Spire Inc. · NYSE:SR
Spire — AGA Financial Forum 2022
34 slides from Spire's conference presentation, May 17, 2022
Slide 1: Energizing the future
Energizing the future Investor Presentation AGA Financial Forum May 17-19, 2022
Slide 2: 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; 19 consecutive commitment to 7-8% annual years carbon neutral rate base by midcentury growth Attractive yield of 3.7%1 1Based on $2.74 per shar
Slide 3: Energizing the future
Energizing the future • We remain focused on our growth strategy and commitments – Investing in infrastructure upgrades, new business and technology – Enhancing operating and service performance – Progressing on sustainability to become a carbon neutral company by midcentury • We continue to “answer
Slide 4: Regulatory update
Regulatory update Missouri • Began deferral of non-operational overheads per MoPSC order • Filed new rate case to recover cost of service, earn a fair and reasonable return • $8.5M in ISRS revenue approved effective May 7 Alabama • Spire Gulf RSE (rate stabilization and equalization) reset effective
Slide 5: Missouri – 2022 rate case
Missouri – 2022 rate case 25% • On April 1, Spire Missouri filed a new general rate case, seeking recovery of: 45% – Our full, updated cost of service, including deferred non-operational 30% overhead costs – Increased capital investment • Filing also seeks opportunity to earn Overheads recovery fair
Slide 6: Missouri – overhead costs
Missouri – overhead costs Deferred overheads Actuals through Forecasted @ (Millions) Future recovery 3/31/22 9/30/22 Costs to be capitalized Depreciation $6.6 $21.0 Costs to be expensed Cost of service 5.9 15.0 ISRS overheads Cost of service 5.0 5.0 Total $17.5 • Cost buckets identified and being tr
Slide 7: Investing in growth
Investing in growth Capital expenditures (Millions) $304 $300 23 $276 • 1H FY22 capex totaled $276M 11 $250 – $129M infrastructure upgrades $200 – $67M new business $150 281 265 – $34M for ultrasonic meters $100 • 5-year capex remains $3.1B $50 – FY22 forecast updated to $540M $0 1H FY21 1H FY22 to
Slide 8: Our sustainability commitment
Our sustainability commitment Methane emission reduction (From 2005 levels) • Protecting the environment 26% – Reduced methane emissions by 46% 43% 46% – Established team to lead environmental 59% commitment efforts 73% – Created baseline for Scope 1 and 2 emissions 2015 2020 2021 2025 2035 Target T
Slide 9: Upgrading our infrastructure and reducing methane emissions
Upgrading our infrastructure and reducing methane emissions Estimated replacement miles remaining Miles of pipeline replaced (As of 12/31/21) (By fiscal year) Total 400 356 382 362 Bare Cast Vintage replacement steel1 iron1 plastic miles 322 297 300 Missouri 1,4922 481 — 1,973 Alabama 478 370 271 1,
Slide 10: Spire STL Pipeline
Spire STL Pipeline • On Dec. 3, the FERC issued a new temporary operating certificate • Allows pipeline to continue operating indefinitely during remand process • As part of remand process currently underway, the FERC – Is considering a new permanent operating certificate – Will prepare an EIS • We
Slide 11: Spire Storage
Spire Storage • Committed to serving utility customers throughout the western U.S. • Operations have been optimized; delivering solid service and breakeven results • Revised development plan under evaluation – Position facility to serve evolving markets in western U.S. – Gain commercial validation t
Slide 12: Spire Marketing
Spire Marketing • Provides logistical services – Wholesale services to utilities, producers, power generation, storage and pipelines – Focused on physical delivery of gas – Allows for optimizing commodity, transportation and storage portfolio • Positioning is key to meet customer needs and take adva
Slide 13: 1H FY22 net economic earnings
1H FY22 net economic earnings Per diluted Millions common share Six months ended March 31, 2022 2021 2022 2021 Net Income [GAAP] $ 229.3 $ 276.3 $ 4.28 $ 5.20 Missouri regulatory adjustment — (9.0) — (0.18) All other adjustments1 14.3 5.2 0.28 0.10 Net Economic Earnings (NEE)2 $ 243.6 $ 272.5 $ 4.56
Slide 14: 1H FY22 net economic earnings
1H FY22 net economic earnings (Millions) As reported Pro forma for Uri* Six months ended March 31, 2022 2021 2022 2021 By segment Gas Utility $ 236.4 $ 236.1 $ 236.4 $ 233.3 Gas Marketing 14.9 43.1 8.7 25.3 Other (7.7) (6.7) (7.7) (7.5) • Gas Utility up $3.1M on a pro forma basis – New rates in Miss
Slide 15: Strong financial position
Strong financial position 1 Adjusted EBITDA (Millions) • Solid adjusted EBITDA $500 • Ample liquidity ~$360M at 3/31/22 – Supported by credit facility and commercial paper program $490 $460 – Supports credit metrics targets ▪ FFO/debt4: 15-16% $0 ▪ Holdco debt: below 20% 1H FY21 1H FY22 • Balanced l
Slide 16: Outlook
Outlook FY22 guidance • LT NEEPS growth target of 5%–7% 0.30 • FY22 NEEPS of $3.75–$3.95 $3.95 0.20 – Includes MO rate of return impact $4.18 0.05 and anticipated growth $3.75 – Does not include any impact for MO overhead costs (now deferred) FY21 MO 5%-7% Gas Utility Marketing – Reflects forecast a
Slide 17: Energizing the future
Energizing the future Our energy warms homes, fuels businesses and advances communities. As we step forward, we’re laying the groundwork for an innovative, resilient and sustainable energy future. 17 Spire | Investor presentation – May 2022
Slide 18: 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 19: Appendix
Appendix 19 Spire | Investor presentation – May 2022
Slide 20: 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 21: 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 21 Spire | Investor presentation – May 2022
Slide 22: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 993 127 41 2,489 Customers1 428,400 84,300 18,400 1,194,781 Pipeline miles ~24,100 ~4,300 ~1,200 ~31,100 Rate base (Millions) $6342 $1172 $443 $2,8994 Return on equity 10.4
Slide 23: 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 24: The case for natural gas
The case for natural gas Abundant and domestic The U.S. has 3,368 Tcf of The U.S. natural gas Direct use of natural gas is a more future natural gas supply, transmission and distribution efficient energy: 91% vs 36% for 100 years worth1 system (2.6M miles of generation from converting natural underg
Slide 25: Sustainability – 2021 highlights
• Sustainability – 2021 highlights Environment .. .. .. .. .. .. .. .. .. Established a dedicated team .. .. .. .. Created a baseline for .. .. to lead our environmental .. .. .. commitment efforts .. Scope 1 and 2 emissions .. .. .. .. .. .. .. .. . .. .. Became a founding limited partner .. .. ..
Slide 26: Sustainability – 2021 highlights
Sustainability – 2021 highlights People Governance .. .. .. Measured our workforce .. Formally assigned oversight of sustainability to specific committees of our .. Continued to develop new and demographics to establish a .. .. Board of Directors to monitor strategy and plans, and ensure that progre
Slide 27: 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 28: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA • Rate Stabilization and Equalization (RSE) annual rate-setting process – RSE parameters evaluated 3-4 four years • Spire Alabama RSE reset – Q1 FY23 • Spire Gulf RSE reset – Q1 FY22 Spire Alabama – Rates set based on forward-year
Slide 29: 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 30: Other financial information
Other financial information 30 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 y 2 0 2 2
Slide 31: Growing our dividend
Growing our dividend Annualized common stock dividend per share Dividend yield 3.7%2 $2.90 1 $2.74 $2.70 $2.60 $2.49 $2.50 $2.37 Dividend per share $2.30 $2.25 $2.10 $2.10 $1.96 $1.90 $1.70 $1.50 $1.30 2016 2017 2018 2019 2020 2021 2022 • Annualized 2022 common stock dividend – 5.4% increase in FY22
Slide 32: YTD key variances
YTD key variances Six months ended March 31, Adjustments Missouri As reported regulatory (Millions) 2022 2021 Variance adjustment NSC reclass Variance Operation and Maintenance Gas Utility $ 211.5 $ 207.0 $ 4.5 $ (9.0) $ 1.4 $ (3.1) Gas Marketing 5.9 10.4 (4.4) (4.4) Other 12.2 13.2 (1.0) (1.0) Tota
Slide 33: YTD FY22 net economic earnings
YTD FY22 net economic earnings Per diluted Gas Gas common (Millions, except per share amounts) Utility Marketing Other Total share2 Six months ended March 31, 2022 Net Income (Loss) [GAAP] $ 232.3 $ 4.7 $ (7.7) $ 229.3 $ 4.28 Adjustments, pre-tax: Fair value and timing adjustments — 13.6 — 13.6 0.27
Slide 34: Adjusted EBITDA reconciliation to GAAP; Long-term capitalization
Adjusted EBITDA1 reconciliation to GAAP Six months ended March 31, (Millions) 2022 2021 Net Income [GAAP] $ 229.3 $ 276.3 Add back: Missouri regulatory adjustment — (9.0) Interest charges 56.1 51.5 Income tax expense 59.1 68.6 Depreciation and amortization 115.8 102.3 Adjusted EBITDA [non-GAAP] $ 46