Spire Inc. · NYSE:SR
Spire — Q1 2021 Earnings Presentation
22 slides from Spire's earnings presentation, Feb 4, 2021
Slide 1: Stepping forward
Stepping forward First quarter fiscal 2021 update February 4, 2021
Slide 2: Participants on today's call
Participants on today’s call Suzanne Sitherwood Steven L. Lindsey Steven P. Rasche President and Executive Vice President Executive Vice President Chief Executive Officer and Chief Operating Officer and Chief Financial Officer 2 Spire | First quarter fiscal 2021 update
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: Stepping forward
Stepping forward • We’re off to a solid start to FY21 – Higher Q1 earnings – Strong operating performance • Executing on our strategic priorities to drive growth and support environmental sustainability • Building on our ESG performance record – Supporting our commitment to carbon neutrality – Joine
Slide 5: Advancing and innovating for a better tomorrow
Advancing and innovating for a better tomorrow • As an essential energy provider, it’s our privilege and responsibility to deliver affordable, reliable and clean energy, while working to create a sustainable energy future • So, we’ll keep stepping forward, advancing and innovating for a better tomor
Slide 6: Investing in growth
Investing in growth Capital expenditures (Millions) $250 • Q1 FY21 capital spend of $164M $200 $192 – Gas utility capex of $150M $164 40 • $85M for pipeline replacement $150 14 • $38M for new business $100 – Lower spend for Spire STL Pipeline 152 150 (placed in service Q1 FY20) $50 • On track for fu
Slide 7: Further strengthening operating performance
Further strengthening operating performance • Overall improving trends Methane emission reduction (from 2005 levels) – Reduced employee injuries – Improved pipeline safety 26% – Strengthened system integrity 39% 53% – Enhanced field service 72% – Greater sustainability (reduced methane emissions) •
Slide 8: Moving forward with our Missouri rate review
Moving forward with our Missouri rate review • Seeks recovery of costs and $850M+ in capital investment since 2018 – Making our system safer, more reliable and cleaner for our customers and communities – Implementing service enhancements customers want – Proposing new programs and options for our cu
Slide 9: Alabama and Mississippi regulatory update
Alabama and Mississippi regulatory update • Alabama utilities’ annual rate-setting completed under RSE – Spire Alabama rates based on 10.5% ROE (incl. 10 bp adder for AIM) – Spire Gulf rates based on 10.7% ROE – New rates effective Dec. 1, 2020 • Spire Mississippi annual rate-setting completed – Bas
Slide 10: Growing net economic earnings
Growing net economic earnings Per diluted Millions common share Three months ended December 31, 2020 2019 2020 2019 Net Income [GAAP] $ 88.9 $ 67.0 $ 1.65 $ 1.24 Provision for ISRS rulings ― 2.6 ― 0.05 All other adjustments1 (12.0) 2.2 (0.23) 0.04 Net Economic Earnings (NEE)2 $ 76.9 $ 71.8 $ 1.42 $
Slide 11: Increasing contribution margins
Increasing contribution margins Millions Quarter ended December 31, 2020 2019 Change Operating Revenues $ 512.6 $ 566.9 $ (54.3) -10% Contribution Margin1 Gas Utility $ 272.2 $ 264.6 $ 7.6 3% Gas Marketing 24.1 7.8 16.3 209% Other and eliminations 13.4 8.0 5.4 67% $ 309.7 $ 280.4 $ 29.3 10% • Gas Ut
Slide 12: Key variances
Key variances Three months ended December 31, As reported Pension (Millions) 2020 2019 Variance adjustment Variance Operation and Maintenance Gas Utility $ 103.0 $ 108.6 $ (5.6) $ 0.9 $ (4.7) Gas Marketing 3.3 3.1 0.2 0.2 Other 5.3 4.9 0.4 0.4 Total $ 111.6 $ 116.6 $ (5.0) $ 0.9 $ (4.1) Other Income
Slide 13: Maintaining strong financial position
Maintaining strong financial 1 Adjusted EBITDA position (Millions) $188 • Robust and growing EBITDA $200 $158 • Balanced long-term capitalization • Spire Alabama issued $150M of senior notes on Dec. 15, 2020 • Significant liquidity in revolver and CP program, with ~$430M available $0 at Dec. 31, 202
Slide 14: Growing our dividend
Growing our dividend Annualized common stock dividend per share Dividend yield 4.1%2 $2.70 $2.60 1 80% $2.49 $2.50 $2.37 $2.30 $2.25 Dividend payout ratio Dividend Dividend per share 70% payout ratio $2.10 $2.10 $1.96 $1.90 60% $1.70 $1.50 $1.30 50% 2016 2017 2018 2019 2020 2021 • Annualized common
Slide 15: Driving future growth
Driving future growth Capital expenditures (Millions) 5-year forecast: ~$3.0B • 5-7%1 LT annual NEEPS growth target $625 $610 $600 • FY21 NEEPS guidance of $4.00-$4.20 $590 $580 $590 • $3.0B capex plan through 2025 – Focused on infrastructure upgrade program extending over the next 15 years and 560
Slide 16: Spire is a compelling investment
Spire is a compelling investment 90%+ regulated Robust 5-year 5-7% long-term Growing Strong ESG business mix capex plan EPS growth dividend for performance 18 consecutive including 7-8% annual years environmental rate base sustainability growth Attractive yield of 4.1%1 1Based on $2.60 per share div
Slide 17: Energy keeps our world turning, moving us forward.
Energy keeps our world turning, moving us forward. As an essential energy provider, we’ll keep stepping forward, advancing and innovating for a better tomorrow. 17 Spire | First quarter fiscal 2021 update
Slide 18: Appendix
Appendix 18 Spire | First quarter fiscal 2021 update
Slide 19: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 947 123 34 2,424 Customers1 424,800 84,400 18,400 1,186,500 Pipeline miles ~24,300 ~4,300 ~1,200 ~31,100 Rate base (Millions) $5882 $1082 $383 $2,7804 Return on equity 10.4
Slide 20: Net economic earnings reconciliation to GAAP
Net economic earnings reconciliation to GAAP Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Total common share2 Three months ended December 31, 2020 Net Income (Loss) [GAAP] $ 76.5 $ 15.2 $ (2.8) $ 88.9 $ 1.65 Adjustments, pre-tax: Fair value and timing adjustments
Slide 21: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended December 31, 2020 Operating Income [GAAP] $ 106.8 $ 20.3 $ 5.8 $ ― $ 132.9 Operation and maintenance 103.0 3.3 8.6 (3.3) 111.6 Depreciation and amortization 48.6 0.3 1.9
Slide 22: Adjusted EBITDA reconciliation to GAAP
Adjusted EBITDA1 reconciliation to GAAP Three months ended December 31, (Millions) 2020 2019 Net Income [GAAP] $ 88.9 $ 67.0 Add back: Provision for ISRS rulings - 2.6 Interest charges 25.7 26.2 Income tax expense 22.6 14.3 Depreciation and amortization 50.8 47.5 Adjusted EBITDA [non-GAAP] $ 188.0 $