Year end fiscal Earnings conference call. November 15, 2017

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1 Year end fiscal 2017 Earnings conference call November 15, 2017

Operating Officer, Distribution Operations

2 Participants on today s call Suzanne Sitherwood President and Chief Executive Officer Steven L. Lindsey Executive Vice President and Chief Operating Officer, Distribution Operations Steven P. Rasche Executive Vice President and Chief Financial Officer 2

3 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 Our forwardlooking 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. Although 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, 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 longterm 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, as well as the after-tax impacts related to acquisition, divestiture, and restructuring activities. Management believes that this presentation provides a useful representation of operating performance by facilitating comparisons of year-over-year results. 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 Scott.Dudley@SpireEnergy.com 3

4 2017 was another year of achievements for Spire Achieved further organic growth Increased our investment in infrastructure Posted strong operating performance Transitioned our gas companies to Spire Delivered earnings per share growth 4

Raising our dividend by 7.1% Annualized dividends per share $2.30 $2.10 $1.90 $1.70 $1.66 +2.4 % +3.5 % +4.5 % $1.76 $1.70 $1.84 +6.5 % +7.1% $1.96 $2.10 +7.1 % $2.

1% increase supported by our Long-term earnings growth targets Conservative payout ratio and target range of 55% - 65% 15 years of consecutive increases; 73 years of continuous payment

5 Raising our dividend by 7.1% Annualized dividends per share $2.30 $2.10 $1.90 $1.70 $ % +3.5 % +4.5 % $1.76 $1.70 $ % +7.1% $1.96 $ % $ Dividend Yield 2.9% 2 $1.50 $ Annualized dividend increased to $2.25 per share 7.1% increase supported by our Long-term earnings growth targets Conservative payout ratio and target range of 55% - 65% 15 years of consecutive increases; 73 years of continuous payment 1 Quarterly dividend of $ per share effective January 3, 2018, annualized. 2 Based on $2.25 per share dividend and SR average closing stock price of $76.63 for month of October S p i r e Y e a r E n d F Y 1 6 E a r n i n g s C o n f e r e n c e C a l l

6 Delivering on our promises We grew organically Added customers for third straight year Leveraged our scale, technology and shared services to drive efficiencies Increased our investment in infrastructure FY17 total capital spend up ~50%, driven by gas company infrastructure upgrades Includes investment in Spire STL Pipeline Achieved further improvements in our operating performance, including Employee safety System operations Service for our customers All of our gas companies became Spire on September 25 Part of building a better natural gas company Focus on service, savings and support 6

How we re improving service through technology Spire transition included launch of a new, mobile-friendly website Debuted My Account, an online customer account

7 How we re improving service through technology Spire transition included launch of a new, mobile-friendly website Debuted My Account, an online customer account management tool These platforms make it easier for customers to connect with us and manage their account on the go Launched multi-year company-wide IT platform enhancement 7

8 Driving growth and improving operating performance Continued growth in customers and margins Increased investment in infrastructure upgrades, technology and our people Improved safety, customer service and overall system performance 8

9 Growing the homes and businesses we serve Increased customers across our Missouri and Alabama utilities Installed more than 10,000 new meters Added 1,300 multi-family units Increased new business investment Enhanced our tools and processes for business development Increased our focus on economic development Building on existing partnerships Greater up-front involvement Total utility customers (Millions) Note: Rolling 12-month average customers for all gas utilities for period of Spire s ownership and average customers of acquired utilities for period of ownership in the year of acquisition. 9

10 Increasing capital investment in our gas utilities Spire capital expenditures (Millions) FY17 Gas Utility capital spend of $413 million, up 42% $293 $438 $25 $240 million for infrastructure upgrades (pipeline replacement) $58 million for new business (+26%) $291 $413 $17 million for EnergySouth FY16 FY17 ~83% of spend recovered with minimal lag or reflected in earnings Replaced 324 miles of pipe, up 20% 226 miles (+16%) at Spire Missouri 98 miles (+30%) at Spire Alabama Gas Utility Other Miles of main replaced Note: Miles are based on internal records. Totals shown represent miles replaced by utilities regardless of ownership by Spire Inc. Includes utilities owned at least 12 months.

Raising the bar on performance At Spire, everything starts with safety and we re getting even better Conducted 4 th Annual Safety Summit Decreased employee injury rate by 7%

11 Raising the bar on performance At Spire, everything starts with safety and we re getting even better Conducted 4 th Annual Safety Summit Decreased employee injury rate by 7% Reduced leaks across our system Further improved leak response times Improved customer service levels Appointment attainment Customer experience Customer satisfaction ratings 11

12 We re driving earnings growth Net Economic Earnings Gas Utility $ $ $ 3.86 $ 3.67 Gas Marketing Other (20.7) (17.6) (0.44) (0.40) $ $ $ 3.56 $ 3.42 Net economic earnings (NEE) growth across our businesses Gas Utility earnings grew 13.2% ($21.2 million) as a result of Full-year earnings contribution from EnergySouth (ESI) Higher contribution margin (infrastructure upgrades and customer growth) Slightly lower run-rate O&M expenses Gas Marketing NEE increased 6% on higher trading volumes and storage optimization Other costs reflect a full year of ESI-related interest expense NEE per share +4.1%, reflecting higher share count (ESI and unit mandatory conversion) 1 See Net economic earnings (non-gaap) reconciliation in Appendix. Year Ended September 30 Millions % Growth 12.4% 4.1% Per Diluted Share 12

13 Revenues and margin (Millions) $ % EnergySouth Run Rate Operating Revenues Gas Utility $ 1,667.9 $ 1,459.4 $ % $ 92.1 $ Gas Marketing % Other and Eliminations (6.5) (0.6) (5.9) $ 1,740.7 $ 1,537.3 $ % Contribution Margin 1 Year Ended September 30 Gas Utility $ % $ 66.6 $ 28.0 Gas Marketing % Other and Eliminations (3.7) 3.4 (7.1) $ $ $ % Revenues grew 13%, reflecting higher commodity costs and the addition of EnergySouth Gas Utility run-rate contribution margin up $28 million, or 3% ($8.6) million lower due to warmer winter weather $19.2 million improvement in RSE adjustments and cost sharing benefit in Alabama $14.2 million higher ISRS 3 at Spire Missouri Change Gas Marketing margin grew $0.7 million (4%) reflecting favorable trading volumes and storage optimization 1 Contribution margin is operating revenues less gas costs and gross receipts taxes. See Contribution margin (non-gaap) reconciliation in Appendix. 2 Gas Marketing contribution removes the impacts of fair value adjustments. These adjustments are reflected in the line item Other and Eliminations. 3 Infrastructure System Replacement Surcharge. Gas Utility Change 13

14 Expenses (Millions) $ % EnergySouth Run Rate Operating Expenses Gas Utility Year Ended September 30 Natural & propane gas $ $ $ % $ 22.0 $ 56.3 Other operation & maintenance % 33.5 (6.0) Depreciation & amortization % Taxes, other than income taxes % Gas Marketing % Other and Eliminations % Operating Income % Other Income, Net (6.6) (8.6) % Interest Expense % Income Tax Expense % Effective Tax Rate 32.4% 32.5% Fuel cost increase reflects higher commodity costs Change Lower run-rate O&M expenses mainly due to warmer weather (lower employee-related costs) Depreciation and taxes higher on increased capital investment Gas Utility Change Higher Gas Marketing expenses reflect increased commodity costs and volumes Higher interest reflects the addition of EnergySouth and higher short-term borrowing costs 14

15 Fourth quarter highlights Fourth Quarter Ended September 30 Millions Per Diluted Share Net Economic Earnings Gas Utility $ (5.8) $ (10.2) $ (0.12) $ (0.23) Gas Marketing Other (7.8) (5.8) (0.16) (0.13) $ (10.5) $ (14.1) $ (0.22) $ (0.32) Q4 loss is typical as our gas utility earnings are concentrated in the winter heating season Gas Utility net economic loss improved by $4.4 million Higher ISRS and lower O&M costs at Spire Missouri Favorable regulatory adjustments for Spire Alabama Full quarter impact of EnergySouth results Gas Marketing NEE up $1.2 million on higher trading volumes and asset optimization Corporate costs reflect the addition of EnergySouth plus net higher interest rates 1 See Net economic earnings (non-gaap) reconciliation in Appendix. 15

16 We re growing our cash flow FY17 EBITDA 1 grew 13% to $482 million Ample liquidity provided by our credit facilities and commercial paper program Solid LT equity capitalization % Includes $170 million Spire Missouri first mortgage bonds funded 9/15/17 Reflects shares issued in 2016 and 2017 Spire Alabama poised to issue $75 million in debt in early FY18 FY17 EBITDA 1 (Millions) $500 $400 $300 $200 $428 FY16 Long-term capitalization 2 (at September 30, 2017) Equity Debt Average share count $482 FY % 51.3% EBITDA is Earnings before interest, income taxes, depreciation and amortization. See EBITDA (non-gaap) reconciliation in Appendix. 2 See Adjusted long-term capitalization reconciliation in Appendix. 40 FY16 FY17 FY18 ~2.2 million shares (EnergySouth) issued May 12, 2016 ~2.5 million shares (Equity Units) issued April 3, For FY16 NEE, EnergySouth shares and earnings were excluded. FY17 includes EnergySouth in total including all shares issued plus 1.25 million shares, or a half-year impact, of the April 3, 2017 offering. FY18 includes the full 2.5 million shares. All years include shares issued annually for equity compensation and other activity.

17 We re progressing on plans to bring new energy to St. Louis Spire STL Pipeline improves our supply diversity, reliability, resiliency 65-mile pipeline connecting to REX Capacity of 400 MMcf/d with Spire Missouri to be foundation shipper (350 MMcf/d) Investment of $190 million - $210 million $25 million spend in FY17 including pipe Received Environmental Assessment from FERC on September 29 FERC approval anticipated in Dec. On track for mid-fy19 in-service date 17

18 We re progressing on our Missouri rate proceedings We updated our original filings through the Sept. 30 true-up period Combined rate base grew $100 million Utility capital structure at 54% equity As proposed, Missouri customer bills will be lower than 10 years ago Our proposals seek to Better align our Missouri utilities Modernize the rate setting process consistent with our legislative efforts Parties to case have commenced discussion of issues and potential areas of agreement Missouri rate filings (through Sept. 30, 2017 true-up period) Spire Missouri East West Total Rate base $1.3B $0.8B $2.1B Request (net of ISRS) $25.5M $34.0M $59.5M % increase 4% 8% Annual ISRS $32.6M $16.4M $49.0M Capital structure (equity) 54% ROE 10.35% Procedural schedule 2017 September October November December 2018 January February March 8 Other parties direct testimony Rebuttal testimony Surrebuttal testimony Hearings and briefs Hearings and briefs MoPSC decision Expected effective date for new rates 18

19 Driving continued growth FY17 capital spend up ~50% ($145 million) FY18 spend forecast is $485 million $415 million for utilities $70 million for STL Pipeline 5-year capital spend of $2.3 billion Driven by utility infrastructure upgrade programs with lives of roughly 20+ years Over 80% recovered with minimal regulatory lag or reflected in earnings Jurisdictional spend remains fairly evenly split Long-term annual NEE per share growth target remains 4% - 6% Formal FY18 earnings guidance to be provided after conclusion of MO rate cases Capital expenditures forecast (Millions) 5-year forecast: $2.3B $485 $510 $ $420 $ Utility, with Minimal Lag Other Utility Spire STL Pipeline Capital expenditure by jurisdiction/project (Millions) $510 $485 $ $420 $ MO East MO West Alabama/EnergySouth Spire STL Pipeline

20 We continue to deliver on our promise to bring people and energy together in ways that make the world a better place. 20

21 Appendix 21

22 Net economic earnings (non-gaap) reconciliation (Millions, except per share amounts) Gas Utility Gas Marketing Other Total Per Diluted Share 2 Fiscal Year Ended September 30, 2017 Net Income (Loss) (GAAP) $ $ 3.4 $ (22.3) $ $ 3.43 Adjustments, pre-tax: Unrealized loss on energy-related derivatives Realized gain on economic hedges prior to the sale of the physical commodity - (0.3) - (0.3) (0.01) Acquisition, divestiture and restructuring activities Income tax effect of adjustments 1 (0.6) (2.2) (0.9) (3.7) (0.08) Net Economic Earnings (Loss) (Non-GAAP) $ $ 6.8 $ (20.7) $ $ 3.56 Diluted EPS (GAAP) $ 3.83 $ 0.07 $ (0.47) $ 3.43 Net Economic EPS (Non-GAAP) 2 $ 3.86 $ 0.14 $ (0.44) $ 3.56 Fiscal Year Ended September 30, 2016 Net Income (Loss) (GAAP) $ $ 7.1 $ (21.9) $ $ 3.24 Adjustments, pre-tax: Unrealized (gain) loss on energy-related derivatives (0.3) (0.1) - Lower of cost or market inventory adjustments Realized gain on economic hedges prior to the sale of the physical commodity - (1.6) - (1.6) (0.04) Acquisition, divestiture and restructuring activities Income tax effect of adjustments 1 (0.7) 0.5 (2.6) (2.8) (0.06) Weighted average shares adjustment Net Economic Earnings (Loss) (Non-GAAP) $ $ 6.4 $ (17.6) $ $ 3.42 Diluted EPS (GAAP) $ 3.57 $ 0.16 $ (0.49) $ 3.24 Net Economic EPS (Non-GAAP) 2 $ 3.67 $ 0.15 $ (0.40) $ Income taxes are calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items. 2 Fiscal 2016 net economic earnings per share exclude the impact of the May 2016 equity issuance to fund a portion of the acquisition of EnergySouth. The weighted average diluted shares used in the net economic earnings per share calculation for three months ended June 30, 2016 was 43.5 million compared to 44.6 million in the GAAP diluted EPS calculation. Fiscal 2017 net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted EPS calculation. 22

23 Net economic earnings (non-gaap) reconciliation (Millions, except per share amounts) Gas Utility Gas Marketing Other Total Per Diluted Share 2 Three Months Ended September 30, 2017 Net Income (Loss) (GAAP) $ (6.5) $ 1.5 $ (8.3) $ (13.3) $ (0.28) Adjustments, pre-tax: Unrealized loss on energy-related derivatives Realized gain on economic hedges prior to the sale of the physical commodity - (0.1) - (0.1) - Acquisition, divestiture and restructuring activities Income tax effect of adjustments 1 (0.5) (1.1) (0.2) (1.8) (0.04) Net Economic Earnings (Loss) (Non-GAAP) $ (5.8) $ 3.1 $ (7.8) $ (10.5) $ (0.22) Diluted EPS (GAAP) $ (0.14) $ 0.03 $ (0.17) $ (0.28) Net Economic EPS (Non-GAAP) 2 $ (0.12) $ 0.06 $ (0.16) $ (0.22) Three Months Ended September 30, 2016 Net Income (Loss) (GAAP) $ (10.6) $ 4.3 $ (7.9) $ (14.2) $ (0.31) Adjustments, pre-tax: Unrealized gain on energy-related derivatives (0.2) (2.8) - (3.0) (0.06) Lower of cost or market inventory adjustments - (0.4) - (0.4) (0.01) Realized gain on economic hedges prior to the sale of the physical commodity - (0.7) - (0.7) (0.02) Acquisition, divestiture and restructuring activities Income tax effect of adjustments 1 (0.1) 1.5 (1.3) 0.1 Weighted average shares adjustment Net Economic Earnings (Loss) (Non-GAAP) $ (10.2) $ 1.9 $ (5.8) $ (14.1) $ (0.32) Diluted EPS (GAAP) $ (0.23) $ 0.09 $ (0.17) $ (0.31) Net Economic EPS (Non-GAAP) 2 $ (0.23) $ 0.04 $ (0.13) $ (0.32) 1 Income taxes are calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items. 2 Fiscal 2016 net economic earnings per share exclude the impact of the May 2016 equity issuance to fund a portion of the acquisition of EnergySouth. The weighted average diluted shares used in the net economic earnings per share calculation for three months ended June 30, 2016 was 43.5 million compared to 44.6 million in the GAAP diluted EPS calculation. Fiscal 2017 net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted EPS calculation. (0.01) 23

24 Contribution margin (non-gaap) reconciliation (Millions) Gas Utility Gas Marketing Other Eliminations Consolidated Fiscal Year Ended September 30, 2017 Operating income (loss) (GAAP) $ $ 5.2 $ (5.1) $ - $ Operation and maintenance expenses (5.5) Depreciation and amortization Taxes, other than income taxes Less: Gross receipts tax expense (83.0) (0.1) - - (83.1) Contribution margin (non-gaap) (5.5) Natural and propane gas costs (8.7) Gross receipts tax expense Operating revenues (GAAP) $ 1,667.9 $ 79.3 $ 7.7 $ (14.2) $ 1,740.7 Fiscal Year Ended September 30, 2016 Operating income (loss) (GAAP) $ $ 11.8 $ (7.8) $ - $ Operation and maintenance expenses (2.4) Depreciation and amortization Taxes, other than income taxes (0.2) Less: Gross receipts tax expense (75.3) (0.1) - - (75.4) Contribution margin (non-gaap) (2.4) Natural and propane gas costs (3.0) Gross receipts tax expense Operating revenues (GAAP) $ 1,459.4 $ 78.5 $ 4.8 $ (5.4) $ 1,

25 EBITDA 1 (non-gaap) reconciliation (Millions) Net Income $ $ Add back: Fiscal Year Ended September 30, Interest Charges Income Tax Expense Depreciation & Amortization EBITDA $ $ Adjusted long-term capitalization reconciliation As of September 30, 2017 As of September 30, 2016 (Millions) Equity Debt Total Equity Debt Total Capitalization Per Balance Sheet $ 1,991.3 $ 1,995.0 $ 3,986.3 $ 1,768.2 $ 1,820.7 $ 3,588.9 Current Portion of Long-Term Debt Reclassify Equity Units (143.8) - Adjusted Long-Term Capitalization $ 1,991.3 $ 2,095.0 $ 4,086.3 $ 1,912.0 $ 1,926.9 $ 3,838.9 % of Total 48.7% 51.3% 100.0% 49.8% 50.2% 100.0% 1 EBITDA is earnings before interest, income taxes, depreciation and amortization. 2 Equity Units reclassified as equity for September 30,

First quarter fiscal 2018

First quarter fiscal 2018 Earnings conference call February 1, 2018 Participants on today s call Suzanne Sitherwood President and Chief Executive Officer Steven L. Lindsey Executive Vice President and