AGA Financial Forum Palm Desert, CA May 16-19, 2015
Management Representatives Carl Chapman Chairman, President and CEO Susan Hardwick Senior VP and CFO Robert Goocher Treasurer and VP-Investor Relations Aaron Musgrave Director, Investor Relations 2
Vectren in 2015 & Beyond Infrastructure Opportunities Leading the Way Over the last four years, Vectren has developed a utility growth strategy focused on gas system investment and narrowed its nonutility business mix Driven by a…
Vectrens Compelling Business Mix Vectren Vectren Utility Nonutility Indiana - Vectren Distribution & North (Gas) Infrastructure Transmission Pipeline 574,000 Customers Services Construction 1.1 million total utility customers…
Strategies to Achieve Financial Goals Utility Execute investment & cost control strategies to achieve utility earnings growth target Gas system infrastructure investment to drive consistent earnings growth, while enhancing reliability…
Summary of Updated Financial Targets Originally Shared November 2014 Current Previous Annual total shareholder return* 9-11% 8-10% Consolidated earnings growth 5-7% 4-5% Consolidated payout ratio 60% 65% Long-term dividend growth…
Long Dividend Record Continues Executing on Strategy Gives Confidence for Bright Future Growing EPS and Declining Payout Ratio Positioned Vectren to Significantly Increase the Dividend Growth Rate Since 2010, Vectren has…
Excellent Shareholder Returns Vectrens achievement of consistent earnings growth over the last five years has driven excellent annual shareholder returns We believe our strategy of focusing on our core, premier utility business and…
1st Qtr. Results Mark Great Start to 2015 EPS Growth Continues; Guidance Affirmed Consolidated Results* Strong start to 2015 1st qtr. EPS of 0.69 was slightly above plan & well ahead of 0.63 in 2014 Earnings growth anchored by solid…
2015 Guidance Affirmed Consistent Earnings Growth Expected to Continue in 2015 Consolidated: 2.40 to 2.55 per share Utility: 1.85 to 1.95 per share Nonutility: 0.55 to 0.65 per share Affirming above EPS guidance ranges based on…
Utility - 2015 1st Quarter Review Steady Growth Driven by Infrastructure Investment Continues Earnings for the first quarter were 63.0 million, or 0.76 per share, compared to 61.3 million, or 0.74 per share in 2014 Improved results…
Utility - Vectrens Top Tier Regulatory Framework Gas Electric IN-South IN-North Ohio IN-South Infrastructure Replacement Recovery Under SB 560 Recovery of Federal Mandates Under SB 251 Infrastructure Environmental CapEx Recovery…
Utility Cap Ex Utility growth driven by expected investments in gas system infrastructure in millions Forecast 5-Yr Total Utility Cap Ex 2014 2015 2016 2017 2018 2019 2015-2019 Indiana 167 165 210 185 160 165 885 Ohio 87 105 85 80…
Utility Rate Base & Sources of Funding Faster Gas Rate Base Growth with Continuing Opportunity to Earn At or Near Overall Allowed Return via Recovery Mechanisms and Cost Control Growth in rate base over the next five years funded with…
Utility Outlook 2015 utility EPS guidance midpt. of 1.90 per share, up 5.6% from 2014 EPS of 1.80 Earnings growth driven by return on investment in new gas infrastructure Control operating costs as culture of performance management…
VISCO - 2015 1st Quarter Review Improved Results Over Prior Year; On Plan for 2015 Vectren Infrastructure Services (VISCO) Improved 1st quarter results were up 2.7 million compared to the prior year Earnings from operations up over 8…
VESCO - 2015 1st Quarter Review Return to Profitability Still Expected in 2015 Vectren Energy Services (VESCO) 1st quarter revenues & ending backlog up significantly vs. prior year, reflecting positive momentum to start the year…
Nonutility Outlook 2015 Nonutility EPS guidance midpt. of 0.60 per share, up from 0.47 per share in 2014, excluding Coal Mining results Expect VISCO to contribute EPS of approx. 0.57 per share in 2015 (guidance midpoint) vs. 0.52 per…
Remaining 2015 Earnings Growth Expected in 2nd Half of Year Remaining 0.13 per share of the total expected 0.19 per share increase in Vectrens 2015 EPS (2.47 at midpoint) vs. 2014 EPS (2.28) should come as planned in the 2nd half of…
Vectren Well Positioned for Premium Valuation Vectren positioned for greater stability and higher, consistent earnings growth Utility remains our core and gas utility investment is the growth engine Infrastructure investments will…
Questions 22
Appendix
Appendix Consolidated 1st Quarter Results 3 Months Ended Mar 31 In millions, except per share amounts 2015 2014 Utility Group 63.0 61.3 Nonutility Group Infrastructure Services (2.6) (5.3) Energy Services (3.1) (3.0) Other…
Appendix Infrastructure Services Metrics 3 Months 2015E Ended Mar 31 (3) in millions Midpoint 2015 2014 Gross Revenue 850 176.9 123.0 Gross Margin as % of Gross Revenue 18% 10% 7% (1) EBITDA 133 11.4 3.2 Depreciation &…
Appendix Infrastructure Services Estimated Backlog General Description of Types of Customer Contracts for Infrastructure Services Infrastructure Services operates primarily under two types of contracts blanket contracts and bid…
Appendix Energy Services Metrics 3 Months 2015E Ended Mar 31 (3) in millions Midpoint 2015 2014 Revenue 220 23.1 17.5 Gross Margin as % of Revenue 20% 21% 24% EBITDA (1) 6 (4.4) (3.8) Interest 1 0.3 0.3 179D Tax Deductions…
Appendix Non-GAAP Measures The following table reconciles consolidated net income, consolidated basic EPS, and Nonutility Group net income (loss) to those results excluding Coal Mining results in 2014. Note that the Coal Mining…
Appendix Use of Non-GAAP Performance Measures and Per Share Measures Results Excluding Coal Mining Management uses consolidated net income, consolidated earnings per share, and Nonutility Group net income (loss), excluding results…
Appendix Additional Utility & Nonutility Information
Appendix Utility Service Territories & Rate Base IN OH 2.6 Billion of Rate Base in Rates* Gas Utilities Rate Base: 1.2 billion* 0.9 billion Indiana 0.3 billion Ohio 10.2% Total Gas Allowed ROE Electric Utility Rate Base: 1.3…
Appendix Utility Electric System Profile Generation Portfolio - Profile Environmental & System Hardening 5 Coal-fired base units 1,000 MW Over 410 million invested during last 100% scrubbed for SO2 decade in emissions control…
Appendix VISCO at a Glance Operates in 25 states, primarily in Upper Midwest, Midwest, Mid-Atlantic and South Approximately 3,600 employees at peak in 2014 Nearly 200 million of consolidated net property and equipment as of…
Appendix VISCO Business Segments Minnesota Limited Miller Pipeline Miller Pipeline Transmission Division Distribution Division Water/Wastewater Div. Pipeline construction and Pipeline construction and Pipeline construction and…
Appendix VISCO Long-Term Customer Relationships Long-term customers Long-term customer relationships are key Relationship with top 10 distribution customers averages 25 years Reputation for high quality construction work and…
Appendix VISCO Competitive Landscape Changes in competitive landscape Consolidation continues in our industry Market preference for larger contractors Fragmented market many small family-owned contractors still servicing…
Appendix VISCOs Low Risk Revenue Profile Demand for construction work continues to remain strong in 2015 No significant impact on VISCOs operations to date from lower oil & natural gas prices; if prices dont rebound in 15, there…
Appendix VISCO - Strategically Well-Positioned for Continued Earnings Growth Key Long-Term Growth Initiatives Capitalize on demand from the very long construction cycle in the gas distribution, gas and oil transmission, and…
Appendix VESCO at a Glance Primary subsidiary, Energy Systems Group, founded in 1994 Accredited by the National Association of Energy Service Companies (NAESCO) Licensed to do business in 46 states, the U.S. Virgin…
Appendix VESCO Business Segments Performance Contracting Sustainable Infrastructure Operations & Maintenance Public & Federal Sectors Public, Private and Federal Sectors Focus on plants and projects built by Design and…
Appendix VESCO Market Sectors and Customers Municipalities One of 16 DOE qualified ESCOs (1) Water and Wastewater Utilities One of 15 USACE* qualified ESCOs (2) Electric and Gas Utilities Department of Energy Solid Waste…
Appendix VESCO Competitive Landscape Power System Engineering Services Performance Contracting Sustainable Infrastructure (CHP, Biomass) 2014 Navigant Consulting, Inc. All rights reserved. 42
Appendix VESCO Financial Outlook for 2015 & Beyond Market appears to have turned a corner after multi-year downturn tied to recession Record new construction orders in 2014 of 189 million provides strong backlog to support 2015-16…
Appendix VESCOs Growth Outlook Key Long-Term Growth Initiatives Focus on continuing to win projects in the growing federal market Expand the public sector business as demand for energy efficiency projects continues to recover…
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