Spire Inc. · NYSE:SR
Spire — Investor Presentation (April 2021)
38 slides from Spire's investor presentation, April 2021
Slide 1: Stepping forward
Stepping forward Investor Presentation April 2021
Slide 2: Stepping forward
Stepping forward • We’re off to a solid start to FY21 – Higher Q1 earnings of $1.42 per share – Strong operating performance • Executing on our strategic priorities to drive growth and sustainability • Meeting the cold weather challenge • Building on our ESG performance – Supporting our commitment t
Slide 3: Spire is a compelling investment
Spire is a compelling investment 90%+ regulated Robust 5-year 5-7% long-term Growing Strong ESG business mix capex plan EPS growth dividend for performance 18 consecutive including 7-8% annual years environmental rate base sustainability growth Attractive yield of 3.6%1 1Based on $2.60 per share div
Slide 4: Effectively managing February cold weather event
Effectively managing February cold weather event • Mid-February’s cold weather event impacted supply, pricing and demand for natural gas at our MO utilities, and in markets served by Spire Marketing • Missouri gas utility impacts – We were able to meet utility customer demand given robust supply, tr
Slide 5: Growing rate base
Growing rate base FY20 capital expenditures (Millions) $53 • FY20 capex of $638M reflects $37 – $548M gas utility investment • $311M for infrastructure upgrades • $97M for new business – 5th year $548 in a row of increased spend • 7% new meter growth in FY20 – Spire STL Pipeline placed into service
Slide 6: FY21 capital investment
FY21 capital investment Capital expenditures (Millions) $250 • Q1 FY21 capital spend of $164M $200 $192 – Gas utility capex of $150M $164 40 • $85M for pipeline replacement $150 14 • $38M for new business $100 – Lower spend for Spire STL Pipeline 152 150 (placed in service Q1 FY20) $50 • On track fo
Slide 7: Our growth guidance
Our growth guidance Capital expenditures (Millions) 5-year forecast: ~$3.0B • 5-7%1 LT annual NEEPS growth target $625 $610 $600 • FY21 NEEPS guidance of $4.00-$4.20 $590 $580 $590 • $3.0B capex plan through 2025 – Focused on infrastructure upgrade program extending over the next 15 years and 560 57
Slide 8: Growing organically
Growing organically New premise activations 15,000 12,441 • Strong focus on new business 10,938 11,159 11,645 9,498 – Record $97M investment in FY20 10,000 – Strong start to FY21 with $38M in Q1 5,000 • Greater engagement on economic development 0 • Driving margin via customer growth 2016 2017 2018
Slide 9: Advancing through innovation
Advancing through innovation • Building on legacy of continually improving service, efficiency and cost • Formalized approach to innovation with structure and processes • Launched Innovation Center • Driving innovation through technology upgrades and adoption • Implementing advanced metering technol
Slide 10: Delivering strong operating results
Delivering strong operating results Improving safety, system integrity and sustainability Employee safety Damages (OSHA – Days Away, Restricted or Transferred rate) (Per 1,000 locates) 3.65 4.76 4.78 3.22 4.24 3.87 3.89 2.63 1.88 1.56 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Leaks Leak resp
Slide 11: Further strengthening operating performance
Further strengthening operating performance • Improvements continued in Q1 Methane emission reduction (from 2005 levels) – Reduced employee injuries – Improved pipeline safety 26% – Strengthened system integrity 39% 53% – Enhanced field service 72% – Better sustainability (reduced methane emissions)
Slide 12: Moving forward with our Missouri rate review
Moving forward with our Missouri rate review • Seeks recovery of costs and $850M+ in capital investment since 2018 – Making our system safer, more reliable and cleaner for our customers and communities – Implementing service enhancements customers want – Proposing new programs and options for our cu
Slide 13: Maintaining strong financial position
Maintaining strong financial 1 Adjusted EBITDA position (Millions) $188 • Robust and growing EBITDA $200 $158 • Balanced long-term capitalization • Spire Alabama issued $150M of senior notes on Dec. 15, 2020 • Significant liquidity in revolver and CP program, with ~$430M available $0 at Dec. 31, 202
Slide 14: Growing our dividend
Growing our dividend Annualized common stock dividend per share Dividend yield 3.6%2 $2.70 $2.60 1 80% $2.49 $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 60% $1.70 $1.50 $1.30 50% 2016 2017 2018 2019 2020 2021 • Annualized common
Slide 15: Advancing and innovating for a better tomorrow
Advancing and innovating for a better tomorrow • As an essential energy provider, it’s our privilege and responsibility to deliver affordable, reliable and clean energy, while working to create a sustainable energy future • So, we’ll keep stepping forward, advancing and innovating for a better tomor
Slide 16: 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 17: Supplemental Material
Supplemental Material • Spire leadership • Our business and operating footprint • Financial performance • Our gas-related businesses • Other financial information 17 Spire | Investor presentation – April 2021
Slide 18: Spire executive leadership team
Spire executive leadership team B Suzanne Steve Steve Mark Mike Sitherwood Lindsey Rasche Darrell Geiselhart President and Executive Vice President, Executive Vice President, Senior Vice President, Senior Vice President, Chief Executive Officer Chief Operating Officer Chief Financial Officer Chief L
Slide 19: Spire business unit presidents
Spire business unit presidents Scott Carter Joe Hampton Scott Smith Pat Strange President, Spire Missouri President, Spire Alabama President, Spire STL Pipeline President, Spire Marketing and Mississippi and Spire Storage 19 Spire | Investor presentation – April 2021
Slide 20: We're a growing, financially strong natural gas company
We’re a growing, financially strong natural gas company • 5th largest publicly traded natural gas company serving 1.7 million homes and businesses across Alabama, Mississippi and Missouri • Executing on our value- creation strategy – Growing organically – Investing in infrastructure – Advancing thro
Slide 21: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 947 123 34 2,424 Customers1 424,800 84,400 18,400 1,186,500 Pipeline miles ~24,300 ~4,300 ~1,200 ~31,100 Rate base (Millions) $5882 $1082 $383 $2,7804 Return on equity 10.4
Slide 22: Upgrading our infrastructure and reducing methane
Upgrading our infrastructure and reducing methane • Targeting 53% methane reduction by Estimated replacement miles remaining As of 12/31/20 2025 from 2005 levels Total Bare Cast Vintage replacement • Committed to achieving carbon steel1 iron1 plastic miles neutrality by midcentury Missouri 1,5852 55
Slide 23: The case for natural gas
The case for natural gas 110+ Abundant and domestic years The U.S. has 3,374 Tcf of The U.S. natural gas Direct use of natural gas is a future natural gas supply, transmission and distribution more efficient energy: 91% vs more than 110 years worth system (2.6M miles of 36% for generation from under
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 clarity
Missouri regulatory clarity • Legislation enacted during 2020 (Millions) ISRS revenues clarifies ISRS eligibility Effective • All appeals of prior ISRS cases decided Filed date date Annualized FY20 – No impact on collections going forward June 2018 10/08/18 $ 8.0 $ 8.0 – One-time $15M refund in Aug.
Slide 26: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA • Rate Stabilization and Equalization (RSE) annual rate-setting process – RSE parameters evaluated every four years • Spire Alabama RSE reset – Oct. 1, 2022 • Spire Gulf RSE reset – Oct. 1, 2021 Spire Alabama – Rates set based on
Slide 27: Alabama and Mississippi regulatory update
Alabama and Mississippi regulatory update • Alabama utilities’ annual rate-setting completed under RSE – Spire Alabama rates based on 10.5% ROE (incl. 10 bp adder for AIM) – Spire Gulf rates based on 10.7% ROE – New rates effective Dec. 1, 2020 • Spire Mississippi annual rate-setting completed – Bas
Slide 28: 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 29: Our commitment to Corporate Social Responsibility (CSR)
Our commitment to Corporate Social Responsibility (CSR) Environment Communities People Leadership • Ongoing investment in • Supporting our • Inspiring future • Experienced manage- pipeline upgrades and communities through leaders via training, ment with deep bench system integrity financial contribu
Slide 30: Growing net economic earnings
Growing net economic earnings Per diluted Millions common share Three months ended December 31, 2020 2019 2020 2019 Net Income [GAAP] $ 88.9 $ 67.0 $ 1.65 $ 1.24 Provision for ISRS rulings ― 2.6 ― 0.05 All other adjustments1 (12.0) 2.2 (0.23) 0.04 Net Economic Earnings (NEE)2 $ 76.9 $ 71.8 $ 1.42 $
Slide 31: Our gas-related businesses
Our gas-related businesses 31 Spire | Investor presentation – April 2021
Slide 32: Growing Spire Marketing
Growing Spire Marketing • Provides gas marketing services Spire Marketing’s operational reach in the central and southern U.S. • Mostly wholesale services to munis, producers, power generators, storage operators, pipelines and utilities • A logistics-based business providing physical delivery of gas
Slide 33: Spire STL Pipeline completed and placed into service
Spire STL Pipeline completed and placed into service • Commercial operation in Nov. 2019 • 65-mile pipeline provides new natural gas supply to St. Louis – Capacity of 400 MMcf/day (with 350 MMcf/day for Spire Missouri) – Enhances diversity, reliability and resiliency of our supply • Key contributor
Slide 34: Developing Spire Storage
Developing Spire Storage • We’re committed to serving customers through ongoing development and operation of the facility • Revised development plan in FY20 to allow additional time to – Optimize and position facility to serve evolving markets in western U.S. – Gain commercial validation through FER
Slide 35: Other financial information
Other financial information 3535 Spire | Investor presentation – April 2021
Slide 36: 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 Three months ended December 31, 2020 Net Income (Loss) [GAAP] $ 76.5 $ 15.2 $ (2.8) $ 88.9 $ 1.65 Adjustments, pre-tax: Fair value and timing adjustments
Slide 37: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended December 31, 2020 Operating Income [GAAP] $ 106.8 $ 20.3 $ 5.8 $ ― $ 132.9 Operation and maintenance 103.0 3.3 8.6 (3.3) 111.6 Depreciation and amortization 48.6 0.3 1.9
Slide 38: Adjusted EBITDA reconciliation to GAAP; Pro forma long-term capitalization
Adjusted EBITDA1 reconciliation to GAAP Three months ended December 31, (Millions) 2020 2019 Net Income [GAAP] $ 88.9 $ 67.0 Add back: Provision for ISRS rulings - 2.6 Interest charges 25.7 26.2 Income tax expense 22.6 14.3 Depreciation and amortization 50.8 47.5 Adjusted EBITDA [non-GAAP] $ 188.0 $