Spire Inc. · NYSE:SR
Spire — Q2 FY2017 Earnings Presentation
21 slides from Spire's earnings presentation, May 3, 2017
Slide 1: Second Quarter FY2017 Earnings Conference Call
Second Quarter FY2017 Earnings Conference Call May 3, 2017
Slide 2: Presenters on today's call
Presenters on today’s call Steven L. Lindsey Steven P. Rasche Execut ive Vice P resident Executive Vice President and Chief Operat in g Officer, and Chief Financial Officer Dist ribut ion Operati on s 2 Spire | Second Quarter FY17 Earnings Conference Call
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: Slide 4
Slide 5: Delivering on our promises
Delivering on our promises • Solid performance in first half of FY17 ‒ Gas Utility earnings growth despite warm weather ‒ Continued improvements in operations • Executing on our plans ‒ Growing our gas utility business ‒ Investing in infrastructure ‒ Integrating Alagasco and EnergySouth ‒ Transition
Slide 6: Highlights
Highlights • Q2 net economic earnings (NEE) up to $2.38 per share • Gas Utility NEE up more than 9% – Reflects benefit from addition of EnergySouth, lower O&M, higher capex – Contribution margins were adversely impacted by warmer than normal winter weather • Q2 margin was lower by $9.7 million, with
Slide 7: Increasing capital investment
Increasing capital investment Capital expenditures • YTD FY17 driven by Gas Utility YTD FY17 (Millions) – EnergySouth: $8 million addition $200 – Missouri utilities and Alagasco YTD: $150 $169 million (+$49 million) • $106 million for infrastructure upgrades $100 $187 • $29 million for new business
Slide 8: Missouri regulatory and legislative update
Missouri regulatory and legislative update • Filed our first base rate increase request in four years on April 11 ‒ Laclede Gas: net $29 million (+5%) ‒ MGE: net $37 million (+9%) • As proposed, Missouri customer bills will be lower than 10 years ago • Reflects our progress and growth ‒ Significant
Slide 9: Missouri rate case
Missouri rate case • Filed rate base of $2.0 billion ‒ Laclede Gas: $1,232 million (6.4% CAGR) ‒ MGE: $793 million (9.6% CAGR) ‒ Anticipate ~$100 million growth at update • Laclede Gas capital structure and 10.35% ROE ‒ Equity at 12/31/16 was 57.2% ‒ Anticipate ~54% equity at update given current de
Slide 10: Progressing with our Spire STL Pipeline project
Progressing with our Spire STL Pipeline project • Project diversifies our supply portfolio, improving reliability and resiliency ‒ 65-mile pipeline will connect to Rockies Express to access lower-cost shale gas ‒ Capacity of 400 MMcf/d with Laclede Gas to be foundation shipper (350 MMcf/d) • Filed f
Slide 11: Net economic earnings
Net economic earnings Second Quarter Ended March 31 Millions Per Diluted Share Net Economic Earnings1 2017 2016 2017 2016 Gas Utility $ 112.2 $ 102.5 $ 2.45 $ 2.35 Gas Marketing - 3.0 - 0.07 Other (3.2) (2.0) (0.07) (0.05) $ 109.0 $ 103.5 $ 2.38 $ 2.37 Average Shares Outstanding 45.7 43.5 • Net econ
Slide 12: Revenues and margin
Revenues and margin Second Quarter Ended March 31 Gas Utility Millions Change Change 2017 2016 $ % EnergySouth All Other Operating Revenues Gas Utility $ 643.7 $ 612.7 $ 31.0 5.1% $ 37.7 $ (6.7) 1 Gas Marketing 22.2 25.2 (3.0) -11.9% 1 Other (2.5) (28.6) 26.1 n/m $ 663.4 $ 609.3 $ 54.1 8.9% 2 Contri
Slide 13: Expenses
Expenses Second Quarter Ended March 31 Millions Change Change 2017 2016 $ % EnergySouth All Other Operating Expenses Gas Utility Natural & propane gas $ 254.3 $ 261.1 $ (6.8) -3% $ 8.6 $ (15.4) Operation and maintenance (O&M) 98.4 94.3 4.1 4% 10.3 (6.2) Depreciation & amortization 37.9 33.8 4.1 12%
Slide 14: Year-to-date highlights
Year-to-date highlights Six Months Ended March 31, Millions Per Diluted Share Net Economic Earnings1 2017 2016 2017 2016 Gas Utility $ 164.0 152.5 $ 3.59 $ 3.50 Gas Marketing 1.4 2.7 0.03 0.07 Other (8.9) (6.6) (0.20) (0.16) $ 156.5 148.6 $ 3.42 $ 3.41 Average Shares Outstanding 45.7 43.5 • Net econ
Slide 15: Strong cash flow and capital structure
Strong cash flow and capital EBITDA1 structure (Millions) $350 • YTD FY17 EBITDA1 of $349 million, $300 up 8% from last year $250 • Spire completed several transactions $200 $325 $349 related to the 2014 Alagasco financing $150 $100 ‒ $250 million floating-rate notes called (at par) $50 ‒ $150 milli
Slide 16: Outlook update
Outlook update • 5-year capital expenditures forecast Capital expenditures forecast increased to $2.3 billion $600 5-year forecast: $2.3B ‒ Driven by increasing infrastructure upgrade (Millions) $510 investment $500 $480 $445 95 $430 ‒ Now reflects anticipated spend through 2021 30 70 $420 $400 ‒ Ro
Slide 17: Spire stands for the energy we deliver and what that energy makes possible.
Spire stands for the energy we deliver and what that energy makes possible. We remain committed to providing safe, reliable energy, but we are now redefining what it means to serve. 17 Spire | Second Quarter FY17 Earnings Conference Call
Slide 18: Appendix
Appendix 18 S p i r e | S e c o n d Q u a r t e r F Y 1 7 E a r n i n g s C o n f e r e n c e C a l l
Slide 19: 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 March 31, 2017 Net Income (Loss) (GAAP) $ 112.3 $ (1.0) $ (3.3) $ 108.0 $ 2.36 Adjustments, pre-tax: Unrealized loss on energy-related deri
Slide 20: Contribution margin (non-GAAP) reconciliation
Contribution margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three Months Ended March 31, 2017 Operating Income (Loss) $ 182.6 $ (1.7) $ (0.5) $ - $ 180.4 Operation and maintenance $ 99.3 $ 1.5 $ 2.1 $ (1.4) 101.5 Depreciation and amortization $
Slide 21: EBITDA (non-GAAP) reconciliation
EBITDA1 (non-GAAP) reconciliation Six Months Ended March 31, (Millions) 2017 2016 Net Income $ 153.2 $ 147.7 Add back: Interest Charges 44.8 38.3 Income Tax Expense 75.6 70.9 Depreciation & Amortization 75.8 67.6 EBITDA $ 349.4 $ 324.5 Adjusted long-term capitalization reconciliation As of March 31,