It’s a promise. Investor Presentation February 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-Q for the quarter ended December 31, 2017 to be filed with the Securities and Exchange Commission later today. This presentation also includes “net economic earnings,” “net economic earnings per share,” “contribution margin,” “EBITDA,” and “adjusted long - term capitalization,” non - GAAP measures used internally by management when evaluating the Company’s performance and results of o perations. Net economic earnings exclude from net income the after-tax impacts of fair-value accounting and timing adjustments associated with energy-related transactions, as well as acquisition, divestiture, and restructuring activities. 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. Beginning in the first quarter of fiscal 2018, net economic earnings also exclude the largely non-cash earnings impacts of the recently enacted Tax Cuts and Jobs Act including amounts subject to regulatory treatment. Management believes that excluding the impacts of tax reform provides visibility into the true run-rate earnings of the Company. Contribution margin adjusts operating income to include only those costs that are directly passed on to customers and collected through revenues, which are the wholesale cost of natural gas and propane, and gross receipts taxes. 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. EBITDA is earnings before interest, income taxes, depreciation and amortization. A reconciliation of net income to net economic earnings is contained in our SEC filings, and a summary reconciliation is contained in the Appendix to this presentation. Reconciliations of EBITDA to net income, of contribution margin to operating income, and of capitalization per balance sheet to adjusted long-term capitalization are 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 2 Spire | Investor Presentation – February 2018
We’ve transformed our company through increasing our scale and expanding our geographic footprint. • We operate natural gas companies across Alabama, Mississippi and Missouri • Since 2012: – Homes and businesses served increased by 1.1 million – Enterprise value more than quadrupled to $5.8 billion* * As of February 2, 2018 3 Spire | Investor Presentation – February 2018
We are Spire Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Transforming our company • Growing organically • Investing in infrastructure • Acquiring and integrating • Technology and innovation 4 Spire | Investor Presentation – February 2018
Delivering on our promises • Delivered solid Q1 earnings of $1.19 per share • Continuing our commitment to organic growth and investing in our utility business • Pursuing opportunities in natural gas pipelines and storage • Seeking reasonable regulatory outcomes while pursuing change legislatively 5 Spire | Investor Presentation – February 2018
Growing organically Total utility customers • Targeting programs that add customers (Millions) and grow margin 1.8 1.69 1.68 – Enhanced business development tools and 1.57 1.55 processes 1.5 – Increased focus on economic development 1.12 1.2 • Seizing market opportunities through 0.9 – Strategic line extensions in Missouri 0.63 0.6 – Potential municipal utility purchases – Pursuit of multi-family segment 0.3 • In Q1, we made significant progress by 0 – Investing $55 million in pipeline replacement 2012 2013 2014 2015 2016 2017 across our three-state footprint Note: Rolling 12-month average customers for all gas utilities for period of – Investing $22 million in new business (+66%) Spire’s ownership and average customers of acquired utilities for period of ownership in the year of acquisition. – Adding 15% more new meters in Missouri 6 Spire | Investor Presentation – February 2018
Investment in growth remains a top priority • Q1 FY18 capex of $111 million (+24%) Capital expenditures forecast (Millions) • FY18 forecasted spend of $490 million 5-year forecast: $2.3B – $415 million investment for gas utilities $520 $490 – $75 million for Spire STL Pipeline & storage $438 105 $430 75 $420 25 • 5-year forecast of $2.3 billion 110 100 105 105 113 – Driven by utility infrastructure upgrade programs with lives of roughly 20+ years 315 315 320 310 300 – Over 80% recovered with minimal regulatory lag or reflected in earnings – Utility spend well balanced across 2017 2018 2019 2020 2021 jurisdictions/projects Utility, with minimal lag Other utility Pipelines and Storage 7 Spire | Investor Presentation – February 2018
Investing in pipelines • Spire STL Pipeline improves our supply diversity, reliability, and resiliency – 65-mile pipeline connecting to REX – Capacity of 400 MMcf/d with Spire Missouri to be foundation shipper (350 MMcf/d) • Progressing on Spire STL Pipeline – Expect to receive FERC approval in early 2018 – Land acquisition and construction planning continues – On track for mid-FY19 in-service date and investment of $190 - $210 million • Assessing additional opportunities in Missouri and Alabama 8 Spire | Investor Presentation – February 2018
Investing in gas storage • Acquired majority interest in Ryckman Creek Resources – Natural gas storage facility in Wyoming – Certificated at 35 Bcf of working gas – Interconnects with five interstate pipes and has access to REX • Positioned to serve multiple customer groups and geographic markets • Growing investment that will support our long-term growth targets – $26 million purchase price – Plan to upgrade infrastructure over the next two years (~$15 million) ‒ Expect earnings accretion in FY19; excluded from FY18 NEE as we integrate 9 Spire | Investor Presentation – February 2018
Pursuing regulatory change • Republican MO governor focused on ‒ Improving business environment ‒ Supporting economic development ‒ Enhancing government efficiency • Governor recently appointed new Republican commissioner to MoPSC • We are pursuing change through legislative initiatives in MO and AL ‒ SB 730: Rate Case Modernization Act • Seeks rate stability through performance- based and annual rate setting • On the Senate floor for debate • Companion legislation in the House ‒ Also proposed rate stabilization mechanisms in our MO rate-case filings ‒ Supporting damage prevention through “One Call” legislation in Alabama 10 Spire | Investor Presentation – February 2018
Missouri rate case update • We filed rate cases in April 2017 seeking a fair, reasonable outcome – Requested modest increase • To recover investments that enhanced safety, reliability, customer service Reflecting $70 million in savings and • synergies from our growth – Even with increase requested, bills will be lower than 10 years ago – Key issues are rate base, capital structure, ROE, cost of service items • Working with MoPSC to return tax reform benefits to customers • Expect new rates in late March 11 Spire | Investor Presentation – February 2018
Tax Cuts and Jobs Act • Signed into law in late December 2017 • Federal corporate tax rate lowered from 35% to 21% – Continued deductibility of interest expense – Elimination of full expensing of property for tax purposes • Tax law changes recognized in fiscal Q1 – Required re-measurement of deferred taxes – Recorded largely non-cash decrease to income tax expense of $59.9 million, an increase in GAAP earnings of $1.24 per share • We plan on passing tax reform benefits back to our utility customers – In Alabama, new rates reflecting tax benefit were effective Feb. 1, 2018 – In Missouri, we are finalizing the benefit amount and process for flowing back to customers 12 Spire | Investor Presentation – February 2018
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