Energy in motion Year-end fiscal 2018 earnings results November 15, 2018
Participants on today’s call • Suzanne Sitherwood President and Chief Executive Officer • Steven L. Lindsey Executive Vice President and Chief Operating Officer, Distribution Operations • Steven P. Rasche Executive Vice President and Chief Financial Officer 2 Spire | Year -end fiscal 2018 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. For a more complete description of these uncertainties and risk factors, see our Form 10-K for the fiscal year ended September 30, 2018 to be filed today with the Securities and Exchange Commission. This presentation also includes “net economic earnings,” “net economic earnings per share,” “contribution margin,” “adjusted EBI TDA,” 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, 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 related to pension costs and property sold 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. Adjusted EBITDA is earnings before interest, income taxes, depreciation and amortization, plus largely non-cash write-offs related to Missouri rate cases. 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 adjusted 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 | Year -end fiscal 2018 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 | Year -end fiscal 2018 earnings results
Strengthening leadership to support our growth • Joe Hampton President, Spire Alabama, Gulf Coast and Mississippi • Scott Carter President, Spire Missouri 5 Spire | Year -end fiscal 2018 earnings results
Strengthening leadership to support our growth • Pat Strange President, Spire Marketing • Scott Jaskowiak President, Spire STL Pipeline and Spire Storage 6 Spire | Year -end fiscal 2018 earnings results
We believe that energy exists to help people, and we believe that how we do our work matters. 7 Spire | Year -end fiscal 2018 earnings results
While working through complexities of multiple regulatory resets in 2018, we’re proud to report that we delivered NEE of $3.72 per share. 8 Spire | Year -end fiscal 2018 earnings results
Building Spire STL Pipeline • Received FERC Notice to Proceed on November 5 • Completed project construction schedule • Targeting in-service date in second half of calendar 2019 • Ready to mobilize for construction once land acquisition is completed • Total project investment targeted at $210 - $225 million 9 Spire | Year -end fiscal 2018 earnings results
Advancing our gas-related businesses • Positioning Spire Marketing for further growth and success ‒ New business center in Houston being led by industry veterans Expanding our geographic reach and customer base ‒ ‒ Strong FY18 results reflect our growth initiatives and favorable market conditions • Building Spire Storage Completed acquisition of two adjacent facilities, including minority interest ‒ ‒ Integrating and upgrading operational capabilities ‒ Expanding service offerings ‒ Marketing to broad range of customers (utilities, power generators, pipelines, producers and marketers) Total investment through fiscal year end of $56M ‒ 10 Spire | Year -end fiscal 2018 earnings results
Increasing earnings and dividends • Affirming long-term earnings per share growth target of 4% - 7% • Establishing guidance for FY19 NEEPS of $3.70 - $3.80 • Increasing our dividends per share – 2019 dividend raised 5.3% to $2.37 – 16 consecutive years of increases – 74 years of continuous payment – Maintained conservative payout ratio and target range of 55% - 65% 11 Spire | Year-end fiscal 2018 earnings results
We’re driving earnings growth Year ended September 30, Millions Per diluted share Net Economic Earnings (NEE) 1 2018 2017 2018 2017 Gas utility $ 183.1 $ 181.5 $ 3.71 $ 3.86 Gas marketing 22.9 6.8 0.46 0.14 Other (22.3) (20.7) (0.45) (0.44) $ 183.7 $ 167.6 $ 3.72 $ 3.56 Average shares outstanding 2 49.3 47.0 • Net economic earnings +$16.1M (10%) on growth in both business segments ‒ Gas Utility +$1.6M • Higher contribution margin and the benefit of the lower income tax rate • Offset in part by higher operating expenses ‒ Gas Marketing NEE +$16.1M on improved market conditions ‒ Other expenses reflect higher after-tax interest and other corporate costs, partially offset by higher Spire STL Pipeline AFUDC earnings • NEE per share +4.5% including our successful 2.3 million share offering in May 1 See Net economic earnings (non-GAAP) reconciliation in Appendix. 2 Average Shares Outstanding in millions. 12 Spire | Year -end fiscal 2018 earnings results
Increasing revenues and margin Years ended September 30, Millions Change 2018 2017 $ % (Millions) Operating Revenues Gas utility $ 1,888.4 $ 1,667.9 $ 220.5 13% Gas marketing 71.6 79.3 (7.7) -10% Other and eliminations 5.0 (6.5) 11.5 NM $ 1,965.0 $ 1,740.7 $ 224.3 13% Contribution Margin 1 Gas utility $ 947.5 $ 939.0 $ 8.5 1% Gas marketing 41.3 11.6 29.7 256% Other and eliminations 6.1 1.9 4.2 221% $ 994.9 $ 952.5 $ 42.4 4% • Revenues grew 13%, reflecting higher demand and higher commodity costs • Gas Utility contribution margin increased by $8.5M as a result of: + Higher usage volumes from winter weather, ISRS and modest customer growth ‒ Seasonal rate design change at Missouri utilities and lower utility rates due to tax reform • Gas Marketing margin up $29.7M on colder weather and improved market conditions 1 Contribution margin is operating revenues less gas costs and gross receipts taxes. See Contribution margin (non-GAAP) reconciliation in Appendix. 13 Spire | Year -end fiscal 2018 earnings results
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