Slide 1: Investor Presentation March 2018
It’s a promise. Investor Presentation March 2018
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: We've transformed our company through increasing our scale and expanding our geographic footprint
We’ve transformed our company through increasing our scale and expanding our geographic footprint. • We operate natural gas companies across Alabama, Mississippi and Missouri, serving 1.7 million homes and businesses • Since 2012: – Homes and businesses served increased by 1.1 million – Enterprise v
Slide 4: We are Spire
We are Spire Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Transforming our company • Growing organically • Investing in infrastructure • Acquiring and integrating • Technology and innovation 4 Spire | Investor Presentation – Ma
Slide 5: Growing organically
Growing organically • Targeting programs that add customers Total utility customers (Millions) and increase margin 1.8 1.68 1.69 – Enhanced business development approach 1.55 1.57 1.5 – Increased focus on economic development • Seizing market opportunities through 1.2 1.12 – Strategic line extension
Slide 6: Investment in growth remains a top priority
Investment in growth remains a top priority • Q1 FY18 capex of $111 million (+24%) Capital expenditures forecast (Millions) • FY18 forecasted spend of $490 million 5-year forecast: $2.3B – $415 million investment for gas utilities $520 $490 – $75 million for Spire STL Pipeline & storage $438 75 105
Slide 7: Investing in pipelines
Investing in pipelines • Spire STL Pipeline improves our supply diversity, reliability, and resiliency – 65-mile pipeline connecting to REX – Capacity of 400 MMcf/d with Spire Missouri to be foundation shipper (350 MMcf/d) • Progressing on Spire STL Pipeline – Expecting FERC approval in early 2018 –
Slide 8: Investing in gas storage
Investing in gas storage • Acquired majority interest in Ryckman Creek Resources – Natural gas storage facility in Wyoming – Certificated at 35 Bcf of working gas – Interconnects with five interstate pipes and has access to REX • Positioned to serve multiple customer groups and geographic markets •
Slide 9: We're maximizing all of our businesses
We’re maximizing all of our businesses • Spire Marketing provides wholesale services to diverse customer base • It optimizes a portfolio of commodity, transportation and storage contracts ‒ Operated on over 20 interstate and intrastate pipelines in FY17 ‒ 7.2 Bcf of leased storage • Its core operati
Slide 10: Pursuing regulatory change
Pursuing regulatory change • Republican MO governor focused on ‒ Improving business environment ‒ Supporting economic development ‒ Enhancing government efficiency • Governor recently appointed new Republican commissioner to MoPSC • We are pursuing change through legislative initiatives in MO and AL
Slide 11: Missouri rate case update
Missouri rate case update • MoPSC issued an amended order March 7 – Authorizes 9.8% return on equity and 54.2% equity capitalization – New rates to reflect ~$70 million in savings and return of tax reform benefits to customers – Resets the infrastructure system replacement surcharge (ISRS) • We have
Slide 12: Impacts of tax reform
Impacts of tax reform • Federal corporate rate lowered from 35% to 21% ‒ Interest deductibility expected to be fully retained ‒ Elimination of full expensing of property for tax purposes • Q1 FY18 impacts ‒ Recorded the impact of re-measured deferred taxes and benefit of lower rates in Q1 ‒ NEE per
Slide 13: We're driving earnings growth
We’re driving earnings growth • FY17 NEE per share of $3.56, up 4.1% • 5-year growth in Gas Utility earnings of 10.1% • Q1 FY18 NEE per share increased to $1.19 Gas Utility Gas Marketing Other2 Net economic earnings per share1 $4.00 $3.56 $3.42 0.14 $3.05 $3.19 0.15 $3.00 $2.79 $2.87 0.10 0.31 0.39
Slide 14: Q1 earnings growth driven by return to normal weather
Q1 earnings growth driven by return to normal weather • Net economic earnings1 (NEE) $57.9 million, up $10.4 million • NEE per share $1.19 reflecting 6% share increase from issuances ‒ In May 2016 for Spire EnergySouth acquisition, and ‒ In April 2017 upon maturity of equity units • Gas Utility: NEE
Slide 15: Maintaining a strong financial position and cash flow
1 Maintaining a strong financial EBITDA (Millions) position and cash flow $150 • Q1 FY18 EBITDA1 of $148 million, up 16% from last year $148 • Ample liquidity at the peak of our seasonal borrowing $127 • Solid LT equity capitalization2 49.4%, $100 up 0.7% from last quarter Q1 FY17 Q1 FY18 • Evaluati
Slide 16: Raising our dividend by 7.1%
Raising our dividend by 7.1% Annualized dividends per share +7.1% $2.30 $2.251 Dividend Yield +7.1% 3.3%2 $2.10 $2.10 +6.5% +4.5% $1.96 +2.4% +3.5% $1.90 $1.84 $1.76 $1.70 $1.70 $1.66 $1.50 $1.30 2012 2013 2014 2015 2016 2017 2018 • 2018 annualized dividend increased to $2.25 per share • 7.1% increa
Slide 17: Outlook for continued growth
Outlook for continued growth • 5-year capital spend of $2.3 billion Capital expenditure by jurisdiction/project – Driven by utility infrastructure upgrade (Millions) programs with lives of roughly 20+ years $520 $490 – Over 80% recovered with minimal regulatory $438 105 $420 $430 75 25 lag or reflec
Slide 18: We're bringing people and energy together
We’re bringing people and energy together in ways that enrich the lives of those we serve and add value for our stakeholders. 18 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 – M a r c h 2 0 1 8
Slide 19: Appendix
Appendix 19 Spire | Investor Presentation – February 2018
Slide 20: Our Spire utility portfolio
Our Spire utility portfolio Alabama MO East MO West Gulf Mississippi (Alagasco) (Laclede Gas) (MGE) (Mobile Gas) (Willmut Gas) Founded 1852 1857 1867 1836 1933 Primary Office Birmingham St. Louis Kansas City Mobile Hattiesburg Employees 826 1,670 579 1631 Customers 421,000 651,000 513,000 84,900 18,
Slide 21: Missouri regulatory summary
Missouri regulatory summary • Below-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
Slide 22: 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 Spi
Slide 23: Mississippi regulatory summary
Mississippi regulatory summary • Above-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 adju
Slide 24: We delivered solid first quarter performance
We delivered solid first quarter performance Three Months Ended December (Millions, except earnings per share) FY18 FY17 Earnings by Segment Gas Utility $ 59.5 $ 51.8 Gas Marketing 3.6 1.4 Other (5.2) (5.7) Net Economic Earnings (non-GAAP)1 $ 57.9 $ 47.5 Net Economic Earnings Per Share (non-GAAP)1 $
Slide 25: Net economic earnings per share (non-GAAP) reconciliation
Net economic earnings per share (non-GAAP) reconciliation Fiscal Years Ended September 30, 2012 2013 2014 2015 2016 2017 Total Spire Diluted Earnings Per Share (GAAP) $2.79 $2.02 $2.35 $3.16 $3.24 $3.43 Adjustments, pre-tax: Unrealized (gain) loss on energy-related derivatives (0.02) 0.04 (0.04) (0.
Slide 26: 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, 2017 Net Income (GAAP) $ 45.2 $ 3.5 $ 67.3 $ 116.0 $ 2.39 Adjustments, pre-tax: Unrealized loss (gain) on energy-related deri
Slide 27: Contribution margin (non-GAAP) reconciliation
Contribution margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three Months Ended December 31, 2017 Operating income (loss) (GAAP) $ 101.8 $ 5.0 $ (1.7) - $ 105.1 Operation and maintenance 99.8 1.6 4.3 (2.3) 103.4 Depreciation and amortization 40.3
Slide 28: EBITDA and Adjusted long-term capitalization reconciliation
EBITDA1 (non-GAAP) reconciliation Three Months Ended December 31, (Millions) 2017 2016 Net Income $ 116.0 $ 45.2 Add back: Interest charges 24.4 22.1 Income tax (benefit) expense (33.1) 22.3 Depreciation & amortization 40.4 37.8 EBITDA $ 147.7 $ 127.4 Adjusted long-term capitalization reconciliation