Energy in motion Investor presentation December 2019 1 Spire | Investor presentation - December 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,” “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 as a result of disallowances in our Missouri rate proceedings. For fiscal 2019 this included ISRS rulings. 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. 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 largely non-cash write-offs related to Missouri rate cases. 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. 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 2 Spire | Investor presentation - December 2019
Delivering solid results • Delivered another year of consistent growth and improving performance • We’re delivering on our growth strategies ‒ Growing organically ‒ Investing in infrastructure ‒ Advancing through innovation • Always with a focus on safety, system integrity and customer service • FY19 net economic earnings per share of $3.73, up 5.1% from FY18 run-rate 3 3 Spire | Investor presentation - December 2019
Advancing our midstream operations • Appointed industry veteran Scott Smith to lead our midstream operations • Spire STL Pipeline completed and placed into service – Finished construction, land restoration and pre-operational testing – Received FERC approval of final rates and authorization to commence service – Began delivering a reliable, more diverse and resilient energy supply to Spire Missouri East – Total project cost of ~$265M • Developing Spire Storage – Near-term focus on operations for the winter – Disciplined approach to development and commercial strategy – FY19 spend on facilities and equipment of $35M 4 Spire | Investor presentation - December 2019
Investing in growth • $823M capital spend in FY19 Capital expenditures (Millions) – $575M gas utility investment $900 $823 • $287M on pipeline upgrades $750 • $91M on new business 248 – $45M higher than forecast due to $600 $499 increased infrastructure upgrades 43 $450 – Non-utility spend in line with forecast $300 575 including $150M for Spire STL Pipeline 456 $150 • Regulatory recovery $0 – Alabama annual RSE filings 2018 actual 2019 actual Spire Alabama exceeded 2019 AIM target • Gas Utility Pipelines, storage for pipeline replacement miles and other • Pending filing reflects 10bp ROE increase for 2020 – Missouri pipeline upgrades via ISRS; additional $8.8M effective Nov. 16 5 Spire | Investor presentation - December 2019
Growing organically Contribution margin 1 – Gas Utility • Strong focus on new business (Millions) • Greater engagement on economic 1,000 $967 $948 development $939 • Driving margin via customer growth 900 and supportive regulatory outcomes 800 700 Advancing through innovation 2017 2018 2019 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 6 Spire | Investor presentation - December 2019 postretirement benefit costs transferred below the operating income line.
Delivering strong operating performance Reducing employee injuries Improving pipeline safety OSHA DART 1 rate Damages per 1,000 locates 4.84 4.78 4.76 3.66 3.65 4.24 3.22 3.87 2.63 1.88 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Enhancing service and safety Strengthening system integrity Average leak response time (minutes) Leaks per 1,000 system miles 174.0 32.4 28.9 141.9 28.4 26.8 25.2 99.7 75.6 60.4 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 1 Days away, restricted or transferred. 7 Spire | Investor presentation - December 2019
Delivering net economic earnings growth Per diluted Millions common share Year ended September 30, 2019 2018 2019 2018 Gas Utility Recap of run-rate performance $ 199.8 $ 183.1 NEE 1 Gas Marketing NEEPS 19.4 22.9 Other 2018, as reported (24.1) (22.3) $ 183.7 $ 3.72 Net Economic Earnings (NEE) 2 Marketing adj 3 $ 195.1 $ 183.7 $ 3.73 $ 3.72 (8.2) (0.17) . . MO regulatory adjustments (30.6) (0.62) 2018 run rate $ 175.5 $ 3.55 . . Effect of Tax Cuts and Jobs Act 60.1 1.21 2019 results $ 195.1 $ 3.73 . . MO ISRS provision Change (12.2) (0.23) 11.2% 5.1% All other adjustments 4 1.7 1.0 0.02 0.02 Net Income [GAAP] $ 184.6 $ 214.2 $ 3.52 $ 4.33 Average diluted shares outstanding 50.8 49.3 • NEE up $19.6M or 11.2% on a run rate basis; NEE per share up 5.1% ‒ Gas Utility up $16.7M due to higher contribution margin and more favorable weather patterns ‒ Gas Marketing decline reflects return of more normal market conditions offset by business expansion Other costs reflect higher AFUDC from the Spire STL Pipeline offset by Spire Storage negative EBITDA 5 of ($13.2M) ‒ • NEE per share reflects the impact of preferred dividends and new common shares issued • GAAP results reflect prior year rate resets and tax reform as well as current year ISRS provision 1 Dollars in Millions. 2 See Net economic earnings [non-GAAP] reconciliation in the Appendix. 3 Per share benefit in Gas Marketing from unusually favorable market-driven conditions during the winter of 2017-18. 4 All other adjustments include acquisition and recurring fair value adjustments and tax impacts of adjustments. 5 See Spire Storage EBITDA [non-GAAP] reconciliation in the Appendix. 8 Spire | Investor presentation - December 2019
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