Spire Inc. · NYSE:SR
Spire — The Laclede Group — Investor Presentation (February 2016)
54 slides from Spire's investor presentation, February 2016
Slide 1: The Laclede Group Investor Presentation February 2016
February 2016 THE LACLEDE GROUP, INC. ® The Laclede Group
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: Energy exists to help people
Energy exists to help people.” To enrich their lives, grow thei’ businesses, advance their» - communities. It’s a simple but it’s one that’s at the hea of our business. ty
Slide 4: Laclede is a gas company at its core
LACLEDE IS A GAS COMPANY AT ITS COR [GEEZ missouri cas Evercy Financially strong and growing natural gas services provider $4.6 billion enterprise value Largest gas utility in Missouri and Alabama 5th largest publicly trading gas utility based on customers served Customer base is 92% residential St.
Slide 5: Successfully executing on our growth strategy
SUCCESSFULLY EXECUTING ON OUR GROWTH STRATEGY ¢ Growing our gas utility business ¢ Acquiring and integrating gas utilities ¢ Modernizing our gas assets ¢ Investing in innovation and emerging markets THE LACLEDE GROUP | INVESTOR PRESENTATION | FEBRUARY 2016
Slide 6: Unlocking value
UNLOCKING VALUE Valuation * Disciplined approach for identifying and evaluating acquisitions * Internal and external expertise used to identify — Value drivers — Integration points — Investment/growth opportunities Integration Proven Laclede process to unlock value — Functional teams develop multi-y
Slide 7: Recent accomplishments
wk a { \ fo . A e i. iy i RECENT ACCOMPLISHMENTS For Fiscal 2016 * Raised dividend by 6.5% * Launched NEE guidance of $3.34 - $3.44 per share; representing growth of 5% - 8% * Planned capital spend of $315 million; 5-year plan for more than $1.6 billion * Q1 net economic earnings (NEE) per share and
Slide 8: Te Laclede Group
Te Laclede Group
Slide 9: Growing our gas utility business
GROWING OUR GAS UTILITY BUSINESS 4 TieLaclede Group
Slide 10: Capital spend by category
($ Millions) $350 2016 $315 $300 $290 MO: ISRS Recoverable $250 Alabama $200 $171 MO: New Business $150 $315 Other Utility and $100 Non-Utility $50 $0 20141 2015 2016E • – – • 1Capital spend includes one month of Alagasco in fiscal 2014.
Slide 11: Growing organically
GROWING ORGANICALLY Increasing revenues and margins — Growing customers and improving retention — Realigned sales approach to increase penetration — Leveraging technology, communications and process improvement to achieve cost efficiencies Seizing market opportunities — Building commercial/industria
Slide 12: Modernizing our gas assets
Slide 13: Modernizing our gas assets
MODERNIZING OUR GAS ASSETS ¢ Providing a better, more diverse portfolio of gas supply assets Improving reliability, resiliency and access to lower cost shale gas Striving to optimize our supply and transportation portfolios Initial focus has been on opportunities in eastern Missouri Have defined a p
Slide 14: REX/PEPL new lateral
Niobrara REX/PEPL Marcellus/Utica Missouri New Lateral Rockies Express Panhandle • MoGas • Southern Star • Enable MRT • • •
Slide 15: Gas marketing
GAS MARKETING Provides non-regulated natural gas sales/services to diverse customer base primarily in Midwest Leverages market expertise and risk management protocols and skills Focuses on optimizing portfolio of commodity, transportation and storage contracts - Operated on 17 interstate and intrast
Slide 16: Investing in innovation and emerging markets
INVESTING IN INNOVATION AND EMERGING MARKETS ip Tie Laclede Group
Slide 17: Spire station in Greer, South Carolina
• ‒ ‒ ‒ • • – – • Spire station in Greer, South Carolina
Slide 18: Delivering shareholder value
bess —— DELIVERING SHAREHOLDER VALUE ip TieLaclede Group 18
Slide 19: Net economic earnings per share
• – – – • $3.75 $3.05 $3.19 $3.00 $2.79 $2.79 $2.87 $2.52 $2.25 $1.50 3.14 2.83 2.51 2.10 2.14 $0.75 1.63 $0.00 2 2010 2011 2012 2013 2014 2015 Gas Utility Gas Marketing Other3 1See Net Economic Earnings (Non-GAAP) Reconciliation in Appendix. 2Interest expense associated with Alagasco acquisition to
Slide 20: EBITDA
($ Millions) ($ Millions) $400 $450 $404.5 $322.4 $300 $300 $246.4 $200 $122.6 $150 $100 $100.4 Alagasco $138.5 Alagasco $0 $0 2014 2015 2014 2015 • – – • • • 1EBITDA is Earnings Before Interest, Taxes, and Depreciation and Amortization. See EBITDA (Non-GAAP) Reconciliation in Appendix.
Slide 21: Dividend yield and payout ratio
Dividend Yield 3.1%2 $2.00 Payout Ratio1 $1.963 62.7% 58.1% 59.5% 59.2% 57.7% $1.84 $1.80 $1.76 $1.70 $1.66 $1.62 $1.60 $1.40 2011 2012 2013 2014 2015 2016 • • – – • 1Payout ratio calculated on net economic earnings per share. 2Based on $1.96 per share dividend and LG average stock price of $62.49 f
Slide 22: Capitalization and liquidity
(at September 30, 2015) ($ millions) Total Facilities $750 $600 $450 Equity Debt $300 50.1% 49.9% $150 $287 $338 $0 9/30/14 9/30/15 (in millions) Equity Debt Total Notes Payable Unused Capacity Under Capitalization per balance sheet $1,573.6 $1,771.5 $3,345.1 Existing Facilities Reclassify equity un
Slide 23: Outlook for growth
Slide 24: Earnings guidance
EARNINGS GUIDANCE Longer Term ¢ Affirming 4% - 6% long-term EPS growth target Fiscal 2016 ¢ NEE target remains $3.34 - $3.44 per share ¢ Represents growth of 5% - 8% over 2015 * Quarterly distribution of earnings — Unseasonably warm weather did impact Q1 — Expected to push ~5% of total annual NEE pe
Slide 25: 5-Year Forecast: $1.6 Billion +
5-Year Forecast: $1.6 Billion + ($ Millions) $350 $325 $330 $335 $335 $315 $300 $290 110 110 110 110 $250 103 96 $200 $171 $150 72 $100 212 215 220 225 225 194 $50 99 $0 2014 2015 2016E 2017E 2018E 2019E 2020E Utility, with Minimal Lag Other Utility and Non-Utility • – – • •
Slide 26: Te Laclede Group
Te Laclede Group
Slide 27: FY 2016 First Quarter Results
FY 2016 FIRST QUARTER RESULTS
Slide 28: First quarter highlights
FIRST QUARTER HIGHLIGHTS Solid Q1 earnings despite warmer weather at start of heating season Organic growth initiatives continue to deliver results — Customers up close to 1% year-over-year across our three utilities — Additional success on line extensions, reinforcements and customer conversions Al
Slide 29: Net economic earnings, first quarter
First Quarter Ended December 31 $ Millions Per Diluted Share Net Economic Earnings 1 FY16 FY15 FY16 FY15 Gas Utility $ 50.0 $ 49.8 $ 1.15 $ 1.15 Gas Marketing (0.3) $ 0.4 - $ 0.01 Other (4.6) $ (4.5) (0.11) $ (0.10) $ 45.1 $ 45.7 $ 1.04 $ 1.06 • • • 1See Net Economic Earnings (Non-GAAP) Reconciliati
Slide 30: Operating revenues and margin, first quarter
First Quarter Ended December 31 Change ($ millions) FY16 FY15 $ % Operating Revenues Gas Utility $ 398.8 $ 581.4 $ (182.6) -31% Gas Marketing & Other 0.6 38.2 (37.6) -98% $ 399.4 $ 619.6 $ (220.2) -36% 1 Operating Margin Gas Utility 220.1 225.8 (5.7) -3% Gas Marketing 5.4 5.1 0.3 6% Other 0.8 0.7 0.
Slide 31: First quarter income statement
First Quarter Ended December 31 Change ($ millions) FY16 FY15 $ % Operating Revenues $ 399.4 $ 619.6 $ (220.2) -36% Operating Expenses Gas Utility Natural & propane gas 148.5 304.3 (155.8) -51% Other operation & maintenance 91.6 97.1 (5.5) -6% Depreciation & amortization 33.5 32.0 1.5 5% Taxes, othe
Slide 32: Q1 EBITDA and cash flow
($ millions) ($ millions) $40 $120 $20 $100 $33.5 $80 $0 $60 $121.0 $122.1 -$34.1 $40 -$20 $20 -$40 $0 Q1 FY15 Q1 FY16 Q1 FY15 Q1 FY16 • – – • 1EBITDA is Earnings Before Interest, Taxes, and Depreciation and Amortization. See EBITDA (Non-GAAP) Reconciliation in Appendix.
Slide 33: Q1 capital expenditures
($ millions) $75 $50 $60.0 $62.4 $25 $0 Q1 FY15 Q1 FY16 • • • – –
Slide 34: Appendix
APPENDIX
Slide 35: The Laclede Group leadership team
THE LACLEDE GROUP LEADERSHIP TEAM a Steven L. Lindsey Suzanne Sitherwood Executive Vice President and President and Chief Operating Officer, Chief Executive Officer Distribution Operations President & CEO, Laclede Gas CEO, Alagasco Mark C. Darrell L. Craig Dowdy Senior Vice President, Senior Vice Pr
Slide 36: Missouri and Alabama utilities
Missouri Alabama • • • • – – • • • – – – –
Slide 37: Missouri utilities rate base and customers
• • • – – – • Rate Base (millions)1 $944 Allowed ROE (for ISRS) 9.70% Customers2 1,148,300 Employees3 2,147 ¹Rate base as filed in 2013 general rate case. 2Average customers for 12 months ended September 30, 2015 for Laclede Gas and MGE. 3Employees supporting Laclede Gas and MGE combined at Septembe
Slide 38: Alagasco rate base
• • – – • Rate Base (millions)1 $565 Pre-tax WACC (for ISRS) 9.75% ¹Rate base as filed in general rate case concluded in 2014.
Slide 39: Missouri regulatory summary
MISSOURI REGULATORY SUMMARY General rate case required every three years to retain ISRS eligibility — Cost-of-service, rate base and capital structure determined using historical test year - Mechanisms to address pensions, energy efficiency and conservation ISRS enables accelerated cost recovery of
Slide 40: Alagasco equity, ROE and customers
• • • – – • Average Common Equity1 (millions) $416 Allowed ROE2 10.85% Customers3 419,400 Employees3 909 ¹For 12 months ended September 30, 2015. 2Effective fiscal year 2016, includes 5 basis point adder for achieving certain customer satisfaction ratings. 3Average number of customers for fiscal yea
Slide 41: Alabama regulatory summary
ALABAMA REGULATORY SUMMARY ¢ Alabama Public Service Commission —- commissioners elected to 4-year terms - Twinkle Andress Cavanaugh, President (R) - 2016 — Jeremy H. Oden (R) - 2018 — Chris “Chip” Beeker (R) - 2018 ¢ Rate Stabilization & Equalization (RSE) mechanism — Ratemaking process in place for
Slide 42: Alabama rate stabilization and equalization
Equity • Rates based on approved budgeted balances; • Approved equity and retained earnings reviewed quarterly vs. actuals • Up to 56.5% of total capitalization • 10.8% ROE for 2015-2018 Debt • Interest recovered in rates as a pass through • Includes short and long-term debt of actual costs incurred
Slide 43: Other Alabama rate mechanisms
OTHER ALABAMA RATE MECHANISMS Enhanced Stability Reserve (ESR) ¢ Allows deferral and recovery of certain non-recurring or non- controllable costs Force majeure events Self-insurance losses Environmental costs Loss of a major industrial customer ¢ Provides for additional rate stability and risk mitig
Slide 44: Credit ratings
• • • ̶ ̶ ̶ • Laclede Group Laclede Gas Laclede Gas Alagasco Unsecured Debt First Mortgage Bonds Commercial Paper Unsecured Debt S&P BBB+ A A-2 A- Moody’s Baa2 A1 P-2 A2 Fitch BBB+ A F2 Not Rated ¹For purposes of this calculation, long-term capitalization gives 100% equity treatment to notes issued
Slide 45: Equity units summary
EQUITY UNITS - SUMMARY * 2,875,000 equity units issued June 2014; net proceeds of $139 million - $50 face value per unit consisting of: * 3-year equity forward contract * A 1/20 interest in $1,000, 8-year junior subordinated note - 6.75% cash coupon: 2.00% interest on notes, 4.75% contract payment ¢
Slide 46: Transportation pipeline access
TRANSPORTATION PIPELINE ACCESS — Panhandle Eastern — Enable Energy — Natural Gas Pipeline Co. — ANR — Southern Star — MoGas — Ozark — Sonat — Transco THE LACLEDE GROUP | INVESTOR PRESENTATION | FEBRUARY 2016 46
Slide 47: Net economic earnings reconciliation
Fiscal Years Ended September 30, (Millions, except per share amounts) 2010 2011 2012 2013 2014 2015 Net economic earnings (Non-GAAP) $ 56.1 $ 62.4 $ 62.6 $ 65.0 $ 100.1 $ 138.3 Add: Unrealized gain (loss) on energy-related derivatives (2.1) 1.4 0.3 (0.5) 0.9 1.8 Add: Lower of cost or market inventor
Slide 48: Net economic earnings by segment, fiscal 2015
Gas Gas Per Share (In Millions, except per share amounts) Utility Marketing Other Total Amounts (2) Twelve Months Ended September 30, 2015 Net Income (Loss) (GAAP) $ 153.3 $ 4.1 $ (20.5) $ 136.9 $ 3.16 Unrealized gain on energy-related derivatives (1) (0.1) (1.7) - (1.8) (0.04) Lower of cost or mark
Slide 49: Net economic earnings by segment, Q1
Gas Gas Per Share ($ millions, except per share amounts) Utility Marketing Other Total Amounts (2) Three Months Ended December 31, 2015 Net Income (Loss) (GAAP) $ 49.3 $ 2.3 $ (4.7) $ 46.9 $ 1.08 Unrealized gain on energy-related derivatives (1) (0.1) (2.9) - (3.0) (0.07) Lower of cost or market inv
Slide 50: Operating margin reconciliation, fiscal year
Gas Gas (in millions) Utility Marketing Other Eliminations Consolidated Fiscal Year Ended September 30, 2015 Operating revenues $ 1,895.8 $ 153.4 $ 3.7 $ (76.5) $ 1,976.4 Na tura l a nd propa ne ga s expens e 957.6 140.5 0.3 (75.5) 1,022.9 Gros s recei pts tax expens e 96.1 0.2 - - 96.3 Operating ma
Slide 51: Operating margin reconciliation, Q1
Gas Gas ($ millions) Utility Marketing Other Eliminations Consolidated Three Months Ended December 31, 2015 Operating revenues $ 399.5 $ 12.8 $ 0.8 $ (13.7) $ 399.4 Natural and propane gas expense 161.9 7.4 - (13.4) 155.9 Gross receipts tax expense 17.5 - - - 17.5 Operating margin (non-GAAP) 220.1 5
Slide 52: EBITDA reconciliation, fiscal year
Consolidated Alagasco Fiscal Years Ended Fiscal Year Ended September 30, September 30, (in millions) 2015 2014 2015 Net Income $ 136.9 $ 84.6 $ 48.0 Add back: Interest Charges 74.6 46.2 13.9 Income Tax Expense 62.2 32.3 29.3 Depreciation & Amortization 130.8 83.3 47.3 EBITDA $ 404.5 $ 246.4 $ 138.5
Slide 53: EBITDA reconciliation, Q1
($ millions) Q1 FY16 Q1 FY15 Net Income $ 46.9 $ 47.1 Add back: Interest Charges 19.0 19.2 Income Tax Expense 22.5 22.4 Depreciation & Amortization 33.7 32.3 EBITDA $ 122.1 $ 121.0 1EBITDA is Earnings Before Interest, Income Taxes, and Depreciation and Amortization.
Slide 54: Te Laclede Group
Te Laclede Group
The Laclede Group — Investor Presentation (February 2016) on 6ix