Slide 1: Energy that advances: Second quarter fiscal 2020 update
Energy that advances Second quarter fiscal 2020 update May 8, 2020
Slide 2: Participants on today's call
Participants on today’s call Suzanne Sitherwood Steven L. Lindsey Steven P. Rasche President and Executive Vice President Executive Vice President Chief Executive Officer and Chief Operating Officer and Chief Financial Officer 2 Spire | Second 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: Focusing on staying safe and healthy while connecting in new ways
Focusing on staying safe and healthy while connecting in new ways 4 Spire | Second quarter fiscal 2020 update
Slide 5: Answering every challenge
Answering every challenge Our experience: Connecting with us should feel like a “handshake at the front door.” Our mission: Answer every challenge, advance every community and enrich every life through the strength of our energy. 5 Spire | Second quarter fiscal 2020 update
Slide 6: Addressing the coronavirus challenge
Addressing the coronavirus challenge • Protecting the health and safety of our employees, customers and communities is our core value • How we have responded – Activated our Incident Support and Crisis Management teams – Established standing communications and updates for employees, leaders and our
Slide 7: Focusing on our strategy
Focusing on our strategy • Executing on our value-creation strategy – Growing organically – Investing in infrastructure – Advancing through innovation • Ensuring we remain strong— financially and operationally • Q2 financial results below plan due to warmer weather • Pursuing favorable regulatory ou
Slide 8: Steps we're taking to address coronavirus
Steps we’re taking to address coronavirus Employees Customers Community • Employing healthy practices • Continuing to provide safe and • Donating $250k to local area (hand washing, social distancing) reliable service food pantries and meal • New emergency leave and other • Suspended disconnections a
Slide 9: Expanding capital investment
Expanding capital investment Capital expenditures (Millions) 1H actuals $400 $377 $346 • Furthering utility organic growth 122 67 $300 – $53M new business investment YTD – New business spend and new meter $200 additions on pace with last year 255 279 • YTD spend on track with plans $100 – $279M util
Slide 10: Pursuing favorable regulatory outcomes
Pursuing favorable regulatory outcomes Missouri • Legislation to clarify ISRS statute continues to progress – Senate (SB618) passed – Substitute to SB618 passed in House May 6; now in conference committee • Stipulation on February 2020 ISRS request – Agreement between Spire, MoPSC Staff and OPC – An
Slide 11: Delivering solid net economic earnings
Delivering solid net economic earnings Per diluted Millions common share Three months ended March 31, 2020 2019 2020 2019 Gas Utility $ 144.3 $ 146.7 Gas Marketing 5.1 6.2 Other (5.4) (5.0) Net Economic Earnings (NEE)1 $ 144.0 $ 147.9 $ 2.75 $ 2.90 MO ISRS provision (2.2) - (0.04) - All other adjust
Slide 12: Utility Q2 contribution margin
Utility Q2 contribution margin Actual ($ Millions) 2020 2019 Change % Change Weather in Q2 FY 20 Missouri Residential volumetric (WNAR) $ 84.8 $ 85.4 $ (0.6) -1% 11% warmer than normal; C&I (no mitigation) 29.2 34.5 (5.3) -15% 19% warmer than 2019 All other revenues 93.7 90.8 2.9 3% Missouri total $
Slide 13: Other key Q2 variances
Other key Q2 variances As reported Pension ($ Millions) 2020 2019 Variance adjustment Variance O&M Gas Utility $ 95.8 $ 112.0 $ (16.2) $ 19.1 $ 2.9 Spire Marketing 3.6 2.7 0.9 0.9 All Other 6.3 3.6 2.7 2.7 Total $ 105.7 $ 118.3 $ (12.6) $ 6.5 Other Expense (Income) $ 19.5 $ (6.1) $ 25.6 $ (19.1) $ 6
Slide 14: Liquidity and financial position
Liquidity and financial position Adjusted EBITDA 1 (Millions) • Funded a $150M, 364-day term loan $500 $413 on March 26 $400 $401 • Maintain significant liquidity in $300 revolver and CP program, with $200 $661M available at March 31 $100 • Robust YTD EBITDA $0 • Issued 113k shares under our ATM 1H
Slide 15: Coronavirus – financial impacts and mitigation
Coronavirus – financial impacts and mitigation • Residential customers represent ~70% of utility revenues and margins • A majority of our earnings come during the winter heating season • Monitoring our commercial and industrial customers, especially smaller firms, that will be impacted by economic s
Slide 16: Coronavirus – financial impacts and mitigation
Coronavirus – financial impacts and mitigation Forecasted FY20 impacts ($ Millions) EBIT EPS EBIT sensitivity Lost fees ($1.9) ($0.03) $0.5M/month Lower margins Residential $0.1M/month per 1% change in margin thru FYE Commercial & industrial (2.2) (0.03) $0.2M/month per 1% change in C&I margin t
Slide 17: Driving long-term growth
Driving long-term growth Capital expenditures (Millions) 5-year forecast: $2.8B • 5-year capex plan updated through $640 2024 to $2.8B 80 $530 $520 $530 $540 30 10 10 10 – Driven by utility spend (95% of total) – Delivers rate base growth of 7-8% over 560 500 510 520 530 the forecast period • Long-t
Slide 18: For more than 160 years, there has been one constant—we serve people
For more than 160 years, there has been one constant— we serve people. As we continue to focus on the future, we're committed to growing, innovating and doing all we can to advance people, performance and possibilities. 18 Spire | Second quarter fiscal 2020 update
Slide 19: Appendix
Appendix 19 Spire | Second quarter fiscal 2020 update
Slide 20: 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 21: Growing the dividend
Growing the dividend Annualized common stock dividend per share Dividend $2.70 yield 3.4%2 80% $2.491 $2.50 $2.37 $2.30 $2.25 Dividend payout ratio Dividend Dividend per share 70% payout ratio $2.10 $2.10 $1.96 $1.90 $1.84 60% $1.70 $1.50 $1.30 50% 2015 2016 2017 2018 2019 2020 • Annualized common s
Slide 22: ISRS update
ISRS update MoPSC requested and authorized ISRS revenues FY 2020 estimated ISRS revenues(a) collected revenues Plastics not Subject to Subject to ISRS Currently under (Millions) Requested authorized Authorized FY 2019 ISRS ruling ruling appeal Note September 2016 effective: 1/28/2017 $8.0 $ ─ $7.7 $
Slide 23: The coronavirus
The coronavirus United States Missouri Alabama Population 331,002,651 6,169,270 4,779,736 Cases 1,219,952 8,581 9,102 % of population 0.4% 0.1% 0.2% per 1M population 3,686 1,391 1,904 Reopening our economies • Alabama phased reopening started May 1 − <10 people/6 feet/50% occupancy https://governor
Slide 24: Revenues and contribution margin
Revenues and contribution margin Millions Change Three months ended March 31, 2020 2019 $ % Operating Revenues Gas Utility $ 679.0 $ 776.8 $ (97.8) -13% Gas Marketing 33.3 25.5 7.8 31% Other and eliminations 3.2 1.2 2.0 $ 715.5 $ 803.5 $ (88.0) -11% 1 Contribution Margin Gas Utility $ 369.8 $ 366.7
Slide 25: Operating expense detail
Operating expense detail Three months ended March 31, 2020 2019 As Pension Pro forma As (Millions) reported reclass 1 run rate reported Operating Expenses Gas Utility Natural & propane gas $ 249.0 $ $ 249.0 $ 337.4 Operation and maintenance (O&M) 93.1 19.1 112.2 109.5 Depreciation and amortizat
Slide 26: Year-to-date earnings
Year-to-date earnings Per diluted Millions common share Six months ended March 31, 2020 2019 2020 2019 Gas Utility $ 213.4 $ 213.1 Gas Marketing 11.2 14.5 Other (8.8) (13.8) Net Economic Earnings (NEE)1 $ 215.8 $ 213.8 $ 4.06 $ 4.20 MO ISRS provision (4.8) - (0.09) - All other adjustments2 (10.4) 8.
Slide 27: 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 Three months ended March 31, 2020 Net Income (Loss) [GAAP] $ 142.3 $ (3.3) $ (5.4) $ 133.6 $ 2.54 Adjustments, pre-tax: Provision for ISRS rulings 2.2
Slide 28: Net economic earnings reconciliation to GAAP
Net economic earnings reconciliation to GAAP Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Total common share2 Six months ended March 31, 2020 Net Income (Loss) [GAAP] $ 209.4 $ $ (8.8) $ 200.6 $ 3.77 Adjustments, pre-tax: Provision for ISRS rulings 4.8 4.
Slide 29: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended March 31, 2020 Operating income (Loss) [GAAP] $ 212.9 $ (4.4) $ 2.0 $ $ 210.5 Operation and maintenance 95.8 3.6 9.6 (3.3) 105.7 Depreciation and amortization 47.0
Slide 30: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Six months ended March 31, 2020 Operating income [GAAP] $ 309.2 $ $ 3.6 $ $ 312.8 Operation and maintenance 204.4 6.7 17.5 (6.3) 222.3 Depreciation and amortization 93.4 0.1 3.2
Slide 31: Adjusted EBITDA and Spire Storage EBITDA reconciliation to GAAP
Adjusted EBITDA1 reconciliation to GAAP Six months ended March 31, (Millions) 2020 2019 Net Income [GAAP] $ 200.6 $ 221.9 Add back: MO ISRS provision 4.8 Interest charges 53.9 53.5 Income tax expense 44.5 48.1 Depreciation and amortization 96.7 89.1 Adjusted EBITDA [Non-GAAP] $ 400.5 $ 412.6 Spire
Slide 32: Adjusted long-term capitalization reconciliation to GAAP
Adjusted long-term capitalization reconciliation to GAAP March 31, 2020 September 30, 2019 1 (Millions) Equity Debt Total Equity1 Debt Total Capitalization $ 2,669.5 $ 2,484.8 $ 5,154.3 $ 2,546.4 $ 2,082.6 $ 4,629.0 Current portion of long-term debt — 5.4 5.4 — 40.0 40.0 Long-term Capitalization [GA