Good morning and welcome to the Spire First Quarter 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 Scott Dudley, Managing Director, Investor Relations. Please go ahead..

Good morning and welcome to Spire's fiscal 2021 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's 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 & Presentations.

Presenting on the call today are; Suzanne Sitherwood, President and CEO; Steve Lindsey, Executive Vice President and Chief Operating Officer; and Steve Rasche, Executive Vice President and CFO. 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.

With that, I'll turn the call over to Suzanne..

Thank you, Scott and good morning to everyone joining us today for our first quarter update. On our year end call, we reported that fiscal 2020 continue to make strides towards our strategic priorities, despite the challenges from the coronavirus pandemic.

By year end, we delivered growth and solid financial and operating results, while advancing our sustainability objectives. As we step forward, I'm pleased to tell you that we're building on last year's momentum and are off to a good start in fiscal 2021.

We reported higher first quarter earnings largely driven by our gas utility, but also thanks to solid results from gas marketing. Steve Rasche will cover our first quarter financial update in a moment. At the same time, our operating performance is strong with improvements in safety, system integrity, service and environmental sustainability.

As we step into the new year, we're committed to executing on our strategic priorities that drive our growth, while building on our ESG record. In particular, we remain focused on our commitment to being a carbon neutral company by midcentury and achieving our methane emissions reduction goals.

As you know, currently the primary driver in emissions reduction is pipeline replacement. We are on track with our plans, including investments in infrastructure upgrades and other programs to identify and reduce leaks.

At the same time, we continue to evaluate other ways to meet our environmental commitments, because we believe that natural gas has an important role to play in the energy transition to a low-carbon future. We're looking at our RNG and carbon offsets in the near-term, while setting hydrogen as a longer-term solution.

Keep in mind, that these carbon reducing approaches represent investment opportunities that can support earnings growth. That's because natural gas is critical to ensuring Americans have access to energy choices that are clean and affordable.

And we announced yesterday, Spire has joined ONE Future, a natural gas industry coalition focused on improving the management of methane emissions across the entire value chain.

Steve Lindsey will have more to say on this, but we are pleased to join several of our LDC peers and combining efforts to reduce methane emissions and collectively report on our achievements. We have also taken an important step in naming one of our Spire executives to lead our environmental efforts.

Earlier this week, we named Nick Popielski as Head of Environmental Commitment. Nick currently leads Spire's Business and Economic Development Efforts.

He brings expertise and data and analytics to this new role as he works to develop new business processes and guides the company's strategy behind our commitment to being a carbon-neutral company by midcentury.

Although the environment is the focus we're talking about today, it is only one area within our Corporate Social Responsibility or ESG strategy. And I'm pleased to note that our total ESG efforts are getting noticed.

As one example, Spire was ranked by Newsweek as one of America's Most Responsible Companies, recognizing for the second year in a row our strong performance as a corporate citizen. Specifically, we are recognized for our commitment to the environment, social issues and corporate governance.

At the start of our fiscal year, we've also progressed on several regulatory matters, including completing the annual rate-setting for our two Alabama utilities in Spire Mississippi, as well as filing a rate review in Missouri. Steve Lindsey will cover this in more detail.

As we build on our momentum from last year, it is important to capture our success and look to the future. In that spirit, last week we launched Our Story, our online annual review that outlines where we are today and what we're focused on going forward.

I encourage you to explore the site at ourstory.spireenergy.com and see all the ways we are stepping forward, advancing and innovating for a better tomorrow. In the meantime, let me share a few quick highlights. You'll see that we began Our Story by highlighting what we're doing to protect our environment.

This includes our commitment to be in a carbon-neutral company to infrastructure upgrades and methane emissions reductions. You'll also see that we're driving future growth and earnings through our investment and upgrading our infrastructure, new businesses and innovation. We're advancing people and performance.

This encompasses everything from our operating performance, including safety, system integrity and service, the programs that help employees learn, grow and you're included. And last, but certainly not least, we take good care of our communities, including providing support during the pandemic.

Overall, Our Story is about being an essential energy provider, including what it means to have the privilege and responsibility of delivering affordable, reliable and clean energy, while working to create a sustainable energy future.

As I noted last time, achieving our collective success is only possible through the efforts of our 3,600 amazing Spire employees.

Our employees continue to step up in the face of challenges, whether it's the Coronavirus or winter storms, Spire employees dedicate themselves to getting the job done and ensuring our customers and communities are well served, supported and kept safe and healthy. With that, I'll turn the call over to Steve Lindsey..

Thank you, Suzanne. I also want to acknowledge the continuing efforts of our employees, especially in the midst of the pandemic and caring for, supporting and serving our customers and communities.

The work you do every day helps us keep advancing as a company, enabling us to raise the bar on our performance and stay on track with our plans and commitments. Thanks to your efforts, we are stepping forward with confidence in our ability to achieve another year of success and growth.

As you know, the key drivers of our growth continue to be the investments we make in our infrastructure upgrades and in adding customers through our organic growth efforts. We've had a strong start to fiscal 2021, with our capital expenditures plan.

In the first quarter, our capital spend totaled $164 million, including $150 million for our gas utilities on pace with our spend a year ago. Over half of our utility CapEx went towards pipeline replacement. And our new business spend was nearly $38 million, which reflects more than 30% growth over what we invested in the first quarter a year ago.

You'll note that our spend for pipelines storage and other is down significantly. The biggest driver is lower investment for Spire STL Pipeline, which was completed and placed into service in mid-November of 2019. We are on track with our full year plan spend $590 million, 95% of that, which is earmarked for our gas utilities.

Our pipeline and storage investment is on track with our plan for the year as well. Our robust five-year CapEx plan totaling $3 billion will drop 7% to 8% utility and rate-based growth. As Suzanne said, we're building on our momentum from last year and this is certainly true of our performance on the operating side.

We're seeing improvements in key areas that impact safety, system integrity, service and sustainability. For example, our OSHA DART rate continues to improve with a lower level of employee injuries. We're also seeing consistent year-over-year performance in damage rates and average leak response time.

And as well as the case last year, the leaks per 1,000 system miles is down significantly, resulting in an enhanced safety and reliability, lower operating costs and reduced methane emissions.

To support our efforts in this area, Suzanne noted earlier, Spire has joined ONE Future, a coalition leading companies across the natural gas supply chain focused on an innovative, performance and science-based approach the management of methane emissions.

Spire is one of 37 member companies that include LDCs, producers and midstream operators across the US. The goal is to achieve an average rate of methane emissions across the entire natural gas value chain that is 1% or less for the total natural gas production delivery. As a member company, Spire will report the methane intensity for 2020.

We're excited to be partnering with likeminded companies to develop and implement innovative ways to reduce our industry's environmental footprint and create a more sustainable energy future for generations to come. The aim of ONE Future aligns with our strategic priority to advance through innovation.

Now, let me turn to regulatory update, starting with our Missouri rate review that we filed in mid-December last year. This was a normal course filing designed to recover and reflecting base rates, the significant investment that we have made more than $850 million in fact, since our last rate reset in 2018.

This value is focused on the benefits created for our customers and communities including, making our systems safer, more reliable and cleaner.

Implementing customer service enhancements included an online customer portal, technology platform enhancements and advanced metering technology, proposing new programs and options including a voluntary carbon-neutral program, and RNG.

Ensuring our customers have equal access to our beneficial programs and services regardless of which side of the state they're on, by combining our Missouri utilities. Our request is for a $64 million increase in base rates, which is net of $47 million already being collected through ISRS.

For typical residential customer, this represents an increase of about 5.6% on their monthly bill. Our filing reflects a rate base at the end of fiscal 2020 of nearly $2.8 billion, an equity ratio of 54.25% and return on equity of 9.95%.

In terms of the rate review process, we're currently in the midst of discovery, during which we're responding to data requests from the Missouri Public Service Commission staff.

Based on discussions with the commission and staff, the procedural schedule includes, direct testimony from staff and other interested parties in May, a likely update period for the test year of May 31st, 2021 and hearings that will likely start in June and continue through August.

While the rate review process in Missouri is 11 months of fully litigated, our history and preference is to reach an agreement sooner than that, such the key elements in the case can be settled and a constructive outcome for all can be achieved.

Turning to our Southeast utilities, the annual rate setting process has been completed for our Alabama utilities, with new rates effective on December 1st, 2020. These rates are based on allowed ROEs established under the RSC mechanism, including, 10.5% for Spire Alabama and 10.7% for Spire Gulf.

We also completed the annual rate reset for Spire Mississippi with new rates effective January 12th, reflecting an ROE of 10% at 50% equity ratio.

In addition to working with regulators on rate matters, we're increasingly engaging with Public Service Commissions on initiative to expand our natural gas service for all parts of our service territories, including agricultural areas. We're working to sustain and grow critically important industries and advanced rural economic development.

We were pleased to receive unanimous support from the Alabama Public Service Commission for a multiphase project to expand our natural gas service to poultry farmers in Ranburne, Alabama.

Shown in the photo on this slide is the groundbreaking ceremony for the project featuring Twinkle Cavanaugh, President of the Alabama Public Service Commission was the driving force in working with us to bring this program to reality.

Before turning the call over to Steve Rasche, I want to comment on initiatives across the state our utilities operate in to prohibit local natural gas bans. Legislation has been filed or is expected in Missouri, Alabama and Mississippi to address this issue.

We're supportive of these legislative efforts, because we strongly believe customers should have the right to energy choice and to enjoy the benefit of reliable, affordable and clean natural gas. With that, I'll turn it over to Steve Rasche for a financial review and update.

Steve?.

Thanks, Steve and good morning, everyone. You know, it was one year ago in this call that I shared a live picture of the celebration of the Super Bowl Champion, Kansas City Chiefs. What a difference a year makes in many ways.

Except of course, that Chiefs are competing again for the championship this Sunday, and all of us will be cheering them on, go Chiefs. Okay, now back to business. Turning to our results for the quarter. We delivered consolidated net economic earnings of nearly $77 million or $1.42 per share, up from $72 million or $1.33 per share last year.

Our gas utilities posted earnings of $76 million, up $7 million from last year, reflecting higher margins and lower operating costs. Gas marketing posted solid results with earnings that were down $2.8 million compared to last year's strong first quarter.

And all other businesses and corporate costs improved to $2.8 million, reflecting a full quarter of Spire STL Pipeline's operating contribution, as well as earnings from Spire Storage compared to a loss last year. Looking quickly at a few details.

Total operating revenues of $513 million were down 10% as lower demand due to milder weather combined with lower commodity prices. Contribution margin on the other hand was up $29 million or 10%. Gas utility margin grew $7.6 million as lower usage was more than offset by higher Missouri ISRS, New Alabama and Gulf rates and modest customer growth.

Gas marketing's margins, excluding fair value adjustments that we removed for net economic earnings purposes, was down $3.3 million from a year ago. This decline reflects both less favorable market conditions and as we discussed last quarter, the net costs associated with our storage positions.

We did begin to monetize some of these positions in December as planned, and we remain on track to unlock that value in the remainder of the winter heating season. Other business margins were $13 million, well above last year and reflecting improved performance in both the STL Pipeline and Spire Storage.

Looking at a couple other key variances here on Slide 12. Operation and maintenance expenses were down $4 million, after considering the reclassification of mentioned cost and regulatory deferral.

Big driver here was lower O&M costs at the gas utilities, reflecting both fundamentally lower operations and employee related costs and some favorable timing of expenses. Other income reflects higher investment returns offset by prior year, AFUDC for the STL Pipeline.

And finally, income tax, which reflects higher taxable income and a change in our effective tax rate from the mid 17% range last year to roughly 20% this year consistent with our expectations. We remain in a strong financial position and our long-term capitalization remains balanced.

During the quarter, we took advantage of very favorable market conditions by issuing $150 million of long-term debt at Spire Alabama, to help fund our infrastructure upgrades. And as we hit the peak of our seasonal and working capital needs, we retained significant capacity and liquidity.

We also continue to grow our cash flow with first quarter EBITDA up 19% to $188 million. Net cash flow funds both our investments and rate base as Steve just talked about, as well as our dividends. In fact, our Board just declared a quarterly dividend of $0.65 per common share payable on April 2nd.

At Spire, we have a long history of rewarding shareholders with prudent, consistent and growing dividends. In fact, we have paid a dividend each year for the past 76 years, and then increased our dividends for the past 18 years running. Turning to our guidance, we reaffirm our long-term net economic earnings per share growth target range of 5% to 7%.

We also reaffirm our fiscal '21 earnings target range of $4 to $4.20 per share. As Steve mentioned, our long-term capital expenditure plans are also unchanged with a targeted spend of $3 billion for the five years through 2025 and a current year forecast of $590 billion.

This plan ensures that we will continue to deliver safe, reliable and sustainable energy to our customers, continue to reduce our methane emissions, and drives rate base growth of between 7% and 8%.

And as a reminder, our capital investment plan is well diversified across our service territories, supported by upgrade programs with long lines and covered by our regulatory mechanisms that ensure minimal regulatory lag for most of our spend.

Our financing plan is largely unchanged and reflects our commitment to a balanced and strong capital structure to support our growth and investment plans going forward, including our targets for both FFO to debt and holding company debt that support our strong credit ratings.

So in summary, we're off to a solid start to the fiscal year and are investing to the long-term success across our businesses. With that, let me turn it back over to you, Suzanne..

Thank you, Steve and thank you, Steve. In closing, let me underscore about Spire as a compelling investment. As you've heard, we continue to pursue growth through further investments and upgrading our gas utility infrastructure. We believe a focus on our growing regulated business is the key to what makes Spire attractive.

Our business mix is over 90% regulated, ensuring earnings stability and value. We have a robust CapEx plan to 2025, totaling $3 billion, with 98% of that stand for our gas utility, and timely regulatory recovery. Our capital plan drives 7% to 8% annual rate base growth, which supports the long-term annual earnings per share growth target of 5% to 7%.

We pay a growing dividend that offers an attractive yield in excess of 4%. And we have strong ESG performance, but the focused efforts to further reduce greenhouse gas emissions on the way to achieving carbon neutrality. We look forward to updating you on our progress and success and achieving our goals as 2021 continues to unfold.

As always, we appreciate your interest and investment in Spire. Stay safe, stay healthy and now we're ready to take your questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will be from Michael Weinstein with Credit Suisse. Please go ahead. Michael, your line is open. Perhaps you're muted on your end..

Hi, sorry about that. Good morning. Hey, could you discuss the prospects for, I know you briefly mentioned that you might that the rate settlements have been a historic target for you guys in Missouri.

Could you discuss the prospects for rate settlement in Missouri, given, you know, a resolution of some of the more controversial issues you know that's resolved by legislation prior rate case focal points surrounding tax reform, capital structure, prepaid, interest expense you know have been resolved as well in the last case, you know, are things going to be substantially easier this time around?.

Hey, Mike, well this is Suzanne, I'll provide some color and Steve Lindsey may want to add something to that. But as you know that the cadence of rate cases in Missouri are 11 months process. And there's a cadence to us filing the case and an intervener is filing their case.

And as generally what happens after the interveners filed their case, between that period of time and then through the hearing process is when the parties get together and try to land a settlement.

You know, if you go back in multiple decades and, in fact, with Missouri, most of the time it results in a settlement or at least a partial settlement and then the commissioners may decide the hanging chads as the last few items, if you will, so that is just my normal course, the cadence.

So you know, we always believe it's better to get around a table and see if for all parties if we can reach a settlement in whole or part, so that would be our objective this time as well..

And Michael, this is Steve Lindsey, I would just kind of always go back to the why. And really, the reason we're in there is a couple of pretty big pieces, you know, the capital investment we've made and there's just a natural cadence to that from an ISRS perspective.

But really to go back to what we're trying to do for customers, this is the right time as well. Lots of programs, options, enhancements to customer service, you know, investments and technology that provide customers with more options, even some RNG options.

So I think if you really kind of go back to the why we're doing this right now, I would anchor back to that. And then as Suzanne said, obviously, we would like to have the process, not go the full length of term.

And we think we're in a position that makes a lot of sense with some of the resolutions we've got on the recent ISRS issues, some of the legislation that got passed, so we'd like, you know, again, the reason we're in there is for the right reasons, and we'll work with all parties to make this as expedited as possible..

Got you. Hey, we weren't expecting to monetize those storage purchases in the marketing segment.

And so a little bit later like more like second quarter, can you comment on marketing conditions that allowed earlier monetization in this quarter? And then also, you know, do you expect similarly strong results in the second quarter? Or you know is it - did you frontload most of those gains?.

Yeah. Hey, Michael this is Steve, I'll take a shot at that. Yeah - there was some, there was a small amount of storage that we expected to get tucked on in December, which is really the beginning of the heating season for the geographies that we serve. So that wasn't surprising.

Overall, market conditions were flattish, not particularly supportive through the first quarter. And actually even through January as everybody knows on the call, because we all watch it and we've now seen a whole lot of snow. In fact, most of you all are probably looking at a lot of snow and a lot of cold.

And the markets have injected more volatility and the commodity price is up. So I, you know, we live through the entire heating season, and I think we see some opportunities going forward. So I wouldn't read anything into the early withdrawal that was planned.

Clearly, we look at daily markets, and if we see an opportunity to optimize the position a little bit earlier, a little bit late we use that flexibility in order to maximize the value.

So from that standpoint, I'm not particularly concerned, the most important point is, we're on track to unlock that value that we essentially locked in last summer when we laid in the positions. In terms of seasonality or our focus, that most of those - that realization is going to happen in the quarter we're physically in right now.

So I would expect to see a good strong numbers coming out of Spire marketing when we chat with you all three months from now..

Got you. Hey, one last question on ONE Future. How much of the plan, I guess it seems like it's focused mostly on methane leak reduction? But could you talk about plans to maybe blend the renewable natural gas into the system as part of the methane emissions, global methane emissions reduction strategy.

And, you know, is this a way that to achieve carbon negative results for gas utilities, if you are actually helping to flare - essentially flare gas coming off landfills and dairy farms that kind of thing?.

I'll start with that and then pass it again to Steve to provide more color that he'd like to provide. I'll start with, there's many organizations that ONE Gas is one of them. But there's also the American Gas Association, and many others that are looking at from wellhead to burner tip, what we can do to eliminate emissions.

And the beauty about ONE Gas that is from wellhead to burner tip. As far as us, Spire as an example, we're working with our Commission in terms of what we can introduce is you know legislation or using our pipeline replacement program and those kinds of things.

So, I think you'll see as time moves on, there'll be several organizations doing multiple things. And natural gas, as you know, is abundant and expensive.

If we want consumer choices as we navigate through this process, but these associations that bring us together, again, be it American Gas Association and ONE Gas with layout plans for carbon neutrality by a time certain. It's very important for us to be involved and included. And that's one of the reasons for ONE Gas, ONE Future.

Steve?.

Yeah, and I clearly think there are some strong alignment for us with ONE Future, because what I like about the organization is, it's not just for example, a segment in the natural gas value chain, for example, like LDCs or storage, it's literally from wellhead to burner tip.

And I think that's the way we ought to approach this as an industry as we need to address it on the entirety of that value chain.

And secondly, other things that come from that, for example, are the technical committees that are a part of ONE Future are going to allow us to potentially have access to better leak detection technology too, you know, things that help us, that predict artificial intelligence around damage prevention, all the pieces, that you know, if we had to do this independently as companies it may take a longer period of time, I think that helps us accelerate that.

And then if you think about just the service areas that we are in right now, there's opportunity with agricultural landfill to do some things with RNG. That's why we're proposing some programs with the Commission. We think we're in a good spot to be able to do that.

And you know, obviously, there's gas quality and all the things that we would have to address. But we really build this as a piece of the puzzle. I don't think there's any one big thing that's going to get anybody there. I think there's a lot of pieces and this is helping us solve a few of those pieces early..

Got you. Thank you very much, that's all I have..

Thanks, Mike..

Thanks, Mike..

The next question will be from Richard Ciciarelli with Bank of America. Please go ahead..

Hi, good morning. Thanks for taking my question..

Good morning..

Good morning, Richard..

Good morning..

Hey, just back on the Missouri rate case. I know there are couple of peers that you know, one's in the midst of one right now, one just recently went through one.

Just curious if you can, you know, draw any comparisons to you know those outcomes and what's currently going on? And any, I know you discussed settlements with any early indication from the Commission thus far on how things are progressing?.

Hey, Richie, this is Steve, I'll take a shot and the team will jump in as we need to. Yeah, we're, of course, we're watching not only what's going on in Missouri, but we're watching everything that's going on in our space across North America. And I think we're pretty optimistic about getting to a reasonable outcome.

Yeah, that the rate proceeding that you referenced did have - that every company has their own unusual items that they have to deal with, with the staff and the Commission and that one in particular had a bunch of issues around cap structure and especially around cap structure with the holding company versus the operating company, which are things that we've addressed a long time ago, what I think we got to the right spot, from our customer perspective and from a business operating perspective at the last rate case, and I think we're in a pretty good spot to be there in.

You do see those complications do reflect themselves and not only the cap structure, where they choose the cap structure and the ROE, but I think we're in a good strong position.

And frankly, we've been operating as we said, we would, leaving the last rate case, which is operating Spire Missouri for the benefit of the customers in Missouri ring-fencing it and doing all the right things so that, that Commission, the staff and our customers can be confident in our ability to lead going forward..

Hey, Rich thanks for the question.

This is Steve Lindsey, the one piece that I would add that's a little different about this one than maybe some of our prior cases is, is one of the things we're looking to do is to combine the two utilities, Missouri East and Missouri West under one tariff, we think obviously that provides consistency across the state for 1.2 million customers, you think there's efficiency opportunities, and so that's something that's a little different about this one.

But for the most part, again, you know, we're in there for a lot of the same reasons that you typically are in Missouri around capital recovery, but in this case, enhanced customer programs and combining the two utilities.

So I'd say that's a little bit of the difference, but otherwise, we're very comfortable that the positions that we have are benefitting for the customers. And really from the Commission's perspective, we think it'll help them from an efficiency perspective going forward as well..

And I was going to raise actually a point to Lindsey - to Steve Rasche and so I'm glad you brought that up. The only other point I would add to it, the Commission and the Commission staff is fully aware since that acquisition, it was our plan to do that at the right time and then in the right way for our customers.

So that's there's nothing really new about that..

Okay, that's very helpful. And just switching gears a little bit to the STL Pipeline. I know there's some challenges there by some an environmental group, one at FERC, and I guess other in Missouri on the PGA filing.

Just curious how those are progressing and what's your kind of comfort level with the potential outcome there?.

Hey, Rich, this is Steve Lindsey, I'll start yeah and basically, the process right now is, it was brought forward by the Environmental Defense Fund. And it's really addressing the FERC process. It's not the STL Pipeline, per se, but it was their process in approving that. So that pipeline has been operating since November of 2019.

So we're well over a year has been operating very efficiently. We're accessing supply from parts of the country for our customers here that we didn't have before.

And the one thing that I will say is, with some of the interconnects that we've recently made and some of the other operational benefits that are coming, the benefits from the pipeline are even better and larger than we thought originally. And so that even to me makes the case even stronger.

From a timing perspective, right now, I believe all arguments are due to be in March relative to the case right now. And then we'll just have to go from there. But we feel very confident and the rationale behind the original certificate that was received and in the event that we have to go through that process.

Again, we think of anything, additional benefits have been added to the original case..

All right, got it. That was very helpful. That's all I had. Thanks again..

Yeah, thank you..

The next question will be from Richard Sunderland with JP Morgan. Please go ahead..

Hi, good morning. Thanks for taking my questions..

Good morning, Richard..

Maybe starting off with the utility results of the quarter just curious if you could speak to the O&M timing, particularly how you see that coming in throughout the balance of the year? And maybe any other considerations, you know, specific to this quarter in particular with you know, COVID related savings and whatnot?.

Well, hey, Rich let me take a shot at that. There was clearly some timing in O&M and part of that gets back to the weather.

And again, we did comment that the demand because of milder weather was a little bit down and that does actually allow us to do a better job and be more effective and efficient in our capital program than we would normally expect had we had normal weather, so that clearly is something that may or may not come back until we calibrate the capital spend plan for the rest of the year.

And again, we tend to think of life in 12 month increments so we do adjust the cadence of spend accordingly. So from that perspective, that clearly was a timing benefit.

And then, it is not unusual and our history here to start the year a little bit better on the O&M side than we had to expect, because some of those expenses usually start ramping up when we get into the season after the heating season. And we take a good hard look at what we want to get done during the summertime period.

We have as we've talked about in past calls, done a good job of working with our team internally to keep a lid on cost and as with most companies, we're still in COVID phase with limited or no travel and meetings and all that stuff and frankly, we look forward to the time when we can actually start going out and interacting with our customers, potential customers and with our team members across the US.

But that net isn't going to happen until the second half of this calendar year as the rate things are going and we'll have to see how the vaccine rollout and everything else progresses. In terms of absolute impact on COVID as we mentioned in the last quarter, really isn't impacting us that much.

We're not seeing - we're seeing some benefit on the O&M side, we're - our residential, our largely residential customer base demand is holding up. So we're not seeing a lot of headwinds, right now, as we enter the first part of the heating season in COVID, because remember, last year, we weren't really dealing with this until March of 2020..

Yeah, and the one part that I would add that Steve talked about, he kind of ended with it was we are now in a new part of operating in this environment that we didn't have before. We started in the March of last year. So we've gone through the quote, lineup season, we're now into the more extreme parts of winter.

And really even going back, you know, three, four or five years, we have done, I think a very good job of being able to balance what weather gives us. Some of it is positive, some of it isn't, how we manage our construction process versus our O&M and we balance things really for the year, not for the quarter.

And so I think we've done a good job of really having historical ability to manage that. And so I would look at things by the quarter, per se, I really think we try to take a longer-term perspective on that.

And even with the environment we're in right now, we're doing a very good job, if you go back to our operational metrics that we discussed earlier, we're exactly where we need to be right now as we're in the middle of winter..

Great, thank you. Appreciate the color. And maybe one final one for me just circling back to the rate case there. You've gone through the kind of the settlement prospects a lot, but just curious on the kind of jurisdictional consolidation in particular, you know, how you see that impacting the settlement process you know versus prior experiences.

And if there are any kind of sticky issues or particular items around kind of that aspect, in particular, that could impact the rate case?.

So I'll start, sort of pass along. I said at the beginning that from day one it's been our expectation, and we've been transparent with the Commission as we've navigated different rate cases along the way that the goal would be to combine the two.

On a statewide basis they have one utility serving customers, you know, at the same rate and the same structure and the same service levels and continuing to prove - improve year-over-year and beneficial to the state.

And we don't see customers as just one big group, when it gets down to the work that Steve Lindsey and his team does day in and day out.

You know, we really do see those customers individuals, what are the residential customers experiencing? What are the residential customers that are lower on the socioeconomic level versus higher on the socioeconomic level? What about small commercial businesses, restaurants? What about light industry? And so, you know, we do through a technology and our people were able to look into our customers and how they're taking their experiences with us, not just on a cost basis, but on a service basis.

And to the extent, that we are customer-centric in this way, and doing it the same way across our great State of Missouri as well as Alabama for that matter. We grow off those platforms and we're able to provide better service for our customers. And you know that's important.

It's also important from an economic development perspective, you know, if you're the Governor on the Economic Development Team, energy is vital to how you attract industry and businesses.

And when your utilities are strong in terms of the services they provide and the cost structures and the ability to use technology to help them do what they need to do every day that is high value. And so, again, it was - this path was started at the beginning. We're a Spire and Spire has the gas to the preponderance of the gas services in the state.

So I see this as a strategic move for the state as well as for our customers..

Yeah, and the only thing I would add to really Suzanne's comments were, if you think about if multiple companies operate within a state, there's an inherent inefficiency in doing that. And when you combine those companies, for example, you get opportunities for you know improved service efficiency.

I think that's really the case with us as well, we're the same owner per se, but we're having to operate a little bit differently right now just because of tariffs. And I think again, the consolidation that just makes a lot of sense..

Got it. Thank you..

[Operator Instructions] The next question will come from Selman Akyol with Stifel. Please go ahead..

Thank you. Good morning, all. So just going back to ONE Future real quick. Couple of quick questions there.

First of all, since you talked about it from the wellhead all the way through, will you guys have any input then say on who the producers are who actually provide your natural gas?.

Well, I don't know that I would anchor that back to ONE Future. I think that's more of our business model.

And the way we're looking at it from that perspective, but I think what it does is, it provides some transparency with again, people all along the value chain, and I think that's what we're really looking at as an industry is, we want to get better collectively, not as single companies.

And so, the way the structure works there is, we collectively report and so if you think about all the different pieces on the value chain, we'll be reporting on our LDCs, which would be the distribution side and even midstream with the pipeline and storage.

There's other pieces that will be reported, we don't, in essence, have access to that specific information about companies, it's the aggregation of the companies. What we will see is kind of where we land amongst the group, amongst the 37. But we won't have any insider information, if you will, relative to those companies.

But again, I think if we're all signing up and committing to make that outcome that's the goal for ONE Future has put out there. I think what that says to me is, those are the kind of companies that you would want to align with..

And the other piece and you know Steve been more active in this so he may want to add on, is the goal as Steve described in the value chain, there's a desire to set targets and that keep moving those targets that there's a clearer message in terms of again, from conduction area to burner tip in terms of what the carbon reductions are.

So that is one of the benefits of this organization as well, more transparency and the reductions and what those targets are..

Understood. And then just along those lines, I think you said you'll say where you were for 2020, I guess at the end of that.

I guess my question is, are you going to provide also where you started out, I guess for you know, 2019?.

Yeah. And so, you know, again, we will use the definitions that ONE Future is looking relative to methane intensity and report for that.

But if you kind of go back to what we have been reporting, we went back to 2005 and from that point, we have seen a 39% reduction in our methane emissions, this is on our distribution system, we're projecting that number to go up to 53% by 2025. So we've been reporting really in the methane challenge.

So, all that information is out there, we'll continue to report that the additional information that will provide to ONE Future will be based on the calculation relative to methane intensity. So everything that we have, to be quite honest, is going to be transparent, it's going to be public.

This is a part of a coalition that we think goes above and beyond just what Spire does and really reflects the efforts of the entire industry..

Understood.

And then last question here, anything on the AGM this quarter?.

No, Selman this is Steve -.

Very good -.

Well the AGM wasn't active..

All right, thank you..

Selman, thanks..

[Operator Instructions] The next question is from Brian Russo with Sidoti. Please go ahead..

Hi, good morning..

Hey, Brian..

Hey, you mentioned some external growth opportunities in some rural parts of Alabama.

And also possibly on the backside with poultry type customers, can you just elaborate on that like what's the size of the opportunity and can that - can it be synergistic for some of the R&D opportunities that - that's ongoing?.

Sure. And the expansions that we're referencing, and that we even had a picture about in the presentation are in the southern parts of Alabama, and it's too primarily poultry and agricultural areas. And for the most part, those will result in conversions. And typically those are conversions from propane and things like that.

These are customers that have been raising their hand and wanting natural gas available to them for a period of time. And so we went in and put some programs together, worked with the Commission, and as you can see, President Cavanaugh was obviously part of that.

That I think that is viewed as economic development, it's rural expansion, there's a lot of different ways you can talk about it, but is providing gas to parts of the state that didn't have it.

Even down if you go all the way to the coast, in our Gulf operating area, there's some opportunity down there with expansion of industry and things like that coming to the state. And then if you come back here to Missouri on the western side of the state, we're doing a lot of that expansion as well.

And that's through a process in Missouri known as CCNs which are Certificate of Convenience and Necessity. Previously, we had to kind of do those one at a time customer by customer. We've recently had a good success and actually getting a CCN for an entire county which makes it much more efficient.

So, I think, I don't want to put a number out there, because we really don't know, because the opportunities will come as we get out and canvass the areas, but it's clearly something customers want.

And I think what we're seeing in both of our jurisdictions is, it's being supported by those Commissions which I think is a win-win for both, you know, the company, the customers and really the state from an economic development perspective..

Okay, thank you for that.

And, you know, you [technical difficulty] decided to not issue much equity in this fiscal first quarter under the ATM and you alluded to earlier, the financing needs remain unchanged, should we just, you know, assume what was not issued in the first quarter just to extrapolate that over the rest of the year? How should we just view you know, any incremental equity and, you know, increasing average share count?.

Yeah, Brian, this is Steve, I think you're spot on when we've used the ATM in that way over the since its life since we introduced it two years ago, as I recall, and I think you can think about it that way, clearly, you know, we also look at the tape, and make sure that we're trading at fair value.

I think, hopefully, we would all agree, I think most we all do, on the call that we and many of our peers were trading below fair value. So it felt appropriate to hang tight right now and wait for the market to settle out a little bit. And again, we're delivering good first quarter earnings.

So that hopefully will be another repetition for folks, we look at the value for us and for a few of our peers..

And were there any COVID related deferrals made in this fiscal first quarter? I think you had a little over $3 million as of September, just curious?.

Right, Brian. I don't have the number off the top of my head, which would answer the question. I think it was small, but a couple of $100,000 tweak it was $100,000 now that I found the answer. So now we have - we had largely assessed our position at the end of the year.

And remember, since we're at [930] [ph] year end, we were assessing up until mid-November. So we were well into the quarter, we're reporting on now and had good visibility. So I'm not surprised that number hasn't moved very much..

And any update of filling the excess capacity at the STL Pipeline?.

Yeah, so the team is always working on, you know what those opportunities might be, nothing that we've announced, like Steve Lindsey said earlier, we're highly satisfied with the operation of that pipeline, you know, I'm an old operator, believe it or not, and I know what it's like to be in gas control and operate pipelines and the pressure volumes that we're bringing in, the design that, you know, in terms of into our system and around the different parts where we have difficulty holding pressures and so forth like Steve Lindsey said, that pipeline has outperformed our expectations.

And we are more than delighted to have that pipeline as part of our system and serving our customers. It also, like I mentioned earlier, because of the volumes and pressure it brings into the St.

Louis region in terms of economic and development growth, we're able to now be able to invite those industries in, because we do have those volumes of gas and the pressure needed to support those kinds of industries..

Great.

And just one last - just a clarification the rates adjustment in Alabama of $1.3 million what was that attributable to?.

Well we reset rates in Alabama both - on both of the utilities in Alabama on an annual basis and those rates go into effect on or about December one of each year based upon the budget that we're operating in. So that's kind of the normal cadence, Brian of how rates are adjusted..

Okay, thank you..

Thank you..

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks..

Thank you, everyone for joining us today. We will be around the rest of the day for any follow-ups and we look forward to catching up with you in future. Have a great day..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..