Slide 1: Year End Fiscal 2016 Earnings Conference Call
Year End Fiscal 2016 Earnings Conference Call November 15, 2016
Slide 2: Participants on today’s call
Participants on today’s call Suzanne Sitherwood Steven P. Rasche Steven L. Lindsey P resid ent and Executive Vice President Executive Vice President Chief Executive Officer and Chief Financial Officer and Chief Operatin g Officer, Distribut ion Operati on s 2 Spire | Year End FY16 Earnings Conferenc
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 delivers
Spire delivers • Another banner year of growth and transformation • Continued growth of our utilities and strategy execution • Became Spire in April to better reflect the company we have become • Spire stands for – How we aspire to serve our communities – Growth we want to achieve – Energy we delive
Slide 5: FY2016 highlights
FY2016 highlights • Earnings per share up 7% in FY16 – Further Gas Utility growth – Strong operational performance • A journey of growth since 2012 – Customers now 1.7 million up from 630,000 – Enterprise value quadrupled to $5.3 billion – Market capitalization tripled • Successful strategy executio
Slide 6: Spire STL Pipeline
Spire STL Pipeline 70-mile pipeline with • Modernizing our gas assets to: capacity of 400 MMcf/d ‒ Achieve more diverse supply portfolio ‒ Improve reliability and resiliency ‒ Access lower-cost shale gas Connects to • Laclede Gas expects to be a Rockies Express foundation shipper with contractual pi
Slide 7: Acquisition of Mobile Gas and Willmut Gas
Acquisition of Mobile Gas and Willmut Gas • Completed on September 12 • Grows our gas utility business – Adds 103,000 customers and growing commercial and industrial load – Provides opportunities for additional capital investment and organic growth • Accretive to net economic earnings per share in F
Slide 8: Missouri legislative and regulatory update
Missouri legislative and regulatory update • Legislative initiatives introduced, centered on regulatory reform • Senate established Interim Study Committee on utility regulation • Committee sessions held late August to discuss alternative ratemaking • MoPSC working session this summer on changes, in
Slide 9: Strong operations
Strong operations • Solid business results supported by strong operational performance • Everything starts with safety – Reduced our employee injury rate – Reduced at-fault vehicle accidents 17% – Record performance in average leak response time, leaks per mile of main and damage prevention rate • C
Slide 10: Infrastructure investment
Infrastructure investment Spire capital expenditures (Millions) $300 • FY16 spend of $293 million, almost all for gas utilities $200 – Up nearly $40 million from FY15 $293 $290 run rate excluding non-recurring spend $100 last year – Increased infrastructure spend in FY16 $0 – Increased new business
Slide 11: Growing and serving our customers
Growing and serving Total utility customers our customers (Millions) 1.8 1.679 • Increased customers for second 1.568 straight year across all of our utilities 1.6 1.553 • Highest customer count in last 5 years 1.4 • Continued momentum in adding and converting commercial and 1.2 1.122 industrial cus
Slide 12: 2016 National Gas Rodeo teams
2016 National Gas Rodeo teams 12 Sp S iprier e| |Y Y e ae ra rE E nnd dF F YY1 61 6E E a ranr n i ni n g sg sC C onon f ef reer ne n c ec eC C a lall l
Slide 13: Net economic earnings
Net economic earnings Years Ended September 30 Millions Per Diluted Share Net Economic Earnings1 2016 2015 2016 2015 Gas Utility $ 160.3 150.4 $ 3.67 $ 3.47 Gas Marketing 6.4 4.2 0.15 0.10 Other (17.6) (16.3) (0.40) (0.38) $ 149.1 138.3 $ 3.42 $ 3.19 • Net economic earnings (NEE) per share of $3.42,
Slide 14: Operating revenues and margin
Operating revenues and margin Years Ended September 30 Millions Change 2016 2015 $ % Operating Revenues Gas Utility $ 1,459.4 $ 1,895.8 $ (436.4) -23.0% Gas Marketing & Other 77.9 80.6 (2.7) -3.3% $ 1,537.3 $ 1,976.4 $ (439.1) -22.2% 1 Operating Margin Gas Utility 844.4 842.1 $ 2.3 0.3% Gas Marketin
Slide 15: Expenses
Expenses Years Ended September 30 Millions Change 2016 2015 $ % Operating Expenses Gas Utility Natural & propane gas $ 492.2 $ 882.4 $ (390.2) -44% Other operation & maintenance 377.5 390.6 (13.1) -3% Depreciation & amortization 136.9 129.9 7.0 5% Taxes, other than income taxes 125.2 142.1 (16.9) -1
Slide 16: Fourth quarter highlights
Fourth quarter highlights Fourth Quarter Ended September 30 Millions Per Diluted Share Net Economic Earnings1 2016 2015 2016 2015 Gas Utility $ (10.2) $ (12.4) $ (0.23) $ (0.29) Gas Marketing 1.9 1.2 0.04 0.03 Other (5.8) (4.9) (0.13) (0.11) $ (14.1) $ (16.1) $ (0.32) $ (0.37) • Q4 loss is typical,
Slide 17: Strong cash flow, capital structure and liquidity
Strong cash flow, capital EBITDA1 structure and liquidity (Millions) $500 • FY16 EBITDA1 of $428 million, $400 up 6% from last year $300 • Significant liquidity with more than $350 million of capacity at YE $200 $405 $428 • Maintained our balanced LT capital $100 structure $0 ‒ LT leverage moved fro
Slide 18: Increasing dividends
Increasing dividends Annualized dividends per share +7.1% Dividend Yield $2.20 +6.5% $2.101 3.4%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 • Annualized dividend increased to $2.10 per share • 7.1% increase based on growing earnings •
Slide 19: 2017 earnings guidance
2017 earnings guidance • 2017 net economic earnings per share Net economic earnings per share (NEEPS) target of $3.50 - $3.60 $4.40 • Key assumptions $4.20 ‒ Reasonably normal weather 4% - 6% ‒ Continued success in our capital spending $4.00 long-term and integration plans growth $3.80 ‒ EnergySouth
Slide 20: Capital expenditures outlook
Capital expenditures outlook • 2017 target increases to $410 million Capital expenditures forecast – $370 million Gas Utility spend, over 70% recoverable in rates with minimal 5-year forecast: $2.0B + regulatory lag (Millions) $485 $440 – Increase from 2016 $400 $410 35 65 95 $400 • Adding Mobile Ga
Slide 21: 2017 regulatory calendar
2017 regulatory calendar • Alagasco and Mobile Gas 2017 RSE update filings ‒ Filed with Alabama PSC on Oct. 26, anticipate rates effective Dec. 1 ‒ Rate filings based on FY17 budgeted revenue, operating expenses and capital spending ‒ Target ROE and capital structures of 10.85% and 56.5% (Alagasco)
Slide 22: The Spire journey continues
The Spire journey continues • Spire continues its growth and transformation • Our focus remains squarely on: – Growing our gas utilities organically and through prudent investment in upgrades – Integrating Mobile Gas and Willmut Gas – Moving forward with Spire STL FPO – IMAGE MAY Pipeline CHANGE – I
Slide 23: 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. 23 S p i r e | Y e a r E n d F Y 1 6 E a r n i n g s C o n f e r e n c e C a l l
Slide 24: Appendix
Appendix 24 S p i r e | Y e a r E n d F Y 1 6 E a r n i n g s C o n f e r e n c e C a l l
Slide 25: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Per Diluted Gas Gas (Millions, except per share amounts) Utility Marketing Other Total Share2 Year Ended September 30, 2016 Net Income (Loss) (GAAP) $ 159.0 $ 7.1 $ (21.9) $ 144.2 $ 3.24 Adjustments, pre-tax: Unrealized (gain) loss on energy-related de
Slide 26: 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 September 30, 2016 Net Income (Loss) (GAAP) $ (10.6) $ 4.3 $ (7.9) $ (14.2) $ (0.31) Adjustments, pre-tax: Unrealized gain on energy-relate
Slide 27: Operating margin (non-GAAP) reconciliation
Operating margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Y ear Ended September 30, 2016 Operating revenues $ 1,459.4 $ 78.5 $ 4.8 $ (5.4) $ 1,537.3 Natural and propane gas expense 539.7 60.7 0.2 (3.0) 597.6 Gross receipts tax expense 75.3 0.1 -
Slide 28: EBITDA and adjusted long-term capitalization reconciliation
EBITDA1 (non-GAAP) reconciliation Years Ended September 30 (Millions) 2016 2015 Net Income $ 144.2 $ 136.9 Add back: Interest Charges 77.2 74.6 Income Tax Expense 69.5 62.2 Depreciation & Amortization 137.5 130.8 EBITDA $ 428.4 $ 404.5 Adjusted long-term capitalization reconciliation As of September