Hello and welcome to the Spire Third Quarter Conference Call. You will be in listen-only mode during the presentation. But there will be an opportunity afterwards to ask questions, instructions will follow at that time. [Operator Instructions]. This conference call is being recorded. I would now like to turn the call over to Scott Dudley. Mr.

Dudley?.

Good morning and welcome to Spire's earnings call for fiscal 2019 third quarter. We issued our earnings news release this morning and you may access it on our website at spireenergy.com, under newsroom.

There's also a slide presentation that accompanies our webcast today and you may download it from either the webcast site or from our website under investors and then events and presentations. Presenting on the call today are Suzanne Sitherwood, President and CEO; and Steve Rasche, Executive Vice President and CFO.

Also joining us in the room today are, Steve Lindsey, Executive Vice President and Chief Executive Officer of Gas Utilities and Distribution Operations; and Mike Geiselhart, Senior Vice President of Strategic Planning and Corporate Development. Before we begin, let me cover our Safe Harbor statement and our 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 non-GAAP measures used by management, when evaluating our performance and results of operations. Explanations and reconciliations of these non-GAAP measures to their GAAP counterparts, are contained in our news release.

So with that, I will turn the call over to Suzanne..

Thank you Scott, and good morning to everyone joining us for today's update. During our third quarter, we continued our momentum to successfully execute on our growth plans. Keeping us squarely on track with our full year earnings target.

Before we share the detail, I'd like to thank more than 3,500 employees who teamed together to produce strong operating and financial results. Every time I stop at a job site in St.

Louis to say hello, to our field technicians or walk into an operations office in Alabama to say good morning, I perhaps visit our teams in Houston and Edmonton, I'm inspired by the amazing people, who take care of our customers, our community and one another day after day. I'm grateful to be on this journey with them.

And I'm also thankful for our shareholders, who make the work possible through their investments. In terms of financial and operating results, we continue to focus on organic growth, infrastructure upgrades and modernization at our utilities, as well as innovation and technology company wide.

Our technology investments include those IT infrastructure for enterprise and customer focused applications. At the same time, we continue to invest in the development of our gas related businesses by our Spire marketing, Spire storage and Spire STL Pipeline.

Combine these investments in strategic focus are leading to improvements in both our operating performance, as I'll discuss in a moment and financial results, which Steve Rasche, will cover in great detail.

Our results for the quarter of $0.07 per share and net economic earnings came in where we expected, given the impacts of the regulatory reset in Missouri last year. These results to keep us on track with our full year earnings target of $3.70 to $3.80 per share.

With that, let's turn to an update on the performance of each of our businesses, starting with our gas utilities, which account for about 90% of our earnings. We're consistently growing our gas utilities through our robust capital program, focused on pipeline replacement and modernization, as well as new businesses.

Year-to-date through our third quarter. Our utility capital span is $405 million, with more than half of that dedicated to infrastructure upgrades. While we quickly see the benefits from these investments in terms of improved safety, service, system integrity and operating costs, we also want to ensure timely financial recovery.

In Missouri, the Infrastructure System Replacement Surcharge or ISRS, allows recovery of the costs of our pipelines with minimal regulatory lag. We generally file for additional ISRS revenue every six-months.

Because of these filing, we received approval for $8 million and additional annual ISRS revenue near the start of fiscal 2019, and another $13.2 million in May. Two weeks ago, we filed for additional ISRS of $11 million, for recovery of new investments, plus another $3.4 million for disputed costs associated with replacement of plastic materials.

As you may recall, the qualification of incidental plastic pipe replacement is under appeal at the Western Missouri District Court. We have included the cumulative impact of our July ISRS request. In Alabama, rate making essentially real-time and we recover our capital spend through the annual rate making process called RSE.

Plus, we have an incentive for pipeline replacement in Alabama in the form of an additional 10 basis points of Return on Equity. I'm pleased to report that we're on track with the required replacement miles to qualify for the additional returns in next year's rate.

Growth for our utilities also comes from organic initiatives, designed to add customers and burner tips to deliver higher margins. Our investment in new business is up nearly 19% year-to-date over last year. As a result, our new premise activation continue to grow, outpacing last year's record levels.

And finally, we continue to control our discretionary costs, to ensure we deliver consistent earnings growth and the best cost structure for our customers. At our gas utilities, we continue to see improvements in operating performance, driven by our investments in pipeline upgrade, technology and our people.

At Spire, everything begins with safety, and I'm proud to share that we're seeing lower employee injury rates and better safety overall. Modernizing our pipeline system is leading to enhance system integrity, but overall reductions in leaks and better leak response times. We're also seeing success in reducing third party damages to our systems.

Thanks to several programs that promote safe excavation practices across our entire footprint. In fact, Alabama recently enacted legislation changes to its existing call before you dig, 811 program.

These changes were designed to help reduce excavation damages by requiring all utilities to be members of the safe 811 system, as well as adding stronger enforcement provisions to the existing law. And finally, our service levels and performance in the field continue to build on last year's success.

Our customer satisfaction scores for our field technicians and appointment payment rates continue to trend upward. At Spire marketing, we position the business for long term growth and success by building an even stronger team that's actively extending its business model across a broader geography.

Team is managing the logistics of moving more gas from more utilities, power generators and producers, resulting in growth in both customers and volumes. I'd like to note that, based on net dollar exposure more than 75% of Spire's marketing customers are utilities, are utility affiliates.

Thanks in part to the geographic expansion of the business, via marketing delivered net economic earnings of $17.8 million for the first nine-months of our fiscal year. This is just slightly lower than a year ago when market conditions were stronger than normal. Now, turning to Spire Storage.

Our current focus is on ensuring reliable operations during the upcoming winter. Our commercial and operating execution this year has been based on a single strategic objective.

To demonstrate to prospective customers and the market, the ability of our facilities to reliably meet contractual commitments and the operational needs of our customers during the upcoming winter. Commercially, we've been prudent, selling volumes for the upcoming winter that are consistent with our expected operating capabilities.

Operationally, we've been focused on completing specific capital projects designed to enhance our current withdrawal capacity and winter preparedness. We anticipate spending approximately $25 million of incremental capital on these specific projects and the remainder of FY '19.

In addition, we're pleased to report that we've increased our engagement with both existing and prospective customers. As a result, we continue to advance our understanding of their needs and the broader set of market opportunities for our business throughout the Rockies and the West.

Finally, regarding staffing, we continue to build a team that supports efforts to grow the business. Regarding the Spire STL Pipeline, I'm proud to report that construction which began in December, is now substantially complete with 97% of the 65 mile pipeline installed. As you've no doubt heard, the Midwest and the St.

Louis area specifically experienced historic flooding this year. This caused a delay in completing about 3 miles of the project, near the confluence of the Mississippi and Missouri rivers. Construction in the impacted area will resume as soon as the waters recede, sufficiently to allow the crews and their equipment back on the site.

Due to the delay, we expect to incur additional costs to complete construction and restoration, causing total project costs to exceed $240 million, which is the top end of our estimated of cost range. We will be updating the total cost and our final, filings later this year.

We also expect a flood delay to push the in-service day to later in calendar 2019. In closing, I'm pleased to report that our board has declared the quarterly common stock dividend a $0.5925 per share, payable October 2.

We're very proud of our dividend track record, 74 years of uninterrupted dividend payment increases for 16 years in a row and a conservative payout ratio within our targeted range of 55% to 65%. Also Spire's Board of Directors declared the regular quarterly dividend on our newly issued preferred stock.

The Prorated dividend, $0.344 per share is payable August 15, the holders of records on August 5. With that summary, I'd like to turn the call over to Steve Rasche, to provide a review of our results and other financial updates.

Steve?.

Thanks, Suzanne. Good morning, everyone. Let's take a look at our quarterly results starting here on slide 11. Our third quarter net economic earnings were $5 million, down just over $10 million from a year ago. As a reminder, prior year results included the noise of our rate resets, including a change in Missouri rate design.

These impacts account for over 60% of the year-over-year variance. And thankfully, this was the last quarter that we'll have this lack of comparability with last year. Looking at the results by business segment. Gas utility posted earnings of $7.6 million, down $9.3 million from last year or down roughly $2.9 million after the rate case reset.

That decline reflects growing utility earnings, more than offset by slightly higher interest costs and lower miscellaneous income from a non-recurring gain, we've recognized last year.

Gas marketing earnings of $3.3 million were down marginally from a year ago, reflecting the benefits of our expansion effort that largely offset the return to more normal market conditions and higher operating costs. All other businesses and corporate expenses were $5.9 million, down slightly from last year.

This includes a $5.1 million loss from Spire Storage, which was excluded from net economic earnings last year and higher interest expense. Offset by higher AFUDC from Spire STL pipeline. Net economic earnings were $0.07 per diluted share compared to $0.31 a year ago.

With the current period per share earnings reflecting the increase in share count from our equity offering last May and our ATM program, as well as the preferred stock dividends. Turning to the details on the next slide.

Total operating revenues of $321 million, were down $29 million from last year, reflecting lower utility volumes and the timing of gas cost recovers. Contribution margin of nearly $194 million was also down from last year, due mostly to fair value adjustments as far marketing.

In fact, after removing the change in fair value adjustments of just under $27 million, marketing margins decreased just $700,000, as higher volumes and margins from our expansion were offset by narrower basis differentials.

Gas utility margins of $195 million were down a little more than $1 million, as rate resets that reduced margins by $4.2 million were largely offset by new ISRS revenues and modest customer growth. Looking at operating expenses, starting with the gas utilities.

Utility fuel costs and gross receipts taxes were down on lower volumes, operation and maintenance or O&M expenses were higher, largely due to the regulatory reset and a reclassification of post retirement benefit costs between miscellaneous income and O&M costs.

Excluding those variances are O&M costs were up $2.8 million on slightly higher employee costs and bad debt expense. Depreciation expenses were higher, consistent with our higher capital investments.

Gas marketing expenses, after removing the other side of the fair value impact were higher by just over $7 million, reflecting higher volume and transportation charges not surprising given the business expansion. Miscellaneous income was higher by $9.5 million, primarily reflecting the other side of the $8 million benefit cost reclassification.

Interest expense was up on higher rates and short term borrowing levels. And finally, income taxes. Expense for this quarter was a benefit of $2.9 million, reflecting our pre-tax loss position as well as the amortization of excess accumulated deferred income tax in Missouri. A year-to-date, effective tax rate currently stands at 17.1%.

And we do expect that to dip a bit for the full year by 0.5 point or so. And just to finish up the tax discussion, we expect our full year effective tax rate to be about 18% next year. Our year-to-date performance is highlighted here on slide 15 and gives good perspective on how we're performing in this year given last year's rate resets.

A couple of things to point out. Overall, net economic earnings grew by $8.5 million or 4%. Gas utility earnings were up by $12.6 million, reflecting the rate design changes at Missouri utilities. Other positive regulatory adjustments and modest customer growth.

And if you look at the utility O&M cost on the year-to-date basis, after removing the impacts of rate resets and re classifications, we're holding the line on expenses about up 1% from last year.

Gas marketing earnings were just below last year, but recall that we've benefited from very favorable market conditions two winters ago and our plans to grow this business by expanding geographically has resulted in year-to-date volumes that are up 62% from last year and earnings that have largely offset the changing market conditions.

Other expenses, roughly $3.7 million, reflecting a $12.5 million loss from Spire Storage, largely offset by higher Spire STL pipeline earnings and lower corporate cost. We continue to grow our cash flow and maintain a strong financial position. Our year-to-date adjusted EBITDA is up $11 million to $478 million.

We had solid short term liquidity and our long term capitalization improved again and now stands at just over 53% equity.

We were also active in the market this quarter with both a successful offering, a perpetual prefers with net proceeds of $242 million, as well as our at the market equity program that we activated this quarter and raised just under $5 million.

We're in a strong position, and stand, ready to fund and retire $125 million in holding company debt that matures in August. Turning to slide 17, we continue to drive capital expenditures that's fueling our long term growth.

Year-to-date, we've invested $609 million, as Suzanne mentioned, which is up 82% from last year, with increases across all businesses. Our utility investments are up over 35% and that higher investment is being driven by infrastructure upgrades and new business spend.

We've invested $123 million in Spire STL pipeline as we near completion of the project. And we continue to invest in Spire Storage, with year-to-date investments and operational upgrades of $25 million, in addition to the base gas investment that we discussed last quarter. Finally, let's take a look at our outlook.

We reaffirm our current year net economic earnings guidance range of $3.70 to $3.80 per share and our long term per share growth target of 4% to 7%.

Given our progress across the businesses so far this year, we are increasing our current year capital spend target to $780 million, up $40 million from our last update, which reflects the higher spend rate at our utilities.

The retiming of a portion of the spend on Spire STL pipeline and our anticipated storage spend for the remainder of the fiscal year are roughly $25 million. Those updates also push our five-year capital target to $2.9 billion, up 100 million from our last update.

As a reminder, our capital spend targets are supported by infrastructure upgrade programs that will continue for 15 to 18 years. Spread across our utility footprint and help drive 6% rate based growth with generally minimal regulatory lag. It also supports our goal of providing consistent earnings growth over time.

And given our solid financial position, our financing needs going forward are relatively balanced between operating company debt and equity as shown here on the slide. So, we're on track with our plans for this year and increasing our investments to drive growth in the coming years.

All from a position of financial strength focused on continued long-term success across our businesses and consisting earnings growth over the long term. With that, let me turn back over to you, Suzanne..

Thank you, Steve. In summary, our year-to-date financial and operating performance to the third quarter puts us on track to meet our targets for the year, including investment and growth in our business. Before going to questions, I'd like to say a few words about Spire's Corporate Social Responsibility Report, which we published online in May.

We know that ESG and sustainability are increasingly important to our investors and other key stakeholders. That's why we took the initiative to develop a corporate social responsibility strategy, gather our data, benchmark disclosure, best practices and evaluate reporting template.

We also asked the financial community, including some of you on this call, about what you'd like to see from us in terms of CSR and ESG reporting. We appreciate your input and I think you'll find our first ever report informative and inspiring. If you haven't already done so, we encourage you to read the report and let us know what you think.

We included information on our efforts to operate sustainability, sustainably from an environmental, social and governance perspective. And we included stories and data on how we support our local communities and protect our environment, with a particular focus on reducing methane emissions.

And as always, we appreciate your continued interest and investment at Spire. Now, we're ready to take your questions..

[Operator Instructions] Our first question comes from Michael Weinstein of Credit Suisse. Please go ahead..

Hi, good morning, guys. So on the STL pipeline, the, you're saying that the total CapEx for this year has increased $40 million.

I mean, roughly speaking, is there any percentage of that you can sort of hint that might be the amount that's allocated to STL's pipelines increase?.

Michael, this is Steve, let me start on that and then I can turn it over to Mike, to give a little bit more color. Yes, the $40 million is really in the absolute sense as the increase in the spend rate for the utilities, because of the success we've seen this year.

In fact, despite some cold winter weather and some wet spring, we've been able to really be successful at ramping up our utility spend this year. In an absolute sense that's the $40 million.

If you look underneath that in terms of the timing between fiscal year '19 and fiscal year '20, we actually pushed about $25 million of our targeted spend for Spire STL pipeline to 2020, recognizing that we still can't get access to that three miles that was impacted by the historic flooding and we replace that with the $25 million that we discussed on the call, which would be our estimated spend on storage for the remainder this year.

So that was really more of a timing aspect. In terms of increasing the total cost of the pipeline. We're really not in a position right now to be able to guide to a specific number. We kind of need the contractors and our team to be able to get an access to those done three miles so that we can figure out exactly what cost we need in order to complete.

Mike, did you want to add anything?.

No, I think that covers it, Steve..

And the official estimate for getting it done with, I think it was, is September, is that what you've been, is that what you've been originally targeting? And what's the, something that after September is now the new date?.

Yes. We originally guided that we would have it in place by the end of our fiscal year, which would have been in September or October 1st. And now we expect it to be sometime in the fourth calendar quarter. Given what we know today..

Got you. Got you. Okay, great. Just, is there anything you guys can talk about in terms of further expansion opportunities? Looking beyond, after a rest of your pipeline is done. And after you get the storage consolidation done next year? I think in the past you've talked about expansion opportunities toward St.

Louis, maybe some more gas opportunities and storage opportunities maybe in Kansas City or even Missouri, Alabama.

Just wondering if there's anything else you can talk about, like what might be the next phase of growth?.

Michael, just thinking about all of that correctly. In fact, Mike and his team conducted a lot of that analysis. We obviously are very focused right now on pipeline and storage where we are setting the market from supply and transportation perspective in and around the Alabama market.

And it was the western side of the state of Missouri, Kansas City, you've got some ideas and thought about that. We're still working through that, but mostly the teams right now are focussed on the completion of the pipeline and storage..

The next question comes from Dennis Coleman with Bank of America. Please go ahead..

Good morning. This is Jason on for Dennis..

Hi, Jay..

Maybe a little bit more on STL, I know you'll mentioned that we have to wait for the first filing later this year for the exact number of a, can you go and maybe it is a cost going to be significantly over 240 million that you've mentioned?.

Yes. So Jason, here's the way, I think about it too. Because we've share, we have three miles remaining and you've seen from the picture and probably other pictures, the water level.

We just need to get in there, but when we look at that three miles to simplify it, it might really simplify a 1.5 mile is really connecting that high conservative in the ground, if you will. And then we have about a 1.5 mile install connect, and then right away we need to sort of, re-prep that clean it up from the flood.

So it's a short period of work, it's not in terms of timing, a lot of work. But to be able to provide a cost estimate, we really just need to get in there and be able to look at that. We don't want to speculate, but we also know the work's fairly contained, as I've described it. And so we look at it about up to a six-week amount of work.

That we want also, again, want to be able to get in there and look at it. We can look at it from aerials kind of helicopters and that sort of thing. But it's hard to get our boots on the ground in some of these areas. Once again, one of the reasons we want to show you a picture.

We have to keep reminding ourselves that this is record flooding that has occurred in this area and its been quite impactful actually to community more broadly up and down the river. And I'm sure, you've heard some of that coverage.

Mike, is there anything like add to that here?.

Yes, I mean, we've got 11 miles in between the two big rivers, six of which Suzanne's already spoken to. So I think we just need a better understanding of what sort of restorations really going to be required in general and that 11 miles between the rivers.

And then like Suzanne also mentioned, it's probably around six-weeks of work with maybe a crew and a half. So, that part of it is not, hugely difficult. It's really just more, we need to wait for the water levels to get down and the water table to get down to a level where we can get back in there and hold the ditch and finish up this work.

So and another reason for the uncertainty about costs at this point is, timing really does drive cost. I mean, we have a fair amount of kind of fixed type overheads that are involved in doing a project like this. And with each passing week, in each passing month, it sort of adds to the overall cost. Timing really matters as a fixed cost.

So once we have a better kind of sense of, when we can get back in there and finish the work, that'll help us really get our arms around what's final cost is going to be..

Okay, great. Thanks. That's helpful. Suzanne and Mike, I appreciate it.

And will, can you discuss how that turns might be impacted as those costs creep up?.

Yes, this is Mike again. We have a precedent agreement with our anchor shipper, the utility inspired Missouri. There is a provision in there that enables us to do an increase to the extent that our maximum permitted rate approved by FERC goes up, as a result of increased project costs which is clearly happened in our case here.

But there is a limitation on that provision and it's limited to $0.02. So the original negotiated rate with Spire was $0.23 and we have the ability under the precedent agreement to increase that by as much as $0.02, so we will make that filing in the not too distant future again, once we have a sense for what the final project costs are going to be.

We'll make that filing and look to update that maximum permitted rate. And that will in turn drive an adjustment to that $0.23. And, you know at this point, our expense expectation would be that we would probably end up with the $0.25 rate for the anchor shipper or, as a result of that process..

Got it. Okay. And I guess, maybe looking at 2020, the new in-start day, we're missing a pretty big part of the winter season there.

Can you, maybe talk about how that might impact 2020 earnings and you guys give the 4% to 7% long term range, but could give any color on that time?.

Yes, the timing may impact a little bit, but you'd be surprised at how little the delta is between on the pipeline, between AFUDC and we'll be getting from cash earnings. Not that, I don't like cash earnings a lot more. We all like cash earnings a lot more. So I'd add, I think we can manage around that.

And again, it'll be a little bit higher investment, which gives us a little bit more to get a return on. When you think about 4% to 7%, it begins with that 90% of our business, which is the gas utilities.

And I think what you've seen this year, especially when you look at the year-to-date results because of the noise of the rate design reset that we've been able to drive fairly good growth from our utilities, we expect that to continue. And Spire marketing has color, clearly performed well, offsetting some pretty significant headwinds.

So I tend to think about the utilities and our ability to continue to grow that starting with the 6% rate base growth.

And that's where when you look at our spend this year in the utility and our ability to actually achieve and overachieve the targets that we had said earlier this year, I think that bodes well for our ability to continue to grow and going into 2020 and beyond. And that's our job is to deliver consistent growth over many years..

Sure. Okay. That's helpful. Thanks. Thanks, Steve. One last one from me is just on storage. Can you maybe provide an update for year-to-date in terms of how much has been spent and could you may be discuss the $12 million loss where those expenses are going into that's still part of the gas or maybe on the infrastructure side. Thanks..

Yes. This is Mike. With regard to year-to-date for fiscal '19, the total spend is right around $82 million and that's comprised of $56 million of base gas purchases we made last winter kind of in the first quarter of the fiscal year and into January as well.

And then the remaining $26 million is sort of traditional CapEx, which just like the $25 million we are going to spend or expect to spend in the final quarter of this fiscal year, is largely focused on really trying to tighten up the operations.

As we, as we've operate the business, we have a much better understanding of where there's opportunities to kind of improve some of the equipment, particularly with regard to surface equipment and processing equipment. And so we've been focused on that.

So far, we've spent $26 million through the first three quarters and expect to spend around $25 million on similar types of projects in the last count, in the last quarter of this fiscal year..

Okay. I appreciate it..

And in terms of the components of cost, about a quarter of that is the, is the capital cost, the interest costs associated with the investments we made and the rest is really the lack of pull through. As we've been developing the facility at the margin line and we've been building team.

So, we continue to build the team that we need for the long term, which means we're making the investment now in terms of team that's operating. And well operated going forward and we knew that was going to be investment in the short term.

And those really are kind of the moving parts that result in the, just over $12 million for the first nine-months of this year..

Got it. Okay. Thanks, everyone..

Thanks..

[Operator Instructions] The next question comes from Shar Pourreza of Guggenheim Partners. Please go ahead..

Hi, good morning, guys. Most of the questions were answered. Just two minor ones on STL again.

What's the AFUDC that you have in your numbers for 2019's guide?.

We are looking….

Oh, boy, off, the top of my head, I'm trying to think if I have that number for you, Shar..

Okay..

I can tell you, in the first, through the first nine-months of the year, let me a second, I'm going to flip through pages, that one is just a little question. That was actually, a pretty good one. So,.

You want a better one, but I'm trying to sort of, why I'm asking this, if you see some sort of a delay in STL, right.

For instance, if the water levels don't recede and construct, you start flowing gas, maybe later in 2019 to maybe early 2020, is there sort of an impact we should be thinking about from your AFUDC earnings that you guys have been better than planned. And then just maybe a quick status update have the water levels receded.

So I guess, what's given confidence that you'll be able to flow gas with only couple month delay?.

So, in the water receding land you're looking at a map and Mike, you must do track that daily, so, to know, and maybe Mike can provide a little color on..

Yes. In that area between the rivers that I referred to earlier, at the peak of the flooding, we had around 8 to 10 feet of standing water above the surface, on the ground in that area. As of earlier this week, I think in parts of that area, we were pretty much down to nothing on the surface.

And then the other portion kind of, on the other side of the tracks, was 1 to 2 feet of still standing water, right. So what we need to do, is obviously get rid of all the standing water and then we need, somewhere in the neighborhood of about 8 to 9 feet of a water table, right..

Okay..

So we've got sort of like the water table drop a, to at least 8, if not 9 feet. Because we need 7 foot of cover over our pipe. So we need to get to that point to finish the 3 miles that was mentioned earlier.

But on the other sort of 8-ish miles in between the rivers, we can actually get started with restoration earlier than that, because we don't need to worry about the water table for the pipe that's already in the ground..

Got it. Okay, that's helpful. Yes, go ahead. Sorry..

For the year-to-date, AFUDC is $4 million, now that ramps up, of course, as the capital spend ramps up. But that gives you a feel for it. It was just around, it was $2 million for the last quarter..

Got it.

And you don't envision if you get an incremental delay beyond what you have, it'll be material enough to impact your numbers for '19?.

No, that I have, I have, we, we've brought the scenarios that you expect we would as we saw the flooding coming down and we think it pretty much trades inside the noise..

Perfect. Thanks, guys. Sorry about the minor question. Have a good morning..

The next question comes from Selman Akyol with Stifel. Please go ahead..

Thank you. Good morning. I'm just pivoting back to storage real quick. I know you guys talked about defining customer needs, etc.

But does delays in the Cheyenne Connector impact you would off from that standpoint?.

No, this is Mike, I don't believe so. You were really kind of focused more in terms of gas flows to the west of our facility. And really the supply side is not really an issue for our facility right now. It's really more sort of shoring up the shippers and the withdrawal on our, in our asset..

Okay, great. And then just one another one. This is for Steve, I guess, you noted the equity capital is now at 53%. Is that sort of the ideal level for you, is that I should be thinking about Spire long term? A - Steve Rasche Yes. And the 53%, Selman, just to be clear as a pro forma number, kind of adds the rating agencies would look at it.

If we're being fair and taking 50% credit for the preferred, which is how the rating agencies look at our actual preferred. And actually factoring in the $125 million that we plan to retire next month and holding company debt.

And I would say, it's in the range, if you look at where the equity ranges are inside our utilities and we always want to make sure that we stay close between the various stacks in our company.

Our equity returns are in that high to mid 50's range, so, I'm keeping our equity capital there is a good thing when you look at the consolidated entity in a long term basis. And I would also say, and we included in the presentation, what our financing means are going out over the next several years. You can see they're fairly well balanced.

No plans for any holding company, long term debt. It's really all going to be offering company long term debt and then some equity, because as we continue to invest $500 million to $700 million a year going forward. We want to be clear that we have to finance it in a balanced way.

And then the last point would be, having an equity capitalization that's in the low to mid 50s, gives us just a measure of security, given we don't know what the future holds in terms of where the economy is going to be going, where potential investments might be either inside the companies we have or know the companies.

And we want to make sure not only that we're prepared, but we're ready, if the opportunity presents itself. And this is in keeping with what we committed to the rating agencies years ago, when we did the Alagasco acquisition primarily and we took on of, chuck of holding company debt.

We charted a path for them to show how not only we were going to get the long term equity capitalization above 50, but also fundamentally pay down holding companies debt, when the cash flows of the new business and it's really about us achieving what we told everybody, including the rating agencies we were going to do over a period of time..

All right. Thank you very much..

The next question comes from Michael Weinstein of Credit Suisse. Please go ahead..

Hi, guys, just one quick follow up. Another quick, simple question. The equity raise for the, through the ATM is a three-year program.

Just wondering, if the delays in the STL pipeline and maybe the cost increase might affect that in some way? Would you be pulling forward more or maybe issuing more equity this year than you originally planned for that?.

Yes, Michael, I point back to that slide, where you, if you do the math and understand that we've already raised that $250 million in preferred it, it points to a fairly low level, but a little bit of usage in the ATM at the bottom end of the range.

I don't honestly consider right now, knowing what we know that, that's really going to change, on our raises and we have some fairly wide bands to work within.

In fact, I will always saying and I think you know us well, enough to know that, as we plan forward, we're always assessing where the market opportunities are, what are the needs of the business, and we would stand ready if the needs of the business presented or if the market opportunity presented itself to take advantage of that.

And that's one of the reasons why we issued $250 million in perpetual preferred shares earlier this year. We saw market opportunity, the pricing was extremely advantageous. And we leaned into that a little bit, which actually helps to extend the life of our current ATM authorization..

Right. Okay. Thank you..

Thank you..

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