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Good morning, and welcome to the Spire Inc. First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Megan McPhail, Managing Director, Investor Relations. Please, go ahead.

Good morning, and welcome to Spire's Fiscal 2024 First Quarter Earnings Call. We issued an earnings news release this morning, and you may access it on our website at spireenergy.com under Newsroom. There is a slide presentation that accompanies our webcast, and you may download it from either the webcast site or from our website under Investors and then Events and Presentations. Before we begin, let me cover our Safe Harbor statement and use of non-GAAP earnings measures. Today's call including responses to questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although our forward-looking statements are based on reasonable assumptions, there are various uncertainties and risk factors that may cause future performance or results to be different than those anticipated. These risks and uncertainties are outlined in our quarterly and annual filings with the SEC. In our comments, we will be discussing net economic earnings and contribution margin, which are both non-GAAP measures used by management when evaluating our performance and results of operations. Explanations and reconciliations of these measures to their GAAP counterparts are contained in both our news release and slide presentation. On the call today is Steve Lindsey, President and CEO; and Steve Rasche, Executive Vice President and CFO. Also in the room today are Scott Doyle, Executive Vice President and COO; Adam Woodard, Vice President and Treasurer; and Scott Dudley, Investor Relations. With that, I will turn the call over to Steve Lindsey. Steve?

Thanks, Megan. Good morning to everyone. Thank you for joining us today to review our first quarter performance and an update on recent developments and outlook. I'd like to begin by thanking our employees for their continuing dedication and commitment, serving our customers as we enter the important winter heating season. Following a warmer than normal fiscal year first quarter, we experienced extreme cold weather across our service territories last month. Rigid conditions impacted customers in Alabama, temperatures in parts of our Missouri service territory dipped as low as negative 12, with Windchill as low as negative 35. As a result of our preparation and significant investment in our gas utilities, we are well-positioned to deliver safe, reliable, and affordable natural gas energy for our customers and communities when they needed it the most. Our gas utilities to our midstream gas marketing segments, our teams worked tirelessly and I'm incredibly proud of our employees for their dedication and collaboration during this time. We will remain focused on continued execution of our strategy while achieving operational excellence. In doing so, our priorities remain the same, to grow our businesses, invest in central infrastructure, and drive continuous improvement. During the first quarter, we delivered net economic earnings of $1.47 per share compared to an NEE of $1.55 per share a year ago. Our results reflect growth in our gas utility segment and returned to a more normal market conditions for Gas Marketing and Midstream segments compared to very favorable conditions a year ago. In regulatory matters new rates under the rate stabilization and equalization or RSE mechanism are now effective for our utilities in Alabama. And as you might recall, this constructive annual rate-setting framework uses the forward-year budget and average common equity rather than rate base for rate-making purposes. I'm pleased to say, we recently welcomed Scott Doyle to our leadership team as Executive Vice President and Chief Operating Officer. Scott has nearly 30 years of experience in the industry and brings with him deep knowledge in capital deployment, regulatory strategy, and operational leadership. As COO he will oversee our gas utilities across Alabama, Missouri, and Mississippi. I'm confident that Scott will be a tremendous addition to our company. Would also like to take this opportunity to recognize Ed Glotzbach, who retired from the Spire Board of Directors last week. Ed has been a Director of our company for 19 years and served as Board Chair since 2015. The service spanned the transformation of Spire from a regional utility to one of the largest publicly traded natural gas companies in the United States. We are grateful for his considerable contributions to Spire's success. Rob Jones, who has been a valuable member of our Board since 2016 was elected Chair at Spire's Board of Directors meeting last week. Rob has played a key role in the strong oversight and governance provided by our Board, and I look forward to working closely with him going forward. At Spire we are strongly committed to delivering value over the long term for our customers, communities, employees, and shareholders, we'll will achieve this by remaining focused on providing essential energy with exceptional service. We're positioned well for success in FY2024 and over the longer term as we execute on our capital investment plans to support the growth expansion and performance of our utilities and our gas-related businesses. Turning to an update on capital investments. In the first quarter, our CapEx totaled $227 million with the majority of the spend for our gas utilities. Year-over-year our gas utility CapEx increased nearly 20% with an emphasis on upgrading distribution infrastructure and connecting more homes and businesses to safe, reliable, and affordable natural gas. The investment in our Midstream segment totaled $52 million, largely for the expansion of Spire Storage West, which remains on pace to be completed for next year's heating season. In January, we filed a new ISRS request with the Missouri Public Service Commission for revenues of $17.3 million. This filing includes recovery of ISRS eligible investment for the September 2023 through February 2024 period. Once approved, the related rate increase is anticipated to be effective by July of 2024. I'm pleased to note that we completed our acquisition of the MoGas and Omega pipeline companies in mid-January. The MoGas pipeline consists of 263 miles of interstate natural gas pipeline, primarily in Missouri, and interconnects with Spire [STL] (ph) Pipeline to deliver gas for our growing customer base. The Omega pipeline is a 75-mile natural gas distribution system primarily serving Fort Leonard Wood Army base and South Central Missouri has interconnected with the MoGas pipeline system. MoGas and Omega are ideal fits with our existing midstream businesses, as they bolster resiliency and expand our footprint within Missouri. With that, I'll turn it over to Steve Rasche for a financial review and update on our guidance and outlook. Steve?

Thanks, Steve, and good morning. It has certainly been an interesting start to the fiscal year from a weather standpoint and our team delivered, congratulations. Let's take a look at our results and outlook. For our first fiscal quarter, we reported net economic earnings of $82.7 million compared to roughly $85 million last year. On a per-share basis, earnings of $1.47 were $0.08 lower than last year. All of our businesses performed well and the key factors to focus on are, first, we saw higher earnings in our gas utilities driven by new rates in Missouri and Alabama. Secondly, our marketing and midstream businesses delivered solid results with the acknowledgment, as Steve noted, that the volatile market we saw a year ago did not recur this year. And lastly, other corporate costs were lower, reflecting an $8.2 million pretax gain on the settlement of an interest rate swap. Slide 7 provides detail on key variances. Let's hit a couple of the highlights. Gas utility margins were higher as we benefited from new rates. And while we did experience warmer temperatures across our utility footprint, our weather normalization mechanisms were effective in both Missouri and Alabama. And resulting residential margins were in line with expectations. Margins in marketing and midstream were lower as I just mentioned. And looking at operation and maintenance expenses, gas utility expenses were down $3.3 million due to lower employee-related costs, partially offset by higher insurance expenses. Spire marketing costs were lower due to lower business volumes, and midstream costs were higher due to growth in scale of the segment and $1.9 million in MoGas acquisition cost. And as a reminder, these acquisition costs are excluded from our consolidated net economic earnings. Interest expense was higher by $7 million with higher interest expense on long-term debt principally due to higher debt levels, combined with higher short-term interest expense due to higher rates and marginally lower debt levels compared to last year. As a reminder, we get recovery of a portion of our higher interest expense through carrying cost credits in Missouri, and those credits grew by $1.7 billion last quarter. And finally, other income was $11.4 million above last year due to the gain on the settlement of the interest rate swap and those carrying cost credits. Turning to our outlook, we remain confident in our growth strategy and our results so far this fiscal year support our goals. As a result, we are affirming our guidance including long-term net economics per share growth of 5% to 7%. Fiscal 2024 net economic earnings of $4.25 to $4.45 per share. Our earnings target ranges by business segment and both current-year and 10-year CapEx targets. Moving to Slide 9, our three-year financing plan also remains unchanged. We've now settled our forward equity sale and are on track for our equity unit conversion. Last week, our Board reauthorized our ATM program at $200 million and we will use this program to meet our very modest remaining equity needs through 2026. As I mentioned earlier, we are seeing lower total short-term borrowings even after factoring in our nine-month term loan noted here. We are on track to collect our deferred gas cost balances and expect to be substantially recovered by the end of this heating season. Our long-term debt financing plan is largely tied to refinancing activity. The remarketing I just mentioned, and an incremental $50 million to $100 million to fund the MoGas acquisition. Our interest rate hedging program is well-positioned relative to these needs and future interest rates. And we continue to target FFO to debt at 15%, 16% on a consolidated basis and expect to be in this range by fiscal 2025. In summary, we are executing in line with our plans and are favorably positioned going forward both operationally and financially. Before I wrap up, I would like to take this opportunity to recognize Scott Dudley our Managing Director of Investor Relations, who has joined us today on the call. As many of you know, Scott is retiring on March 1, after a distinguished career in Investor Relations spanning nearly 40 years. Most of that time was spent in the power utility space. And the term FOD or Friend of [indiscernible] which applies to many of you listening today is a badge of the highest honor here at Spire. We were very fortunate to convince Scott to join us 11 years ago to build out our IR program, and I will miss working with you, my friend. Best of luck in this next phase of your life, which I suspect will include a lot more time on the golf course. With that, let me turn it back over to you, Steve.

Thanks, Steve, and I would like to echo your comments about Scott. I know, I personally will miss your hard work, enthusiasm, and personality. We truly appreciate the dedication you've displayed over the years. We wish you and your family nothing but the best in your retirement. To wrap up, during the first quarter, we were able to deliver solid financial and operating performance while executing on our capital investment plan, which supports the growth, safety, and reliability of our gas utilities and the expansion of Spire Storage West. We continue to remain focused on executing our strategy in fiscal year 2024 and beyond. Finally, we wish the best of luck to the Kansas City Chiefs in the upcoming Super Bowl in Las Vegas. We are very proud to be the natural gas provider to Kansas City and Arrowhead Stadium, including providing warmth under the field during the recent frigid playoff game. That concludes our prepared remarks. We're now ready to take questions.

We will now begin the question-and-answer session. (Operator instructions) Our first question today is from Shar Pourreza with Guggenheim Partners. Please go ahead.

Good morning, guys. This is Jamieson Ward on for Shar. How are you?

Hi, James.

We're good, James.

In the prepared remarks, you mentioned the weather normalization mechanisms were affected this quarter in Missouri and Alabama. Could you give us a bit more color on the lower C&I usage in the quarter compared to your expectations and maybe how you're thinking about weather-normalized volumes for the rest of fiscal 2024?

Yeah. Great question, Jamieson. I think -- and this is Adam. I think the lower C&I usage, some of that is certainly weather-related. In that, we don't have weather normalization over smaller commercial and industrial accounts. So I think that's probably the lion's share of that piece of it, and that's always been outside of the normalization factor.

Perfect. Okay. Just wanted to confirm there. And then the second part is also on weather. Just given the significant impact of weather in the second quarter last year, I think it was about 20 million or so. Could you expand a bit on the potential impact of the extreme cold weather in January on fiscal Q2 this year?

Hey, Jamieson, this is Steve. Yeah, it's funny. We went from extreme warm in Q1 to really cold in January. Unfortunately, it's going to be 65 degrees today here in St. Louis, so it's amazing how quickly weather changes. That will happen in the next quarter, and we clearly want to get through the rest of winter and then we'll update the market. I think rest is assured that we were well positioned across all of our businesses. So we served our customers well on the utility side, first and foremost. We were well positioned in marketing and we were actually well positioned in the midstream business too. And just hang tight once we get through winter, we'll update everybody on our next earnings call.

Perfect. That's all I have. Thank you very much.

Thanks, Jamieson.

The next question is from Richard Sunderland with J.P. Morgan. Please go ahead.

Hi, good morning. Thanks for the time today.

Good morning.

Good morning, Rich.

Maybe to take another stab at Jamieson's second question there. I'm wondering if you can frame 1Q results versus budget, given what sounds like working weather normalization. And I realize here that you're reaffirming guidance but trying to get a sense of if that reaffirm is looking at 1Q plus the January weather really just considering 1Q in of itself.

This is Steve, I'll take a shot at it and then everybody else can weigh in. We look -- we obviously know where January was, so it would be impossible to not think about that. But even before we had the cold weather in January, we were very comfortable with our first quarter results and they supported our expectations across our business units. And again, as we get through the winter, as we always do, we'll look at what the pushes and pulls are across all of our businesses. And it's why we have ranges of earnings, is we have to deal with the things that we can deal with and that's all the stuff that we focus on to serve our customers and then the things that we have to manage, and that includes weather and customer demand in certain classes. So, now I think you can rest assured the first quarter results were very supportive of our plans for the year and we'll see how the rest of the winter plays out.

Great. That's helpful context there. And then diving in on the utility for 1Q, there were some O&M savings you called out, curious if that's kind of on target for the year. What are your expectations going forward with one quarter on the books now? Anything else worth unpacking on the O&M front?

No, Rich, this is Adam. I don't know if there is a whole lot more to unpack after one quarter where we are still watching the expense and being very careful there. We liked the results for the first quarter and we continue to make that a focus for us during the rest of the year.

And, Rich, I would add that, we never want to draw a line based on one dot. We like where the first dot landed, but our overriding goal is to manage O&M below the rate of normalized rate of inflation. So we've started off in a good spot. There is clearly always some timing things that go back and forth, but I think it's very supportive of our overall plan for the year.

Great. Very helpful. Well, I'll leave it there, and to Scott, best of luck in retirement.

Thanks, Rich.

The next question is from Julien Dumoulin-Smith with Bank of America. Please go ahead.

Hi. This is [Tanner] (ph) on for Julien. Good morning, team.

Hi, Tan.

Good morning, Tan.

Hi. Just wanted to ask about the growth-related CapEx in the quarter, it looks like a slight run rate step up from fiscal year 2023. Is that growth fully attributable to new residential connections, is there a geographic focus to this growth? And are you seeing any trends with respect to new connections and the customer composition specifically?

Yeah. Great. Great question, Tanner. I don't know if I would attribute that to specific growth trends. Some of it was movement from quarter to quarter of some items. We've been -- we've seen some movement around the path or the CapEx profile of the storage project also in the utilities. From quarter to quarter, we have different prioritization around what's getting in a specific quarter. So I don't know if there -- I wouldn't draw a trend line from that, I think it's really just something that's moving across quarters.

And I'll follow, this is Steve. That one thing that we are very focused on is the consistency year-over-year of our capital deployment, in terms of infrastructure, new business. And so I don't think the uptick has anything to do relative to that. I think it's a pretty consistent year-over-year message relative to our new construction. But we do have other types of programs, meters, and things like that, and investment in some other types of things that are not necessarily infrastructure specific. But again, I think if you think about the way we deploy, it's very consistent, it's very even across all of our footprints. So whether it's Missouri East, whether it's Missouri West, whether it's the Southeast, that's the way we really focus over the long-term. And we reaffirm, we used to have a five-year plan, now we have a 10-year plan. And I think we're very confident in our ability to deliver on that.

Yeah. Good point.

Great. Thank you. And then at the parent stripping out one-time items for the hedging and the interest expense in the quarter, you noted base corporate costs were higher year-over-year. How should we think about the cadence of those ongoing base corporate costs going forward through the rest of fiscal 2024?

I think they're going to be pretty flat, Tanner, this is the other Steve. And it's very consistent with the assumptions we had underlying the guidance of corporate cost. And as you might recall, when we launched guidance last year for that other category, which would include corporate costs, that was down pretty significantly from the run rate we had the year before. Again, part of that was due to one-time costs that didn't recur late in fiscal year 2023.

All right. Great. Thank you, and congratulations to Scott Dudley, by the way. Thank you for all of your help and appreciate it.

[Operator Instructions] The next question comes from Christopher Jeffrey with Mizuho. Please go ahead.

Hi, everyone. Maybe to approach the puts and takes for the guidance for the year from a couple of different angles. Just wondering as far as like the regulatory aspects, the RSC in Alabama, the ISRS in Missouri. Have those been kind of in line so far is what you're expecting in the budget? And then maybe on the also the other income items where you're kind of expecting those one times the interest hedging recovery on some of those higher debt levels. Like, how is that kind of trending against the expectations for the year?

Christopher, hi. This is Adam. Yeah, I think that -- I think those items have met our expectations, as far as the coming back to a normalized RSC in Alabama. I think the cadence of our ISRS filings has been planned in and has come in as expected. So, yeah, I think your observation there is a good one and question is a good one. I think those items have really met our expectations thus far in the year and things are running according to plan.

And Chris, I would add that, yeah, we fully contemplated the one time item, which was the hedge settlement, which happened in early October. So it was well before we even launched guidance. If there is one thing that we saw in Q1, and we're seeing it reversing Q2, that would be the drawdown in deferred gas costs because that's tied to customer demand. So even though the weather norm worked, the additional amount we would get from the PGA and the deferred gas costs, specifically in Missouri, was a little below what we had expected. But I can assure you that what we're seeing in January, that comes back around, which is why we never want to get overly exercised about what happens in one small piece of the overall winter. We want to get through the entire winter season, and then we'll reevaluate. We're still on track to get those largely paid off by the end of the heating season.

Great. Thanks. And then as far as that January weather, I think people have asked on the utility side, but on the marketing side -- and then it also sounds like there's some midstream kind of leverage to those types of weather events, dislocations. Just wondering how you're thinking about both of those pieces, the marketing and the midstream for 2Q and the rest of the year?

Yeah, I don't know, we're in Q2 right now. So let us get through the rest of the winter. And again, we all know it was cold for 10 days. In January, which was a welcome relief from the heat that we saw in Q1 but it's warm again today and we have to plan for the entire winter. And again the most important thing is we were well positioned to serve our customers across all of our businesses. That's what our primary focus is and we'll update everybody as we get through the end of winter next quarter.

Great. Thanks, everyone. And congratulations to Scott.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Megan McPhail for any closing remarks.

Thank you for joining us on the call this morning. We look forward to speaking with many of you later today and in the coming weeks.