Slide 1: Energy in motion: Year-end fiscal 2018 earnings results
Energy in motion Year-end fiscal 2018 earnings results November 15, 2018
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 Operating Officer, Distribution Operations • Steven P. Rasche Executive Vice President and Chief Financial Officer 2 Spire | Year-end fiscal 2018 earnings re
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: Putting our energy in motion
Putting our energy in motion Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Transforming our company 1. Growing organically 2. Investing in infrastructure 3. Acquiring and integrating 4. Innovation and technology 4 Spire | Year-e
Slide 5: Strengthening leadership to support our growth
Strengthening leadership to support our growth • Joe Hampton President, Spire Alabama, Gulf Coast and Mississippi • Scott Carter President, Spire Missouri 5 Spire | Year-end fiscal 2018 earnings results
Slide 6: Strengthening leadership to support our growth
Strengthening leadership to support our growth • Pat Strange President, Spire Marketing • Scott Jaskowiak President, Spire STL Pipeline and Spire Storage 6 Spire | Year-end fiscal 2018 earnings results
Slide 7: We believe that energy exists to help people
We believe that energy exists to help people, and we believe that how we do our work matters. 7 Spire | Year-end fiscal 2018 earnings results
Slide 8: Delivered NEE of $3.72 per share
While working through complexities of multiple regulatory resets in 2018, we’re proud to report that we delivered NEE of $3.72 per share. 8 Spire | Year-end fiscal 2018 earnings results
Slide 9: Building Spire STL Pipeline
Building Spire STL Pipeline • Received FERC Notice to Proceed on November 5 • Completed project construction schedule • Targeting in-service date in second half of calendar 2019 • Ready to mobilize for construction once land acquisition is completed • Total project investment targeted at $210 - $225
Slide 10: Advancing our gas-related businesses
Advancing our gas-related businesses • Positioning Spire Marketing for further growth and success ‒ New business center in Houston being led by industry veterans ‒ Expanding our geographic reach and customer base ‒ Strong FY18 results reflect our growth initiatives and favorable market conditions •
Slide 11: Increasing earnings and dividends
Increasing earnings and dividends • Affirming long-term earnings per share growth target of 4% - 7% • Establishing guidance for FY19 NEEPS of $3.70 - $3.80 • Increasing our dividends per share – 2019 dividend raised 5.3% to $2.37 – 16 consecutive years of increases – 74 years of continuous payment –
Slide 12: We're driving earnings growth
We’re driving earnings growth Year ended September 30, Millions Per diluted share 1 Net Economic Earnings (NEE) 2018 2017 2018 2017 Gas utility $ 183.1 $ 181.5 $ 3.71 $ 3.86 Gas marketing 22.9 6.8 0.46 0.14 Other (22.3) (20.7) (0.45) (0.44) $ 183.7 $ 167.6 $ 3.72 $ 3.56 2 Average shares outstanding
Slide 13: Increasing revenues and margin
Increasing revenues and margin Years ended September 30, Millions Change (Millions) 2018 2017 $ % Operating Revenues Gas utility $ 1,888.4 $ 1,667.9 $ 220.5 13% Gas marketing 71.6 79.3 (7.7) -10% Other and eliminations 5.0 (6.5) 11.5 NM $ 1,965.0 $ 1,740.7 $ 224.3 13% 1 Contribution Margin Gas utili
Slide 14: Controlling expenses
Controlling expenses Years ended September 30, Millions Change (Millions) 2018 2017 $ % Operating Expenses Gas Utility Natural & propane gas $ 770.1 $ 570.5 $ 199.6 35% Operation and maintenance (O&M) 455.6 405.0 50.6 12% Depreciation & amortization 167.0 153.5 13.5 9% Taxes, other than income taxes
Slide 15: Income tax expense
Income tax expense Year ended September 30, Quarter ended September 30, (Millions) 2018 2017 2018 2017 GAAP expense (benefit) before ADIT amortization1 $ (23.0) $ 77.6 $ (19.2) $ (6.7) Amortization of excess ADIT (3.5) (3.5) GAAP income tax expense (benefit) $ (26.5) $ 77.6 $ (22.7) $ (6.7) Benefit
Slide 16: Fourth quarter highlights
Fourth quarter highlights Quarter ended September 30, Millions Per diluted share Net Economic Earnings (NEE)1 2018 2017 2018 2017 Gas utility $ (25.0) $ (5.8) $ (0.49) $ (0.12) Gas marketing 4.7 3.1 0.09 0.06 Other (6.3) (7.8) (0.12) (0.16) $ (26.6) $ (10.5) $ (0.52) $ (0.22) Average shares outstand
Slide 17: Strengthening our financial position
Strengthening our FY18 adjusted EBITDA 1 financial position (Millions) $500 $493 1 • FY18 adjusted EBITDA of $493M $482 • Stronger long-term capitalization ‒ Equity improved 350bp from last year ‒ Near-term equity needs covered by May 2018 offering $400 • $975 million credit facility FY17 FY18 ‒ Ext
Slide 18: 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 19: Investing for long-term growth
Investing for Capital expenditures forecast long-term growth (Millions) 5-year forecast: $2.6B $650 • 5-year capital investment forecast 175 $499 $495 $505 increased to $2.6B, up from $2.5B 43 $485 15 15 15 70 63 75 65 70 • Capital spend target for 2019 is set at $650M 410 420 • Driven by higher uti
Slide 20: Driving long-term earnings growth
Driving long-term earnings growth • Long-term NEEPS growth target of 4% - 7% – Reflects ~6% annual utility rate base growth and regulatory certainty – Growing contribution from all businesses • Base year is run-rate FY18, removing 17¢ of Spire Marketing 2018 earnings (due to weather and market condi
Slide 21: 2019 NEEPS guidance
2019 NEEPS guidance • Initiating 2019 NEEPS guidance of $3.70 - $3.80 – Gas Utility growth driven by organic initiatives and infrastructure upgrades more than offsetting full-year impact of rate resets in Missouri (~3¢) and Alabama (~11¢) – Increasing contribution as we develop Spire STL Pipeline co
Slide 22: Delivering strong operating performance and growth
Delivering strong operating performance and growth • Improved safety, system performance and service • Continued growth in customers and margins • Increased investment in infrastructure upgrades, new business and technology 22 S p i r e | Y e a r - e n d f i s c a l 2 0 1 8 e a r n i n g s r e s u l
Slide 23: Enhancing system operations
Enhancing system operations • Capital investment drives gains in safety, system integrity and service • Improved employee safety with injury rates 18% lower than last year • Record performance in other areas of safety and system integrity ‒ Improved leak response times ‒ Reduced leaks per 1,000 syst
Slide 24: Moving forward confidently
Moving forward confidently • Regulatory resets allow us to execute on our plans with confidence ‒ Completed two Missouri rate cases in March • Increased return and improved capitalization • Weather normalization for residential customers mitigates margin exposure ‒ Received approval for first post-r
Slide 25: Growing organically
Growing organically Contribution margin – Gas Utility (Millions) • Increased the number of homes and 1,000 $939 $948 businesses we served in FY18 900 $844 – New business capital investment up 800 44% to $85 million – Installed record 11,000+ new meters 700 – Contracted 4,600 multi-family units 600 2
Slide 26: Driving growth through investment
Driving growth through Spire capital expenditures investment (Millions) $650 • FY18 utility capital spend $499 175 $438 43 of $456M, up 10% 25 63 75 55 ‒ $279M for infrastructure upgrades ‒ Replaced 382 miles of pipelines, up 7% 358 393 400 • Increasing utility spend in FY19 ‒ Total investment $475M
Slide 27: Inspiring innovation through technology
Inspiring innovation through technology • Technology helps us connect with and better serve our customers • Using machine learning and iterative forecasting to identify and target growth opportunities • Inspiring new and innovative ways to bring people and energy together • Elected Steve Schwartz to
Slide 28: 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. 28 S p i r e | Y e a r - e n d f i s c a l 2 0 1 8 e a r n i n g s r e s u l t s
Slide 29: Appendix
Appendix 29 Spire | Year-end fiscal 2018 earnings results
Slide 30: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi MO East MO West Founded 1852 1836 1933 1857 1867 Primary office Birmingham Mobile Hattiesburg St. Louis Kansas City Employees 861 1561 1,721 600 Customers 420,600 83,900 18,500 653,600 516,300 Pipeline miles ~23,000 ~4,300 ~1,200 ~16,000 ~14,000 R
Slide 31: Raising our dividend by 5.3%
Dividend Yield Raising our dividend by 5.3% 3.2%2 Annualized dividends per share $2.50 70% $2.37 $2.30 $2.25 65% Dividend payout ratio Dividends per share $2.10 $2.10 $1.96 60% $1.90 $1.84 $1.76 $1.70 55% $1.70 $1.66 $1.50 50% 2012 2013 2014 2015 2016 2017 2018 2019 • Annualized dividend increased t
Slide 32: 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 Three months ended September 30, 2018 Net (Loss) Income (GAAP) $ (21.8) $ 4.9 $ (9.0) $ (25.9) $ (0.51) Adjustments, pre-tax: Unrealized gain on energy-relate
Slide 33: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Consolidated share2 Year ended September 30, 2018 Net Income (GAAP) $ 144.4 $ 24.9 $ 44.9 $ 214.2 $ 4.33 Adjustments, pre-tax: Missouri regulatory adjustments 30.6 — — 30.
Slide 34: Contribution margin (non-GAAP) reconciliation
Contribution margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended September 30, 2018 Operating (Loss) Income (GAAP) $ (17.3) $ 6.1 $ (8.4) $ — $ (19.6) Operation and maintenance 110.6 2.3 12.5 (2.6) 122.8 Depreciation and amortizati
Slide 35: Contribution margin (non-GAAP) reconciliation
Contribution margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Year ended September 30, 2018 Operating Income (Loss) (GAAP) $ 262.2 $ 33.8 $ (16.3) $ — $ 279.7 Operation and maintenance 464.1 7.4 30.3 (10.1) 491.7 Depreciation and amortization 167.
Slide 36: Adjusted EBITDA and long-term capitalization reconciliation
Adjusted EBITDA1 (non-GAAP) reconciliation Year ended September 30, (Millions) 2018 2017 Net Income $ 214.2 $ 161.6 Add back: Interest charges 98.4 89.1 Regulatory asset write-offs 2 38.4 — Income tax (benefit) expense (26.5) 77.6 Depreciation & amortization 168.4 154.1 EBITDA $ 492.9 $ 482.4 Adjust