Slide 1: We are Spire
We are Spire Investor Presentation December 2016
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: We like to say energy exists to help people
We like to say energy exists to help people. That’s why our symbol consists of two shapes that form a handshake. 3 S pire | Investor Present at ion - Decembe r 2016
Slide 4: We are Spire
We are Spire • We became Spire in April to better reflect the company we have become • In late summer 2017, we will unite our utilities and businesses as Spire • Our transformation has been driven by successful execution of our growth strategy 4 S pire | Investor Present at ion - Decembe r 2016
Slide 5: We are growing, as promised
We are growing, as promised • Growing our gas utility business • Acquiring and integrating gas utilities • Modernizing our gas assets • Investing in innovation Growth since 2012: – Customers increased by 1.1 million – Enterprise value quadrupled to $5.3 billion – Market capitalization tripled 5 S pi
Slide 6: At our core, we are a gas company
At our core, we are a gas company • Five gas utilities across three states • Largest gas company in Missouri and Alabama • Focus on safe and reliable service, community development and growth 6 S pire | Investor Present at ion - Decembe r 2016
Slide 7: Growing organically
Growing organically Total utility customers (Millions) 1.8 1.679 • Increasing revenues and margins 1.6 1.553 1.568 – Growing customers and improving retention – Increasing penetration 1.4 – Achieving operating efficiencies • Seizing market opportunities 1.2 1.122 – Pursuing line extensions in Missou
Slide 8: Investing in infrastructure
Investing in infrastructure Capital expenditures (Millions) $300 • FY16 spend of $293 million, almost all for gas utilities $200 – Up nearly $40 million from prior year $290 $293 (excluding non-recurring spend in FY15) $100 – Increased infrastructure spend – Increased new business investment 36% – 7
Slide 9: Increasing capital investment
Increasing capital investment • 2017 target increases to $410 million Capital expenditures – $370 million Gas Utility spend, 70%+ recoverable in rates with minimal regulatory 5-year forecast: $2.0B + lag (Millions) $440 $485 – Increase from 2016 $410 95 65 $400 $400 35 • Adding Mobile Gas and Willmu
Slide 10: 2017 regulatory calendar
2017 regulatory calendar • Alagasco and Mobile Gas 2017 RSE update filings ‒ Filed with Alabama PSC on October 26, rates effective December 1 ‒ Based on FY17 budgeted revenue, operating expenses and capital spending • Mobile Gas RSE review, effective in FY18 rates • Latest Missouri ISRS filings in p
Slide 11: Adding Mobile Gas and Willmut Gas
Adding Mobile Gas and Willmut Gas • Completed September 12, 2016 ‒ $344 million transaction value including assumption of $67 million of debt ‒ Funded with $138 million equity issuance and $165 million of debt • Grows our gas utility business – Adds 103,000 customers and growing commercial and indus
Slide 12: Launching Spire STL Pipeline
Launching Spire STL Pipeline • Modernizing our gas assets to – Achieve more diverse supply portfolio – Improve reliability and resiliency – Access lower-cost shale gas • Laclede Gas expects to be a foundation shipper with contractual commitment of 350 MMcf/d • Completed open season to solicit commer
Slide 13: STL Pipeline brings new energy to homes and businesses
STL Pipeline brings new energy to homes and businesses • 70-mile pipeline with capacity of 400 MMcf/d • Connects to Rockies Express pipeline • Project investment of $190 million - $210 million • Expect fiscal 2019 in-service date 13 S pire | Investor Present at ion - Decembe r 2016
Slide 14: Delivering services through Gas Marketing
Delivering services through Gas Marketing • Provides wholesale services to a diverse, sophisticated customer base • Operates primarily in central U.S. • Leverages market expertise and risk management protocols and skills • Optimizes portfolio of commodity, transportation and storage contracts – Oper
Slide 15: Delivering shareholder value
Delivering shareholder value • Driving earnings growth through gas utilities • Maintaining strong cash flow, capital structure and liquidity • Increasing dividends 15 S pire | Investor Present at ion - Decembe r 2016
Slide 16: Driving growth through Gas Utility earnings
Driving growth through Gas Utility earnings • 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 non-utility businesses
Slide 17: 2017 earnings guidance
2017 earnings guidance • FY17 net economic earnings per share Net economic earnings per share (NEEPS) target of $3.50 - $3.60 $4.40 • Key assumptions $4.20 ‒ Reasonably normal weather 4% - 6% ‒ Continued success in our capital spending $4.00 long-term and integration plans growth $3.80 ‒ EnergySouth
Slide 18: Maintaining strong cash flow, capital structure and liquidity
Maintaining strong cash flow, EBITDA 1 capital structure and liquidity (Millions) $500 1 • FY16 EBITDA of $428 million, $400 up 6% from prior year $300 • Significant liquidity with more than $350 million capacity at year end $200 $405 $428 • Maintained balanced capitalization $100 ‒ Year-end long-te
Slide 19: Increasing dividends
Increasing dividends Annualized dividends per share +7.1% Dividend Yield $2.20 +6.5% $2.101 3.3%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 • Annualized dividend increased to $2.10 per share • 7.1% increase based on growing earnings •
Slide 20: At Spire, we stand for what our energy makes possible.
At Spire, we stand for what our energy makes possible.
Slide 21: Appendix
Appendix spire
Slide 22: Spire leadership team
Spire leadership team Suzanne Sitherwood Steven P. Rasche Steven L. Lindsey Mark C. Darrell Michael C. Geiselhart President and Executive Vice President, Executive Vice President and Senior Vice President, Senior Vice President, Chief Executive Officer Chief Financial Officer Chief Operating Officer
Slide 23: 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 909 1,614 555 219 45 Customers 420,500 647,000 508,000 84,500 18,500 Pipeline Miles ~23,000 ~16,000 ~14,000 ~4,300 ~1,20
Slide 24: FY16 operating highlights
FY16 operating highlights 1 • Net economic earnings (NEE) up $10.8 million to $149.1 million • NEE per share $3.42 up from $3.19 in prior year ‒ Gas Utility: NEE $160.3 million up from $150.4 million • Flat operating margins, reflecting $18.0 million headwind due to warmer weather, offset by $13.8 m
Slide 25: FY16 financial summary
FY16 financial summary (Millions, except earnings per share and % amounts) FY16 FY15 Earnings by Segment Gas Utility $ 160.3 $ 150.4 Gas Marketing 6.4 4.2 Other (17.6) (16.3) Net Economic Earnings (non-GAAP)1 $ 149.1 $ 138.3 Net Economic Earnings Per Share (non-GAAP)1 $ 3.42 $ 3.19 Other Key Metrics
Slide 26: 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 27: 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 28: 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 29: Equity Units summary
Equity Units summary • 2,875,000 Equity Units issued June 2014; net proceeds of $139 million ‒ $50 face value per unit consisting of: • 3-year equity forward contract • A 1/20 interest in $1,000, 8-year junior subordinated note ‒ 6.75% cash coupon: 2.00% interest on notes, 4.75% contract payment • E
Slide 30: 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 31: 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 Year Ended September 30, 2016 Net Income (Loss) (GAAP) $ 159.0 $ 7.1 $ (21.9) $ 144.2 $ 3.24 Adjustments, pre-tax: Unrealized (gain) loss on energy-related de
Slide 32: EBITDA reconciliation Adjusted long-term capitalization reconciliation
EBITDA1 (non-GAAP) reconciliation Fiscal Year Ended September 30, (Millions) 2016 2015 Net Income $ 144.2 $ 136.9 Add back: Interest Charges 77.2 74.6 Income Tax Expense 69.5 62.2 Depreciation & Amortization 137.5 130.8 EBITDA $ 428.4 $ 404.5 Adjusted long-term capitalization reconciliation As of Se