Spire Inc. · NYSE:SR
Spire — Laclede Group — CFA Society of St. Louis (December 2008)
43 slides from Spire's conference presentation, Dec 10, 2008
Slide 1: The Laclede Group
The Laclede Group CFA Society of St. Louis December 10, 2008
Slide 2: Forward-looking statements
This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Future operating results may be affected by various uncertainties and risk factors, many of which are beyond the control of The Laclede Group, Inc., including w
Slide 3: Company Overview
Company Overview • Public Utility Holding Company Formed 2001 • Strong Utility Platform • Growth Components Complementary to Core • Demonstrated Strategic Success • S&P Small Cap 600 Company
Slide 4: Strategic Execution
Strategic Execution • Six Consecutive Years of Record Earnings – Acquisition and organic growth • Utility Operations – Strong rate case results – Stability of earnings – Operational improvements • Non-Utility Components – Logical extension of core utility business – Continued growth of Laclede Energ
Slide 5: Accessible Liquidity
Laclede Group Laclede Gas FMB Laclede Gas CP S&P A A A-1 Moody’s A3 P-2 Fitch A- A+ F1 Accessible Liquidity • Strong Credit Ratings • Continued Access to Capital Markets – Utility issued First Mortgage Bonds in September 2008 • Short-Term Liquidity – Commercial Paper remains accessible – Lines of cr
Slide 6: Industry Overview
The Laclede Group Industry Overview
Slide 7: Natural Gas Industry
Natural Gas Industry
Slide 8: Natural Gas Industry
Natural Gas Industry
Slide 9: Natural Gas Industry
Natural Gas Industry Source: American Gas Association • Natural gas meets almost one-fourth of U.S. energy needs • 98 percent of U.S. natural gas supply is produced in North America • Cleanest burning fossil fuel – Significant component in current and future green initiatives
Slide 10: Natural Gas Industry
Natural Gas Industry Source: American Gas Association • AGA’s recommendations to optimize natural gas’ role in president-elect Obama’s environmental and economic goals: – Develop policies that ensure more natural gas is used directly in America’s homes and businesses – Increase access to domestic su
Slide 11: Laclede Gas
M\Lactede Gas
Slide 12: Years of Service
150 Years of Service • Established as The Laclede Gas Light Company in 1857 • Original Dow Jones index company • Largest LDC in Missouri
Slide 13: Our System & Strengths
Our System & Strengths • 630,000 Customers (83% Market Saturation) • Over 16,000 Miles of Pipe • Diversified Gas Supply • Significant Storage Capacity – Market area: 5 Bcf natural gas, 3 Bcfe liquid propane – Upstream system: 23 Bcf
Slide 14: Upstream Pipeline Transportation Network
Upstream Pipeline Transportation Network
Slide 15: Hedging Program
Hedging Program • Minimizes Gas Price Volatility – Hedging only • Covers Up to 70 Percent of Normal Purchases • Disciplined Approach – Price and time driven hedging components – NYMEX futures and options • Gains, Losses, and Expenses Included in PGA
Slide 16: Regulation
Regulation • Missouri Public Service Commission • Constructive Outcomes – August 2007: $38.6 MM increase in non-gas revenues – Enhanced Rate Design – Infrastructure System Replacement Surcharge (ISRS) – Reduced reliance on off-system sales – Enhanced Gas Supply Incentive Program (GSIP)
Slide 17: Enhanced Rate Design
Enhanced Rate Design • Traditional Rate Design – Lower monthly customer charge – Recovery through volumetric rate – Exposure to weather and customer conservation • Laclede Design (Effective November 2002) – Margin recovery through first rate block • Enhanced Laclede Design (Effective August 2007) –
Slide 18: ISRS
ISRS • Infrastructure System Replacement Surcharge (ISRS) • Enacted in 2003 • Allows Recovery Between Rate Cases of Facility- Related Expenditures – Compliance with state and federal safety requirements • Recovers Depreciation, Property Taxes, and Rate of Return • Reset After Each Rate Case – $1.6 M
Slide 19: Advocacy
Advocacy • Missouri Energy Development Association – Missouri investor-owned natural gas, electric, and water utilities • Advocates measures to support utility infrastructure and services to benefit Missouri citizens and businesses – Current Chairman: Douglas H. Yaeger – Legislative achievements • I
Slide 20: Operational and Customer Focus
Operational and Customer Focus
Slide 21: Laclede Energy Resources
Laclede
Slide 22: Laclede Energy Resources
Laclede Energy Resources • Non-regulated Natural Gas Marketer – Large retail and wholesale customer base – Organically grown – Flexible pricing alternatives – Risk management utilizing financial markets • Lock in margins – Experienced Management
Slide 23: Laclede Energy Resources
Laclede Energy Resources • Strong Performance During 2008 – Record earnings exceed fiscal 2006 performance – 15% increase in sales volumes – Volumes delivered similar to Laclede Gas Company (123 Bcf vs. 108 Bcf) • Growth in Overall Portfolio – Additional transportation capacity and gas supplies – In
Slide 24: Current LER Footprint
75% of Business Activity 99% of Business Activity Current LER Footprint
Slide 25: Drivers of Growth
Drivers of Growth • Pipeline Expansion Projects – New marketing opportunities • Storage Expansion • New Gas Supply Basins – Shale plays • Producer Services • Additional Markets – Power generation – Ethanol business growing in the Midwest – LDCs
Slide 26: Canadian Gas / Shale plays
Canadian Gas Reduction Fayetteville Shale| Haynesville Shale Te Laclede Group
Slide 27: Laclede Energy Resources
daclede TEREAGY RESOURCES
Slide 28: Laclede Pipeline Company
iG Laclede Pipeline Company
Slide 29: Laclede Pipeline Company
Laclede Pipeline Company • Uniquely Situated LPG Pipeline – Market crossroads location – Only U.S. interstate LPG pipeline with LDC customer
Slide 30: LPG Pipeline Assets
LPG Pipeline Assets • March 2006: LPC Filed an Application with FERC – Provides common carrier LPG transportation in interstate commerce – Allows propane and butane shipments by third parties – Preserves historic role re: Laclede Gas Company peaking needs • LPC’s FERC Tariff Effective April 1, 2006
Slide 31: SM&P Utility Resources
iG SM&P Utility Resources
Slide 32: SM&P Utility Resources
SM&P Utility Resources • Underground Locating and Marking Company - Acquired in January 2002 – Grew business – Developed technological competencies – Built on industry leadership to provide high-quality services • Divested March 31, 2008 – Sale price: $85 million • Purchase price: $43 million – Now
Slide 33: Financial Review
The Laclede Group Financial Review
Slide 34: Liquidity and Financial Capacity
Liquidity and Financial Capacity • Shelf Registration – Laclede Group: Automatic shelf (pay as you go) • Well-known seasoned issuer – Laclede Gas: $270.0 MM remaining • Financing Authority – MPSC: $372.4 MM remaining
Slide 35: Liquidity and Financial Capacity
Liquidity and Financial Capacity • Standing Lines of Credit – Laclede Group: $ 50.0 MM – Laclede Gas: $320.0 MM • Expiration extended one year to December 2011 • Seasonal Lines of Credit – Laclede Gas: $ 75.0 MM, 11/2008-3/2009 • New Bond Issue – $80 MM of 6.35%, callable after 5 years, 30-year Firs
Slide 36: Segment Earnings 2001, 2004, 2008
a 8 é 2001 Segment 2004 Segment 2008 Segment Earnings Earnings Earnings (Continuing Operations) $30.4 $36.1 $57.5 2% 1% 8% 1% 1% DLaclede Gas Msme&p GLeR Bother The Laclede Group
Slide 37: Diluted EPS
Diluted EPS (Cont. $1.76 $1.03 Diluted EPS $1 be ss $1.90 $90.0 $80.0 $70.0 4 $60.0 $50.0 2004 2005 2006 2007 2008 @ Continuing Operations @ Discontinued Operations Note: The Laclede Group issued 1.725 million common shares in May 2004. me Laclede Group
Slide 38: Earnings and Dividends Per Share
Earnings and Dividends Per Share
Slide 39: Stock price high, low, average
$60 $50 $40 $30 $20 $10 @ High MLow © Average * t t f t é . . tof " t t t t t t t 2001 2002 2003 2004 2005 2006 2007 Nov-08 Te Laclede Group
Slide 40: Return
Return • Since Laclede Group was formed (October 1, 2001)* – Laclede Group CAGR: 15.9% – S&P 500 Index CAGR: -0.5% • Current Economy (Beginning July 1, 2008)* – Laclede Group: 24.5% gain – S&P 500 Index: 30.8% loss
Slide 41: Summary
Summary
Slide 42: Key Takeaways
Key Takeaways • Strong Core Gas Distribution Business – Stable earnings platform – Ongoing customer service initiatives – Focus on internal improvements • Synergistic Growth Components – LER and Laclede Pipeline expansion opportunities – Asset-based opportunities complementary to core • Focus on Sha
Slide 43: Q&A
The Laclede Group Q&A Reliable Return, Rational Growth, Strong Dividends
Laclede Group — CFA Society of St. Louis (December 2008) on 6ix