Spire, Inc. (Missouri) :SR-US: Earnings Analysis: 2017 By the Numbers : November 29, 2017

Spire, Inc. (Missouri) reports financial results for the year ended September 30, 2017.

We analyze the earnings along side the following peers of Spire, Inc. (Missouri) – Chesapeake Utilities Corporation, Atmos Energy Corporation, Sempra Energy, WGL Holdings, Inc., Northwest Natural Gas Company, New Jersey Resources Corporation, Vectren Corporation, National Fuel Gas Company, CenterPoint Energy, Inc. and Energy Transfer Equity, L.P. (CPK-US, ATO-US, SRE-US, WGL-US, NWN-US, NJR-US, VVC-US, NFG-US, CNP-US and ETE-US) that have also reported for this period.


  • Gross margins widened from 26.13% to 26.55% compared to the same period last year, operating (EBITDA) margins now 27.49% from 26.94%.
  • Year-on-year change in operating cash flow of -12.18% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • One-time items weakened operating performance.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017 2016 2015 2014 2013
Relevant Numbers (Annual)
Revenues 1744.8 1522.5 1985.6 1628.8 1017.88
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 161.2 143.7 136.4 84.3 52.51
Earnings Growth (YOY) 12.18 5.35 61.8 60.53 -15.71
Net Margin 9.24 9.44 6.87 5.18 5.16
EPS 3.43 3.24 3.15 2.35 2.02
Return on Equity 8.58 8.6 8.85 6.6 6.37
Return on Assets 2.56 2.53 2.63 2.06 2.1

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Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 26.13% to 26.55% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 26.94% to 27.49% compared to the same period last year. For comparison, gross margins were 26.13% and EBITDA margins were 26.94% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

SR-US’s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently -100.84, compared to last year’s level of -109.73 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

SR-US’s change in operating cash flow of -12.18% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The expansion in operating (EBIT) margins from 17.91% to 18.66% has also impacted the company’s earnings growth. However, one-time items have been a drag on the operating performance. As a result, the company’s pretax margins contracted from 14.04% to 13.71%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Spire, Inc. (Missouri)

Company Profile

Spire Inc. operates as a public utility holding company, which provides natural gas service through its utility operations while engaging in non-regulated activities. It operates its business through the Gas Utility and Gas Marketing segments. The Gas Utility segment includes the regulated operations of Laclede Gas Company and Alabama Gas Corporation. The Gas Marketing segment includes Laclede Energy Resources, Inc. a subsidiary engaged in the marketing of natural gas and related activities on a non-regulated basis. It also engages in other businesses, including the transportation of liquid propane, real estate development, the compression of natural gas, financial investments in other enterprises, propane sales transactions, propane storage, and related services, and merchandise sales business. The company was founded on October 1, 2001 and is headquartered in St. Louis, MO.

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