Energy that advances Investor presentation March 2020 - PowerPoint PPT Presentation

Energy that advances Investor presentation March 2020

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 in 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 | Investor presentation – March 2020

Energy that advances • Creating enhanced value for all our stakeholders by – Growing organically – Investing in infrastructure – Advancing through innovation • Delivering results – Off to a strong start in FY20 – Higher Q1 NEE per share of $1.33 – Continued strong operating performance • Advancing our gas-related businesses • Strengthening our financial position • Explore OurStory.SpireEnergy.com to see how we’re using our energy to continue to advance people, performance and possibilities 4 Spire | Investor presentation – March 2020

We’re a growing, financially strong natural gas company • 5-year capital investment target of $3.0B focused on infrastructure upgrades Delivering • Growing organically across our utility and gas-related businesses growth Targeting 4 – 7% annual long-term EPS growth • • Strong and growing cash flow; $517M of EBITDA in FY19, up 5% Financial • Solid equity capitalization and ample liquidity via $975M credit facility strength • Investment grade credit ratings with improving metrics Delivering average total shareholder return of 17% per year 1 • Superior Growing dividend with attractive 3.2% yield 2 investor • returns Increasing market capitalization 4.6  since 2012 • 1 For the five years ended September 30, 2019. 2 Based on SR average stock price for the 30 days ended March 17, 2020. 5 Spire | Investor presentation – March 2020

Investing in growth Capital expenditures (Millions) $250 • Q1 FY20 capital spend of $192M $207 $192 $200 – Gas utility up $15M, focused on 70 40 pipeline upgrades and new business $150 – Midstream spend $100 • $29.5M for Spire STL Pipeline 152 137 $50 $10.3M for Spire Storage • • FY20 capex target raised to $610M $0 Q1 FY19 Q1 FY20 – $540M for gas utilities, driving 7%-8% rate base growth 5-year forecast: $3.0B $823 – $50M for Spire STL Pipeline 248 $610 – $20M for Storage and other 70 $530 $515 $525 10 30 10 • 5-year spend remains $3.0B – More than $500M/year for gas utilities 540 515 575 500 505 – Modest spend for the other businesses FY19 FY20 FY21 FY22 FY23 Gas Utility Pipelines, storage and other 6 Spire | Investor presentation – March 2020

Enhancing stakeholder value Contribution margin 1 – Gas Utility (Millions) Growing organically 1,000 • Strong focus on new business $967 $948 $939 • Greater engagement on economic 900 development • Driving margin via customer growth 800 and supportive regulatory outcomes 700 2017 2018 2019 Advancing through innovation O&M expenses per customer 2 • Building on legacy of continually $270 improving service, efficiency and cost $270 • Formalizing approach to innovation $256 $256 $260 $252 with structure and processes $250 $244 • Leveraging technology $251 $241 $247 $240 • Controlling costs across our utilities $230 2014 2015 2016 2017 2018 2019 1 See Contribution margin [non-GAAP] reconciliation in the Appendix. 2 Operation and maintenance (O&M) expenses and customers for Spire Missouri, Spire Alabama and Spire Gulf for all years. Expenses in orange for 2018 and 2019 exclude Missouri rate case items and the mix of service and non-service 7 Spire | Investor presentation – March 2020 postretirement benefit costs transferred below the operating income line.

Advancing our midstream operations • Industry veteran Scott Smith joined Oct. 2019 to lead midstream operations • Spire STL Pipeline completed and placed into service – Began commercial operation in mid-November 2019 – Provides a reliable, more diverse and resilient energy supply to Spire MO East – Total project cost of ~$265M • Developing Spire Storage – Near-term focus on operations for the winter – Disciplined approach to investment, development and commercial strategy – Targeting $10M capital investment in Q2 FY20 – Expect to achieve positive EBITDA contribution by end of FY20 8 Spire | Investor presentation – March 2020

Regulatory update Missouri • Jason Holsman (D) joined the Missouri Public Service Commission on Jan. 16 • Pursuing resolution of ISRS recovery in dispute – Judicial: March 17 – Missouri Supreme Court denied requests by Spire and the MoPSC to review MO Appeals Court orders and remanded case to MoPSC – Legislative: legislation introduced to clarify language in ISRS statute • House Bill #1992 – floor debate postponed; House in recess until at least March 30 • Senate Bill #618 – passed on March 9 • Spire filed an ISRS request on Feb. 3 that included $13.4M of new recovery for infrastructure upgrades Alabama • 2020 rates effective Dec. 1 – Includes the launch of Spire Alabama’s off -system sales/capacity release program – Spire Alabama rates reflect a 10bp ROE increase for achieving the AIM pipeline replacement target in 2019 9 Spire | Investor presentation – March 2020

ISRS: Court and legislative timeline 2020 2021 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Missouri March 17 – Supreme Court denies request to Supreme review Missouri Appeals Court orders Court Missouri Appeals Appeals Court may act on January and July 2019 ISRS appeals Court Spire files new ISRS request on Feb 3 MoPSC makes a determination MoPSC upon remand for initial ISRS rulings Spire could file an early MO rate case after 60-days notice ISRS legislation introduced If successful, settles future ISRS filings in House and Senate and may inform legislative intent Legislation Reintroduce legislation in 2021 If unsuccessful Judicial and regulatory actions Spire’s actions Legislation 10 Spire | Investor presentation – March 2020