Slide 1: Third Quarter FY2017 Earnings Conference Call
Third Quarter FY2017 Earnings Conference Call August 2, 2017
Slide 2: Participants on today’s call
Participants on today’s call Suzanne Sitherwood President and Chief Executive Officer Steven P. Rasche Executive Vice President and Chief Financial Officer Steven L. Lindsey Executive Vice President and Chief Operating Officer, Distribution Operations 2 Spire | Third Quarter FY17 Earnings Conference
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: Delivering on our promises
Delivering on our promises • Solid performance year-to-date in FY17 ‒ Growth in net economic earnings per share ‒ Continued improvements in safety, customer service and system operations • We are executing on our growth plans ‒ Growing organically ‒ Investing in infrastructure ‒ Acquiring and integr
Slide 5: We’re growing in all the ways we said we would
We’re growing in all the ways we said we would • Growing organically to achieve – Customer growth across our gas companies – Increased efficiencies and cost management • Investing in infrastructure – YTD capital spend up more than 50%, driven by Gas Utility – Spire STL Pipeline progressing according
Slide 6: We’re progressing on plans to bring new energy to St. Louis
We’re progressing on plans to bring new energy to St. Louis • Spire STL Pipeline improves our supply diversity, reliability and resiliency ‒ 65-mile pipeline will connect to Rockies Express to access lower-cost shale gas ‒ Capacity of 400 MMcf/d with Laclede Gas to be foundation shipper (350 MMcf/d)
Slide 7: We’re driving earnings growth
We’re driving earnings growth Third Quarter Ended June 30 Millions Per Diluted Share Net Economic Earnings1 2017 2016 2017 2016 Gas Utility $ 23.3 $ 18.0 $ 0.48 $ 0.41 Gas Marketing 2.3 1.8 0.05 0.04 Other (4.0) (5.2) (0.09) (0.12) $ 21.6 $ 14.6 $ 0.44 $ 0.33 Average Shares Outstanding 48.2 43.5 • N
Slide 8: Revenues and margin
Revenues and margin Third Quarter Ended June 30 Gas Utility Millions Change Change 2017 2016 $ % EnergySouth All Other Operating Revenues Gas Utility $ 306.6 $ 253.3 $ 53.3 21.0% $ 17.6 $ 35.7 1 Gas Marketing 17.9 14.8 3.1 20.9% 1 Other and Eliminations (1.0) (18.8) 17.8 n/m $ 323.5 $ 249.3 $ 74.2 2
Slide 9: Expenses
Expenses Third Quarter Ended June 30 Millions Change Change 2017 2016 $ % EnergySouth All Other Operating Expenses Gas Utility Natural & propane gas $ 76.7 $ 54.1 $ 22.6 42% $ 4.3 $ 18.3 Operation & maintenance (O&M) 100.8 91.8 9.0 10% 7.8 1.2 Depreciation & amortization 38.4 34.2 4.2 12% 2.6 1.6 Ta
Slide 10: Year-to-date highlights
Year-to-date highlights Nine Months Ended June 30, Millions Per Diluted Share Net Economic Earnings1 2017 2016 2017 2016 Gas Utility $ 187.3 $ 170.5 $ 4.02 $ 3.91 Gas Marketing 3.7 4.5 0.08 0.10 Other (12.9) (11.8) (0.28) (0.27) $ 178.1 $ 163.2 $ 3.82 $ 3.74 Average Shares Outstanding 46.6 43.5 • Ne
Slide 11: We’re maintaining strong cash flow and financial position
We’re maintaining strong cash YTD EBITDA1 (Millions) flow and financial position • YTD EBITDA1 of $440 million, +11% • Solid LT capitalization2 of 51.3% equity, +150bp from year end $396 $440 ‒ Recent capital raises added equity and decreased LT debt by ~$143 million • Pending $170 million Laclede G
Slide 12: Capital investment remains a top priority
Capital investment Capital expenditures (Millions) remains a top priority • YTD FY17 capital spend up 53% ($104 million) $299 – $75 million increase at the Missouri Utilities and Alagasco driven by $195 • Infrastructure upgrades • New business investment 9 mos. FY16 9 mos. FY17 – EnergySouth added $
Slide 13: We’re moving Missouri’s energy forward
We’re moving Missouri’s energy forward • Filed our first base rate increase request in four years on April 11 ‒ Laclede Gas: net $25.5 million (+4%) ‒ MGE: net $34.0 million (+8%) ‒ Net requests reflect additional $3 million ISRS for both Laclede Gas and MGE, effective June 1 • As proposed, Missouri
Slide 14: New rates allow us to better serve our customers
New rates allow us to better serve our customers • Filed rate base of $2.0 billion ‒ Laclede Gas: $1,232 million (6.4% CAGR) ‒ MGE: $793 million (9.6% CAGR) ‒ Anticipate ~$100 million growth at update • Laclede Gas capital structure and 10.35% ROE ‒ Equity at Dec. 31, 2016 was 57.2% ‒ Anticipate ~54
Slide 15: Our outlook focuses on growth
Our outlook focuses on growth Capital expenditure by jurisdiction (Millions) • We expect FY17 NEE per share to be $510 $485 in the upper half of our $3.50 - $3.60 $445 75 95 $420 $430 25 range given stronger Q3 results 135 130 130 135 135 • Long-term annual NEE per share 130 135 140 140 145 growth t
Slide 16: We’re working to build a better natural gas company
We’re working to build a better natural gas company • Spire is more than a name. It’s a promise. A promise to champion people by delivering energy that inspires. • On Sept. 25, 1.7 million homes and businesses will come to know us as Spire • We’re using our combined strength to create a better exper
Slide 17: Spire stands for the energy we deliver and what that energy makes possible
Spire stands for the energy we deliver and what that energy makes possible. We remain committed to providing safe, reliable energy, but we are now redefining what it means to serve. 17 Spire | Third Quarter FY17 Earnings Conference Call
Slide 18: Appendix
Appendix 18 S p i r e | T h i r d Q u a r t e r F Y 1 7 E a r n i n g s C o n f e r e n c e C a l l
Slide 19: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Gas Gas Per Diluted 2 (Millions, except per share amounts) Utility Marketing Other Total Share Three Months Ended June 30, 2017 Net Income (Loss) (GAAP) $ 23.0 $ 3.7 $ (5.0) $ 21.7 $ 0.45 Adjustments, pre-tax: Unrealized loss (gain) on energy-related d
Slide 20: Contribution margin (non-GAAP) reconciliation
Contribution margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three Months Ended June 30, 2017 Operating income (loss) (GAAP) $ 47.1 $ 5.9 $ (2.7) $ - $ 50.3 Operation and maintenance 101.9 1.5 4.5 (1.3) 106.6 Depreciation and amortization 38.4 0.
Slide 21: EBITDA and adjusted long-term capitalization reconciliation
EBITDA1 (non-GAAP) reconciliation Nine Months Ended June 30, (Millions) 2017 2016 Net Income $ 174.9 $ 158.4 Add back: Interest Charges 66.2 57.7 Income Tax Expense 84.3 77.7 Depreciation & Amortization 114.4 102.0 EBITDA $ 439.8 $ 395.8 Adjusted long-term capitalization reconciliation As of June 30