Spire Inc. · NYSE:SR
Spire — Q1 2020 Earnings Presentation
24 slides from Spire's earnings presentation, Feb 5, 2020
Slide 1: Energy that advances
Energy that advances First quarter fiscal 2020 update February 5, 2020
Slide 2: Participants on today’s call
Participants on today’s call Suzanne Sitherwood President and Chief Executive Officer Steven P. Rasche Executive Vice President and Chief Financial Officer 2 Spire | First quarter fiscal 2020 update
Slide 3: Forward-looking statements and use of non-GAAP measures
Forward-looking statements and use of non-GAAP measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward- looking statements in this presentation speak only as of today, and we assume no duty to update them.
Slide 4: Energy that advances
Energy that advances • Delivering increased shareholder value starts with serving our customers better than ever before • We’re pushing boundaries and doing all we can to advance people, performance and possibilities • Explore OurStory.SpireEnergy.com to see all the ways we used our energy to advanc
Slide 5: Keeping our promises
Keeping our promises • Creating enhanced value for all our stakeholders by – Growing organically – Investing in infrastructure – Advancing through innovation • Delivering results – Off to a strong start in FY20 – Higher Q1 NEE per share of $1.33 – Continued strong operating performance 5 Spire | Fir
Slide 6: Investing in growth
Investing in growth • Q1 FY20 capital spend of $192M Capital expenditures (Millions) – Gas utility investment up $15M focused $250 on pipeline upgrades, new business $207 – Midstream spend $200 $192 • $29.5M for Spire STL Pipeline 70 40 $150 • $10.3M for Spire Storage • Full-year FY20 spend target r
Slide 7: Creating enhanced value for all our stakeholders
Creating enhanced value for all our stakeholders Growing organically • Focused on new business investment • Greater engagement on economic development • Driving margin through customer growth and supportive regulatory outcomes Advancing through innovation • Building on legacy of continually improvin
Slide 8: Regulatory update
Regulatory update Missouri • Jason Holsman (D) joined the Missouri Public Service Commission on Jan. 16 • Pursuing resolution of ISRS recovery in dispute – Judicial: Spire and the Missouri Public Service Commission filed motions for transfer of the Appeals Court orders to the Missouri Supreme Court
Slide 9: Growing the dividend
Growing the dividend Annualized common stock dividend per share Dividend $2.70 yield 3.0%2 70% 1 $2.49 $2.50 $2.37 $2.25 65% $2.30 Dividend payout ratio Dividend per share Dividend $2.10 $2.10 payout ratio $1.96 60% $1.90 $1.84 $1.70 55% $1.50 $1.30 50% 2015 2016 2017 2018 2019 2020 • Annualized com
Slide 10: Placeholder – Kansas City Chiefs Super Bowl Champions
Placeholder – Kansas City Chiefs Super Bowl Champions 10 Spire | First quarter fiscal 2020 update
Slide 11: Delivering net economic earnings growth
Delivering net economic earnings growth Per diluted Millions common share First quarter ended December 31, 2019 2018 2019 2018 Gas Utility $ 69.1 $ 66.4 Gas Marketing 6.1 8.3 Other (3.4) (8.8) Net Economic Earnings (NEE) 1 $ 71.8 $ 65.9 $ 1.33 $ 1.30 MO ISRS provision (2.6) - (0.05) - All other adju
Slide 12: Driving higher contribution margins
Driving higher contribution margins Millions Change First quarter ended December 31, 2019 2018 $ % Operating Revenues Gas Utility $ 530.7 $ 575.2 $ (44.5) -8% Gas Marketing 32.3 25.8 6.5 25% Other and eliminations 3.9 1.0 2.9 290% $ 566.9 $ 602.0 $ (35.1) -6% Contribution Margin 1 Gas Utility $ 264.
Slide 13: Controlling expenses
Controlling expenses Millions Change First quarter ended December 31, 2019 2018 $ % 1 Operating Expenses Gas Utility Natural and propane gas $ 214.6 $ 251.7 $ (37.1) -15% Operation and maintenance (O&M) 106.0 102.5 3.5 3% Depreciation and amortization 46.4 43.7 2.7 6% Taxes, other than income taxes
Slide 14: Maintaining solid financial position
Maintaining solid financial position Adjusted EBITDA (Millions) 1 • Strong adjusted EBITDA in Q1 FY20 $200 $158.1 • Capitalization2 of 48.2% equity reflecting $152.1 $150 recent long-term debt financing – Spire Missouri issued $275M of 2.84%, 10-yr. $100 bonds in Nov.; repaid $100M term loan – Spire
Slide 15: Our guidance
Our guidance Capital expenditures (Millions) $823 5-year forecast: $3.0B • Long-term annual NEEPS growth target 248 remains 4%-7% $610 70 $530 $515 $525 • FY20 NEEPS guidance to be launched 30 10 10 after more clarity on ISRS rulings 575 540 500 505 515 • 5-year capex plan remains $3.0B • Increased
Slide 16: We’ll continue pushing boundaries, growing, innovating
We’ll continue pushing boundaries, growing, innovating and doing all we can to advance people, performance and possibilities. 16 Spire | First quarter fiscal 2020 update
Slide 17: Appendix
Appendix 17 Spire | First quarter fiscal 2020 update
Slide 18: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 941 119 35 2,389 Customers1 420,600 83,900 18,500 1,169,900 Pipeline miles ~23,000 ~4,300 ~1,200 ~30,000 Rate base (Millions) $5092 $922 $293 $2,2174 Return on equity 10.40
Slide 19: ISRS: Court and legislative timeline
ISRS: Court and legislative timeline 2020 2021 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Considers If Supreme Court accepts the case Missouri Spire and Supreme MoPSC Court If Supreme Court does not acce
Slide 20: ISRS update
ISRS update MoPSC requested and authorized revenues (a ) ISRS revenues collected FY 2020 estimated ISRS revenues Amount not Q1 Subject to Subject to ISRS Currently under Other ISRS (Millions) Requested authorized (b) Authorized FY 2019 FY 2020 ISRS ruling ruling appeal revenue Note Prior to 2017 Rat
Slide 21: Net economic earnings reconciliation to GAAP
Net economic earnings reconciliation to GAAP Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total common share First quarter ended December 31, 2019 Net Income (loss) [GAAP] $ 67.1 $ 3.3 $ (3.4) $ 67.0 $ 1.24 Adjustments, pre-tax: Provision for ISRS rulings 2.6
Slide 22: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated First quarter ended December 31, 2019 Operating income [GAAP] $ 96.3 $ 4.4 $ 1.6 $ $ 102.3 Operation and maintenance 108.6 3.1 7.9 (3.0) 116.6 Depreciation and amortization 46.4 1.1
Slide 23: Adjusted EBITDA reconciliation to GAAP; Spire Storage EBITDA reconciliation
Adjusted EBITDA1 reconciliation to GAAP First quarter ended December 31, (Millions) 2019 2018 Net Income [GAAP] $ 67.0 $ 67.3 Add back: MO ISRS provision 2.6 Interest charges 26.7 25.9 Income tax expense 14.3 14.7 Depreciation and amortization 47.5 44.2 Adjusted EBITDA [Non-GAAP] $ 158.1 $ 152.1 S
Slide 24: Adjusted long-term capitalization reconciliation to GAAP
Adjusted long-term capitalization reconciliation to GAAP December 31, 2019 September 30, 2019 (Millions) Equity1 Debt Total Equity1 Debt Total Capitalization $ 2,590.1 $ 2,484.4 $ 5,074.5 $ 2,546.4 $ 2,082.6 $ 4,629.0 Current portion of long-term debt — 45.3 45.3 — 40.0 40.0 Long-term Capitalization