Energy in motion First quarter fiscal 2019 February 6, 2019 - PowerPoint PPT Presentation

Energy in motion First quarter fiscal 2019 February 6, 2019

Participants on today’s call • Suzanne Sitherwood President and Chief Executive Officer • Steven P. Rasche Executive Vice President and Chief Financial Officer 2 Spire | First quarter fiscal 2019 earnings results

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. More complete descriptions and listings of these uncertainties and risk factors can be found in our annual (Form 10-K) and quarterly (Form 10-Q) filings with the Securities and Exchange Commission. This presentation also includes “net economic earnings,” “net economic earnings per share,” “contribution margin,” “EBITDA,” and “adjusted long - term capitalization,” non - GAAP measures used internally by management when evaluating the Company’s performance and results of o perations. Net economic earnings exclude from net income the after-tax impacts of fair-value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture, and restructuring activities and the largely non-cash impacts of other non-recurring or unusual items such as certain regulatory, legislative, or GAAP standard-setting actions. In fiscal 2018, these items included the revaluation of deferred tax assets and liabilities due to the Tax Cuts and Jobs Act, and the write-off of certain long-standing assets as a result of disallowances in our Missouri rate proceedings. The fair value and timing adjustments, which primarily impact the Gas Marketing segment, include net unrealized gains and losses on energy-related derivatives resulting from the current changes in fair value of financial and physical transactions prior to their completion and settlement, lower of cost or market inventory adjustments, and realized gains and losses on economic hedges prior to the sale of the physical commodity. Management believes that excluding these items provides a useful representation of the economic impact of actual settled transactions and overall results of ongoing operations by facilitating comparisons of year-over-year results. Contribution margin is defined as operating revenues less natural and propane gas costs and gross receipts tax expense, which are directly passed on to customers and collected through revenues. 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, income taxes, depreciation and amortization. Reconciliations of net income to net economic earnings and of contribution margin to operating income are contained in our SEC filings and in the Appendix to this presentation. Reconciliations of EBITDA to net income and of capitalization per balance sheet to adjusted long-term capitalization are also contained in the Appendix. 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 | First quarter fiscal 2019 earnings results

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 4 Spire | First quarter fiscal 2019 earnings results

Building on our momentum • Posted strong Q1 net economic earnings of $1.30 per share, up 9% from a year ago • Grew utility earnings per share by over 7% this quarter • Delivered improved operating results across our gas utilities • Began construction of Spire STL Pipeline • Received FERC approval to consolidate our storage facilities 5 Spire | First quarter fiscal 2019 earnings results

Growing our gas utilities • Driving organic growth – Enhancing our new business processes, driving residential and commercial growth – New business capital investment of $27M, up 19% – 9% growth in new meters (over last year’s record pace) • Increasing capital investment – Q1 utility capital expenditures up by 40% – 85% of utility spend recovered with minimal lag or reflected in earnings • Securing regulatory recovery of investments – Missouri: $19M in additional annual ISRS revenues filed Jan. 14 – Alabama: Progressing on AIM program (incentive to accelerate infrastructure upgrades) • Managing costs across our utilities 6 Spire | First quarter fiscal 2019 earnings results

Enhancing our operating performance • Investment in infrastructure upgrades, technology and our people is driving operating performance • Continuing to see positive results – Reduced employee injury rates and improved overall safety – Further enhanced system integrity – Reduced maintenance costs – Increased field service levels 7 Spire | First quarter fiscal 2019 earnings results

Inspiring innovation through technology • Technology is helping us connect with and better serve customers • We are seeing increased levels of engagement via My Account ‒ Serving more than 680,000 homes and businesses ‒ Increased enrollment in paperless billing, budget billing and AutoPay ‒ Greater adoption of self-service for billing options and service reconnection • We’re achieving higher service levels 8 Spire | First quarter fiscal 2019 earnings results

Building Spire STL Pipeline • We’ve received required approvals, permits and land rights • Construction is now underway • Total project investment estimated at $210-$225 million • The 65-mile pipeline will bring new gas supply to the St. Louis region • Targeting in-service date by the end of our fiscal year 9 Spire | First quarter fiscal 2019 earnings results

Advancing our other gas-related businesses • Positioning Spire Marketing for further growth and success ‒ Adding talent and building the team in Houston ‒ Scaling the business by expanding geographic reach and customer base ‒ We achieved strong Q1 performance with NEEPS of $0.16 • Building Spire Storage ‒ With FERC approval, we’re integrating our facilities and finalizing development plan ‒ Evaluating investments to take advantage of expanded longer term opportunities ‒ Growing capacity and capabilities to serve a variety of customers, including utilities, power generators and producers ‒ Earnings contribution expected in fiscal 2020 10 Spire | First quarter fiscal 2019 earnings results

Growing the dividend Annualized dividends per share Dividend Yield 3.1% 2 1 Dividend payout ratio Dividends per share Dividend payout ratio • Board declared quarterly dividend of $0.5925, payable April 2 • 16 consecutive years of increases; 74 years of continuous payment • Dividend growth (5.3% in 2019) supported by our ‒ Long-term earnings growth targets ‒ Conservative payout ratio and target range of 55%-65% 1 Quarterly dividend of $0.5925 per share effective January 3, 2019, annualized. 2 Based on $2.37 per share dividend and SR average closing stock price of $75.55 for month of January 2019. 11 Spire | First quarter fiscal 2019 earnings results

We’re driving earnings growth First quarter ended December 31, Millions Per diluted share 2018 2017 2018 2017 Gas Utility $ 66.4 $ 59.5 $ 1.31 $ 1.22 Gas Marketing 8.3 3.6 0.16 0.08 Other (8.8) (5.2) (0.17) (0.11) Net Economic Earnings (NEE) 1 $ 65.9 $ 57.9 $ 1.30 $ 1.19   Effect of TCJA 2 59.9 1.24 All other adjustments 2 1.4 (1.8) 0.02 (0.04) Net income (GAAP) $ 67.3 $ 116.0 $ 1.32 $ 2.39 Average diluted shares outstanding 50.8 48.4 • Net economic earnings up nearly 14% or $8.0M with growth in both business segments ‒ Gas Utility +$6.9M or 12% ‒ Gas Marketing +$4.7M or 131% ‒ Offset, in part by higher corporate costs and the net loss from Spire Storage (excluded from NEE last year) • NEE per share up 11¢ or 9%, reflecting higher share count from our May 2018 equity offering 1 See Net economic earnings (non-GAAP) reconciliation in the Appendix. 2 Tax Cuts and Jobs Act; All other includes recurring NEE adjustments for fair value, acquisition, and income tax effect. 12 Spire | First quarter fiscal 2019 earnings results