Southwest Gas Holdings, Inc.

Good day, ladies and gentlemen, and welcome to the Southwest Gas Holdings 2021 Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star then 1 on your touch-tone telephone. If anyone should require assistance during the conference, please press star then 0 to reach an operator. As a reminder, this call is being recorded. I would like to turn the call over to Boyd Nelson. Vice President of Strategy and Investor Relations. You may begin.

Thank you, Michelle, and welcome, everyone, to the Southwest Gas Holdings year-end 2021 earnings call. My name is Boyd Nelson, and I'm the Vice President of Strategy and Investor Relations. I am assuming responsibilities for investor relations from Ken Kenney, our Vice President of Finance and Treasurer, who, after a period of transition, will focus full-time on finance matters for the company. We have posted today's presentation on our IR website. On today's call, we have John Hester, President and CEO of Southwest Gas Holdings, Paul Daly, President and CEO of Century, Karen Howler, Executive Vice President, Chief Legal and Administrative Officer, Greg Peterson, Senior Vice President and CFO, and Justin Brown, Senior Vice President and General Counsel. Please note that on today's call, the company will address certain factors that may impact this coming year's earnings and provide some longer-term guidance. Further, our attorneys have asked me to remind you that some of the information that will be discussed today contains forward-looking statements. These statements are based on management's assumptions, which may or may not come true, and you should refer to the language on Slides 2 and 3 of this presentation, as well as in the press release, and also our SEC filings, for a description of the factors that may cause actual results to differ from our forward-looking statements. All forward-looking statements are made as of today, and we assume no obligation to update any such statement. With that, I'd like to turn the call over to John. Thanks, Boyd.

On slide six, we present an agenda for today's call. We've got a lot of exciting content for today's call. is the announcement yesterday that Holdings will be pursuing an exciting separation of its Century business unit in an effort to continue facilitating its growth trajectory and create enhanced value for shareholders. For our call today, I'll kick things off with an overview of yesterday's announcement regarding our Board of Directors' decision to pursue a separation of Century Infrastructure Services business unit from Holdings Karen will overview the value proposition our ongoing regulated natural gas operations continue to offer our shareholders. Justin will provide an update on major rate case activity and our continuing collaboration with regulators to safely and reliably serve our customers' energy needs. Paul will overview the value proposition that our infrastructure services unit offers our shareholders, especially with the newly announced separation. and Greg will then review our recent operating results and outlook for 2022. Turning to slide eight, we provide some more perspective around the century separation news and why we are confident and enthusiastic this is an optimal time to pursue the strategic course of action. Many of you are aware that we acquired Century's predecessor entity in 1996 to fulfill a need for high quality utility infrastructure After our acquisition, we quickly saw a similar infrastructure contract in need by many other peer-regulated utilities. The Century brand and organization was established in its current form in 2014. As a board and management team, we regularly strategically review this business in conjunction with outside advisors to ensure our family of businesses is maximizing value for our shareholders. We've always been open-minded about the possibility that separation in some form could be the best way to unlock its value, while at the same time guarding against any premature separation that would shortchange the tremendous value that this business has created for our shareholders. After continued organic growth, along with major acquisitions like LinkLine, Nuco, LineTech, and most recently Riggs-Dissler, We are now confident that Century has the scale, the capabilities, and the geographic diversity to stand on its own. We originally inquired Century for $25 million, and since then, our board and management team has built Century into the significant business that it is today, a business that generated record revenues of $2.5 billion on a pro forma basis in 2021, with years of planning, growth, and investment. The successful acquisitions I referenced have now positioned Century as a strong, independent company with notable opportunities in many aspects of the energy transition, among others. Our attractive investment-grade regulated utility customer base and our track record of significant EVs care set. As Paul will review a little later, Century is now well-placed to capitalize on the energy transition. Moving to slide 9, we show a snapshot of our regulated and unregulated businesses following the separation. Our regulated business will be a fully regulated natural gas leader with continued focus on providing reliable, affordable, clean energy region. It will continue to benefit from the significant population growth and strong regional economies we are experiencing across our service territory footprint and offer strong, consistent, risk-adjusted total returns with a competitive dividend. There's no expected impact of the separation on utility operations, customers, or customer rates. Between southwest gas and Mountain West, We have more than 2,500 employees, with the utility serving 2.1 million customers. Financially, Southwest Gas Holdings delivered $1.52 billion in pro forma regulated operations revenue in 2021. Meanwhile, Century, as a standalone company, has a legacy of more than 100 years of operational experience and is well positioned for continued profitable growth at the forefront of the utility infrastructure modernization and the energy transition. The business now has significant scale with approximately 10,500 employees serving clients in 45 states and provinces in the U.S. and Canada. Century will continue to be led by CEO Paul Daly and the current Century management team. Southwest Holdings management, including the participants in this call, are expected to stay with the Holdings entity. Moving to slide 10. I want to highlight a few points in particular on the benefits of the separation. Fundamentally, this transaction is about unlocking value for stockholders to encourage the market valuations of both Southwest Gas and Century in line with peers. In addition, we anticipate the flexibility to meaningfully reduce future equity financing needs, including with respect to Mountain West. Subject to ongoing discussions with our rating agencies, this expectation results segments post-separation. Separation will result in both Southwest Gas and Century having compelling financial profiles that more accurately reflect the strengths and opportunities of each business. As a result, the separation will provide more targeted investment opportunities for shareholders and enhance transparency through more direct comparability to pure play industry peers. We're also very confident that both companies will benefit from improved capital allocation efficiency and strategic flexibility, which will encourage continued pursuit of value-accretive opportunities that are in line with their distinct markets, customer bases, and business initiatives. This is especially notable given the consolidation trends in our industries. As you can tell, we're really extremely proud of the businesses we've built and the value they've created for shareholders. I do want to take a moment in the call to thank all of our employees who have worked so hard to help grow our respective business segments and help us reach this important milestone. This is an exciting time for all of us, and we look forward to the next chapter of growth for both Southwest Gas Holdings and Century as we seek to maximize value for our shareholders, I'll now turn the call over to Karen to talk a little bit about Southwest Gas post-separation.