Slide 1: Energy that advances
Energy that advances Investor Presentation June 2020
Slide 2: 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 3: Energy that advances
Energy that advances • Executing on our value-creation strategy – Growing organically – Investing in infrastructure – Advancing through innovation • Delivering results – Strong Q1 – Q2 results below plan due to weather • Maintaining strong operating performance • Strengthening our financial position
Slide 4: We’re a growing, financially strong natural gas company
We’re a growing, financially strong natural gas company • 5-year capex target of $2.8B focused on infrastructure upgrades Delivering • Growing organically across our utility and gas-related businesses growth • Targeting 4-7% annual long-term EPS growth • Strong and growing cash flow; FY19 EBITDA $51
Slide 5: Addressing the coronavirus challenge
Addressing the coronavirus challenge Our mission: Answer every challenge, advance every community and enrich every life through the strength of our energy. • Protecting the health and safety of our employees, customers and communities is our core value • How we have responded – Activated our Inciden
Slide 6: Steps we’ve taken to address coronavirus
Steps we’ve taken to address coronavirus Employees Customers Community • Employing healthy practices • Continuing to provide safe and • Donating $250k to local area (hand washing, social distancing) reliable service food pantries and meal • New emergency leave and other • Suspended disconnections an
Slide 7: Coronavirus – financial impacts and mitigation
Coronavirus – financial impacts and mitigation • Residential customers represent ~70% of utility revenues and margins • A majority of our earnings come during the winter heating season • Monitoring our commercial and industrial customers, especially smaller firms, that will be impacted by economic s
Slide 8: Coronavirus – financial impacts and mitigation
Coronavirus – financial impacts and mitigation Forecasted FY20 impacts ($ 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 9: Reopening our economies
Reopening our economies • Alabama – Phased re-opening started May 1, with social distancing and occupancy limits – Alabama now fully opened with restrictions that expire July 3 • Missouri – Phased re-opening started May 4, with social distancing and occupancy limits – Beginning June 16, MO moves to
Slide 10: Pursuing favorable regulatory outcomes
Pursuing favorable regulatory outcomes Missouri ISRS – passage of legislation; 2019 and 2020 filings • Legislation to clarify ISRS statute passed mid-May, sent to Governor for signing – Effective Aug. 28 if enacted into law – Defines pipeline upgrades eligible for ISRS recovery based on materials th
Slide 11: Settling remand of 2016, 2017 and 2018 ISRS cases
Settling remand of 2016, 2017 and 2018 ISRS cases • Stipulation and Agreement reached between Spire, MoPSC Staff and OPC; set for MoPSC approval in the near term • $15.0M one-time refund to be reflected on bills after Aug. 1 – Refund applied against FY19 provision totaling $12.2M – Remaining $2.8M a
Slide 12: 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 13: 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) – Focused on pipeline upgrade program 560 500 510 520 530 extending over next 8-10 years
Slide 14: Enhancing stakeholder value
Enhancing stakeholder value 1 Growing organically O&M expenses per customer $270 • Strong focus on new business $270 • Greater engagement on economic $260 $256 $256 development $252 $250 $244 • Driving margin via customer growth $241 $251 $247 and supportive regulatory outcomes $240 $230 2014 2015 2
Slide 15: Maintaining solid liquidity and financial position
Maintaining solid 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
Slide 16: 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 17: 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 18: 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 19: Upgrading our infrastructure and reducing methane
Upgrading our infrastructure and reducing methane Estimated replacement miles remaining • Achieved a 39% reduction in As of 12/31/19 greenhouse gas emissions since 2005 • Committed to – 53% reduction in methane emissions by 2025 from 2005 base – Achieving carbon neutrality by midcentury *Completion
Slide 20: Delivering strong operating performance
Delivering strong operating performance Reducing employee injuries Improving pipeline safety OSHA DART1 rate Damages per 1,000 locates 3.66 3.65 4.84 4.76 4.78 3.22 4.24 3.87 2.63 1.88 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Strengthening system integrity Enhancing service and safety Leaks
Slide 21: 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. 21 Spire | Investor presentation – June 2020
Slide 22: t a t i o n –
22 S p i r e | I n v e s t o r p r e s e n t a t i o n – J u n e 2 0 2 0
Slide 23: Supplemental material
Supplemental material • Spire leadership • Our business and operating footprint • Additional gas utility information • Our gas-related businesses • Financial performance • Other financial information 23 S p i r e | I n v e s t o r p r e s e n t a t i o n – J u n e 2 0 2 0
Slide 24: 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 25: 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 25 S p i r e | I n v e s t o r p r e s e n t a t i o n – J u n e 2 0 2 0
Slide 26: We’ve expanded to serve more customers and markets
We’ve expanded to serve more customers and markets • We’re the fifth largest publicly traded natural gas company serving 1.7 million homes and businesses across Alabama, Mississippi and Missouri • We are developing and growing our gas-related businesses – Spire Marketing – Spire STL Pipeline – Spire
Slide 27: Additional gas utility information
Additional gas utility information 27 Spire | Investor presentation – June 2020
Slide 28: 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 $2,2174 Return on equity 10.40
Slide 29: Missouri regulatory summary
Missouri regulatory summary • Average-rated regulatory jurisdiction by RRA1 • Traditional approach: general rate case typically filed every three years – Cost-of-service, rate base and capital structure determined using historical test year – Both utilities have weather mitigated rate designs and me
Slide 30: ISRS update
ISRS update Expected ($ Millions) Authorized FY20 collection Notes June 2018 $8.0 $8.0 Collection continues despite refund of amount collected in FY19 effective 10/8/18 January 2019 12.4 12.4 Under appeal at Missouri Court of Appeals; fully briefed; awaiting effective 5/25/19 scheduling of oral argu
Slide 31: 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 (last set in 2018) – Uses forward-year budget and quarterly reviews Spire Alabama – Rates set based on retained sh
Slide 32: 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 33: Our gas-related businesses
Our gas-related businesses 33 S p i r e | I n v e s t o r p r e s e n t a t i o n – J u n e 2 0 2 0
Slide 34: 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 • Utilities account for majority of customers (by net dollar ex
Slide 35: Spire STL Pipeline completed and placed into service
Spire STL Pipeline completed and placed into service • Began commercial operation in mid-November 2019 • The 65-mile pipeline is providing a new gas supply to the St. Louis region – Enhances diversity, reliability and resiliency – Capacity of 400 MMcf/day with Spire Missouri contracted for 350 MMcf/
Slide 36: Developing Spire Storage
Developing Spire Storage • Solid operations during winter season, meeting customers’ needs • Disciplined approach to project development and capital deployment – Completed several capital projects to ensure reliable winter operations – YTD FY20 capex $20M; Q3 FY20 targeted investment $10M – Total in
Slide 37: Financial results for YTD and Q2 FY20 ending March 31
Financial results for YTD and Q2 FY20 ending March 31 37 Spire | Investor presentation – June 2020
Slide 38: Year-to-date FY20 earnings
Year-to-date FY20 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.
Slide 39: Year-to-date FY20 financial summary
Year-to-date FY20 financial summary Six months ended March 31, (Millions, except earnings per share) 2020 2019 Earnings by Segment Gas Utility $ 213.4 $ 213.1 Gas Marketing 11.2 14.5 Other (8.8) (13.8) Net Economic Earnings (non-GAAP)1 $ 215.8 $ 213.8 Net Economic Earnings Per Share (non-GAAP)1 $ 4.
Slide 40: Delivering solid Q2 net economic earnings
Delivering solid Q2 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 adj
Slide 41: Q2 revenues and contribution margin
Q2 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
Slide 42: Q2 utility contribution margin
Q2 utility 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 43: 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 44: 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 45: Other financial information
Other financial information 45 S p i r e | I n v e s t o r p r e s e n t a t i o n – J u n e 2 0 2 0
Slide 46: 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 47: 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 48: 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 49: 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 50: Adjusted 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 51: 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