Energy in motion Investor presentation March 2019
2 2 Spire | Investor Presentation | December 2018 Spire | Investor presentation – March 2019
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 | Investor presentation – March 2019
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 | Investor presentation – March 2019
We’re expanding to serve more customers and markets • We’ve transformed our company by increasing our geographic footprint • Our gas companies now serve 1.7 million homes and businesses across Alabama, Mississippi and Missouri • We are advancing our gas-related businesses – Spire Marketing – Spire STL Pipeline – Spire Storage 5 Spire | Investor presentation – March 2019
Building on our momentum • Operating with regulatory certainty from 2018 resets in MO and AL • Executing on organic growth and capital investment plans • Achieving strong Q1 financial performance – NEEPS of $1.30, up 9% – Utility NEEPS up over 7% • Advancing our gas-related businesses – Expanding Spire Marketing – Constructing Spire STL Pipeline – Integrating Spire Storage; finalizing development plan • Strengthening our financial position 6 Spire | Investor presentation – March 2019
Growing our gas utilities • Driving organic growth – 19% growth in new business capital investment in Q1 – Continued growth in new meter installations in Q1 • Increasing capital investment – 40% increase in utility capital expenditures in Q1 – 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 (eff. mid-May) – Alabama: Progressing on AIM program (incentive to accelerate infrastructure upgrades) • Managing costs across our utilities 7 Spire | Investor presentation – March 2019
Investing for Capital expenditures long-term growth (Millions) $250 • Q1 FY19 capital spend up $96M $200 • FY19 forecasted spend of $650M $150 – $475M for gas utilities $207 $100 – $150M for Spire STL Pipeline $111 $50 – Refining plan for Spire Storage $0 • 5-year capital investment of $2.6B Q1 FY18 Q1 FY19 – Supported by infrastructure upgrade 5-year forecast: $2.6B programs with lives up to 18 years $650 – Driving long-term 6% rate base growth 175 $505 $499 $495 $485 43 – 85%+ of utility spend recovered with 70 70 75 65 63 minimal lag or reflected in earnings 420 405 410 400 393 2018 2019 2020 2021 2022 Utility, with minimal lag Other utility Pipelines and storage and new business 8 Spire | Investor presentation – March 2019
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 | Investor presentation – March 2019
Growing Spire Marketing • Logistics-based business supported by Spire Marketing’s operational reach strong risk management – Provides gas marketing services to diverse customer base in central and southern U.S. – Physically delivers gas on 20+ pipelines – Optimizes portfolio of commodity, transportation and storage contracts • Positioning Spire Marketing for further growth and success – Adding talent, building team in Houston – Expanding geographic reach, customer base • Strong Q1 NEEPS of $0.16, double the prior year, driven by – Geographic expansion of our business and favorable market conditions – Ongoing basis differentials that increased value from optimizing our portfolio 10 Spire | Investor presentation – March 2019
Developing Spire Storage • FERC approved combining operations of our two storage facilities in Wyoming • We are integrating and finalizing the development and investment plan to: – Take advantage of expanded long-term opportunities to serve a variety of customers (utilities, power generators and producers) – Increase injection and withdrawal capabilities – Expand working gas capacity – Improve overall performance • $100M total investment through Q1 FY19 • Expect earnings contribution in FY20 11 Spire | Investor presentation – March 2019
Strengthening our EBITDA 1 financial position (Millions) $160 • Q1 FY19 EBITDA 1 of $152M, up 3% $152 $148 • Ample liquidity at the peak of our $140 seasonal borrowing • Solid LT equity capitalization 2 51.3%, $120 up 190 basis points from a year ago $100 • Planned financings on track Q1 FY18 Q1 FY19 ‒ On Dec. 3, Spire MO completed and funded $100M 3-year term loan Long-term capitalization 2 (at December 31, 2018) ‒ On Jan. 15, Spire AL completed private placement of $90M in Senior Notes • Feb. 6 announced $150M equity At-The-Market (ATM) program ‒ 3-year program Equity 48.7% 51.3% ‒ Not active at this time Debt ‒ Satisfies anticipated equity needs for the next two years 1 EBITDA is earnings before interest, income taxes, depreciation and amortization. 2 See Adjusted long-term capitalization reconciliation in the Appendix. 12 Spire | Investor presentation – March 2019
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 $77.28 year-to-date in 2019 through March 15. 13 Spire | Investor presentation – March 2019
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