Good day, and welcome to the Spire Inc. Q2 FY 2025 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Megan McPhail, Managing Director of Investor Relations. Please go ahead.

Good morning and welcome to Spire's fiscal 2025 second quarter earnings call. On the call with me today is Scott Doyle, President and CEO; and Adam Woodard, Executive Vice President and CFO. We issued an earnings news release this morning and you may access it on our website at spireenergy.com under News Room. There is a slide presentation that accompanies our webcast, which can be downloaded from our website under Investors and then Events and Presentations. Before we begin, let me cover our safe harbor statement and use of non-GAAP earnings measures. Today's call, including responses to questions, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although our forward-looking statements are based on reasonable assumptions, there are various uncertainties and risk factors that may cause future performance or results to be different than those anticipated. These risks and uncertainties are outlined in our quarterly and annual filings with the SEC. In our comments, we will be discussing non-GAAP measures used by management when evaluating 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. Now here is Scott who will start on Page 4 of the presentation.

Thank you, Megan. Good morning, everyone, and thank you for joining us today for our fiscal second quarter earnings conference call. I am honored to address you today as the newly appointed President and CEO of Spire. I'd like to express my gratitude to Steve Lindsey for his dedicated service and commitment to Spire over the years. Under his leadership, the company made significant strides and built a strong foundation for the future. Steve is assisting me over the next several months ensuring we have a seamless transition. I want to assure you our strategy remains unchanged. We'll continue to focus on organic growth, infrastructure investment, and continuous improvement. This includes modernizing our systems to benefit our customers, advancing our regulatory engagement, and maximizing value for our customers and other stakeholders while keeping the safety of our employees, customers, and communities at the center of it all. Before I dive into results, I would like to express my gratitude to our employees for their dedication to providing safe and reliable gas service for our customers. Despite challenges of extreme cold at times throughout the winter, our natural gas system performed exceptionally well, thanks to their hard work and commitment. Turning to our performance for the quarter, this morning, we announced adjusted earnings of $3.60 per share compared to $3.45 per share a year ago. The year-over-year increase reflects strong growth in our Utility and Midstream segments, partially offset by slightly lower results in gas marketing. Our performance is driven by strategic infrastructure investments to modernize our natural gas systems coupled with our ongoing commitment to disciplined cost management. Adam will provide a more detailed breakdown of our results and share insights into our outlook. Now for an update on regulatory matters. Since our last earnings call, we have worked closely with key stakeholders in our ongoing Missouri rate case. We will continue to collaborate in the coming months to ensure a constructive outcome. In addition, earlier this month, the Missouri Public Service Commission staff recommended a $19 million revenue increase in our Infrastructure System Replacement Surcharge or ISRIS request. This is our fifth such request since our last general rate case and if approved would bring our revenues in the rider to an annualized rate of $72.6 million. On the legislative front, we are pleased that Missouri Governor, Kehoe, signed Senate Bill 4 into law marking a significant advancement for the state's utilities. This constructive legislation introduces a future test year rate setting model that is forward-looking allowing natural gas and water utilities to set rates based on projected costs rather than historical expenses. By attracting investment in energy infrastructure, the bill aims to enhance system reliability and drive economic growth across Missouri. The bill allows utilities to file a rate case based on a future test year starting in July of 2026. We continue to be focused on achieving consistent and constructive regulatory outcomes in all of our jurisdictions leading to a more sustainable financial performance trajectory. Looking ahead, we are reaffirming our long-term EPS growth target of 5% to 7%. This is supported by our 10-year $7.4 billion capital investment plan, and we expect to deliver within our fiscal 2025 earnings guidance of $4.40 to $4.60 per share. We are committed to delivering strong results in the second half of the year and beyond. With a focus on executing on our capital investment plan, driving operational excellence, and strengthening the performance of our utilities and gas-related businesses, Spire is poised for sustainable growth. In St. Louis, we're excited about the growth opportunities ahead. The labor market has now fully recovered, reaching pre-pandemic employment levels. In addition, Boeing recently was selected to build the next-generation fighter aircraft for the United States Air Force, driving growth of high-quality jobs in the St. Louis area, strengthening Missouri's economy and securing a prosperous future for our community. I would also like to highlight that last week, we renewed our labor agreement with our local 548 union representing employees in our Alabama service territory. This three-year agreement is a win-win as it provides stability to our workforce and allows us to focus on operational excellence. We are well positioned to achieve our financial and operational goals as we execute our strategy to grow organically, invest in infrastructure, and drive continuous improvement. Turning to Page 5, we continue to make capital investments to improve reliability, resiliency, and safety for the benefit of our customers. Year-to-date, our capex totaled $479 million with the majority of the spend taking place at our gas utilities. Year-over-year utility capex increased nearly 27% as we focus on upgrading distribution infrastructure and connecting more homes and businesses to safe, reliable, and affordable natural gas. Investment in our Midstream segment totaled $84 million year-to-date, largely for the expansion of Spire Storage West. The expansion is now substantially complete and we are pleased with the returns on the project. We expect to have the final components placed in-service by the end of this summer. Looking ahead, we are increasing our fiscal 2025 capital investment target by $50 million to $840 million. The higher capex includes a $15 million increase at Spire Missouri and the $35 million increase at Midstream primarily for the storage expansion project. As a reminder, our long-term investment plan is focused on organic growth at utilities. Approximately 98% of our 10-year capital expenditure plan is targeted utility spend driving our growth and rate base. Moving to Page 6 for a Missouri rate case update, last week, the PSC staff proposed a $246 million annual revenue increase in our Spire Missouri rate case. This increase amount is made up of two parts, approximately $205 million included in the staff's direct testimony and staff's estimated $42 million true-up through May 31, 2025. The proposed revenue increase differs from our requested increase of $290 million primarily due to staff's proposed 9.63% return on equity and 53.19% equity layer compared to our requested return on equity of 10.5% and 55% equity layer and discrete adjustments, which we expect to be addressed in subsequent testimony. You may recall our requested increase reflects an estimated rate base of $4.4 billion inclusive of discrete adjustments. We expect future testimony to address the weather mechanism and other elements of the case. Evident hearings are scheduled to begin on August 4 and an order commission and new rates are expected to be effective by October. We appreciate the constructive engagement thus far and remain committed to working closely with stakeholders throughout the remainder of the process. I'll now turn the call over to Adam for a financial review and update on guidance and outlook.

Thanks, Scott, and good morning, everyone. I'll start with a review of our quarterly results, which are detailed on pages 7 and 8 of our presentation. During the second quarter, we reported adjusted earnings of over $214 million, an increase of almost $18 million compared to last year. The gas utility segment had earnings of approximately $195 million in the second quarter, over $7 million higher than last year. The increased results reflect higher contribution margin at Spire Missouri driven by an increase in distress revenues and usage net of weather mitigation as well as new rates at Spire Alabama. These favorable items were partially offset by lower Spire Alabama usage net of weather mitigation. Excluding bad debt, utility earnings also reflected lower run rate O&M expense and higher depreciation expense. During the quarter, we continued to see strong earnings growth in our Midstream segment driven by new contracts on additional capacity, higher rates on contract renewals, and asset optimization at Spire Storage. Earnings in our Marketing segment were strong, but slightly lower than the prior year due to reduced market volatility. Lastly, other corporate costs were higher primarily due to higher borrowing balances. In both Missouri and Alabama, we experienced colder temperatures than last year and slightly colder than normal temperatures. Our volumetric margins in Missouri for the quarter were higher by nearly $7 million, but short of our expectations. This adjustment is highly dependent on the relationship between heating degree days and customer usage set in the previous rate proceeding. The weather mitigation adjustment in Missouri was not effective as revenues were not aligned with usage over the course of the quarter. Looking now to Alabama, while we experienced a higher than anticipated adjustment under the weather mitigation mechanism during the quarter, the year-to-date results are largely in line with expectations. We are focused on cost management and continue to expect run rate O&M expense at the gas utility to be flat relative to fiscal 2024 levels. During the quarter, gas utility run rate O&M expense was lower by $800,000 when compared to last year. Turning now to our growth outlook on Page 9. We are confident in our long-term adjusted earnings per share growth target of 5% to 7%. This is reinforced by 7% to 8% rate base growth at Spire Missouri and steady sustained equity growth at Spire Alabama coupled with efficient recovery mechanisms. We remain committed to executing on our strategy and are firming our FY 2025 adjusted earnings guidance range of $4.40 to $4.60 per share. Weighted average shares for FY 2025 are expected to be approximately 58.5 million, slightly lower than our previously anticipated 59 million shares providing the benefit in expected adjusted earnings per share for the year. We are updating our adjusted earnings targets by business segment to reflect first half results and expectations for the remainder of the year. We're lowering the gas utility range by $11 million, primarily due to weather-related margin headwinds experienced year-to-date. As a result of the ineffectiveness of the weather adjustment and usage, we anticipate approximately $9 million of lower margins from residential customers. We are raising the range for gas marketing by $4 million on stronger-than-expected earnings in the first half of the year, and we are increasing our Midstream earnings outlook by $8 million to reflect the realization of higher rates and capacity and optimization of our storage assets during the first half of the year. The range for corporate and others loss was increased by $4 million, primarily due to higher interest expense from higher short-term balances. Moving to Slide 10 for our financing update. Our three-year financing plan is unchanged. To support our equity needs, we settled approximately $43 million of forward sales during the quarter. Looking ahead, we anticipate using our ATM program for planned equity issuances through 2027. In April, we priced $150 million of Spire Missouri first mortgage bonds that we expect to fund on May 1. Our financing plan includes additional issuances in 2026 and 2027 to refinance maturities and incremental debt of approximately $500 million to fund our capital plan. Our FFO to debt target remains at 15% to 16%. In summary, we are executing our financing plan effectively and are confident in our financial position going forward. With that, let me turn it back over to you, Scott.

Thanks, Adam. As you've heard today, we have made significant progress towards achieving our priorities for the year, strengthening our position as a more resilient, efficient, and sustainable company that creates value for both customers and shareholders. Our unwavering commitment to delivering natural gas safely and reliably remains at the core of our efforts. We are executing on our capital investment plan while actively collaborating with key stakeholders to secure constructive regulatory outcomes that benefit both our customers and shareholders. Additionally, we are focused on meeting our fiscal 2025 adjusted earnings per share guidance range and preserving the strength of our balance sheet. Executing on these objectives is not just a focus for FY 2025, but a long-term commitment to driving success and delivering meaningful results in the years to come. Thank you for your ongoing support of Spire and we look forward to seeing many of you at the AGA Financial Forum in a few weeks. We're now ready to take questions.

Thank you. We will now begin the question-and-answer session. And the first question comes from Richard Sunderland with JPMorgan.

Hey, good morning, and Scott, congrats on your new leadership of the company.

Morning, Rich. Thank you.

Digging into the results a little bit in finer detail, some moving pieces on the segment guidance. I realize share count is tweaked as well. Can you speak a little bit about 1H trends and then where you're trending on a full-year basis given all these moving pieces?

Hey, Rich, it's Adam. We wanted to take a moment to address the margin weakness we observed in Missouri, which led us to lower our guidance. Fortunately, the midstream performed better than we expected, allowing us to increase that guidance. As we move into the summer months, we don't anticipate much performance from the gas utilities, but we expect the midstream to trend positively through the end of the year. Additionally, as I mentioned in the last call, we are optimistic about our marketing efforts and their trajectory for the remainder of the year.

Understood. So it sounds like the sort of weather at the utility is obviously unfortunate. Is that really the sole deviation on the utility side? I think you referenced $9 million of customer margin. So it looks like there should be a few other small pieces in there too. Just trying to understand the weather versus where else you're having difficulty forecasting the utility.

That's the main driver. As you mentioned, there's a few other pieces, but the main driver really is the weather-related margin.

Okay. Understood. And then with the midstream guidance, that $8 million increase, is it solely a one-off for 2025 or are you seeing a higher run rate for the business going forward?

That's a great question. We're feeling more positive about our capacity and pricing compared to where we started the year, but part of that is due to optimization. This suggests a gradual increase in run rate over time, but I want to clarify that it's not a complete increase in run rate. Some of that optimization relates to the circumstances and volatility we experienced in the first couple of quarters.

Okay. Understood. And sorry, just one last one on Midstream while we're on that. The higher capex for Midstream, is that impacting your return expectations for the storage expansion project?

Yes, it's Adam again. No, it's not. We did see some higher capital costs going into that and really it continues to exceed our return expectations.

Great. I'll leave it there. Thank you.

Thank you. And the next question comes from David Arcaro with Morgan Stanley.

Hey, good morning. Thanks so much. Hey, best wishes to Steve and congratulations, Scott.

Thank you, David. Appreciate that.

Yes, absolutely. I was curious just maybe on the weather mechanism. Could you elaborate a bit more on kind of what you see as the path forward here within the rate case, just prospects and where that could go?

Yes. Thank you, David. It's Adam. This is a key focus in the rate case and goes beyond the typical cost of service and cost of capital evaluations we are currently undertaking. It's one of our main concerns. We believe we are well-positioned to discuss this with staff, the commission, and other stakeholders. However, we recognize that there are issues that need to be addressed, and this is a significant priority for us.

Yes. And David, I'll just add. We've proposed in this current case a couple of different options that we want to work with commission staff on and all the stakeholders as we get into the next elements of this case. And it ranges from decoupling to updating the weather time horizon that uses the comparison as well. So a lot of detail that we've got provided in the case, but clearly some work to be done there and we look forward to those discussions going forward.

Yes, got it. Makes sense. Thanks. And then I was just curious your latest thinking on the prospects for a settlement within the rate case?

Yes. Hey, great question and we still have a lot of work to do. So that's a little early in the process. Maybe just kind of lay out process where we are in these stages. We do have the community meetings that take place. They're coming up here very shortly. Then we have the public hearing or the commission hearing later this summer. There'll be opportunity that's built into the schedule for settlement discussions and those settlement talks can take place both prior to and after the commission hearing as well. The commission, at least that we're just watching over the last 12 to 18 months appears to be working towards settlement. So we're certainly willing to entertain those types of discussions as well. So look forward to collective and collaborative discussions going forward.

Okay. Excellent. I appreciate the color. Thanks.

Thank you.

Thanks, David.

Thank you. And the next question comes from Gabe Moreen with Mizuho.

Hey, good morning, and congrats, Scott, as well. I would just ask, I know it's a little premature to ask about subsequent rate cases in Missouri given that you're still involved in the midst of one right now. But as far as SB 6 and its passage, can you talk about timing on future rate cases? Do you have to wait until that's implemented before you even start another rate case? So I'm just curious in terms of timing and how that may or may not influence your thoughts about future regulatory activity in Missouri?

Yes. Good morning, Gabe, and thank you for your question. Our primary focus at the moment is on the current case. According to Senate Bill 4, the earliest a gas or water utility can file a rate case based on a future test year is in July 2026. Until then, we won't be able to file, but we are interested in adapting to that new framework in Missouri. We will have more updates as we move forward, but right now our efforts are dedicated to concluding this case.

Thanks, Scott. Maybe if I could just add a follow on Missouri regulation. I know you're trying to reform the weather mechanism in this rate case here. And I think staff is going to opine sometime soon on that. Is that a negotiation? Is it sort of a thumbs up, thumbs down? I'm just curious how you envision that sort of shaking out within the rate case.

Yes, good question. I think as in all cases, these are things that both parties clearly take sides and then work together and it's something that could be worked on together to get to the right solution that addresses both the needs of the customer, but as well as the company as well. And I think that's the posture we're going to take as we work through this as well. So just like in all cases, there's opportunity for both sides to bring the issues to the table and work together to get to a constructive solution. That's what we're working towards.

Understood. Thanks, Scott. Appreciate it.

Thank you. And the next question comes from Stephen D'Ambrisi with Ladenburg Thalmann.

Hey, guys, thanks very much for taking my question. Scott, congratulations on the new role and best of luck leading the company.

Thank you, Stephen, good morning.

Good morning. My question is about the adjustment to your guidance. From the earlier responses, it seems that if you can resolve the weather norm mechanism related to this rate case, the earnings potential of the utility business remains stable. There may also be some modest improvement in the marketing and midstream sectors. Am I understanding this correctly, and how are you approaching this guidance update?

Yes. Hi, Steve, it's Adam. I'll share my perspective and then let Scott add in. I think that's a reasonable assumption. We anticipate a positive outcome regarding the weather mitigation mechanism, and we also recognize some structural improvement in our midstream guidance compared to our previous expectations. So I believe that's a justified assumption.

Yes. I think it's important to consider the broader trends within our company, as outlined in our previous discussions and in relation to the ongoing case. We're focused on building momentum as we conclude this fiscal year and prepare for 2026. You can see the positive impact of our customer affordability project implemented last year, with expenses remaining appropriately allocated. A closer look at the numbers shows a decrease in administrative costs, while investments in field activities have increased, ensuring that funds are directed toward customer benefits. We're currently focused on capital investment across both midstream and utilities, with storage projects beginning to yield returns. As we work on our capital recovery in the pending case with the commission, these efforts are helping us regain expected returns in our business. We are optimistic about the future and that remains our focus.

Thank you. I have a follow-up regarding implementation. I know you are currently pursuing a rate case, and there may be some time involved. Do you anticipate that the commission needs to initiate a rulemaking, or will there be a process in place? Will this happen concurrently, or is there anything that must be addressed from a regulatory standpoint before you can file for a future test year? Thanks.

Yes. I want to highlight the provisions in the bill. It allows for a case to be filed after July 2026. There is also some rulemaking that needs to be completed by July of the following year. We expect that once they begin, the rulemaking will be underway, and we will definitely operate within the parameters of the legislation as we consider the timing of our next case.

Okay. That's great. Thank you very much for the time. Appreciate it.

Thanks, Steve.

Thank you. This concludes our question-and-answer session. I would like to turn the floor back over to Megan McPhail for any closing comments.

So thank you for joining the call today. Have a great day.

Thank you so much. Thank you for attending today's presentation. The conference has now concluded and you may now disconnect your lines.