Good morning, everyone, and Welcome to the Spire Inc. Q4 Fiscal Year 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Megan McPhail, Managing Director, Investor Relations. Please go ahead.

Good morning and welcome to Spire's fiscal 2024 fourth 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. You may download it either from the webcast site, or from our website, under Investors and then Events & Presentations. Before we begin, let me quickly 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 upon 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 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. I would like to note, going forward, the non-GAAP measures we previously referred to as net economic earnings and net economic earnings per share will be referred to as adjusted earnings and adjusted earnings per share. On the call today is Steve Lindsey, President and CEO; and Steven Rasche, Executive Vice President and CFO. Also in the room today is Scott Doyle, Executive Vice President and COO; and Adam Woodard, Vice President and Treasurer. With that, I will turn the call over to Steve Lindsey. Steve?

Thanks, Megan, and good morning, everyone. Thank you for joining us for an update on Spire's fiscal 2024 year-end results, outlook and other developments across our businesses. Before I begin, I want to take this opportunity to acknowledge and thank our Chief Financial Officer, Steven Rasche. After 15-years of service, Steve will step down from his role as CFO on January 1 and will continue to serve as Senior Advisor until his retirement this spring. Steve has been instrumental to Spire's success over the years and he leaves behind a tremendous legacy. His dedication and leadership have driven transformation across the organization and scale the company you see today. I know I speak on behalf of all of our coworkers when I extend my gratitude and say congratulations. And Steve, we wish you nothing but the best. I'm pleased to say that Adam Woodard, our current Vice President, Treasurer and CFO of Gas Utilities will succeed Steve as the new CFO. Many of you know that Steve and Adam have worked closely over the last several years ensuring a seamless transition. Adam has a deep understanding of the company, industry and financial markets and has played a key role in developing our strategy since joining Spire in 2018. We are confident in Adam's ability to lead us in his new role. Turning now to slide four, where I'll walk through three key categories, financial and operational performance, regulatory and outlook. This morning, we reported fiscal 2024 adjusted earnings of $4.13 per share, an increase of $0.08 per share, compared to a year ago. This improvement reflects higher earnings to Gas Utility and Midstream segments partially offset by lower earnings in our Gas Marketing segment. Our results for the fourth quarter were below expectations as a result of headwinds created by…

Thanks, Steve, and good morning, everyone. Let's review our fiscal year '24 results and our guidance for 2025 and beyond. For the year ended September 30, 2024, we reported adjusted earnings of nearly $247 million, 8% ahead of last year. On a per share basis, our earnings of $4.13 were $0.08 higher than last year. These results include our fourth quarter loss of just under $28 million or $0.54 per share, reflecting the seasonality of our businesses. Those adjusted earnings were $10 million or $0.24 better than last year, but fell below our expectations coming into the quarter, due to weak market conditions impacting our marketing segment combined with slightly higher holding company interest expense. Now I'll focus my remaining remarks today on the full fiscal year. Looking at our business segments. Our Gas Utilities earned $221 million, up 10% or $20 million from last year as new customer rates in both Missouri and Alabama were offset by partial weather mitigation in Missouri and higher interest expense. Midstream delivered earnings of $34 million, up $19 million as we are seeing pull-through from our Salt Plains and MoGas acquisitions, as well as earnings associated with our storage expansion. Gas Marketing earned $23 million as strong market conditions last winter were offset by lower basis volatility over the last six months. As a reminder, marketing delivered solid results this year and was slightly above our initial expectations, but these results were well below last year due to the significantly favorable market conditions in fiscal year ‘23 that did not recur this year. And finally, other corporate costs were $30 million, a nearly $4 million or 11% improvement over last year, reflecting the benefit of an interest rate hedge and lower corporate cost offset in part by Holdco interest expense. For your reference,…

Thanks, Steve. I'd like to finish with our priorities for the coming year on slide 11 as we are laser-focused to achieve our targets for fiscal year '25 and beyond. Our priorities for this year are aligned in building a more resilient, efficient and sustainable company that delivers value for our customers and shareholders. First and foremost, we're committed to delivering natural gas safely and reliably. During the year, we expect to deploy $790 million of capital primarily at the gas utilities. And we are engaged with key stakeholders to achieve constructive regulatory outcomes for customers and shareholders while strengthening regulatory recovery mechanisms. And lastly, we're focused on delivering our fiscal year 2025 EPS guidance range and maintaining the strength of our balance sheet. We look forward to updating you on our progress throughout the year. Thank you for joining us today and we will now take your questions.

Ladies and gentlemen, at this time, we'll begin the question-and-answer session. [Operator Instructions] And first in line, we have Richard Sunderland from JP Morgan. Please go ahead with your question.

Hey, good morning, and thank you for the time today.

Hey, Rich.

Hi, Rich.

And I guess before my questions, Steve and Adam, congratulations to both of you on the announcements. And Steve, best of luck in retirement here.

Thanks, man.

Let's see, first and foremost, the 2025 segment drivers, I'm hoping you can parse those in some finer detail, particularly midstream where it looks like you're expecting to exceed the year-over-year growth previously indicated there and I guess Marketing as well. So for both of those is this really the baseline going forward? And I guess that baseline is just ratcheted up a little bit versus what you guided to previously. Any details there would be helpful.

Yes, Rich, great question and thanks again. Marketing is consistent with how we've handled previous years. We go back to the organic growth strategy for the Marketing business that Pat, John, [Brent] (ph) and the team drive and we'll hopefully be positioned to take advantage of market opportunities. But that's why we anchored back to the original guidance for last year, which we were actually able to beat in '24. So that's kind of the normal organic step that we would expect in every business because we expect every business to grow. Midstream, yes, you're -- I think you're correct. We gave some directional guidance six months ago when we were still in the process of landing the final timing of the Spire Storage West expansion and also just now starting to see the benefits of the contracts, many of which started on April 1 of this year. And I think we have better clarity now into how that business is growing into the investment returns that we've talked about with you and the rest of the investors previously. So I think the expectation is that we're getting close to where that run rate would be for that business. Clearly, we're going to work through the rest of the expansion as Spire Storage West and some of that capacity. We're coming online in December of this year. And then contracts generally renew in the industry overall, as you know, on [4/1] (ph). So we'll continue to manage that going forward. But you're right, it's a pretty good step up from where we originally guided. But a lot of that is due to us getting a better fix and clarity in the business mix. And we also, just to help out, did clarify where we see the business mix for 2025 to help you as you're doing your modeling.

Great. Got it. That was helpful. And then picking up the other side of that piece with the utilities, I realized the Missouri rate case filing is not out there yet, coming shortly. But you had some commentary around how the rate case gets you back into the range for 2026 against that 5% to 7% growth. Could you just be clear on some of that commentary from the rate case? It sounded like you were saying a reasonable outcome returns you to 5% to 7%. Is it -- was it just the outcome gets you there or you need an uplift in the authorized ROE as well? Just want to make sure I understand the drivers there.

No, it's -- really we're looking for a straightforward recovery, cost of service recovery. We're behind there and as we've talked about before, we do -- we are under-earning in Missouri, so just bringing that back up closer to authorized. We feel very -- one, encouraged by our dialogue with stakeholders coming into the case, but also confident in our filing of the case that we can reach a reasonable outcome for Spire and Spire Missouri. But that's -- that we're not expecting anything. We're no -- we're just counting on rate of return or returning -- capital return and cost of service return to get us into that range.

Okay. Okay, understood. And then just one final one for me. I know there's been attention on some of the weather impacts in recent years. It looks like in slide nine you're saying a return to normal weather for 2025. So just want to confirm one, ‘25 the outlook assumes normal weather across the Utilities and two, just curious how weather has been trending to-date since the start of your fiscal year?

Yes. So yes, that is the assumption is normalized weather. We have -- in a functioning weather normalization mechanism, we do -- we -- that is something that we -- as Steve mentioned in his remarks is something that we're focused on in the filing to fine-tune that mechanism for more straightforward recovery. But yes, we are assuming normalized weather. So far this year, the fall has started on a warmer-than-normal basis. No comment on the mechanism, how the mechanism has worked thus far.

Okay, great. Well, thank you for the time there and congrats again to everyone. Thank you.

Thank you, Rich.

Our next question comes from Julien Dumoulin-Smith from Jefferies. Please go ahead with your question.

Hey guys, it's James Ward on for Julien. Just wanted to join in -- hey, how are you?

Good.

Just wanted to join in first on wishing you all the best, Steve, in retirement and your future endeavors and also to say congratulations, Adam, on your new role. Well-deserved and look forward to continuing to work with you here.

Appreciate it.

So on the debt front, the weather mechanism question was asked there earlier and then the segment elements we were interested in as well. So appreciate the color there. As we look at refinancings given the recent cuts at the Fed and assumptions heading into 2025 now that we've got an election outcome, understanding limitations on potential impacts there as well in terms of leadership. What are you guys assuming in terms of interest rates and your guidance relative to 2024 levels or I guess, I should say relative to current levels both next year and then beyond?

Yes, sure. James, this is Adam.

High level.

Yes, no, absolutely. And James, this is Adam. On the short-term side, obviously, you observed, we all observed the Fed has started to cut. That is something that we didn't assume would happen on the short-term side. We would expect in our plans to see two to three more cuts before the end of next year. But, your guess is as good as mine as far as when those occur and I think there's been some uncertainty around that. But I think a couple more cuts would be expected. On the long-term side, we don't have a lot to do in the next 12 months, but we are pretty comfortable with the current level of longer-term rates that we're seeing right now.

Terrific. That's extremely helpful. And any additional color just in terms of -- obviously you mentioned the incremental $600 million. You've got refinancings. Just any color around FFO to debt. You obviously have a lot of cushion relative to like S&P's threshold and so on. That would be our final question there.

No, absolutely, great question. We do continue to see progress there, I think really getting fully up in that target in a sustainable way. We're above that target with Moody's now, but on a sustainable basis. I think we'll see -- we'll certainly see that coming out of the rate case.

Yes. Okay, that's what we're looking at with the projections and it seems like you're going to have a lot of cushion. Okay, thank you so much guys, really appreciate it. And congrats again to everyone. Thank you.

And our next question comes from Christopher Jeffrey from Mizuho Securities. Please go ahead with your question.

Hi, everyone. Thanks for taking my question and congrats to Adam and Steve. Maybe just touching on the outlook for the legislative session upcoming in Missouri. There seem to be a few Utility-focused bills that could have some impacts for Spire. Just kind of can you speak about those more broadly and whether those would impact the timing of your rate case filing or any of the asks therein?

Yes. Hey, Christopher, this is Scott Doyle. I'll answer your last question first. It won't impact the timing or kind of how we proceed with the rate case. What we are working through this legislative session is clarifying future test year availability for Gas Utilities. As you may recall, legislation made its way through in the last session earlier this year. And so we look to work on the progress that was made in that legislation and advance that topic as we move through this legislation -- legislative session.

Okay, great, thanks. And then maybe just looking at the updated CapEx guide. Just kind of curious, it seems like we're kind of putting in more CapEx for '24 and '25, just how you're looking about maybe the run rate for '26 and beyond and kind of the drivers on those decisions?

Yes, Chris, it's Adam. A lot of that is driven obviously by a lot of our CapEx is driven by Missouri and I think we have talked before about their -- in particular, maybe a little bit out of run rate we're looking and focused on getting our meter replacements done in the near term. So that has moved up kind of that CapEx growth in Missouri. And specifically, we see that getting done in '25 and getting back into kind of a more normalized 7% to 8% rate base growth, but probably a little bit higher than that over the last 18 months or so. Just getting the meters done. You don't want to spread that out too far out into not over time.

And Chris, this is Steve. The last thing I would say is as we're winding down the deployment of capital into the storage expansion, I think we talked earlier about roughly 98% is dedicated to the Utilities for the next 10 years and really it goes well beyond that. We're giving you a 10-year outlook right now. But we've got a long line of sight from a capital deployment perspective and we have good regulatory mechanisms in Missouri as well as in Alabama, which is pretty much real-time rate making. So we feel very good about our capital plan in these facilities.

Great. Super helpful. Thanks, Steve and Adam.

Thanks, Chris.

[Operator Instructions] Our next question comes from Bill Appicelli from UBS. Please go ahead with your question.

Hi, good morning, and congrats to Steve and Adam. I echo everyone else's sentiments there. Just wanted to dig into the, I guess, the Q4 results a bit. You guys had guided down full year earnings last quarter and then you came in a little bit light of the lowered expectations for the full-year. So I guess what happened there? Was it -- was it gas marketing? Was that -- I think you had modified that outlook to $27 million to $31 million for the full-year and you came in at $23 million. So was that what fell short of expectations in Q4 or can you share a little more color on that, please?

Yes, Bill, and thanks for your well wishes. This is Steve. You are spot on. If you think about the businesses, the two areas in Q4 that surprised us on the negative side were primarily Marketing and it was really reflective of the market. We have seen -- I mentioned in the prepared remarks and Adam even alluded to it as we get through October that the market has been kind of meh, to use a more current term, the low commodity prices, low basis differential. It doesn't give us a lot of opportunity to create value. And that surprised us on the negative side. And I -- if we step back, if you think about marketing overall, they achieved their goal for the year, actually, overachieved our expectations for the year that we started the year with. We just had some assumption of a more normalized rate of demand coming into the fourth quarter and it didn't materialize. So we're still very pleased with where we ended up, but it clearly surprised us on the downside. And then -- we own that one. The other segment was probably a couple of million dollars higher in terms of interest costs than we had expected. And I think we've got our arms around the interest expense going forward, but that also surprised us a little bit. And surprisingly the other two, the big business segments that are majority of our business, actually performed very well this quarter. And I think that sets us up well as we think about '25 going forward.

Hey, Bill. And this is Steve. I'll follow-up on Steve's comments. You got to go back to the root word in marketing is market. And there's opportunity there some years and sometimes there might not be as much. But over the last five years, they've done an unbelievable job of creating results that have allowed us to invest in our utilities and not have to go to the market for equity. So I think we think about this in the long term. So some years and some quarters, you might have some ups and downs, but if you think about the way we're structured from a Utility perspective, from a Midstream perspective, and that's a combination of storage and pipelines and marketing. I think we're very comfortable with the business mix that we have.

Okay, great. And then just a follow-up question on the O&M. I think, prior conversations, there was some expectation of cost savings that were going to show up in Q3 and Q4 pushed out to be '26. But I guess you did actually achieve better overall on O&M profile in '24. And now you're saying run rate O&M in line with '24 for '25. So is there more sort of cost savings opportunity or maybe just sort of address the cadence of the cost reductions and how they've showed up relative to your expectations?

Yes, hey Bill, this is Scott. Yes, just real quick on O&M and I'll give maybe some color on kind of what's driving it and hand it back off to Adam on the guide as well. But that savings, the initial savings and even some of the longer term savings are coming from kind of a mix of labor reductions in our corporate support functions as well as our utility leadership structure. And then even within that, we're optimizing both our internal and external labor strategy across our full operations, whether you're talking about our construction and service activities and delivering our service or even in our call centers, how we optimize our labor strategy there as well. And then we're beginning to see some of the efficiency gains associated with technology spend that we've made here recently in the form of the meters that we're deploying as we're getting that system fully deployed and fully active. As Adam mentioned earlier, we'll have that system fully deployed in the St. Louis Market area mid-next year. And so we have opportunities coming in front of us associated with that deployment. And Adam, you may just want to comment on the guide.

Yes, Bill, on the guide, we're very pleased to be able to guide flat O&M at the Utility. Clearly, we made some progress last year that's extending into this year. But given the headwinds that we're all seeing from a cost perspective, it's something that we feel very good about. And we typically have over time have managed below inflation, but this is kind of an extra step below that.

All right, great. Thank you all very much.

Okay, Bill.

Thanks, Bill.

And ladies and gentlemen, at this time, I'm showing no additional questions. I'd like to turn the floor back over to Megan McPhail for any closing remarks.

Thank you all for joining the call this morning. We look forward to speaking with many of you later today and in the coming weeks. Have a great day.

And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining.