Slide 1: Energy in motion
Energy in motion Investor presentation December 2019 1 Spire | Investor presentation - December 2019
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: Delivering solid results
Delivering solid results • Delivered another year of consistent growth and improving performance • We’re delivering on our growth strategies ‒ Growing organically ‒ Investing in infrastructure ‒ Advancing through innovation • Always with a focus on safety, system integrity and customer service • FY1
Slide 4: Advancing our midstream operations
Advancing our midstream operations • Appointed industry veteran Scott Smith to lead our midstream operations • Spire STL Pipeline completed and placed into service – Finished construction, land restoration and pre-operational testing – Received FERC approval of final rates and authorization to comme
Slide 5: Investing in growth
Investing in growth • $823M capital spend in FY19 Capital expenditures (Millions) – $575M gas utility investment $900 $823 • $287M on pipeline upgrades $750 • $91M on new business 248 – $45M higher than forecast due to $600 $499 increased infrastructure upgrades $450 43 – Non-utility spend in line w
Slide 6: Growing organically; Advancing through innovation
Growing organically Contribution margin1 – Gas Utility • Strong focus on new business (Millions) • Greater engagement on economic 1,000 $967 $948 development $939 • Driving margin via customer growth 900 and supportive regulatory outcomes 800 700 Advancing through innovation 2017 2018 2019 O&M expen
Slide 7: Delivering strong operating performance
Delivering strong operating performance Reducing employee injuries Improving pipeline safety OSHA DART1 rate Damages per 1,000 locates 3.66 3.65 4.84 4.76 4.78 3.22 4.24 3.87 2.63 1.88 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Strengthening system integrity Enhancing service and safety Leaks
Slide 8: Delivering net economic earnings growth
Delivering net economic earnings growth Per diluted Millions common share Year ended September 30, 2019 2018 2019 2018 Gas Utility $ 199.8 $ 183.1 Recap of run-rate performance Gas Marketing 19.4 22.9 NEE1 NEEPS Other (24.1) (22.3) 2018, as reported $ 183.7 $ 3.72 Net Economic Earnings (NEE) 2 $ 195
Slide 9: Missouri ISRS rulings
Missouri ISRS rulings • On November 19, the Missouri Court of Appeals for the Western District issued three opinions in ISRS-related appeals – 2016/2017 rulings on intermittent plastics – 2018 ruling on evidentiary standard for cast iron and bare steel • No debate on the prudence of investment, but
Slide 10: Missouri ISRS rulings – financial implications
Missouri ISRS rulings – financial implications MoPSC ISRS actual revenues Subject to authorized collected by fiscal year 11/19/19 (Millions) revenues 2018 & prior 2019 rulings FY 2017 and prior MoPSC authorized revenues intermittent plastic $ 4.2 $ 4.2 $ - $ 4.2 Regulatory liability $ (12.2) Income
Slide 11: ISRS revenue as of 12/4/2019
ISRS revenue as of 12/4/2019 MoPSC requested and ISRS revenues FY 2020 estimated ISRS authorized revenues (a ) collected revenues Plastics not Subject to Subject to Currently Other ISRS (Millions) Requested authorized Authorized FY 2019 ISRS ruling ISRS ruling under appeal revenue Note September 201
Slide 12: Strengthening our financial position
Strengthening our financial position Adjusted EBITDA 1 (Millions) 1 • FY19 adjusted EBITDA up $25M $550 $517 or 5% over last year $500 $492 • Solid adjusted long-term $450 capitalization2 of 51.9% equity $400 • $150M ATM equity program $350 – Issued ~180k shares in FY19 $300 – $15M in gross proceeds
Slide 13: Growing the dividend
Growing the dividend Annualized common stock dividend per share Dividend $2.70 yield 3.1%2 70% $2.491 $2.50 $2.37 $2.25 65% $2.30 Dividend payout ratio Dividend per share Dividend $2.10 $2.10 payout ratio $1.96 60% $1.90 $1.84 $1.70 55% $1.50 $1.30 50% 2015 2016 2017 2018 2019 2020 • Annualized comm
Slide 14: Updating our guidance
Updating our guidance Capital expenditures (Millions) $823 5-year forecast: $3.0B 248 • Long-term annual NEEPS growth $590 $530 $515 $525 target remains 4%-7% 70 30 10 10 • Increasing 5-year (2019-2023) capital spend target to $3.0B 575 520 500 505 515 – Higher utility spend • Balanced investment ac
Slide 15: Appendix
Appendix 15 Spire | Investor presentation - December 2019
Slide 16: Spire executive leadership team
Spire executive leadership team B Suzanne Steve Steve Mark Mike Sitherwood Lindsey Rasche Darrell Geiselhart President and Chief Executive Vice President, Executive Vice President, Senior Vice President, Senior Vice President, Executive Officer Chief Operating Officer Chief Financial Officer Chief L
Slide 17: 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 17 Spire | Investor presentation - December 2019 E
Slide 18: We've expanded to serve more customers and markets
We’ve expanded to serve more customers and markets • We’re the fifth largest publicly traded natural gas company serving 1.7 million homes and businesses across Alabama, Mississippi and Missouri • We are developing and growing our gas-related businesses – Spire Marketing – Spire STL Pipeline – Spire
Slide 19: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 941 119 35 2,389 Customers1 420,600 83,900 18,500 1,169,900 Pipeline miles ~23,000 ~4,300 ~1,200 ~30,000 Rate base (Millions) $5432 $982 $293 $2,2174 Return on equity 10.40
Slide 20: Missouri ISRS rulings
Missouri ISRS rulings Intermittent plastics /2016 and 2017 appeals • The original appeals related to Spire’s practice of including the replacement of incidental material (mostly plastics installed to make main repairs prior to full replacement) as part of total cast iron and bare steel main upgrade
Slide 21: Missouri ISRS rulings
Missouri ISRS rulings Evidentiary standard /2018 appeal • Appeal of first ISRS determination by MoPSC after the last general rate case • The MoPSC authorized ISRS revenue collection after adjusting for exclusion of incidental plastics in accordance with 2016 remand proceeding methodology • Spire app
Slide 22: The case for natural gas
The case for natural gas: abundant, domestic, safe, economical, efficient, and better for the environment • The U.S. has 3,838 Tcf of future natural gas supply, 128 years worth • The U.S. natural gas transmission and distribution system (2.5M miles of underground pipeline) is the safest and most rel
Slide 23: Contribution margin
Contribution margin Millions Change Year ended September 30, 2019 2018 $ % Operating Revenues Gas Utility $ 1,860.8 $ 1,888.4 $ (27.6) -1% Gas Marketing 83.7 71.6 12.1 17% Other and eliminations 7.9 5.0 2.9 58% $ 1,952.4 $ 1,965.0 $ (12.6) -1% 1 Contribution Margin Gas Utility $ 967.1 $ 947.5 $ 19.6
Slide 24: Controlling expenses
Controlling expenses Year ended September 30, 2019 2018 Change vs pro forma As As Pension Pro forma 1 (Millions) reported reported Rate case reclass run rate $ % Operating Expenses Gas Utility Natural & propane gas $ 698.2 $ 770.1 $ 770.1 $ (71.9) -9% Operation and maintenance (O&M) 432.3 441.2 $ (3
Slide 25: Controlling expenses (cont'd.)
Controlling expenses (cont’d.) Year ended September 30, 2019 2018 Change vs pro forma As As Tax Pension Pro forma 1 (Millions) reported reported Reform reclass run rate $ % Operating Expenses Gas Marketing 154.3 109.2 109.2 45.1 41% Other 34.2 30.9 30.9 3.3 11% Other Income (Expense), Net 21.2 (8.0)
Slide 26: Q4 net economic earnings
Q4 net economic earnings Per diluted Millions common share Fourth quarter ended September 30, 2019 2018 2019 2018 Gas Utility $ (20.9) $ (25.0) Gas Marketing 1.6 4.7 Other (4.4) (6.3) 1 Net Economic (Loss) Earnings (NEE) $ (23.7) $ (26.6) $ (0.54) $ (0.52) Effect of Tax Cuts and Jobs Act - 6.1 - 0.1
Slide 27: Income tax expense and effective rate
Income tax expense and effective rate Year ended September 30, Quarter ended September 30, (Millions) 2019 2018 2019 2018 1 GAAP expense (benefit) before ADIT amortization $ 42.9 $ (23.0) $ (8.6) $ (14.5) Amortization of excess ADIT (8.4) (3.5) (2.1) (3.5) GAAP income tax expense (benefit) $ 34.5 $
Slide 28: FY2019 net economic earnings [non-GAAP] reconciliation
FY2019 net economic earnings [non-GAAP] reconciliation Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Total common share 2 Year ended September 30, 2019 Net Income (Loss) [GAAP] $ 190.5 $ 18.5 $ (24.4) $ 184.6 $ 3.52 Adjustments, pre-tax: Missouri ISRS provision 12.
Slide 29: Q4 net economic earnings [non-GAAP] reconciliation
Q4 net economic earnings [non-GAAP] reconciliation Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total common share Three months ended September 30, 2019 Net (Loss) Income [GAAP] $ (30.2) $ 0.3 $ (4.4) $ (34.3) $ (0.74) Adjustments, pre-tax: MO ISRS provision 12.
Slide 30: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended September 30, 2019 Operating (Loss) Income [GAAP] $ (23.8) $ 0.9 $ (2.7) $ $ (25.6) Operation and maintenance 111.4 3.2 9.3 (2.7) 121.2 Depreciation and amortizatio
Slide 31: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Year ended September 30, 2019 Operating Income (Loss) [GAAP] $ 293.4 $ 23.2 $ (14.3) $ $ 302.3 Operation and maintenance 441.7 11.7 31.6 (10.9) 474.1 Depreciation and amortization 179
Slide 32: Adjusted EBITDA [non-GAAP] reconciliation
Adjusted EBITDA [non-GAAP] reconciliation Year ended September 30, (Millions) 2019 2018 Net Income [GAAP] $ 184.6 $ 214.2 Add back: Interest charges 104.4 98.4 MO ISRS provision 12.2 !! Regulatory asset write-offs !! 38.4 Income tax expense (benefit) 34.5 (26.5) Depreciation & amortization 181.7 1
Slide 33: Adjusted long-term capitalization [non-GAAP] reconciliation
Adjusted long-term capitalization [non-GAAP] reconciliation September 30, 2019 September 30, 2018 (Millions) Equity1 Debt Total Equity1 Debt Total Capitalization $ 2,546.4 $ 2,082.6 $ 4,629.0 $ 2,263.3 $ 1,900.1 $ 4,163.4 Current portion of long-term debt — 40.0 40.0 — 175.5 175.5 Long-term Capitali