Executive Summary

Q4 2015 EPS was $0.23 (basic and diluted) on net income of $9.9M, down 10.9% YoY from $0.26 on $11.1M as exceptionally mild weather (mildest fourth quarter in 30 years) reduced volumes; electric on‑system kWh fell 6.3% YoY and retail gas volumes fell 27.2% YoY .
Electric segment gross margin rose $2.3M YoY on new Missouri rates effective July 26, 2015, but higher depreciation (+$1.8M), interest (+$1.0M) and lower gas margin (−$1.4M) weighed on consolidated results .
2016 weather‑normalized EPS guidance was set at $1.38–$1.54 on Feb 4, 2016, then was lowered by $0.10–$0.12 to $1.26–$1.44 to reflect merger‑related transaction costs tied to Algonquin/Liberty Utilities’ acquisition of Empire; approx. $15–$17M total transaction costs with ~50% payable in 2016 and ~$4.5M in Q1 2016 .
Stock reaction catalyst: the announced all‑cash acquisition at $34.00 per share (21% premium to Feb 8 close) by Algonquin’s Liberty Utilities on Feb 9, 2016 likely dominated trading and expectations, overshadowing near‑term fundamentals .

What Went Well and What Went Wrong

What Went Well
- Electric margin +$2.3M YoY on the back of Missouri retail rate increases implemented July 26, 2015; improved customer counts also supported revenue .
- Lower maintenance and repair expense in the quarter (−$1.9M) provided a partial offset to other cost headwinds .
- Management highlighted consistent execution despite weather headwinds; “We continued to consistently execute our operating and financial plans during the fourth quarter of 2015…” — Brad Beecher, President & CEO .
What Went Wrong
- Exceptionally mild weather drove down volumes: total on‑system electric sales −6.3% YoY; retail gas volumes −27.2% YoY; gas segment gross margin −$1.4M YoY .
- Cost headwinds: depreciation and amortization +$1.8M, interest expense +$1.0M, operating expense +$1.5M, and lower AFUDC (−$0.6M impact to earnings) pressured profitability .
- Ongoing regulatory lag effects from Asbury AQCS costs (in service Dec 15, 2014) through July 26, 2015 rate effective date, and expectation of similar lag around Riverton combined cycle recovery timing .

Financial Results

Note: The press releases present margins and profitability, not total revenues for Q4 2015; gross margin is shown below where available .

Consolidated P&L and Margin Snapshot

Metric ($USD Millions, except per share)	Q4 2014	Q2 2015	Q3 2015	Q4 2015
Electric Margin	85.5	87.1	116.6	87.8
Gas Margin	7.2	4.2	3.8	5.8
Other Revenues	2.0	2.0	2.2	2.5
Gross Margin	94.7	93.3	122.6	96.1
Operating & Maintenance	41.3	44.0	40.8	40.9
Depreciation & Amortization	18.5	20.1	20.1	20.3
Taxes	15.6	13.1	25.9	15.1
Operating Income	19.3	16.1	35.8	19.8
Interest Expense & Other, net	8.2	9.3	10.5	9.9
Net Income	11.1	6.8	25.3	9.9
EPS (Basic)	$0.26	$0.16	$0.58	$0.23
EPS (Diluted)	$0.26	$0.15	$0.58	$0.23

Segment/Sales KPIs

KPI	Q4 2014	Q2 2015	Q3 2015	Q4 2015
Total On‑System Electric Sales (GWh)	1,198	1,123	1,366	1,122
• Residential (GWh)	444	347	514	385
• Commercial (GWh)	386	394	437	369
• Industrial (GWh)	257	272	287	260
• Other (GWh)	111	110	128	108
Total Retail Gas Sales (bcf)	1.28	0.33	0.21	0.94
• Residential (bcf)	0.87	0.21	0.11	0.63
• Commercial/Industrial (bcf)	0.40	0.12	0.10	0.30
• Other (bcf)	0.01	0.00	0.00	0.01

Context and drivers:

YoY in Q4: Electric margin +$2.3M (rates) but weather/volumetric factors −$8.0M; Gas margin −$1.4M on −27.3% sales decline; maintenance −$1.9M, but D&A +$1.8M, interest +$1.0M, AFUDC change −$0.6M to earnings .
Full‑year 2015: net income $56.6M vs $67.1M in 2014; EPS $1.29 diluted; under‑recovery prior to new rates, higher O&M, D&A, taxes, interest; weather also weighed; electric on‑system sales −1.8% YoY .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EPS (weather‑normalized)	FY 2016	$1.38–$1.54 per share (as of Feb 4, 2016)	$1.26–$1.44 per share (as of Feb 26, 2016)	Lowered by $0.10–$0.12 (transaction costs)
Missouri Rate Case Assumption	FY 2016	Oct 1, 2016 effective date at filed $33.4M; 30‑yr avg weather; <1% energy growth	Not specified as changed; updated range includes merger transaction effects	Maintained (assumption context)
Dividend	Q1 2016	—	$0.26/share payable Mar 15, 2016; record Mar 1, 2016	Declared

Earnings Call Themes & Trends

Note: A Q4 2015 earnings call was scheduled for Feb 5, 2016; however, a full transcript was not available via the tools. Themes below reflect disclosures across Q2–Q4 press releases.

Topic	Previous Mentions (Q2 2015)	Previous Mentions (Q3 2015)	Current Quarter (Q4 2015)	Trend
Weather impacts on volumes	Milder weather drove lower electric/gas volumes; on‑system sales −1.4% TTM	Warmer weather increased cooling degree days; electric sales +3.3% QoQ; gas flat	Mildest Q4 weather in 30 years; electric −6.3% YoY; gas volumes −27.2% YoY	Volatility persists; Q4 sharply negative
Rate recovery/regulatory lag	Missouri rate order effective Jul 26, 2015; under‑recovery prior to order	Guidance unchanged with fuel cost savings reflected in rates	New rates lifted electric margin; continued lag on Asbury AQCS; Riverton recovery timing to create lag	Recovery improving but lag remains
Cost structure (O&M, D&A, taxes, interest)	SLCC outage and Riverton contract drove higher maintenance; D&A up on Asbury AQCS; interest up	Lower maintenance; D&A, taxes, interest up YoY	Maintenance down; D&A +$1.8M; interest +$1.0M; taxes +$0.2M YoY	Mixed; structural cost creep continues
SPP Integrated Market effects	SPP IM/fuel recovery revenue changes offset in margin	—	SPP IM and other fuel recovery revenue down ~$7.3M, offset by fuel expense	Neutral to margin
Capex projects (Asbury AQCS, Riverton CCGT)	Asbury AQCS in rates starting Jul 2015	Full‑year AQCS recovery underpinning guidance	Expect partial‑year new rates for Riverton CCGT in 2016, but lag impacts earnings	Rate base growth continues
Strategic alternatives/M&A	—	—	“No update” on strategic alternatives (Dec 13, 2015 announcement) ; Feb 9 announced sale to Algonquin/Liberty	Acquisition announced post‑quarter

Management Commentary

Strategic message: Execution amid adverse weather with ongoing rate base growth. “We continued to consistently execute our operating and financial plans during the fourth quarter of 2015 even though confronted by exceptionally mild weather…” — Brad Beecher, President & CEO .
Earnings drivers (Q4): Rate increases added ~$4.4M to electric revenues (net of Missouri base fuel recovery), but weather and volumetric factors reduced revenues by ~$8.0M; gas margin down ~$1.4M as sales fell 27.3% .
Full year context: Higher O&M (+$2.9M), maintenance (+$1.7M), D&A (+$7.3M), taxes (+$2.1M), interest (+$3.2M), and lower AFUDC (−$2.2M) drove a ~$10.5M decline in net income YoY, largely reflecting under‑recovery timing .
2016 outlook: Weather‑normalized EPS initially $1.38–$1.54 assumes 30‑year average weather, <1% energy growth, Oct 1, 2016 Missouri rate effective date at filed $33.4M, and higher operating costs from Riverton; later reduced to $1.26–$1.44 due to merger transaction costs .

Q&A Highlights

A Q4 2015 earnings call occurred Feb 5, 2016, but a full transcript was not available via the tools; therefore, Q&A themes and any guidance clarifications from the live call could not be verified from primary sources .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2015 EPS and revenue was unavailable via the GetEstimates tool for this ticker, so we cannot assess beats/misses versus S&P consensus at this time. Values via S&P Global were unavailable due to missing mapping in our tool; therefore no estimate comparisons are shown.
Actuals: Q4 2015 EPS $0.23 (basic and diluted) vs Q4 2014 $0.26; net income $9.9M vs $11.1M; gross margin $96.1M vs $94.7M; electric margin $87.8M vs $85.5M .

Key Takeaways for Investors

Weather overshadowed fundamentals in Q4; underlying electric margin benefited from Missouri rates, but cost inflation (D&A, interest, taxes) and gas weakness compressed earnings power near term .
Regulatory lag remains a core swing factor: Asbury AQCS recovery began mid‑2015; Riverton combined cycle recovery expected to be partial in 2016, implying continued lag until rate alignment .
2016 guidance reset lower due to acquisition transaction costs (−$0.10–$0.12), which is a one‑time overhang rather than a deterioration in underlying operations; near‑term EPS trajectory will include ~$4.5M of Q1 2016 transaction expense .
Short‑term trading is likely dominated by merger arbitrage to the $34.00 cash takeout price, reducing sensitivity to quarterly fundamentals in the interim .
Volume volatility from weather persists; downside risk to gas margin in mild periods; upside in normalized conditions — watch winter/summer degree‑day patterns vs 30‑year norms .
SPP Integrated Market and fuel recovery revenue shifts are largely neutral to margin (offset in fuel expense), so focus on base rate progress and cost trajectory rather than top‑line swings tied to SPP .
Dividend continuity maintained ($0.26 per quarter at the time); post‑closing capital structure and regulatory commitments should be monitored under Liberty Utilities’ ownership .

EMPIRE DISTRICT ELECTRIC CO (EDE)·Q4 2015 Earnings Summary