Third Quarter 2016 Earnings Conference Call August 3, 2016 - PowerPoint PPT Presentation

Third Quarter 2016 Earnings Conference Call August 3, 2016

Participants on today’s call Suzanne Steven P. Steven L. Michael C. Sitherwood Rasche Lindsey Geiselhart President and Executive Vice President, Executive Vice President Senior Vice President, Chief Executive Officer Chief Financial Officer and Strategy and Chief Operating Officer, Corporate Development Distribution Operations 2 Spire | 3 rd Quarter FY16 Earnings Conference Call

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, 2015 filed with the Securities and Exchange Commission (SEC) and our Form 10-Q for the quarter ended June 30, 2016 to be filed with the SEC later today. This presentation also includes “net economic earnings,” “net economic earnings per share,” “operating margin,” and “EBITDA,” 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, as well as the after-tax impacts related to acquisition, divestiture, and restructuring activities, including costs related to the pending acquisition of Mobile Gas and Willmut Gas and the acquisition and integration of Missouri Gas Energy (MGE) and Alabama Gas Corporation (Alagasco). Management believes that this presentation provides a useful representation of operating performance by facilitating comparisons of year-over-year results. Operating 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, taxes, depreciation and amortization. A reconciliation of EBITDA to net income and of operating margin to operating income can be found in the Appendix to this presentation. 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 | 3 rd Quarter FY16 Earnings Conference Call

Spire delivers • Another solid quarter of financial and operating performance • While delivering on our promises to our customers, communities and shareholders • At Spire, we are about: Bringing people and energy together ‒ ‒ Championing people by delivering energy that inspires • We remain focused on the growth and transformation of Spire • We continue to successfully execute on our strategy 4 Spire | 3 rd Quarter FY16 Earnings Conference Call

Successfully executing on our growth strategy Growing our gas Acquiring and Modernizing Investing in utility business integrating gas our gas assets innovation utilities Investing in prudent Added 1 million Positioning Gas newBLUE IT infrastructure customers Marketing for modernization upgrades continued success MGE (2013) Two Spire CNG Successful organic fueling stations Improving supply Alagasco (2014) growth initiatives diversity, reliability Mainstay and resiliency Mobile Gas and Growing commercial partnership Willmut Gas and industrial load Launched Spire STL (pending 2016) Pipeline project Operational enhancements and efficiencies 5 Spire | 3rd Quarter FY16 Earnings Conference Call

Third quarter highlights • Higher net economic earnings ¹ per share of $0.33 with Gas Utility and Gas Marketing both contributing to increase • Spire STL Pipeline underway with launch of open season • Acquisition of Mobile Gas and Willmut Gas remains on track 1 See Net economic earnings (non-GAAP) reconciliation in Appendix. Spire | 3 rd Quarter FY16 Earnings Conference Call 6

Legislative and regulatory • Current developments ‒ Missouri regulatory reform initiatives by Senate and Missouri Public Service Commission (MoPSC) ‒ Office of Public Counsel (OPC) earnings complaint ‒ OPC and MoPSC Staff investigation into recent acquisitions • We support efforts to reform and modernize state utility regulation 7 Spire | 3 rd Quarter Earnings Conference Call

EnergySouth acquisition • Parent company of Mobile Gas and Willmut Gas • Grows our gas utility business ‒ Adds 104,000 customers and growing commercial and industrial load ‒ Provides additional capital investment and organic growth opportunities • Adds to cash flow and earnings ‒ Accretive to NEE per share in FY18 ‒ Supports investment and dividends • Permanent financing for the acquisition in place • Anticipate closing shortly after: ‒ Mississippi Public Service Commission approval ‒ Satisfying customary closing conditions 8 Spire | 3 rd Quarter FY16 Earnings Conference Call

Spire STL Pipeline 70-mile pipeline with • Helps modernize our gas assets to: capacity of 400 MMcf/d ‒ Achieve more diverse supply portfolio ‒ Improve reliability and resiliency ‒ Access lower-cost shale gas Connects to • FERC-regulated pipeline 100% Rockies Express owned by Spire pipeline • July 22: Spire STL Pipeline was accepted by FERC into their pre- filing process Project investment of • Laclede Gas expected to be a $170 - $200 million foundation shipper with contractual commitment of 350 MMcf/d • August 1: launched open season to solicit commercial interest in pipeline Expect fiscal 2019 capacity in-service date 9 Spire | 3 rd Quarter FY16 Earnings Conference Call

Net economic earnings Third Quarter Ended June 30 Millions Per Diluted Share Net Economic Earnings 1 FY16 FY15 FY16 FY15 Gas Utility $ 18.0 $ 16.5 $ 0.41 $ 0.38 Gas Marketing 1.8 0.5 0.04 0.01 Other (5.2) (5.9) (0.12) (0.14) $ 14.6 $ 11.1 $ 0.33 $ 0.25 • Net economic earnings (NEE) per share of $0.33, up $0.08 • Strong quarterly performance was broad-based ‒ Solid Gas Utility earnings driven by lower expenses ‒ Improved Gas Marketing earnings ‒ Lower corporate costs 1 See Net economic earnings (non-GAAP) reconciliation in Appendix. 10 Spire | 3 rd Quarter FY16 Earnings Conference Call

Operating revenues and margin Third Quarter Ended June 30 Millions Change FY16 FY15 $ % Operating Revenues Gas Utility $ 253.2 $ 260.2 $ (7.0) -3% Gas Marketing & Other (3.9) 15.0 (18.9) -126% $ 249.3 $ 275.2 $ (25.9) -9% Operating Margin 1 Gas Utility $ 176.9 $ 172.9 $ 4.0 2% Gas Marketing (0.2) 3.1 (3.3) -106% Other and Eliminations 0.6 0.6 - 0% $ 177.3 $ 176.6 $ 0.7 0% • Gas Utility revenues down 3%, reflecting lower commodity costs • Gas Utility margin up $4.0 million ‒ $3.3 million higher ISRS revenues for Missouri Utilities ‒ $2.8 million lower RSE adjustment at Alagasco ‒ Partially offset by $2.1 million of other variances, mainly timing of gas cost recoveries • Gas Marketing margin, after removing fair value adjustments, grew ~$2.0 million ‒ Higher volumes and storage earnings ‒ Partially offset by narrowing spreads 1 Operating margin is operating revenues less gas costs and gross receipts taxes. See Operating margin (non-GAAP) reconciliation in Appendix. 11 Spire | 3 rd Quarter FY16 Earnings Conference Call

Expenses Third Quarter Ended June 30 Millions Change FY16 FY15 $ % Operating Revenues $ 249.3 $ 275.2 $ (25.9) -9% Operating Expenses Gas Utility Natural & propane gas 54.1 57.7 (3.6) -6% Other operation & maintenance 91.8 90.6 1.2 1% Depreciation & amortization 34.2 32.5 1.7 5% Taxes, other than income taxes 27.4 26.2 1.2 5% Gas Marketing & Other 6.5 32.2 (25.7) -80% Operating Income 35.3 36.0 (0.7) -2% Other (Income) Deductions, Net (1.6) (0.5) (1.1) 220% Interest Expense 19.4 17.8 1.6 9% Income Tax Expense 6.8 4.6 2.2 48% • Excluding $7.6 million gain on sale of property in FY15, other O&M expenses were lower by $6.4 million on lower bad debt expense (weather, commodity costs) and employee related costs • Depreciation up $1.7 million reflecting increased capital investment • Higher property, payroll and gross receipts taxes • Gas Marketing costs lower reflecting lower commodity costs and higher mix of trading revenues (recorded net), partially offset by higher volumes 12 Spire | 3 rd Quarter FY16 Earnings Conference Call