Slide 1: Energy that advances
Energy that advances Investor presentation March 2020
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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: Energy that advances
Energy that advances • Creating enhanced value for all our stakeholders by – Growing organically – Investing in infrastructure – Advancing through innovation • Delivering results – Off to a strong start in FY20 – Higher Q1 NEE per share of $1.33 – Continued strong operating performance • Advancing o
Slide 5: We're a growing, financially strong natural gas company
We’re a growing, financially strong natural gas company • 5-year capital investment target of $3.0B focused on infrastructure upgrades Delivering • Growing organically across our utility and gas-related businesses growth • Targeting 4 – 7% annual long-term EPS growth • Strong and growing cash flow;
Slide 6: Investing in growth
Investing in growth Capital expenditures (Millions) $250 • Q1 FY20 capital spend of $192M $207 $200 $192 – Gas utility up $15M, focused on 70 40 pipeline upgrades and new business $150 – Midstream spend $100 • $29.5M for Spire STL Pipeline 137 152 $50 • $10.3M for Spire Storage • FY20 capex target r
Slide 7: Enhancing stakeholder value
Enhancing stakeholder value 1 Contribution margin – Gas Utility (Millions) Growing organically 1,000 • Strong focus on new business $939 $948 $967 • Greater engagement on economic 900 development • Driving margin via customer growth 800 and supportive regulatory outcomes 700 2017 2018 2019 Advancing
Slide 8: Advancing our midstream operations
Advancing our midstream operations • Industry veteran Scott Smith joined Oct. 2019 to lead midstream operations • Spire STL Pipeline completed and placed into service – Began commercial operation in mid-November 2019 – Provides a reliable, more diverse and resilient energy supply to Spire MO East –
Slide 9: Regulatory update
Regulatory update Missouri • Jason Holsman (D) joined the Missouri Public Service Commission on Jan. 16 • Pursuing resolution of ISRS recovery in dispute – Judicial: March 17 – Missouri Supreme Court denied requests by Spire and the MoPSC to review MO Appeals Court orders and remanded case to MoPSC
Slide 10: ISRS: Court and legislative timeline
ISRS: Court and legislative timeline 2020 2021 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Missouri March 17 – Supreme Court denies request to Supreme review Missouri Appeals Court orders Court Missouri A
Slide 11: ISRS update
ISRS update MoPSC requested and authorized revenues (a) ISRS revenues collected FY 2020 estimated ISRS revenues Amount not Q1 Subject to Subject to ISRS Currently under Other ISRS (Millions) Requested authorized (b) Authorized FY 2019 FY 2020 ISRS ruling ruling appeal revenue Note Prior to 2017 Rate
Slide 12: Maintaining solid financial position
Maintaining solid financial position Adjusted EBITDA (Millions) 1 • Robust adjusted EBITDA in Q1 FY20 $200 $158.1 • Capitalization2 of 48.2% equity reflecting $152.1 $150 $410M long-term net debt financing – Spire Missouri issued $275M of 2.84%, 10-yr. $100 bonds in Nov.; repaid $100M term loan – Sp
Slide 13: Growing the dividend
Growing the dividend Annualized common stock dividend per share Dividend $2.70 yield 3.2%2 70% $2.491 $2.50 $2.37 $2.25 65% $2.30 Dividend payout ratio Dividend Dividend per share payout ratio $2.10 $2.10 $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: Our guidance
Our guidance Capital expenditures (Millions) $823 5-year forecast: $3.0B • Long-term annual NEEPS growth target 248 remains 4%-7% $610 70 $530 $515 $525 • FY20 NEEPS guidance to be launched 30 10 10 after more clarity on ISRS rulings 575 540 500 505 515 • 5-year capex plan remains $3.0B • FY20 spend
Slide 15: The case for natural gas
The case for natural gas 110+ Abundant and domestic years The U.S. has 3,374 Tcf of The U.S. natural gas Direct use of natural gas is a future natural gas supply, transmission and distribution more efficient energy: 91% vs more than 110 years worth system (2.6M miles of 36% for generation from under
Slide 16: Our commitment to Corporate Social Responsibility (CSR)
Our commitment to Corporate Social Responsibility (CSR) People Communities Environment Leadership • Recruiting and training • Supporting our • Robust investment in • Experienced manage- our people to safely communities through pipeline upgrades and ment team with deep deliver excellent financial con
Slide 17: Reducing methane emissions
Reducing methane emissions Spire methane reduction Metric tons/year 22,532 17,789 17,275 16,667 15,969 15,532 14,854 14,484 13,637 13,715 2005 2011 2012 2013 2014 2015 2016 2017 2018 2019 • Spire has achieved a 39% reduction in greenhouse gas emissions since 2005 • We’re committed to a 5% annual red
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Slide 19: Appendix
Appendix 19 Spire | Investor presentation – March 2020
Slide 20: 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 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 – March 2020
Slide 22: 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 23: 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) $5092 $922 $293 $2,2174 Return on equity 10.40
Slide 24: Growing Spire Marketing; Developing Spire Storage
Growing Spire Marketing Developing Spire Storage • Gas marketing services primarily in • Disciplined approach to project central and southern U.S. development and capital deployment • Mostly wholesale services to munis, – Several targeted capital projects to producers, power generators, storage ensu
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Slide 26: Upgrading our infrastructure over the next 15+ years
Upgrading our infrastructure over the next 15+ years Estimated replacement miles remaining As of 12/31/19 Total Vintage replacement Steel Cast iron plastic miles Missouri 1,6521 630 2,282 Alabama 518 483 274 1,275 Mississippi 442 442 Total 2,612 1,113 274 3,999 % of total 65% 28% 7% 100% Miles
Slide 27: 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 28: 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 29: 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 30: 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 31: 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 32: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA • Rate Stabilization and Equalization (RSE) annual rate-setting process – RSE parameters evaluated every four years (last set in 2018) – Uses forward-year budget and quarterly reviews Spire Alabama – Rates set based on retained sh
Slide 33: 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 34: Q1 FY20 financial summary
Q1 FY20 financial summary Three months ended December 31, (Millions, except earnings per share) 2019 2018 Earnings by Segment Gas Utility $ 69.1 66.4 Gas Marketing 6.1 8.3 Other (3.4) (8.8) Net Economic Earnings (non-GAAP)1 $ 71.8 $ 65.9 Net Economic Earnings Per Share (non-GAAP)1 $ 1.33 $ 1.30 Othe
Slide 35: Q1 FY20 earnings growth
Q1 FY20 earnings growth • Net economic earnings1 (NEE) $71.8M (+$5.9M) • NEE per share $1.33 (+2%) reflecting – Improved results from Gas Utility – Solid performance from Gas Marketing (strong performance in year-ago period) – Higher earnings from Spire STL Pipeline (entered service during quarter)
Slide 36: Net economic earnings reconciliation to GAAP
Net economic earnings reconciliation to GAAP Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total common share First quarter ended December 31, 2019 Net Income (loss) [GAAP] $ 67.1 $ 3.3 $ (3.4) $ 67.0 $ 1.24 Adjustments, pre-tax: Provision for ISRS rulings 2.6
Slide 37: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated First quarter ended December 31, 2019 Operating income [GAAP] $ 96.3 $ 4.4 $ 1.6 $ $ 102.3 Operation and maintenance 108.6 3.1 7.9 (3.0) 116.6 Depreciation and amortization 46.4 1.1
Slide 38: Adjusted EBITDA reconciliation to GAAP
Adjusted EBITDA1 reconciliation to GAAP First quarter ended December 31, (Millions) 2019 2018 Net Income [GAAP] $ 67.0 $ 67.3 Add back: MO ISRS provision 2.6 Interest charges 26.7 25.9 Income tax expense 14.3 14.7 Depreciation and amortization 47.5 44.2 Adjusted EBITDA [Non-GAAP] $ 158.1 $ 152.1 S
Slide 39: Adjusted long-term capitalization reconciliation to GAAP
Adjusted long-term capitalization reconciliation to GAAP December 31, 2019 September 30, 2019 (Millions) Equity1 Debt Total Equity1 Debt Total Capitalization $ 2,590.1 $ 2,484.4 $ 5,074.5 $ 2,546.4 $ 2,082.6 $ 4,629.0 Current portion of long-term debt — 45.3 45.3 — 40.0 40.0 Long-term Capitalization