Spire Inc. · NYSE:SR
Spire — Investor Presentation (December 2022)
36 slides from Spire's investor presentation, December 2022
Slide 1: Energizing the future
Energizing the future Investor Presentation December 2022
Slide 2: Spire is a compelling investment
Spire is a compelling investment $ 7.0B 20 90%+ regulated Robust 10-year 5-7% long-term Growing Strong ESG business mix capex plan EPS growth dividend for performance; 20 consecutive commitment to 7-8% annual years carbon neutral rate base by midcentury growth Attractive yield of 4.3%1 1Based on $2.
Slide 3: Energizing the future
Energizing the future • Reflecting challenges and opportunities, in FY22 we delivered – Net economic earnings of $3.86 per share – Improved safety, system resilience and integrity, and sustainability performance • Focused on serving and supporting our customers, managing bill impacts • Settled Misso
Slide 4: Spire Missouri update
Spire Missouri update • Settlement unanimously approved by MoPSC – $78M revenue increase – 8.25% pre-tax ISRS rate of return – Resolution of overheads issue with deferred costs recovered in rates – Expanding programs to support customers and increase assistance – Rates targeted to be effective on De
Slide 5: Investing in growth
Investing in growth Capital expenditures • FY22 capex totaled $552M (Millions) $800 – Driven by $528M gas utility investment $700 $700 $625 • $279M – pipeline infrastructure upgrades $600 34 $552 150 • $114M – new business $500 24 $400 – Investment in innovation and $300 591 technology 528 550 $200
Slide 6: Driving resilience, safety, system integrity and sustainability
Driving resilience, safety, system integrity and sustainability Employee safety Damage rate (OSHA – Days Away, Restricted or Transferred rate) (Per 1,000 locates) 4.78 3.22 4.24 3.89 3.87 3.74 3.67 2.63 1.88 1.56 1.51 1.19 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Leaks Gas utility
Slide 7: Strong financial position
Strong financial position 1 Adjusted EBITDA (Millions) • Solid adjusted EBITDA1 $600 • Balanced long-term capitalization • Ample liquidity heading into winter $400 $651 $637 $200 $0 FY21 FY22 Long-term capitalization1 (at September 30, 2022) 42.6% 2 Equity 3 Debt 4.0% Preferred stock 1See Adjusted E
Slide 8: Growing our dividend
Growing our dividend Annualized common stock dividend per share Dividend yield 4.3%1 $2.882 $2.74 $2.60 Dividend per share $2.49 $2.37 $2.25 2018 2019 2020 2021 2022 2023 • Annualized 2023 common stock dividend increased 5.1% to $2.88 per share • Supported by long-term earnings growth • 2023 marks 2
Slide 9: Spire STL Pipeline
Spire STL Pipeline • FERC issued a new temporary operating certificate Dec. 2021 • Pipeline continues to operate indefinitely during FERC remand process currently underway – FERC is considering a new permanent operating certificate – FERC issued a final Environmental Impact Statement in October 2022
Slide 10: Spire Storage
Spire Storage • Operations have been greatly improved to deliver reliable service and breakeven results • Storage is essential to balance seasonal gas heating demand and support intermittent renewables • Strategy is to expand capacity to meet growing storage demand – Minimal new storage capacity has
Slide 11: Spire Storage expansion project
Spire Storage expansion project • Capital investment of $195M – Construction over next two years’ construction seasons (April–October) – Addition of injection/withdrawal wells, compression, pipeline infrastructure and gas processing equipment • When completed, working gas capacity increased 16 Bcf 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: Outlook
Outlook Capital expenditures forecast ~$7.0B • We remain confident in our growth ($ Millions) $780 prospects targeting 5-7% NEEPS $720 $740 $760 growth over the longer term $700 $660 $660 $680 $700 $640 • Expanding capex plan to 10 years 150 50 770 and total investment of $7.0B 690 710 730 750 650 6
Slide 14: Guidance
Guidance 4.50 • Re-affirming long-term earnings growth $4.25 target of 5-7% 4.25 – Base year is run rate FY22 – Supported by 7-8% rate base growth 4.00 $4.05 – 90%+ regulated business mix $3.86 • FY23 net economic earnings target of ($.12) $3.74 3.75 $4.05–$4.25 per share NEE by business unit 3.50 F
Slide 15: FY23 operating costs
FY23 operating costs • O&M costs are anticipated to be higher, reflecting – Overall inflationary increases estimated at 4% – Expensing of Missouri cost of service deferred in FY22 ~$24M • Amortization will reflect 15-year recovery (at ~$2.9M per year) of Missouri costs deferred as of Sept. 30, 2022
Slide 16: Appendix
Appendix 16 Spire | Investor presentation – December 2022
Slide 17: 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 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 – December 2022
Slide 20: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 1,009 127 39 2,347 Customers1 430,100 84,200 18,400 1,199,900 Pipeline miles ~24,400 ~4,200 ~1,200 ~31,400 Rate base (Millions) $6342 $1172 $493 Return on equity 9.70%4 9.9
Slide 21: 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 – Innovating thr
Slide 22: 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 23: 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 .. .. .. of
Slide 24: Advancing our environmental sustainability
Advancing our environmental sustainability • Established Scope 1 and Scope 2 emissions baseline • Evaluating renewable energy resources (RNG), focusing on – Exploring RNG opportunities, including methane capture from wastewater treatment plants as well as landfills and agricultural operations (anima
Slide 25: 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 progress
Slide 26: 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 27: 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 – Rates set based on forward-year budget, retained shareholders’ equity, and current recovery of planned capex • Spi
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: Other financial information
Other financial information 29 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 – D e c e m b e r 2 0 2 2
Slide 30: FY22 net economic earnings
FY22 net economic earnings Millions Per diluted common share 2021 2021 Twelve months ended September 30, 2022 As reported Run rate3 2022 As reported Run rate3 Net Income [GAAP] $ 220.8 $ 271.7 $ 271.7 $ 3.95 $ 4.96 $ 4.96 All other adjustments1 (4.5) (5.4) (40.4) (0.09) (0.10) (0.78) Net Economic Ea
Slide 31: Key FY22 variances
Key FY22 variances Twelve months ended September 30, 2021 Net 1 (Millions) 2022 run rate NSC reclass variance Contribution Margin Gas Utility $ 1,047.7 $ 1,032.4 $ - $ 15.3 New 2021 rates partially offset by warmer weather Gas Marketing 63.3 37.2 - 26.1 Uri dispute settlement ($8.2M), H2 value creat
Slide 32: FY21 results reconciliation
FY21 results reconciliation Twelve months ended September 30, As reported Gas Utility Spire Marketing 2021 (Millions) 2021 Uri/2021 rate order Supreme Ct. ruling and Other run rate1 Contribution Margin Gas Utility $ 1,063.7 $ 31.3 $ - $ - $ 1,032.4 Gas Marketing 77.6 - - 40.4 37.2 Other and eliminat
Slide 33: FY22 NEE run rate reconciliation
FY22 NEE run rate reconciliation Millions Per diluted common share 2021 2021 Uri/Missouri Uri/Missouri 1 Twelve months ended September 30, As reported rate case Run rate As reported rate case Run rate1 Gas Utility $ 230.6 $ (4.0) $ 226.6 Gas Marketing 47.0 (28.0) 19.0 Other (11.3) (3.0) (14.3) Net E
Slide 34: FY22 NEE reconciliation to GAAP
FY22 NEE reconciliation to GAAP Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Total common share2 Twelve months ended September 30, 2022 Net Income (Loss) [GAAP] $ 198.6 $ 35.6 $ (13.4) $ 220.8 $ 3.95 Adjustments, pre-tax: Fair value and timing adjustments ⎯. (11.4
Slide 35: FY22 contribution margin reconciliation to GAAP
FY22 contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Twelve months ended September 30, 2022 Operating Income [GAAP] $ 339.9 $ 46.9 $ 21.4 $ ⎯ $ 408.2 Operation and maintenance 413.3 14.6 37.1 (15.4) 449.6 Depreciation and amortization 2
Slide 36: Adjusted EBITDA reconciliation to GAAP; Long-term capitalization
Adjusted EBITDA1 reconciliation to GAAP Twelve months ended September 30, (Millions) 2022 2021 Net Income [GAAP] $ 220.8 $ 271.7 Add back: Missouri regulatory adjustment ⎯ (9.0) Interest charges 119.8 106.6 Income Tax expense 58.9 68.5 Depreciation and amortization 237.3 213.1 Adjusted EBITDA [non-G