Slide 1: Energy in motion
Energy in motion Investor presentation December 2018
Slide 2: Spire | Investor presentation
2 Spire | Investor p Pr e s e n t a t i o n | D e c e m b e r 2 0 1 8
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: Putting our energy in motion
Putting our energy in motion Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Transforming our company 1. Growing organically 2. Investing in infrastructure 3. Acquiring and integrating 4. Innovation and technology 4 Spire | Invest
Slide 5: We're expanding to serve more customers and markets
We’re expanding to serve more customers and markets • We’ve transformed our company by increasing our geographic footprint • Our gas companies now serve 1.7 million homes and businesses across Alabama, Mississippi and Missouri • We are advancing our gas-related businesses – Spire Marketing – Spire S
Slide 6: Moving forward confidently
Moving forward confidently • Gaining regulatory certainty through recent resets in Missouri and Alabama • Executing on our organic growth and capital investment plans • Advancing our gas-related businesses • Strengthening our financial position • Delivering solid FY18 net economic earnings per share
Slide 7: 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 • Received approval for $8 million ISRS increase in Missouri • Alabama rate-setting parameters (RSE) upd
Slide 8: Growing organically
Growing organically Contribution margin – Gas Utility (Millions) • Targeting programs to increase 1,000 $939 $948 utility customers and margins 900 $844 • Increased homes and businesses 800 we served in FY18 700 – New business capex to $85M (+44%) – Installed record 11,000+ new meters 600 2016 2017
Slide 9: Investing for long-term growth
Investing for Capital expenditures forecast long-term growth (Millions) 5-year forecast: $2.6B $650 • 5-year capital investment forecast 175 $499 $495 $505 increased to $2.6B 43 $485 15 15 15 70 63 75 65 70 • Driven by higher utility spend – Supported by infrastructure upgrade programs with lives up
Slide 10: Building Spire STL Pipeline
Building Spire STL Pipeline • Received FERC Notice to Proceed on November 5 • Completed project construction schedule • Targeting in-service date in second half of calendar 2019 • Ready to mobilize for construction once land acquisition is completed • Total project investment targeted at $210 - $225
Slide 11: Growing Spire Marketing
Growing Spire Marketing • Solid business model supported by Spire Marketing’s operational reach strong risk management protocols – Provides gas marketing and related services to diverse customer base – Physically delivers gas on 20+ pipelines – Optimizes portfolio of commodity, transportation and st
Slide 12: Investing in storage
Investing in storage • Building Spire Storage – Integrating two adjacent natural gas storage facilities we acquired – Upgrading operational capabilities and expanding service offerings • Marketing to a broad range of customers: – Utilities – Power generators – Pipelines – Producers – Marketers • $56
Slide 13: Strengthening our financial position
Strengthening our FY18 adjusted EBITDA 1 financial position (Millions) $500 $493 1 • FY18 adjusted EBITDA of $493M $482 • Stronger long-term capitalization – Equity improved 350bp from last year – Near-term equity needs covered by May 2018 offering $400 • Ample liquidity from $975M facility FY17 FY1
Slide 14: Driving long-term earnings growth
Driving long-term earnings growth • Long-term NEEPS growth target of 4% - 7% – Reflects ~6% annual utility rate base growth and regulatory certainty – Growing contribution from all businesses • Base is run-rate FY18 NEEPS, which removes 17¢ of Spire Marketing earnings driven by market conditions tha
Slide 15: 2019 NEEPS guidance
2019 NEEPS guidance • Initiating 2019 NEEPS guidance of $3.70 - $3.80 – Gas Utility growth driven by organic initiatives and infrastructure upgrades more than offsetting full-year impact of rate resets in Missouri (~3¢) and Alabama (~11¢) – Increasing contributions from gas-related businesses as we
Slide 16: Raising our dividend by 5.3%
Raising our dividend by 5.3% Dividend Yield Annualized dividends per share 3.2%2 $2.50 70% 1 $2.37 $2.30 $2.25 65% Dividend payout ratio Dividends per share $2.10 $2.10 $1.96 60% $1.90 $1.84 $1.76 $1.70 55% $1.70 $1.66 $1.50 50% 2012 2013 2014 2015 2016 2017 2018 2019 • Annualized dividend increased
Slide 17: At Spire, we're always in motion
At Spire, we’re always in motion, using our energy to get the job done today while exploring new and innovative ideas for tomorrow. 17 Spire | Investor presentation | December 2018
Slide 18: Appendix
Appendix 18 Spire | Investor presentation | December 2018
Slide 19: 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, Chief Operating Officer of General Counsel and Distribu
Slide 20: Our Spire utility portfolio
Our Spire utility portfolio Alabama Gulf Mississippi MO East MO West Founded 1852 1836 1933 1857 1867 Primary office Birmingham Mobile Hattiesburg St. Louis Kansas City Employees 861 1561 1,721 600 Customers 420,600 83,900 18,500 653,600 516,300 Pipeline miles ~23,000 ~4,300 ~1,200 ~16,000 ~14,000 R
Slide 21: Pipeline replacement program
Pipeline replacement program Robust infrastructure replacement programs with lives up to ~20 years Estimated replacement miles As of 12/31/17 Vintage Est. years to 1 Steel Cast iron plastic Total completion Missouri 1,750 800 - 2,550 16-18 Alabama 550 650 250 1,450 18-20 Total 2,300 1,450 250 4,000
Slide 22: 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 23: Missouri regulatory and legislative update
Missouri regulatory and legislative update • State regulatory framework improved in 2018 with passage of electric and water utility legislation • As a result of our recently completed rate cases, we now have – Regulatory certainty in key areas, including ROE and capital structure – Full residential
Slide 24: 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 for potential rate reductions – Rates set based on retained shareholders’ equity • S
Slide 25: 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 26: We delivered solid FY18 performance
We delivered solid FY18 performance Twelve months ended September 30, (Millions, except earnings per share) 2018 2017 Earnings by Segment Gas Utility $ 183.1 181.5 Gas Marketing 22.9 6.8 Other (22.3) (20.7) Net Economic Earnings (non-GAAP)1 $ 183.7 $ 167.6 Net Economic Earnings Per Share (non-GAAP)1
Slide 27: FY18 earnings growth
FY18 earnings growth • Net economic earnings1 (NEE) $183.7M, up $16.1M or 10% • NEE per share $3.72 (+$0.16 or 4.5%), reflecting 4.9% share increase • Gas Utility: NEE $183.1M – Contribution margin2 +$8.5M • Higher demand due to the return of normal weather • Higher MO ISRS and modest customer growt
Slide 28: Missouri rate cases
Missouri rate cases • New rates went into effect on April 19 – Reflect ~$70 million in cost savings from our transformative growth – Authorized 9.8% ROE, utility LT capital structure and $2.0B rate base Impact (Millions) Customer rates Earnings Base rate increase $66.2 $66.2 Rate reduction for tax b
Slide 29: Tax Cuts and Jobs Act
Tax Cuts and Jobs Act • We lowered customer rates for all utilities as a result of tax reform • 1H financial results include impacts based on the available guidance, including – Lowering our effective tax expense by $14.4 million, reflecting lower federal income taxes, net of amounts reflected in lo
Slide 30: Income tax expense
Income tax expense Year ended September 30, Quarter ended September 30, (Millions) 2018 2017 2018 2017 1 GAAP expense (benefit) before ADIT amortization $ (23.0) $ 77.6 $ (14.5) $ (6.7) Amortization of excess ADIT (3.5) (3.5) GAAP income tax expense (benefit) $ (26.5) $ 77.6 $ (18.0) $ (6.7) Benefit
Slide 31: Net economic earnings per share (non-GAAP) reconciliation
Net economic earnings per share (non-GAAP) reconciliation Fiscal year ended September 30, 2012 2013 2014 2015 2016 2017 2018 Total Spire Diluted Earnings Per Share (GAAP) $2.79 $2.02 $2.35 $3.16 $3.24 $3.43 $4.33 Adjustments, pre-tax: Missouri regulatory adjustments — — — — — — 0.62 Unrealized (gain
Slide 32: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Gas Gas Per diluted (Millions, except per share amounts) Utility Marketing Other Consolidated share2 Year ended September 30, 2018 Net Income (GAAP) $ 144.4 $ 24.9 $ 44.9 $ 214.2 $ 4.33 Adjustments, pre-tax: Missouri regulatory adjustments 30.6 — — 30.
Slide 33: Contribution margin (non-GAAP) reconciliation
Contribution margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Year ended September 30, 2018 Operating Income (Loss) (GAAP) $ 262.2 $ 33.8 $ (16.3) $ — $ 279.7 Operation and maintenance 464.1 7.4 30.3 (10.1) 491.7 Depreciation and amortization 167.
Slide 34: Adjusted EBITDA and adjusted long-term capitalization reconciliation
Adjusted EBITDA1 (non-GAAP) reconciliation Year ended September 30, (Millions) 2018 2017 Net Income $ 214.2 $ 161.6 Add back: Interest charges 98.4 89.1 Regulatory asset write-offs 2 38.4 — Income tax (benefit) expense (26.5) 77.6 Depreciation & amortization 168.4 154.1 EBITDA $ 492.9 $ 482.4 Adjust