Earnings Transcript for SR - Q4 Fiscal Year 2024

Operator: 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.

Megan McPhail: 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?

Steve Lindsey: 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 natural gas market fundamentals and higher expenses at corporate. We began 2025, I can assure you we are striving to deliver consistent financial results in the future. Steve will provide a deeper dive into our results and outlook in a moment. Recognizing confidence in our long-term growth plan, the Board of Directors recently approved an increase to our common dividend of 4%, bringing the annualized rate to $3.14 per share. This is our 22nd consecutive year of dividend increases, which we have continuously paid since 1946. The vital part of this confidence is our ability to execute successfully on our capital expenditure plan. This past year, we invested $861 million across the Gas Utilities and gas-related businesses to further enhance safety and reliability for our customers. From a regulatory perspective, we are engaged with key stakeholders to strengthen recovery mechanisms in our jurisdictions. Our goal is to achieve more consistent and constructive regulatory outcomes leading to a more sustainable financial performance. The last key message pertains to our financial outlook. Today we rolled out our 10-year capital expenditure plan forward to 2034 and an increase to $7.4 billion. We also reaffirmed our long-term EPS growth target of 5% to 7% and launched fiscal 2025 earnings guidance of $4.40 to $4.60 per share. Looking ahead, we have visibility into improving our earned returns in Missouri during FY ‘26, which we anticipate will help us achieve our targeted growth range. We remain focused on delivering this, driven by our strategy to grow our businesses, invest in infrastructure and drive continuous improvement to deliver value. Turning to slide five for an update on our capital investment plan. The long-term driver of our earnings growth remains investment focused on modernizing infrastructure at our Gas Utilities. During fiscal 2024, our capital investment totaled $861 million with over 80% invested in the Gas Utilities segment. $295 million was spent to upgrade infrastructure and an additional $111 million was spent connecting new homes and businesses. We also accelerated our deployment of advanced meters to residential customers, investing $184 million in FY ‘24. During the year, we installed 350,000 advanced meters, bringing the total number of customers benefiting from this technology to over 850,000. The investment in our Midstream segment over the year totaled $170 million, largely for the storage expansion and we remain on track for the additional withdrawal capacity to come online next month. Here, in fiscal year '25, we plan to invest $790 million, representing an incremental $100 million of spend to Gas utilities, compared to our prior forecast. This capital plan is once again focused on reliability, new service connections and completion of Spire Missouri's advanced meter installations. Lastly, our robust 10-year CapEx plan is now $7.4 billion with approximately 98% at the Gas Utilities, driving 7% to 8% rate base growth at our largest utility, Spire Missouri. Turning to slide six for an update on our Gas Utilities. Throughout the year, our employees continue to deliver for our customers, providing them energy safely and reliably with a focus on excellent service and affordability. Investments made during the year are driving benefits for customers, shareholders and the communities that we serve. On our call in July, we discussed with you the launch of a customer affordability initiative to lower our overall cost structure and improve operational efficiency across the organization. We're realizing benefits of this initiative and continue to expect to see cost savings and improved efficiencies to support growth expectations. During fiscal year 2024, our Gas Utility segment benefited from lower run rate O&M expenses that were 3% better, compared to the prior year and we expect FY ‘25 run rate O&M at the utilities to be flat compared to FY ‘24 as we continue to benefit from our cost management initiatives. However, we will continue to maintain our focus on the safety and reliability of our natural gas system. For example, our average leak response time in 2024 was nearly four minutes or 13% faster than it was in 2021. On the regulatory front, constructive mechanisms across our jurisdictions are essential to ensure that we receive timely recovery of our costs associated with delivering natural gas safely and reliably. To that end, we expect to file a rate case in Missouri by the end of the month. Recover costs incurred for investment in infrastructure and technology upgrades to better serve our customers. Our top priorities in the case remain updating our cost of service, rate base and rate of return. We're looking at options to improve recovery of volumetric revenue, including the impacts of both weather and conservation. We anticipate that the request, paired with last week's approval to lower our purchase gas adjustment result in an overall build decrease for the average residential customer. We look forward to working with key stakeholders throughout the process. I’m pleased to say that the Missouri Public Service Commission recently approved $16.7 million annual increase for our infrastructure rider, or ISRS, which allows us to recover revenues for certain eligible projects in between rate cases. The increase was effective earlier this month and brings our revenues reflected in this rider to an annualized rate of $53.6 million. Further, in Missouri, this week we filed our first Integrated Resource Plan, or IRP, with the Commission. The IRP provides a blueprint for how Spire Missouri's energy will support our customers and communities in the state over the next 20-years, with the primary goal being to ensure our customers' energy needs are met. Moving now to regulatory update for Alabama operations. As a reminder, our rates in the state are updated annually and are set using a forecasted budget. We are currently in the RSE rate-setting process and are working closely with the Public Service Commission staff to update rates. To sum up, we are well positioned for success as we execute on our robust capital investment plan to support the growth and performance of our utilities and our gas-related businesses. We believe in the ability of our experienced management team and employees to successfully lead us into the future. I will now hand the call over to Steve to provide a financial update.

Steven Rasche: 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, a detailed variance analysis of our fiscal year and fourth quarter results is included in the appendix to this presentation. Turning to our outlook, as Steve mentioned earlier, we are reaffirming our long-term adjusted earnings per share growth target of 5% to 7%, retaining the midpoint of our original fiscal year '24 guidance range of $4.35 per share as a base. This growth is driven by. First, 7% to 8% rate base growth and continued timely recovery via the ISRS mechanism in Missouri, coupled with a reasonable outcome in the soon-to-be-filed rate case with new rates targeted to be effective in fiscal year '26. Second, equity growth in the Southeast coupled with annual RSE resets; and finally, continued focus on cost efficiency. We are launching our fiscal year '25 adjusted earnings range at between $4.40 and $4.60 per share. At the midpoint, this is a 9% growth from our actual results in ’24, but falls a bit short of our growth target range at the midpoint as we work through the Missouri rate case. With a reasonable outcome and expected improvements in our earned ROE, we anticipate moving fully back into the target range for fiscal year ‘26 and beyond. Turning to our business unit guidance. We anticipate our Gas Utilities will earn between $238 million and $258 million next year reflecting the combined benefits of incremental Missouri ISRS revenues and the return of normal weather, new rates in Alabama and Gulf under the RSE mechanism and no increase in run rate O&M cost. As Steve noted earlier, our fiscal year '24 operations and maintenance expenses excluding bad debts were 3% below last year and our goal in fiscal year '25 is to lock in those savings and offset the impacts of other inflationary increases in wages, insurance, third-party costs among others with our cost-efficiency initiatives. We also expect net interest expense to be lower. Turning to gas marketing. We anticipate adjusted earnings of $21 million to $25 million reflecting an increase from our initial '24 expectations due to organic growth. Midstream adjusted earnings are targeted between $40 million and $46 million reflecting the growth in both storage and pipelines. In the storage business, we expect to see full-year benefit of the storage contracts we commenced in fiscal year '24 combined with bringing the rest of the Spire Storage West capacity online in fiscal year '25. These benefits will be offset in part by higher operating costs, interest expense and depreciation. On the pipeline side, we will see the full year benefit from the MoGas acquisition. We anticipate the resulting Midstream business mix to be roughly 55% storage and 45% pipelines in fiscal year '25. Corporate & Other principally interest cost is anticipated to be in the range of negative $30 million to $36 million down from last year's run rate of roughly $36 million after adjusting for the interest rate hedge benefit that is not expected to recur in fiscal year '25. We've also updated our three-year financing plan as outlined on slide 10. After a very busy fiscal year '24, our equity needs going forward dropped to a much lower level that we'll manage with our ATM program. I would note that at 9/30, we had $75 million of forward equity sales that will settle in fiscal year '25. And turning to our long-term debt needs. Our three-year financing plan assumes refinancing of maturities and incremental debt of roughly $600 million to fund our capital plan. A debt maturity table is included in the appendix. And finally, no change to our credit metric or payout targets. In summary, we have a solid plan heading into fiscal year ‘25 and we'll remain focused on delivering against those goals. And Steve, I appreciate your kind words on my retirement next spring. My decision was actually pretty easy knowing that I am handing off to Adam and a strong and focused fire leadership team. It's funny, I can assure you that I fondly say goodbye to 6

Steve Lindsey: 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.

Operator: 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.

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

Steve Lindsey: Hey, Rich.

Steven Rasche: Hi, Rich.

Richard Sunderland: 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.

Steven Rasche: Thanks, man.

Richard Sunderland: 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.

Steven Rasche: 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.

Richard Sunderland: 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.

Adam Woodard: 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.

Richard Sunderland: 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?

Adam Woodard: 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.

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

Adam Woodard: Thank you, Rich.

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

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

Steve Lindsey: Good.

James Ward: 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.

Adam Woodard: Appreciate it.

James Ward: 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?

Adam Woodard: Yes, sure. James, this is Adam.

James Ward: High level.

Adam Woodard: 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.

James Ward: 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.

Adam Woodard: 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.

James Ward: 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.

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

Christopher Jeffrey: 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?

Scott Doyle: 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.

Christopher Jeffrey: 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?

Adam Woodard: 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.

Steve Lindsey: 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.

Christopher Jeffrey: Great. Super helpful. Thanks, Steve and Adam.

Steve Lindsey: Thanks, Chris.

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

Bill Appicelli: 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?

Steven Rasche: 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.

Steve Lindsey: 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.

Bill Appicelli: 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?

Scott Doyle: 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.

Adam Woodard: 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.

Bill Appicelli: All right, great. Thank you all very much.

Adam Woodard: Okay, Bill.

Steven Rasche: Thanks, Bill.

Operator: 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.

Megan McPhail: 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.

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