Spire Inc. (SR) Q1 2014 Earnings Report, Transcript and Summary

Good day, and welcome to the first quarter earnings call with The Laclede Group. My name is Patricia, and I will be your web event specialist today. [Operator Instructions] It is now my pleasure to turn the webcast over to Scott Dudley, Director, Investor Relations. Mr. Dudley, the floor is yours.

Good morning, and welcome to the earnings conference call for our first quarter of fiscal 2014. We issued a news release this morning announcing our financial results, and you may access the release on our website at thelacledegroup.com under the News Releases tab. Today's call is scheduled for 1 hour and will include a discussion of our results and a question-and-answer session. Prior to opening up the call for questions, the operator will provide instructions on how to join the queue to ask a question. On the call are Suzanne Sitherwood, President and CEO; and Steve Rasche, Executive Vice President and CFO. Also in the room with us today are Steve Lindsey, Executive Vice President and Chief Operating Officer of Distribution Operations; and Mike Spotanski, Senior Vice President and Chief Integration and Innovation Officer. Before we begin, let me cover our Safe Harbor statement and use of non-GAAP earnings measures. Today's earnings conference call, including responses during the Q&A session, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements speak only as of today, and we assume no duty to update them. 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. A description of the uncertainties and risks factors can be found in our quarterly report on Form 10-Q, which will be filed later today. In our comments, we'll be discussing results in terms of net economic earnings, a non-GAAP measure used by management when evaluating the company's performance. 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 impacts related to the MGE acquisition. A full explanation of the adjustments and a reconciliation of net income to net economic earnings are contained in the news release we issued this morning. So with that, I will turn the call over to Suzanne.

Thank you, Scott. Let me add my welcome to those who have joined us this morning. Steve Rasche will follow me and cover our operating results and other financial matter in more detail in a moment. I would like to give you a broader update on the company as we continue to move ahead with our growth strategy in 2014. In our just-published annual report, we recounted our successes and achievements in 2013 under an [indiscernible] upward. As we shared last year's acquisition of Missouri Gas Energy was transformational for our company. It doubled our size, and set in motion a new direction for Laclede. We are growing and now moving onward with an upward trajectory. As we progress in 2014, we are continuing to pursue our strategic imperative. We are integrating MGE, a significant element of our growth by acquisition. We are further investing in our core utility operation with accelerated pipeline replacement. And we are building Spire, a provider of fueling solutions of operators of natural gas vehicles. Now I'd like to update you on each of these initiatives. Regarding the integration of MGE, I am pleased to say that the process is well underway and began in earnest upon our closing of the transaction in September. A great deal of planning went into the process to bring Laclede Gas and Missouri Gas Energy together. Internal teams from across the 2 organizations have been working with our outside partners to first identify synergies and ways to improve processes, and now our internal teams are implementing those plans. When Laclede completed its information technology upgrade last year, I mentioned how important technology is as an enabler of our success as we work to achieve synergies in the integration and continue to grow. One of the key elements we are working on right now is the systems integration for MGE. This important effort is going well and progressing according to plan. We expect to complete the integration of the supply chain and accounting systems later this spring, with the conversion of the customer care and billing system occurring over the summer of 2015. Meanwhile, the teams are working on other elements of the integration that generally relate to efficiency and best practices, with an eye towards delivering the overall synergies that we originally identified. We are making great progress across the board, thanks to the effort and hard work of employee-led teams across the organization. In our initial integration planning, we fully considered MGE's needs to follow general rate case and the company's normal labor matters. As announced back in September, MGE filed a general rate case, a first in more than 3 years, as required under state statute to remain eligible to file for revenue increases under the Infrastructure System Replacement Surcharge or ISRS mechanism. MGE filed for a $23.4 million revenue increase. After including interest revenues that are already being collected, the net increase requested is $17.1 million, an increase of 3.6%. In Q1, we continue to invest in the replacement of our distribution infrastructure, which now includes some 30,000 miles of pipeline with the addition of MGE. The year-over-year increase in our capital spending was driven by a pipeline replacement investment, which are recoverable under ISRS. This surcharge supports earnings growth for the Gas Utility through timely return of and return on these infrastructure investments between general rate cases. These investments not only enhance the safety and reliability of our distribution system, they also reduce maintenance costs going forward. The other element of our growth strategy is developing and investing in emerging technologies, is also progressing according to our plan. A year ago, we launched Spire, an initiative to provide tailored end-to-end fueling solutions for natural gas vehicles. At that time, we announced our first and flagship project, a fueling station at Lambert-St. Louis International Airport. I'm pleased to announce that this fueling station, which serves a number of commercial fleets, began commercial operations in December. We are pleased with initial volumes and customer traffic, which has been as good as, if not a little better, than we had projected. Our pipeline of possible future projects is growing. We continue to have discussions with a number of other potential customers, operators and heavy-duty trucks, transit, weight haulers and municipal vehicle fleet about projects nationally. We look forward to updating as these projects come to fruition. When we first laid out our strategic vision, we took time at the beginning to make sure we have the team, the structure, the resources and the processes needed to be successful as we pursued growth. We realigned our senior team, made some changes in functional responsibilities and built a structure to support a shared service model capable of handling growth and managing a larger organization. To ensure we had a strong leadership team in place to harness the full potential of Spire, an initiative involving other emerging technologies, we recently named Peter Stansky [ph] as Senior Vice President and Chief Operating Officer of Laclede Venture Corp., the entity that houses Spire. Peter brings significant sales management experience and technical expertise to our team and will be responsible for driving continued growth of the innovation part of the business. Last quarter, I spoke about our efforts in fiscal 2013 to ramp up communications engagement with key stakeholders, our customers, employees, regulators and the financial community to build an understanding of our strategy and specific plans for executing against that strategy. We recently announced that Craig Dowdy has joined us as Senior Vice President of External Affairs, Corporate Communications and Marketing. He will provide leadership for regulatory affairs, government and legislative matters and economic development strategies in addition to communications and marketing. Another announcement we made last week was our agreement to relocate to new offices in downtown St. Louis, driven in part by our pending sale of one of our service facilities, as well as our MGE integration. With the addition of MGE, we knew we would need a new space to accommodate our growth. We're excited about creating a different kind of space as well, one with a work environment that fosters collaboration and efficiency and helps us attract and retain top talent to continue to drive value for our customers and our shareholders. Now before turning to review our financial results, I want to ask Steve Lindsey to say a few words about the operation of our system during the recent cold snap across the U.S.

Thank you, Suzanne, and good morning to everyone. In the first quarter, we experienced temperatures that were 18% colder than last year and about 8% colder than normal. The low temperatures continued in January and early parts of February as well. These conditions drive up gas usage for heating, and so it's particularly important that our gas supply and distribution system are able to readily serve our customers' needs during these critical times. I'm very pleased to say that our system at both Laclede Gas and MGE performed extremely well in handling the increased load, including the highest send-out day in over 17 years with minimal impacts to our customers. Our ability to deliver reliable service when the need is greatest is attributable to the efforts we put into our demand planning and to the investments we've made in upgrading our distribution infrastructure. It is also attributable to the hard-working men and women of Laclede who take pride and dedicate themselves to consistently delivering safe, reliable and cost-effective gas service every day.

Thank you, Steve. Before turning the call over to Steve Rasche, let me quickly review our first quarter results headline. Overall, we posted a solid quarter. Net economic earnings grew 29%, reflecting growth in our Gas Utility operations, particularly offset by lower earnings from Gas Marketing, as expected. Our results are on track with our goals for the full year 2014. And now let me turn it over to Steve to cover our operating results in a bit more detail.

Thanks, Suzanne, and good morning, everyone. Let me review our operating results for our fiscal first quarter ended December 31, 2013, and give you a few updates on other initiatives. As usual, we'll focus on net economic earnings, and our news release includes a reconciliation between net economic earnings and net income. And as a reminder, our current year results include Missouri Gas Energy, or MGE, in its entirety, including the debt and equity capital raised to finance the transaction. Looking first at our income statement, total operating revenues were nearly $469 million, with Gas Utility revenues up 74%, due largely to the addition of MGE. Gas Marketing revenues were down about $9 million after taking into account the roughly $12 million change in intersectional revenues during the quarter. A better measure of growth and scale is operating margin, our revenues less gas cost and gross receipts tasks. Consolidated operating margin for the quarter was $156.8 million, up just over $52 million over the prior year, and driven by a nearly 59% increase in utility margins, which I'll touch on a bit more in a second. Walking down the rest of the income statement, operating and maintenance expenses were also higher, up $22.7 million over the prior year, but higher by just $2.6 million after removing the impact of adding MGE this year. And that increase was due largely to a mix of customer activity and compliance work a little higher than last year and slightly lower levels of capital work compared to our plan, all due to the colder weather that we experienced last quarter, that Steve Lindsey just mentioned. These variances were largely due to timing, and we expect our capital spending and our synergy realization to ramp up as we progress through the year, and both remain on target. Depreciation and amortization was higher by $9.1 million, of which $7.6 million is due to MGE. The remaining increase reflects our continued investment in infrastructure over the last year. Operating expenses in the other category were down significantly from last year, since 2013 included MGE transaction cost that did not recur in 2014. Interest expense was higher year-on-year, reflecting the debt issued to support the MGE transaction. And income tax expense, at an effective rate of 34.2% for the quarter, was about 300 basis points higher than a year ago and consistent with our guidance at the beginning of the year that the addition of MGE, historically a marginal rate taxpayer, would increase our overall effective tax rate into the low 30% range for 2014. Resulting GAAP net income for the quarter was $35.6 million, up from $25.6 million last year. On a net economic earnings basis, first quarter earnings were $36.3 million, up 29% year-on-year from $28.2 million last year. On a per-share basis, net economic earnings were $1.11 per fully diluted share compared to $1.25 per share for last year. It's important to remember that the current year per share amount reflect the increase in our equity outstanding to 32.6 million common shares, roughly 40% -- 45% higher than last year. It's also important to note that with the addition of MGE, our earnings pattern has changed a bit, due in large part to the rate designs used by Laclede and MGE. And while both rate designs provide a high level of certainty in our recovery of cost over the full fiscal year, each does have a different slight pattern of how the recoveries are received between quarters. Laclede's weather-mitigated rate design places a portion of the recovery in the first block of usage during the winter heating season. As a result, Laclede has historically seen almost all of its earnings in the first 2 quarters of the fiscal year, the heating season here in Missouri. And it has often had an operating loss in the fourth fiscal quarter of the year, the peak of the summer season. MGE's straight fixed variable rate design tends to smooth out its earnings a bit more, resulting in a higher percentage of its earnings during the summer months compared to Laclede. Putting these 2 rate designs together, we anticipate our consolidated earnings pattern to smooth out a bit compared to last year, with between 80% to 85% of our earnings coming during the first half of the fiscal year and the remainder spread over the last 2 quarters of the year. Now let's take a quick look at our operating results for our 2 segments. Gas Utility operating margins were up by $57.2 million in the first quarter, with $51.3 million of that increase attributed to MGE. The remaining increase was driven by asset optimization activities, colder weather compared to last year and some modest customer growth. Margins were offset in part by higher depreciation and amortization expenses, as I mentioned earlier, as well as higher other operating expenses, due principally to MGE. Resulting net economic earnings for the quarter improved to $35.8 million, up $10.5 million or almost 42% from last year. Gas Marketing, principally the operations of Laclede Energy Resources, saw operating margins of $2.2 million compared to $6 million last year, with the decline largely attributed to the expiration of 2 favorable supply agreements in December of 2012 and October of 2013. Resulting net economic earnings for the quarter of $800,000 compared to $3.3 million last year. LER's business continues to be impacted by the narrow mark of basis differentials and low natural gas price volatility, although both price and volatility has increased of late due to the extraordinary winter conditions that Steve Lindsey mentioned a second ago. Turning to the balance sheet, at December 31, most of the movements in working capital were tied to our seasonal needs, with both accounts payable and accounts receivable increasing with the higher gas usage by our customers, offset in part by declining inventories used to meet their heating demand. I should also point out that goodwill decreased during the quarter, due principally to the closing of our agreement with Algonquin Power & Utilities, that in effect, allowed them to purchase New England Gas Company directly from Southern Union Company. Laclede received $11 million as part of that deal, which effectively reduced our purchase price for MGE and reduced goodwill. Taking a step back, Laclede Group remains in strong financial position. Our long-term capitalization stands at just over 56% equity, reflecting, among other things, continued earnings, as well as the redemption of $80 million of Laclede Gas first mortgage bonds on January 6 of this year. At quarter end, our short-term commercial paper borrowings were just $94 million, up just $10 million from a year ago despite the fact that the borrowing now supports a much larger utility than the prior year. Needless to say, we continue to have ample liquidity to meet our needs. Turning to our cash flow statement, cash flow provided by operating activities was a net usage of $15.7 million for the quarter, due largely to the seasonal working capital needs that I just mentioned. Excluding those temporary changes, first quarter operating cash flows were $55.6 million, up from $37.5 million last year. Capital spending for the quarter was also strong, increasing to $34.6 million, up almost $7 million from the same period last year. This increase was driven by the addition of MGE and infrastructure investments across the utilities, and as I mentioned earlier, our spending was impacted slightly by the cold weather this quarter. It's also important to remember that nearly 55% of our capital spend this quarter was ISRS recoverable. And during the quarter, MGE filed with the Missouri Public Service Commission to increase its ISRS surcharge by $1.6 million. While Laclede filed to establish a new ISRS for $7.4 million, its first since its general rate case became effective in 2013. We anticipate the MGE and the Laclede filings will be reviewed by the staff and ruled upon by the commission later this spring. Looking forward to the rest of 2014, let me recap our outlook. As Suzanne mentioned, the MGE integration began in earnest this quarter, and our goal remains to achieve net synergies of between $25 million and $34 million annually by fiscal 2016, which is year 3 post-close, with those net synergies ramping up this year and into fiscal 2015, as we fully integrate Missouri Gas Energy. And as Suzanne noted, we remain on track with those goals. And as we discussed last quarter, we expect to incur significant onetime cost to integrate MGE and Laclede. And in the first quarter, we incurred $1.2 million of those costs. As a reminder, we defer 50% of that balance, or $600,000, last quarter to recovery in the future rate case. Overall, we remain on track to deliver 2014 consolidated net economic earnings per share equal to the 2013 per share results. And we expect our regulated earnings to grow from 2013 levels, as nonregulated earnings are anticipated to be no more than 5% of the overall earning mix for the current fiscal year. And we remain on track with our capital spending goals for fiscal year of approximately $185 million, with almost 60% of those spending being ISRS recoverable. So in summary, we're off to a solid start for fiscal 2014, and we are tracking according to our plans. We are maintaining a strong financial position and continuing our 11th consecutive year of increasing dividends, as we announced last week a quarterly dividend of $0.44 per share payable in April. We thank you again for your support and confidence in Laclede and look forward to updating you on progress as the year continues. Let me turn it back over to you, Suzanne.

Thank you, Steve. We are indeed off to a good start in 2014. As the year progresses, we are going to adhere to our strategic imperative and build on the success and momentum from last year. We will keep our promises to our stakeholders, most importantly our customers and our shareholders. We will continue to successfully integrate MGE and meet our earnings goal. We will continue to drive innovation and natural gas fueling and other emerging technologies. We will finalize the MGE general rate case. We will continue to invest in utility infrastructure to ensure safety and reliability and reduce maintenance costs. We will develop a plan to connect to our customers, community and company through communication, to improve customer service at every touch point. And we will continue to deliver shareholder value by leveraging our asset, our expertise and our people. And we'll do all this while scouting for new opportunities. We look forward to updating you on our progress and we are now ready to take questions.

[Operator Instructions] Your first question comes from Sarah Akers with Wells Fargo.

Now that we have the staff recommendation in the MGE case, are you able to outline the key areas of disagreement there and the prospect for a settlement?

Sarah, this is Steve. Let me take a shot at that, and then Steve Lindsey can weigh in if he has anything else to add. At this point, the issues that we continue to have discussions -- I'm going to start with ROE and not surprisingly, both the staff and the OPC filed for an ROE below the 9.7%, which was exactly the ROE that Laclede got in their rate case mid-2013. And that would clearly be one of the areas of discussion. We still feel confident that the rate we filed at is the right rate, which we'll end up at. Aside from that, there's a number of other issues underneath the surface, none of which I think rise to the occasion. Clearly, the staff is focused on operational performance and making sure that we continue to meet the customer service metrics that they value and we value also, so that the transition into The Laclede Group is seamless.

Okay. And then I know we talked -- go ahead.

[indiscernible] I guess in a macro level comment as just someone who has been in industry for 30-something years, it's just a traditional path that the negotiation taking up that concern and that taking up our concern and so we're -- the parties are in process, like the way I would have summarize it, and...

And, Sarah, this is Steve Lindsey. I guess one other point I would add is the reason for this rate case is that Suzanne had mentioned earlier, to continue to collect on our 3-year plan from ISRS' perspective. So this is a pretty straightforward case. There are some things we're going to continue to work on with all the parties, but the reason for this case was to continue with the ISRS revenues.

Great. And with the staff coming in at the 7 9 to 8 9 on the ROE in the recommendation, does that make it pretty challenging to bridge that gap and reach a settlement? Or do you still think there's potential there without coming off the 9 7?

Well, I think, again, we're continuing to work with all the parties. I think this is not unusual in this type of cases from starting position. I think, we appreciate both the staff as well as the other parties being willing to sit down and have these discussions and we're continuing to work towards a settlement. So I don't consider this unusual and I think it's pretty much going as normal from a timing perspective.

Great. And then one on LER, is the expectation still for a 40% decline year-over-year in those earnings? And then does the more favorable winter weather and gas conditions provide upside to that forecast? Or how should we think about that full year impact?

Yes, Sarah, this is Steve. I would still stick with our macro guidance at where LER is going to go. Clearly, there has been more volatility returns to the market. And if you have the assets in the right place, and we have, you get to take advantage of those. Those have been spotty and they generally last for a day or 2. And clearly, that's the strategic advantage of having a marketing company in our mixes that we get to take advantage of market opportunities when we have the assets and the right place. But I think that on a macro level, it's still important to think of a nonregulated business as being at 5% or less of our overall consolidated earnings per share for this year.

[Operator Instructions] Your next question comes from Dan Fidell with U.S. Capital Advisors.

Just a few questions for me. I guess just following up on Sarah's questions. Just on the marketing side, as we look forward, should we be think -- I think in the past, you've talked about the marketing business being less than 10% of total EPS. This year, it's sort of less than 5%. Is there a better run rate we should be thinking about just on a forward basis?

Yes is a simple answer, Dan. The 10% is a percentage we use when we were just Laclede Gas. But adding Missouri Gas Energy into the mix, it's now, as Steve Rasche has said, 5% -- less than 5% or up to 5%. And the other piece that Steve mentioned, which is absolutely right and we've talked about before, is we like to have an LER in the mix. So when you got opportunities do arise, that we -- when they do arise, we still don't see it when you look at the mass exceeding that 5% marker that Steve's placed out there.

Okay, great. Just a quick question on CapEx, too. Just making sure you still kind of tracking for the $185 million total CapEx for fiscal '14, which I think was in your most recent slide deck. And then if you could just kind of remind us how that breaks out between Laclede and MGE?

Yes, Dan, this is Steve. We are clearly on track for $185 million. And that breakout between the 2 businesses, historically, MGE has been in a run rate in the high $30 million to low $40 million range, and we were certainly expect that to tick up into the mid-50s at a minimum. And again, most of that increase is going to be in ISRS recoverable spending, pipeline replacement programs, which was clearly one of the opportunities we had when we acquired MGE. That's -- the spend at Laclede will stay fairly consistent with what we saw last year, when you think about the investments in pipeline, what you're going to see is a little bit difference in mix because the significant investments that we've made in IT over the last few years on the Laclede side dropped off to a much lower level in 2014. And we'll see a little bit higher level of spend on pipes even at the Laclede side.

And, Dan, this is Steve Lindsey. One point I would I'd add to that is obviously we manage our ISRS spend within the cap guidelines. And so at Laclede, we are going to do a slight amount more of a pipeline perspective with MGE. We'll do probably about twice as much as what they did last year to give you a frame of reference on pipeline replacement.

Just last question for me. I think for Steve Rasche, I think for income tax and credit-related question. Can you just kind of tell us what your expectations are for an effective tax rate for the year? I think you'd said low 30s this quarter, came in, I think, about 34%. And then secondarily, just in terms of on the credit side, how do you gauge kind of the impact from Moody's recent upgrade? How should we be thinking about that in terms of the benefit to you guys going forward?

Okay, great question. On the tax rate, yes, our effective tax rate for the new consolidated group will be in the low 30% range, probably a percentage point lower than what we saw in the first quarter. And we'll see some -- we'll see that rate move a little bit during the fourth quarter. But I think with the addition of MGE, we'll see that smooth out a little bit from maybe some of the volatility that we might have seen in prior years with just Laclede. From a credit and rating agencies' standpoint, yes, we were pleased to see Moody's action that was something that was well signaled to the market a while back. And Moody's just following where S&P landed during 2013. That's the collectability for LDC, especially for first mortgage bonds, is very high. And clearly, that puts us in a great position, as we look in the longer-term on what we would want to do from a borrowing perspective. They didn't change the commercial paper ratings. So from that standpoint it really doesn't change our day-to-day borrowing needs, but as -- just to keep it all in perspective, the commercial paper borrowing rates for the company is in the 22- to 29-basis-point range, so that number, on an annual basis still rounds to 0, which is kind of where the market is now for issuers of our quality. But it's always good to get an upgrade notch and we work closely, not only with Moody's but with S&P and Fitch, to make sure that they're well aware what's going and I think all that's work over the years has paid dividends for us and for our peers.

[Operator Instructions] Your next question comes from Selman Akyol with Stifel. Selman Akyol - Stifel, Nicolaus & Co., Inc., Research Division: Firstly, now that you started integrating MGE, have you got any surprises, any more synergies, bigger opportunity than you originally thought?

Well, to answer the first part of your question if we found any surprises, no is a simple answer on that one. What we have found that we expected is, quite frankly, a great group of employees that understand the gas business and work hard every day, which makes it easier when you're implementing things like technology projects and so forth to ultimately get to your synergy commitments that we've articulated here this morning. And it's actually been quite a pleasure working with the employees and working on these business plans together. Because as I mentioned earlier, we've had MGE employees and Laclede Gas employees working together on this integration teams and bringing forward the best and brightest solutions from both sides of the state. That's -- it has been rewarding. So we're still on target to meet the expectations that Steve Rasche mentioned earlier in his comments. Selman Akyol - Stifel, Nicolaus & Co., Inc., Research Division: Great. And then on the operating margin, if you back out MGE and coming up with 103 versus 97, in the commentary in the press release, you talked about asset optimization and colder weather driving the growth. Can you break that out or is there any additional color you can give there in terms of which is the larger portion of that?

Selman, this is Steve. Asset optimization really is the bucket that we think about when we think about how we optimize all of the assets that we used to support what we do every day. And that includes not only the transportation commitments that we have on pipelines, but also the natural gas and other fuels that we have in storage. During the quarter, what we saw is we saw an opportunity to sell a bit of propane into the market. We did that in December. We were not in the market during the January time frame, when propane market really took off. But we saw an opportunity to sell a little bit of propane out of our cavern in our service territory in December, and we did that to take advantage of prices, which were really driven by the demand for propane in the fall -- harvest season because we had such a wet harvest season here in the Midwest. There was a lot of propane demand to the dry the crops so that they go into further processing. We -- that was offset in part by little bit lower volume on off-system sales and capacity release because that market remains pretty soft. If you think about it, we're talking about it last quarter. And through the last quarter, the storage of natural gas was riding at or above all-time high. That has certainly changed as we've gotten into January with some fairly large draws because of the cold weather. But during the first fiscal quarter, we saw our opportunities for capacity release and off-system sales dropped a little bit. So those are really kind of the 2 big pieces when we continue to have a little bit of sales of other fuels and use our assets as best we can to drive value to our customers and to our shareholders. Selman Akyol - Stifel, Nicolaus & Co., Inc., Research Division: Great. And then in terms of the emerging technologies in Spire, you mentioned sort of a backlog starting to grow additional projects maybe out there. Is there a way you put more color around that and you give some goalposts to track on?

Yes, I'll throw a quick intro and then I'm going to pass it to Mike who is in the room. Yes, I mean we're excited about talking about Lambert International Airport, but to your point, we felt a lot of other customers that are in the funnel that we've been working with. And as one of our reasons for the announcement of Peter, he brings years of sales and technical experience so that we can continue to work to get some of those customers to closing because Mike's role, as you know, is innovation and integration. So he's got dual responsibilities, so we wanted an executive over that piece of the business to continue to help customers down the path under Mike's leadership. And, Mike, do you want to share a little more color as well?

I think that's very well said, Suzanne. That sums it up very well. Selman, we do have a number of opportunities as we continue to watch this market and develop our business model. And listen to what our customers want and need. We've continued to look at the business model, look at the offerings that we provide and talk to that customer base out there. And again, we're forming a model, and don't forget, that Spire's business model is an end-to-end custom solution, so we've got a number of those opportunities in the hopper right now. And as Suzanne mentioned, bring in Peter on to help us drive those home is a huge step forward for us. Selman Akyol - Stifel, Nicolaus & Co., Inc., Research Division: All right, and then my last question, and again I heard you loud and clear in terms of the non-reg being 5% or less than this year, but if we were to look out, say, 3 years, is there a goal? Would it still be at 5%? Or would you think maybe increasing to something larger than that?

Yes, we don't have a goal. What we know is we have 2 gas companies right now that we're integrating and [indiscernible] do the math, it's less than 5%. I've talked a lot about growth and acquisition and organic growth. And so if we add other gas companies into our group, then obviously, that percentage will shrink. It's just a mathematical computation. Yes, so we have a marker out there. We just continue to stay focused on our growth strategies and work as hard, and time will tell what the percentages look like.

Yes, Selman, we continue to look at the assets of the new larger organization, how we can optimize those, and LER clearly plays a role in making sure that we can maximize that value.

[Operator Instructions] Our next question or comment comes from Selman Akyol. Selman Akyol - Stifel, Nicolaus & Co., Inc., Research Division: All my questions have been answered.

[Operator Instructions] At this time, I'm not showing any further questions.

Okay. Well, thank you all for joining us today. We will be around throughout the rest of the day for any follow-ups. Thanks again, have a great day.

Thank you again for joining us today. This concludes today's program. You may now disconnect. Have a great day.