Earnings call: Spire reports Q2 earnings, reaffirms FY24 guidance

In its fiscal second quarter earnings call, Spire Inc. (NYSE: NYSE:) reported a decrease in net economic earnings per share to $3.45, down from $3.70 in the same period last year. The company cited warmer weather in Missouri and higher interest expenses as the primary reasons for the decline.

Despite this, Spire remains committed to its growth strategy and infrastructure investments. The company also reaffirmed its fiscal year 2024 guidance, projecting net economic earnings of $4.25 to $4.45 per share and maintaining its long-term growth target of 5% to 7%.

Key Takeaways

• Spire’s net economic earnings per share for the fiscal second quarter were $3.45, compared to $3.70 in the prior-year period.
• The decrease was mainly due to warmer weather in Missouri, affecting usage, and higher interest expenses.
• The company is focused on growing its businesses and investing in infrastructure, emphasizing the importance of in America’s energy future.
• Positive regulatory outcomes were achieved in Missouri and Alabama, with new rates and revenue approvals.
• Spire reaffirmed its fiscal year 2024 earnings guidance range and its long-term earnings growth target.

Company Outlook

• Spire expects to continue its focus on controlling operating and maintenance expenses.
• The company is investing in capital projects, such as the expansion of Spire Storage West.
• They anticipate a rebound in weather and mitigation next year.

Bearish Highlights

• Warm temperatures led to decreased usage and only partial mitigation in Missouri.
• The Gas Utility segment was negatively impacted by the weather normalization adjustment rider in Missouri.

Bullish Highlights

• Regulatory outcomes in Missouri and Alabama were favorable, with new rates and revenue approvals.
• The Midstream segment showed solid performance and captured value during January’s cold snap.
• The expansion of Spire Storage West and the integration of MoGas are expected to contribute to growth.

Misses

• The company reported a decrease in net economic earnings per share from the same quarter last year.
• There was a lack of correlation between degree days and weather mitigation in Missouri.

Q&A Highlights

• Steven Rasche discussed the company’s midstream business growth, expecting higher rates due to market volatility.
• Spire is set to file a rate case before May 2026 to reduce regulatory lag and support its capital investment program.
• The company has successfully completed re-contracting for storage capacity at higher than expected rates.
• Lower overall O&M costs and the recovery of deferred gas costs are anticipated to improve results in 2024.

During the earnings call, Spire Inc. outlined their strategic focus on infrastructure modernization and the importance of natural gas in a sustainable energy landscape. The company’s commitment to safety, efficiency, and reliability remains strong, as does their confidence in meeting long-term growth targets. Despite the challenges posed by weather and market conditions, Spire’s positive regulatory developments and strategic investments position them to capitalize on future opportunities and maintain a steady course for growth.

InvestingPro Insights

Spire Inc. (NYSE: SR) faces a challenging environment, as reflected in their recent earnings call, yet they stay committed to their growth strategy. To provide a more in-depth perspective, let’s consider some real-time data and insights from InvestingPro.

InvestingPro Data:

• The company’s Market Cap stands at $3.57 billion.

• Spire’s P/E Ratio is currently at 16.74, with an adjusted P/E Ratio for the last twelve months as of Q1 2024 at 18.11.

• The Dividend Yield as of the latest data is 4.89%, highlighting the company’s commitment to returning value to shareholders.

InvestingPro Tips:

• Spire has raised its dividend for 20 consecutive years, demonstrating a strong commitment to providing shareholder value even amid financial pressures.

• However, it’s important to note that the company operates with a significant debt burden, which could impact its financial flexibility.

For readers looking to delve deeper into Spire Inc.’s financial health and future prospects, there are additional InvestingPro Tips available at These tips provide valuable insights into the company’s performance and potential investment opportunities. Moreover, for those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With numerous tips available on InvestingPro, you can stay ahead of the market with informed analysis and data-driven decision-making.

Full transcript – Laclede Group Inc (SR) Q2 2024:

Operator: Good day and welcome to the Spire Fiscal 2024 Second Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Megan McPhail, Managing Director of Investor Relations. Please go ahead.

Megan McPhail: Good morning and welcome to Spire’s fiscal 2024 second 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 the — 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 net economic earnings and contribution margin, which are both 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. On the call today is Steve Lindsey, President and CEO; Scott Doyle, Executive Vice President and COO; and Steve Rasche, Executive Vice President and CFO. Also in the room today is 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 today for a review of our second quarter performance and an update on recent developments and outlook. Let’s start with our quarterly results. This morning, we reported fiscal second quarter net economic earnings of $3.45 per share compared to NEE of $3.70 per share a year ago. The year-over-year decrease was driven by a few key items, including lower usage in Missouri due to significantly warmer-than-normal weather and higher interest expense. Scott and Steve will discuss our results in more detail in a moment. Our results reflect our dedication and commitment to serve our customers and communities safe and reliable energy. And we continue to execute on our strategy to grow our businesses, invest in infrastructure and drive continuous improvement to deliver value over the long term. Having a diverse portfolio of natural gas businesses enhances our ability to provide value. Further, consistent with our Board of Directors’ focus on strong oversight and governance, last month, we announced the election of Sheri Cook as the newest addition to our Board. Her extensive business experience and leadership in human resources, along with her background in economics and finance, will be vital as we execute our strategy. Her presence and involvement throughout our Alabama service territory further ensures we remain connected to our communities we serve. And I look forward to working closely with her in the future. Before I wrap up, I would like to highlight the important role that natural gas plays and will continue to play as part of America’s sustainable energy future. Approximately 200 million Americans and businesses use natural gas, because it is affordable, reliable and safe. In fact, according to the American Gas Association, households that use natural gas for heating, cooking and clothes drying save over $1,100 on average per year compared to homes using electricity. Together, natural gas utilities across the country, including Spire, continue to invest billions of dollars of capital each year to enhance the natural gas distribution and transmission systems. As an industry, we can be proud of the important work we’ve done in modernizing infrastructure and deploying technology that have led to increased safety, efficiency and reliability for natural gas customers. To sum up. We are well positioned for success in the second half of fiscal year ’24 and over the long-term as we execute on our robust capital investment plan to support the growth and performance of our utilities and our gas-related businesses. Spire is a strong and well-positioned company with a proven growth strategy. We have confidence in that strategy and in the ability of our experienced management team and employees to successfully lead us into the future. With that, I’ll now turn the call over to you, Scott.

Scott Doyle: Thank you, Steve. And good morning, everyone. I’d like to begin by thanking our employees for their hard work and continued focus on maintaining safe and reliable natural gas service to our customers through the winter heating season. I am extremely grateful and proud to be a part of the Spire team. Turning now to an update on the Gas Utility segment. Our commitment to strong operations and continued modernization of our system was visible when we were well positioned to deliver safe, reliable and affordable natural gas energy for our customers and communities who depend on this resource as a critical energy need. We remained focused on driving efficiencies throughout the organization, including streamlining systems and processes and maintaining an unwavering commitment to operational excellence. On the regulatory front, in Missouri we were pleased with the constructive outcome in our recent filing for an updated ISRS, our semiannual capital recovery infrastructure rider. Last week, the Missouri Public Service Commission approved $16.8 million in new revenues for recovery of system upgrade investments made September 2023 through February 2024, bringing our annualized ISRS revenue to $36.9 million. Rates are expected to be effective later this month. In Alabama, the rates that were effective January 1st were the result of working alongside the public service commission staff during our annual rate-setting process. As you may recall, our rates in Alabama are set using a forecasted budget. Our second quarter results reflect the benefits of these constructive regulatory mechanisms we have in each state, as earnings benefited from new rates in Alabama and previously approved Missouri ISRS revenues. During the quarter, we experienced warm temperatures across all of our service territories; and Alabama temperatures were approximately 10% warmer than normal. I’m glad to say, as a result of our efforts with the Alabama PSC to incorporate more accurate customer usage patterns into rates, the weather normalization mechanism in Alabama continues to be effective. However, in our Missouri service territory, service severe fluctuations in temperatures throughout the quarter resulted in the weather normalization adjustment rider or WNAR being less effective than last year. And the lost weather-related margins in our residential customer class during the quarter were only partially mitigated. Overall, weather for the quarter was 15% warmer than normal. However, combined the months of February and March were nearly 32% warmer than normal. During these months, we saw periods of extremely warm days followed by periods of more normal temperatures. These significant fluctuations in weather can cause usage to be lower than what the degree days would imply. We look forward to working with the Missouri PSC staff to evaluate how to better recover lost weather-related margin in the future. As a reminder, the WNAR does not apply to the less weather-sensitive commercial, industrial and transportation customer classes. Slides 15 and 16 in our appendix include further information on weather and customer usage for the quarter and year-to-date. During the quarter, interest costs increased. And O&M costs were also slightly higher than last year’s second quarter, increasing $2.3 million or approximately 2%. However, year-to-date, our O&M expenses remain below last year. Let me assure you, we are laser focused on navigating these headwinds. On the cost side, we continue to control our O&M expenses. We believe that, going forward, controlling O&M increases will enable our utility financial performance to further improve fiscal 2024. We are working to improve efficiencies and reduce costs across the organization. We are targeting elements of our cost structure that can be reduced based on enhancements in technology that have occurred or will occur in the coming years. In addition, we are working to ensure our shared services are efficiently aligned and supportive of our capital investment programs. Moving to Slide 5 and an update on our capital investment plan. We continued to invest significant amounts of capital focused on modernizing our gas utilities. Fiscal year-to-date, our CapEx totaled $409 million, which was primarily at our gas utilities. Year-over-year, our Gas Utility CapEx increased 7% to $311 million, with an emphasis on upgrading distribution infrastructure and connecting more homes and businesses. We continue to install advanced meters for residential customers across our service territory. And fiscal year-to-date, we have installed over 120,000 advanced meters, bringing the total number of customers benefiting from this technology to 660,000. Investment in our Midstream segment totaled $98 million fiscal year-to-date, largely for the expansion of Spire Storage West. Looking ahead, the expected fiscal year ’24 capital investment at the Gas Utility segment remains unchanged. However, we are increasing our total fiscal year ’24 capital investment target by $35 million to $800 million in support of our storage expansion project. I will now hand the call over to Steve Rasche to discuss this project in more detail and provide a financial update.

Steven Rasche: Thanks, Scott. And good morning, everyone. Let’s start with our Midstream segment. As you know, we closed the acquisition of MoGas and Omega in January of this year. And we are pleased with both our progress and integration as well as the solid performance of the system this winter. We’ve also updated our expansion plan at Spire Storage West, supporting our targeted completion in fiscal year ’25. Here are a few key points. During the quarter, we completed our open season and re-contracting activities for the capacity that is coming online in fiscal years ’24 and ’25. Consistent with the higher demand we’ve been seeing in the Western U.S., we were able to lock in rates well above our initial estimates and for contract terms consistent with the current market of three to five years. We also increased our total targeted investment by $55 million to $250 million, with $35 million of that investment falling in fiscal year ’24. This increase was driven by expanded scope of the project, including enhancing the power supply, line heating and maintenance capabilities; higher drilling costs for the injection and withdrawal wells; and increased construction costs, especially for electrical, equipment and labor, reflecting the high demand across the energy sector and the market overall. Combining these factors, the returns on the project have improved from our original target. To put this in perspective, the total impact of the Spire Storage West expansion and a full-year of MoGas is expected to increase our Midstream earnings by $10 million to $12 million in fiscal year ’25. Now turning to our results. Earlier today, we reported fiscal second quarter net economic earnings of $197 million, down $2.6 million from last year. Looking at the segments. Our Gas Utility had earnings of $188 million, an increase of $4 million from last year. As Scott just touched on, higher rates and effective weather mitigation in Alabama were offset in large part by lower usage and only partial mitigation in Missouri. Both Gas Marketing and Midstream had very tough comps from the prior year, and as we guided earlier, we did not expect those highly favorable market conditions to recur this year. We did benefit from the cold snap in January, and both segments were well positioned to capture value. For marketing, that value is reflected in the second quarter results. Midstream also captured value, and we anticipate seeing that showing up in the back half of this year. And lastly, lower corporate costs were offset by higher interest expense. On a per share basis, we reported net economic earnings of $3.45 per share compared to $3.70 last year, with most of the decline attributed to the impact of higher share count this year as a result of our forward sale that settled in December and the equity unit conversion in March. Slide 8 provides detail on key variances. Hitting a couple of the highlights. As I just mentioned, gas utility margins were higher overall. And the volumetric component, net of weather mitigation, was $10.3 million higher in Alabama and $8.6 million lower in Missouri. Gas marketing margins, net of fair value adjustments were lower, as I just touched on. And midstream was higher as a result of the addition of MoGas and Salt Plains. Looking at operations and maintenance expenses. Gas utility expenses increased by $2.3 million, as lower operational costs and third-party spend were offset by higher employee-related costs. I would also echo the point that for the first half of our fiscal year, our utility O&M costs are actually down $900,000 compared to last year. Marketing and midstream costs moved up consistent with the underlying business drivers. And interest expense was higher by $5 million, driven mostly by higher long-term and short-term interest rates this quarter. Turning to our outlook. We remain confident in our long-term net economic earnings per share growth target of 5% to 7%, starting from the midpoint of our fiscal year ’24 guidance range. Our growth is driven by our utility rate base investments, a key component of our 10-year CapEx target of $7.3 billion. Despite the headwinds faced in the first half of the year, we are reaffirming our fiscal year ’24 net economic earnings range of $4.25 to $4.45 per share. We are updating our business segment targets to reflect our first half results and expectations for the rest of the year. We are lowering our gas utility range by $10 million, as we expect to offset some of the headwinds we discussed earlier by cost management. We’ve raised the range for gas marketing by $5 million on stronger-than-expected earnings in the first half of the year. We’ve also increased the range for midstream by $4 million to reflect the pull-through of new storage rates and the value created during the winter. And corporate costs moved up by $2 million to reflect higher interest expense. Moving to Slide 10. Our three year financing plan is unchanged from last quarter, and this year’s financing needs are now largely complete. On the equity side, we completed both a forward sale settlement and an equity units conversion. And our ATM program placed $12 million in forward settlements this quarter. This leaves very modest equity needs through 2026. And with the $350 million note placement by Spire Inc., our long-term debt needs are also largely satisfied. And the remaining long-term debt financing in our plan is largely tied to future refinancing activity. I would also note that we funded a short-term $200 million loan in January, and this loan will be fully repaid in early May. And we continue to target FFO-to-debt at 15% to 16% on a consolidated basis. So in summary. We are well positioned to continue growing and delivering strong overall performance for our customers, communities and investors. Thank you for your continued interest in Spire. And we look forward to seeing many of you at the AGA Financial Forum later this month. Operator, we’re now ready to take questions.

Operator: We will now begin the question-and-answer session. [Operator Instructions] Please note this event is being recorded. The first question comes from Richard Sunderland with JPMorgan. Please go ahead.

Richard Sunderland: Hi, good morning. Can you hear me?

Steve Lindsey: Yes, we can. Good morning, Rich.

Richard Sunderland: Great. Thank you for the time today. A couple of ones on the weather, to start. I guess, looking across the business and given these weather headwinds, where are you trending in the guidance range of the segment revisions? I think, on my thumb math, it’s maybe a 1% decline old to new, so is it fair, that that’s putting you in the bottom half of the range? And then I’m also curious kind of where FFO-to-debt stands currently given this weather headwind as well.

Steven Rasche: Yes. Rich, let me start on that. Yes, we have a range. And I can’t argue with the logic that you put forward. If you look at the individual business units, it would show a little bit of degradation in total. And it’s weather in the utility and a little bit of interest rates at the corporate. And that — what I would say is that, as you think about this half year and then play it forward as we think about next year, the beauty of the weather headwinds, if there’s any bright sides to that cloud that we’ve dealt with, is that we would expect to get that to normalize weather and mitigation next year, which is essentially what we had in Missouri last year. And that, if you look at the material, and we did in the appendix to the presentation, provide a lot more granular information on the weather, it would point to a rebound of 18% range. So if you think about how to model the rest of this year, but then what does that look like as you rebase this year going forward, we’re very confident that we’re still on track. Adam?

Adam Woodard: Yes, Richard. And I think that — good question on FFO-to-debt, connecting that to our weather pull-through. As you know, we’re — given our volume — the volumes that we count on for cash flow, that has — those lower volumes have negatively impacted that cash flow growth trajectory, so we do — while we still see very steady progress to that target range, we do now expect that to happen after year-end ’24. On the bright side, we do see deferred gas costs almost completely recovered here at the end of the quarter and hope to be completely recovered here shortly.

Richard Sunderland: Got it, got it. Thank you. Very helpful color all around. And then I think you unpacked this in the script but did want to revisit in terms of how this weather impact is showing up. You were mentioning extreme fluctuations. And then there’s a — greater usage impacts relative to what the degree days are. Is that effectively the difference between your 2Q results now and 1Q? I’m just trying to think about, were the degree days were light on both sides but the weather impacting your results is actually really showing up this quarter. If you could help parse kind of 2Q versus 1Q, that’d be helpful.

Scott Doyle: Richard, this is Scott Doyle, yes. Maybe I can help with that a little bit. Maybe just start with the response and tie back to the quarter last year. We were at — we were — this quarter, we were 2% warmer than the quarter last year. And so if you just look at last year, we had good weather mitigation with the same mechanism in place. When you look at this quarter, really February, March were much warmer than normal. And it was variable weather, so much so that there was no real consistent weather pattern across those two months. What we saw, as we’ve been analyzing the data, is that the customer usage is off significantly during those months and are not correlated to the — to what the HDDs would show for that same time period. So on balance, what that tells us is there’s some work we need to do, relative to that mechanism, to get better correlation. That’s work we have to do with PSC staff. The timing of that will be — rate case is the forum which that takes place, but dialog can certainly take place in advance of that as well, so look for that, for us to dig more deeply into that more closely with staff as we work to enhance and improve that mechanism.

Richard Sunderland: Understood. Understood. And then just one last one, if I could. I know you reiterated that the growth outlook here. We’ve also had, I guess, a couple of quarters now with some interest rate commentary and rate impacts and results. Just curious what you’re assuming now on a forward basis for interest rates given kind of the latest market backdrop and then your — relative to your plan outlook here?

Adam Woodard: Yes. No, Rich, great question. We have continued to take a higher-for-longer tack. Obviously, the interest rate forecasts are moving as well. I think a lot of the extra interest expense received is more balance based rather than interest rate based. So again, going back to the kind of the volumetric pull-through, that’s probably having more of a kind of a stubbornly long impact there than actual — our actual interest rate forecast.

Richard Sunderland: Got it. Got it. I will leave it there. Thank you for the time today.

Adam Woodard: Thanks, Rich.

Operator: The next question comes from Shar Pourreza with Guggenheim. Please go ahead.

Jamieson Ward: Hi, guys. This is Jamieson Ward on for Shar. How are you?

Adam Woodard: Hi, Jamieson.

Jamieson Ward: So Richard had some good questions there that a couple of the ones I had. But I did have — I wanted to just delve a little bit more into on the weather. You mentioned the rate case will be the proper avenue to go about making adjustments to the mechanism and that there’s a lack of correlation in Missouri between degree days and the amount of mitigation. Just sort of wondering, has the cause of that been identified? Is it something that needs to be studied. Just trying to get a sense of where we’re at. Like is there a solution in mind and you’re just waiting for the next rate case to be filed to kind of tack it on to that? Or is it something that requires maybe a bit more modeling to figure out why they’re not connecting the way that you would expect them to and the way they are working properly in other jurisdictions that you have — just kind of how we should think about sort of the work to be done there in order to get them to match up? And then a follow-up would just be timing of when we might see, I guess, in this case, asking about a case. But really, the question is when we might see a new mechanism take effect?

Scott Doyle: Hey, Jamieson, Scott Doyle again. Thank you for your question. I think the simple answer to your question is, is this something that does require a little more study, and more modeling just to see if there’s an opportunity to correlate this particular weather pattern. Just recall, this weather pattern was unique in its that it was not a normal weather pattern, and it doesn’t follow the norms perhaps within the mechanism. And so we just need to take a deeper dive, looking at alongside the PSC staff as we do that. In answer to your question about the timing of the rate case, as a result of us using the new risk mechanism, we have a must file date by May of 2026, but expect our rate case to be filed sooner than that as we work to reduce regulatory lag associated with our significant capital investment program that we have underway right now.

Jamieson Ward: Perfect. Very clear. Really appreciate the color. Thanks guys.

Scott Doyle: Thanks, Jamieson.

Operator: [Operator Instructions]. Our next question comes from Christopher Jeffrey with Mizuho Securities. Please go ahead.

Christopher Jeffrey: Hi, everyone. Thanks for the question. Maybe turning to the midstream and the storage, in particular, it looks like the guidance there was raised for the new storage rates like Steve was talking about. Just curious how we should think about, is there any more room for expansion, any spare capacity there and kind of how we should think about the fees expected after the capacity expansion in ’25. Are those rated at — are those kind of locked in at the current rates right now? Thanks.

Steven Rasche: Chris, this is Steve. Let me take a shot at that. We had a number of things there. If I missed something, just ping me. Yes, if you think about the midstream business overall, broadly, let’s start to run. We’re going to step into the new scale that we currently operate and/or are describing to get to as we finish the expansion of Spire Storage West and the back half of this year in ’25 and ’26 and the reason for that and the reason why you should expect to see that kind of step up over the next 2.5 years is that the physical dynamics of storage are that you bring the storage online and then as the wells and the cavern seasoned over time, the team not only gets comfortable with how the operations are, but then we get a better feel for how we can optimize the use of that cavern capacity over time. And this is pretty standard in the space. It takes a couple of years at least to kind of work our way through that. So if you think about the Midstream segment broadly, you should expect to see that kind of step up over the next 2.5 years. And we’ve given the guidance for this year for the midstream business, and we gave you a preview of how to think about the midstream business for ’25. Will we continue to look for opportunities to optimize? Absolutely. That’s part of our job. But remember, the midstream business is a business where the rates that we charge really are driven by the volatility of the commodity, but the actual monetization of that volatility in many ways is left for our customers. But it does support higher rates. And as we mentioned on the call in the prepared remarks, we have now completed the open season and the re-contracting or the capacity that is online, that actually just started injection in April, but we’ll come online as we get into the next winter and an injection season next spring. And we are extremely pleased that the rates that we got were well above what we had estimated. They’re in the mid-20s range, which is kind of where that segment of the market is right now. We — if you look at the market overall, the terms for contracts are between three and five years. And our contracting falls right in that category. In fact, I think the average is right in the middle of four years. So from that standpoint, we will have some of our legacy contracts roll as we go through the next couple of years, we’re in a very good position in terms of capturing the fixed storage value, getting it under contracting being operated for a while. I think your last question was additional expansion opportunities. It’s something that, frankly, the team has thought a little bit about if you think about [indiscernible] but right now, we are laser-focused in making sure that, one, we complete the integration for MoGas that we lock down and get everything operationalized there. It is actually performing very well. And lastly, that we complete the expansion of Spire Storage West. And those are really our current focus, and that will be our focus. And when we can take a breath and get through the winter, probably next winter because that’s when the river beats a road for the Spire Storage West facility, then we’ll start looking at where might other opportunities be. But at this juncture, I wouldn’t want to tell you to model anything in, but we do have a good path to see some step growth over the next 2.5 years.

Christopher Jeffrey: Great. Thank you, Steven. That’s super helpful. And then maybe just last one for me. Just kind of in terms of the reiterated guidance for ’24, if I kind of just compare that expectation for the second half of the year compared to last year’s second half, kind of implies a decent amount of improvement. Just wondering in that context of year-over-year kind of what are you expecting to kind of be the driver of that trend improvement?

Steven Rasche: Yes. That’s a pretty broad question. Let me focus on the utility and the corporate and other segment because I think we’ve been pretty clear in what the drivers and movers are in both the midstream and the marketing segment. If you remember last year, we had some outsized one-off costs in the corporate side in the last fiscal quarter of last year, we obviously don’t expect any of that to recur this year. So from a cost perspective, you should expect to see our overall O&M costs be a lot lower. And as Scott mentioned in his prepared remarks, we are focused a lot on how we can get our costs in line and keep those in line over time. Now we have a long history of doing this. and doing this successfully, it shouldn’t be lost on you or anybody else that our actual cost in the utility are lower than they were last year. And we’re going to continue to make sure that we have the right cost structure that meet our customers’ needs but also — and support the growth. And that’s going to be an ongoing process. So that will be one of the tailwinds that you will see when you compare this year versus last year. And then secondly, — as Adam mentioned, now that we have largely recovered all of our fire gas costs, and I think we can expect with April bills and as they flow through, we’ll get the rest of that deferred gas costs recovered. The headwinds on the balances and short-term debt should mitigate quite a bit and maybe turn into a tailwind. And although we have the same view that the market does is probably higher for longer, getting those balances down is another way in which we should be able to create a little bit of uplift when you compare this year versus last.

Christopher Jeffrey: Great, thank you. That’s all for me.

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

Megan McPhail: Thank you for joining us on the call today. We look forward to talking to you later today and in the coming weeks at AGA. Have a good day.

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

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