AGA Financial Forum May 15-17, 2016
2 Spire | AGA Financial Forum – May 15 -17, 2016
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. Forward-looking statements are typically identified by words such as, but not limited to: “estimates,” “expects,” “anticipates,” “intends,” and similar expressions. A lthough our forward-looking statements are based on reasonable assumptions, various uncertainties and risk factors may cause future performance or results to be different than those anticipated. For a more complete description of these uncertainties and risk factors, see our Form 10-K for the fiscal year ended September 30, 2015 and our Form 10-Q for the quarter ended March 31, 2016, both filed with the Securities and Exchange Commission (SEC). This presentation also includes “net economic earnings,” “net economic earnings per share,” “operating margin,” “EBITDA,” and “adjusted long -term capitalization” non -GAAP measures used internally by management when evaluating the Company’s performance and results of operations. Net economic earnings exclude from net income the after-tax impacts of fair-value accounting and timing adjustments associated with energy-related transactions, as well as the after-tax impacts related to acquisition, divestiture, and restructuring activities, including costs related to the acquisition and integration of Missouri Gas Energy (MGE) and Alabama Gas Corporation (Alagasco). Operating margin adjusts operating income to include only those costs that are directly passed on to customers and collected through revenues, which are the wholesale cost of natural gas and propane, and gross receipts taxes. These internal non-GAAP operating metrics should not be considered as an alternative to, or more meaningful than, GAAP measures such as operating income or net income. EBITDA is earnings before interest, taxes, depreciation and amortization. A reconciliation of net income to net economic earnings is contained in the Company’s SEC filings, and a summary reconciliation is contained in the Appendix to this presentation. A reconciliation of EBITDA to net income and of operating margin to operating income can be found in the Appendix to this presentation. A reconciliation of capitalization per balance sheet to adjusted long-term capitalization is contained in the Appendix to this presentation. Note: Years shown in this presentation are fiscal years ended September 30, unless otherwise indicated. Investor Relations Contact Scott W. Dudley Jr. Managing Director, Investor Relations 314.342.0878 Scott.Dudley@SpireEnergy.com 3 Spire | AGA Financial Forum – May 15 -17, 2016
We are Spire • Spire better reflects the growing company we have become • Will unite our natural gas companies under one name in 2017 • We are about: ‒ Bringing people and energy together ‒ Championing people by delivering energy that inspires • We have been on a transformational journey, guided by a well-articulated growth strategy • Over the last three years we have: ‒ Significantly increased our scale ‒ Expanded our geographic footprint Quadrupled our enterprise value ‒ 4 Spire | AGA Financial Forum – May 15 -17, 2016
Successfully executing on our growth strategy Growing our gas Acquiring and Modernizing Investing in utility business integrating gas our gas assets innovation utilities Investing in prudent Added 1 million Positioned Gas Spire natural gas infrastructure customers Marketing for fueling stations upgrades continued success MGE (2013) • Lambert-St. Louis Successful organic Improving supply Int’l Airport Alagasco (2014) growth initiatives diversity, reliability • Greer, SC and resiliency Mobile Gas and Growing Mainstay Willmut Gas commercial and Spire St. Louis partnership (pending) industrial load Pipeline (pending) 5 Spire | AGA Financial Forum – May 15 -17, 2016
We are a gas company at our core 1 • Five gas utilities 1 across three states • Largest gas company in Missouri and Alabama • Focus on safe and reliable service, community development and growth 1 Gives effect to the pending acquisition. 6 Spire | AGA Financial Forum – May 15 -17, 2016
Growing our gas utility business 7 Spire | AGA Financial Forum – May 15 -17, 2016
Higher capital investment Capital expenditures (In Millions) $150 • FY16 capital target of $320 million $100 – Now includes Spire St. Louis Pipeline – 2/3 of FY16 utility spend recoverable with $129.5 $121.8 minimal regulatory lag $50 • 5-year forecast raised to $1.8 billion from $1.6 billion $0 1st Half FY15 1st Half FY16 • Latest ISRS 1 update 5-year forecast: $1.8B+ – Increase of $9.0 million has been (In Millions) recommended by MoPSC staff $430 – If approved by the Commission, annual run $400 $370 $365 95 $335 $320 rate would increase to $35.3 million 40 40 $290 10 $300 110 110 • Additional upside from Mobile Gas 110 110 98 96 $200 $171 and Willmut Gas upon closing 72 225 225 220 212 215 $100 – Run rate capital spend of ~$17 million 194 99 – Opportunity to increase investment in $0 prudent infrastructure upgrades 2014 2015 2016E 2017E 2018E 2019E 2020E Other Utility and Non-Utility Utility, with Minimal Lag Spire St. Louis Pipeline 1 ISRS is Infrastructure System Replacement Surcharge in Missouri. 8 Spire | AGA Financial Forum – May 15 -17, 2016
Growing organically • Increasing revenues and margins – Growing customers and improving retention – Increasing penetration – Leveraging technology, communications and process improvement to achieve efficiencies • Seizing market opportunities – Building commercial/industrial load – Line extensions in Missouri service areas – Developing other products and services – Acquiring municipal gas utilities • Realizing early successes – ~1% customer growth across all three utilities – Converted several large industrial customers – Economic development partnerships in AL 9 Spire | AGA Financial Forum – May 15 -17, 2016
10 Spire | AGA Financial Forum – May 15 -17, 2016
Acquiring and integrating gas utilities 11 Spire | AGA Financial Forum – May 15-17, 2016
Mobile Gas and Willmut Gas • A strategic acquisition: ‒ Grows our gas utility business ‒ Delivers on customer and community benefits ‒ Expands existing Southern footprint ‒ Adds to earnings and cash flow • Adds 104,000 customers ‒ 85,000 served by Mobile Gas (AL) ‒ 19,000 served by Willmut Gas (MS) • $344 million price represents 11.3 times LTM adjusted EBITDA • Targeting close in 2016, subject to customary closing conditions and regulatory approvals 12 Spire | AGA Financial Forum – May 15 -17, 2016
Acquisition of Mobile Gas and Willmut Gas • Supports gas utility growth through capital investment and organic growth Grows our Gas Utility • Increases scale of regulated business Business • Adds growing commercial and industrial customer load Delivers on • Continues our focus on safe, reliable and efficient service Customer and • Builds on shared values of active civic engagement and community support Community • Mobile and Willmut to remain active corporate citizens in communities served Benefits • Builds on Alagasco’s success and working relationships in Alabama Expands Existing • Expands within a highly rated regulatory environment to serve ~60% of all natural Southern gas customers in Alabama Footprint • Adds Mississippi, another state with a highly rated regulatory environment • Accretive to NEE 1 per share in fiscal 2018 (neutral in fiscal 2017) Adds to Earnings and • Supports long-term annual NEE per share growth target of 4% - 6% Cash Flow • Cash flow supports investment, shareholder value and growing dividends 1 NEE is net economic earnings (non-GAAP). 13 Spire | AGA Financial Forum – May 15 -17, 2016
14 Spire | AGA Financial Forum – May 15 -17, 2016
Modernizing our gas assets 15 Spire | AGA Financial Forum – May 15-17, 2016
Spire St. Louis Pipeline • Supports gas asset modernization: ‒ Achieve more diverse supply portfolio ‒ Improve reliability and resiliency Marcellus/Utica • Gives our eastern Missouri system access to lower cost shale gas from Rockies Express Marcellus and Utica – 100% Spire ownership Spire – FERC regulated St. Louis Pipeline – Laclede Gas: expected foundation shipper MISSOURI • 60-mile pipeline • Capacity of 400 MMcf/d • Project cost $170 - $200 million • 30-36 months from open season to in-service date 16 Spire | AGA Financial Forum – May 15 -17, 2016
Gas Marketing • Provides wholesale natural gas services to diverse, sophisticated customer base • Operates primarily in the Midwest • Leverages market expertise and risk management protocols and skills • Optimizes portfolio of commodity, transportation and storage contracts – Operated on 17 interstate and intrastate pipelines in FY15 – 4.75 Bcf of leased storage • 1 st half FY16 NEE 1 of $2.7 million 1 See net economic earnings (non-GAAP) reconciliation in Appendix. 17 Spire | AGA Financial Forum – May 15 -17, 2016
Investing in innovation 18 Spire | AGA Financial Forum – May 15-17, 2016
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