Slide 1: Energy in motion
Energy in motion Investor presentation March 2019
Slide 2: Spire | Investor p P r e s e n t a t i
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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: Putting our energy in motion
Putting our energy in motion Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Transforming our company 1. Growing organically 2. Investing in infrastructure 3. Acquiring and integrating 4. Innovation and technology 4 Spire | Invest
Slide 5: We’re expanding to serve more customers and markets
We’re expanding to serve more customers and markets • We’ve transformed our company by increasing our geographic footprint • Our gas companies now serve 1.7 million homes and businesses across Alabama, Mississippi and Missouri • We are advancing our gas-related businesses – Spire Marketing – Spire S
Slide 6: Building on our momentum
Building on our momentum • Operating with regulatory certainty from 2018 resets in MO and AL • Executing on organic growth and capital investment plans • Achieving strong Q1 financial performance – NEEPS of $1.30, up 9% – Utility NEEPS up over 7% • Advancing our gas-related businesses – Expanding Sp
Slide 7: Growing our gas utilities
Growing our gas utilities • Driving organic growth – 19% growth in new business capital investment in Q1 – Continued growth in new meter installations in Q1 • Increasing capital investment – 40% increase in utility capital expenditures in Q1 – 85% of utility spend recovered with minimal lag or refle
Slide 8: Investing for long-term growth
Investing for Capital expenditures long-term growth (Millions) $250 • Q1 FY19 capital spend up $96M $200 • FY19 forecasted spend of $650M $150 – $475M for gas utilities $100 $207 – $150M for Spire STL Pipeline $111 $50 – Refining plan for Spire Storage $0 • 5-year capital investment of $2.6B Q1 FY18
Slide 9: Building Spire STL Pipeline
Building Spire STL Pipeline • We’ve received required approvals, permits and land rights • Construction is now underway • Total project investment estimated at $210-$225 million • The 65-mile pipeline will bring new gas supply to the St. Louis region • Targeting in-service date by the end of our fis
Slide 10: Growing Spire Marketing
Growing Spire Marketing • Logistics-based business supported by Spire Marketing’s operational reach strong risk management – Provides gas marketing services to diverse customer base in central and southern U.S. – Physically delivers gas on 20+ pipelines – Optimizes portfolio of commodity, transporta
Slide 11: Developing Spire Storage
Developing Spire Storage • FERC approved combining operations of our two storage facilities in Wyoming • We are integrating and finalizing the development and investment plan to: – Take advantage of expanded long-term opportunities to serve a variety of customers (utilities, power generators and pro
Slide 12: Strengthening our financial position
Strengthening our EBITDA 1 financial position (Millions) $160 1 $152 • Q1 FY19 EBITDA of $152M, up 3% $148 • Ample liquidity at the peak of our $140 seasonal borrowing $120 • Solid LT equity capitalization2 51.3%, up 190 basis points from a year ago $100 • Planned financings on track Q1 FY18 Q1 FY19
Slide 13: Growing the dividend
Growing the dividend Annualized dividends per share Dividend Yield 3.1%2 1 Dividend payout ratio Dividends per share Dividend payout ratio • Board declared quarterly dividend of $0.5925, payable April 2 • 16 consecutive years of increases; 74 years of continuous payment • Dividend growth (5.3% in 20
Slide 14: Targeting long-term earnings growth of 4%-7%
Targeting long-term earnings growth of 4%-7% • Reflects ~6% annual utility rate base growth, regulatory certainty, and growing contribution from all businesses • Base is run-rate FY18 NEEPS, which removes 17¢ of Spire Marketing earnings driven by market conditions that are not expected to recur • Ea
Slide 15: 2019 NEEPS guidance of $3.70-$3.80
2019 NEEPS guidance of $3.70-$3.80 • Gas Utility growth driven by organic initiatives and infrastructure upgrades more than offsetting full-year impact of rate resets in MO (~3¢) and AL (~11¢) • Increasing contributions from gas-related businesses as we complete Spire STL Pipeline and continue growi
Slide 16: At Spire, we’re always in motion, using our energy to get the job done
At Spire, we’re always in motion, using our energy to get the job done today while exploring new and innovative ideas for tomorrow. 16 Spire | Investor presentation – March 2019
Slide 17: Appendix
Appendix 17 Spire | Investor presentation – March 2019
Slide 18: s t o r p
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Slide 19: 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, Chief Operating Officer of General Counsel and Distribu
Slide 20: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 861 123 33 2,321 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 $243 $2,2174 Return on equity 10.40
Slide 21: Pipeline replacement program
Pipeline replacement program Robust infrastructure replacement programs with lives of 15 - 18 years Estimated replacement miles As of 12/31/18 Total Vintage replacement Total system 1 Steel Cast iron plastic miles miles Missouri 1,740 720 - 2,460 30,000 Alabama 540 570 280 1,390 27,300 Total 2,280 1
Slide 22: Gaining regulatory certainty
Gaining regulatory certainty • Missouri rate cases completed in March 2018 – Increased return (ROE) and higher equity capitalization – Secured weather normalization that mitigates margin exposure • Received approval for $8M ISRS increase in Missouri • Alabama rate-setting parameters (RSE) updated –
Slide 23: Missouri rate cases
Missouri rate cases • New rates went into effect on April 19, 2018 – Reflect ~$70 million in cost savings from our transformative growth – Authorized 9.8% ROE, utility LT capital structure and $2.0B rate base Impact (Millions) Customer rates Earnings Base rate increase $66.2 $66.2 Rate reduction for
Slide 24: Missouri regulatory summary
Missouri regulatory summary • Average-rated regulatory jurisdiction by RRA1 • 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 me
Slide 25: Missouri regulatory and legislative update
Missouri regulatory and legislative update • Utility regulation improved with passage of electric and water legislation in 2018 • As a result of our 2018 rate cases, we have – Regulatory certainty in key areas, including ROE and capital structure – Full residential weather normalization • We are ass
Slide 26: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA • Progressive approach using forward year budget • Rate Stabilization and Equalization (RSE) – Annual rate-setting process with quarterly reviews for potential rate reductions – Rates set based on retained shareholders’ equity • S
Slide 27: Mississippi regulatory summary
Mississippi regulatory summary • Average-rated regulatory jurisdiction by RRA • Rate Stabilization Adjustment (RSA) – RSA provides for annual rate performance reviews rather than periodic rate cases • Formulaic approach to ROE setting with equity capitalization currently set at 50% • Rate adjustment
Slide 28: We delivered solid first quarter performance
We delivered solid first quarter performance Three months ended December 31, (Millions, except earnings per share) 2018 2017 Earnings by Segment Gas Utility $ 66.4 59.5 Gas Marketing 8.3 3.6 Other (8.8) (5.2) Net Economic Earnings (non-GAAP)1 $ 65.9 $ 57.9 Net Economic Earnings Per Share (non-GAAP)1
Slide 29: Q1 FY19 earnings growth
Q1 FY19 earnings growth • Net economic earnings1 (NEE) $65.9M, up $8.0M • NEE per share $1.30 up 9%, reflecting – Improved results from Gas Utility and Gas Marketing – Partially offset by higher corporate costs and the operating loss from Spire Storage • Gas Utility: NEE $66.4M (+$6.9M) – Contributi
Slide 30: Tax Cuts and Jobs Act
Tax Cuts and Jobs Act • We lowered customer rates for all utilities as a result of tax reform • 1HFY18 financial results include impacts based on the available guidance, including – Lowering our effective tax expense by $14.4M, reflecting lower federal income taxes, net of amounts reflected in lower
Slide 31: Income tax expense
Income tax expense Year ended September 30, Quarter ended September 30, (Millions) 2018 2017 2018 2017 1 GAAP expense (benefit) before ADIT amortization $ (23.0) $ 77.6 $ (14.5) $ (6.7) Amortization of excess ADIT (3.5) (3.5) GAAP income tax expense (benefit) $ (26.5) $ 77.6 $ (18.0) $ (6.7) Benefit
Slide 32: Net economic earnings [non-GAAP] reconciliation
Net economic earnings [non-GAAP] reconciliation Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total share Three months ended December 31, 2018 Net Income (Loss) [GAAP] $ 66.4 $ 10.0 $ (9.1) $ 67.3 $ 1.32 Adjustments, pre-tax: Unrealized gain on energy-related der
Slide 33: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended December 31, 2018 Operating income (loss) [GAAP] $ 95.6 $ 12.5 $ (3.0) $ 105.1 Operation and maintenance 104.9 2.6 7.4 (2.7) 112.2 Depreciation and amortization 43.
Slide 34: EBITDA and adjusted long-term capitalization reconciliation
EBITDA1 [non-GAAP] reconciliation Three months ended December 31, (Millions) 2018 2017 Net Income $ 67.3 $ 116.0 Add back: Interest charges 25.9 24.4 Income tax expense (benefit) 14.7 (33.1) Depreciation & amortization 44.2 40.4 EBITDA $ 152.1 $ 147.7 Adjusted long-term capitalization reconciliation