Good morning, and welcome to the Spire Second Quarter Earnings call. [Operator Instructions]. I would now like to turn the conference over to Scott Dudley, Managing Director, Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to our second quarter earnings call. We issued our earnings news release this morning, and you may access it on our website at spireenergy.com under Newsroom. There's a slide presentation that accompanies our webcast, and you may download it either from the webcast site or from our website under Investors and then Events and Presentations. Presenting on the call today are Suzanne Sitherwood, President and CEO; Steve Lindsey, Executive Vice President and Chief Operating Officer; and Steve Rasche, Executive Vice President and CFO. Before we begin, let me cover our safe harbor statement and use of non-GAAP earnings measures. Today's call, including responses to questions, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although our forward-looking statements are based on reasonable assumptions, there are various uncertainties and risk factors that may cause future performance or results to be different than those anticipated. These risks and uncertainties are outlined in our quarterly and annual filings with the SEC. In our comments, we will be discussing net economic earnings, contribution margin, adjusted EBITDA and adjusted long-term capitalization, which are all 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 our news release and the slide presentation. So with that, I will turn the call over to Suzanne.

Thank you, Scott, and good morning to everyone joining us for our second quarter update. I'd like to begin by acknowledging that we're all adjusting to a new normal. As we focus on staying safe and healthy during the coronavirus, we're living in a world of video calls, FaceTime, webcast, working from home, wearing face masks and washing our hands a lot, and we're connecting in new ways. Like you, many of us aren't in our offices and aren't able to see one another face to face. In fact, today is the second time in nearly 2 months, that Steve Rasche, Steve Lindsey and I have been in the same location. Rest assured that we're dispensing and disinfecting and getting the job done. It's not easy to stay connected in times like this. At Spire, connecting with us should feel like a handshake at the front door. But without the ability to actually shake someone's hand, we found ourselves leaning into other expressions of caring and friendship. Like how we listen, how we check on our elderly neighbors, how we smile, and wave hello to strangers. It's how our crew start work, take off their hat and put their hands over their heart when a funeral precession drives by. These moments of connection and curing inspire the good in all of us and provide the energy it takes to walk through a time like this. A time when some communities are impacted more than others, but none go untouched. A time when we understand how essential our service is and how people count on us to deliver. A time when safety has an expanded meaning, and Personal Protective Equipment becomes an everyday necessity. But at Spire, it's easier for us to pivot. We have a very clear mission that guides…

Thank you, Suzanne. I want to begin by acknowledging the outstanding efforts of our employees during the difficult times brought on by the coronavirus and the resulting economic shutdown. We're providing great service for our customers while taking extra care to ensure their health, safety and well-being as well as your own and helping support our communities in this time of need. And we all thank you very much. Suzanne mentioned, we quickly activated the CMT with 10 primary areas of focus. This morning, I'd like to take a moment to outline the steps we've taken to address the coronavirus limit its impact on 3 of those areas; our employees, customers and communities. Keeping these stakeholders healthy, safe and supported is more than a priority for us, it's a core value. It's who we are at Spire. For our employees, we have educated everyone on healthy practices and encourage people to follow the advice to the experts, including the CDC and other public health organizations. Our guidelines include staying home when not feeling well, frequent hand washing, social distancing and other best practices. We implemented policies to help employees handle the impacts of the coronavirus, including taking care of family members or dealing with children being home from school. An example of this is the implementation of our emergency LIHEAP program. For our field workers and technicians, we have taken extra safety precautions to protect them and our customers. We prescreen a customer's premise to ensure that no one is sick or symptomatic before we allow our workers to enter a home or business. And we equip our employees with Personal Protective Equipment. For our office-based employees, we implemented a work-from-home policy starting in March and extending through May. Along with work from home and social distancing, we've also implemented…

Good morning, and let me add my wishes for good health and safety to everyone and a huge shout-out to all of our first responders, health care workers and our own team who continue to serve bravely every day. Let me cover our quarterly results, the financial impact of coronavirus and an update to our targets for the second half of our fiscal 2020. Turning to our results for the quarter. We delivered consolidated net economic earnings of $144 million, down $3.9 million from last year. Our gas utility posted earnings of just over $144 million, down $2.4 million from last year as a result of warmer weather and losses on investments. Gas marketing delivered earnings of just over $5 million, down just over $1 million from last year as higher volumes from our expansion were offset by less favorable market conditions and higher costs. And we saw higher earnings from the Spire STL Pipeline, which entered service last quarter, a lower loss from Spire Storage, reflecting the benefits of our operational improvements and slightly higher corporate costs. Looking at our per share results. Current year earnings of $2.75 per share were down $0.15 from last year, reflecting lower earnings as well as the impact of preferred and common stock issued over the last 12 months. I'd offer 2 additional comments. First, as Suzanne mentioned, we saw a limited financial impact from the coronavirus this quarter since it really didn't hit our service territories until mid-March, more on the forward impact in a few minutes. And secondly, as reflected here, net economic earnings continues to include all ISRS revenues, or saying it another way, excluding the provision we booked for GAAP purposes. For this quarter, ISRS revenue subject to a provision were $2.2 million, including interest, bringing the cumulative provision…

Thank you, Steve, and Steve. As we close today's presentation, I think it's important to take a moment to acknowledge the strength of our collective energy. Spire's utilities have been operating for more than 160 years, thanks to great leadership, great partnership and a legacy of hard-working caring employees, we have survived wars, the great depression, weather disasters and the 1918 influenza pandemic. The long successful history and with the support of our investors, our communities and our public policy leaders, we will work our way through the impact of the coronavirus. We'll do it together, and we'll do it in a way that brings sustained long-term value for our shareholders, customers and the communities we serve. Before we open for questions, I'd like to thank Spire's employees, many of whom are listening to this webcast. I know how hard you work, and I know how much you care about one another. Our customers and the communities that we live and work in. You make me proud every day, and I am forever grateful for the way you rally to answer challenges. You are leaders, you are conveners, you are helpers, you are heroes. You understand that fundamentally, energy exists to help people and you give your all to deliver energy safely, reliably and with all your heart. To the investors and analysts on the call today, we'd like to thank you for your investment and the trust you place in us. On behalf of our Board of Directors, our executive team and our employees, we take that trust very seriously, especially during these uncertain times. We look forward to seeing you again soon, either as part of the upcoming virtual AGA Financial Forum or other virtual conferences and road shows in the months ahead. Of course, we look forward to the time when we can, once again, meet face to face. Until then, we wish you well and trust that you will stay safe and healthy. Now we'll take your questions.

[Operator Instructions]. The first question comes from Richie Ciciarelli with BofA Securities.

I hope everyone is healthy and safe today. Just had a couple here on ISRS. Can you just go over the difference between the 2 versions of the House and Senate Bill and where you ultimately expect that to land once it gets reconciled? And then on the recent settlement with the ISRS filing, where -- I guess what changed this time around with OPC, where you were able to garner a settlement there?

Richie, this is Steve Lindsey, and I appreciate you calling in this morning. On your first question relative to the legislation, in terms of the content of our portion, there's really not that much difference between the House and Senate bills. What you have are some things that get attached as they go through the process. And so really, we're fairly consistent with those bills. And again, if you go back to what they're trying to accomplish, it's to really reinforce what the intent of the statute was when it was put in place over 15 years ago, which is around infrastructure upgrades, particularly around bare steel and cast iron and to really just kind of codify some of that in terms of the language. So I don't think there's a lot of difference between those 2, and that's why when it goes back to the committee for reconciliation, there'll be some cleanup relative to the things that are attached there. Relative to your second part of the question, in terms of the stipulation, I think we've just been working collectively. And again, we felt this way all along that the pipe that we've been replacing meets all the requirements relative to what needs to be part of the infrastructure upgrades, including in the ISRS program. Even to the fact that we still agree that the plastics that we've been replacing are a much more efficient way to upgrade our system, but this primarily focused on the bare steel and cast iron and did they meet those criteria. We're providing additional evidence. But I think in terms of the reason that we've got to this is because we continue to work together to strongly support, again, the intent of why we've been replacing this pipe around safety, reliability and efficiency of operating our systems. So I think it's progress, if you want to look at it that way. And again, even with the cases that are still there, we'll continue to present evidence and hopefully make our case around the pipe that had been replaced in previous years is the same criteria that we're using going forward.

Got it. That's very helpful. And then just around your CapEx profile. I think you might have been one of the few companies to raise your spending this year for 2020. Just curious, what's given you the increased confidence to execute on the plan this year, given the headwinds with COVID-related pressures?

Richie, this is Steve. Great question. A couple of things. First of all, I guess, the downside, the warmer weather that has impacted our margins is it does give us a little bit better working conditions on our capital spend. And as Steve talked about, we had a strong winter season, and now we're heading into the heart of our capital spend. So I think that's point number one. And then number two, playbook for utilities as we look at how we can best try to offset both the headwinds from weather and also the headwinds from coronavirus that we talked about ramping up our capital spend is one of those activities. It's clearly something that helps get us back to work, and we're doing it with the cooperation and understanding of the leaders throughout our states and our jurisdictions. And I think it's just helping us to ensure that not only are we doing the right thing by upgrading our infrastructure, but we're also doing it in a way that's going to make us even more resilient as we go forward. So I think that it's really just an evolution of all those things. And again, you've seen us ramp up and ramp down in the past, and we think this is an opportunity for us to ramp up a little bit.

And Richie, this is the other Steve, let me follow-up from an operational perspective. I would like to reinforce that as we -- and again, while this past quarter was only really several weeks, in terms of the measurement period, we never stopped working. And you'll hear some businesses talk about return to work. We talk about it more as the transition. And if you think about it from a construction and capital perspective, we really didn't take our foot off the gas. We obviously changed some of our processes and procedures relative to Personal Protective Equipment. And to be quite honest, we've limited going into customers' homes to do service tie-overs and changeovers. We'll go back and do that. But again, in terms of the infrastructure that we've been working on and we'll continue to, that really didn't slow down, and that's a great tribute to our frontline employees, the management that's out there that really pulled together, if you think about our 3 strategic areas of focus, one of those is innovation, and we got innovative in the way we're continuing to think about our work. The other part I would just want to reinforce is that our capital for these type programs is fairly evenly distributed across our 3 major operating areas in terms of the East side of Missouri West and Alabama. And so we're not just impacted in one area in terms of ratcheting upper back. We're fairly evenly spread even with the new business as well. So if you think about that increase that we saw year-to-date of nearly 10% that I referenced, that's pretty evenly spread across all of our operating companies, which I think gives us a good balance as well.

The next question comes from Michael Weinstein with Crédit Suisse.

I was wondering if you guys have a better sense at all how whether legislation would preclude the need for a ruling at the Supreme Court or not at this point, after confirming with your own lawyers and maybe outside counsel.

Michael, this is Steve. The Supreme Court opportunity, at least for the rulings that came out of the appellate court has already passed. They opted not to take the appeal that we and the Public Service Commission put for it. So really, the legislation that Steve Lindsey talked about is the best opportunity for a longer-term fix. We obviously are continuing to work with the Missouri Public Service Commission, the staff, the OPC and the other interveners to not only crispen up the support for our filings. But then also to get to a more unified view going forward and what makes sense for our customers.

And I would just say, too, that's all consistent with when we started this journey, we pursued a regulatory legislative and judicial outcome. And so all 3 of those paths. So we're on track with what we strategically set out to begin with.

What's the July 16 decision that we're waiting on? What is that?

Okay. So this would be -- this is on the cases that were remanded back to the commission. So once they go back to the Public Service Commission, they, in essence, have 120 days to make a decision based on those cases that did not go through to the Supreme Court. So you got several moving parts that are going on here from a legislative perspective and regulatory, but that is on the cases that were under appeal that have been remanded back to the commission.

The decision you're referencing there is the decision by the regulators, right, on the remanded, right?

Yes. It's just -- had been remanded back to the Missouri Commission, yes.

Got it. I got it. Okay. And on the guidance, the long-term guidance, the base here is still 2019? Or is there a base here?

Yes. I chuckle, Michael, it's a fair question. I think the answer is if you look at our capital spend program over 5 years and driving rate base growth of 7% to 8%, we expect that we should be able to drive the kind of growth that we've talked about in the long term over the bottom line. I chuckle because we're all dealing with, and we've spent a lot of time, and I know our peers are because you've been on those calls. A lot of time dealing with the current situation. And in fullness of time, as we understand what's happening in the current year 2020, we'll find a way to rebase and make sure everybody understands. But right now, we're just trying to make sure that we and our customers get through this year, and we do it in a fashion that we feel good about. So that when we hit 2021 and beyond, we're hitting it at full steam with our customers coming along right.

Yes, that would be my understanding. I mean I think a lot of people are trying to look through 2020 as an abnormal year. So that's -- I just wanted to see what that's like.

It definitely could be an abnormal year.

Yes. I think a lot of people would like to look through this year.

[Operator Instructions]. The next question comes from Brian Russo with Sidoti.

Just curious on the weather normalization mechanism in Missouri, that was "ineffective" what -- structurally what made it ineffective? And what would you need to do in so far as further discussions with regulators and/or during your next rate case to fix it? Or can it ever be perfect?

All right. Well, Brian, this is Steve Lindsey. Thanks for the question. And I wish I'd knew all the answers to that because it's a very complex formula. I think the one thing I would say is we have something in place now that we didn't have before, which is positive. It did help, but it didn't completely address the differences between weather, obviously, and volumes and the revenue. So I think there's a couple of pieces to it. One is -- and I think, Steve even mentioned this, first of all, it does not even include the small commercial class and some of those others that are really weather-sensitive and look and behave a lot like residential class. So I think that's one opportunity that if you look at other weather normalization mechanisms in the country. They do include that. So that's clearly an opportunity. The other is that it's not linear. And what I mean by that is every day isn't the same. Every week isn't the same as you go through the month. So you could have some outcomes that show results of degree days that didn't really translate to the way gas flowed from a customer's perspective. So I think there's opportunity as we move forward. And again, it's a start. It's not far. We recognize that, and we think we'll be able to make a pretty strong presentation as to where the deficiencies are because, again, the program is intended to mitigate risk. As Steve indicated, if it's too cold, we shouldn't benefit. If it's too warm, we shouldn't be harmed, and it's really to try to tighten that band. And what we would look to do going forward is to tighten the band even closer than what it is now.

Got it. And remind me, what percent of the overall bill is a fixed charge?

And that roughly depends on the type of year that you're having, but it could be 25% -- 20% to 25%, I think, based on a residential customer. And again, that has variability, obviously, based on the type of winter that you have because that's where most of the volumetric fees comes in.

Okay, great. And just on the Supreme Court denial of your request for rehearing. Remind me how many millions of dollars of revenues is that? And when might that impact net economic earnings? Is it after a commission decision, so the middle part of July or from a legal perspective, do you now have more clarity as to the recovery of those costs? I'm curious to when a provision might be taken against net economic earnings.

Yes, Brian, this is Steve Rasche. There's a detailed chart in the appendix to our presentation that you can take a look at, which really outlines the various layers of ISRS. The total provision, that is the total of all the collections that are included in the rulings that are part of the appellate court decision and then the Supreme Court's decision that they can honor $16.9 million. And that we continue to collect on those, and we're collecting $2 million and change every quarter. So up until the time that the Missouri Public Service Commission makes a final determination, we will continue to collect those funds. I would point out, there are various components of that $16.9 million. Part of it has to do with the conclusion whether cast iron, bare steel is worn out and incinerated and another component about incidental plastics that are replaced along with longer lines of the cast iron, bare steel. And the Public Service Commission is going to have to weigh in based upon the remand from the appellate court on each one of those. When they reach their decision and that's that July 15 date that we've been talking about, then the commission will not only decide on the -- how to handle each of those individual ISRS determinations, but it will also determine whether or not the amounts will be refunded to the extent they determine there's a refund or if the amounts will be used in some other fashion. And the commission has full right to be able to decide how they want to handle that. So again, that -- at that point, once we have the determination from the Public Service Commission, then I think we're obviously obligated to take a look at our net economic earnings calculation. And to the extent that those revenues are now not going to be earned revenues or earnings that we would adjust our net economics measure at that point. And just to keep it in perspective, of the $16.9 million, a little over $4 million of that impacts our current year. Vast majority of it was the initial provision that we booked for the last fiscal year.

Okay. Got it. Understood. And then just on the equity. If I heard you correctly, you issued $10 million of equity in the fiscal second quarter, and that satisfies your needs for the entire year?

No. I mean if you go to our guidance page, you can see that we have a guided range of equity of $50 million to $100 million is our total need for the year. So in the first quarter, we knocked out roughly $10 million of that at the low end. And the beauty of where we stand is we do have -- and we're in ongoing discussions with our rating agencies. We do have some leverage and some cushion in our credit metrics, which are the ones that everybody is always looking at. So we do believe that we will be in the equity markets later this year as long as the markets continue to rebound in an orderly fashion. But it's not anything we have to do, but I think our preference is in order to maintain strong credit metrics and a balanced capital structure that it would be appropriate for us to get in the range of the equity that we've guided in our long-term guidance.

Okay. And then the February stipulation on $11.1 million revenues under ISRS. Is that what you filed for?

Boy, we filed for -- the reason why I'm struggling, Brian, is that we filed for lot of different numbers because we filed for amounts that had not been awarded for plastics in prior filings. I think the best number to think about in terms of what was our net expectation in terms of what we were going to get out of the filing, it was probably in -- I don't have it off the top of my head. It was in the high $11 million sort of low $12 million range. And there's always some difference between what we expect and what we actually get because our ISRS filings generally include 45 to 60 days' worth of forecasted capital spend. And so that always gets trued up in a rate case, and that is clearly what happened in this filing for ISRS, I'm sorry.

Okay. And when does the Missouri legislature end this year?

Well, we're kind of writing the playbook as we go right now. There's probably at least another couple of weeks of session. I know that, again, this is not a special session. This was just to start-up again, and we were very pleased to be included as part of the legislation is being considered. But we came out -- or as we talked about, we're out of both chambers, and now we're in reconciliation. So we view that ours is moving forward at a pace that at least we're pleased so far.

The next question comes from Selman Akyol with Stifel.

A lot has been asked and answered. So just a few follow-ups and clarifications, if I could. Just following up on that last question. So we'll get a legislative response one way or another by the end of the month. If that's successful, then can you -- does that have any impact on sort of the July outcome, in your opinion?

Well, I would say that it doesn't directly because it is a looking forward. But I think what it does is give some hopefully, guidance to the commission that what we've been, again, operating under the assumption, though, for over 15 years, has been validated and has been cleaned up, if you will, in this legislation. Again, we think that everything we've been doing from this point forward from when the program went into place has met those requirements. I think this reinforces that. So hopefully, from the commission's perspective, they can use that as part of their decision-making in that -- the infrastructure that we've been upgrading does meet these requirements.

And I'm sure everyone on the phone is aware but it's not unusual for a House to produce a bill and then the Senate sent over to the other chamber that, in this case, the Senate, they pretty much write it the same way, but not exactly the same way. So then the committees are created. And as Steve said, it goes to conference so that they can settle those differences. So that's not unusual at all in the legislative process.

Right. Let me just ask this. Your bill is not attached or it doesn't include other things that would be controversial per se. So if it could get to the Governor's desk, I think he's in...

I wouldn't call it controversial, but like a lot of bills, they're written in one chamber for a specific need, and then it goes to the other chamber and the other chamber adds other elements, which is what happened in this instance. So that's when the 2 committees come together in conference and sort of clean the bill up to -- and that's where we are. And again, that's not uncommon.

Okay. I think you referenced additional investment in storage for $10 million. How much more is to go there?

Yes. Selman, this is Steve. We're still in the process of figuring out what our long-term development plan is, obviously, given some of the things we've been focused on. We're clearly very pleased with the operational performance of the storage field this winter, and you saw that in the improved operating results. And we -- but we haven't yet come up with the longer-range plan, but what our commitment to our investors and to you all is that we'll continue to bring you along for the journey. And so as we think about the amount that we are going to spend between now and the next call, that's the $10 million that we increased in our capital spend target for this year.

Okay. And then just kind of going back to the ineffectiveness of the weather mitigation. And I know you guys are looking at ways to improve that. Does that -- will that have to wait really until you go through your next rate case in order to be improved? Or could it be improved before that?

That would be -- yes. So your question basically having answered it. So it is part of the overall rate structure, and so that will be part of our next rate filing, yes.

Yes. Which I would say, again, that's not unusual. The 2 requirements of a rate case are set revenue requirement and rate design. And it's very rare for commissions to take up either rate design or revenue requirement outside of a rate case. It does occur, but it's very rare. And I would just add on, I'll get a little bit of the floor here. It's not unusual either for these mitigation mechanisms to be in place as a starting point because they are complex and there are different classes of customers and even within these classes, people use energy in different ways, either all heating or some or more year around and those sorts of things. So they are a bit complex. So like Steve and Steve mentioned, I was glad to see the commission work with us and start, and we'll continue to refine as we solve cases over time.

[Operator Instructions]. The next question comes from Richard Sunderland with JPMorgan.

Just one for me today. The STL Pipeline, additional capacity, if I missed this earlier, apologies, but any update on discussions around contracting that? And I would imagine there has been some impacts from COVID. So maybe expectations at this point, if any?

Yes. Thank you for the question. We'll continue to look for opportunities. But right now, first of all, I want to confirm that it did go into service and served the side of the state very well as we went through the winter. We'll continue to operate that pipeline in the way it was designed to do and access gas from the Northeast to bring to this side for our customers here. Again, as opportunities emerge, but I think a lot of those opportunities have probably been put on standstill right now as we're going through some of these challenges. But as those opportunities are out there, we'll continue to pursue those with the additional capacity.

So just to follow-up real quick. The opportunities that you see then, would those potentially be as soon as, say, 2021? Or is this more of a long-dated opportunity to put additional contracts in place and then, I guess, eventually add compression?

Yes. So yes, good question. We've shared with you in the past, we absolutely can add compression to the pipeline. And again, I want to echo Steve's comment from an operational perspective, the pipeline has performed very well this past winter. Even -- I mean, it's against the backdrop of warmer winter, but we were able to exercise that pipe pretty well. And from pressure and flows and so forth that operated again very well. There is additional capacity, and we can add compression. And there is a market. And I suspect some of that will depend on how the natural gas and industry plays out over time. There's been a lot going on in our industry as far as wells and lock ins and supply sources and those kinds of things. So we'll sort that over time. The pipeline operationally, and there is the market sitting behind it. So we'll see how that plays out.

[Operator Instructions]. At this time, there are no further questions. So this concludes our question-and-answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks.

Well, thank you all for joining us. I know it's a busy earnings day. We're going to be around throughout the rest of the day, and we'll look forward to catching up with many of you then. Thanks and be safe.

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