Slide 1: Investor Presentation September 2016
Investor Presentation September 2016
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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: We are Spire
We are Spire • Spire reflects the growing company we have become • Our natural gas companies will transition to Spire in 2017 • We are about: ‒ Championing people by delivering energy that inspires ‒ Bringing people and energy together • Our transformational journey has been guided by a well-articul
Slide 5: We are a gas company at our core
We are a gas company at our core • Five gas utilities across three states • Largest gas company in Missouri and Alabama • Focus on safe and reliable service, community development and growth 5 S pire | Investor Present at ion - S ept emb e r 2016
Slide 6: Successfully executing on our growth strategy
Successfully executing on our growth strategy Growing our gas Acquiring and Modernizing Investing in utility business integrating gas our gas assets innovation utilities Investing in prudent Added 1.1 million Positioned Gas newBLUE IT infrastructure customers Marketing for modernization upgrades con
Slide 7: Growing our gas utility business
Growing our gas utility business 7 S pire | Investor Present at ion - S ept emb e r 2016
Slide 8: Growing organically
Growing organically • Increasing revenues and margins – Growing customers and improving retention – Increasing penetration – Achieving operating efficiencies • Seizing market opportunities – Building commercial/industrial load – Line extensions in Missouri service areas – Developing other products a
Slide 9: Capital investment
Capital investment (Millions) $250 • YTD spend reflects run rate growth $200 after removing nonrecurring facility and ITS projects in 2015 $150 • FY16 target of $310 million with over $100 $202.9 $195.3 73% recoverable in rates with $50 minimal regulatory lag $0 • With increase effective May 31, ISR
Slide 10: Legislative and regulatory overview
Legislative and regulatory overview • Missouri – traditional rate-setting approach, with pipeline replacement rider ‒ Laclede Gas and MGE due to file rate cases in April 2017 ‒ Missouri regulatory reform being studied by a Senate interim committee and MoPSC working session ‒ Office of Pubic Counsel
Slide 11: Acquiring and integrating gas utilities
Acquiring and integrating gas utilities 11 S pire | Investor Present at ion - S ept emb e r 2016
Slide 12: Acquisition of Mobile Gas and Willmut Gas
Acquisition of Mobile Gas and Willmut Gas • Grows our gas utility business – Adds 104,000 customers and growing commercial and industrial load – Provides opportunities for additional capital investment and organic growth • Closed on September 12 ‒ Transaction value of $344 million including assumpti
Slide 13: Modernizing our gas assets
Modernizing our gas assets 13 S pire | Investor Present at ion - S ept emb e r 2016
Slide 14: Spire STL Pipeline
Spire STL Pipeline • Helps modernize our gas assets to: 70-mile pipeline with ‒ Achieve more diverse supply portfolio capacity of 400 MMcf/d ‒ Improve reliability and resiliency ‒ Access lower-cost shale gas • FERC-regulated pipeline; will be Connects to Rockies 100% owned by Spire Express pipeline
Slide 15: Gas Marketing
Gas Marketing • Provides wholesale natural gas services to diverse, sophisticated customer base • Operates primarily in the Midwest • Leverages market expertise and risk management protocols and skills • Optimizes portfolio of commodity, transportation and storage contracts – Operated on 17 intersta
Slide 16: Investing in innovation
Investing in innovation 16 S pire | Investor Present at ion - S ept emb e r 2016
Slide 17: Natural gas fueling solutions
Natural gas fueling solutions • Focused on customer-led strategy – End-to-end solutions for return to base fleets – Large market for Class 8 tractor trailers – Design, construct, own, and operate public stations with anchor customer contracts • Developing market and customer relationships via Mainst
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Slide 19: Delivering shareholder value
Delivering shareholder value 19 S pire | Investor Present at ion - S ept emb e r 2016
Slide 20: Earnings growth driven by gas utilities
Earnings growth driven by gas utilities • 5-year growth in Gas Utility earnings of 14% driven by: – Organic growth initiatives and investment in infrastructure upgrades – Acquisitions and effective integration • Smaller contribution from Gas Marketing reflecting market conditions Net economic earnin
Slide 21: Strong cash flow, capital structure and liquidity
Strong cash flow, capital EBITDA1 structure and liquidity (Millions) $400 • Year-to-date FY16 EBITDA1 of $396 million, up 4% from last year $300 • Significant liquidity with more than $200 $381.0 $395.8 $650 million of capacity $100 • LT capitalization ~52% equity $0 9 Mos. FY15 9 Mos. FY16 ‒ Reflec
Slide 22: Strong dividend track record
Strong dividend track record Dividend Yield 2.9%2 Annualized dividends per share +6.5% $2.00 $1.961 +4.5% +3.5% +2.5% $1.84 $1.80 $1.76 $1.70 $1.66 $1.62 $1.60 $1.40 2011 2012 2013 2014 2015 2016 • Increase accelerated to 6.5% in 2016 based on our growing earnings • 13 years of consecutive increases
Slide 23: Outlook for growth
Outlook for growth • We expect FY16 NEE per share to be in upper end of our target range of $3.34 - $3.441 • Long-term annual NEE per share growth target remains 4% - 6% • Mobile Gas and Willmut Gas to add to NEE per share in FY18 • Spire STL Pipeline targeted for 2019 in-service date, with contribu
Slide 24: Energy exists to help people
Energy exists to help people. To enrich their lives, grow their businesses, advance their communities. It’s a simple idea, but one that’s at the heart of our business. 24 S pire | Investor Present at ion - S ept emb e r 2016
Slide 25: Appendix
Appendix 25 S pire | Investor Present at ion - S ept emb e r 2016
Slide 26: Spire leadership team
Spire leadership team A. Suzanne Sitherwood B. Steven P. Rasche President and Executive Vice President, Chief Executive Officer Chief Financial Officer A B C. Steven L. Lindsey D. Mark C. Darrell Executive Vice President Senior Vice President, and Chief Operating Officer, General Counsel and Distrib
Slide 27: Our utility portfolio
Our utility portfolio Alagasco Laclede Gas MGE Mobile Gas Willmut Gas Founded 1852 1857 1867 1836 1933 Primary Office Birmingham St. Louis Kansas City Mobile Hattiesburg Employees 909 1,614 555 219 45 Customers 420,000 647,000 501,000 85,000 19,000 Pipeline Miles ~23,000 ~16,000 ~14,000 ~4,300 ~1,20
Slide 28: Year-to-date FY16 operating results
Year-to-date FY16 operating results • Net economic earnings1 (NEE) up $8.8 million to $163.2 million • NEE per share $3.74 up from $3.56 last year ‒ Gas Utility: NEE $170.5 million up from $162.8 million • Warm winter adversely impacted operating margins and benefitted certain other operating costs
Slide 29: Nine months FY16 financial summary
Nine months FY16 financial summary FY16 FY15 Earnings by Segment Gas Utility $ 170.5 $ 162.8 Gas Marketing 4.5 3.0 Other (11.8) (11.4) Net Economic Earnings (non-GAAP)1 $ 163.2 $ 154.4 Net Economic Earnings Per Share (non-GAAP)1 $ 3.74 $ 3.56 Other Key Metrics EBITDA2 $ 395.8 $ 381.0 Cash Flow from
Slide 30: Missouri regulatory summary
Missouri regulatory summary • 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 mechanisms to address purchased gas costs, pension
Slide 31: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA1 • Progressive approach using forward year budget: • Rate Stabilization and Equalization (RSE) ‒ Annual rate-setting process with quarterly reviews for potential rate reductions ‒ Rates set based on retained shareholders’ equity
Slide 32: Mississippi regulatory summary
Mississippi regulatory summary • Highly rated regulatory jurisdiction by RRA • Rate Stabilization Adjustment (RSA) ‒ Filing by September 15th with rates effective November 1st (June 30th test year) ‒ Provides for annual rate performance reviews rather than periodic rate cases Formulaic approach to
Slide 33: Equity units summary
Equity units summary • 2,875,000 equity units issued June 2014; net proceeds of $139 million ‒ $50 face value per unit consisting of: 3-year equity forward contract A 1/20 interest in $1,000, 8-year junior subordinated note ‒ 6.75% cash coupon: 2.00% interest on notes, 4.75% contract payment • E
Slide 34: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Fiscal Years Ended September 30, 2010 2011 2012 2013 2014 2015 Net Economic Earnings Per Share Excluding Propane Sale (Non-GAAP) $ 2.36 $ 2.52 $ 2.79 $ 2.87 $ 3.05 $ 3.19 Add: Sale of Excess Propane Inventories1 0.16 0.27 - - - - Net Economic Earnings
Slide 35: 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 Nine Months Ended June 30, 2016 Net Income (Loss) (GAAP) $ 169.6 $ 2.8 $ (14.0) $ 158.4 $ 3.60 Adjustments, pre-tax: Unrealized (gain) loss on energy-related
Slide 36: EBITDA and adjusted long-term capitalization reconciliation
EBITDA1 (non-GAAP) reconciliation Nine Months Ended June 30 (Millions) FY16 FY15 Net Income $ 158.4 $ 155.6 Add back: Interest Charges 57.7 56.1 Income Tax Expense 77.7 71.9 Depreciation & Amortization 102.0 97.4 EBITDA $ 395.8 $ 381.0 Adjusted long-term capitalization (non-GAAP) reconciliation As o