Slide 1: Second Quarter 2016 Earnings Conference Call
Second Quarter 2016 Earnings Conference Call May 4, 2016
Slide 2: Participants on today's call
Participants on today’s call Suzanne Steven P. Rasche Steven L. Lindsey Sitherwood E x e c u t i v e V i c e P r e si d e n t , E x e c u t i v e V i c e P r e si d e n t President and Chief Financial Officer and Chief Executive Officer Chief Operating Officer, D i st r i b u t i on O p e r a t i on
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: We are Spire
We are Spire SpireEnergy.com 4 S p i r e | 2 nd Q u a r t e r E a r n i n g s C o n f e r e n c e C a l l
Slide 5: We are Spire
We are Spire • Spire better reflects the growing company we have become • It will unite our natural gas companies as we migrate to one brand in 2017 • We are about: ‒ Bringing people and energy together ‒ Championing people by delivering energy that inspires • We have been on a transformational jour
Slide 6: Successfully executing on our growth strategy
Successfully executing on our growth strategy Growing our gas Acquiring and Modernizing Investing in utility business integrating gas our gas assets innovation utilities 6 S p i r e | 2 nd Q u a r t e r E a r n i n g s C o n f e r e n c e C a l l
Slide 7: Second quarter highlights
Second quarter highlights • Higher second quarter net economic earnings¹ per share of $2.37, driven by Gas Utility • We continue to execute on our growth strategy: ‒ Acquisition of Mobile Gas and Willmut Gas ‒ Moving forward with our STL Pipeline to modernize our gas assets ‒ Focus on organic growth
Slide 8: Mobile Gas and Willmut Gas
Mobile Gas and Willmut Gas • A strategic acquisition that delivers many benefits: ‒ Grows our gas utility business by adding 104,000 customers ‒ Delivers safe, reliable and efficient service to customers while continuing our commitment to civic involvement and community support ‒ Expands Southern fo
Slide 9: STL Pipeline
STL Pipeline 60-mile pipeline with capacity of • Supports strategy to modernize our 400 MMcf/d gas assets to: ‒ Achieve more diverse supply portfolio ‒ Improve reliability and resiliency Connects to ‒ Access lower cost shale gas Rockies Express • Gives our eastern Missouri and Panhandle distribution
Slide 10: Net economic earnings
Net economic earnings Second Quarter Ended March 31 $ in Millions Per Diluted Share Net Economic Earnings1 FY16 FY15 FY16 FY15 Gas Utility $ 102.5 $ 96.5 $ 2.35 $ 2.22 Gas Marketing 3.0 2.1 0.07 0.05 Other (2.0) (1.0) (0.05) (0.02) $ 103.5 $ 97.6 $ 2.37 $ 2.25 • Net economic earnings (NEE) per share
Slide 11: Operating revenues and margin
Operating revenues and margin Second Quarter Ended March 31 $ in Millions Change FY16 FY15 $ % Operating Revenues Gas Utility $ 611.5 $ 847.0 $ (235.5) -28% Gas Marketing & Other (2.2) 30.4 (32.6) -107% $ 609.3 $ 877.4 $ (268.1) -31% 1 Operating Margin Gas Utility 307.5 305.8 1.7 1% Gas Marketing 3.
Slide 12: Expenses
Expenses Second Quarter Ended March 31 $ in Millions Change FY16 FY15 $ % Operating Revenues $ 609.3 $ 877.4 $ (268.1) -31% Operating Expenses Gas Utility Natural & propane gas 261.1 482.8 (221.7) -46% Other operation & maintenance 94.3 103.8 (9.5) -9% Depreciation & amortization 33.8 32.2 1.6 5% Ta
Slide 13: Year-to-date highlights
Year-to-date highlights First Half Ended March 31 $ in Millions Per Diluted Share 1 Net Economic Earnings FY16 FY15 FY16 FY15 Gas Utility $ 152.5 146.3 $ 3.50 $ 3.38 Gas Marketing 2.7 2.5 0.07 0.06 Other (6.6) (5.5) (0.16) (0.13) $ 148.6 143.3 $ 3.41 $ 3.31 • Gas Utility earnings +$6.2 million, refl
Slide 14: Strong cash flow, capital structure and liquidity
Strong cash flow, capital EBITDA1 structure and liquidity ($ in millions) • YTD EBITDA1 of $325 million up 4% $300 from last year $200 • Long-term capitalization stands at $311.8 $324.5 ~52% equity $100 • Significant liquidity: nearly $500 $0 million of capacity 1st Half FY15 1st Half FY16 • Funding
Slide 15: Higher capital investment
Higher capital investment ($ in millions) $150 • FY16 capital forecast increased to $320 million, reflecting STL Pipeline $100 • Five year forecast raised to $1.8 $129.5 $121.8 billion from $1.6 billion $50 • Additional upside from Mobile Gas and Willmut Gas upon closing $0 1st Half FY15 1st Half FY
Slide 16: Strong dividend track record
Strong dividend track record Dividend Yield Annualized dividends per share 3.0%2 $2.00 $1.961 $1.84 $1.80 $1.76 $1.70 $1.66 $1.62 $1.60 $1.40 2011 2012 2013 2014 2015 2016 • Increase accelerated to 6.5 percent in 2016 based on our growing earnings • 13 years of consecutive increases; 71 years of con
Slide 17: Outlook for growth
Outlook for growth • NEEPS target remains $3.34 - $3.44, a growth of 5 - 8% over 2015 • Capital spend raised to $320 million including STL Pipeline • Mobile and Willmut anticipated to add to NEEPS in fiscal 20181 • STL Pipeline targeted for 2019 in service date • Long-term annual NEEPS growth target
Slide 18: The Spire journey
The Spire journey • We continue on our journey of transformation, now as Spire • Journey continues to be driven by: – Organic growth – Adding Mobile Gas and Willmut Gas – STL Pipeline • We look forward to providing you with further Spire journey updates FPO – IMAGE MAY as the year unfolds CHANGE 18
Slide 19: Appendix
Appendix 19 S p i r e | 2 n d Q u a r t e r E a r n i n g s C o n f e r e n c e C a l l
Slide 20: Net economic earnings (Non-GAAP) reconciliation
Net economic earnings (Non-GAAP) reconciliation Per Share Gas Gas Amounts ($ in millions, except per share amounts) Utility Marketing Other Total (2) Three Months Ended March 31, 2016 Net Income (Loss) (GAAP) $ 102.4 $ 1.5 $ (3.1) $ 100.8 $ 2.31 Unrealized gain on energy-related derivatives (1) 0.1
Slide 21: Net economic earnings (Non-GAAP) reconciliation
Net economic earnings (Non-GAAP) reconciliation Per Share Gas Gas Amounts (In Millions, except per share amounts) Utility Marketing Other Total (2) Six Months Ended March 31, 2016 Net Income (Loss) (GAAP) $ 151.7 $ 3.8 $ (7.8) $ 147.7 $ 3.39 Unrealized gain on energy-related derivatives (1) - (1.2)
Slide 22: Operating margin (Non-GAAP) reconciliation
Operating margin (Non-GAAP) reconciliation Gas Gas (In Millions) Utility Marketing Other Eliminations Consolidated Three Months Ended March 31, 2016 Operating revenues $ 612.7 $ 8.0 $ 0.9 $ (12.3) $ 609.3 Natural and propane gas expense 273.0 4.0 - (12.0) 265.0 Gross receipts tax expense 32.2 0.1 -
Slide 23: EBITDA (Non-GAAP) reconciliation
EBITDA1 (Non-GAAP) reconciliation First Half Ended March 31 (In Millions) FY16 FY15 Net Income $ 147.7 $ 141.5 Add back: Interest Charges 38.3 38.3 Income Tax Expense 70.9 67.3 Depreciation & Amortization 67.6 64.7 EBITDA $ 324.5 $ 311.8 Adjusted long-term capitalization reconciliation ($ in million
Slide 24: STL Pipeline to access shale plays
STL Pipeline to access shale plays Niobrara REX/PEPL Marcellus/Utica Missouri New Lateral Rockies Express Panhandle MoGas Southern Star Enable MRT 24 S p i r e | 2 n d Q u a r t e r E a r n i n g s C o n f e r e n c e C a l l