Investor Presentation March 1, 2010

Transcription

1 Investor Presentation March 1, 2010

2 Forward Looking Statements Nasdaq: NRGY, NRGP Except for the historical information contained herein, the matters discussed in this presentation (e.g., our growth outlook and forecasted economics) are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include, among other things, market conditions, weather risks and other factors discussed in the Company s filings with the Securities and Exchange Commission including Forms 10- K, 10-Q, and 8-K. Furthermore, any forward-looking statements presented are expressed in good faith and are believed to have a reasonable basis as of the date of this presentation. Inergy assumes no responsibility to update this information and it may be superceded by later information. Forward-looking statements are not guarantees of future performance or an assurance that our current assumptions and projections are valid. Actual results may differ materially from those projected. 2

3 Investment Highlights Income Dual Platform Operating Strategy A Leading National Propane Franchise Fee-based Midstream Business Anchored by Northeast U.S. Gas Storage Strong Financial Performance Record Growth Midstream Energy Storage Platform Rapidly Becoming a Larger Component of Business Manageable Pipeline of Midstream Expansion Projects Underway Record of Consistent EBITDA & Distributable Cash Flow Growth Disciplined Consolidator of Retail Propane Industry Safety Underlying Businesses Characterized by Recession Resistant Stable Cash Flows Strong Balance Sheet and Distribution Coverage Recent Capital Markets Activity Provides Ample Balance Sheet Liquidity to Execute on High-Return Expansion Projects 3

4 Inergy Snapshot Inergy, L.P. is a geographically diverse retail propane and midstream energy business ~$4.8 billion combined partnership enterprise value with ~$301 million TTM Adj. EBITDA (a) Propane Midstream 4th largest retail propane distributor serving ~800,000 customers in 32 states Footprint located in quality markets with an intense focus on delivering financial and operational performance Supported by experienced supply, transportation, and logistics group based in KC Balanced Business Model (b) Propane ~63% 40 Bcf high-deliverability natural gas storage operations located in New York, potentially expandable to over 52 Bcf Leading provider of underground LPG storage in the Northeastern U.S. Industry-leading solution mining and salt production company in upstate New York NGL fractionation, storage, and terminalling operation strategically located on the West Coast Midstream ~37% (a) TTM Adjusted EBITDA as of December 31, Enterprise value as of February 19, (b) Forecast run rate 2010 Adjusted EBITDA. 4

5 Distinguished Distribution Performance Two Securities Offer a Compelling Combination of Income & Growth Inergy has consistently grown cash distributions & maintained strong coverage ratios $1.18 $1.45 $1.60 $1.91 $0.90 $2.14 ~11% Distribution Growth CAGR (a) $1.23 $ Consecutive Quarterly Distribution Increases $1.77 $2.60 $2.44 $2.29 ~37% Distribution Growth CAGR (a) $2.86 $2.74 $3.76 NRGP NRGY Fiscal 2002 (a) Annualized paid distributions Run Rate Fiscal 2003 Fiscal 2004 Fiscal 2005 Fiscal Fiscal 2007 Fiscal 2008 Fiscal 2009 Run Rate

6 Public GP Provides 2 nd Strategic Source of Equity Capital 0.7% General Partner Interest Management & Others Inergy Holdings, L.P. NASDAQ: NRGP Enterprise Value~$1.4 B (a) Incentive Distribution Rights Inergy, L.P. 100% ownership Operating Subsidiaries 7.1% Limited Partner Interest NASDAQ: NRGY Enterprise Value~$3.4 B (b) 73.1% Limited Partner Interest 26.9% Limited Partner Interest 92.2% Limited Partner Interest Public Unitholders & Others Public Unitholders & Others Offers Inergy Access to Both Growth & Income Oriented Investor Bases NRGP Highlights Management aligned with debt and equity investors through ownership of ~73% of NRGP equity and ~28% of combined NRGY and NRGP equity market capitalization Equity market capitalization of ~$1.4 billion Modest $31.5 million of debt NRGP currency can be used strategically as a second source of equity capital to fund NRGY growth NRGY Highlights Demonstrated access to public equity and debt capital markets Total Funded Debt / Consolidated EBITDA ~ 3.5 x (a) Inergy Holdings, L.P. equity market value as of February 19, 2010 and net debt balances as of December 31, (b) Inergy, L.P. equity market value as of February 19, 2010 and net debt balances as of December 31, The trading value of Inergy, L.P. units is grossed-up to reflect ~0.7% general partner interest. 6

7 Inergy Strategy Deliver Operational Excellence Further Enhance the Operation of an Outstanding Propane Franchise Maintain flexible operating model in attractive markets Deliberate focus on residential customer base with high tank control Premier Service Provider in Core Midstream Markets Midstream operations primarily fee-based; long-term contract-driven cash flow Executing toward an integrated energy storage hub in the Northeast with access to all major pipelines and over 50 Bcf of gas storage Disciplined Capital Investment Continue Growth Through Capital Expansion Projects & Acquisitions Propane - Expand existing retail footprint and establish new footprints with top regional businesses Midstream - Execute capital expansion projects around existing asset base Pursue and evaluate complementary midstream opportunities Seek to further strengthen the long-term growth profile with stable, fee-based cash flow streams 7

8 Propane Operations A leading national retail business Quality geographic footprint profitable markets 4 th largest national retailer Consistent financial performance Residential customer focus 70% 90% tank control Cost + margin service provider with little commodity price exposure Successful integration of 80 propane acquisitions Centralized supply, transportation, & logistics business Consolidates buying power & leverages across North American infrastructure Lowers retail cost, protects margins, reduces risk 200+ transport fleet facilitates linking inefficiencies in nationwide markets Superior profitability within peer group 8

9 Superior Operating Performance Business model and intense focus on retail margin lends itself to better pricing and operational decision-making = Key Profit Driver Acquisition integration & elimination of cost redundancies have driven significant value to cash flow line over last 4 years 850 (25%) redundant positions eliminated 1,200 (30%) surplus vehicles eliminated Average fleet age improved by 30% Strong transportation, supply and procurement business protects margins & creates material 3rd party cash flow $0.75 $0.60 $0.45 $0.30 $0.15 $0.00 $1.20 $1.05 $0.90 $0.75 EBITDA/Retail Propane Gallon (a) Inergy (b) (b) (c) Peer Average (c) Gross Profit/Retail Propane Gallon (a) (a) Source: most recent 10-K & 10-Q filings. Data includes gross profit & EBITDA from propane operations. (b) Inergy s EBITDA and gross profit exclude i) non-cash gains or losses on derivative contracts associated with fixed price sales to retail propane customers, ii) non-cash compensation expenses, and iii) gains or losses on the disposal of assets as disclosed in SEC filings. (c) Peer average includes: APU, ETP, FGP, and SPH. 9 $0.60 $0.45 Inergy (b) Peer Average (c)

10 Propane Industry Fragmentation Domestic Retail Market for LPG is Approximately 10.0 Billion Gallons (a) United Propane Gas 0.7% MFA Oil Co. (c) 0.8% Cenex (c) 2.1% Growmark (c) 2.9% Southern States (c) 0.7% Over 5,000 Independent Retailers 62.0% Suburban Propane 3.5% Inergy, L.P. 3.8% Energy Transfer 5.8% Ferrellgas 8.4% (a) (b) (c) Top 10 Propane Retailers Control ~38% of Market Share (b) Source: December 2009 American Petroleum Institute Report. Source: February 2010 LPGas Magazine. Cooperatives. Amerigas 9.3% 10

11 Midstream Business Stable Fee-Based Cash Flows High Quality Assets High Return Capital Expansion Opportunities Stable, fee-based cash flow profile with no commodity price exposure Growing business representing an increasing percentage of Inergy s run-rate EBITDA NE Midstream assets 100% contracted with long-term agreements Newly constructed core energy infrastructure in the Northeast in the heart of the Marcellus Shale Natural gas and LPG storage assets uniquely positioned with a first-mover advantage in the infrastructure development of the Marcellus Shale Assets have capital expansion opportunities which further enhance financial returns and support distribution growth Well positioned to seek additional midstream growth via acquisition 11

12 Leading Independent Storage Provider Inergy is among the largest independent natural gas storage providers and the largest independent located in the Northeast demand market Abundant pipeline interconnections available close to storage assets (Millennium, Tennessee Gas Pipeline, National Fuel, Empire, Transco, Dominion) Inergy is playing a major role in the development of storage and transportation infrastructure in the Marcellus Shale Top 5 U.S. Independent Natural Gas Storage Providers Legend Rank Company Location 12 Working Capacity (bcf) 1 Iberdrola (Caledonia, Freebird, Katy, Waha Hub) Mississippi, Alabama, New Mexico, Texas 50 (a) 2 Inergy (Stagecoach, Steuben, Thomas Corners, Seneca Lake) New York, Pennsylvania 42 3 Niska-Riverstone (Wild Goose, Salt Plains) California, Oklahoma 41 4 Plains All American (Bluewater, Pine Prarie) Michigan, Louisiana 39 5 Arcapita (Falcon Storage) Texas 35 (a) Pro forma for recently announced Seneca Lake acquisition expected to close mid-2010.

13 Premier Energy Storage Platform 4 Assets & 3 Expansion Projects Located Atop the Marcellus Shale Natural Gas Storage & Transportation LPG Storage Stagecoach (26.3 Bcf capacity) Steuben Gas Storage (6.2 Bcf capacity) Underway Finger Lakes LPG (7.0 mm bbl capacity) Thomas Corners Gas Storage Facility (7.0 Bcf Capacity) Seneca Lake Gas Storage (2.0 Bcf Capacity Expected to close Summer 2010) Marc 1 Hub Line (43-mile 30 Bi-directional lateral) North-South Project (additional compression to provide firm wheeling services between TGP and Millennium pipelines) US Salt Gas Storage Development (Up to 10.0 Bcf Capacity) Opportunity Exists to Operate as an Integrated Storage Hub Results in Increased Commercial Opportunities in Region Blue font denotes future expansion opportunities 13

14 Integrated Northeast Storage Hub Midstream assets strategically located atop the prolific Marcellus Shale (a) Seneca Lake acquisition expected to close Summer (a) Potential for over 52 Bcf of working gas storage capacity contained in an ~40 mile radius within 200 miles of New York City Largest independent natural gas storage operator in NE Abundant interconnections available Enhanced commercial opportunities exist from leveraging exceptional platform Executing towards an integrated NE storage hub

15 Financial Performance Total Gross Profit ($ millions) EBITDA ($ millions) $600.0 $500.0 $400.0 $300.0 $200.0 $100.0 $0.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $502 $457 Total Gross Profit $574 $575 FY 2007 FY 2008 FY 2009 TTM Adjusted EBITDA (c) $297 $301 $239 $211 32% 28% 31% 22% December 31, 2009 As Adjusted Cash $ 15.8 Revolving working capital facility $ 25.0 Revolving general partnership credit facility Senior unsecured notes 1,039.4 Other debt 33.5 Total Debt $ 1,208.9 Total Partners Capital $ 1,003.0 Total Capitalization $ 2, (a)(b) FY 2010 Adjusted EBITDA Guidance Range $340 - $350 Long-term Debt / FY 2010 Midpoint of Forecast Adjusted EBITDA Guidance 3.4x (a)(b) $0.0 FY 2007 FY 2008 FY 2009 TTM % Midstream EBITDA Contribution (a) Reflects the additional borrowings under our revolving general partnership credit facility incurred to fund the recent acquisitions, to fund our growth and other capital expenditures in our midstream business. (b) Reflects the repayment of approximately $200.0 million of outstanding indebtedness under the revolving general partnership facility from the issuance of common units in January (c) Adjusted EBITDA represents EBITDA excluding the gain or loss on derivative contracts associated with retail propane fixed price sales contracts, the gain or loss on the disposal of fixed assets and long-term incentive and equity compensation expenses. Item 6 to the Partnership s Annual Report on Form 10-K provides a historical reconciliation of net income to EBITDA and adjusted EBITDA. 15

16 Investment Highlights Income Dual Platform Operating Strategy A Leading National Propane Franchise Fee-based Midstream Business Anchored by Northeast U.S. Gas Storage Strong Financial Performance Record Growth Midstream Energy Storage Platform Rapidly Becoming a Larger Component of Business Manageable Pipeline of Midstream Expansion Projects Underway Record of Consistent EBITDA & Distributable Cash Flow Growth Disciplined Consolidator of Retail Propane Industry Safety Underlying Businesses Characterized by Recession Resistant Stable Cash Flows Strong Balance Sheet and Distribution Coverage Recent Capital Markets Activity Provides Ample Balance Sheet Liquidity to Execute on High-Return Expansion Projects 16

17 Committed to Generating Industry-Leading Returns to Our Investors 17