Ladies and gentlemen, thank you for standing by. And welcome to the Laclede Group’s Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Scott Dudley, Managing Director, Investor Relations. You may begin your conference.

Thank you and good morning, welcome to the Laclede Group earnings conference call for the third quarter of fiscal 2015. We announced our financial results this morning and you may access the news release on our website at thelacledegroup.com, and you can find that under the News Releases tab. Today’s call is scheduled for up to an hour and will include discussion of our results, and question-and-answer session. Prior to opening up the call for questions, the operator will provide instructions on how you may join the queue to ask a 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 is, Steve Lindsey, Executive Vice President and Chief Operating Officer of Distribution Operations. Before we start, let me cover our Safe Harbor statement and discussion of our 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, as well as 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’ll turn the call now over to Suzanne.

Thank you, Scott, and welcome everyone. I’m proud to report we turned in another quarter of solid performance, as we continue to execute on our growth initiative. I’ll begin with the quick summary of our results and then I will provide an update of other items related to achieving our strategic objectives. Steve Rasche will follow me with a more detailed discussion of our operating results and financial position, as well as some commentary on our outlook. This morning, we reported net economic earnings at $0.25 per share for the third quarter and $3.56 [ph] per share for the nine-month period. Steve will discuss the details in a moment, but I'm pleased to note that these results are in line with our expectations and we remain on track to achieve our growth target for the year. At the AGA Financial Forum in May, we had an opportunity to meet with many of you to discuss our achievements relative to our strategic growth initiatives. I like to spend a few minutes recapping that discussion and providing a few updates. We remain focused on transforming our business and continuing to deliver long-term growth by executing on the four pillars of our strategy. First, we are growing our core Gas Utility business through investment and further pipeline infrastructure upgrades and organic growth initiatives. Second, as we demonstrated, we are growing to acquire another gas utility and successfully integrating them to create value for investors, customers and the communities we serve. Third, we are working to further leverage our natural gas industry expertise to optimize our current and future investments in natural gas transportation, source and supply assets across both our regulated gas facilities and our gas marketing business. And fourth, we are investing in innovation and emerging market. I’ll start with our initiatives…

Thanks, Suzanne. Good morning, everyone. We announced three quarter earnings earlier this morning that came in to the top end of our expectations, due to timing and a slight improvement in our income tax rate. Let me take a few minutes to review those results with you and talk a little bit about the rest of this year and 2016. Starting with the third quarter results, total operating revenues were just over $275 million, up 14% from last year. Operating margins or earnings contribution after gas cost and gross receipt taxes of $177 million was 36% higher than last year. Our business segment, Gas Utility margins of $173 million were up $50 million from last year, as the addition of Alagasco contributed $54 million in margin, while the operating margin of our Missouri utilities, declined by $4 million. This decline reflects interest revenues that were higher in the quarter, but they were more than offset by the change in Missouri Gas Energy’s rate design. As we noted in previous quarters, MGE’s rates now include a variable user space component, which has shifted the margin into the first and second quarters of the fiscal year and decreased margins in the third and fourth quarters. Gas marketing delivery operating margins of $3.1 million down from $6.5 million last year, this decline reflects the return of normal weather and market conditions in the Midwest, as compared to the higher volatility and wider price differentials prevalent in the prior year. Remember that last year the overall market was recovering from the record cold winter of 2014 and the market dynamics were still working to return to the new normal, so to speak, that we are seeing again this year. Returning to the income statement, other operations and maintenance expenses of just under $91 million…

Thanks, Steve. So summarize, we continue to execute on our strategy and delivered results in line with our expectations, including our earnings per share growth target. We are executing well and we continue to transform Laclede to effectively integrating and bringing together our utility companies and improving the business models of our non-regulated businesses. This transformation includes the shift in our corporate culture to reflect where we are today, a larger, growing company, to serve gas utility customers across two states and provide other gas services across the Midwest and other parts of the country. We continue work to build stronger connections and communications at all of our constituencies, sharing our changes and our plans. Our recent AGA presentation had simplified they’re reflected truly are the company. The slide depicts the community with a description, the description is energy exists to help to live their lives, relative businesses, advance the community. This is simple idea that had won the heart of our business. In that spirit I offer things are more than 3,000 employees for their commitments through our simple idea. And months ahead, you can expect that we will continue our efforts to focus and solidify our emerging messages to our stakeholders, and continue to deliver on our product. Operator, we are now ready to take questions. Thank you.

[Operator Instructions] Your first question comes from Dan Eggers with Credit Suisse.

Hey, good morning guys. Hey, good morning, sorry about that. Just a couple of questions, Suzanne you've made mentioned to the Muni system acquisitions or something about Muni's in your prepared remarks. I just wanted if you could just, maybe elaborate a little bit more on that or tell me if I just misheard you?

Here I’ve given a little bit more expansion regarding organic growth. We’ve shared just a couple of calls ago, we had hired our Vice President of Organic Growth, and he’s done a lot of preliminary work in terms of areas that we should be focused on. And one of those areas on the resistible [ph] and also with the acquisition of Alagasco, there’s several municipals [ph] on that scale, as well as even some in Missouri too. We are just focused right now on understanding who they are and we also think about it in terms of all the pipeline regulations and Steve Lindsey is at the table and he can talk a little bit more that if you'd like but some of these municipals are actually reaching out to gas company because they have a stronger need in understanding what [indiscernible] and Steve if you want to add.

I think we’re [indiscernible] exactly where we’re really seeing a trend nationally that has enhanced pipeline safety regulation moving at the place. Some of these near to operators are looking for business either in the operation or exist in more perhaps concluding divesting our existing system. So we are out in market, we’re making ourselves available to have discussions with those long [indiscernible] and we do these as part of our organic growth.

Again we’ve in the water space where it makes tremendous amount of sense for the communities probably to be selling their systems because of the capital obligations and operational challenges, yet they seem not to show a whole lot of willingness to do it. As you guys are kind of looking into this, are you seeing interest either from the communities [ph] or the people in the communities would suggest, this is something you guys get yourself more actively involved in?

Well, yes, I think again as you mentioned some of the operational characteristics of the system have changed, as well as leadership looking at different municipalities. So I think again, our overall work right now is to evaluate where those opportunities to exist, have those discussions, and if those opportunities present themselves be ready and take a little bit more of a proactive approach that we have in the plans.

And you know what are the plans is, capital constrains, some of the communities have, especially coming out of the sort of the 2008 recession period and then you layer on this additional on Federal regulation. I still have the volume capacity and other capital resources to terms to you. So that’s part of what’s driving interest to your point.

Do you think this is – is there an opportunity to kind of be a manager of their systems instead you get paid in a little capital way, you pay their management fee effectively to run it for them without having to do a lot of balance sheet work necessarily?

I guess I repeat we keep our mind open to you what the interest about, if we go to municipalities and for the Public Service Commission. I think if you will the commission really transactions in different way that we will keep our minds regardless taking the liabilities to the help of that system and our ability to evaluate with the extremely important. And then, secondly how we work with the regulators to get the – it's a right way to transition that principle into the gas company that works for customers and our shareholders, and there [indiscernible], but we've done a lot of homework and we feel pretty confident about our approach.

This is Andy, I think this is the fiscal year 2016 event where we'll start to see something converter how long [indiscernible] take to make sense of this from our perspective?

I think the few line items on organic growth, I'm trying to give into the [indiscernible] in terms of mix evaluation clearly wanted to the pillars and we've done a lot of analysis regarding to municipals that are in Missouri as well as Alabama and we have – they are working out in the field. So, I guess, time will tell that definitely something that we studied well and we are out looking.

And I guess, probably on the organic front you made mention of kind of looking at your share for shale related infrastructure and that sort of thing. Can you just maybe explain a little bit what the thought process is there? And I guess the timing is you give an update at the end of next quarter's call up your fiscal year end?

It's correctly. You did hear that correctly. So we embarked under my guide by heart leadership as Senior Vice President of Corporate Development Strategy. We started evaluating all the upstream asset that are prior actually to closing Alagasco for our considering utility and we were looking at the historical supply, transportation and stores contracts and sources for serving our customers. So we started evaluation process on how long they service regarding the liability for our customers on the short term and the long-term. As you know again with the introduction of shell gas in the various basement and there is attributes for these basements. As you know that changed the market, as well as the pipeline respond to those supply basements. So I believe and my colleagues believe the responsibility for us to embark on this evaluation, we started in eastern part of the state and we split up for a lot of the modeling therefore physical and logical modeling are now starting to same sort of western side of the state in Alabama and because we’ve started earlier with eastern side in more sophisticated, I mean reliability and then you layer on commercial availability you want some of their supply transportation services pipeline and go forward it. And that some of what you will hear an update for the end of next quarter.

Okay, great. Thank you guys.

Thank you.

Your next question comes from the line of Spencer Joyce with Hilliard Lyons.

Steve, Suzanne, and Scott good morning, how are you?

[Indiscernible].

Good morning.

Steve. I like that teaser on the guidance. We are all eagerly weighted queue for now.

[Indiscernible].

Just a quick one here. Steve refreshes on the timing for that reallocation of the earnings kind of across the quarters, those rate structure changes will have anniversary like as of Q4, is that right. So we should have a pretty clean year kind of in the rear view mirror as of next quarter.

We should but Alagasco will not have been in the mix last year cause you might recall close on that at the end of August. So we kept it out of our net earnings for the full year or so, if that and Alagasco is more seasonal due mainly to the fact of the geographies that it’s providing a natural gas. And so the fourth quarter will still be a little bit kinky, what I would suggest, Spencer is go back to the guidance that we talked about earlier in the year and I did talk about on the call and talk about on the call and we kind of give ranges of the earnings by quarter and that range that we gave for the fourth quarter was a loss of between 9% and 11%. And as I just mentioned, we expect to be a little bit above that range. So a little bit higher than 11%, I mean the loss for the quarter and that’s really timing of expenses as much as it is the change in the seasonality. But I would say that once we get beyond this year that I think we should have a reasonable cadence to work through, as you look at 2016 and beyond.

Okay, great. So maybe one more kind of noisy or kinky quarter there and that we should be pretty clean?

Yes, it is real hard. Not to make it noisy and comfortable for you. So –

Yes, well, I know you all did a great job closing those acquisitions right at the end of the year, which made it nice to work with. Turning up to the income statement, the gain on sale from this quarter was that baked into the O&M line, was that a offset O&M expense or was that in the other income line?

That was in the O&M expense line and you’d want to take out that $7.6 million essentially reduction in operating expenses in order to get to a better run rate.

Okay, perfect that’s – and I think that was in the release. I just want to make sure I was understanding that right, that’s kind of a large item. Finally for me, on the corporate overhead and sort of the other unallocated expense or earnings line, we’ve obviously seen some wider losses this year, but I’m assuming that should peak somewhat for full year fiscal 2015, and then perhaps draw down a little bit moving forward. Is that kind of, I guess qualitatively the right way to think about those, the other segment, if you will?

Yes, the other – the magical all other categories is everything that doesn’t set it nice and uniquely into a segment. And you’re right, the vast majority of those expenses are interest expense on the Group debt that we should financially, Alagasco transactions. So, and those are all, mostly at fixed rate some at variable rate, but short-term variable rate, so I until we start retiring that debt, that will be a fairly static number by quarter-to-quarter basis. There is a small amount of what I’ll call unallocated corporate costs that would also fall in that category. Those don’t generally vary much on a quarter-to-quarter basis, a little bit more this quarter because of some integration costs but we would pull those out for an economic earnings purposes. So, I think over time Spencer, as we start delivering the business and we know that in 2017, we delever the business with the – unit mandatory’s, liquidating at least the equity forward component those liquidating. That will definitely see change and the interest component in that other category. Aside from that is probably has a bit more flattish going into 2016.

Okay. Perfect. So now – a potential drawdown talking point in 2017, but before that you’re looking kind of flattish.

Yes.

All right. Nice quarter, that’s all I have.

Thanks, Spencer.

Your next question comes from the line of Selman Akyol with Stifel.

Thank you, good morning.

Hey, good morning.

A couple of quick questions. On your acquisition related expenses from Alagasco, how much longer do you expect those to be running through? Should we expect to see this continue to bleeding to 2016 as well?

Yes, we do. We typically look on a broad brush Selman, when we look at integration. It’s generally a two to three-year program, if we look at MGE and that’s a really good marker to take a look at. We do anticipate there being some cost next year which would be the third year of that acquisition. Remember, we’re only coming up on the first anniversary of Alagasco. And as Suzan mentioned in our prepared remarks, we are now implementing the integration plans. So, we would clearly expect those integration cost to continue through 2016 and then perhaps some into 2017 at Alagasco. At that point, probably not much from MGE going forward.

All right. And then I think you said before that MGE was a good marker and maybe up to $20 million of integration expenses there, am I remembering that correctly?

You are, and that was our original transaction cost guidance and we came in well underneath that. Our integration costs for MGE are running at a level significantly below that. In fact, if you give me just a second here because we do disclose that information every quarter, I’m not sure if I’m going to get it to – I will get it to you separately if I could –

Okay, we can follow-up offline

Yes.

But so I’m just taking back 2016 in terms of Alagasco, should we expect sort of similar run rates to 2015 or is the bulk behind that is very just kind of quantify that?

I would suspect that just as with MGE, you’re going to see a fairly consistent run of cost, they run into different categories, depending upon what’s driving them. So I would suspect we’ll see a similar level as we go through 2016 and that embraced our tailing off as we get to 2017.

Great, I appreciate that. And then just looking at the CapEx expenses, I clearly understand what’s being spent in Missouri, can you go through with the $56 million, where that’s being spent for Alagasco?

Over a half of it was pipeline replacement and that’s clearly what our goal is in fact if you look into 2016 and beyond, we would expect that number to even go a little bit higher. So in terms of the fully 50 – 30 or almost two-thirds of that amount is either pipeline replacement or other things that would be directly associated with pipes or new customers. And then this year, and we see the same thing happening in St Louis or in Missouri, as we do have some facilities costs that are coming in this year, that’s about $10 million at Alagasco this year which we wouldn’t expect to recur next year. From our pipeline replacement perspective, all the three utilities will be at or above the level they were at last year. So we are managing holistically and at Alagasco, there is one large infrastructure expansion and as a surprise or improvement that this year, so that in other major pieces, what’s going on in 2015

All right. Last one for me on still on the CapEx, $300 million for this year, roughly split two-thirds between Missouri and one-third for Alagasco?

Yes, sir.

Got it. All right. Thank you very much.

Thanks, Selman.

Thanks, Selman. [Operator Instructions] At this time we have no further questions. Management, I’m turning this back to you for closing remarks. Scott

Great, thank you all for joining us and will be available throughout the day for any follow-ups. Thanks for joining us.

This concludes today’s conference call. You may now disconnect.