Energy in motion Investor presentation December 2018
2 2 Spire | Investor Presentation | December 2018 Spire | Investor presentation | December 2018
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 filed with the Securities and Exchange Commission (SEC). 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 | Investor presentation | December 2018
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 | December 2018
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 Storage – Spire STL Pipeline 5 Spire | Investor presentation | December 2018
Moving forward confidently • Gaining regulatory certainty through recent resets in Missouri and Alabama • Executing on our organic growth and capital investment plans • Advancing our gas-related businesses • Strengthening our financial position • Delivering solid FY18 net economic earnings per share (NEEPS) of $3.72 • Setting growth expectations for FY19 and beyond – FY19 NEEPS guidance of $3.70-$3.80 – Long-term annual NEEPS growth target of 4%-7% based on FY18 run-rate earnings 6 Spire | Investor presentation | December 2018
Gaining regulatory certainty • Missouri rate cases completed in March 2018 – Increased return (ROE) and higher equity capitalization – Secured weather normalization that mitigates margin exposure • Received approval for $8 million ISRS increase in Missouri • Alabama rate-setting parameters (RSE) updated – ROEs and CCM reset – Capital structures harmonized – Gained infrastructure upgrade incentive for Spire Alabama Spire Alabama Spire Gulf Current Prior Current Prior Return on Equity (ROE) Range 10.15% - 10.65% 10.50% - 10.95% 10.45% - 10.95% 10.45% - 10.95% Adjusting point 10.40% 10.80% 10.70% 10.80% Equity capitalization 55.50% 56.50% 55.50% 56.00% Infrastructure incentive AIM: +/-10 bps ROE CIMFR: 75% eq ratio > baseline thru 2019 Cost Control Measurement (CCM) Metric O&M / customer Total O&M O&M / customer Total O&M Base year 2018 2007 2017 2014 +/ - band 1.50% 1.75% 1.50% 1.75% 7 Spire | Investor presentation | December 2018
Growing organically Contribution margin – Gas Utility (Millions) • Targeting programs to increase 1,000 $948 $939 utility customers and margins 900 $844 • Increased homes and businesses 800 we served in FY18 – New business capex to $85M (+44%) 700 – Installed record 11,000+ new meters 600 2016 2017 2018 – Contracted 4,600 multi-family units O&M expenses per customer 1 • Achieved higher Gas Utility margin • Focused on managing costs across $270 our utilities, post the regulatory $270 resets $260 $255 $252 $250 $244 $241 $250 $240 $230 2014 2015 2016 2017 2018 1 Operation and maintenance (O&M) expenses and customers for Spire Missouri, Spire Alabama and Spire Gulf for all years. 2018 (in orange) excludes pension and other amortization ($8M) associated with rate proceedings in MO and AL. 8 Spire | Investor presentation | December 2018
Investing for Capital expenditures forecast long-term growth (Millions) 5-year forecast: $2.6B $650 • 5-year capital investment forecast 175 $505 $499 $495 increased to $2.6B $485 15 15 43 15 70 70 75 65 63 • Driven by higher utility spend – Supported by infrastructure upgrade programs with lives up to 20 years 420 405 410 400 393 – More than 85% of utility spend recovered with minimal regulatory lag or reflected in earnings 2018 2019 2020 2021 2022 Utility, with minimal lag Other utility Pipelines and storage • Also reflects development of and new business Rate base 1 growth Spire STL Pipeline and Spire Storage Balanced 5-year spending Missouri East $2.8 33% $2.6 Missouri West 27% Alabama/Mississippi 10% Pipelines and 2017 2018 2019 2020 2021 2022 storage 30% 1 Rate base for Missouri utilities per order authorized 2/21/18 for cases C-GR-2017-0215 and C-GR-2017- 0216, plus retained shareholders’ equity for Spire Alabama and Spire Gulf per RSE filings on 10/26/18, and Spire Mississippi rate base per stipulation 4/10/18, all with 9 Spire | Investor presentation | December 2018 estimated growth subject to prudence review.
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 10 Spire | Investor presentation | December 2018
Growing Spire Marketing • Solid business model supported by Spire Marketing’s operational reach strong risk management protocols – Provides gas marketing and related services to diverse customer base – Physically delivers gas on 20+ pipelines – Optimizes portfolio of commodity, transportation and storage contracts • Strong FY18 results driven by – Improved market conditions – Wider regional basis differentials – Greater storage and transport optimization • Positioning Spire Marketing for continued growth and success – Industry veterans leading the business and growing the team – Expanding geographically with Houston business center 11 Spire | Investor presentation | December 2018
Investing in storage • Building Spire Storage – Integrating two adjacent natural gas storage facilities we acquired – Upgrading operational capabilities and expanding service offerings • Marketing to a broad range of customers: – Utilities – Power generators – Pipelines – Producers – Marketers • $56M total investment through FY18 • Expect small earnings contribution in FY19 12 Spire | Investor presentation | December 2018
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