Spire Inc. · NYSE:SR
Spire — Investor Presentation (March 2017)
32 slides from Spire's investor presentation, Mar 22, 2017
Slide 1: We are Spire
We are Spire Investor Presentation March 2017
Slide 2: 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 3: We are Spire
We are Spire • We became Spire in April 2016 to better reflect the growing company we have become • Our transformation has been driven by successful execution of our strategy – Growing our gas utility business – Acquiring and integrating gas utilities – Modernizing our gas assets – Investing in inno
Slide 4: At our core, we are a gas company
At our core, we are a gas company • Focused on enriching our customers lives through the strength of our energy • We operate five gas utilities across Missouri, Alabama and Mississippi serving nearly 1.7 million homes and businesses • Since 2012: – Customers increased by 1.1 million – EV more than q
Slide 5: Recent highlights
Recent highlights For Fiscal 2017 • Raised dividend by 7.1% • Initiated net economic earnings (NEE) guidance of $3.50 - $3.60 per share • Planned capital spend of $410 million; 5-year plan of $2.0+ billion • On track with integrations of Alagasco and EnergySouth • Filed for approval of Spire STL Pip
Slide 6: Growing organically
Growing organically Total utility customers (Millions) 1.8 1.68 • Increasing revenues and margins 1.6 1.55 1.57 – Growing customers and improving retention – Increasing penetration 1.4 – Achieving operating efficiencies • Seizing market opportunities 1.2 1.12 – Pursuing line extensions in Missouri 1
Slide 7: Increasing capital investment
Increasing capital investment Capital expenditures – First quarter (Millions) $100 • Q1 spend up $27 million (43%) $75 – $21 million increase at the Missouri Utilities and Alagasco driven by $50 $89 • Infrastructure upgrades, aided by weather $62 $25 • New business investment – $3 million for Energy
Slide 8: Managing regulatory matters across jurisdictions
SS Managing regulatory matters across jurisdictions • Annual rate filings in Alabama ‒ New rates were effective December 1 ‒ Based on 2017 budget and authorized ROEs (10.8% for Mobile Gas; 10.85% for Alagasco) • ISRS increases for our Missouri Utilities effective January 28 ‒ +$4.5 million for Lacle
Slide 9: Legislative and regulatory initiatives in Missouri
SS Legislative and regulatory initiatives in Missouri • New Republican governor with Republican majority in House and Senate • Governor focused on reforms to strengthen state, improve efficiency • Senate interim committee report recommended legislation be filed to improve utility regulatory process
Slide 10: Progressing with our Spire STL Pipeline project
Progressing with our Spire STL Pipeline project • Diversifying our gas supply portfolio to improve reliability and resiliency ‒ ~70-mile pipeline with capacity of 400 MMcf/d ‒ Connects to Rockies Express pipeline to access lower-cost shale gas • Filed for FERC approval on Jan. 26 • Laclede Gas signe
Slide 11: Delivering services through Spire Marketing
Delivering services through Spire Marketing • Provides wholesale services to a diverse, sophisticated customer base • Operates primarily in central U.S. • Optimizes portfolio of commodity, transportation and storage contracts – Operated on 30 interstate and intrastate pipelines in FY16 – 5.4 Bcf of
Slide 12: Delivering shareholder value
Delivering shareholder value • Driving earnings growth through gas utilities • Maintaining strong cash flow, capital structure and liquidity • Increasing dividends 12 S pire | Investor Present at ion - March 2017
Slide 13: Driving earnings growth
Driving earnings growth • 2016 NEE per share grew by 7.2% • 5-year growth in Gas Utility earnings of 9.7% driven by: – Organic growth initiatives and investment in infrastructure upgrades – Acquisitions and effective integration • Smaller contribution from Gas Marketing reflecting market conditions
Slide 14: Strong cash flow, capital structure and liquidity
Strong cash flow, capital EBITDA1 structure and liquidity (Millions) $150 • Q1 FY17 EBITDA1 of $127 million, +4% • Maintained balanced LT capitalization2 $100 of 50.2% equity, +40bp from year end • Completed new 5-year $975 million $122 $127 $50 Spire revolving credit facility ‒ Provides working cap
Slide 15: Capital market activity
Capital market activity 2017 February March April April-September • Spire issued $150 • Spire redeemed • Issue ~2.5 million1 • Laclede Gas first million 3.543% $250 million shares with gross mortgage bonds to senior notes due floating-rate notes proceeds of fund by 9/15: 2024 (2/22) (3/10) $144 mill
Slide 16: 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 • 2017 annualized dividend $2.10 per share (+7.1%) • 14 years of consecutive increases; 72 yea
Slide 17: 2017 earnings guidance
2017 earnings guidance Net economic earnings per share • FY17 NEE per share target of $4.40 $3.50 - $3.60 $4.20 • Key assumptions 4% - 6% ‒ Earnings mix to remain 96% - 97% $4.00 long-term growth gas utility $3.80 ‒ Execution of our capital spending $3.60 and integration plans $3.60 ‒ Planned capita
Slide 18: At Spire, we stand for what our energy makes possible.
At Spire, we stand for what our energy makes possible. 18 S p i r e | I n v e s t o r P r e s e n t a t i o n - M a r c h 2 0 1 7
Slide 19: S pire | Investor Present at ion - March 2017
19 S pire | Investor Present at ion - March 2017
Slide 20: Appendix
Appendix 20 S p i r e | I n v e s t o r P r e s e n t a t i o n – F e b r u a r y 2 0 1 7
Slide 21: 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 and Senior Vice President, Chief Operating Officer, General Counsel and Distrib
Slide 22: 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 825 1,665 564 2421 Customers 420,500 647,000 508,100 84,500 18,500 Pipeline Miles ~23,000 ~16,000 ~14,000 ~4,300 ~1,200
Slide 23: First Quarter FY17 operating highlights
First Quarter FY17 operating highlights • Net economic earnings1 (NEE) up $2.4 million to $47.5 million • NEE per share $1.04 in both years, reflecting share count up 5% ‒ Gas Utility: NEE $51.8 million up from $50.0 million • Operating margin, up $23.1 million ($19.4 million from EnergySouth), refl
Slide 24: First Quarter FY17 financial summary
First Quarter FY17 financial summary (Millions, except earnings per share) FY17 FY16 Earnings by Segment Gas Utility $ 51.8 $ 50.0 Gas Marketing 1.4 (0.3) Other (5.7) (4.6) Net Economic Earnings (non-GAAP)1 $ 47.5 $ 45.1 Net Economic Earnings Per Share (non-GAAP)1 $ 1.04 $ 1.04 Other Key Metrics EBI
Slide 25: 2017 regulatory calendar
2017 regulatory calendar • Alagasco and Mobile Gas 2017 RSE update filings ‒ Rates effective December 1 ‒ Based on FY17 budgeted revenue, operating expenses and capital spending • Mobile Gas RSE review, effective in FY18 rates • Latest Missouri ISRS filings in process, effective by June 3, 2017 ‒ Re
Slide 26: 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 27: 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 28: 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 29: 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 30: Net economic earnings per share (non-GAAP) reconciliation
Net economic earnings per share (non-GAAP) reconciliation Fiscal Years Ended September 30, 2011 2012 2013 2014 2015 2016 Total Spire Diluted Earnings per Share (GAAP) $ 2.86 $ 2.79 $ 2.02 $ 2.35 $ 3.16 $ 3.24 Adjustments, pre-tax: Unrealized (gain) loss on energy-related derivatives (0.11) (0.02) 0.
Slide 31: 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 32: EBITDA (non-GAAP) reconciliation; 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