Slide 1: First Quarter FY2017 Earnings Conference Call
First Quarter FY2017 Earnings Conference Call February 1, 2017
Slide 2: Participants on today's call
Participants on today’s call Suzanne Sitherwood Steven P. Rasche Steven L. Lindsey Presid ent and Executive Vice President Executive Vice President Chief Execut ive Officer and Chief Financial Officer and Chief Operatin g Officer, Distribut ion Operati on s 2 Spire | First Quarter FY17 Earnings Conf
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: Spire continues to deliver
Spire continues to deliver • Off to a good start in FY17, building on momentum and strong performance in FY16 ‒ Solid financial results in first quarter in warmer than normal weather across our footprint ‒ Further improvement in operating performance • We continued to execute on our plans and do wha
Slide 5: FY17 year-to-date highlights
FY17 year-to-date highlights • Net economic earnings (NEE) increased 5.3%, with both Gas Utility and Gas Marketing up • Q1 NEE per share equal to last year on higher share count • LER transitioned to Spire Marketing in December; working toward gas utilities’ transition in late summer • Integrations
Slide 6: Increasing dividends
Increasing dividends Annualized dividends per share +7.1% Dividend Yield $2.20 +6.5% $2.101 3.2%2 $2.00 +4.5% $1.96 +2.4% +3.5% $1.84 $1.80 $1.76 $1.70 $1.66 $1.60 $1.40 $1.20 2012 2013 2014 2015 2016 2017 • Board declared quarterly dividend of 52.5 cents per share, payable April 4 • Annualized divi
Slide 7: Progressing with our Spire STL Pipeline project
Progressing with our Spire STL Pipeline project ~70-mile pipeline with • Modernizing our gas assets to achieve capacity of 400 MMcf/d more diverse supply portfolio and improve reliability and resiliency • Filed for FERC approval on Jan. 26 Connects to Rockies • Laclede Gas signed precedent Express p
Slide 8: Managing regulatory matters across jurisdictions
SS Managing regulatory matters across jurisdictions • Completed RSE filings in Alabama ‒ New rates were effective December 1 for Alagasco and Mobile Gas ‒ Based on 2017 budget and authorized ROE • Latest ISRS increases for our Missouri Utilities effective Jan. 28 ‒ +$4.5 million for Laclede Gas ‒ +$
Slide 9: Legislative and regulatory initiatives in Missouri
SS Legislative and regulatory initiatives in Missouri • Newly elected Republican governor and Republican majorities in both Missouri House and Senate • Governor’s policy changes focus on reforms to strengthen state and improve government effectiveness • Senate interim committee report recommended le
Slide 10: Net economic earnings
Net economic earnings First Quarter Ended December 31 Millions Per Diluted Share 1 Net Economic Earnings 2016 2015 2016 2015 Gas Utility $ 51.8 $ 50.0 $ 1.13 $ 1.15 Gas Marketing 1.4 (0.3) 0.03 - Other (5.7) (4.6) (0.12) (0.11) $ 47.5 $ 45.1 $ 1.04 $ 1.04 Average Shares Outstanding2 45.7 43.4 • Net
Slide 11: Operating revenues and margin
Operating revenues and margin First Quarter Ended December 31 Gas Utility Millions Change Change 2016 2015 $ % EnergySouth All Other Operating Revenues Gas Utility $ 476.7 $ 399.5 $ 77.2 19.3% $ 26.5 $ 50.7 Gas Marketing & Other 18.4 (0.1) 18.5 $ 495.1 $ 399.4 $ 95.7 24.0% 1 Operating Margin Gas Uti
Slide 12: Expenses
Expenses First Quarter Ended December 31 Gas Utility Millions Change Change 2016 2015 $ % EnergySouth All Other Operating Expenses Gas Utility Natural & propane gas $ 193.8 $ 148.5 $ 45.3 31% $ 6.4 $ 38.9 Other operation & maintenance 99.4 91.6 7.8 9% 8.8 (1.0) Depreciation & amortization 37.7 33.5
Slide 13: Strong cash flow, capital structure and liquidity
Strong cash flow, capital EBITDA1 structure and liquidity (Millions) $150 • Q1 FY17 EBITDA1 of $127 million, +4% from last year $100 • Maintained balanced LT capitalization2 of 50.2% equity, +40bp from year end $50 $122 $127 • Completed new 5-year $975 million Spire revolving credit facility $0 ‒ Ba
Slide 14: Capital expenditures
Capital expenditures Capital expenditures – First quarter (Millions) $100 • Q1 capital spend up $27 million (43%) $75 – $21 million increase at the Missouri $50 Utilities and Alagasco driven by $89 • Infrastructure upgrades $62 $25 • New business investment • Mild weather $0 Q1 FY16 Q1FY17 – $3 mill
Slide 15: Earnings guidance
Earnings guidance • Long-term annual NEE per share growth Net economic earnings per share target remains 4% - 6% $4.40 • 2017 NEEPS target remains $3.50 - $3.60 $4.20 • Actively evaluating tax reform plans 4% - 6% ‒ Trump plan: 15% rate, election linking $4.00 long-term growth expensing of capex and
Slide 16: Our momentum continues
Our momentum continues • Growing while transitioning our businesses to Spire • Executing according to our proven formula for acquiring, integrating and organically growing gas utilities • Progressing on Spire STL Pipeline project to benefit customers and grow regulated earnings FPO – IMAGE MAY CHANG
Slide 17: Spire stands for the energy we deliver
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 | First Quarter FY17 Earnings Conference Call
Slide 18: Appendix
Appendix 18 S p i r e | F i r s t 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: 2017 regulatory calendar
2017 regulatory calendar • Alagasco and Mobile Gas 2017 RSE update filings ‒ New rates effective Dec. 1 ‒ Rate filings based on FY17 budgeted revenue, operating expenses and capital spending ‒ Target ROE and capital structures of 10.85%1 and 56.5% (Alagasco), 10.80% and 56.0% (Mobile Gas) • Mobile G
Slide 20: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Gas Gas Per Diluted (Millions, except per share amounts) Utility Marketing Other Total Share2 Three Months Ended December 31, 2016 Net Income (Loss) (GAAP) $ 51.7 $ (0.8) $ (5.7) $ 45.2 $ 0.99 Adjustments, pre-tax: Unrealized loss on energy-related der
Slide 21: Operating margin (non-GAAP) reconciliation
Operating margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three Months Ended December 31, 2016 Operating revenues $ 476.7 $ 21.7 $ 1.8 $ (5.1) $ 495.1 Natural and propane gas expense 214.5 21.5 - (3.9) 232.1 Gross receipts tax expense 19.0 - - -
Slide 22: EBITDA and adjusted long-term capitalization reconciliation
EBITDA1 (non-GAAP) reconciliation First Quarter Ended December 31 (Millions) 2016 2015 Net Income $ 45.2 $ 46.9 Add back: Interest Charges 22.1 19.0 Income Tax Expense 22.3 22.5 Depreciation & Amortization 37.8 33.7 EBITDA $ 127.4 $ 122.1 Adjusted long-term capitalization reconciliation As of Decemb