Slide 1: We are energy in motion
We are energy in motion Investor presentation September 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: Our energy is in motion
Our energy is in motion Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Our strategic priorities • Growing organically • Investing in infrastructure • Acquiring and integrating • Innovating and advancing technology 3 Spire | Inves
Slide 4: 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 5: We’re a growing, financially strong company
We’re a growing, financially strong company • 5-year capital investment of $2.9B 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 Financial • Solid ca
Slide 6: We continue to drive consistent growth in our gas utilities
We continue to drive consistent growth in our gas utilities. 6 Spire | Investor presentation – September 2019
Slide 7: Growing organically
Growing organically New premise activations 12,000 10,937 11,159 11,397 9,498 8,167 8,141 • Enhancing our approach to new 8,000 business and economic development • Increasing spend on new business 4,000 – YTD FY19 new business investment up $10M (~19%) from a year ago 0 2014 2015 2016 2017 2018 2019
Slide 8: Increasing our capital investment
Increasing our capital Capital expenditures investment (Millions) $750 $780 250 • Focus on infrastructure upgrades $499 – Pipeline upgrades over next 15-18 years $500 43 100 63 – Drives 6% long-term rate base growth – Utility spend ~80% recovered with $250 393 430 minimal lag or reflected in earning
Slide 9: Inspiring innovation through technology
Inspiring innovation through technology • Completing our companywide information technology modernization • Leveraging technology and robust databases for – New business development – Targeting growth opportunities – Improving workload planning • Providing customers better ways to connect with Spire
Slide 10: Improving operating performance
Improving operating performance Investment in infrastructure upgrades, technology and our people are driving improved safety, system integrity and service. Reducing employee injuries Improving pipeline safety OSHA DART1 rate Damage rate per 1,000 locates 3.66 3.65 4.84 4.76 4.78 3.22 4.24 3.84 2.63
Slide 11: Progressing on regulatory initiatives
Progressing on regulatory initiatives Renewal • Reauthorizes Pipeline and Hazardous Material Safety Administration (PHMSA) of Pipeline • Focus on safety standards and mandates for system integrity Safety Act • Congress will address later this year • Working with Governor and state leaders to drive e
Slide 12: We continue to develop our gas-related businesses to drive earnings growth
We continue to develop our gas-related businesses to drive earnings growth. 12 Spire | Investor presentation – September 2019
Slide 13: Growing Spire Marketing
Growing Spire Marketing • We provide gas marketing services Spire Marketing’s operational reach in the central and southern U.S. • Utilities account for 75+% of customers (by net dollar exposure) • We’re a logistics-based business providing physical delivery of gas – Delivering gas on 35+ pipelines
Slide 14: Completing Spire STL Pipeline
Completing Spire STL Pipeline • The 65-mile pipeline will bring new gas supply to the St. Louis region – Enhances supply diversity, reliability, and resiliency – Capacity of 400 MMcf/day with Spire Missouri contracted for 350 MMcf/day • Pipe installation 97% complete • Historic flooding has delayed
Slide 15: Developing Spire Storage
Developing Spire Storage • Disciplined approach to project development and capital deployment – Completing several targeted capital projects to ensure reliable operations during upcoming winter – Approximately $25M of incremental capex in the remainder of FY19 – Total investment to date1 of $139M, i
Slide 16: We’re executing on our growth strategy
We’re executing on our growth strategy to further deliver financial strength and performance. 16 Spire | Investor presentation – September 2019
Slide 17: Delivering solid YTD performance
Delivering solid YTD Capital expenditures performance (Millions) $700 $609 • YTD spend on track with FY19 plans $600 – Gas utility spend $405M, up 35% $500 204 – $123M for Spire STL Pipeline $400 $334 64 – $81M for Spire Storage ($56M for base gas) $300 35 29 • YTD NEE of $219M, up 4% $200 341 270 •
Slide 18: Strengthening our financial position
Strengthening our financial position Adjusted EBITDA 1 (Millions) 1 • YTD adjusted EBITDA of $478M $500 $478 $467 • Ample liquidity with credit facility $450 and commercial paper program $400 • Solid adjusted long-term capitalization2 of 53.1% equity $350 • Issued $250M of 5.90% preferred $300 stock
Slide 19: Growing the dividend
Growing the dividend Annualized common stock dividend per share Dividend yield 2.8%2 1 Dividend payout ratio Dividend per share Dividend payout ratio • Quarterly common stock dividend of $0.5925 declared, payable October 2 ‒ 5.3% annualized growth in 2019 ‒ 16 consecutive years of increases; 74 year
Slide 20: Affirming our guidance
Affirming our guidance Capital expenditures (Millions) 5-year forecast: $2.9B $780 • FY19 NEEPS range $3.70 - $3.80 250 $560 $520 $520 $515 • Long-term NEEPS growth target 100 75 90 90 30 100 10 100 10 of 4% - 7% • 5-year capital spend target increased 430 395 400 405 410 to $2.9B reflecting FY19 up
Slide 21: We’re evolving as a business
We’re evolving as a business and we continue to build on how we serve, grow and lead in our communities. 21 Spire | Investor presentation – September 2019
Slide 22: The greatest energy in the world comes from people
We believe the greatest energy in the world comes from one source—people We built our Corporate Social Responsibility (CSR) strategy around four key areas, and now—for the first time ever— we’re reporting on how we impacted: Our people Our communities Our environment Our leadership 22 S pire | Inves
Slide 23: Introducing Spire’s very first CSR Report
Introducing Spire’s very first CSR Report In our CSR Report, you’ll see how we’ve used our energy for good, influencing each of our targeted areas in FY18—the first full year of our CSR efforts. We’re committed to driving positive and significant change in the communities we serve. Learn more at CSR
Slide 24: 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. 24 S p i r e | I n v e s t o r p r e s e n t a t i o n – S e p t e m b e r 2 0 1 9
Slide 25: Supplemental material
Supplemental material • Spire leadership • Additional gas utility information • Other financial information 25 Spire | Investor presentation – September 2019
Slide 26: 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 Executive Officer, Chief Financial Officer Genera
Slide 27: Spire business unit presidents
Spire business unit presidents Scott Carter Joe Hampton Scott Jaskowiak Pat Strange President, Spire Missouri President, Spire Alabama President, Spire STL Pipeline President, Spire Marketing and Mississippi and Spire Storage 27 S p i r e | I n v e s t o r p r e s e n t a t i o n – S e p t e m b e r
Slide 28: Additional gas utility information
Additional gas utility information 28 Spire | Investor presentation – September 2019
Slide 29: Our Spire gas utility portfolio
Our Spire gas 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 1
Slide 30: Upgrading our infrastructure over the next 15-18 years
Upgrading our infrastructure over the next 15-18 years Estimated replacement miles remaining As of 12/31/18 Total Total Vintage replacement system 1 Steel Cast iron plastic miles miles Missouri 1,740 720 2,460 30,000 Alabama 540 570 280 1,390 27,300 Total 2,280 1,290 280 3,850 57,300 % of total 59
Slide 31: 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 32: 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 33: Missouri regulatory and legislative update
Missouri regulatory and legislative update • Restructuring of agencies to facilitate economic and workforce development • Received annualized ISRS of $21.2M since rate cases concluded April 2018 – $8.0M effective October 18, 2018 – $13.2M effective May 3, 2019 – Non-ISRS eligible amounts recoverable
Slide 34: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA • Rate Stabilization and Equalization (RSE) – RSE parameters evaluated every four years – Annual rate-setting process with forward-year budget and quarterly reviews Spire Alabama – Rates set based on retained shareholders’ equity
Slide 35: 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 36: Other financial information
Other financial information 36 Spire | Investor presentation – September 2019
Slide 37: Affirming our earnings guidance
Affirming our earnings guidance • FY19 NEEPS range of $3.70 - $3.80 • Long-term NEEPS growth target of 4 - 7% – Base is run-rate FY18 NEEPS – Removes 17¢ of Spire Marketing NEEPS driven by market conditions not expected to recur Net economic earnings per share 1 1Run-rate adjustment is an estimate o
Slide 38: 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 R
Slide 39: Income tax expense and effective rate
Income tax expense and effective rate Quarter ended June 30, Nine months ended June 30, (Millions) 2019 2018 2019 2018 GAAP expense (benefit) before ADIT1 amortization $ (0.8) $ 5.7 $ 51.5 $ (8.5) Amortization of excess ADIT (2.1) — (6.3) — GAAP income tax expense (benefit) $ (2.9) $ 5.7 $ 45.2 $ (8
Slide 40: Net economic earnings [non-GAAP] reconciliation
Net economic earnings [non-GAAP] reconciliation Per diluted Gas Gas common (Millions, except per share amounts) Utility Marketing Other Total share2 Three months ended June 30, 2019 Net Income (Loss) [GAAP] $ 7.6 $ (4.7) $ (5.9) $ (3.0) $ (0.09) Adjustments, pre-tax: Unrealized loss on energy-relate
Slide 41: Net economic earnings [non-GAAP] reconciliation
Net economic earnings [non-GAAP] reconciliation Per diluted Gas Gas common (Millions, except per share amounts) Utility Marketing Other Total share2 Nine months ended June 30, 2019 Net Income (Loss) [GAAP] $ 220.7 $ 18.2 $ (20.0) $ 218.9 $ 4.27 Adjustments, pre-tax: Unrealized gain on energy-related
Slide 42: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended June 30, 2019 Operating Income (Loss) [GAAP] $ 25.3 $ (7.0) $ (5.0) $ $ 13.3 Operation and maintenance 113.4 3.2 8.4 (2.6) 122.4 Depreciation and amortization 45
Slide 43: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Nine months ended June 30, 2019 Operating Income (Loss) [GAAP] $ 317.2 $ 22.3 $ (11.6) $ $ 327.9 Operation and maintenance 330.3 8.5 22.3 (8.2) 352.9 Depreciation and amortization
Slide 44: Adjusted EBITDA [non-GAAP] reconciliation
Adjusted EBITDA [non-GAAP] reconciliation Nine months ended June 30, (Millions) 2019 2018 Net Income [GAAP] $ 218.9 $ 240.1 Add back: Interest charges 79.1 74.0 Regulatory asset write-offs !! 38.4 Income tax expense (benefit) 45.2 (8.5) Depreciation & amortization 134.9 122.9 Adjusted EBITDA [non-G