Good day, and welcome to today’s webinar entitled The Laclede Group First Quarter Fiscal 2015 Earnings Webcast. My name is Caroline, and I will be your web event specialist today. At the end of today’s presentation, we will have a question-and-answer session, and questions will be taken over the telephone conference. [Operator Instructions] Additional instructions will follow at that time. It is now my pleasure to turn today’s webcast over to Scott Dudley, Managing Director of Investor Relations. Scott, the floor is yours.

Well, thank you and good morning, and welcome to our earnings conference call for the first quarter of fiscal 2015. We issued a news release this morning announcing our financial results. And you may access that release on our website at thelacledegroup.com, and that will be under the News Releases tab. Today’s call is scheduled for one hour and will include a discussion of our results, and as mentioned the question-and-answer session at the end. Prior to opening up the call for questions, the operator will again provide instructions on how to join the queue to ask your question. Presenting on our call today are Suzanne Sitherwood, President and CEO; and Steve Rasche, Executive Vice President and CFO. Also in the room with us today is Steve Lindsey, Executive Vice President and Chief Operating Officer of Distribution Operations. 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 risk factors can be found in our Annual Report on Form 10-K, and quarterly report on Form 10-Q, which will be filed later today. In our comments, we will be discussing financial results in terms of net economic earnings and operating margin which are non-GAAP measures 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 acquisition, divestiture and restructuring activities, including costs related to the acquisition and integration of Missouri Gas Energy and Alabama Gas Corporation. 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. A full explanation of the adjustments and a reconciliation of these non-GAAP measures to their GAAP counterparts are contained in the news release we issued this morning. So with that, I will turn the call over to Suzanne.

Thank you, Scott. And I welcome those who’ve joined us this morning. After completing a very successful year in 2014, including executing on our growth strategy and delivering on the commitments we made to our investors and other stakeholders, we are off to a solid start in Fiscal 2015. We continue to implement our growth strategy by completing two transformative acquisitions and doing the other things we said we would do. So let’s take a minute - few minutes to update everyone on our progress to date. Steve Rasche will follow me with a more detailed discussion of our operating results and financial position as well as a review of our outlook for this year and beyond. This morning, we reported first quarter net economic earning of $1.6 per share, compared to a $1.11 per share last year. The change from last year reflects the shift and the quarterly distribution of our earnings per share. That shift is due to the addition of Alagasco. The additional shares outstanding issued to finance the deal, and a change in MGE’s rate design to include a small usage base component. Despite, all these moving parts, let me confirm upfront, we are on track for achieving our full year earnings target and we remain confident in our about ability to deliver long-term growth of 4% to 6% annually and exceeding that range this year and next. Also as a reminder, our growth strategy includes investing in pipeline replacement and infrastructure, organically growing our existing businesses, acquiring other gas utilities and assets, and developing and investing in CNG fueling and other emerging technologies. As I take a moment here to update you on each of these initiatives, I want to also note some refinements we have made to our leadership team, to ensure continued success…

Thanks, Suzanne, and good morning, everyone. Let me review our operating results for the first fiscal quarter of 2015 and give a few other updates. I’ll start with our first quarter income statement. Total operating revenues were $620 million. Operating margin or earnings contribution after gas cost and gross receipts tax of $231 million was $75 million or 48% higher than last year. By business segment, Gas Utility margins of $226 million were up $72 million from the prior year, with approximately $68 million of that increase due to the addition of Alagasco. The remaining $4 million was the result of higher MGE margins, incremental ISRS revenues and modest customer growth, offset in part by lower asset optimization activity compared to last year. Gas marketing generated a quarterly operating margin of $5.1 million, up $2.9 million from a year ago. All of this increase was due to fair value accounting adjustments. And removing those adjustments, LERs margins decreased $700,000 in the quarter. This decline reflects current market conditions of low price volatility and regional basis differentials, as well as the expiration of a supply contract in late 2013. Operating and maintenance expenses of $97 million were up $35 million, $32.6 million of that increase is the addition of Alagasco. The remaining increase reflects higher customer service expenses and professional fees, offset in part by lower salary and benefit costs as a result of the warmer weather we experienced in the first quarter compared to last year. Depreciation and amortization of $32 million was up $12 million from last year, essentially the addition of Alagasco. And similarly, taxes and other income of $38 million was higher by $9.4 million of which $8.8 million was Alagasco. Interest expense for the quarter of $19.2 million was higher year-over-year by $8.7 million, reflecting the…

Thank you, Steve. We are, indeed, off to a solid start in 2015, and are executing well against our growth objectives for the year, including hitting our milestone for the MGE and Alagasco integration. I also announced last quarter that in order to accommodate our growth, we would be relocating our offices in Downtown, St. Louis. This is both a newly renovated space and a different kind of space for Laclede. One fosters creativity, collaboration, and efficiency, as we work to deliver on our strategy, and it’s consistent with our shared services model. I’m pleased to report that our relocation will be largely completed in the month of February. We are excited about our new home and believe it will further enable us to work better for the sake of our customers and our shareholders. We’re now ready to take questions.

Thank you. And at this time, we would like to take any questions that you might have for us today. [Operator Instructions] Your first question comes from Dan Eggers with Credit Suisse.

Hey. Good morning, guys.

Hey, Dan.

Good morning, Dan.

Hey, Suzanne I guess first question kind of on the, can you give a little more color on the Alagasco process for kind of laying out the synergies and how you are looking at doing it? can you just –what processes are going on between now and say the summer when you guys think you have your plan and then how you are going to talk to us on the Street, as far as what those numbers look like and how you are going to achieve them?

Yes, sure. As I mentioned before, it’s similar process, really the same process that we took with MGE and we pulled together implementation teams with co-leads from both side utilities, and basically, they take their current work processes at both companies and map those out. Then they look for best practices and technology deployment to improve efficiencies as well as improving business metrics, if you will, around customer services and then safety and that sort of thing. So they really are working through their existing processes and then they overlay what are the best practice processes. So that’s what we call the design phase, that should be wrapped up around the end of March, and we started all that in September. And then we go through really consolidating those plans and Q1 master plan. And so, as we get towards the end of the summer, we’ll know pretty well what the trajectory is in terms of the way that we plan on implementing those individual plans to create what I call the master plan. That’s the process that we took with MGE and that’s when I referenced the MGE integration plan and that we are on plan, in fact, we exceeded our plans last year with MGE in terms of our target and as well the timing of our implementation. So again, it’s similar. And as I mentioned in my formal remarks, Alagasco is a standalone utility, where MGE put an asset purchase, so they were more the activity that ET and Sag were here again at standalone, so mapping those processes take a little bit more time. And - but we are very comfortable, in fact, I meant - I use the word confident, I’m confident where we are with those proposals and meeting our objectives. It’s a little longwinded, but I thought a little color might help.

No, that’s good. I guess if we were going to translate that down to what you guys are thinking about for an O&M cost inflation outlook maybe for 2015, or maybe 2015, 2016, 2017, or some time horizon, where do you guys think you can manage costs?

Yes. For Alagasco, when you are specifically talking about integration, I have to bring you back really to the RSE structure there and us managing based on the 30-year investment model that Alabama has in place, it creates rate stability. We will manage Alagasco consistent with that RSE program and that way that it’s been managed in the past. And then at a group level, as Steve Rasche has shared and I’ve talked about the 4% to 6% earnings target - net economic earnings target over time and leading into the high-end of that in the short-term in the next couple of years is the way to think about that. Now, I’ll ask Steve, anything to add…

Yes. Dan, I don’t think I can add anything except to clarify that the RSE mechanism in Alabama gives us a clear path to how if we can keep the O&M cost out, how we can share the benefit of those lower costs with our shareholders and with the customers in Alabama. And that taking that regulatory question off the table makes it a lot easier as we go through our planning, both integration now and as we plan for the future over the next few years.

Got it, thanks. I guess just on the - Steve, maybe on the quarterly allocation of earnings and the mix is going to come out a little bit different this year than maybe you thought coming into the year, this new pattern you are discussing now, should we assume that’s kind of the normalized view, or do you think we are going to take 2015 as a learning experience with Alagasco to figure out what the right combination of quarterly contribution is going to be?

Great question, and it is a learning year, this year. And I think when we entered the year, we knew that there was going to be a shift in earnings, and it was largely going to benefit the second quarter, the quarter ended March, and to take away from earnings in the other three quarters. And I think as we’ve gone through especially the integration process this quarter, we learned a few things that don’t change our view of the accretion of the year overall, or of the attractiveness of either the MGE or the Alagasco deal, but it does change how we think about the earnings falling in the individual quarters. And we’ll - I think we’ve got a good view of what a normal year would look like with normal weather in each of the four quarters, and hopefully, we’ve clarified that with everybody this morning. The only caveat I always say and anybody in our industry would say that is, the big question is always weather. We always manage through that, as a company and as an industry, both when it’s really, really cold like it was a year ago, or when it was really, really warm, as it was in 2012, and we just have a way of managing the puts and takes. And as we look at the rest of this year, we see that the takes being a little bit less opportunity to sell excess molecules in the market, because there is not a lot of value for excess gas this year, for all the reasons that have been well documented in the industry. But at the same time, we’ve got a much better line of sight in O&M costs and we’ve been able to manage those down a little bit better.

I guess, one last one, Suzanne, just on the Spire expansion in South Carolina project, what are you seeing as far as additional stations to be built? Are we going to have more announcements this year and kind of what is your goal from a deployment perspective?

Yes, we don’t have quote a goal of X number of stations by a time certain. We are being very slow on the particle to make sure that we can, one, that we’re conducting the right analysis on these stations. Two, that we exceed expectations in terms of the volume, if you will, that are running through those stations. So the other piece on the customer side is, we want to make sure that we are engineering and operating and managing those stations in a way that it meets our customer expectations. We’ve had a lot of great learning from both stations, in fact, to the point of customers tell us in essence all the stations they use, they like these the best, they’re fast fulfilled, they are always operating. And at the Spire station alone we’ve far exceeded our expectations, in fact, in year two we got to our fifth year level of expected volumes. And we are seeing some of the same interest at the Greer station too. I think it’s important to our company and our industry to be focused on natural gas vehicle applications, which is why it’s one of our growth pillars. But we don’t have stations - X number of stations by a time certain, our approach is more as I described.

Great. Thank you very much.

Thanks, Dan.

Your next question comes from Stephen Byrd with Morgan Stanley.

Good morning.

Good morning, Stephen.

Good morning, Stephen.

I wanted to just cover a couple of topics, just at Alagasco, as you look at the business and think about the integration process, I think, you’ve given a lot of very good color around that. I’m just curious, your impressions so far in terms of certain areas where you might want to emphasize more in terms of greater spending whether that be on pipeline replacement or anything else, just I know you are still in the process, but just any initial impressions as you, at this point in the process?

Yes. Well, from a pipeline replacement perspective and investment Steven Lindsey is here, and in talking to him, because he has done a lot of homework on that, I think he can quickly get to the response you are looking for?

Sure. Really I think we are taking the same approach that we’ve had here in Missouri. As we noted in the earlier comments, we had a 20% increase at Laclede, and really at MGE in our first year of operation, we replaced more pipes than the previous three years combined. So I think in Alabama, they’ve being doing a good job of replacing pipe, but I think there is opportunity there. We’ve met with their operational management team and there is a lot of projects that they have in the queue. So I think a capital deployment plan there is exactly similar to what we looked at in Missouri, so very good opportunity there.

Okay, that’s great. I wanted to switch over to just the gas price and volatility outlook. I’m just curious, you all live in this world in this business and know it better than we do. I’m just curious of your impressions in terms of volatility that we’ve seen, volatility has fallen. Do you expect that to change, or is this the sort of new normal we are in? What could kind of change that volatility or the price dynamics down the road?

I assume you are asking the question from an LER perspective?

Yes.

And yes, we’ve talked about their - it is just about - it’s the new norms, if you will. And from LER perspective, I think they’ve sort of rolled out of the history and now they have a current business model they are operating under and it’s very service oriented to customers. They are pretty sophisticated at what they do and not all customers are as sophisticated and so oftentimes they can see a customer’s need in the market and they take advantage of that. But it is very service oriented, it’s matching a physical assets with a commodity and providing that service that could be either daily, monthly or what have you. They are generally power generators, manufacturers helping on the supply side with - those are the time you get those supply to market, those types of services. And so we are satisfied that we are happy as to where they are and they play a significant role here as you’ve heard me talk about in the past.

Okay, great. And just lastly, just given the kind of growth that you are experiencing and the outlook looks quite good over the next couple of years, any general commentary on the dividend policy and growth in the dividend given the kind of growth that you are experiencing?

Hi, Stephen, this is Steve. I think you can look back over the last couple of years and what we’ve done in the dividend, and we were percolating along a couple of years ago at about a 2.5% growth every year and we’ve stepped that up by a 4%, 100 basis points every year, as we continue to chart our future and as we continue to improve our growth profile. So I think you can look at that trend and rest assured that we understand that investors when they look at investing in Laclede look at not only the growth profile, but they also look at the dividend yield and the growth in the dividend, and we have a great track record of 12 years now of increasing our dividend 4.5% last year. And I think it was important from our board’s perspective, and it was important for us to send the right message to our investors to increase that dividend and step into that increase a little bit more and it shouldn’t be lost that that increase now falls, at least, in the bottom end of that range of our long-term growth guidance. And we will continue to look at that, we don’t make those dividend decisions in a vacuum one-year at time, we look over our long-term plan, and we want to make the right steps that we feel we can honor consistently going forward. In terms of how we think about the dividend mechanically, we always look to the utilities as the support for that dividend, LER and our other non-regulated businesses are great businesses to be in, but they’re not dividend paying entities and we want to take whatever capital they generate and be able to invest that back in the business. And we like where we are in terms of our payout ratio. Historically, we’ve been 55% to 65% payout ratio. We are right and about the middle of that range right now, which is a good strong place to be. It’s not something that’s going to put anything at risk from a cash flow standpoint, but gives us plenty of headroom and upside, as we continue to go forward.

Great. That’s very helpful. Thank you very much.

Thank you. Operator: Your next question comes from Sarah Akers with Wells Fargo.

Good morning.

Hey, Sarah.

Hi, Sarah.

A question on the supply chain analysis. When do you expect to conclude that study, and then based on what you’ve done to-date, do you think there will be new infrastructure projects coming out of that?

So the quote supply analysis just for a little bit more clarity as supply storage and transportation, we are not talking about supply chain. Although, we do have a supply chain analysis going on with our integration, but we should finish that early summer in terms of getting a holistic look and we are starting with the Missouri analysis for a system reliability. And so late spring, early summer we should have that analysis completed. And that analysis will help us answer your very question, Sarah. So what makes sense given the changing market dynamics. And given that we’ve got Laclede Gas and MGE, 90% of the customers in the state. And what are the right combinations of supply sources and storage for peaking purposes, and of course the transportation services as well. There is more to come on that, I’ve just been trying to shadow a little bit for everybody that we are working on that project and you can expect more conversation on it, as we move forward.

Great. And then shifting to Missouri, with the current legislative session, are you aware of any bills, or do you anticipate any proposals that might impact Laclede there?

Yes, we - as you know, it was a bill that was introduced a couple of years ago and it failed, and I think that’s what you are referencing. We are still highly supportive of a change in the ISRS current structure to five years. We think it makes sense to stay out of rate cases for as long as possible. We are holding down our cost structure. It’s expensive and time consuming to protect rate cases, it’s a little bit inefficient for management, obviously because they’re very focused on that, and that is occurring. But most importantly, it holds the cost down for customers, because it takes the expense of conducting those cases. And if you look nationally, there is few states that you can turn to require rate cases every three years. So we just think it makes sense to keep the cost to customer stable and stay out again to a longer period of time.

Great. And then last question, what are you seeing these days in terms of customer growth and sales growth in Missouri?

Yes, because Steve Lindsey is so proud of this, I’m going to let him talk about that we are excited to see that last year on a go-forward, we are seeing some growth and, of course, Steve has made an announcement recently too, so...

Hey, Sarah, this is Steve Lindsey, thanks for the question. This past year, we actually did see positive net growth in all of our jurisdictions. And we are staying very closely in touch with our builders, developers, both residential and commercial and starting to see some good signs from those builders and developers. As a matter of fact, we were even talking earlier this week around some of our construction crews are actually having to make some decisions between cash earning replacement and new business, which are very good decisions they have to make though. And as Suzanne mentioned, we are going to have a very strong focus on organic growth in our existing businesses. And so that’s the traditional type growth we talk about with residential, commercial, but also expanding service offerings to our customers, both at a commercial and industrial level, and also looking at the potential for some small municipal acquisitions. So we’re trying to put together a larger portfolio of how we grow our existing businesses, but I think, we are pretty optimistic that the future looks good for us.

Great. Thanks a lot.

Thanks, Sarah.

Thanks, Sarah.

Your next question comes from Selman Akyol with Stifel.

Thank you. Good morning.

Good morning.

Good morning.

On the CapEx for $300 million, can you talk about how much of that is going to be recoverable under ISRS mechanisms?

Yes, Selman, this is Steve. About 50% of our annual spend will be recoverable through ISRS mechanisms and the other caveat I would make is, when you think about Alabama, it’s really - it’s a different recovery mechanism essentially, because we’re in a jurisdiction with forward rate making. All of the spend is factored into the rate. So in some ways a 100% of that is recoverable in the rates down in Alabama. But when you talk about Missouri, it’s about half of the spend that comes out of Missouri is going to be pipeline replacement and other expenditures that are qualified for ISRS recovery.

All right. Can you also breakdown the $300 million between the three utilities?

Yes, I can. The - got to think about it for a second here. If you look at it right now down in Alabama, about $85 million of the total $300 million is going to be Alagasco related. About $10 million of it is non-regulated businesses, which would be NGV fueling stations and other items. And so the remaining amount of just over $200 million, about $205 million is Laclede. So roughly about $100 million of that you could ring-fence for ISRS recoverability.

Got you. And then, not that it’s huge here, but just in terms of Spire, is lower oil prices a challenge for you guys? Is it changing any of the tenure of the conversations you are having at this point?

No, not really, to be frank and we talk to a lot of customers all the time and mostly the focus is on diesel conversion and sort of point to point tractor trailer and return to base diesel. And which the per gallon equivalent is higher on a diesel conversion and plus there is the air quality aspect and just a longer line of sight on that. So who has got the crystal ball on when prices will start flipping and going out, in fact, all of us heard on the news this morning the news went the other way today, so and the market is reacting. So we’ve got a long line of sight on that and it’s definitely the economics have to work for the customer, but they are still working at these prices.

All right. And then just given you are still digesting two acquisitions, has anything changed, or is your outlook hunger strong, as it is, your ability to integrate, can you do another one at this point I mean?

Well, you said it and I said it in my opening remarks. We are manically focused on integrating and executing our plans on these two acquisitions. In 2014, we did very well with MGE and that we are on track with Alagasco and I feel very confident where we are. And I’ve also shared, in fact, Mike Geiselhart I mentioned in my opening remarks, he manages that group and we have a model and database and exercise it, and all the time, so that we stand based on public information, so we stand ready, but we’re very focused on integrating these two acquisitions. And I guess time will tell, what’s available in the market, but regardless, if it’s not strategic and multiple levers to create value then we move on. So that’s just how we think about it.

All right. Thank you very much.

Thanks, Selman.

[Operator Instructions] Your next question comes from Felix Carmen with Visium Asset Management.

Good morning.

Good morning, Felix.

Good morning.

Steve, do you mind just providing a little bit more clarity on the allocation of earnings? Are you seeing the second quarter come in more around 65%, or what does the new distribution look like? Can you provide some more clarity on that?

Thanks, Felix. Let me give you a view on the first couple of quarters. And again the important caveat is, we’re still comfortable with the main estimate, our first call for the year. So nothing has changed, it’s really about how you ship between the various quarters. And if you look at the first quarter, we probably traded about a 0.5% below the bottom of the range, we gave a range of 34% to 36%, we probably traded less than a point below that range. So good enough for horseshoes, but we certainly want to get better about that. As I look at the second quarter, we’re probably trading down by about 1.5 point at the bottom of the range, and we’ve given a range of 69% to 71%. So that would give you a good feel for the second quarter. And then the last two quarters and really the fourth quarter is what’s going to benefit from the shift in earnings. And that’s really related to, as I talked about earlier to the rate design in Alabama and Missouri and our deeper knowledge of how that the earnings actually fall in a quarter-by-quarter basis.

And as you look out into 2016 and beyond, do you envision this allocation’s thing this new way or do you look at a kind of the way you initially guided?

Great question, I think based on where we stand today, I think the new allocation between the quarters makes more sense, just based upon rate design, which doesn’t change. And again, always within that you have the caveat of weather and the way weather generally works in our industry. And most of the folks on the phone know that is it impacts margin first and then it also gives us the opportunity to manage our O&M cost. And you just have to go back a couple of years to 2012, which was the warmest winter on record than anybody cares to keep records on over 100 years. And our margin shortfall that year was well in excess of $10 million in the deep winter quarter and we were able to make all that up by reducing our operating expenses. And part of that is just logical, because if it’s warmer there is less stress on the system, there is less leaks, and less of the maintenance cost that we have to perform on the system, which gives us more opportunity to manage those costs, less overtime, less unproductive time, and more time to do construction work, which is ultimately what’s going to help us keep our O&M cost down. And Felix, one other point, and again I mentioned it on the - in the prepared remarks, if you look at the quarter and especially if you look at the second quarter and I understand where you all are from the standpoint of trying to model a year and this is a new bigger company, so there is some complexity with having three different utilities and not a lot of history. So that’s why we anchored back to the mean estimate for the second quarter as a good point and which to put in the middle of your range if you want to think about it in a dollars per share standpoint. As another way to kind of test your models is you think about how the earning is going to fall on a quarter-by-quarter basis.

Okay. Thank you. And I’m sorry if you’d mentioned this before. What was the weather impact for the quarter?

We didn’t really talk about the weather impact per se. I think as we look at the first two quarters, it’s clear that we’re going to have - well, we’re going to have a warmer winter than last year. But at that - that’s an easy comparison. But it looks at least so far like it’s a little bit warmer than normal. We didn’t call it out specifically, because I’m not sure that in the grand scheme of things, that normal weather variations say inside the 10% plus or minus range isn’t what we deal with that every day. But I think what you’ll see is, as you look at the numbers for the quarter and then you think about the second quarter is, so clearly some of the margins that were driven from off system sales capacity release in LER will be under some stress, because there is not a lot of value in excess molecules. This year those have no value, last year they had tremendous value. But we’re also very confident in our ability to manage the O&M costs, so that when you get to the bottom-line, we still get to the same answer.

Okay. Thank you, guys.

Thank you.

[Operator Instructions] There are no further questions.

Okay. Great. Well, thank you all for joining us. I know it’s a busy earnings day in the sector. So I appreciate your time and look forward to catching up with you later today. If you have any questions please feel free to give us a call. Thanks so much, bye-bye.

Ladies and gentlemen, thank you to all of our participants for joining today. This does conclude our webcast. And you may now disconnect. Have a good day.