Slide 1: Energy that advances: Year-end fiscal 2020 update
Energy that advances Year-end fiscal 2020 update November 18, 2020
Slide 2: Participants on today's call
Participants on today’s call Suzanne Sitherwood Steven L. Lindsey Steven P. Rasche President and Executive Vice President Executive Vice President Chief Executive Officer and Chief Operating Officer and Chief Financial Officer 2 Spire | Year-end fiscal 2020 update
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: Delivering on our commitments
Delivering on our commitments • Executing on strategic priorities to drive growth and sustainability – Infrastructure upgrades – Organic growth – Innovation and technology • Serving customers with safe and reliable energy in midst of coronavirus • Gaining regulatory clarity in Missouri • Driving imp
Slide 5: Advancing our strong ESG performance
Advancing our strong ESG performance • Building on our Social and Methane emission reduction (from 2005 levels) Governance track record • Continuing to deliver on 26% environmental sustainability 39% 53% – Lowering methane emissions 72% • Achieved 39% reduction since 2005 • Targeting 53% reduction b
Slide 6: Investing in growth
Investing in growth FY20 capital expenditures (Millions) $53 • FY20 capex of $638M reflects $37 – $548M gas utility investment • $311M for infrastructure upgrades • $97M for new business – 5th year $548 in a row of increased spend • 7% new meter growth in FY20 – Spire STL Pipeline placed into servic
Slide 7: Delivering strong operating results
Delivering strong operating results Improving safety, system integrity and sustainability Employee safety Damages (OSHA – Days Away, Restricted or Transferred rate) (Per 1,000 locates) 3.65 4.76 4.78 3.22 4.24 3.87 3.89 2.63 1.88 1.56 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Leaks Leak resp
Slide 8: Missouri regulatory clarity
Missouri regulatory clarity • Legislation enacted during 2020 (Millions) ISRS revenues clarifies ISRS eligibility Effective • All appeals of prior ISRS cases decided Filed date date Annualized FY20 – No impact on collections going forward June 2018 10/08/18 $ 8.0 $ 8.0 – One-time $15M refund in Aug.
Slide 9: Our next Missouri rate case
Our next Missouri rate case • Expect to file by calendar 2020 year-end • Filing case now is right approach given rate base growth and other developments – Invested $850M+ in infrastructure upgrades – Implementing new customer programs and options (including RNG) – Improved customer service through t
Slide 10: Looking back at 2020
Looking back at 2020 Per diluted Millions common share Twelve months ended September 30, 2020 2019 2020 2019 Net Income [GAAP] $ 88.6 $ 184.6 $ 1.44 $ 3.52 Impairments 148.6 ― 2.89 ― Provision for ISRS rulings ― 12.2 ― 0.23 All other adjustments1 (29.4) (1.7) (0.57) (0.02) Net Economic Earnings (NEE
Slide 11: Looking back at 2020
Looking back at 2020 Millions Twelve months ended September 30, 2020 2019 Gas Utility $ 213.4 $ 199.8 Gas Marketing 9.1 19.4 Other (14.7) (24.1) Net Economic Earnings (NEE)1 $ 207.8 $ 195.1 • Gas Marketing: –$10.3M – Less favorable current market conditions – Added costs of storage to take advantage
Slide 12: Key variances
Key variances Twelve months ended Sept. 30, As reported Pension (Millions) 2020 2019 Variance adjustment Variance Natural gas $ 696.1 $ 840.3 $ (144.2) $ (144.2) Operations and Maintenance Gas Utility 421.3 441.7 (20.4) $ 9.1 (11.3) Spire Marketing 11.8 11.7 0.1 0.1 All Other 25.5 20.7 4.8 4.8 Total
Slide 13: Coronavirus
Coronavirus (Millions) FY20 Lost fees ($2.3) Margins 0.4 Bad debt expense (4.8) Other direct costs, net 0.3 ($6.4) Missouri AAO deferral 3.8 Impact of Alabama RSE 1.9 Net coronavirus impact ($0.7) • Coronavirus impact includes – Lost late payment fees (MO) from late March through mid-June – Higher b
Slide 14: Stepping forward
Stepping forward Capital expenditures (Millions) 5-year forecast: ~$3.0B • 5-7%1 LT annual NEEPS growth target $625 $610 $600 • FY21 NEEPS guidance of $4.00-$4.20 $590 $580 $590 • $3.0B capex plan through 2025 – Focused on infrastructure upgrade program extending over the next 15 years and 560 570 5
Slide 15: Growing the dividend
Growing the dividend Annualized common stock dividend per share Dividend yield 4.3%2 $2.70 $2.60 1 80% $2.49 $2.50 $2.37 $2.30 $2.25 Dividend payout ratio Dividend Dividend per share 70% payout ratio $2.10 $2.10 $1.96 $1.90 60% $1.70 $1.50 $1.30 50% 2016 2017 2018 2019 2020 2021 • Annualized common
Slide 16: 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 18 consecutive including 7-8% annual years environmental rate base sustainability growth Attractive yield of 4.3%1 1Based on $2.60 per share div
Slide 17: Energy keeps our world turning, moving us all forward.
Energy keeps our world turning, moving us all forward. As an essential energy provider, we’ll keep stepping forward, advancing, innovating and remaining focused on creating a better tomorrow. 17 Spire | Year-end fiscal 2020 update
Slide 18: Appendix
Appendix 18 Spire | Year-end fiscal 2020 update
Slide 19: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi Missouri Primary office Birmingham Mobile Hattiesburg St. Louis Employees1 947 123 34 2,424 Customers1 424,800 84,400 18,400 1,186,500 Pipeline miles ~24,300 ~4,300 ~1,200 ~31,100 Rate base (Millions) $5882 $1082 $373 $2,7144 Return on equity 10.4
Slide 20: Q4 net economic earnings
Q4 net economic earnings Per diluted Millions common share Fourth quarter ended September 30, 2020 2019 2020 2019 Net Loss [GAAP] $ (19.7) $ (34.3) $ (0.45) $ (0.74) Provision for ISRS rulings ― 12.2 ― 0.23 NEE adjustments1 4.4 (1.6) 0.08 (0.03) Net Economic Earnings (NEE)2 $ (15.3) $ (23.7) $ (0.37
Slide 21: Maintaining strong financial position
Maintaining strong financial position Adjusted EBITDA (Millions) 1 • Maintain significant liquidity in $600 $552 $517 revolver and CP program, with $500 ~$475M available at Sept. 30 $400 • Robust and growing EBITDA $300 $200 • FY20 raised $41M in gross proceeds $100 under equity ATM and DRIP program
Slide 22: Net economic earnings reconciliation to GAAP
Net economic earnings reconciliation to GAAP Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Total common share2 Three months ended September 30, 2020 Net Loss [GAAP] $ (8.4) $ (6.6) $ (4.7) $ (19.7) $ (0.45) Adjustments, pre-tax: Fair value and timing adjustments (0
Slide 23: Net economic earnings reconciliation to GAAP
Net economic earnings reconciliation to GAAP Gas Gas Per diluted 2 (Millions, except per share amounts) Utility Marketing Other Total common share Year ended September 30, 2020 Net Income (Loss) [GAAP] $ 213.6 $ 7.0 $ (132.0) $ 88.6 $ 1.44 Adjustments, pre-tax: Impairment losses ― ― 148.6 148.6 2.89
Slide 24: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three months ended September 30, 2020 Operating Income (Loss) [GAAP] $ 4.7 $ (8.9) $ 4.3 $ ― $ 0.1 Operation and maintenance 101.4 2.9 10.2 (3.1) 111.4 Depreciation and amortization 48.5 0
Slide 25: Contribution margin reconciliation to GAAP
Contribution margin reconciliation to GAAP Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Year ended September 30, 2020 Operating Income (Loss) [GAAP] $ 334.3 $ 9.3 $ (137.2) $ ― $ 206.4 Operation and maintenance 421.3 11.8 38.2 (12.7) 458.6 Depreciation and amortization 189.7
Slide 26: Adjusted EBITDA and adjusted long-term capitalization reconciliation to GAAP
Spire Inc. adjusted EBITDA1 reconciliation to GAAP Year ended September 30, (Millions) 2020 2019 Net Income [GAAP] $ 88.6 $ 184.6 Add back: Impairments 148.6 ― Provision for ISRS rulings ― 12.2 Interest charges 105.5 104.4 Income tax expense 12.4 34.5 Depreciation and amortization 197.3 181.7 Adjust