Centuri Holdings, Inc.

Welcome to Southwest Gas Holdings' fourth quarter and full year 2024 earnings conference call. Today's call is being recorded and our webcast is live. A replay will be available later today and for the next 12 months on the Southwest Gas Holdings website. At this time, all participants are in a listen-only mode. A question and answer session will follow the prepared remarks. If you would like to ask a question at that time, please press star 1 on your phone. I will now turn the call over to Justin Forsberg, Vice President of Investor Relations and Treasurer of Southwest Gas Holdings.

Thanks, Konstantin, and hello, everyone. Thanks for joining the call today. This morning, we issued and posted to Southwest Gas Holdings' website our fourth quarter and full year 2024 earnings release and the associated Form 10-K. The slides accompanying today's call are also available on Southwest Gas Holdings' website. We'll refer to those slides by number throughout the call today. Please note that on today's call, we will address certain factors that may impact 2025 earnings and discuss some longer-term guidance. Some of the information that will be discussed today contains forward-looking statements. These statements are based on management's assumptions and what the future holds, but are subject to several risks and uncertainties. including uncertainties surrounding the impacts of future economic conditions and regulatory approvals. This cautionary note, as well as a note regarding non-GAAP measures, is included on slides two and three of this presentation, in today's press release, and in our filings with the Securities and Exchange Commission, which we encourage you to review. These risks and uncertainties may cause actual results to differ materially from statements made today. We caution against placing undue reliance on any forward-looking statements, and we assume no obligation to update any such statement. As shown on slide four, on today's call we have Karen Haller, President and CEO of Southwest Gas Holdings, and Rob Stefani, Chief Financial Officer of Southwest Gas Holdings, as well as Justin Brown, President of Southwest Gas Corporation, and other members of the management team available to answer your questions during the Q&A portion of the call today. I'll now turn the call over to Karen.

Thanks, Justin. Thank you for joining us today to discuss the Southwest Gas Holdings results and outlook. Starting with slide five, Southwest Gas Holdings continues to press forward on our transformational strategy of becoming a premier fully regulated natural gas utility. Following the successful Sentry IPO last April and recent onboarding of Chris Brown as the new Sentry CEO, We continue to monitor market conditions with respect to our separation strategy options, and we remain very focused on completing the separation of Sentry in a manner that is beneficial to shareholders. I'm extremely proud of the team's dedication and commitment throughout 2024 as we made significant progress positioning the utility for long-term success and growth. We advanced our regulatory strategy, and are seeing positive impacts as we recover investments in enhancing safety, reliability, and our ability to meet the needs of our growing customer base. We have also begun to see tangible benefits of our utility optimization strategy. The utility finished the year with record annual operating margin performance and the second straight year of a return on equity over 8%. Customer growth and demand remains strong, and the entire Southwest Gas team is focused on safely addressing the needs of our customers, investing in the communities we serve, and delivering value for our shareholders. We are strategically deploying capital and investing in our operations so that we can meet our customers' demand for safe, reliable, and affordable energy solutions. Southwest Gas has strong momentum heading into 2025. and we expect utility net income to land within the range of $265 to $275 million for the full year. We expect net income growth will be driven by margin improvements related to our regulatory strategy as well as our continued cost management efforts. Looking further out, we are planning for robust capital spending driven by economic activity in our service territories. which we expect to drive strong rate-based growth. You can see our refreshed guidance metrics on the slide, and I'll discuss our short- and long-term guidance expectations in more detail later on the call. I also want to reiterate our commitment to further improving our earned utility return on equity, maintaining investment-grade balance sheets, and paying competitive dividends to our shareholders. As you can see on slide six, we achieved all our 2024 strategic priorities. We strengthened our balance sheets across the enterprise, increasing liquidity and preserving financial flexibility, while meaningfully advancing our regulatory strategy. As it relates to plans for Sentry's full separation, we onboarded a CEO at Sentry and continue to gauge market conditions for executing disposition transactions. As a reminder of the remaining separation options, we may ultimately separate the business through a series of taxable sell-downs or share exchanges, which exit path could include some combination thereof. The successful execution of a sell-down or share exchange is contingent on favorable market conditions, so we have currently preserved the alternative of a tax-free spend. We expect our significant $1.5 billion net operating loss balance could serve as an offset to any taxable transactions. As a reminder, if we do execute a taxable transaction, the ability to execute a tax-free spend will no longer be possible. However, regardless of the form of an initial taxable transaction, whether it be a sell-down or share exchange, Both of those options would remain on the table for further separation as we further downsize our ownership beyond the initial transaction. We remain committed to separating Century and we will provide further updates on timing and structure when available. On the right-hand side of the slide, you can see another priority in 2025 is our financing plan. which potentially includes the need to extend either all or a portion of the existing $550 million term loan facility at the Holco and expected issuances of less than $100 million of new equity under our existing ATM program. Both of these items are contingent on successful execution of century separation plans, and some or all of these capital markets' needs could be avoided pending the form of the century separation. Justin Brown will discuss our regulatory progress and strategy in more detail in a moment. But I will note that while we have much ahead of us in 2025, we feel we are on track to achieve our regulatory and operational priorities. As noted on slide seven, our strong balance sheet provides us with the flexibility to be thoughtful in our approach to capital investments and our efforts to deliver shareholder value. I'll highlight a few of our team's achievements on slide seven. At the utility, we continue to see strong growth as a result of strong economic activity that continues to drive significant in-migration, with about 41,000 new meter sets added during the last 12 months. At the end of 2024, we had more than $360 million of cash on hand across the enterprise. enabling us to honor our commitments and execute our 2025 strategy. We remain excited about the future of the company. Now to Justin.