Slide 1: AGA Financial Forum
AGA Financial Forum May 15-17, 2016
Slide 2: Spire | AGA Financial Forum – May 15-17, 2016
2 Spire | AGA Financial Forum – May 15-17, 2016
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 • Spire better reflects the growing company we have become • Will unite our natural gas companies under one name in 2017 • We are about: ‒ Bringing people and energy together ‒ Championing people by delivering energy that inspires • We have been on a transformational journey, guided by
Slide 5: 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 Investing in prudent Added 1 million Positioned Gas Spire natural gas infrastructure customers Marketing for fueling stations upgr
Slide 6: We are a gas company at our core
We are a gas company at our core 1 • Five gas utilities1 across three states • Largest gas company in Missouri and Alabama • Focus on safe and reliable service, community development and growth 1Gives effect to the pending acquisition. 6 Spire | AGA Financial Forum – May 15-17, 2016
Slide 7: Growing our gas utility business
Growing our gas utility business 7 Spire | AGA Financial Forum – May 15-17, 2016
Slide 8: Higher capital investment
Higher capital investment Capital expenditures (In Millions) $150 • FY16 capital target of $320 million – Now includes Spire St. Louis Pipeline $100 – 2/3 of FY16 utility spend recoverable with $129.5 $121.8 minimal regulatory lag $50 • 5-year forecast raised to $1.8 billion from $1.6 billion $0 1st
Slide 9: Growing organically
Growing organically • Increasing revenues and margins – Growing customers and improving retention – Increasing penetration – Leveraging technology, communications and process improvement to achieve efficiencies • Seizing market opportunities – Building commercial/industrial load – Line extensions in
Slide 10: Spire | AGA Financial Forum – May 15-17, 2016
10 Spire | AGA Financial Forum – May 15-17, 2016
Slide 11: Acquiring and integrating gas utilities
Acquiring and integrating gas utilities 11 S pire | AGA Financial Forum – May 15 -17, 2016
Slide 12: Mobile Gas and Willmut Gas
Mobile Gas and Willmut Gas • A strategic acquisition: ‒ Grows our gas utility business ‒ Delivers on customer and community benefits ‒ Expands existing Southern footprint ‒ Adds to earnings and cash flow • Adds 104,000 customers ‒ 85,000 served by Mobile Gas (AL) ‒ 19,000 served by Willmut Gas (MS)
Slide 13: Acquisition of Mobile Gas and Willmut Gas
Acquisition of Mobile Gas and Willmut Gas Grows our • Supports gas utility growth through capital investment and organic growth Gas Utility • Increases scale of regulated business Business • Adds growing commercial and industrial customer load Delivers on • Continues our focus on safe, reliable and
Slide 14: Spire | AGA Financial Forum – May 15-17, 2016
14 Spire | AGA Financial Forum – May 15-17, 2016
Slide 15: Modernizing our gas assets
Modernizing our gas assets 15 S pire | AGA Financial Forum – May 15 -17, 2016
Slide 16: Spire St. Louis Pipeline
Spire St. Louis Pipeline • Supports gas asset modernization: ‒ Achieve more diverse supply portfolio ‒ Improve reliability and resiliency Marcellus/Utica • Gives our eastern Missouri system access to lower cost shale gas from Rockies Express Marcellus and Utica – 100% Spire ownership Spire – FERC re
Slide 17: Gas Marketing
Gas Marketing • Provides wholesale natural gas services to diverse, sophisticated customer base • Operates primarily in the Midwest • Leverages market expertise and risk management protocols and skills • Optimizes portfolio of commodity, transportation and storage contracts – Operated on 17 intersta
Slide 18: Investing in innovation
Investing in innovation 18 S pire | AGA Financial Forum – May 15 -17, 2016
Slide 19: Natural gas fueling solutions
Natural gas fueling solutions • Focused on customer-led strategy ‒ End-to-end solutions for return to base fleets ‒ Large market for Class 8 tractor trailers ‒ Design, construct, own, and operate public stations with anchor customer contracts • Developing market and customer relationships via Mainst
Slide 20: Delivering shareholder value
Delivering shareholder value 20 S pire | AGA Financial Forum – May 15 -17, 2016
Slide 21: Earnings growth driven by gas utilities
Earnings growth driven by gas utilities • 5-year growth in Gas Utility earnings of 14% driven by: – Investment in infrastructure upgrades – Organic growth – Acquisitions and effective integration • Smaller contribution from Gas Marketing reflecting market conditions Net economic earnings per share1
Slide 22: Growing cash flow and ample liquidity
Growing cash flow and EBITDA1 ample liquidity (In Millions) • YTD EBITDA1 of $325 million up 4%, $300 more than sufficient to meet capital $200 investment and dividend needs $324.5 $311.8 • Significant liquidity from credit $100 facilities with nearly $500 million of unused capacity $0 1st Half FY15
Slide 23: Strong dividend track record
Strong dividend track record Dividend Yield 3.0%2 Annualized dividends per share +6.5% $2.00 $1.961 +4.5% +3.5% +2.5% $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 in
Slide 24: Strong capital structure
Strong capital structure Adjusted long-term capitalization2 • Adjusted long-term capitalization ~52% equity, up from ~50% at fiscal year end1 • Opportunity to de-lever with strong cash flow and equity unit conversion in 2017 51.7% 48.3% • Ready access to capital markets to fund Mobile Gas and Willmu
Slide 25: Outlook for growth
Outlook for growth • NEEPS target remains $3.34 - $3.44, a growth of 5% - 8% over 2015 – On track through 1st half FY16 – Excludes impact of Mobile Gas and Willmut Gas acquisition1 • Capital spend raised to $320 million including Spire St. Louis Pipeline • Mobile and Willmut anticipated to add to NE
Slide 26: Energy exists to help people
Energy exists to help people. To enrich their lives, grow their businesses, advance their communities. It’s a simple idea, but one that’s at the heart of our business. 26 S pire | AGA Financial Forum – May 15 -17, 2016
Slide 27: Appendix
Appendix 27 S p i r e | A G A F i n a n c i a l F o r u m – M a y 1 5 - 1 7 , 2 0 1 6
Slide 28: Spire leadership team
Spire leadership team A. Suzanne Sitherwood B. Steven P. Rasche President and Executive Vice President, Chief Executive Officer Chief Financial Officer A B C. Steven L. Lindsey D. Mark C. Darrell Executive Vice President Senior Vice President, and Chief Operating Officer, General Counsel and Distrib
Slide 29: Our utility portfolio
Our utility portfolio Alagasco Laclede Gas MGE Mobile Gas Willmut Gas Founded 1852 1857 1867 1836 1933 Primary Office Birmingham St. Louis Kansas City Mobile Hattiesburg Employees 909 1,614 555 219 45 Customers 420,000 647,000 501,000 85,000 19,000 Pipeline Miles ~23,000 ~16,000 ~14,000 ~4,300 ~1,20
Slide 30: First half fiscal 2016 operating results
First half fiscal 2016 operating results • Net economic earnings1 (NEE) up $5.3 million to $148.6 million • NEE per share $3.41 up from $3.31 last year ‒ Gas Utility: NEE $152.5 million up from $146.3 million Mild winter and lower demand adversely impacted operating margins and favorably impacted
Slide 31: First half fiscal 2016 financial summary
First half fiscal 2016 financial summary Six Months Ended (In Millions, except earnings per share) March 31, FY16 FY15 Earnings by Segment Gas Utility $ 152.5 $ 146.3 Gas Marketing 2.7 2.5 Other (6.6) (5.5) Net Economic Earnings (non-GAAP)1 $ 148.6 $ 143.3 Net Economic Earnings Per Share (non-GAAP)1
Slide 32: Missouri regulatory summary
Missouri regulatory summary • Traditional approach: general rate case typically filed every three years ‒ Cost-of-service, rate base and capital structure determined using historical test year ‒ Both utilities have weather mitigated rate designs and mechanisms to address purchased gas costs, pension
Slide 33: Alabama regulatory summary
Alabama regulatory summary • Progressive approach: top-rated regulatory jurisdiction by RRA1 • Rate Stabilization and Equalization (RSE) ‒ Annual rate filings using forward year budget with quarterly reviews for potential rate reductions ‒ 10.80% ROE, annual rate adjustment Dec. 1 ‒ Includes current
Slide 34: Mississippi regulatory summary
Mississippi regulatory summary • Highly rated regulatory jurisdiction by RRA • Rate Stabilization Adjustment (RSA) ‒ Filing by September 15th with rates effective November 1st (June 30th test year) ‒ Provides for annual rate performance reviews rather than periodic rate cases Formulaic approach to
Slide 35: Equity units summary
Equity units summary • 2,875,000 equity units issued June 2014; net proceeds of $139 million ‒ $50 face value per unit consisting of: 3-year equity forward contract A 1/20 interest in $1,000, 8-year junior subordinated note ‒ 6.75% cash coupon: 2.00% interest on notes, 4.75% contract payment • E
Slide 36: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Fiscal Years Ended September 30, 2010 2011 2012 2013 2014 2015 Net economic earnings per share excluding propane sale (non-GAAP) $ 2.36 $ 2.52 $ 2.79 $ 2.87 $ 3.05 $ 3.19 Add: Sale of excess propane inventories1 0.16 0.27 - - - - Net economic earnings
Slide 37: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Gas Gas Per Share ( In Millions, except per share amounts) Utility Marketing Other Total Amounts2 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 derivatives1 - (1.2) - (1.
Slide 38: EBITDA and adjusted long-term capitalization reconciliation
EBITDA1 (non-GAAP) reconciliation 1st 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 (non-GAAP) reconciliation As