Spire Inc. · NYSE:SR
Spire — AGA Financial Forum 2019
48 slides from Spire's conference presentation, May 21, 2019
Slide 1: We are energy in motion
We are energy in motion AGA Financial Forum May 21-23, 2019
Slide 2: We believe in a world where energy enriches people's lives. We are Spire.
We believe in a world where energy enriches people’s lives. We are Spire. 2 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 3: Our energy is in motion
Our energy is in motion Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Our strategic priorities • Growing organically • Investing in infrastructure • Acquiring and integrating • Innovation and technology 3 Spire | AGA Financial F
Slide 4: We've expanded to serve more customers and markets
We’ve expanded to serve more customers and markets • We’re the fifth largest publicly traded natural gas company serving 1.7 million homes and businesses across Alabama, Mississippi and Missouri • We are developing and growing our gas-related businesses – Spire Marketing – Spire STL Pipeline – Spire
Slide 5: We're a growing, financially strong company
We’re a growing, financially strong company • Driving 5-year capital investments of $2.8B focused on infrastructure upgrades Delivering • Growing organically across our utility and gas-related businesses growth • Targeting 4 - 7% annual long-term earnings per share growth • Strong and growing cash f
Slide 6: We continue to drive growth in our gas utilities
We continue to drive growth in our gas utilities. 6 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 7: Growing organically
Growing organically New premise activations 12,000 10,937 11,159 11,544 9,498 8,167 8,141 • Enhancing our approach to new 8,000 business and economic development • Increasing spend on new business 4,000 – Growing new premise activations – Expanding into new service areas 0 2014 2015 2016 2017 2018 2
Slide 8: Increasing our capital investment
Increasing our capital Capital expenditures (Millions) investment $740 $750 • FY19 capex target increased to $740M 250 $499 – Higher utility spend of $490M $500 43 95 63 – Includes $82M for utility new business • 5-year capex target increased to $2.8B $250 393 395 (thru 2023) from $2.6B (thru 2022)
Slide 9: Inspiring innovation through technology
Inspiring innovation through technology • Completing our companywide information technology modernization • Leveraging technology and robust databases for – New business development – Targeting growth opportunities – Improving workload planning • Providing customers better ways to connect with Spire
Slide 10: Improving operating performance
Improving operating performance Investment in infrastructure upgrades, technology and our people are driving improved safety, system integrity and service. Reducing employee injuries Improving pipeline safety OSHA DART1 rate Damage rate per 1,000 locates 3.66 3.65 4.84 4.76 4.78 3.22 4.24 3.92 2.63
Slide 11: Progressing on regulatory initiatives
Progressing on regulatory initiatives Renewal • Reauthorizes Pipeline and Hazardous Material Safety Administration (PHMSA) of Pipeline • Focus on safety standards and mandates for system integrity Safety Act • Congress will address later this year • Working with Governor and state leaders to drive e
Slide 12: We continue to develop our gas-related businesses to drive earnings growth
We continue to develop our gas-related businesses to drive earnings growth. 12 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 13: Growing Spire Marketing
Growing Spire Marketing • Building a strong team in Houston • Logistics-based business supported by strong risk management • Delivers gas on 35+ pipelines • Expanding geographically and increasing customers and volumes • Strong first half FY19 performance, with NEE of $0.28 per share • Utilities acc
Slide 14: Building Spire STL Pipeline
Building Spire STL Pipeline • The 65-mile pipeline will bring new gas supply to the St. Louis region • Construction well underway and proceeding on plan – Completed major river crossings – Installing pipe (70%+ complete1), metering stations and ancillary equipment • Targeting in-service by end of FY
Slide 15: Developing Spire Storage
Developing Spire Storage • Integrating our facilities and finalizing the development plan to: – Seize expanded opportunities to serve variety of customers (utilities, power generators and producers) – Increase injection/withdrawal capabilities – Expand working gas capacity – Improve overall performa
Slide 16: We're executing on our growth strategy to further deliver financial strength and performance
We’re executing on our growth strategy to further deliver financial strength and performance. 16 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 17: Delivering solid first half performance
Delivering solid first half Capital expenditures (Millions) performance $400 $377 • First half capital spend of $377M, up $161M 122 $300 – $136M for pipeline upgrades $216 50 – $53M for utility new business, up 23% $200 30 18 – $46M for Spire STL Pipeline, up $17M – $74M for Spire Storage, incl. bas
Slide 18: Maintaining our strong financial position
1 Maintaining our strong Adjusted EBITDA (Millions) financial position $450 $413 • Year-to-date FY19 EBITDA1 $413M, $400 $370 up 12% $350 • Ample liquidity from credit facility $300 and commercial paper program $250 • Solid long-term equity capitalization2 $200 51.6%, up 180 basis points from a 1H F
Slide 19: Confirming our outlook
Confirming our outlook Capital expenditures (Millions) 5-year forecast: $2.8B $740 • Expect 4 - 7% long-term annual $535 $520 NEEPS growth1 250 50 $520 30 $515 10 10 95 90 90 100 100 – Growth from all businesses – Supported by $2.8B capex plan 395 395 400 405 410 – Earnings mix predominately regulat
Slide 20: We're evolving as a business and we continue to build on how we serve, grow and lead
We’re evolving as a business and we continue to build on how we serve, grow and lead in our communities. 20 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 21: We believe the greatest energy in the world comes from one source—people
We believe the greatest energy in the world comes from one source—people We built our Corporate Social Responsibility (CSR) strategy around four key areas, and now—for the first time ever— we’re reporting on how we impacted: Our people Our communities Our environment Our leadership 21 S pire | AGA F
Slide 22: Introducing Spire's very first CSR Report
Introducing Spire’s very first CSR Report In our CSR Report, you’ll see how we’ve used our energy for good, influencing each of our targeted areas in FY18—the first full year of our CSR efforts. We’re committed to driving positive and significant change in the communities we serve. Learn more at CSR
Slide 23: At Spire, we're always in motion, using our energy to get the job done
At Spire, we’re always in motion, using our energy to get the job done today while exploring new and innovative ideas for tomorrow. 23 S p i r e | A G A F i n a n c i a l F o r u m | M a y 2 1 - 2 3 , 2 0 1 9
Slide 24: Supplemental material
Supplemental material • Spire leadership • Additional gas utility information • Other financial information 24 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 25: 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 26: Spire executive leadership team
Spire executive leadership team B Suzanne Steve Steve Mark Mike Sitherwood Lindsey Rasche Darrell Geiselhart President and Chief Executive Vice President, Executive Vice President, Senior Vice President, Senior Vice President, Executive Officer Chief Executive Officer, Chief Financial Officer Genera
Slide 27: Spire business unit presidents
Spire business unit presidents Scott Carter Joe Hampton Scott Jaskowiak Pat Strange President, Spire Missouri President, Spire Alabama President, Spire STL Pipeline President, Spire Marketing and Mississippi and Spire Storage 27 S p i r e | A G A F i n a n c i a l F o r u m | M a y 2 1 - 2 3 , 2 0 1
Slide 28: Additional gas utility information
Additional gas utility information 28 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 29: Our Spire gas utility portfolio
Our Spire gas utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 861 123 33 2,321 Customers1 420,600 83,900 18,500 1,169,900 Pipeline miles ~23,000 ~4,300 ~1,200 ~30,000 Rate base (Millions) $5092 $922 $243 $2,2174 Return on equity 1
Slide 30: Upgrading our infrastructure over the next 15-18 years
Upgrading our infrastructure over the next 15-18 years Estimated replacement miles remaining As of 12/31/18 Total Total Vintage replacement system 1 Steel Cast iron plastic miles miles Missouri 1,740 720 2,460 30,000 Alabama 540 570 280 1,390 27,300 Total 2,280 1,290 280 3,850 57,300 % of total 59
Slide 31: Gaining regulatory certainty
Gaining regulatory certainty • Missouri rate cases completed in March 2018 – Increased return (ROE) and higher equity capitalization – Secured weather normalization that mitigates margin exposure • Alabama rate-setting parameters (RSE) updated – ROEs and CCM reset; capital structures harmonized – Ga
Slide 32: 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 33: Missouri regulatory and legislative update
Missouri regulatory and legislative update • Restructuring of agencies to facilitate economic and workforce development • Received $8M ISRS increase in MO effective Oct. 18 • Additional $13.2M ISRS effective May 3 – Reduced by $4.2M for plastic materials deemed ISRS ineligible since last rate case –
Slide 34: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA • Progressive approach using forward year budget • Rate Stabilization and Equalization (RSE) – Annual rate-setting process with quarterly reviews Spire Alabama for potential rate reductions – Rates set based on retained shareholde
Slide 35: 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 36: Other financial information
Other financial information 36 Spire | AGA Financial Forum | May 21 -23, 2019
Slide 37: Affirming our earnings guidance
Affirming our earnings guidance • FY19 NEEPS range of $3.70 - $3.80 • Long-term NEEPS growth target of 4 - 7% – Base is run-rate FY18 NEEPS – Removes 17¢ of Spire Marketing NEEPS driven by market conditions not expected to recur Net economic earnings per share 1 1Run-rate adjustment is an estimate o
Slide 38: Financing our growth
Financing our growth $250M perpetual preferred offering $150M At-the-Market program • Closed May 21, 2019 (NYSE: SR.PRA) • Announced in February • Issued 10M shares of $25 par • Launched May 16, 2019 depository shares – Three-year authorization • 5.90% coupon – Proceeds used to finance capital • Cal
Slide 39: Growing the dividend
Growing the dividend Annualized dividends per share Dividend Yield 3.0%2 1 Dividend payout ratio Dividends per share Dividend payout ratio • Board declared quarterly dividend of $0.5925, payable July 2 • 16 consecutive years of increases; 74 years of continuous payment • Dividend growth (5.3% in 201
Slide 40: Controlling expenses
Controlling expenses Second quarter ended March 31, 2019 2018 Change vs Pro forma As As Rate case Benefit Pro forma 1 (Millions) reported reported & TCJA reclass run rate $ % Operating Expenses Gas Utility Natural & propane gas $ 337.4 $ 383.7 $ $ $ 383.7 $ (46.3) -12% Operation and mainte
Slide 41: Missouri rate cases – 2018 impacts
Missouri rate cases – 2018 impacts • New rates went into effect on April 19, 2018 – Reflect ~$70 million in cost savings from our transformative growth – Authorized 9.8% ROE, utility long-term capital structure and $2.0B rate base Impact (Millions) Customer rates Earnings Base rate increase $66.2 $6
Slide 42: Missouri rate cases – 2018 impacts
Missouri rate cases – 2018 impacts Quarter ended March 31, Six months ended March 31, (Millions) 2019 2018 2019 2018 GAAP expense (benefit) before ADIT amortization 1 $ 35.5 $ 18.9 $ 52.3 $ (14.2) Amortization of excess ADIT (2.1) (4.2) GAAP income tax expense (benefit) $ 33.4 $ 18.9 $ 48.1 $ (14.
Slide 43: Net economic earnings [non-GAAP] reconciliation
Net economic earnings [non-GAAP] reconciliation Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total share Three months ended March 31, 2019 Net Income (Loss) [GAAP] $ 146.7 $ 12.9 $ (5.0) $ 154.6 $ 3.04 Adjustments, pre-tax: Unrealized gain on energy-related deri
Slide 44: Net economic earnings [non-GAAP] reconciliation
Net economic earnings [non-GAAP] reconciliation Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total share Six months ended March 31, 2019 Net Income (Loss) [GAAP] $ 213.1 $ 22.9 $ (14.1) $ 221.9 $ 4.36 Adjustments, pre-tax: Unrealized gain on energy-related deriv
Slide 45: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended March 31, 2019 Operating income (loss) [GAAP] $ 196.3 $ 16.8 $ (3.6) $ $ 209.5 Operation and maintenance 112.0 2.7 6.5 (2.9) 118.3 Depreciation and amortization
Slide 46: Contribution margin [non-GAAP] reconciliation
Contribution margin [non-GAAP] reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Six months ended March 31, 2019 Operating income (loss) [GAAP] $ 291.9 $ 29.3 $ (6.6) $ $ 314.6 Operation and maintenance 216.9 5.3 13.9 (5.6) 230.5 Depreciation and amortization 8
Slide 47: Adjusted EBITDA [non-GAAP] reconciliation; Long-term capitalization reconciliation
Adjusted EBITDA [non-GAAP] reconciliation Six months ended March 31, (Millions) 2019 2018 Net Income $ 221.9 $ 214.2 Add back: Interest charges 53.5 49.8 Regulatory asset write-offs !! 38.4 Income tax expense (benefit) 48.1 (14.2) Depreciation & amortization 89.1 81.9 Adjusted EBITDA $ 412.6 $ 370.
Slide 48: Spire | AGA Financial Forum | May 21-23, 2019
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