Greetings, and welcome to Ameren Corporation's Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today's call, Andrew Kirk, Director of Investor Relations for Ameren Corporation. Thank you, Mr. Kirk. You may begin.

Thank you, and good morning. On the call with me today are Marty Lyons, our President and Chief Executive Officer; and Michael Moehn, our Senior Executive Vice President and Chief Financial Officer; as well as other members of the Ameren management team. This call contains time-sensitive data that is accurate only as of the date of today's live broadcast, and redistribution of this broadcast is prohibited. We have posted a presentation on the amereninvestors.com homepage that will be referenced by our speakers. As noted on Page 2 of the presentation, comments made during this conference call may contain statements about future expectations, plans, projections, financial performance and similar matters, which are commonly referred to as forward-looking statements. Please refer to the forward-looking statements section in the news release we issued yesterday as well as our SEC filings. For more information about various factors that could cause actual results to differ materially from those anticipated. Now here's Marty, who will start on Page 4.

Thanks, Andrew, and welcome back. We're thrilled that you're healthy again and here with us for this call and ready to fully engage with our investors and the analysts. Good morning, everyone, and thank you for joining us today as we reflect on our 2022 performance and look ahead to 2023 and beyond. I'd like to start by expressing appreciation for the Ameren team's dedication and hard work over the last year. In 2022, we continued to successfully execute our long-term strategy, as shown on Page 4, which is delivering strong results today while laying a strong foundation for the future. Shown on Page 5 are some exciting strategic achievements from the past year for Ameren, our customers, shareholders, the environment and the industry as a whole. Let me touch on a few key accomplishments. We made $3.4 billion of infrastructure investments in 2022 that resulted in a more reliable, resilient, secure and cleaner energy grid, as well as contributed to strong growth at all of our business segments. For example, as part of our Ameren Missouri Smart Energy Plan, over 400 smart switches were installed to reduce outages from hours to minutes and even seconds, and 34 substations were upgraded or built new to better serve communities. In addition, over 300,000 smart meters were installed for our Missouri customers, enabling better visibility into their energy usage. In Illinois, our customers are benefiting from the replacement of more than 3,000 electric poles, 64 miles of coupled steel distribution pipelines and 24 miles of gas transmission pipelines. Further, our transmission business placed in service 19 new or upgraded transmission substations and approximately 200 miles of new or upgraded transmission lines. These are just a few of the many projects completed in 2022. As a result of these and similar investments, I'm…

Thanks, Marty, and good morning, everyone. Turning now to Page 18 of our presentation. Yesterday, we reported 2022 earnings of $4.14 per share compared to earnings of $3.84 per share in 2021, an increase of approximately 8%. This page summarizes key drivers impacting earnings at each segment. I would note in the fourth quarter, we benefited from colder than normal weather as well as an improved market conditions related to the cash surrender value of our company-owned life insurance investments, which contributed to 2022 earnings results at the top end of the earnings per share guidance range that we outlined on our third quarter call. We’ve also included on this page the year-over-year weather-normalized sales trends for Ameren Missouri. Weather-normalized kilowatt hour sales to Illinois residential and industrial customers were down approximately 1.5% and 1% year-over-year, respectively. And weather-normalized kilowatt hour sales to Illinois commercial customers increased by approximately 0.5%. Recall that changes in electric sales in Illinois, no matter the cause, do not affect our earnings since we have full revenue decoupling. Moving to Page 19 of the presentation. Here, we provide an overview of our $19.7 billion of planned capital expenditures for the 2023 through 2027 period by business segment that supports the approximately 8% projected compound annual rate base growth. We’ve incorporated an incremental $2.4 billion compared to the $17.3 billion five-year plan for 2022 through 2026 that we laid out last February. The plan includes investments related to assigned MISO long-range transmission projects as well as renewable energy generation investments aligned with our 2022 Missouri Integrated Resource Plan. As you can see on the right side of this page, we are allocating capital consistent with the allowed return on equity under each regulatory framework. Turning to Page 20. We outlined here the expected funding sources for…

[Operator Instructions] Our first question comes from the line of Nicholas Campanella with Credit Suisse. Please proceed with your question.

Hey, everyone. Thanks for all the info today and Andrew, welcome back. Really happy to hear your voice.

Thanks, Nick. Appreciate it.

Absolutely. Yes. So I guess just on the Missouri rate case, you did have some differences here in rate base for staff, but just wanted to get a sense of your overall appetite to settle this case if that’s still a possibility – just thinking back to how prior cases have gone. Thank you.

Yes, Nick, this is Marty Lyons. Good morning. Thanks for the question. Yes. Look, as we go into each case, we certainly are hopeful of being able to reach a constructive settlement. And as we talked about many times, we have a good history of working with stakeholders in Missouri and reaching constructive settlements. We outlined where we are in the case today in our prepared materials, you saw in the slide deck, and we outlined some of the issues that divide us today, mainly in some of the traditional areas like ROE, but also on a couple of issues like High Prairie and Rush Island energy centers, where there’s some differences between us and the staff in particular. Importantly, all of us will be updating our cases based on year-end rate base as well as other true-up items that go through December 31. So you mentioned some of the differences in rate base. Really, those are just timing differences between the staff’s rate base, which was as of June 30 and the company’s filed position, which projected through December 31. But all of those things are going to be trued up here in the coming days up through December 31. So importantly, some dates that we highlighted, a final reconciliation of the parties’ positions will be due March 30, and that comes after server bottle testimony, which is on March 13. And then evidentiary hearings of those are needed would start on April 3. So traditionally, the best time to be able to reach a constructive settlement given where this rate case is, this rate review would be end of March, early April in terms of when you might be able to really reach a constructive settlement with the parties.

That’s helpful. Appreciate that. And then just on the equity financing, recognizing that you did raise CapEx in this new five-year plan. You do have some sizable needs here in the out years and I know you recently last quarter also said that you were increasing the ATM to $1 billion for 2024 and beyond. But can you just help us understand, with the equity in the plan, just your preferred source of funding that or sourcing it, rather.

Yes. Yes, you bet, Nick. Good morning. This is Michael, A couple of things, then I’ll get specifically on that question. I mean, again, I think as we’ve talked over time, I mean, we do believe our balance sheet really provides us a position of strength here. We’ve worked hard to continue to conservatively manage it. I think we like our ratings where they are, Baa1, BBB+. We obviously have more margin at S&P than we do at Moody’s. We talked about that from time to time. We continue to target this capitalization ratio of close to 45%, which I think, again, it served us well in these various regulatory proceedings and making sure we’re maintaining these balance sheets appropriately at the subsidiaries. In terms of what we need here, you’re right. I mean, the $2.4 billion of incremental capital, I think what we continue to message along the year, as we thought about any increases in capital associated with these opportunities around LRTP or the renewables that we should continue to think about our balance sheet in a similar fashion. And I think that’s what we’re doing here, we’re laying out this incremental really $800 million of equity. There’s some obviously retained earnings in there as well, kind of gets you back to that same sort of capitalization ratio. The ATM has served us well up to this point. I mean, we’ve taken care of all of our needs for 2023, Nick. We’ve sold forward in 2023. So we’re really finished with that $300 million. We started to sell forward into 2024. You’re right that we did increase the capacity of the ATM. We’ll have to continue to evaluate that over time as we would run into any limits there. But again, it’s a really efficient way for us to issue capital. We think it’s a manageable amount if you look at it relative to our total market capitalization. So we feel comfortable with it. And again, I think that it provides us quite a bit of strength there as we just think about the overall funding that we need over the course of the next five years.

Appreciate the color. I’ll get back in the queue. Thank you.

Our next question comes from Jeremy Tonet with JPMorgan. Please proceed with your question.

Hi. Good morning.

Good morning, Jeremy.

I just wanted to start off with, I guess, a rate base CAGR, the 8% as you laid out there in the $2.5 billion figure. Just wondering, what are the IRP assumptions in your CapEx plan update that – underpin the $2.5 billion there. And what does this imply for company ownership of resources versus PPA? And how do you view the overall line of sight here? And when do you expect to kind of get final commission decisions on all resources?

Yes. Good morning, Jeremy, this is Marty. There’s a few questions, I think, embedded in that question. So I’ll start and perhaps Michael would want to add on. First of all, the capital expenditures that we’ve put into the plan in Missouri for the IRP really tie to the plan that we laid out in the IRP. So if you go back and you look at that overall time line, we plan to add 800 megawatts through 2025 and then another 2,000 megawatts of renewables between 2026 and 2030. And if you just do some simple math there, it’s about 400 megawatts per year. So you end up with about 1,600 megawatts overall over a five-year period. And again, we’ve put in about $2.5 billion as an estimate for that. So that’s how it lines up. We were pleased to have the commission, Missouri Public Service Commission approved the Huck Finn project, which was a 200-megawatt solar project we’d proposed, they approved that one recently at CCN. And of course, we’ve got the Boomtown project, which is a 150-megawatt solar project before them now and awaiting the decision. And we continue to work with developers on additional renewable projects to really fill out that plan that we have under the IRP, which we think is absolutely the most prudent way to move forward to provide our customers the reliable, affordable and cleaner energy that they’re seeking. Now back to the overall CapEx plan. What you’ll notice is we’ve got a $19.7 billion overall capital expenditure plan for 2023 to 2027. That compares to the one we had previously, which was 2022 to 2026, we had $17.3 billion. So we’ve added about $2.4 billion overall as we move from our prior plan to this one. And in Missouri in particular, I’d point out that we previously had $8.9 billion of planned expenditures moving now to $10.4 million, which is about a $1.5 billion overall addition. So we’ve embedded the expectation of those renewable projects getting done in the overall $10.4 million. But I would say we’ve taken a measured approach to upping our overall capital expenditure plan, which gives us great confidence in our ability to achieve it. Again, we’ve already had one renewable project approved. We’ve got a strong pipeline of capital expenditure opportunity over the next 10 years, as we’ve talked about, $48 billion and have a lot of confidence in our ability to execute, not only the $10.4 billion plan for Missouri, but the overall $19.7 billion plan we’ve laid out today.

Yes. The only thing, Jeremy, I might add to that, Marty just gave a really comprehensive answer, is just specifically with the pipeline to renewables itself. And look, the team continues to do a lot of really hard work here. There’s some active RFPs they continue to have open. They continue to have a lot of conversations with developers about these projects. I think you had something embedded there about how do we think about maybe PPAs versus ownership. Again, we believe that ownership is in the best interest of our customers for the long term, and that’s really where our focus has been. It’s certainly evidenced by what we did with the wind projects. Certainly, we’re closing with the two renewable solar projects that Marty spoke about. So I’d say an active pipeline, and I think, obviously, the supply chain issues have been well publicized. I think we continue to work through those and feel good about the projects we have out there, and it’s going to continue to be a lot of focus and effort over the coming years.

Got it. That's very helpful there. And then moving, I guess, to MISO here, what are your current thoughts on potential MISO long-range transmission planning, given MISO seems to be modeling more aggressive assumptions in light of IRA. So wondering your thoughts on the outlook there.

Yes. I would say with respect to Tranche 2, we're certainly actively engaged with other stakeholders with MISO and modeling out the benefits of potential projects that would come out of tranche our overall expectation as we sit here today is that the overall portfolio of projects that MISO would approve as part of tranche to will be larger than the overall size of the projects that were approved as part of Tranche 1. But I think it'd be premature to comment on specifically which projects might land in our service territory or be assigned specifically to us. But rest assured, we'll be working with other stakeholders to model the transmission projects that we think would be best for customers and the reliability of the system overall and to obviously effectuate the clean energy transition. And we do expect that, as we said in our prepared remarks, MISO, to make some final determination early next year.

Got it. That's very helpful. And then just kind of tying this together, you've raised CapEx. You've raised rate base growth a little bit here. I'm just wondering what you think this could mean for EPS. You don't have the 30-year, I guess, bringing fluctuations in the way that it was in the past. So as you currently look at your EPS CAGR outlook, do you see any bias within the range towards the higher parts, given this step up in CapEx and rate base here, rate base growth?

Yes, Jeremy, I mean, I think as you know, I mean, our past practice really has not been to sort of speculate where we'll be within that range. I think I'll point to where we have achieved results, obviously. Historically, we've been to 7.5% CAGR since about 2013. So I'll let that sort of speak to itself. Obviously, we did raise the rate base growth from 7% to 8%. And I mean again, as you think about that range, over time, it drives about a $0.45 range, that 6% to 8% over that kind of five-year period. And obviously, there are some drivers, as you pointed out, in terms of just outcomes in the multiyear rate plan, earned versus allowed ROEs, financing assumptions, et cetera. But again, let sort of the past speak for itself at the moment.

Yes. And Jeremy, I'd just reiterate what I said. We feel very confident in our ability to be able to execute that $19.7 billion CapEx plan, which gives us confidence in our ability to execute that 8% rate base growth plan. And that underscores our confidence in the 6% to 8% EPS CAGR that we've outlined today.

Got it. That's helpful. I'll leave it there. And Andrew, really great to hear you on the call.

Thanks, Jeremy. Appreciate it. Glad to hear you, too.

[Operator Instructions] Our next question comes from Julien Dumoulin-Smith with Bank of America. Please proceed with your question.

Hey, good morning, team. Thanks for the time, appreciate the comments thus far. Maybe to follow up on Nick's question earlier, just with respect to Illinois and prospects for settling here. Any further elaborations around the new compact there? Just as you step into this, I just want to understand. Does this need to be sort of fully litigated and fully fleshed out to establish more of a record, given the context of some shift in the compact here? And again, that's a question specifically directed at both the electric and the gas.

Yes. Julien, this is Marty. Yes, I think your intuition is probably right there, especially as it relates to the multiyear rate plan. I think it's hard to speculate. I mean, if ever we have the opportunity to really enter into a constructive settlement with stakeholders, we're certainly going to be interested in having that dialogue with stakeholders. I think it's just very early in this multiyear rate plan filing. Obviously, we haven't seen any staff or intervenor direct testimony. We won't see that until May. And really premature to know whether it's something that could be constructively settled or not. I will note that in Illinois, there hasn't been that history of overall global settlements that we've had in Missouri. But we'll certainly be looking after we get testimony to work with stakeholders to resolve differences, narrow the issues. And if we can, settle and that would hold true for the gas case as well.

Right. It holds through as and you probably want to work through a fully litigated case here.

No. I guess what I was saying there is we're always going to be wanting to work with stakeholders. Once we see the differences to narrow those differences, certainly correct any errors and really to narrow the issues. And if we can reach a global settlement and put that before the commission, we'll seek to do that. I was just saying with respect to the electric distribution part of the business, given the newness of this framework and the fact that we haven't seen any testimony really premature to say whether that's something that has a high degree of probability.

Yes. All right. And actually, as it pertains to QIP here, just – I know that there's a new framework on the electric side, and that's largely established at this point pending implementation. But QIP and its subsequent forms or iterations remains a little bit outstanding. Can you elaborate what your thoughts are, and perhaps going back whether legislatively or otherwise at this point, to get something new? Again, I'll leave it open ended on what that might look like. I know we've talked about this in the past at times, but is there a window today to revisit that conversation perhaps in the slate you did before?

Julian, this is Marty again. Look, we haven't given up some sort of replacement for QIP and really because the QIP was in our die really great rider for our customers, really allowed us to make some investments that bolster the safety and reliability of the gas system. I'd say our focus right now is really though on the gas case that you and I just discussed. And really looking to get a constructive resolution of that case. As you know, the overall gas regulatory environment, even without QIP is solid with forward test years, revenue decoupling, bad debt riders, et cetera. So we believe that going forward, without the QIP, we'd need to be thoughtful about the timing of rate reviews, but they do use forward test years, which I think is very important to think about. And we'll be thoughtful about the timing of capital expenditures to replace aging equipment, et cetera. So we do think the regulatory environment without QIP is something we can manage around, we can still invest, we can earn good returns. But we will look for windows of opportunity to look for something to replace the QIP. I'll leave the door open like you did in terms of what form that may take. But right now, our focus is on that gas case.

Yes. Excellent. And then sorry, quick clarification from earlier. Boomtown, just is there anything different about this? Say, relative to Huck Finn or something like that, that might stand out in terms of that approval process? Obviously, the timing here being a little different in terms of the duration for the CCF.

Yes. I think one of the differences, Julian, is the Huck Finn project was proposed to be compliance with the renewable energy standard that we have in Missouri, and it was approved as such. The Boomtown project is really being proposed twofold. One, for customers, especially large industrial commercial customers that are looking for renewable energy as part of a consumer program for them, and as well as part of our transition under the IRP. But it's not being proposed for specific compliance with the renewable energy standard. And so that's a distinguishing fact between the two.

Andrew, I echo the sentiment.

Thanks, Julien. Appreciate it.

We have reached the end of the question-and-answer session. I would now like to turn the call back to Marty Lyons for closing comments.

Well, thank you all for joining us today. As you heard, we had a very strong 2022, and we really remain focused on delivering again in 2023 and beyond, for our customers, for our communities and for our shareholders. So with that, be safe, and we look forward to seeing many of you over the coming months.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.