Energy that advances Second quarter fiscal 2020 update May 8, 2020 - PowerPoint PPT Presentation

Energy that advances Second quarter fiscal 2020 update May 8, 2020

Participants on today’s call Suzanne Sitherwood Steven L. Lindsey Steven P. Rasche President and Executive Vice President Executive Vice President Chief Executive Officer and Chief Operating Officer and Chief Financial Officer 2 Spire | Second quarter fiscal 2020 update

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,” “adjusted EBITDA,” and “adjusted long - term capitalization,” non - GAAP measures used internally by management when evaluating the Company’s performan ce 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. Beginning with the fourth quarter of fiscal 2019 and continuing into fiscal 2020, these items include the ISRS rulings provisions. 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. 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. Adjusted long-term capitalization treats preferred stock as 50% debt and 50% equity, as rating agencies would treat preferred stock. EBITDA is earnings before interest, income taxes, depreciation and amortization. Management believes EBITDA provides a helpful additional measure of core results of Spire Storage. Adjusted EBITDA is earnings before interest, income taxes, depreciation and amortization, plus the non-cash Missouri ISRS rulings provision. These internal non-GAAP operating metrics should not be considered as an alternative to, or more meaningful than, GAAP measures such as operating income, net income or earnings per share. 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, Storage EBITDA to net income and of adjusted long-term capitalization to capitalization per balance sheet are also contained in the Appendix. Note: Years shown in this presentation are fiscal years ended September 30. Investor Relations contact: Scott W. Dudley Jr. Managing Director, Investor Relations 314-342-0878 | Scott.Dudley@SpireEnergy.com 3 Spire | Second quarter fiscal 2020 update

Focusing on staying safe and healthy while connecting in new ways 4 Spire | Second quarter fiscal 2020 update

Answering every challenge Our experience: Connecting with us should feel like a “handshake at the front door.” Our mission: Answer every challenge, advance every community and enrich every life through the strength of our energy. 5 Spire | Second quarter fiscal 2020 update

Addressing the coronavirus challenge • Protecting the health and safety of our employees, customers and communities is our core value • How we have responded – Activated our Incident Support and Crisis Management teams – Established standing communications and updates for employees, leaders and our customers – Following CDC guidelines and other health and safety best practices – Planning for the next step in this journey 6 Spire | Second quarter fiscal 2020 update

Focusing on our strategy • Executing on our value-creation strategy – Growing organically – Investing in infrastructure – Advancing through innovation • Ensuring we remain strong — financially and operationally • Q2 financial results below plan due to warmer weather • Pursuing favorable regulatory outcomes 7 Spire | Second quarter fiscal 2020 update

Steps we’re taking to address coronavirus Employees Customers Community • Employing healthy practices • Continuing to provide safe and • Donating $250k to local area (hand washing, social distancing) reliable service food pantries and meal programs in our communities • New emergency leave and other • Suspended disconnections and work policies for employees late payment fees • Donated and set up laptops for dealing with coronavirus children in limited-income • Postponing work that’s not time schools and for community • Extra safety precautions for field critical to reduce customer organizations workers contact • Coordinating with state and • Work-from-home starting mid- • Expanding customer assistance local governments and March through LIHEAP and other healthcare community to programs, including DollarHelp • Eliminated all non-essential support coronavirus response travel and group gatherings • Spire donated $500k as a matching gift for the • Enhanced cleaning of facilities DollarHelp program 8 Spire | Second quarter fiscal 2020 update

Expanding capital investment Capital expenditures 1H actuals (Millions) $400 $377 $346 • Furthering utility organic growth 122 67 $300 – $53M new business investment YTD – New business spend and new meter $200 additions on pace with last year 279 255 • YTD spend on track with plans $100 – $279M utility spend focused on upgrades and new business $0 FY19 FY20 – $45M investment in STL Pipeline Gas Utility Pipelines, storage and other – $20M for Spire Storage FY20 forecast (Millions) • FY20 capex plan increased to $700 $640 $610 $640M $600 80 70 – Utility spend up $20M $500 $400 – 88% of capex earmarked for utilities $300 560 540 $200 $100 $0 Prior Updated Gas Utility Pipelines, storage and other 9 Spire | Second quarter fiscal 2020 update

Pursuing favorable regulatory outcomes Missouri • Legislation to clarify ISRS statute continues to progress – Senate (SB618) passed – Substitute to SB618 passed in House May 6; now in conference committee • Stipulation on February 2020 ISRS request – Agreement between Spire, MoPSC Staff and OPC – Annual ISRS increase of $11.1M; subject to MoPSC approval • Status of Appeals court orders – 2016, 2017 and 2018 ISRS cases remanded to MoPSC for final resolution – Decision due by July 16, 2020 Alabama • Off-system sales and capacity release program in effect since Dec. 1 • Earned 10 bp ROE incentive under AIM for FY20; on track with FY21 incentive 10 Spire | Second quarter fiscal 2020 update

Delivering solid net economic earnings Per diluted Millions common share Three months ended March 31, 2020 2019 2020 2019 Gas Utility $ 144.3 $ 146.7 Gas Marketing 5.1 6.2 Other (5.4) (5.0) Net Economic Earnings (NEE) 1 $ 144.0 $ 147.9 $ 2.75 $ 2.90 - - MO ISRS provision (2.2) (0.04) All other adjustments 2 (8.2) 6.7 (0.17) 0.14 Net Income [GAAP] $ 133.6 $ 154.6 $ 2.54 $ 3.04 • Gas Utility NEE down $2.4M – Lower utility contribution margin due to warmer weather – Decreased value of investments in certain employee benefit plans • Gas Marketing NEE down $1.1M – Higher volumes from our continued expansion – Offset by less favorable market conditions and higher costs • Improved performance at Spire STL Pipeline and Spire Storage, offset by higher corporate costs • Impact of preferred and common stock issued in last 12 months = $0.08 per share 1 See Net economic earnings reconciliation to GAAP in the Appendix. 2 All other includes recurring NEE adjustments for fair value, acquisition, and income tax effects of all NEE adjustments. 11 Spire | Second quarter fiscal 2020 update