Good day and welcome to today’s Laclede Group Fourth Quarter Fiscal 2014 Earnings Conference. 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 conference over to Scott Dudley, Managing Director of Investor Relations. Scott, the floor is yours.

Well thank you and good morning everyone. Welcome to the earnings conference call for our fiscal fourth quarter and full year of 2014. We issued a news release this morning announcing our results and you can access that release on our Web site at thelacledegroup.com and that's under the News Releases tab. Our call today is scheduled for about an hour and will include a discussion of our results and a question-and-answer session at the end. Prior to opening up the call for questions, the operator will provide instructions on how to join the queue to ask your question. Presenting on our call today are Suzanne Sitherwood, President and CEO; Steve Rasche, Executive Vice President and CFO; and also in the room with us 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 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 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, divesture and restructuring activities, including one-time costs related to the integration of MGE and the costs related to the acquisition of 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. Let me add my welcome to those who have joined us this morning. Before I get to the task at hand, I would like to share a few remarks regarding the Ferguson civil unrest. I’m sure most of you saw the Grand Jury’s decision and the aftermath. Please note that under Steve Lindsey’s leadership, our operational teams have been working with the authority since August to make sure our customers and employees stay safe and we continue to maintain a reliable gas system. Two years ago, I had the good fortune to add Al Moore to our team as our Director of Security as he was retiring from the St. Louis Metropolitan Police Department. Al’s 20 years of experience with the police have been invaluable. We also added two years ago a seasoned executive around employee and community safety as well as an expert on standing up and incident support team in the event of a need for crisis management at any level. Steve Lindsey and I have worked closely with Tim Goodson over the years. The combination of Steve’s experience along with a seasoned operations team, supported by Al and Tim have allowed us to continue to manage our operations in a safe and reliable manner. I’ll conclude by saying, please keep the impacted families and communities in your thoughts and prayers during this complicated time. Thank you. Now turning to our fiscal 2014 results, I’m happy to report that 2014 was a record year, as we continue to execute on our growth strategy. Mostly my remarks will focus on our many accomplishments. Steve Rasche will follow me with a review of our operating results and other financial matters including our outlook for 2015 and beyond. As I’ve shared before, it’s not growth for growth's sake,…

Thanks Suzanne. Good morning everyone. Let me review our operating results for the fiscal year 2014 and the fourth quarter ended September 30, and give a few updates, including our outlook for 2015 and beyond. Looking first at our full year income statement, total operating revenues were $1.6 billion, operating margin or earnings contribution after gas cost and gross receipts tax of $600 million was higher by $229 million or 62% compared to last year. Looking at the components of the operating margin, Gas Utility margins of $571 million were up $222 million from the prior year with approximately $187 million of that increase due to the additions of Missouri Gas Energy and $15 million due to the September addition of Alagasco. The remaining margin improvement of $20 million was the result of higher demand and off-system sales capacity release as well as higher ISRS and propane revenues. We also saw customer growth, adding roughly 3,000 customers last year in Missouri. Including Alagasco we now serve over 1.56 million customers. Gas marketing generated operating margins of $26 million, an increase of just over $80 million from last year as higher margins earned during last winter more than offset the expiration of two supply contracts in fiscal ’13 and early fiscal ’14. Stepping back, Laclede’s higher overall margins were offset in part by higher operating expenses. Operating and maintenance expenses of just under $288 million were higher than last year by $107 million. This increase was due to several factors. First, nearly $92 million of that increase was due to adding MGE’s full year operating results, another $12 million is from Alagasco’s September operating results. The remaining increase of roughly $3 million reflect higher operating cost associated with the severe winter, principally bad debts and maintenance cost, largely offset by cost…

Thank you Steve. Overall 2014 was a very successful year in which we delivered on our strategic objective and commitments to the market and other stakeholders. We delivered record earnings reflecting strong performance during an extremely cold winter period and met our guidance for the year, excluding the weather benefit. The MGE integration continues to go very well. We are ahead plan in terms of schedule and savings. We completed a second accretive acquisition, in line with our growth strategy as did so within five months from announcing it. We exceeded our organic growth target tied to miles of pipeline replaced and we maintained a strong financial profile including solid investment rate credit ratings and excellent liquidity. In 2015 and beyond we will continue to be focused on integrating MGE and now Alagasco to deliver on our earnings growth target. We will drive further organic growth through customer initiative and build our accelerated pipeline replacement program which will be rolled out in Alabama this year. We are in a strong financial position to carry out our growth plans and we have confidence in our ability to keep delivering value to investors, employees and customers alike. We take these commitments very seriously and we look forward to updating on our success in meeting our goals and delivering on our commitments. We are now ready to take questions.

And at this time, we would like to take any questions that you might have for us today [Operator Instructions]. Your first question will come from the line of Andy Levi with Avon Capital.

Just a couple of questions, just on synergies for Alagasco. I didn’t hear you -- at least I missed it maybe. How should we’d be thinking if -- on synergies if any for Alagasco ’15, ’16?

We have not provided a specific number Andy or any range of number we've talked to you and others about. When we went through the Alagasco modeling process we looked at precedent transactions and much likely do with MGE and created a range of savings. As I mentioned in my remarks we have recent split up those integration teams. They’re headed by both an Alagasco member as well as a Laclede member and they've just begun their work and they are supposed to be completed with their body of work by the end of the second quarter and that’s of this fiscal year.

Okay, so at some point you will share those with us? Is that kind of the thinking?

Yes. I think at some point you will see us share what we shared with MGE. We're just looking at a range of synergies over a period of time and I think that’s how we think about it.

Okay. And then you didn’t gave specific guidance for ’15 and ’16, but can you give us any thoughts on I guess consensus for ’15 is about $3.13. Was it a fairly wide range to get you there and then for ’16 $3.33 is consensus, also with wide range as far as people on the low versus the top end. Can you comment at all, help us a little bit since you didn’t give specific guidance?

We do have a way that we think about that I'm going to pass the baton to Steve because he so elegantly summarizes it. So go ahead.

Andy this is Steve. Great question. As we've talked about in the past, and you and I have had that specific conversation, we understand the desire for earnings guidance in a range and I think we continue to work down to that path. If you can remember, it was only a couple of years ago we started earnings calls and I want to make sure that we’re very confident in how we’re going to deliver that when we finally get to that point of introducing it. You are right; if we look at the main analyst estimate, first call, for the next fiscal year 2015 at $3.15 a share, actually it’s not that bad of a range. It looks to me based on the information I have in front of me, high end of the range is $3.24, low end $3.10. I would say we’re comfortable with the mean and estimate. I think that’s a representative sample. And again, if you go back to the math that we already have been talking to the market about or what we confirmed today starting with the run rate earnings of our business, which would be $3.05 minus $0.17 per share because that was the unusual weather impact, and we should grow above our range at the top of that range for the long term at 6%. So $3.15 clearly falls within that category and I think that’s a good spot to be thinking about going forward.

And then is there any comment on ’16?

Not at this juncture. Again, if you go back to our guidance and we’re going to grow above that 4% to 6% range as we go to ’16. So if you do the math, we clearly indicate that the $3.33 is within that range to think about as we look two years up.

Thank you. And then how is your work with senior management as far as compensation relative to making your earnings goals?

We have a compensation plan that obviously is available in the public domain and basically it's made up of three components. There is a base salary component that is determined by the board for Section 16 and market driven based on years of experience, that sort of thing. There is an annual incentive plan [indiscernible] that is focused on net economic earnings so that we stay focused on executing throughout the year and of course third piece is an equity component that has a longer term of sight -- it has a net economic earnings piece as well as the total shareholder return piece relative to our peers. And so we believe and I believe the board believes that we have the right balance with our compensation structure and we’re focused on the right things which is why, I also believe you see in terms of our execution and I went through it in my remarks that we’re properly executing on a short-term basis while the long-term basis.

And again on the net economic earnings, is that reset every year. So there’s a target for ’15, I guess?

That’s right.

Well, what is the target for ‘15? [Multiple Speakers]

Andy, when we discuss with our Board, as we did in our meeting last week, we spend a lot of time looking our longer range plan. We plan over the traditional buckets of three and five years and we’re looking at how we’re going to drive value over the longer term. And so all of the targets that Suzanne referenced are tied back to our longer range plan of how we’re going to drive value to everybody in the food chain but clearly to our shareholders also.

Your next question will come from the line of Sarah Akers with Wells Fargo.

Just wondering if you could expand on the new opportunities that you’re evaluating, I know nothing is ripe for announcement right now, but can you say whether these initiatives are the inside or outside the utilities and the risk profile of the projects that you’re looking at?

Yes. So there’s -- if you think, Sarah, I think from your question from a utility perspective, in terms of acquisition, we’ve had two major acquisitions there, as you are aware. And you're also aware we have a corporate development group that is always looking at what’s available, but management will make the determination whether or not to proceed on any acquisition, be it large or small. And so that would just be over time an expansion of our gas utility segment. We’ve also talked about our organic growth relative to pipeline replacement and we’ve ran through the map on that, what that has looked like and prospectively a little bit of what are the look like. And in addition to that, we’re focused on organic growth of the utility. It's not just the pipeline replacement, but how we think about customer additions or expanding burner chips or new markets on our gas company system. So that’s the second piece that you’ve heard us talk about. We’ve also talked about Spire and LER. So let me hit those two rather quick. They look and act like gas company retail, gas company customers. They’re not necessarily inside the franchise areas of our gas company, but they are retail customers and they are burner tips and meters and billing and so forth, the services that we provide inside the gas company. So it's Spire and LER. We believe that they are important to our industry and important to providing services for those customers, but again don’t fit nicely inside that franchise area. And so that’s why we’re also focused on Spire and LER, and that’s the four categories that I have outlined earlier in my remarks.

So, when you talk about looking at the supply chain and storage and things like that, would you evaluate or are you evaluating midstream opportunities or potentially something like the rate basing of gas reserves? Are those in the opportunity set?

Yes, I look at it this way and I’ve mentioned to you and others here, we’re a gas company and that’s what we are, and for the most part even including Spire and LER as I just described. So when you think about all the upstream assets at the gas companies like you have articulated, the supply, transportation and storage component, we’re looking under Mike Geiselhart's leadership at a holistic project to make sure that we have the right array of those on a short-term and long-term basis for liability purposes. And especially now having Laclede Gas, MGE and Alagasco, we want to make sure that we have that comprehensive planning process in place and have run that evaluation. And also to the extent is that we can create value for our customers, then we also want to make sure that we’re looking at it from the perspective of value for when those assets are lying hollow. The other piece and it gets more directly to your question, to the extent that, as we get through this process that, we believe by changing out our array that we improve our liability or create more value for our shareholders and for our customers, then we’ll embark on that and we’re not talking about being an upstream midstream company. We're a gas company and so it is anchored back to our gas company.

Your next question will come from the line of Chris Turnure with JPMorgan.

Can you talk a little bit about Alagasco? I guess first, what their net income or net economic earnings contribution was on a full year 2014 fiscal basis, if you had owned them for the entire year? And the kind of equity -- book equity base there? And then how they’re going to contribute to growth going forward versus your 4% to 6% guidance?

Chris this is Steve. Let me take a shot at that. I don’t have the fiscal year performance for Alagasco with me right now. We’ve owned them for exactly a month. So we’ve really been focused on our plan of ownership and going forward, but I think more broadly speaking and getting to the second part of your question, yes, they consistently been able to earn their authorized ROE and I can assure you that they were able to do that this year. In fact they will be returning some funds to the customers because of the cold winter weather, and they did actually move into the category in their cost containment mechanism where there is sharing mechanism below their cost range. So all good things and all things that bode well for the future for Alagasco. So I think the important thing is they met their authorized ROE. They have five rates with the Alabama public service commission. Those are currently under review and we would anticipate that they will go into effect at the beginning of next month, as they would undergo the normal process and those would be based upon the new ROE, about 10.8% or 10.85% with the customer service kicker. So I think we are very confident in utility that we obtained and how we're driving that business. From an ROE or from a capital structure perspective, as you know, when the RSE was reset almost a year ago, the bandwidth of the equity component, the capital structure from 55% to 56.5% and the Company during the last year did a great job of moving very close to that benchmark and I think that we're comfortable that we’ll be able to move up within the structure of the rates as they exit, so we can take full advantage of that increase in the bandwidth that was authorized a year ago. So again, we're just put into a great position. And then I think lastly on the cost, we ended below the band last year on the cost containment mechanism and clearly as we move forward, one of our goals is to operate the utility efficiently and do that within that band and I think that we’re very comfortable with where we are and I think that will create some additional value as we go forward in that aspect also.

Okay and then on your overall CapEx trends, you mentioned a $1.5 billion over five years. Could you give us a little bit more color, one on any lumpiness there or whether that’s going to be consistent, kind of at the $300 million level over that period, and then also just how much of that’s going be flowing through the ISRS mechanism in Missouri or through Alabama and the potential writer there.

Yes couple of question there and keep me honest if I don’t get through all of that. The $300 million is clearly our target for this year and you’re right, capital spend can be lumpy. We do have long line of sight in terms of our investments in the utility business, and specifically driven by the pipeline replacement. So it could be lumpy. But I'm not sure that lumpiness is going to be 50% swing one way or another, but it might where it will be 10% or 20% year-on-year; but I think we’re comfortable with the guidance of the amount of money that we would spend over the next five years. In terms of pipeline replacement, last year that was little bit over 50% of our total capital spend. In that between 50% and 60%, if you go back a year earlier in Missouri, that’s our sweet spot in terms of how we allocate deploy capital in that total say $300 million capital spend and I think you can be comfortable that we’re going stay within that range going forward because we see many years' worth of opportunity to continue what we’ve already done in the state of Missouri, because we’re near run rate in the state of Missouri, looking at both sides of the state and we see the opportunity to continue to accelerate that at Alagasco. With regard to how it fits through the mechanisms, you're right in Missouri that we have the ISRS mechanism and so there's a pretty clear path and how that translates into recovery from in return to the shareholder and recovery on our investment. In Alabama it actually works the same way. It just -- it isn’t a specific mechanism that you can point to because we just have to go back to how the rates are actually established. So the rates that are being evaluated right now by the Alabama Public Service Commission include our assumption of the capital spend for the next year. So it's already embedded in not only the investments we would make but also then the increase in the value of the Company and ultimately an increase in retaining shareholders equity, which again becomes part of that formula for the ultimate rate. So although it's not as easy to identify a specific line or a specific writer, I can assure you that the investment spend down there has the same type of return dynamics that we see in the state of Missouri.

And Chris, this is Steve Lindsey. I'll just add one other point to that, that we're often times asked kind of what’s your line of sight on pipeline replacement and given the three different jurisdictions that we're operating in, that’s somewhere in the 10 to 15 year range dependent upon the place but that gives a good long line of sight into the three jurisdictions.

Okay great. And Steve, did you mention that 50% of the total CapEx was going flow through the ISRS or 50% of the Missouri CapEx?

Yes, we almost Chris have to look at it in a little bit broader sense as how much is going into pipeline replacement or ISRS like investments. So that wouldn’t be 50% of the total collective years for us. It's really how much of our total capital spend are we allocating to pipeline replacement, and that would be that 50% to 60% range.

For all jurisdictions.

For all jurisdictions combined yes.

Your next question will come from the line of Ashar Khan with Visium Asset Management.

My questions have been answered. Thank you.

Your next question is a follow up from the line of Andy Levi with Avon Capital.

Just a couple follow ups. Just back on the Alagasco synergies, are those -- again we don’t know whether they're significant or not, but I guess when we kind of were talking about the growth rate and potential earnings, are synergies for Alagasco included in that or would that be up side?

The synergies are included on our computation. Again that are based on subsequent transactions. And in my remarks I gave a percentage range for O&M non-fuel and so that percentage was based on historic precedent transactions again. So you could sort of do the math from there if you will.

Thanks. And then what’s your dividend policy?

We don’t have a "dividend policy". We have a history with our dividend and you've for couple of years seen us increase that dividend. And the line of sight that we've just talked to, I think you'll see a sort of continuation of that value add by us having a larger organization and longer scale and the investment capital and so forth. So not a policy but surely, given what everything Steve Rasche -- I got a Steve on each of me here -- Steve Rasche went through and how that correlates back to the dividend, we seek to continue to increase value for our shareholders.

Again Andy, the kind of the -- the markers we look at is we -- as we plot our strategy over a longer period of time with dividends, because we never do this in a one year basket. We're always thinking to the future, you would expect us to do that -- is we want to keep our payout ratio at a reasonable -- 55% to 65% is historically kind of the payout ratio that we’ve operated within and we're clearly up in middle of that range by all estimates right now. We clearly look to the gas utilities as the organizations to fund the dividend. You don’t have to go back to many years to where -- the point where LER are making a lot of money, taking advantage of the market opportunities. But a marketing company such as LER really isn’t conducive to doing -- or paying a dividend over a long period of time. So it’s great value when we create it and it's a key strategic part of our portfolio, but we wouldn’t want to base a dividend off of their earnings. So we will look to the utilities. And then we also look into dividend yield to make sure that we’re in the upper half of the upper quartile of our peers and we watch that closely because we know that that dividend yield is a key component part of what our shareholders look to in terms of their overall return. Clearly, we’re getting more folks interested in the growth component of our TSR. That’s where we’ve been driving a lot of our focus. And finally, in terms of the increase, back to what Suzanne mentioned, we do look at that every year and we have made now two steps in a row where not only have we increased the dividend, keeping with our long standing tradition of increasing the dividend, but we’ve now increased it at a faster rate. It was a 3.5% increase last year. So 4.5% increase this year. And I think that just shows our confidence and our ability to continue to drive earnings per share, which becomes one of the metrics we look at when we think about where our dividend is going to be for the long term and our confidence in our ability to execute on our strategy.

So should we assume I guess, with the earnings growth starting to accelerate in ’15 and ’16, above your 4% to 6% range and obviously like you said, you’ve accelerated slightly the dividend growth over the last two years? Is it possible that we could see a further acceleration of the dividend growth in ’15 and ’16, assuming you make the numbers that you hope to make?

We clearly have the opportunity to consider that going forward. At the same time we’re investing a lot back in our business and investing a lot in capital. So we do take a look -- a fairly holistic view of where the cash is and how much we want to invest in the business to drive the growth component of TSR and how much we want to return to our shareholders. It's always the balancing act but it is something we look at every year.

[Operator Instructions] And currently we have no further questions. I’ll turn the call back over to you for closing remarks.

Okay, great. Well, thank you all for joining us for our call on earnings. Happy Thanksgiving and we’ll be talking to you soon. Thanks so much.