Earnings Call: Q3 2018

Aug 2, 2018

Good day, and welcome to the Spire Third Quarter 2018 Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Scott Dudley, Managing Director, Investor Relations. Please go ahead. Good afternoon, and welcome to our Q3 earnings call. We issued our earnings news release this morning, and you may access it on our website atspireenergy.comundernewsroom. There's also a slide presentation that accompanies our webcast today and you may download it from either the webcast site or from our website under Investors and then Events and Presentations. Presenting on our call today are Suzanne Sitherwood, President and CEO and Steve Rasche, Executive Vice President and CFO. Also in the room with us today are Steve Lindsey, Executive Vice President and Chief Operating Officer of Distribution Operations and Mike Geiselhart, Senior Vice President of Strategy and Corporate Development. Before we begin, let me cover our Safe Harbor statement and our 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 described in our quarterly and annual filings with the SEC that may cause future performance or results to be different than those anticipated. In our comments today, we will be discussing net economic earnings and contribution margin, which are non GAAP measures used by management when evaluating our performance and results of operations. Explanations and reconciliations of these non GAAP measures to their GAAP counterparts are contained in our news release. So with that, I will turn the call over to Suzanne. Thank you, Scott, and a warm welcome to all who are joining us this afternoon. I am pleased to have yet another opportunity to share with you how we, as Spire, are continuing to live our mission and deliver on our strategic priorities. Spire continues to be transformed by our pursuit of growth through organic initiatives, investing in infrastructure, acquiring and integrating and innovation and technology. We are moving forward with confidence as evidenced by our posting of yet another solid quarter. Our results reflect further improvements in our operating performance and building on momentum for the first half of the year. Our 3rd quarter net economic earnings came in at $0.31 per share in line with our reset expectations for the year. Our gas utility segment turned in another solid performance. Meanwhile, fire marketing continued to deliver strong results from favorable market conditions. Our ability to hit our earnings target reflects execution on our strategic priorities and more specifically organic growth the and the Spire STL Pipeline. Therefore, based on our year to date performance, we reaffirm our fiscal year 2018 earnings guidance range of $3.65 to $3.75 per share and our capital expenditure forecast of $500,000,000 Let me turn to our gas utility business and provide some highlights and updates. As I already stated, we continue to execute well on our 2 May strategic growth priorities, investing in infrastructure and pursuing organic growth. As Steve Rasche will cover in more detail, we are on track with our capital spend target which as you know is primarily focused on infrastructure upgrades for our gas utilities. Our spending on new business was $59,000,000 year to date and that's up by more than 1 third compared to last year. We also continue to see solid results from our organic growth efforts showing modest customer growth across our utility footprint. We achieved year over year growth in new meters for the 1st 9 months of our fiscal year of 5.7%, which is impressive given that we had record growth in this area last year. On our last call, Steve Lindsey described the improvements we've made in our operating performance in the first half of the year. We are continuing to see gains across the board, including an overall system performance and safety. And we continue to raise the bar on customer service by leveraging technology and innovation. Inherent in our utility business is ongoing regulatory engagement. So I'll turn to that update now. As most of you know, in Missouri, we have a rider called Infrastructure System Replacement Surcharge or ISRS that allows us more timely recovery of our spend on infrastructure upgrades to replace older pipe in our system. We have recently filed requests to recover our infrastructure upgrade spend through June 2018. This spend was not included in rate base and the recent rate cases. We are seeking an annualized revenue increase of $11,900,000 for our Missouri utilities. In addition, we recently filed in Missouri for a new financing authority covering the next 3 fiscal years. We are seeking authorization to issue $500,000,000 which we believe is the appropriate amount to meet our needs for 2019 through 2021. With regard to our recently completed Missouri rate cases, we have filed legal appeals on certain cost disallowances after our request for rehearing by the Missouri Public Service Commission was denied. It is important to gain clarity on these issues for future rate proceeding and we believe that we have a strong position. However, our plan going forward is not predicated on the outcome. In Alabama, the parameters used to set Alabama's rates under the rate stabilization and equalization mechanism or RSE are up for review which periodically occurs. The Alabama Commission has the opportunity but not the obligation to adjust the RSE parameters at the end of each term. Now, I'd like to turn to our non utility businesses. As I noted last quarter, we are taking steps to advance those businesses, Spire Marketing, Spire Storage and our Spire STL Pipeline. We are positioning Spire Marketing continued growth and success. Reflecting our efforts to date, Spire Marketing has been able to take advantage of favorable market conditions to deliver strong year to date earnings. As planned, we are transitioning buyer marketing to Houston with its own office space and we have bought to the team a seasoned leader who has already grown and strengthened the business. Meanwhile, the team is working to build new customer relationships and expand its geographic reach. We are also hard at work to advance our Spire storage business. As you know, we acquired a majority interest in a large storage facility in Wyoming last December. In this quarter, we acquired a smaller adjacent facility. Efforts are underway to integrate the 2 facilities, while making investments to improve their operations and expand the capacity. We see numerous opportunities for Spire storage to serve various geographic regions and customer groups, including utilities, power generators, pipelines and marketers. With respect to Spire STL Pipeline, we are ready to move forward with our project once we receive a certificate of public convenience and necessity from the FERC. As soon as the FERC concludes its final steps in their administrative review process, we will complete the necessary land acquisitions and other pre construction activities. Now, I'd like to pass the call to Steve Rasche. Thanks, Suzanne, and good afternoon, everyone. We posted solid financial results for the Q3 and let's take a closer look, starting here on Slide 8. Net economic earnings were $15,000,000 or $0.31 per share as continuing strong performance in our gas marketing business was offset by lower gas utility earnings and higher corporate costs as expected. Our per share results also reflect our successful equity offering in May, which increased our share count by nearly 5%. Looking at the key drivers of our performance, beginning on the next slide, total operating revenues of $351,000,000 were 8% higher than last year on a combination of higher demand and utility commodity cost. It's hard to remember as we deal with the record summer heat, but April was the coldest in 2 decades in the continental United States, which helped drive demand at our gas utilities and supported strong market conditions overall. Contribution margin was also up by $13,000,000 or 6%. Looking at the 2 business units, gas utilities margins were down 2% from last year, reflecting several trends. On the positive side, we saw demand during the quarter due to cooler weather pushing margins up $3,100,000 We also continue to see modest customer growth. These positive trends were offset by 2 utility rate changes. In Missouri, we now have a new rate design effective April 2019 that has a higher volumetric component and weather normalization. This design reduces the risk of recovery, but also pushes more of our margin to the winter heating season and out of the summer quarters, which includes this quarter. While the impact balances out over a 12 month cycle, it will be a headwind in the back half of our fiscal 2018 as we discussed last quarter. The second headwind was a customer rate reduction in Alabama due to tax reform that lowered margins by roughly $2,000,000 Gas marketing margins were up by $16,100,000 with $13,700,000 of that increase due to fair value accounting adjustments. Excluding those adjustments, margins were up by $2,400,000 due to improved market conditions and favorable basis differential due in part to cooler weather. That provided the opportunity for increased trading value and storage optimization. Turning to Slide 10, let's take a look at expenses. Utility fuel costs were up nearly $31,000,000 and taxes other than income were up by $3,000,000 both reflecting higher demand and volumes. Other operations and maintenance expenses were up about $5,000,000 with roughly $4,000,000 increase in pension and amortization costs from the Missouri rate cases, as well as higher demand driven bad debt expense. Depreciation and amortization was higher reflecting our ramp up in capital investment. Gas marketing operating expenses were down by $19,000,000 but that includes a little over $19,000,000 of derivative gains that were mark to market. Excluding that fair value adjustment, expenses were relatively flat year over year. And finally, interest expense was higher reflecting the long term debt issued over the last 12 months at both Spire Missouri and Spire Alabama, as well as higher short term rates that were offset in part by lower average short term borrowing levels this year. Our year over year performance is highlighted here on Slide 11, shows our economic earnings up by $32,000,000 or 18%, reflecting the benefits of the return to normal weather and improved market conditions, which benefited our utilities and gas marketing. Other corporate expenses were up by $3,000,000 and higher after tax interest and other corporate costs. We continue to grow our cash flow and maintain a strong financial position with year to date adjusted EBITDA up 6 percent to $467,000,000 We also maintain adequate utility, liquidity provided by our credit facility and the commercial paper program. Our long term capitalization improved to 51.5 percent equity this quarter, up 280 basis points from our fiscal year end. This is due in part to our successful equity I also I also wanted to take this opportunity to welcome Adam Woodard, who joins us as the Treasurer, replacing Lynn Rawlings, who retired in April. We thank Lynn for her years of service and look forward to taking advantage of Adam's extensive public and corporate finance experience in the coming years. Moving to Slide 13. Our year to date capital spend of $334,000,000 is up 12% from last year, reflecting higher utility infrastructure upgrades of $188,000,000 up 5% from last year and higher new business investment and meter sets as Suzanne mentioned a few minutes ago. Our progress this year reflects our renewed focus on organic growth and infrastructure investment. Our CapEx forecast for fiscal 2018 remains $500,000,000 and includes a small shift in forecasted spending on the Spire STL Pipeline between 2018 2019, as well as higher utility spend for the balance of this year. And as a reminder, we anticipate over 85% of our capital spend will be recovered with minimal regulatory lag or reflected in earnings. Aside from investing for growth, a portion of our growing cash flow supports our dividend as shown here on the next slide. Our Board just declared a quarterly dividend of 0.56 $25 per share payable on October 2. At Spire, we have a long history of rewarding our shareholders with prudent and consistent dividends. In fact, we have paid a dividend each year for the last 73 years and have increased our dividend for the last 15 years running. Now let's look at our outlook. We are on track to meet our 2018 earnings guidance of $3.65 to $3.75 per share. With a reminder that our earnings cadence has changed due to the new Missouri rate design and we expect to increase our 4th quarter loss materially from prior years. In addition, we are confident that we can deliver long term net economic growth per share of 4% to 7%, with a base year of run rate 2018 earnings that removes roughly $0.17 of Spire marketing performance tied to market conditions that we do not expect to recur next year. Our growth is supported by strong rate base and organic growth across our utilities, as well as growth in our non utility businesses. Our long term growth is also supported by a 5 year CapEx forecast as shown here on Slide 16. We anticipate total investment of $2,500,000,000 through 2022, supported by utility upgrade programs of up to 20 years in length with minimal regulatory lag and well diversified across our entire footprint. So in summary, we continue to grow and invest in our gas utilities with more regulatory certainty and are advancing our non regulated and non utility businesses. We strengthened our financial position with a well timed equity offering and we continue to work to deliver on our long term growth objectives. With that, let me turn it back to you, Suzanne. Thank you, Steve. I'm pleased with the momentum of our strong operating and financial performance across all Spire businesses as we have moved forward with confidence. And I am forever grateful for the hard work and dedication our 3,300 employees who make it happen. Together, we continue to live our mission and deliver on our strategic growth priorities. While we grow our utilities, we're expanding and strengthening our existing non utility businesses, Spire Marketing and Spire Storage and we are ready to move forward with our pipeline project once we receive approval from the FERC. As always, we continue to bring people and energy together in ways that enrich the lives of those who we serve and add value for our shareholders. Thank you again for joining us today and I look forward to updating you again soon. Now we're ready to take your questions. We will now begin the question and answer session. The first question comes from Michael Weinstein of Credit Suisse. Please go ahead. Hi, guys. How are you doing? Good morning, Craig. Hey, Michael. So, at this point, it's August 2nd and we haven't heard from FERC on a steel pipeline, right? That would be correct, yes. Okay. In terms of the approval, yes. Yes. I mean, what's the latest that you need to hear from them in order to start construction this year? Well, there's a series of events and then I'll turn it over to Mike and he can kick through the construction aspect. But what's the latest right now we're in the FERC has a formal agenda every month with the exception of August. They have notational process whereby basically what I call it is sort of non formal. The commissioners aren't at the bench, if you will, and they decide matters every week. We fall into that category, so we are awaiting a FERC decision. So hopefully that's soon, but if not and as we've said in our opening remarks, we're prepared to move forward whenever the FERC Commission makes that decision. And again, nothing about our long term plan changes. But Mike, if you would sort of tick through how the team has worked through that and how they're thinking about that? Yes, good afternoon. We've been looking at scenarios for a while as this process has gone on a bit. And now at this point, I think where we are in response to your question is, we will need to see when the certificate is issued. There is a process by which we need to accept that certificate and then we also need to file a construction plan and get that approved before we get a notice to proceed and begin construction on a project, which we need to enter the right away for the project. So, that entire process will certainly take over a month from the time that we receive the certificate. So given the timing and where we are now, right, we're still involved in evaluating what the right schedule will be moving forward and there's a number of considerations involved in that. There's certainly the risk and the cost of winter construction is one consideration, but also all other things being equal, we'd like to get the project in service sooner rather than later, but we also want to coordinate with contract renewal process that we have ongoing with MRT. So, there is really a number of considerations that we are still juggling and we're going to wait and see when we get the order and then finish off that analysis before we revise, formally revise our schedule and our in service date. And there may be some change in project cost, but at this point, we expect that to be in a pretty narrow range. And the $60,000,000 that's in the 2018 CapEx forecast for pipelines and storage, is that what's the date of I guess, what does that assume in terms of when you start construction on STL? Michael, this is Steve. It's our best estimate we look at a range of outcomes and what we know we need to continue to work on. So as you can imagine and Mike mentioned, we have a number of scenarios. We're obviously very confident in not only getting the certificate, but getting started and $60,000,000 is our best estimate. Once we do get the certificate and as Mike mentioned, we finalize our evaluation of the construction timeline and everything else that's associated with that to the extent that number needs to be updated, we'll update the market. Okay, great. And just one last question. Just the 4th quarter loss is a seasonal effect only from the rate case, right? There's no long there's no ongoing annual effect as we're There's Yes. Not sure I completely understand your question. We have traditionally in past years, if I look at, I'd say the last 3 fiscal years of earnings results, I think we've lost about $0.25 a share, give or take a penny or 2. And so that's kind of the normal cadence. The addition and we've guided if you do the math probably about double that amount given our results for this quarter. Most of that is due to the change in the rate structure in Missouri. I see. And so I mean, but basically you would have an offset in the second and third quarters. Is that fair to say? We would in a normal year, we would have an offset in the We would in a normal year, we would have an offset in the late Q1 and in the Q2 and maybe a little bit in Q3. In fact, we did see a little bit of that in the month of April given the cooler weather that we had. But it's really concentrated in the winter season, which for us is generally begins in November and runs through the early part of March under a normal weather condition. Got you. Okay. Thank you. Thank you. The next question comes from Dennis Coleman of Bank of America. Please go ahead. Yes, thanks. Good afternoon, everyone. Good afternoon, Dennis. If I can pick up on the STL issue again, just a few more details there. There have been some changes at the FERC. I think the commissioner now is retired and so we're down to 4. I could be wrong on that, but I believe it was end of July, his retirement. So any potential impacts there that or read through that you guys are looking at concerned about maybe is too strong of a word, but any impacts? Yes, Dennis, I think you're referencing Commissioner Paulson and his announced date for departing from the FERC is 15th or 16th and so therefore he is available. Yes, he is available to vote between now and then. So that's what when I was leaning into the notational schedule that the commission manages from week to week with the staff at the commission, There's opportunity for him to engage in that decision making until then. And there's no sort of public notice, if you will, of those agendas nor those outcome. There's a cadence that we can look at over the years as to how that occurs. But they do happen every week. And while there's no explicit rulemaking, there's a historically the commissioners have not had a formal agenda in August, which is why I put that out there in my earlier response. So there is a formal agenda and that is posted that the commissioners decide on every month with the exception of August. Again it's not written into any of their rule makings or codified in any kind of way. It's just been practice, just general practice if you will with FERC. So that being said, as long as Commissioner Powelson is there, there's opportunity from decision making from the full bench of 5 commissioners. Clearly those who track the commission have recognized that I would say more recent decisions on procedure and administrative process have been voted along party lines. So we have now 3 Republican commissioners and 2 Democratic commissioners. And so post his departure, that leaves 4, which if you just look at some of the precedent decisions, if one could sort of lean into what has occurred and wonder if it would be a 2 to 2 vote. So in that instance, what would need to happen is President Trump would need to name a replacement, the Senate would need to confirm, and obviously I can't predict how long that would take. All that being said, as Mike Geiselhart speaking to, we've ran all these scenarios pluses and minuses and the reality is our business is diverse enough with our non utility work and our investment in infrastructure and the organic growth that we're experiencing because we've been working hard at that for the last 4 years. But nothing about our long term growth rate changes that Steve and I have talked to you about. So it's just a matter of timing and we're obviously not going to get ahead of the FERC commission. Right, right. And people are watching the FERC quite closely these days for sure. And obviously there's been some action on Enable and some implications Is that expected? I don't think STT Is that expected? I don't think STL would have really been done. So I'm guessing maybe that was expected that you would carry that over for another year? From our gas utility perspective, specifically into the eastern part of our state, The preponderance of the supply is delivered through the MRT system. And yes, we went through an evaluation phase and looked at what was needed for this region, not just today, but prospectively in terms of the amount of growth that we expect on the system and also the way that the region here is sprawled, not unlike other urban centers that have changed over the last 150 years and came back with the best array that we believe best serves this community on a long term basis and which included the Spire STL Pipeline. It also we waive the utility, the gas company signed those contracts to extend that capacity. And I believe as a result of that when MRT filed its case, it said that those billing determinants weren't included, but indeed they should have been and the FERC has now asked MRT to refile its case and update those billing determinants and other factors in the case, including the testimony. That is my understanding. Yes. No, that's my understanding as well. Changing just a little bit, can any details you can share about the additional storage in Wyoming and how that furthers your plans there or what exactly the implications are? Yes. I'll flip it to Mike because he's into that information every day because he owns the project. But I'll connect it to some of what I've spoken with everyone on the phone about before. When we look at the non utility work, we're looking at either upstream for storage or pipeline. And what that means in terms of serving customers much like our utility customer or utility companies are serving customers. This allows us just like marketing to serve customers in a very sophisticated way where there's a need outside the utility company and storage meets that requirement. Between the 5 interstate pipelines that are sitting in that region and our desire to serve power generation, utility customers, other pipelines, it's really a sweet spot for us. And so I'll pass it to Mike and let him give you a little bit more detail. Yes. The field that we acquired is very complementary to the asset that we acquired in December of last year. It has some very nice complementary attributes. It's connected to some of the same pipelines, but we'll be able to be directly interconnected to the geology and in terms of the operating costs associated with injection and especially with withdrawal. So, we think it's going to really fundamentally improve the economics of asset that we bought in December. We think the asset in December would have been great on its own, but it will be even better in combination with this asset over time. Is it the same kind of size? Is it any details you can share in terms of what you've added? Yes, it's not. It's not currently certificated for the same size, but the formation itself we believe has comparable size capability over time. There would need to be additional geologic work done, which we're actually in the process of doing and then you need to go through a certification process at FERC to get the capacity upsized if you will to something more comparable to the Rickman facility that we acquired in December. But yes, we think it has comparable size capability. And as I mentioned earlier, is really has some unique attributes and is really Thanks, Tass. Thanks, Tass. Thanks, Tass. Thanks, Tass. The next question comes from Selman Akyol of Stifel. Please go ahead. Thank you. Good afternoon. Going back to you guys talked about record growth 5.7% in terms of meter adds. Can you break that out a little bit by geography? Sure. Good afternoon. This is Steve Lindsey. And it's very nice because as we think about our infrastructure spend, it's relatively spread out across our 3 major utilities on the east side, west side of Missouri and Alabama. And a lot of our new growth is along the same lines. And so from the new business Capital X, CapEx that we talked about, it's spread pretty evenly as well as the new meters. Now there's fluctuations dependent upon economic development opportunities and things like that. But the thing that I do want to note is that the growth that we're talking about this year and this year to date is actually coming off of our record year last year where we had over 10,000 this is on an annual basis over 10,000 new meters, again, pretty evenly spread across the 3. So we have different fluctuations from quarter to quarter, but overall, we're seeing pretty steady growth in all of our jurisdictions. Okay. I guess what really caught my ear there, it sounds like Missouri is growing faster than it used to? Definitely. I mean, if you look back 3 or 4 years ago, at least from a gas customer perspective, we are. And so I think some of that and we see a strong surge on the western side of the state and some of the things we've done is we're expanding into underserved areas. We're making some inroads into the multifamily area that we hadn't seen in the past. And then we're just working with builders and developers to try to help them as they're thinking about their growth projects. So I think if you look relative to just really the last 4 to 5 years, we are seeing some changes. We're seeing some downtown redevelopment opportunities and things like that. And so again, I think it's not dramatic relative to what we'd like for it to be over the next few years, but it is definitely an uptrend. I want to add to the work that Steve and the team have done there. And I've mentioned to you before things like we've implemented salesforce.com. We've disaggregated the markets and looked at discrete areas and focused on what the needs of those particular markets like Steve mentioned multifamily. We're high grading our processes. We've got technology in place like builder platform where builders can go to those kinds of things. So while the economy is picking up, we've also, the last 4 years, worked in a very diligent way to do, no matter what the market conditions are, to do our very best to get meter set and also to retain meters for that matter. Yes. And one last piece on that is, as you mentioned Missouri specifically, I do think we're starting to see an emphasis on economic development in general. Rob Dixon and his team have really tried to take a focus on where we're missing some opportunities at the state and what can we do. So I think we're seeing some benefits from that as well. Very nice. Seems like you're blocking and tackling is really paying off. Updated. As we think about your CapEx budget that you have out there 2020 going through 2022, pipeline storage seems to fall off pretty dramatically. Should we expect that to have an upward bias as time goes by? Yes. Selman, this is Steve. I can answer that. Yes, clearly, what we include in our capital, long term capital forecast are the things that we believe are actionable that we've talked to the market about. As you know, we have a funnel full of potential opportunities. And as those become more mature, you would expect us to add those to the capital plan. I think we're fairly solid on the utility spend. And you can see if you've been following us over the last number of years, we've even found a way hit the accelerator a little bit faster, across those and that's an area we continue to look at. We have to balance that against the capital needs and the impact on our customers. But so there's always a chance for us to modify that. But I take on your comment that as we identify new projects or opportunities that clearly would be an adder to the $2,500,000,000 that we're currently operating on. All right. Thank you very much. Thank you. The next question comes from Christopher Turnure of JPMorgan. Please go ahead. Good afternoon, guys. Hey. Since the year started, you guys have purchased the Wyoming storage and it looks like added a little bit to that purchase and then had a very successful early part of the year with Spire Marketing and it looks like now you're investing in maybe expanding that business and that potential a bit. Could you speak to that as it does seem to be a bit of a shift from the prior strategy, which was utility focused for the company? Yes, I wouldn't say it's a shift at all. From a Spire marketing perspective, we've since Steve and I've been working together for 6 years, we've talked about how important Spire marketing is to our business that it was really an outshoot of our gas company business. And what I mean by that is providing services like I mentioned earlier to more highly sophisticated customers inside our geographic utility region and out because there's a need in the marketplace for those utility life services. So it's a physical transaction. So we ran a business case to see if it made sense for us to even grow into other geographic areas. And we decided it did make sense because we have the talent and we've invested in the IT systems to do that. And so that is what we've done and of course attracting and retaining talent for this business, the best place to be is in Houston. And we have enough people and enough critical mass now where it made sense to move it. So I just really see it again as organic growth around Spire Marketing not really an expansion. The business model is the same. We're improving the systems. We're bringing in other talent. Mike, it's Mike Staeh here. Mike also leads Spire Marketing and he may want to add something that I haven't mentioned, but that's the way that we generally see it. Yes, we spent a lot of time putting together a very detailed bottom up expansion plan for the business, which we had multiple meetings on internally and with our Board over the last couple of years and felt very confident that we could geographically extend the current model, which really had been growing pretty nicely even prior to that. I mean, if you go back and look at our volumes, they've grown very consistently and very strongly for probably the last 4 to 5 years. And so we're just continuing to build on that. It takes more expertise, more talent to do that. We've generally found it a little challenging to land that talent here in St. Louis. So we just recognize that we really want to kind of continue to move that business forward. We needed to add several key people, especially on the origination and trading side and that will be much easier to do that in Houston and that's actually already bearing fruit and underway. Yes. And Chris, I would add a couple of things. 1, you would expect us to want to drive all of our businesses to grow. That's how we're wired. So we expect every business that we're investing in to grow. And so the things you're seeing us do on the storage side and on marketing and also a pipeline are really focused on driving growth because that's how we create value for our shareholders. Also got to keep it in perspective. The non utility business was 3% of our business last year from an earnings perspective. It might grow to 10 percent this year, but that's because Spire Marketing is having one of those home run years and it's great when the market gives you the opportunity to do that. But the most important fact is we are still predominantly a natural gas utility even given the outsized performance in Inspire Marketing this year, which obviously we don't expect to recur because we don't we can't predict where the market conditions are going to be. We can stay focused on what we do best, which is run gas utilities and then we use our expertise to find other opportunities to create value. Got it. And then, on the gas storage transaction in and of itself, I think your latest message on that was that, you were going to exclude some impact this year, but you expected it, I think, to be modestly accretive beginning next fiscal year. Does that still stand or is that improved now because of this smaller secondary purchase that you made? Our guidance still stands on what we expect next year. And just to keep it all in perspective, we spent an order of magnitude $25,000,000 of consideration to invest in the first storage facility. The total all in price of the second facility was less than half of that and it was already on our radar screen and was part of our plan as we started down the path because they are literally within 3 miles of each other. So having those 2 operators one ultimately one facility has been our plan all along and it's great that we're able to execute and actually keep moving down the path on the strategy that we outlined ourselves when we announced the first part of that move in our fiscal Q1. Great. Thanks, Steve. Thank you. The next question comes from Andrew Levi of ExodusPoint. Please go ahead. Hey, Stephen, Suzanne, Scott. Hey, Eddie. Just back to the STL Pipeline. So any idea what seems to be the holdup on approval? Simple answer is no. Obviously FERC has a process. The docket has been closed in terms of any request from us or any other party for some weeks now. So, I certainly would not try to second guess the timing of the FERC. So what we do know is there's a lot of precedent for pipeline approvals. I also know we've got our environmental assessment very early and quick and that's usually the big gating factor. And then obviously the interveners come into the process and has to be responses as a part of that process and that has been closed like I said for several weeks now. So we remain hopeful that we'll get a decision sometime soon and hopefully like I said before Commissioner Powelson departs. Okay. But either way we're ready. We've done the scenario work and I guess that it doesn't impact our long range plan in terms of what we have guided. Okay. So I have a couple more questions just regarding this. Just the first question is basically what's the premise of replacing the pipe or building the pipe and leaving the Enable pipe? Well, the premise, and I'll back up to my earlier comments as to how did we get to or why did we decide to build the Spire STL Pipeline. Early on about 5, really more like 5 years ago, boy time travel, we decided to evaluate the array of assets that supporting this region. Obviously with Steve Lindsey's leadership, we have the gas distribution system. But how do we get gas into our distribution system? What are those supply basins and what storage if any are we using? And what's happened with gas companies over the last 100 years, the pieces have been added on to the system, our pipelines have been serving these areas, but we've had sprawl in the region, gas loads have shifted and changed and conservation, we're operating the way that we receive gas into the distribution systems based on the original header system from decades ago, aging infrastructure, you're managing systems at lower pressure. So with a change in our distribution infrastructure and the other changes in the region over the decade, we started basically with a blank sheet of paper and said how do we want to build an array of assets that brings supply from not only traditional supply basins like East Texas and Gulf of Mexico, but shale gas that's prolific and low cost to our customers. And also how do we want to de risk the region by not bringing gas just from the south in a traditional way it has over the decades, but bringing gas into the system in a way that creates more of a hub when we're replacing the header system in the region. And so as a part of that evaluation and with REX lateral that's now bidirectional to a node basically north of us and the supply basin in Ohio and Pennsylvania, again that's prolific, not bringing that inexpensive shale gas that's prolific into this region via a RECs lateral, not doing that would not be fulfilling the best cost obligation that we have to our customers. Again, not just for today, but well into the future. And we didn't start out with the Spire STL Pipeline, we started out with an evaluation of the region and what is available from pipeline infrastructure, supply basins, cost structure, peaking load needs to durational load needs and so forth. And a very comprehensive really over a couple of year period building back in a rate that made the most sense for our customers, industrial customers, small businesses and residential for today and for decades to come because these are long term investments that need to be made, if made. So that's how we came to the conclusion for that pipeline and then we filed with FERC and now we're awaiting the FERC approval. Right. And I understand that. That sounds very good. Wasn't there also in the filing, if I'm not mistaken from what I read that earthquakes or an earthquake potential plays a role in part of the diversity as well. Is that correct? Yes. Yes, I guess, it's a great point. Yes, it was in the filing. And I'm chuckling a little bit because there is what is called the New Madrid fault line and it basically runs from South of St. Louis North and our pipe the pipeline interstate pipeline infrastructure runs let's just say in the same direction similar path and I was chuckling a little bit because when I was recruited here and subsequently when Steve Lindsey was recruited here, nobody told us about the new natural fault line during those interviews. But yes, you are correct and that certainly was part of the evaluation process. The resiliency in the system, building a header system and more a hub that to be able to bring gas in different ways and not be 100%, if you will, tied to that south to north pipeline and along that fault line. Okay. And what was the I'm just curious, I mean, are there earthquakes in Missouri or? I don't recall the last time we experienced it, but there are people that are monitoring that earthquake pass all the time, seismic managing, much like they do in other areas that are susceptible to earthquakes. And obviously, we build we like other companies build in resiliency based on that. Other areas we have hurricanes, there's tornado pads and that's just the hate to say it, but it's somewhat day to day operational for us to understand weather patterns into the region and how we manage these emergencies conditions. Okay. And then I have 2 more questions and I apologize for so many questions. But I guess Senator Durbin sent a letter to the FERC asking what's basically taking so long, if I'm not mistaken. And then Commissioner McIntyre wrote back. Can you kind of just describe kind of what's been going on with that? I think Commissioner McIntyre brought up things in the letter back to Durbin regarding market demand, cost and financing and project design. Could you kind of Yes, I'd rather not I'd rather not second guess the correspondences between senators and commissioners. What I do know is the FERC process and when the commission issues its order either in the affirmative or not in the affirmative, there is an order with all the supporting material that we will need to make a determination. So until then, I guess I will reserve my sort of my judgments. I prefer to be commission orders via the state level or at a federal level than opining on correspondences and views. Okay. Thank you very much. Thank you. Thanks, Annie. 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 time with a lot of other earnings. Appreciate your time and we're around the rest of the day for any follow ups. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.