Slide 1: Energy in motion
Energy in motion Second quarter fiscal 2019 May 1, 2019
Slide 2: Participants on today's call
Participants on today’s call Suzanne Sitherwood President and Chief Executive Officer Steven L. Lindsey Executive Vice President and Chief Executive Officer, Gas Utilities and Distribution Operations Steven P. Rasche Executive Vice President and Chief Financial Officer 2 Spire | Second quarter fisca
Slide 3: 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 4: Continuing our momentum
Continuing our momentum • Furthering organic growth • Investing in infrastructure • Innovating through technology • Delivering strong Q2 results, with net economic earnings of $2.90 per share, up from $2.83 last year • Improving operating performance at our gas utilities • Developing and growing our
Slide 5: Growing Spire Marketing
Growing Spire Marketing • Building a strong team in Houston Spire Marketing’s operational reach • Logistics-based business supported by strong risk management – Provides gas marketing services to diverse customer base in central and southern U.S. – Physically delivers gas on 20+ pipelines – Optimize
Slide 6: Building Spire STL Pipeline
Building Spire STL Pipeline • The 65-mile pipeline will bring new gas supply to the St. Louis region • Construction well underway and proceeding on plan • Targeting in-service date by the end of our fiscal year • Total investment to date of $132M • Total estimated project investment increased to $23
Slide 7: Developing Spire Storage
Developing Spire Storage • We are integrating our facilities and finalizing the development plan to: – Take advantage of expanded long-term opportunities to serve a variety of customers (utilities, power generators and producers) – Increase injection and withdrawal capabilities – Expand working gas
Slide 8: Growing the dividend
Growing the dividend Annualized dividends per share Dividend Yield 3.0%2 1 Dividend payout ratio Dividends per share Dividend payout ratio • Board declared quarterly dividend of $0.5925, payable July 2 • 16 consecutive years of increases; 74 years of continuous payment • Dividend growth (5.3% in 201
Slide 9: Focusing on safety and system integrity
Focusing on safety and system integrity • Pipeline Safety Act up for renewal by Congress later this year – Reauthorize Pipeline and Hazardous Materials Safety Admin. (PHMSA) – Focus is on safety standards and mandates for system integrity • Spire has long focused on safety and system integrity throu
Slide 10: Growing our gas utilities
Growing our gas utilities • Increasing capital investment focused on infrastructure upgrades • Recovering our utility investment – Pipeline upgrade investment in Missouri via ISRS • $18.0M in additional annual ISRS requested on Feb. 25 • Includes $3.2M for recovery of costs to replace certain materi
Slide 11: Increasing our utility capital investment
Increasing our utility capital Capital expenditures investment (Millions) $740 $750 • FY19 capital expenditures target 250 $499 increased to $740M $500 43 95 63 – Higher utility spend of $490M – Includes $82M for utility new business $250 393 395 – ~80% of utility spend recovered with minimal regula
Slide 12: Improving operating performance
Improving operating performance Infrastructure upgrades, technology and our people are driving improving operating performance, including • Reducing employee injury rates • Improving system integrity and reliability • Improving service levels and controlling costs 12 Spire | Second quarter fiscal 20
Slide 13: Driving earnings growth
Driving earnings growth Millions Per diluted share Second quarter ended March 31, 2019 2018 2019 2018 Gas Utility $ 146.7 $ 131.7 $ 2.88 $ 2.72 Gas Marketing 6.2 10.2 0.12 0.21 Other (5.0) (4.7) (0.10) (0.10) Net Economic Earnings (NEE) 1 $ 147.9 $ 137.2 $ 2.90 $ 2.83 MO regulatory adjustments (30
Slide 14: Increasing margin
Increasing margin Millions Change Second quarter ended March 31, 2019 2018 $ % Operating Revenues Gas Utility $ 776.8 $ 790.8 $ (14.0) -2% Gas Marketing 25.5 21.3 4.2 20% Other and eliminations 1.2 1.3 (0.1) $ 803.5 $ 813.4 $ (9.9) -1% 1 Contribution Margin Gas Utility $ 366.7 $ 344.1 $ 22.6 7% Gas
Slide 15: Controlling expenses
Controlling expenses Second quarter ended March 31, 2019 2018 Change vs Pro forma As As Rate case Benefit Pro forma 1 (Millions) reported reported & TCJA reclass run rate $ % Operating Expenses Gas Utility Natural & propane gas $ 337.4 $ 383.7 $ $ $ 383.7 $ (46.3) -12% Operation and mainte
Slide 16: Controlling expenses
Controlling expenses Second quarter ended March 31, 2019 2018 Change vs Pro forma As As Rate case Benefit Pro forma 1 (Millions) reported reported & TCJA reclass run rate $ % Operating Expenses Gas Utility Natural & propane gas $ 337.4 $ 383.7 $ $ $ 383.7 $ (46.3) -12% Operation and mainte
Slide 17: Year-to-date earnings growth
Year-to-date earnings growth Millions Per diluted share Six months ended March 31, 2019 2018 2019 2018 Gas Utility $ 213.1 $ 191.2 $ 4.19 $ 3.94 Gas Marketing 14.5 13.8 0.28 0.29 Other (13.8) (9.9) (0.27) (0.21) 1 Net Economic Earnings (NEE) $ 213.8 $ 195.1 $ 4.20 $ 4.02 MO regulatory adjustments .
Slide 18: Strengthening our financial position
Strengthening our Adjusted EBITDA 1 financial position (Millions) $450 1 $413 • YTD adjusted EBITDA of $413M, $400 $370 up 12% $350 • Ample liquidity with credit facility $300 and commercial paper program $250 • Solid LT equity capitalization2 51.6%, up 180 basis points from a year ago $200 1H FY18
Slide 19: Investing for long-term growth
Investing for long-term growth • YTD capital spend of $377M, Capital expenditures up $161M from last year (Millions) – Gas utilities investment of $257M $400 • Includes infrastructure upgrades and new business of $188M • Up $71M from last year $300 – Spire STL Pipeline spend of $46M (up $17M) as we
Slide 20: Affirming our earnings guidance
Affirming our earnings guidance Net economic earnings per share • FY19 NEEPS range $3.70 - $3.80 • Long-term NEEPS growth target of 4% - 7% • Anticipate Q4 loss consistent with last year, reflecting new MO rate design 1 • 5-year capital target increased to $2.8B from $2.6B Capital expenditures – Upd
Slide 21: At Spire, we're always in motion
At Spire, we’re always in motion, using our energy to get the job done today while exploring new and innovative ideas for tomorrow. 21 Spire | Second quarter fiscal 2019 earnings results
Slide 22: Appendix
Appendix 22 Spire | Second quarter fiscal 2019 earnings results
Slide 23: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 861 123 33 2,321 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 $243 $2,2174 Return on equity 10.40
Slide 24: Gaining regulatory certainty
Gaining regulatory certainty • 2018 marked the completion of regulatory resets across our footprint • The last major component was the reset of Spire Alabama’s Rate Stabilization and Equalization (RSE) metrics • As expected, we reset ROEs and CCM benefit sharing and harmonized capital structures acr
Slide 25: Missouri rate cases – 2018 impacts
Missouri rate cases – 2018 impacts • New rates went into effect on April 19, 2018 – Reflect ~$70 million in cost savings from our transformative growth – Authorized 9.8% ROE, utility LT capital structure and $2.0B rate base Impact (Millions) Customer rates Earnings Base rate increase $66.2 $66.2 Rat
Slide 26: Missouri rate cases – 2018 impacts
Missouri rate cases – 2018 impacts Quarter ended March 31, Six months ended March 31, (Millions) 2019 2018 2019 2018 GAAP expense (benefit) before ADIT amortization 1 $ 35.5 $ 18.9 $ 52.3 $ (14.2) Amortization of excess ADIT (2.1) (4.2) GAAP income tax expense (benefit) $ 33.4 $ 18.9 $ 48.1 $ (14.
Slide 27: 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 March 31, 2019 Net Income (Loss) [GAAP] $ 146.7 $ 12.9 $ (5.0) $ 154.6 $ 3.04 Adjustments, pre-tax: Unrealized gain on energy-related deri
Slide 28: Net economic earnings [non-GAAP] reconciliation
Net economic earnings [non-GAAP] reconciliation Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Total share2 Six months ended March 31, 2019 Net Income (Loss) [GAAP] $ 213.1 $ 22.9 $ (14.1) $ 221.9 $ 4.36 Adjustments, pre-tax: Unrealized gain on energy-related deriva
Slide 29: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended March 31, 2019 Operating income (loss) [GAAP] $ 196.3 $ 16.8 $ (3.6) $ $ 209.5 Operation and maintenance 112.0 2.7 6.5 (2.9) 118.3 Depreciation and amortization
Slide 30: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Six months ended March 31, 2019 Operating income (loss) [GAAP] $ 291.9 $ 29.3 $ (6.6) $ $ 314.6 Operation and maintenance 216.9 5.3 13.9 (5.6) 230.5 Depreciation and amortization 8
Slide 31: Adjusted EBITDA [non-GAAP] reconciliation
Adjusted EBITDA [non-GAAP] reconciliation Six months ended March 31, (Millions) 2019 2018 Net Income $ 221.9 $ 214.2 Add back: Interest charges 53.5 49.8 Regulatory asset write-offs !! 38.4 Income tax expense (benefit) 48.1 (14.2) Depreciation & amortization 89.1 81.9 Adjusted EBITDA $ 412.6 $ 370.