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Star Gas Partners’ (SGU) CEO Steven Goldman on Q2 2015 Results – Earnings Call Transcript

Star Gas Partners LP (NYSE: SGU ) Q2 2015 Earnings Conference Call August 04, 2015 11:00 AM ET Executives Steven Goldman – CEO Chris Witty – IR, Darrow Associates Richard Ambury – CFO Analysts Andrew Gadlin – Odeon Capital David Spier – Nitor Capital Michael Prouting – 10K Capital Operator Hello and welcome to the Star Gas Partners, Fiscal 2015 Third Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being record. I would now like to turn the conference over to Steve Goldman Star Gas Partners’ Chief Executive Officer. Please go ahead, sir. Steven Goldman Thank you, Chad. Good morning and thank you for joining us today. With me today is Star Gas Chief Financial Officer, Richard Ambury. After I provide some brief remarks about the quarter and first nine months of fiscal 2015 Rich will review the fiscal third quarter-ended June 30th, 2015 and year-to-date financial results. We will then take your questions. Before we begin Chris Witty of our Investor Relations firm Darrow Associates will read the Safe Harbor Statement. Please go ahead, Chris. Chris Witty Thanks, Steve, and good morning. This conference call may include forward-looking statements that represent the partnership’s expectations and beliefs concerning future events that involve risks and uncertainties and may cause the partnership’s actual performance to be materially different from the performance indicated or implied by such statements. All statements, other than statements of historical facts included in this conference call, are forward-looking statements. Although the partnership believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the partnership’s expectations are disclosed in this conference call and in the partnership’s quarterly reports and its annual report and Form 10-K for the fiscal year ended September 30, 2014. All subsequent written and oral forward-looking statements attributable to the partnership or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. Unless otherwise required by law, the partnership undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this conference call. I’d now like to turn the call back over to Steve Goldman. Steve? Steven Goldman Thanks, Chris. We notice this has been an extraordinary fiscal year thus far as we’ve benefited greatly from falling oil prices and an incredibly cold period this winter unlike anything we have seen in recent memory and we are pleased that we’ve been able to retain much of the benefit of these factors despite an uneven year for weather. Our first quarter and third quarters were certainly an outlook we had planned for what we were counting on in terms of temperatures. Our first quarter you may recall was warmer than normal which challenged us in several ways. It caused equipment sales to be slower than expected and tempered our ramp up of staffing prior to the coldest part of the winter season due to the uncertainty as to how the rest of the winter will proceed. We also faced competitors who are much more aggressive on price to we believe to the lack of weather and related volume. The second quarter was starkly different whether it’s severe temperatures and numerous snowstorms such that we still increased expense related to service and maintenance for both of these during the second quarter and third quarter. I mention this because our third quarter results was somewhat mixed but given the temperatures and other factors impacting it from the quarter before we believe the partnership operated to the best of its ability. In terms of weather the third quarter was cooler during the beginning but that included higher temperatures during May and June. Warm day specifically over 90 degrees helped to drive air conditioning, equipment sales and service so despite the somewhat unusual weather patterns we believe we’ve still been able to deliver our solid results. Our EBITDA and attrition continue to support our belief in that by focusing on the customer and on efficient operations we’re making Star Gas a stronger business every day. One of the areas of improvement that I have spoken about in the past is training and I think it’s important to mention that we are now in the process of creating an internal culture of continuous improvement. We have put in place several new processes to improve the way our employees perform to both better please our customers as well strengthen the bottom line. While we are in the beginning phases of these initiatives our employees have reacted positively to everything we’ve implemented thus far. I mentioned earlier that we’re pleased with our attrition numbers this year but the third quarter’s net attrition was slightly worse than the same period last year and so our sales group has redoubled its efforts to replace these accounts by reaching farther out of our existing footprint for new customers. That said one area of our customer segment that does continue to grow very well has been and is propane and these operations certainly have room to expand even further. In that [way] I’d like to mention we just began operating in Eastern Tennessee this month. We continue to try new things to constantly improve our operating results, notably from a marketing perspective we expanded the use of social media and billboards as two examples to better spread the message about our ability to do more than just service heating equipment. As we all know acquisitions are always an important part of our measure of success, in this regard I’d like to mention that we are in the final negotiations and hopefully we will close soon on another great addition to Star Gas family of businesses and the deal where it’s approximately $20 million. If so when completed we will announce this acquisition. Beside from this acquisition we are also continuing to speak to several other large and small potential owners as usual. Before turning the call over to Rich who will be discussing our financial results I’d like to thank Kim and his team for the tremendous effort that we went through in closing our new credit agreement which allows us to redeem our high interest notes outstanding just to the great deal of time and we’ll strengthen our company financially. With that I’d like to turn the call over to Rich. Richard Ambury Thanks Steven. Good morning everyone. For the third quarter of fiscal 2015 our home heating oil and propane volume decreased by 6% versus last year of 2.6 million gallons to 45 million gallons. Heating degree days were 15% warmer than during the prior year as comparable to fiscal third quarter and 22% warmer than normal. Notes; that temperatures during this non-heating period are not as impactful to annual volume sales as during the heating season. Our heating oil and propane margins increased by over $0.07 year-over-year to approximately $1 per gallon. As a reminder, since the third quarter is a non-heating period with relatively low overall volumes, margins can be impacted quite easily. Total product gross profit was $52 million slightly lower than last year as home heating oil and propane margins were offset by the impact of lower volumes. Star’s net loss declined by $1 million to $8.4 million, largely due to a favorable non-cash change in the fair value of derivative instruments. The adjusted EBITDA loss for the quarter increased by $900,000 to $9.3 million as the impact of higher home heating oil and propane per gallon margins was more than offset by the decline in volume attributable to the warmer weather in a decrease in service and installation profitability. Now let’s review the nine months results. Home heating oil and propane volume rose by 7% as acquisitions primarily [directed] more than offset the impact of net customer attrition, conservations and other factors. In analyzing the results please keep in mind that the first and third quarters of fiscal 2015 were warmer than the first and third quarters of fiscal 2014 while the second quarter of fiscal 2015 was much colder than the second quarter of fiscal 2014. On balance the average temperatures over the nine months period were approximately equal to the average temperatures of the prior year’s comparable period and 5% colder than normal. Volume of other petroleum products rose 27% to 76 million gallons again reflecting significant motor fuel volume provided by Griffith. Total sales declined by 13% to $1.5 billion versus $1.7 billion in the prior year period as the additional sales provided by acquisitions were more than offset by lower selling prices in response to a decline in wholesale product cost of 32% per gallon. Year-to-date product gross profit rose 18% or $64 million to $421 million, due to the growth in sales volume as well as higher home heating oil and propane margins. The decline in home heating oil and propane costs contributed to the per-gallon margin expansion. However as we have mentioned on earlier calls the extreme cold temperatures during the second fiscal quarter of 2015 created additional service requirements. Service and installations gross profit declined by $4 million largely due to the impact of the colder temperatures in storms experience to the second quarter of fiscal 2015. Delivery and branch expenses rose by $23 million or 10%, reflecting the increase in total volume of 10%. These costs increased in the base business on a cents per gallon basis by approximately 3%. As previously mentioned this increase, as well as the higher service expense increased our per gallon margin gross profit requirement. Depreciation and amortization expense rose by $3.5 million, largely due to the Griffith acquisition and interest expense was lower by 19% reflecting lower bank borrowings. Net income increased by $21 million to $83 million due to the impact of higher home heating oil and propane margins, acquisitions and a favorable non-cash change in the fair value of derivative instruments. Adjusted EBITDA increased by $33 million or 26% to a $164 million as the impact of higher home heating oil and propane per gallon margins and acquisition more than offset high operating and service cost largely attributable to cold and temperatures and a numerous snow storms experience during the second quarter of fiscal 2015. Now let’s move over to the balance sheet for a second. We have recently announced that we actually it’s renew five year asset base revolving credit facility that provides the ability to borrow up to $300 million. $450 million during heating season for working capital purposes. The credit facility also provides for a 100 million five year senior secured term loan proceeds from a term loan along with cash on the balance sheet will be used to redeem our 785 senior notes due 2017. The term loan payments schedule is comprised of 10 million per year plus 25% of excess cash flow with the final payment and maturity. We expect to see lower interest expense going forward through this new debt structure. And with that I’d like to turn the call back to Steve. Steven Goldman Thanks, Rich. At this time we would be pleased to address any questions you may have. Chad please open the phone lines for questions. Question-and-Answer Session Operator Thank you. We will now begin the question-and-answer Session. [Operator Instructions] Our first question comes for the day from Andrew Gadlin with Odeon Capital. Andrew Gadlin You mentioned earlier in the call that there is an acquisition in the works for approximately 20 million in proceeds. Can you talk a little bit about geography or business mix? Richard Ambury So New York area company located on Long Island, it’s about somewhere around 19,000 customers it’s a business that more or less reflects our average retail heating oil type business in the area so a very strong competitor of ours so we think of it as a very brand, as I’ve mentioned in the past it’s one of these acquisitions that we’ve been speaking to on and off for years to try to get to this point, we are very excited about the opportunity because we believe it’s a very good addition to Start Gas. Andrew Gadlin And if the acquisition closes mid quarter would you guys put out a press release just to let us know that it’s been done? Steven Goldman We’d either file a press release or an 8-K. Andrew Gadlin Got it. Thanks. And then in terms of the term loan that you are taking out can you remind me what the interest rate on that term loan? Steven Goldman While it’s variable and there is a grid but the lowest grid is LIBOR plus 3 in a quarter. Andrew Gadlin Got it. Well 100 basis points floor? Steven Goldman There is no floor. Andrew Gadlin Okay. And in terms of that facility as you think about it priorities for cash-flow in the near-term would you say you want to pay that tax down as quickly as possible or balancing the opportunities and share buybacks and dividend increases etc. Steven Goldman Sure. We want to balance everything out. The way the excess cash flow covenants to repay anything back over the $10 million, it includes acquisition. So there is no hurry to pay back that loan. So it’s at the end of the term, there is a $60 million bullet which includes the $10 million final maturity, so be it. Richard Ambury We don’t believe that doing this offers our strategy from what we’ve been doing for the last several years, which is looking to make the best use of our earnings to better the business and strengthen the investment of those people that have believed in us up to now. Operator Next question comes from James [indiscernible] with Locust Wood Capital. Unidentified Analyst Hi. Just like to congratulate you guys on a strong third quarter and at Locust Wood we’re just wondering how you guys think about your dividend payout ratios? Richard Ambury We evaluate our dividend payout each and every year, it’s usually sometime in April the fiscal year, depending on what kind of year we’re having and what our opportunities for acquisitions or paying back this debt which is lower rate if not it’s very attractive to keep this outstanding and unit repurchases. Unidentified Analyst Rich, this is Steve also from Locust Wood. Great job you guys have done very well [for us] over the years, would you guys think about in the future reporting your results distributable cash flow basis I mean obviously we can figure it out but the type of people who are following your company it might be helpful to them, have you guys given any thought to that? Steven Goldman No we really haven’t give any thoughts to that, it’s just another non-GAAP SEC type term and I’m not so sure we want to really go down that road right now. Operator The next question comes from David Spier with Nitor Capital. David Spier I just wanted to — most of my questions have already answered, I want to clarify on the term loan, you mentioned about 10 million in annual payments you’re referring to the principal? Steven Goldman That is correct. David Spier Okay, so essentially its 10 million principal payments, and then the interest on that is LIBOR plus you said 375 basis points. Steven Goldman Well, there is a grid depending on our availability, yes. David Spier Okay. It makes a lot of sense. So essentially you’d be able to take down that debt which you’re previously paying about I’d say 11 million in interest payments so you can be able to take it down slowly overtime and then be up about 60 million in the final balloon payment. So that’s correct? Steven Goldman So we do have to set aside 25% of excess cash flow to pay that final maturity during the fiscal year. Operator [Operator Instructions] The next question comes from Michael Prouting with 10K Capital. Michael Prouting I apologize in advance of this background noise. I am at an airport this morning. Just by the way congratulations on the debt refinancing. So it sounds like the strategy really is to not pay that down any quicker than you have to and keep the firepower for any large acquisitions that might come along. Steven Goldman Yes, that’s pretty much it, yes. Michael Prouting Okay. That makes total sense. You talked about an acquisition that you are in the final stages of closing right now. Can you just give us a sense of how the acquisition pipeline looks at this point and also in particular any larger deals that might be out there in the horizon? Richard Ambury It looks probably like it’s been looking for the last several years, whom we’re speaking to four or five different people in different parts of our geography right now. We are always looking to get some others going at the same time. We don’t have anything extraordinarily large that’s imminent right now but again we continue to speak to all potential acquisitions down the road and as I mentioned before this took really several years to get this one done. So you really never know when the seller will be ready to go ahead and finalize the transition. So again it doesn’t look any better than it did before but it isn’t any worse and I think our opportunities are out there and we’re happy where we are with that. Michael Prouting Okay. I appreciate the color on that and I would assume also that as far as valuation is concerned that you’re still within your historical parameters in terms of what you’d be willing to pay. Steven Goldman That is correct. Michael Prouting Okay. And just one I guess somewhat random question, I know there has been discussion previously about collecting or getting rid of the limited partners structure. I’m just wondering if that’s something that’s on the front burner or something that’s going to consideration. Steven Goldman It’s shown on our front burner that doesn’t necessarily mean we won’t look at it from time to time. Operator Our next question comes from Gary [Indiscernible] Unidentified Analyst Okay Steve I believe it was you that said just a couple minutes ago concerning the cash flow, the 25% cash flow to pay back on the term loan. You used the phrase set aside I had read I thought that this had to be paid and not set aside. Steven Goldman I think you are right it is to be paid from 25% of the excess cash flow. Unidentified Analyst Okay at the end of the term or can you do it or is that a long way each should five years. Steven Goldman Yes. The way the term loan worked is we pay 10 million a year for each fiscal year and at the end of each fiscal year we basically see what the excess cash flow is as defined which is roughly EBITDA, less interest, less taxes, less fixed assets, less some pension payments as well as any acquisitions that we might make. Unidentified Analyst There is a cap on it is there are not? Steven Goldman Yes. The cap would be $15 million. That is correct. Unidentified Analyst Yes. Okay, alright so it’s not set aside necessarily it is to be paid. Okay. Steven Goldman That is correct. Unidentified Analyst Okay. That’s okay I just want to clarify. That’s all I have. Steven Goldman Okay. Operator Our next question comes from Gene Riley a Private Investor. Unidentified Analyst Hello. I just have a question about the unit repurchase program in the last two years you’ve been having record earnings and record cash flow but you seem to have ground to a halt on the repurchases when does that turnaround? Steven Goldman Again we look at all opportunities whether its acquisitions having cash on the balance sheet to take debt off the table that’s almost is 9% and we look at it all at various prices and analysis. Operator [Operator Instructions] At this time there are no further questions. So I’d like to turn the conference back over to Steve Goldman for any closing remarks. End of Q&A Steven Goldman Thank you for taking the time today and joining us and for your ongoing interest in Star Gas. We look forward to sharing our fourth quarter 2015 results with all of you in December. Operator The conference has now concluded. Thank you for attending today’s presentation. You may disconnect. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. 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Empire District Electric’s (EDE) CEO Brad Beecher on Q2 2015 Results – Earnings Call Transcript

Empire District Electric Company (NYSE: EDE ) Q2 2015 Earnings Conference Call July 31, 2015 01:00 pm ET Executives Dale Harrington – Corporate Secretary, Director, IR Brad Beecher – President and CEO Laurie Delano – VP, Finance and CFO Operator Good day and welcome to the Empire District Electric Company Second Quarter 2015 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Dale Harrington. Please go ahead. Dale Harrington Thank you, Cassia. And good afternoon everyone and welcome to the Empire District Electronic Company second quarter 2015 earnings conference call. Let me begin, by introducing Brad Beecher, our President and Chief Executive Officer and Laurie Delano, Vice President, Finance and Chief Financial Officer. Who in a few moments will be providing an overview of our 2015 second quarter year-to-date and 12-month ended June 30, 2015 results as well as highlights on other key matters? Our press release announcing second quarter 2015 results was issued yesterday afternoon. The press release and a live webcast of this call including our slide presentation are available on our website at www.empiredistrict.com and a replay of the call will be available on our website through October 31, 2015. Before we begin, I must remind you that our discussion today includes forward-looking statements in the use of non-GAAP financial measures. Slide 2 of our company’s slide deck and the disclosure in our SEC filings present a list of some of the risks and other factors that could cause future results to differ materially from our expectations. I will caution that these list are not exhaustive in the statements made in our discussion today are subject to risks and uncertainties that are difficult to predict. Our SEC filings are available upon request or may be obtained from our website or from the SEC. I would also direct you to our earnings press release for further information on why we believe the presentation of estimated earnings per share impact of individual items and the presentation of gross margin each of which our non-GAAP presentation is beneficial for investors in understanding our financial results. And with that I will now turn the call over to Brad Beecher. Brad Beecher Thank you, Dale. Good afternoon everyone and thank you for joining us. Today, we will discuss our financial results for the second quarter year-to-date and 12 months ended June 30, 2015 period. We will also provide an update on other recent company activities. During their meeting yesterday, the Board of Directors declared a quarterly dividend of $0.26 per share payable September 15, 2015 for shareholders of record as of September 1. On Slide 3 of our presentation, we provided highlights of the quarter year-to-date and 12 months ended periods. We’re going to discuss these more throughout the call. Yesterday, we reported consolidated second quarter 2015 earnings of $6.8 million or $0.16 per share, $0.15 per share on a diluted basis. This compares to the same period in 2014, when earnings were $11.2 million or $0.26 per share. Year-to-date earnings through June 30 are $21.4 million or $0.49 per share compared to $32.1 million or $0.74 per share in the 2014 year-to-date period. For the 12-month ended period ending June 30, 2015 earnings were $56.4 million or a $1.30 per share, $1.29 per share on a diluted basis compared to June 30, 2014 12 months ended earnings of $71.3 million or $1.66 per share. Also a $1.65 per share on a diluted basis. Laurie will provide more details on our financial results later in the discussion. On June 24, 2015 we received an order from the Missouri Public Service Commission granting new rates for Missouri customers. The order approved an annual increase in base revenues of about $17.1 million or 3.9% consistent with a non-unanimous stipulation and agreement filed April 8. You will recall the primary driver of this case with the Air Quality Control System or AQCS at our Asbury power plant. The AQCS was necessary to comply with new EPA standards. We believe the Commission order represent a fair decision that will allow us to recover the cost of this project. In addition to recovering the cost of our AQCS project, the case provides for the recovery of our updated base transmission charges. This order also allows us to track and recover a portion of future changes and transmission expenses. We estimate this recovery to be about 34% of the change in Southwest Power Pool transmission expenses above our base level. This order also grants approval to establish a tracking mechanism for expenses related to the recent Riverton 12 long-term maintenance contract and to continue tracking of pension and other post-employment benefit expenses. Tracking of operating and maintenance expenses for vegetation management. Iatan II, Iatan Common and Plum Point were discontinued. The order is also reflective of a net based fuel decrease of a $1.60 per megawatt hour realized through our participation in the SPP integrated marketplace. Rates became effective July 26, 2015. As a result of our 2015 earnings guidance of a $1.30 to $1.45 per share issued in February of this year remains unchanged. To begin recovering costs related to Asbury in Kansas and environmental rider took effect on June 1, 2015. The rider provides for an increase of approximately $780,000 in annual revenue. While we are pleased to begin recovery of our investment in Asbury, let me remind you results will continue to be impacted by the lag effect even into the third quarter. Given the July 26 affected date for the new Missouri rate. After filing a tariff with the Missouri Public Service Commission in early May. We began offering solar rebates to Missouri customers on May 16. You will recall the Missouri Supreme Court ruled our statutory exemption from the solar provisions of the Missouri Renewable Energy Standard invalid on April 2, 2015. As of June 30, we had processed 70 solar applications totaling about $1.1 million in solar rebate related cost. We have over 30 additional applications in process. These 100 plus applications represent about 1.3 megawatts of install solar generation. Rules relating to the Renewable Energy Standard provide for the recovery of costs associated with the solar revision through customer rates. These costs are currently being deferred on our balance sheet for recovery in a future rate case. Compliance measures are subject to a 1% rate cap. As you see on Slide 4, last Friday July 24, we filed a motion to withdraw our Missouri Energy Efficiency Investment Act filing or MEEIA. We will continue our current portfolio of energy efficiency programs with recovery true based rates. We will review the need for a future MEEIA filing in conjunction with our 20016 integrated resource plan. And just this morning we’ve filed a notice of Intended case filing with the Missouri Public Service Commission. This filing started a 60-day period after which we intend to file a Missouri rate case to recover our Riverton Unit 12 combined cycle investment. This is consistent in keeping with our comments on our last call to follow rate case in the fourth quarter of this year. Laurie will talk a little more in general about this filing in a few moments. I will now turn the call over to Laurie for a discussion of our financial details. Laurie Delano Thank you, Brad and good afternoon, everyone. Our second quarter results were on target with our 2015 earnings guidance. However, before I discuss the details of our second quarter results. I want to reiterate, what Brad a few moments ago about third quarter expectations. As he stated, our new customer rates went into effect July 26, which means we will still experience nearly a month of lag in the third quarter as we continue to depreciate the Asbury addition at about a 5% rate. This short period of lag in quarter three also includes the additional property tax costs associated with the Asbury project coming on line. The Riverton maintenance contract and possibly an increase at SPP transmission expenses. These items are always liked it and our guidance. Now turning back to our results. Again, our second quarter was for the most part, on target with our 2015 plan. As Slide 5, shows our basic earnings per share of $0.16 was lower than last year primarily due to increases in maintenance and depreciation expenses when compared to the same quarter last year. As a reminder the earnings per share numbers I will reference throughout the call are provided on an after tax estimated basis. Again, as shown on Slide 5, consolidated gross margin or revenues less fuel and purchased power expense was relatively flat. Increasing earnings by $0.01 per share quarter-over-quarter. Increased customer counts added slightly to margin but were upset by a slight decrease in margin resulting from weather and other volumetric factors. Lower rates due to fuel cost savings for our wholesale customers was the primary driver of a $1.2 million decrease in rate related revenues reducing margin an estimated $0.02 per share. Decreased fuel costs and changes and other fuel recovery components combined to add an estimated $0.03 per share to margin when compared to the second quarter 2014. As we experienced record low fuel costs during this quarter. A $4.2 million increase in maintenance expense was the largest negative driver of the quarter-over-quarter results, reducing earnings about $0.07 per share. Of this increase, approximately $3.1 million was related to a planned, major maintenance outage for our steam turban at our State Line combined cycle generating facility. The effect of this increased cost will be offset by lower maintenance expense throughout our system in the latter half of this year. Our new Riverton maintenance contract also added about $600,000 to the increase and maintenance expenses. We will continue to see that the added cost on a quarterly basis compared to last year. I’ll remind you that we will be recovering this contract in our new Missouri customer rates with any changes to the base amount being picked up in a new tracking mechanism. Other operating and maintenance expense changes were mostly offsetting. Continued on the Slide 5, increased depreciation and amortization expense was also a significant driver of lower results in the 2015 quarter compared to 2014 reducing earnings about $0.03 per share. Similar to last quarter, this increase in depreciation is driven primarily by the completion of our Asbury environmental project. It also reflects higher levels of plant and service since our last rate case. Increases in property and other taxes and higher interest expenses combined to reduce earnings another $0.02 per share. We will also begin recovering these higher expenses in our new majority customer rates. I want to briefly touch on our year-to-date results before moving on to our 12-month ended results. Our year-to-date or earnings are 40.49 per share on net income of $21.4 million. This was a decrease of $0.25 per share over the same period last year when we earned $0.74 per share. Again, these results are on target with our 2015 earnings guidance. As shown on Slide 6, weather and another volumetric impacts were the significant drivers of the $0.06 per share margin decrease on a year-over-year, year-to-date basis. Reflecting the colder 2014 winter weather. Gains resulting from changes in fuel cost and other fuel recovery items were largely offset by negative changes from customer rates, gas segment results and a FERC refund to our wholesale customers which we talked about on our last call. Production maintenance expenses again primarily related to the State Line combined cycle outage I just mentioned. Our new Riverton maintenance contract and an unplanned outage at our Asbury facility, drove an increase in O&M expenses that lowered earnings per share approximately $0.07 during the period. Again increased depreciation and amortization expenses reduced earnings approximately $0.04 per share. Again reflective of the completion of our Asbury project and higher levels of plant and service. Changes in property and other taxes, interest expense and AFUDC and other categories combined to reduce earnings about $0.06 per share during the year-to-date period. Turning to our 12-month ended result. Slide 7, provides a role forward of our earnings from the 12 months ended June, 2014 to the 12 months ended Jun, 2015. As Brad, indicated our net income decreased $14.8 million or $0.36 cents per share. Slide 7 details the breakdown of the various components of this year-over-year earnings per share decrease. Margin decreased $0.05 per share when comparing the two periods. Weather and other volumetric changes were the primary drivers of this decrease. Again reflecting the colder 2014 winter weather, which decreased electric margin an estimated $0.09 per share? Likewise our gas segment margin also increased an estimated $0.02 per share. These changes reflect a return to a more normal weather cycle in a 12-month ended June 2015 period. Our sales for the 12-month ended June, 2015 period were 4.97 million megawatt hours versus 5.04 million megawatt hours in the 12-month period ending June, 2014. Customer growth and rate changes added an estimated $0.04 to margin changes in fuel cost another refuel recovery items also added about $0.04 offsetting the impact of the FERC refund mentioned earlier. Slide 7 further illustrates, the details of increases in operating and maintenance expense, which decreased earnings per share by $0.17. Increased expense related to the maintenance outage at our State Line combined cycle facility, our new Riverton maintenance contract. Higher maintenance cost of our Asbury Energy Center generating facilities, higher operating costs at our jointly owned generating facilities, and increased SPP transmission expenses were the primary drivers of increased O&M expenses. Other O&M increases and decreases were largely offsetting. Higher depreciation and amortization expense is reduced earnings than estimated $0.08. Again reflecting the Asbury project completion and additional plant in service. Property and other taxes and interest expense reduce earnings per share approximately $0.02 and $0.03 per share respectively. Brad outlined the key points of the right order in our Missouri rate case in his remarks. Slide 8 provides some additional highlights of the rate of order. As indicated the $17.1 million dollar rate increase is net of a base fuel decrease of a $1.60 per megawatt hour corresponding with the savings in fuel cost realized through our participation in the SPP integrated marketplace. The order also provides for the continuation of our fuel adjustment mechanism. Therefore any changes in fuel costs from our base, will be recoverable in customer rates. The order also reflects the total company sales level of approximately 5 million megawatt hours which is consistent with our 12-month ending sales level and our previous comments regarding our sales expectations. In addition the rate recovery from the Riverton maintenance contract was reduced from our original filing. However a corresponding tracking mechanism for this expense item was added, which will allow us to recover changes above the base level allowed in our new rates. As previously indicated tracking mechanisms for vegetation management Iatan and Plum Point operation and maintenance expenses were discontinued. We will be managing those ongoing expenses through our base rates. Also as mentioned, the order not only provides for recovery of our base transmission charges. But also the tracking and recovery of approximately 34% of the future changes in SPP transmission expenses above our base level. As you’ll recall, we had asked for all future transmission changes to be included in the fuel recovery mechanism in our original filing. As indicated, we’ve made no changes to our full year 2015 weather normalized earnings guidance range of a $1.30 to $1.45 per share. Slide 9, illustrate the major drivers of our earnings through 2015 and into 2016. As we have previously disclosed, our guidance ranges assumed in August 1, effective date for the new Missouri customer rates. With the July 26 date now firmly established, we should begin to see earnings build back into our guidance range through the end of the year. As mentioned earlier, we expect maintenance costs to be lower than last year in the last six months of this year. Turning around the cost increase impact at the State Line combined cycle outage. However we will continue to see some higher maintenance costs were Riverton contract. As Brad mentioned earlier, we provided notice to the Missouri Public Service Commission that we intend to file a Missouri rate case on or after October 1, 2015 to recover our Riverton 12 combined cycle investment. This case should follow a similar timeline as the Asbury case that was just completed. We will file the case to include a true up period that will capture the Riverton 12 in-service date as we bring the Riverton project online, we will immediately begin depreciating the addition at approximately a 2% depreciation rate. Once online we will begin to see a lag effect, primarily for depreciation until we get new customer rates in place for the Riverton 12 project in the latter part of 2016. In 2017, we will have a full year of increased customer rates that capture both the Asbury and Riverton projects. On Slide 10, we have updated our trailing 12-month return on equity chart. At the end of the second quarter, our ROE was approximately 7.2%. This ROE is based on our 12-month net income of approximately $56.4 million and a common equity balance at quarter end of about $786 million. We are experiencing and ROE pattern similar to the one we saw in the period between the second quarter of 2009 and the second quarter, 2011 when we were completing our construction program surrounding our Iatan II and Plum Point additions. On our balance sheet, we have $89 million and retained earnings as of June 30. We had $97.3 million of short-term debt outstanding at the end of the quarter and we currently have about $94.5 million outstanding today. On June 11, we entered into a bond purchase agreement for the private placement of $60 million of 3.59% Series First Mortgage Bonds due 2030. The delayed settlement of these bonds is anticipated to occur on or about August 20. We expect to use the proceeds from the sale to refinance existing short-term debt and for general corporate purposes including our Riverton project. This financing combined with the addition of internal equity from our dividend reinvestment and stock purchase plans and our continue billed and retained earnings will keep us near our target 50-50 debt equity capital structure. Finally, if you’re participating on the call through our website. You may have noticed that we have enhanced our investor pages. Our new investor website accessible through www.empiredistrict.com includes the substantial amount of additional financial information, SEC filings, stock history and other analytical data. One of the most notable features is the ability for you to sign up to receive email alerts on our financial filings and press release. I hope you all take advantage of that feature and I hope you’ll be as pleased with the additional functionality and features that our new website as we are. Slide 11 provides a screenshot of this new website. I’ll now turn the discussion back over to Brad. Brad Beecher Thank you, Laurie. We continue to execute our compliance plan which is reflected in Slide 12. Steady progress is being made on the combined cycle addition at our Riverton Power Plant. The operational to provide an additional 100 megawatts of capacity with no additional natural gas fuel required. This results in the high efficient output and very low emissions. During the quarter, the new control room, stack and cooling tower were completed. We are preparing to hydro test the heat recovery steam generator and the start-up and commissioning team as mobilized through the site. Overall, 84% of construction is complete. Project cost through June, 2015 were approximately $135 million excluding AFUDC. We continue to expect the project to be complete in early to mid-2016 at a total cost between $165 million and $175 million. With the current Riverton Project schedule and as evidenced by our intent to file a rate case this morning. We anticipated fourth quarter rate filing in Missouri to begin the cost recovery process. As Laurie mentioned, the timeline of this filing will be similar to the most recent filing in terms of a true up period, operational of law date and procedural schedule. We will experience a period of lag between Riverton 12’s end service date, when we begin depreciating at about 2% rate. Until new customer rates are in place. This morning, we also filed a notice updating our most recent Integrated Resource Plant or IRP with the Missouri Public Service Commission. In the notice, we indicated that Riverton Unit 8 and 9 were retired on June 30, 2015. The unit were originally slated for retirement in 2016 upon completion of the combined cycle addition. However, [indiscernible] wasn’t in need of boiler and condenser repairs. Given the plant retirement the repair was not cost effective. Our notice also provides additional information on our MEEIA application withdrawal. In legislative news, an administrative role has been approved in Oklahoma allowing rate reciprocity to any electric company with less than 10% of its total customers within the state. The rule which is subject to Oklahoma Corporation Commission Oversight will reduce regulatory expenses for our Oklahoma customers. Pending final publication of the rule. It is our intent to file our 2015 Missouri rate pleading and final order with the Oklahoma Commission. In June, the Joplin City Council approve the plan to spend $97 million on additional tornado recovery project, primarily infrastructure improvements. The funding is provided by grants from the US Department of Housing and Urban Development. As a result in mid-September a groundbreaking will be held for a previously approved redevelopment project, a new 56,000 square foot Joplin Public Library. On the economic development front on July 10, after 14 months of discussions and hard work. Owens Corning now plans to open a new manufacturing operation in Joplin. Owens Corning will invest $90 million to establish their operation and a vacant [ph] manufacturing facility just West of Joplin. The plant will produce a type of mineral wool insulation use, most often in commercial buildings. The faculty is expected to employee at 100 workers and is slated to begin operation in June, 2016. After an initial ramp up period, full electric load is projected in the 5 to 6 megawatt range. I’ll now turn the call back to the operator for your questions.