Slide 1: It's a promise. Investor Presentation June 2017
It’s a promise. Investor Presentation June 2017
Slide 2: 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 3: Spire is more than a name. It's a promise.
Spire is more than a name. It’s a promise. • Our name reminds us there are no limits to what we can achieve together. Because when you champion people by delivering energy that inspires, everything is possible. • Our name embodies our promise to bring people and energy together in ways that enrich l
Slide 4: We're committed to bringing our new name, and all it represents, to life
We’re committed to bringing our new name, and all it represents, to life. • We’ve transformed our company, increased our scale and expanded our geographic footprint • We continue to be driven by our desire and strategy to grow – Growing organically – Acquiring and integrating – Investing in infrastr
Slide 5: In 2017, 1.7 million homes and businesses will come to know us as Spire
In 2017, 1.7 million homes and businesses will come to know us as Spire. • We operate natural gas companies across Alabama, Mississippi and Missouri • Since 2012: – Homes and businesses served increased by 1.1 million – Enterprise value more than quadrupled to $5.9 billion* – Market capitalization m
Slide 6: When we replace pipe, install meters or help a customer grow their business
When we replace pipe, install meters or help a customer grow their business, we’re honoring our commitment to the people we serve, including the financial community. 6 S pire | Investor Present at ion - June 2017
Slide 7: We're doing what we said we would do
We’re doing what we said we would do • Increased our capital spending for both FY17 and our five-year outlook • Transitioning our gas companies to Spire masterbrand late this summer • Progressing on Spire STL Pipeline • Filed Laclede Gas and MGE rate cases in Missouri on Apr. 11 • Driving growth – L
Slide 8: Serving more people and communities better than ever
Serving more people and Total homes and businesses served communities better than ever (Millions) • Increasing revenues and margins 1.8 1.68 – Growing customers and improving retention 1.57 1.6 1.55 – Increasing penetration – Leveraging scale and shared services 1.4 to achieve efficiencies • Seizing
Slide 9: Investment in growth remains a top priority
Investment in growth remains a top priority • 5-year capital expenditure forecast increased to $2.3 billion driven by infrastructure upgrades • 86% of spend recovered with minimal regulatory lag or reflected in earnings – 77% via rates (ISRS and new business in Missouri, all Alabama spend) – 9% for
Slide 10: Working with communities to modernize the business environment in Missouri
As we have been growing and acquiring gas companies, we’ve been working with our communities to modernize the business environment in Missouri. 10 S pire | Investor Present at ion - June 2017
Slide 11: We see potential for regulatory change in Missouri
We see potential for regulatory change in Missouri • New Republican governor with party majority in House and Senate, focused on reforms to ‒ Improve business environment ‒ Support economic development ‒ Promote more efficient government • Pursuing changes to improve regulatory approach via ‒ Legisl
Slide 12: We're moving Missouri's energy forward
We’re moving Missouri’s energy forward • Filed our first base rate increase request in four years on Apr. 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 infra
Slide 13: We're focused on the details that impact our customers
We’re focused on the details that impact our customers • New rates allow us to better serve our customers moving forward • 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 struc
Slide 14: New rates allow us to better serve our customers
New rates allow us to better serve our customers • MoPSC has 11 months to decide case • Clock starts from our filing date of Apr. 11 Mar. 8 ’18 Apr. 11 Expected Filed Rate Cases and Update to Effective Date Direct Testimony Sept. 30 for New Rates Discovery (Apr.-Dec.) Rebuttal Surrebuttal Hearings a
Slide 15: We're progressing on plans to bring new energy to St. Louis
We’re progressing on plans to bring new energy to St. Louis • Spire STL Pipeline improves our supply diversity, reliability, 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) •
Slide 16: We're maximizing all of our businesses
We’re maximizing all of our businesses • Spire Marketing provides wholesale services to a diverse, sophisticated customer base • It optimizes a portfolio of commodity, transportation and storage contracts ‒ Operated on 30 interstate and intrastate pipelines in FY16 ‒ 5.4 Bcf of leased storage • Its
Slide 17: Innovation and technology better connects us to the people we serve
Innovation and technology better connects us to the people we serve • Technology upgrades underway to improve customer service experience ‒ Enhanced connectivity, so our customers can reach us when and how they want ‒ Improved online data and resources to enable our customers to get the job done ‒ E
Slide 18: Our financial performance in the first half of 2017
Our financial performance in the first half of 2017 shows how we use our deep knowledge of our business to deliver shareholder value. 18 S pire | Investor Present at ion - June 2017
Slide 19: We're driving earnings growth
We’re driving earnings growth • 2016 NEE per share grew by 7.2% • 5-year growth in Gas Utility earnings of 9.7% driven by: – Organic growth initiatives and investment in infrastructure upgrades – Acquisitions and effective integration • Smaller contribution from Gas Marketing reflecting changing bus
Slide 20: We delivered solid first half FY17 performance
We delivered solid first half FY17 performance (Millions, except earnings per share) FY17 FY16 Earnings by Segment Gas Utility $ 164.0 $ 152.5 Gas Marketing 1.4 2.7 Other (8.9) (6.6) Net Economic Earnings (non-GAAP)1 $ 156.5 $ 148.6 Net Economic Earnings Per Share (non-GAAP)1 $ 3.42 $ 3.41 Other Key
Slide 21: Our first half FY17 earnings grew driven by Gas Utility
Our first half FY17 earnings grew driven by Gas Utility • Net economic earnings1 (NEE) $156.5 million, up $7.9 million • NEE per share $3.42 (+$0.01), reflecting 2.2 million (5%) shares issued for 2016 EnergySouth acquisition • Gas Utility: NEE $164.0 million (+$11.5 million or 7.5%) ‒ Contribution
Slide 22: We're maintaining strong cash flow and capital structure
We’re maintaining strong cash EBITDA1 flow and capital structure (Millions) $350 • YTD FY17 EBITDA1 of $349 million, +8% $300 $250 • As planned, last few months included $200 several Spire capital transactions $325 $349 $150 ‒ All related to the 2014 Alagasco financing $100 ‒ Resulted in a $142 mill
Slide 23: We continue to invest
We continue to invest • Capital spend in the first half FY17 Capital expenditures increased by $65 million (+53%) First half FY17 • Driven by investment at the Missouri (Millions) + 53% utilities and Alagasco $200 – $106 million for infrastructure upgrades – $29 million for new business $150 • FY17
Slide 24: Dividends continue to increase
Dividends continue to increase Annualized dividends per share +7.1% Dividend Yield $2.20 +6.5% $2.101 3.0%2 $2.00 +4.5% $1.96 +2.4% +3.5% $1.84 $1.80 $1.76 $1.70 $1.66 $1.60 $1.40 $1.20 2012 2013 2014 2015 2016 2017 • 2017 annualized dividend $2.10 per share (+7.1%) • 14 years of consecutive increas
Slide 25: Our outlook focuses on growth
Our outlook focuses on growth • Increased 5-year capital spend forecast Increasing 5-year capital spend forecasts from $2.0 billion to $2.3 billion $2.3B ‒ Driven by infrastructure investment $2.0B $600 (Millions) ‒ ~86% with recovered with minimal $1.5B $500 regulatory lag or driving earnings $400
Slide 26: With the name Spire comes a promise
With the name Spire comes a promise. A promise to always go above and beyond for the people we serve today, and those we aspire to serve tomorrow. 26 S pire | Investor Present at ion - June 2017
Slide 27: Appendix
27 S pire | Investor Present at ion - June 2017
Slide 28: Appendix
Appendix 28 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 0 1 7
Slide 29: Spire leadership team
Spire leadership team A. Suzanne Sitherwood B. Steven P. Rasche President and Executive Vice President and Chief Executive Officer Chief Financial Officer A B C. Steven L. Lindsey D. Mark C. Darrell Executive Vice President and Senior Vice President, Chief Operating Officer, General Counsel and Dist
Slide 30: In 2017, 1.7 million homes and businesses will come to know us as Spire
In 2017, 1.7 million homes and businesses will come to know us as Spire. • We operate natural gas companies across Alabama, Mississippi and Missouri • Since 2012: – Homes and businesses served increased by 1.1 million – Enterprise value more than quadrupled to $5.9 billion* – Market capitalization m
Slide 31: Our utility portfolio
Our utility portfolio Alagasco Laclede Gas MGE Mobile Gas Willmut Gas Founded 1852 1857 1867 1836 1933 Primary Office Birmingham St. Louis Kansas City Mobile Hattiesburg Employees 825 1,665 564 2421 Customers 420,500 647,000 508,100 84,500 18,500 Pipeline Miles ~23,000 ~16,000 ~14,000 ~4,300 ~1,200
Slide 32: Missouri regulatory summary
Missouri regulatory summary • 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 mechanisms to address purchased gas costs, pension
Slide 33: Missouri rate case highlights
Missouri rate case highlights Rate base growth (Millions) $2,500 ($ millions, except customer impact) Laclede Gas MGE $2.025B ~$2.1B Gross base rate increase $ 58.1 $ 50.4 $2,000 ISRS rider included above 29.5 13.4 $1.495B $1,500 Net change in customer rates $ 28.6 $ 37.0 Est. impact on avg. residen
Slide 34: Alabama regulatory summary
Alabama regulatory summary • Top-rated regulatory jurisdiction by RRA1 • 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 •
Slide 35: Mississippi regulatory summary
Mississippi regulatory summary • Highly rated regulatory jurisdiction by RRA • Rate Stabilization Adjustment (RSA) ‒ Filing by September 15th with rates effective November 1st (June 30th test year) ‒ Provides for annual rate performance reviews rather than periodic rate cases • Formulaic approach to
Slide 36: We've been active in the capital markets, as planned
We’ve been active in the capital markets, as planned 2017 February March April April-September • Spire issued • Spire redeemed at • Spire issued • Laclede Gas first $150 million 3.54% par $250 million 2,504,700 mortgage bonds senior notes due floating-rate notes common shares, to fund by Sept. 15: 2
Slide 37: Net economic earnings per share (non-GAAP) reconciliation
Net economic earnings per share (non-GAAP) reconciliation Fiscal Years Ended September 30, 2011 2012 2013 2014 2015 2016 Total Spire Diluted Earnings per Share (GAAP) $ 2.86 $ 2.79 $ 2.02 $ 2.35 $ 3.16 $ 3.24 Adjustments, pre-tax: Unrealized (gain) loss on energy-related derivatives (0.11) (0.02) 0.
Slide 38: 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 Six Months Ended March 31, 2017 Net Income (Loss) (GAAP) $ 164.0 $ (1.8) $ (9.0) $ 153.2 $ 3.34 Adjustments, pre-tax: Unrealized (gain) loss on energy-related
Slide 39: EBITDA and adjusted long-term capitalization 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,