Spire reports adjusted EPS of $4.44, up 7.5%, and raises fiscal 2026 guidance to $5.25-$5.45 amid strategic acquisitions and solid infrastructure investments.

Good morning and welcome to Spire's fiscal 2025 year end earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Megan McPhail, managing director, investor Relations. Please go ahead.

Good morning and welcome to Spire's fiscal 2025 year end 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 websiteat spireenergy.com under newsroom. 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 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. Now here is Scott who will start on page four of the presentation.

Thanks Megan and good morning everyone. Thank you for joining us for Spire's year end fiscal 2025 update. We appreciate your continued interest and support as we review our financial results, discuss recent developments and share our outlook for 2026 and beyond. I am incredibly proud of what we accomplished during the year to advance our strategic goals both operationally and financially. We made significant progress towards setting SPIRE up for long term success. This includes the pending acquisition of the Piedmont Natural Gas Tennessee business from Duke, which I'll provide an update on in a moment. We had a great year and none of this would be possible without our 3,500 dedicated employees. I want to thank them for everything they do for our customers and the communities we serve. The commitment and hard work of our employees are the heart of these strong results and the opportunities ahead. We're continuing to build a strong leadership team and I'm delighted to welcome Steve Greenlee as our new Executive Vice President and Chief Operating Officer. Steve has over 25 years of utility operations experience and will oveRSEe our gas utilities in addition to our midstream segment. We're excited about the expertise and collaborative leadership style Steve adds to our team. I'm confident that he will play a key role as we continue to advance our strategy. Turning now to our fiscal 2025 results, adjusted EPS came in at $4.44, up 7.5% from $4.13 in fiscal 2024, reflecting growth across all segments driven by infrastructure investments. In fiscal 2025 we invested $922 million with close to 90% being spent at the utilities, enhancing the reliability and safety of our systems for our customers. On the regulatory front, we are pleased to reach a positive settlement and outcome and in the Missouri rate case and new rates were effective in October. In Alabama, we are currently in the rate Stabilization Equalization or RSE rate setting process and are working closely with the key stakeholders to update rates. We remain focused on achieving consistent and constructive regulatory outcomes in all of our jurisdictions leading to a more sustainable financial performance trajectory despite significant critical investments in our systems. Customer rate increases the past several years in both Missouri and Alabama have been in line with the rate of inflation, reinforcing our commitment to affordability. Natural gas remains the most affordable energy source for heating, water, heating and cooking across our service territories. Electricity is two to three times more expensive than natural gas. In Missouri, new legislation passed establishing a future test year as the rate setting model. This legislation is the result of collaboration among numerous stakeholders across the state. The new forward looking approach will allow natural gas and water utilities to set rates based on projected costs rather than historical expenses, enabling prudent planning, attractive investments in energy infrastructure and fueling economic growth statewide. The bill's passage marks a major milestone and we're grateful for the partnership that helps strengthen Missouri's regulatory framework for both utilities and their customers. This morning we issued fiscal 2026 adjusted EPS guidance, in the range of $5.25 to $5.45. This range excludes the results of the pending acquisition of the Piedmont Tennessee business and includes a full year of earnings related to our natural gas storage facilities. Today we are also providing fiscal 2027 adjusted earnings per share guidance of $5.65 to $5.85, which reflects a full year of expected earnings contribution from the Piedmont Tennessee business and excludes earnings from Spire Storage due to the expected sale of the assets, our long term adjusted EPS growth guidance, is 5 to 7% using the fiscal 2027 guidance midpoint of $5.75 as a base. Our 10 year capital plan, including expected capital needs in Tennessee totals $11.2 billion, demonstrating confidence in the long term fundamentals of our business. I am pleased to say that the SPIRE Board of Directors approved a dividend increase of 5.1%, bringing the annualized rate to $3.30 per share. Spire has continuously paid a cash dividend since 1946 and 2026 will mark the 23rd consecutive year that the dividend has increased. As you can see on Slide 5, we checked all of the boxes on our fiscal 2025 key business priorities and more. It was a year of strong execution and we are committed to delivering strong results in fiscal 2026 and beyond. With a solid foundation, we're confident in our ability to deliver sustainable value for our customers, communities and shareholders in the years ahead. Let's turn now to Slide 6 for an update on our pending acquisition of the Piedmont Tennessee business which remains on track to close in the first quarter of calendar 2026. We completed the Hart Scott Rodino Review in September, marking an important milestone in the approval process and we recently received approval from FERC for the transfer of Piedmont Tennessee's gas supply contracts. Tennessee Public Utility Commission approval is pending and we continue to work closely with the Commission. Turning to our financing plan, we are pursuing a permanent capital structure that is consistent with spire's current credit ratings. Our approach remains largely the same and includes a balanced mix of debt, equity and hybrid securities and ensuring we maintain financial flexibility and strength. We expect a minimal amount of SPIRE common shares to be issued as a percentage of total financing and we have launched a process evaluating the sale of our gas storage facilities as potential sources of funds. We're targeting calendar year end for the completion of this evaluation process. Transition planning for the acquisition is well underway. A seamless transition for both customers employees is our top priority. We're led by an experienced integration team and have an 18 month transition service agreement to provide continuity and support once closed. We are making solid progress on all fronts, regulatory, financial and operational. We are excited about the opportunities this acquisition brings and are committed to delivering value to our customers, employees and shareholders as we move forward. Turning to Slide 7 with the addition of Tennessee, SPIRE will operate across states with constructive regulatory frameworks and minimal regulatory lag. This strengthens our ability to deliver consistent and balanced growth across our utility businesses, improving diversification and stability of earnings. Importantly, each jurisdiction is supported by recovery mechanisms that encourage investment in critical infrastructure. Looking ahead, by fiscal year 2030, we expect our total rate base and capitalization to grow to $10.7 billion from an estimated $8.2 billion at the end of fiscal 2026 driven by our robust capital plan. Our long term adjusted EPS growth target is supported by compound annual rate base growth in Missouri of about 7% and compound annual growth in Tennessee of approximately 7.5%. We also expect 6% regulated equity growth in Alabama and Gulf As a reminder, under the RSE mechanism in Alabama we earn on regulated common equity rather than rate base, which is expected to outpace the total capitalization growth rate. I'll now turn the call over to Adam for a financial review and update. On guidance and outlook.. Adam.

Thanks Scott and good morning everyone. Let's review our fiscal 2025 results and our guidance for 2026 and beyond. In fiscal 2025 we reported adjusted earnings of $275.5 million or $4.44 per share, compared to $247.4 million or $4.13 per share in the prior year. These Results include a fourth quarter adjusted loss of $24 million or $0.47 per share, reflecting the seasonality of our businesses in the quarter. Adjusted earnings were at $3.5 million or $0.07 per share above last year, but fell below our expectations due to higher utility O&M expense. Looking at the full fiscal year for our business segments, gas utilities earned $231 million, up almost 5% over $10 million, up almost 5% or over $10 million from last year as Israel's recovery in Missouri and new rates in Alabama were partially offset by slightly lower usage in Alabama, higher O&M and depreciation expense usage net of weather mitigation in Missouri was comparable in fiscal 2025 to the prior year. Midstream delivered earnings of $56 million, up almost $23 million from last year, driven by additional capacity and asset optimization and spire storage, partially offset by higher operating costs from higher activity and scale. Gas marketing earned $26 million, an increase of $2.5 million, reflecting the business being well positioned to create value. This was partially offset by higher storage and transportation fees and finally, other Corporate costs were $38 million, nearly $8 million higher than the prior year. This reflects the absence of the prior year benefit of an interest rate hedge and higher interest expense in the current year. Turning to slide 10 and our updated capital plan which includes the anticipated Tennessee spend, our latest five year investment plan totals $4.8 billion from fiscal 2026 through fiscal 2030 and we project a 10 year capital plan of $11.2 billion. The majority of this investment, 70%, is dedicated to safety and reliability projects, highlighting our commitment to upgrading distribution infrastructure and ensuring the integrity of our systems. Another 19% supports customer expansion and new business connections helping us to safely deliver reliable and affordable natural gas to more homes and businesses. As a reminder, almost all of our 10 year capital expenditure plan is targeted towards utility investments and we expect to recover a significant portion of through forward test year rate making true up mechanisms or other constructive regulatory tools helping balance infrastructure investment with customer affordability. Turning now to our growth outlook on slide 11, as Scott mentioned, we are reaffirming our long term adjusted earnings per share growth target of 5 to 7% anchored on the midpoint of our fiscal 2027 guidance range of $5.75 per share. This growth is supported by expected rate base growth of approximately 7% in Missouri, 7.5% in Tennessee, in addition to 6% equity growth at the Alabama Utilities. This also reflects timely recovery of investments across all of our jurisdictions. For fiscal 2026, we've issued an adjusted EPS guidance range of $5.25 to $5.45 per share at the midpoint that represents over 20% growth from our 2025 results driven by the rate case outcome in Missouri. This range excludes the pending acquisition of the Piedmont Tennessee business but does include a full year of anticipated earnings from. our gas storage facilities.. We will revise our earnings expectations if the outcome of the storage asset sale evaluation materially affects our outlook. Looking ahead to fiscal 2027, our adjusted EPS guidance range is $5.65 to $5.85 which incorporates a full year of earnings from Piedmont Tennessee and excludes the storage facilities due to the expected sale of the assets at the midpoint. That's 7.5% growth over the 2026 guidance midpoint and nearly 10% compounded annual growth from our prior long term base of $4.35 in fiscal 2024. This strong growth is driven by execution on infrastructure investment, constructive regulatory outcomes and the strategic acquisition of Piedmont Tennessee to expand our gas utility business. Turning to our business segment guidance on Slide 12, we anticipate our gas utilities will generate between $285 million and $315 million next year due to the combined impact of new Missouri rates effective October 24th and anticipated ISRs revenues from a filing expected later this month. New rates in Alabama and Gulf under the RFC mechanism are also expected to benefit earnings beginning in December, partially offsetting these favorable items. We are targeting O and M expense to increase below the rate of inflation in addition to higher depreciation and interest expense. Turning to gas marketing, we anticipate adjusted earnings of 19 to $23 million reflecting expectations under current market conditions. Midstream adjusted earnings are projected to range between $42 million and $48 million in fiscal 2026, including a full year of storage and pipeline operations. Within the storage business, we expect to realize the full benefit of the SPIRE Storage west expansion. Offsetting this are higher operating costs, increased interest and depreciation expense in addition to a decline in year over year optimization related earnings. We anticipate the midstream business mix to be 65% storage and 35% pipeline during fiscal 2026. I would like to note that FERC approved our request to merge the STL and MOGAS pipeline with the merger targeted for completion by January 1, 2026. And finally, corporate and others anticipated to be in the range of negative 31 million to negative $37 million, an improvement from last year's loss of $38 million, primarily driven by lower interest expense resulting from reduced long term debt rates. We've updated our three year financing plan for our base business as outlined on slide 13. The plan does not include financing related to the pending acquisition of the Piedmont Tennessee business which we expect to update along with the conclusion of the Storage Asset sale evaluation. Our equity needs through fiscal 2028 are minimal and are expected to be managed through our ATM program. Turning to the long term debt needs for our current base business, our three year financing plan assumes refinancing and maturities an incremental debt of approximately $625 million. This includes the $200 million of first mortgage bonds issued by Spire Missouri last month. We continue to target FFO to debt of 15 to 16%, providing 300 basis points of cushion above our S and P and Moody's published downgrade thresholds of 12 and 13% respectively. With that, let me turn it back over to you Scott Thanks Adam.

As we look ahead to fiscal 2026, our priorities are clear and aligned with Spire's commitment to operational excellence, regulatory engagement, financial discipline and strategic growth. First and foremost, we remain focused on safely delivering reliable natural gas services to our customers. We we are executing on our capital plan for the year targeting safety and long term infrastructure resilience while maintaining customer affordability through disciplined cost management. On the regulatory front, we're working toward constructive outcomes across all of our jurisdictions. A key step will be preparing to file a future test year rate case in Missouri to ensure timely cost recovery and support ongoing investments. From a financial perspective, we are committed to delivering on our fiscal 2026 adjusted EPS guidance of $5.25 to $5.45 while maintaining a strong balance sheet that supports both our growth strategy and long term shareholder value. Finally, we are making significant progress with the acquisition of the Piedmont Tennessee business. Our focus is on financing and closing the transaction which includes completing the evaluation of the sale of our natural gas storage assets. We remain laser focused on ensuring a seamless integration for customers and employees. Together, these priorities position SPIRE to deliver strong operational and financial performance and sustainable long term growth. We are confident in our path forward and energized by the opportunities ahead. Thank you for your continued support and interest in spire. We will now take your questions.

We will now begin the question and answer session. To ask a question you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time we will pause momentarily to assemble our roster. The first question comes from Julian Dumolin Smith with Jefferies. Please go ahead.

Hi, good morning team. It's Paul Zimbardo filling in for Julian. How are you? Thank you.

Hi, good morning Noel. Thank you for the update. The first question I had was just if you could give a little bit more details and color on the long term growth rate and just really are you expecting continued improvement in earned roes within that path and just any commentary you can share on like how to think about gas marketing midstream growth in that profile as well.

Yeah, sure. This is Scott. So clearly we provided two years of guidance on this call and the primary reason for that is there's a lot of things happening within the business over the next 12 months in this fiscal year and then using 27 is perhaps a cleaner year based on the assumptions that we provided in the prepared remarks. So to the point when we think about earned returns within the utility coming out of the Missouri rate case, there's a step up associated with that as we've brought capital into base rates from an extended period over the last several years, capital that had not passed through our is risk mechanism. And so when we think about earned returns in utility, particularly in Missouri, we're getting closer to our allowed returns in Missouri. We'll file another case in Missouri in the fall of next year and we'll need to prosecute that case. That case will be based on a future test year, but that the outcome of that case is not going to be reflected in the FY27 time period. So when you think about the guideline that we're looking at for FY27, the earned returns in Missouri will be a little less than what they are in 26. When we think about that, when we think about Alabama, the earned returns are close to are allowed as we have a forward looking mechanism there that works annually and we're currently in the process of having it reviewed right now. Marketing in Midstream. So as we think about the guide, clearly all of midstream is in the guide for next year. But as we said on the call, we pulled storage out for FY27 and then marketing, as you know, we rebase every year and it's not part of our growth story when we think about how it supports the overall growth picture or at least the guide for five to seven.

Okay, great. It does sound like you would expect using that 27 base some tailwinds on earned ROE based on that cadence you described, if that's fair.

Yes, that's correct.

Okay. Okay, great. And then any additional detail on the FFO to debt target, the 15, 16%. Just how does that also evolve? If we use a 2027 kind of jumping off point, where in that range do you expect to be and how does that trend over time? Thank you.

Yes. And Paul, as we've talked, we're at the bottom of the threshold ranges now, but that's a lot of that is premised on just getting back into the right recovery path for Missouri. And so we see a pretty steady movement up into the middle of the threshold bands. Both Moody's and S&P going forward really premised on the recoveries in Missouri. But we, you know, we're also taking I think a very deliberate financing tact with Tennessee to make sure that that is also credit positive as well.

Indeed. Yes. Okay, thank you. That makes sense. Appreciate.

Thanks, Paul.

The next question is from Gabe Maureen with Mizuho. Please go ahead.

Hey, good morning everybody. I just wanted to ask a question on the financing mix and timing. You know, Adam, has anything shifted in your mind I guess since you announced the acquisition? Just kind of your latest thoughts. You mentioned the minimal common equity issuance. Just maybe latest thoughts on the financing mix and timing? No big update. We continue to see feel confident about taking a very balanced mix of debt and equity. Obviously we're taking on these assets debt free. So we need to recapitalize rate base at Tennessee. So you can expect that. And then obviously part of that is our evaluation of the storage business and more to come there. We don't have an announcement there but that's, you know those are terrific assets and we are seeing quite a bit of interest there. But we will be making an announcement at some point in the not too distant future. Gotcha. Thanks Adam, I appreciate that. And then maybe if I can ask just on your O and M assumptions kind of going forward it seems like 2017, six year below aiming to stick below inflation. Does that stick for the rest of the plan? And I guess just sort of an overarching basin with the basis with the interaction or sorry the integration planning going on between the utilities. Any best practices or major initiatives that you think you'd share between the two that would I guess keep a lid.

On O and M. Hey Gabe, this is Scott. Great question. Yeah, O and M, our guide for this year is to be below the rate of inflation. Historically that's been our guide year over year and that was actually our performance this year was below the rate of inflation. When you think about the integration activities, we're in the very early stages. But that is our theme as we step into the integration activities. Anytime we go through these, we look to best practices across both organizations and as those that know us or have followed our story for a long time. We have been through this before and when we do that we find things that others do well and we want to make sure we incorporate that into our go forward business. So we'll have more to talk about that as we get a little further into the integration planning and start working more closely with the assets themselves once we close.

Thanks, Scott.

The next question is from Paul Fremont with Ladenburg. Please go ahead.

Thanks. I guess my first question is with the future test year rate adjustment taking place in 28, could 28 be a year that falls outside of that 5 to 7 range given the fact that you'll be further potentially narrowing your under earning in Missouri.

Yeah. Hey Paul, it's Scott. Maybe Adam and I will both tag team this. You know I think a couple things to think about when you when we pivot to future test year, we're going to bring forward some capital into that process. And so we'll have to get through the process before we know what that will be as well. But within the range of what we're providing. We're basing that based on what we know right now and the best, best guess that we have yeah, we don't.

Get too far ahead of rate-making, given that that's another couple, you know, that's a couple years out. But I think your implication, Paul, of a, you know, a more fully earned ROE is usually the implication around future test years. So we don't want to get ahead of that. But that's, we would expect, you know, certainly some improvement there.

And it sounds to me like you're more confident about your decision to sell storage. I think on the last call, you know, you had indicated that would depend on levels of interest. I assume the levels of interest are strong enough that you now feel that it will be sold.

You know, Paul, we're still in the evaluation process. I, as I mentioned earlier, we have seen quite a bit of interest and strong interest in the assets, but more to come there. We'll make an announcement once we get to a conclusion of that process.

Great. And you're expecting to make an announcement one way or another between now and the end of the year, right?

Yeah, we're targeting by the end of the calendar year.

And then just going back to sort of your original comments. If you were to sell the storage, the remaining sort of balance of equity and debt, has that changed since your last call?

Well, that is, that certainly figures into the mix of financing. So that we will, I think once we get to the point of an announcement, we would shed some more light on that.

Okay, and last question. Can you be more specific in terms, in other words, if you're not issuing straight equity, what else would sort of fall into the category of fulfilling your equity need?

I mean, there's other, there are certainly other securities external that we would have access to markets to that would provide equity like coverage there, whether those are equity linked securities or hybrids or what have you. But they're, you know, I think there are some other options there.

And junior subordinated. Dad, is that included as well?

Yeah, I'm using that sign, you know, with, along with, I would use that.

Terminology with a hybrid. Yeah, got it. Okay. That's it for me. Congratulations.

Thanks, Paul. Thanks, Paul.

The next question is from Alex Kania with btig. Please go ahead.

Good morning. Thanks for taking my question. Just would you mind reminding me again just on the, within midstream, just the rough split, I think it was 2, 1/3, 2/3 on kind of pipelines versus storage. And would that be like earnings or would it be EBITDA as well, is fair?

Yeah, it's 1/3 pipeline.

2/3 storage is kind of the split. And depending on which way you Cut the data. It's about the same. So whether it's EBITDA or earnings, about the same.

Great, thanks. And then maybe we're just taking kind of a step too far down the path of an asset sale. But just if there was a decision to move forward with the sale, does that, does that kind of. Would that be big enough to sort of change your kind of long term balance sheet targets, thresholds and things like that as you look forward given regulated assets?

Yeah, I mean, too early to comment. That's part of the evaluation process. There'll be more as we announce the conclusion of the evaluation process.

Good, great, thanks. And my last question just is, you know, on the transition to the forward test here in Missouri, you know, do you anticipate or I guess, you know, do you think that all parties are sort of, you know, on the same page just in terms of how the process is going to look as they, you know, kind of think about the rate making kind of a slightly different paradigm as it had been in the past? Is there any education that needs to be done or, you know, any twists that we should be kind of aware of leading up to the filing?

Yeah, no. So I think you're spot on. It's a case of first impression. And so all the parties are going to need to work together in order to understand both what the filing requirements would be and how to prosecute inside that paradigm. And so all parties will work together. That's historically how it's worked here. And so we look forward to that process and going through it together.

Great. Thanks very much.

Thanks, Alex.

Again, if you have a question, please press Star then one. The next question is from Selman Akiol with Stifel. Please go ahead.

Thank you. Good morning. Two quick ones for me. Maybe you're at the higher end of your growth range. And so could you remind us just in terms of how you think about the dividend in terms of payout ratios and sort of growth going forward?

Hi, Solomon, it's Adam. We would continue to expect the dividend to grow basically at our earnings growth rate. And we do target the kind of the common payout ratio for utilities in that 55 to 65% range.

Very good. And then also as you think about your sort of long term capital needs and you gave a 10 year sort of outlook. Can you just remind us in terms of how much equity you're thinking about that overall?

Yeah, so we did refresh our financing needs in this and you can find that at the back of, I think the earnings presentation. But we really continue to see a minimal amount of equity per year that, you know, some think of that as some additional support for the utility CAPEX program. But, you know, when I say minimal, it's kind of in that zero to $50 million range. So not. Not anything particularly significant.

All right. Thank you very much.

Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Megan McPhail for any closing remarks.

Thank you for joining us this morning. We look forward to speaking with many of you in the coming weeks ahead. Have a good day.

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