase was largely due to approximately $12 of general overheads that were previously deferred and were not reflected in rates collected during the current year. The increase also reflects higher non-employee operations expense of $10.4 and higher bad debts expense of $4.3, partly offset by lower employee-related expenses and favorable insurance expense in the current year. Other income was higher by $7.0, after removing the $0.4 expense due to the NSC Transfer. This variance is primarily attributable to increased inventory carrying cost credits, combined with favorable mark-to-market valuations on unqualified retirement trusts. Interest expense increased $17.9, primarily reflecting higher short-term interest rates and net long-term debt issuances in the current year.
Resulting net income for the six months ended March 31, 2023 represents
a $15.9 increase versus the prior-year period.
Degree days in Spire Missouri's service areas during the six months ended March 31, 2023 were 8.5% warmer than normal, but 1.7% colder than the same period last year. Spire Missouri's total system volume sold and transported were 1,215.9 million CCF for the first half of this year, compared with 1,196.5 million CCF for the same period in the prior year. Total off-system volume sold and transported were 3.9 million CCF for the current year, compared with 16.5 million CCF a year ago. 59
——————————————————————————–
Table of Contents Spire Alabama Six Months Ended March 31, 2023 2022 Operating Income [GAAP] $ 109.2 $ 109.0 Operation and maintenance expenses 69.6 67.4 Depreciation and amortization 34.0 33.2 Taxes, other than income taxes 26.7 23.5 Less: Gross receipts tax expense (19.4 ) (17.0 ) Contribution Margin [Non-GAAP] 220.1 216.1 Natural gas costs 131.2 97.6 Gross receipts tax expense 19.4 17.0 Operating Revenues $ 370.7 $ 330.7 Net Income $ 69.2 $ 74.6 Revenues for the six months ended March 31, 2023 were $40.0 higher than the comparable prior-year period. A key driver was an increase in gas recovery costs totaling $50.4. Further, $9.4 of the increase was attributable to fiscal 2023 results including favorable adjustments under the RSE framework. Revenue in the current year also benefited $5.5 due to the combination of higher off-system sales and gross receipts taxes. These growth drivers were only partially offset by $25.3 unfavorable volume impacts (net of weather mitigation). Contribution margin for the six months ended March 31, 2023, increased $4.0 from the same period in the prior year, as favorable RSE adjustments of $7.8 more than offset unfavorable volumetric impacts of $4.1. Reported O&M expenses for the first half of fiscal 2023 increased $2.2 versus the comparable prior-year period. Run-rate expenses increased $2.0 after removing the $0.2 impact of the NSC Transfer. The increase was largely due to higher non-employee operations expense, a $0.7 increase in bad debts expense, partly offset by lower employee-related expenses. Depreciation and amortization expenses were up $0.8, the result of continued investment in infrastructure upgrades. Interest expense for the six months ended March 31, 2023 increased $7.5 versus the prior-year period, the result of significantly higher short-term interest rates and, to a lesser extent, higher levels of long-term debt.
For the six months ended March 31, 2023, resulting net income decreased
$5.4 versus the prior-year period.
As measured in degree days, temperatures in Spire Alabama's service area during the six months ended March 31, 2023 , were 22.0% warmer than normal and 10.9% warmer than a year ago. Spire Alabama's total system volume sold and transported were 547.7 million CCF for the six months ended March 31, 2023 , compared with 572.5 million CCF for the same period in the prior year. Total off-system volume sold and transported were 28.0 million CCF for the first half this year, compared with 0.1 million CCF a year ago.
LIQUIDITY AND CAPITAL RESOURCES
Recent Cash Flows Six Months Ended March 31, Cash Flow Summary 2023 2022
Net cash provided by operating activities $ 179.9 $ 155.1
Net cash used in investing activities
(340.7 ) (273.2 ) Net cash provided by financing activities 161.5 122.0 60
——————————————————————————–
Table of Contents
For the six months ended March 31, 2023, net cash from operating activities improved $24.8 from the corresponding period of fiscal 2022. The key drivers to the favorable change are the $40.9 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 six months ended March 31, 2023, net cash used in investing activities
was $67.5 greater than for the same period in the prior year. As discussed in
Note 1 of the Notes to Financial Statements in Item 1, on March 31, 2023, Spire made an advance payment of the $37.1 preliminary purchase price for the subsequent acquisition of a natural gas storage facility. Total capital expenditures were $31.9 higher than last year, with a $24.1 spending increase in the Utilities, and a $11.7 increase for Spire Storage, partially offset by a $5.3 spending decline at Spire STL Pipeline. Lastly, for the six months ended March 31, 2023, net cash provided by financing activities increased $39.5 versus the six months ended March 31, 2022. Current-year long-term debt issuances were $755.0, or $455.0 higher than a year ago, and repayments of long-term debt in the current period declined $24.6 compared to the prior-year period. Offsetting a substantial portion of the higher net long-term debt issuances was a $411.6 net increase in repayments of short-term debt. Cash from the issuance of common stock in the current-year period was $3.6, a decline of $20.4 from the comparative period; see the discussion regarding Spire's forward sales of stock under its ATM program in Note 4 of the Notes to Financial Statements in Item 1. Finally, dividends paid on common stock rose $4.4 in the first half of fiscal 2023 compared to the first half of fiscal 2022. 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 March 31, 2023, are related to capital expenditures, principal and interest payments on long-term debt, natural gas purchase obligations, and dividends. Except for the issuance of debt described in Note 6 of the Notes to Financial Statements in Item 1, 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 March 31, 2023, 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
61
——————————————————————————–
Table of Contents Cash and Cash Equivalents
Bank deposits were used to support working capital needs of the business. Spire
had no temporary cash investments as of March 31, 2023.
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 6
of
the Notes to Financial Statements in Item 1.
Long-term Debt and Equity At March 31, 2023, including the current portion but excluding unamortized discounts and debt issuance costs, Spire had long-term debt totaling $3,982.7, of which $2,048.0 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 6 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 April 2023, Spire Missouri has issued $40.4 of common stock, a $250.0 term loan, and $400.0 of first mortgage bonds. 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 147,414 and 142,290 shares at March 31, 2023 and April 30, 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. Spire has an "at-the-market" (ATM) equity distribution agreement, pursuant to which the Company may offer and sell, from time to time, shares of its common stock (including shares of common stock that may be sold pursuant to forward sale agreements entered into in connection with the ATM equity distribution agreement). As of March 31, 2023, under this ATM program, Spire may sell additional shares with an aggregate offering price of up to $152.8 under the current Board of Directors authorization expiring May 2025. For additional information about the ATM program, see Note 4 of the Notes to Financial Statements in Item 1.
Taking into account the current portion of long-term debt, the Company’s
long-term consolidated capitalization consisted of 43% and 46% equity at March
31, 2023 and September 30, 2022, respectively.
ENVIRONMENTAL MATTERS The Utilities and other Spire subsidiaries own and operate natural gas distribution, transmission and storage facilities, the operations of which are subject to various environmental laws, regulations, and interpretations. While environmental issues resulting from such operations arise in the ordinary course of business, such issues have not materially affected the Company's, Spire Missouri's, or Spire Alabama's financial position and results of operations. As environmental laws, regulations, and interpretations change, however, the Company and the Utilities may be required to incur additional costs. For information relative to environmental matters, see Contingencies in Note 11 of the Notes to Financial Statements in Item 1. REGULATORY MATTERS
For discussions of regulatory matters for Spire, Spire Missouri, and Spire
Alabama, see Note 5 , Regulatory Matters, of the Notes to Financial
Statements in Item 1.
62
——————————————————————————–
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 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 six months ended March 31, 2023. 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 March 31, 2023, relative to the corresponding information provided in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2022.
At March 31, 2023, the following swaps were outstanding:
• From the first quarter of fiscal 2021, one swap contract remains outstanding. 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 1.49180%. The Company recorded a $1.0 mark-to-market loss to accumulated other comprehensive income on the swap for the six months ended March 31, 2023. • From the second quarter of 2022, two swap contracts remain outstanding. Both contracts are ten-year interest rate swap contracts; the first swap has a notional amount of $75.o with a fixed interest rate of 1.6475%, while the second swap has a notional amount of $25.0 with a fixed interest rate of 1.746%. The Company recorded a $2.1 mark-to-market loss to accumulated other comprehensive income on these swaps for the six months ended March 31, 2023. • From the first quarter of fiscal 2023, one swap contract is outstanding. 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 3.4480%. The Company recorded a $1.7 mark-to-market loss to accumulated other comprehensive income on this swap for the six months ended March 31, 2023. • In the second quarter of fiscal 2023, the Company entered into multiple two-year interest rate swap contracts with a cumulative total notional amount of $100.0 with fixed interest rates ranging from 3.385% to 3.685%. The Company recorded an $0.5 mark-to-market loss to accumulated other comprehensive income on these swaps for the six months ended March 31, 2023.
As of March 31, 2023, the Company has recorded through accumulated other
comprehensive income a cumulative mark-to-market net gain of $14.3 on open
swaps.
63
——————————————————————————–
Table of Contents
© Edgar Online, source Glimpses