Spire Inc. · NYSE:SR
Spire — Investor Presentation (December 2021)
43 slides from Spire's investor presentation, December 2021
Slide 1: Stepping forward
Stepping forward Investor Presentation December 2021
Slide 2: 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 19 consecutive including 7-8% annual years environmental rate base sustainability growth Attractive yield of 4.3%1 1Based on $2.74 per share div
Slide 3: Stepping forward
Stepping forward • Rising above challenges to deliver solid operating and financial results – Narrower Q4 loss, higher FY21 earnings – Improved safety, system integrity and sustainability performance • Working to ensure Spire STL Pipeline continues to serve customers – FERC issued new temporary cert
Slide 4: Ensuring Spire STL Pipeline continues to serve customers
Ensuring Spire STL Pipeline continues to serve customers • FERC issued new temporary operating certificate Dec. 3 without conditions – Supersedes 90-day certificate that was set to expire in mid-December – Continues operation through the winter and until conclusion of remand proceedings • Temporary
Slide 5: Spire Missouri rate order
Spire Missouri rate order • We’re concerned about the impact of the Amended order issued order and the rate-setting process used, given Nov. 12, 2021: – Our strong operations and service to customers • Revenues: $72M increase – We’ve consistently applied long-standing rate- (incl. $47M of current IS
Slide 6: Spire Missouri rate order – Impacts
Spire Missouri rate order – Impacts • Capital structure – MoPSC abandoned long-standing precedent of excluding short-term debt through a balanced examination of short-term assets and liabilities during the test year, and – Penalized Spire Missouri for its excess gas costs incurred during Winter Stor
Slide 7: Spire Missouri rate order – next steps
Spire Missouri rate order – next steps • Assisting Staff to expedite audit of Spire MO’s compliance with their revised interpretation of acceptable overhead capitalization methods under USOA – Goal is to have resolution by the end of Q1 calendar 2022 – Will seek clarification of any overheads that a
Slide 8: Alabama and Mississippi regulatory update
Alabama and Mississippi regulatory update • Alabama utilities’ annual rate-setting under RSE – Spire Alabama rates based on allowed ROE range of 10.15% – 10.65% (10.4% midpoint) – Spire Gulf rates based on 9.95% ROE – New rates effective December 2021 • Spire Mississippi annual rate-setting pending
Slide 9: Strong financial position
Strong financial position Adjusted EBITDA1 (Millions) • Growing adjusted EBITDA1 $700 • Balanced long-term capitalization $600 $651 • Ample liquidity heading into winter $500 • Improved credit metrics at 9/30/21 $400 $552 − FFO/debt4: 15.4% $300 • Up from 14.3% last year $200 FY20 FY21 • Target rema
Slide 10: Driving resilience, safety, system integrity and sustainability
Driving resilience, safety, system integrity and sustainability Employee safety Damages (OSHA – Days Away, Restricted or Transferred rate) (Per 1,000 locates) 4.78 3.22 4.24 3.89 3.87 3.74 2.63 1.88 1.56 1.51 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Leaks Methane emission reduction (Per 1,0
Slide 11: Investing in growth
Investing in growth Capital expenditures (Millions) • FY21 capex totaled $625M $638 $625 – Driven by gas utility investment • $307M – pipeline infrastructure upgrades • $138M – new business, up $41M YoY, 548 591 6th year in a row of increased spend – Increased investment in technology and innovation
Slide 12: Guidance
Guidance • We remain confident in our long-term growth prospects $4.18 – 5-year capex plan of $3.1B, driving 7-8% rate base growth $4.00 (0.30) – Long-term 5-7% NEEPS growth target – FY22 will be a reset year • FY22 targeted NEEPS of $3.70-$4.00, reflecting (0.20) - $3.70 (0.35) – Pro forma capital
Slide 13: Guidance
Guidance Financing forecast1 • Financing plan reflects (Millions) – Benefit of FY21 earnings and significant improvement in credit metrics $400 – Offset by headwinds over next ~12 mos. $300-400 $300-400 as we work through MO rate order $100-150 $175 $50-100 $25-75 $25-75 – Spire MO issued $300M in 3
Slide 14: 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. 14 Spire | Investor presentation – December 2021
Slide 15: 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 16: Supplemental material
Supplemental material • Spire leadership • Our business and operating footprint • Financial performance • Our gas-related businesses • Other financial information 16 Spire | Investor presentation – December 2021
Slide 17: Spire executive leadership team
Spire executive leadership team B Suzanne Steve Steve Mark Mike Sitherwood Lindsey Rasche Darrell Geiselhart President and Executive Vice President, Executive Vice President, Senior Vice President, Senior Vice President, Chief Executive Officer Chief Operating Officer Chief Financial Officer Chief L
Slide 18: Spire business unit presidents
Spire business unit presidents Scott Carter Joe Hampton Scott Smith Pat Strange President, Spire Missouri President, Spire Alabama President, Spire STL Pipeline President, Spire Marketing and Mississippi and Spire Storage 18 Spire | Investor presentation – December 2021
Slide 19: We're a growing, financially strong natural gas company
We’re a growing, financially strong natural gas company • 5th largest publicly traded natural gas company serving 1.7 million homes and businesses across Alabama, Mississippi and Missouri • Executing on our value- creation strategy – Growing organically – Investing in infrastructure – Advancing thro
Slide 20: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 993 127 41 2,489 Customers1 428,400 84,300 18,400 1,194,781 Pipeline miles ~24,100 ~4,300 ~1,200 ~31,100 Rate base (Millions) $6342 $1172 $443 $2,8994 Return on equity 10.4
Slide 21: The case for natural gas
The case for natural gas 110+ Abundant and domestic years The U.S. has 3,374 Tcf of The U.S. natural gas Direct use of natural gas is a future natural gas supply, transmission and distribution more efficient energy: 91% vs more than 110 years worth system (2.6M miles of 36% for generation from under
Slide 22: Our commitment to Corporate Social Responsibility (CSR)
Our commitment to Corporate Social Responsibility (CSR) Environment Communities People Leadership • Ongoing investment in • Supporting our • Inspiring future • Experienced manage- pipeline upgrades and communities through leaders via training, ment with deep bench system integrity financial contribu
Slide 23: Progressing on our environmental commitment
Progressing on our environmental commitment • Committed to being a carbon neutral company by midcentury – 85% of goal reached via pipeline upgrades – RNG and other offsets being evaluated for the remainder – Achieved 43% reduction in methane emissions in 2020, up from 39% in 2019 • Joined ONE Future
Slide 24: Advancing natural gas and sustainability
Advancing natural gas and sustainability • Energy Choice laws now passed in AL, MS and MO – Ensures customers have right to choose their energy source – Effectively prohibits local authorities from adopting natural gas ban • Missouri RNG legislation (HB 734) signed into law – Allows Spire Missouri t
Slide 25: Upgrading our infrastructure and reducing methane
Upgrading our infrastructure and reducing methane Estimated replacement miles remaining As of 12/31/20 Vintage Total Bare steel1 Cast iron1 plastic replacement miles Missouri 1,5852 553 2,138 Alabama 503 424 271 1,198 Mississippi 438 438 Total 2,526 977 271 3,774 % of total 67% 26% 7% 100% 1Completi
Slide 26: Advancing through innovation
Advancing through innovation • Building on legacy of continually improving service, efficiency and cost • Formalized approach to innovation with structure, processes and dedicated Innovation Center • Driving innovation through technology upgrades and adoption • Implementing advanced metering technol
Slide 27: 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 28: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA • Rate Stabilization and Equalization (RSE) annual rate-setting process – RSE parameters evaluated 3-4 four years • Spire Alabama RSE reset – Oct. 1, 2022 • Spire Gulf RSE reset – Oct. 1, 2021 Spire Alabama – Rates set based on fo
Slide 29: 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 30: Our gas-related businesses
Our gas-related businesses 30 Spire | Investor presentation – December 2021
Slide 31: Spire Marketing
Spire Marketing • Provides logistical services Spire Marketing’s operational reach – Wholesale services to utilities, producers, power generation, storage and pipelines – Focused on physical delivery of gas – Allows for optimizing commodity, transportation and storage portfolio – Strong and experien
Slide 32: Spire STL Pipeline
Spire STL Pipeline • Strong performance since start of commercial operation in Nov. 2019 • 65-mile pipeline provides new natural gas supply to St. Louis – Capacity of 400 MMcf/day (with 350 MMcf/day for Spire Missouri) – Enhances diversity, reliability and resiliency of our supply • Key resource in
Slide 33: Spire Storage
Spire Storage • We’re committed to serving customers through ongoing development and operation of the facility • Revised development plan in FY20 to allow additional time to – Optimize and position facility to serve evolving markets in western U.S. – Gain commercial validation through FERC 7(c) fili
Slide 34: Other financial information
Other financial information 34 Spire | Investor presentation – December 2021
Slide 35: Q4 FY21 net economic earnings
Q4 FY21 net economic earnings Per diluted Millions common share Three months ended September 30, 2021 2020 2021 2020 Net Loss [GAAP] $ (9.9) $ (19.7) $ (0.26) $ (0.45) All adjustments1 (3.2) 4.4 (0.06) 0.08 Net Economic Loss (NEE) $ (13.1) $ (15.3) $ (0.32) $ (0.37) Gas Utility $ (17.8) $ (8.4) Gas
Slide 36: Key quarterly variances
Key quarterly variances (Millions) As reported MO Gas Gas Net Three months ended September 30, 2021 2020 Utility Marketing variance Contribution Margin Gas Utility $ 195.8 $ 168.1 $ 25.3 $ ― $ 2.4 Gas Marketing 19.1 (5.6) 17.8 6.9 Other and eliminations 14.0 13.4 0.6 $ 228.9 $ 175.9 $ 25.3 $ 17.8 $
Slide 37: FY21 net economic earnings
FY21 net economic earnings Per diluted Millions common share Twelve months ended September 30, 2021 2020 2021 2020 Net Income [GAAP] $ 271.7 $ 88.6 $ 4.96 $ 1.44 Impairments ― 148.6 ― 2.89 All other adjustments1 (5.4) (29.4) (0.10) (0.57) Net Economic Earnings (NEE)2 $ 266.3 $ 207.8 $ 4.86 $ 3.76 Ga
Slide 38: FY21 contribution margin
FY21 contribution margin Millions Change Twelve months ended September 30, 2021 2020 $ % Operating Revenues $ 2,235.5 $ 1,855.4 $ 380.1 21% 1 Contribution Margin Gas Utility $ 1,063.7 $ 1,000.7 $ 63.0 6% Gas Marketing 77.6 22.4 55.2 246% Other and eliminations 53.9 44.7 9.2 21% $ 1,195.2 $ 1,067.8 $
Slide 39: Q4 FY21 NEE reconciliation to GAAP
Q4 FY21 NEE reconciliation to GAAP Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total common share Three months ended September 30, 2021 Net (Loss) Income [GAAP] $ (17.8) $ 11.3 $ (3.4) $ (9.9) $ (0.26) Adjustments, pre-tax: Fair value and timing adjustments ― (
Slide 40: FY21 NEE reconciliation to GAAP
FY21 NEE reconciliation to GAAP Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total common share Twelve months ended September 30, 2021 Net Income (Loss) [GAAP] $ 237.2 $ 44.8 $ (10.3) $ 271.7 $ 4.96 Adjustments, pre-tax: Missouri regulatory adjustments (9.0) ― ―
Slide 41: Q4 FY21 contribution margin reconciliation to GAAP
Q4 FY21 contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended September 30, 2021 Operating Income [GAAP] $ 7.6 $ 15.3 $ 3.8 $ ⎯ $ 26.7 Operation and maintenance 112.0 3.5 11.3 (3.6) 123.2 Depreciation and amortization 55.4
Slide 42: FY21 contribution margin reconciliation to GAAP
FY21 contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Twelve months ended September 30, 2021 Operating Income [GAAP] $ 374.0 $ 58.5 $ 17.7 $ ⎯ $ 450.2 Operation and maintenance 422.2 17.1 40.2 (13.7) 465.8 Depreciation and amortization 2
Slide 43: Adjusted EBITDA reconciliation to GAAP; Long-term capitalization
Adjusted EBITDA1 reconciliation to GAAP Twelve months ended September 30, (Millions) 2021 2020 Net Income [GAAP] $ 271.7 $ 88.6 Add back: Impairments — 148.6 Missouri regulatory adjustment (9.0) — Interest charges 106.6 105.5 Income tax expense 68.5 12.4 Depreciation and amortization 213.1 197.3 Adj