Southwest Gas Holdings, Inc.

Ladies and gentlemen, good day and welcome to the Southwest Gas Holdings second quarter 2023 earnings conference call. 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 then 1 on your telephone keypad. As a reminder, today's conference is being recorded. I would now like to turn the call over to Tom Moran, Vice President, General Counsel, and Corporate Secretary for Southwest Gas Holdings. Please go ahead.

Thank you, Kate. Hello, everyone, and welcome to the Southwest Gas Holdings second quarter 2023 earnings call. Throughout the call, we will be referencing presentation slides, which we have posted on our investor relations website. I am joined on today's call by Karen Haller, President and CEO of Southwest Gas Holdings, Rob Stefani, Chief Financial Officer of Southwest Gas Holdings, Justin Brown, President of Southwest Gas Corporation, Paul Daly, President and CEO of Century Group, and Chad Van Sweden, the CFO of Century Group. Please note that on today's call, the company will address certain factors that may impact this year's earnings and provide 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, which may or may not come true, and you should refer to the language on slides two and three of the presentation and the press release. as well as 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 statements. I'll now turn the call over to Karen.

Thanks, Tom. Thank you for joining us today to discuss the Southwest Gas Holdings' second quarter results. Turning to slide five. We are pleased with our progress on our transformational strategy of returning Southwest Gas to its core foundation as a premier fully regulated natural gas utility. We achieved significant milestones this quarter, building on our progress in the first quarter, which continues to position the utility for strength and success, while also advancing the separation of Century into a standalone infrastructure services leader. Notably, we received constructive regulatory outcomes at the utility during the quarter and delivered solid quarter results as we realized benefits from our efficiency and productivity enhancement efforts. Customer growth and demand remains strong, and the Southwest Gas team is acutely 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 the demand for safe, reliable, and affordable energy solutions, while also working constructively with our regulators and legislatures to complement our strong organic rate-based growth. We are confident in our momentum. We remain on track to deliver 5% to 7% CAGR in rate-based growth over the next three years. and maintain a strong investment-grade balance sheet and competitive dividend. Additionally, Sentry has performed outstanding during the first half of the year as they execute on their project pipeline and overcome the headwinds faced during 2022. As you can see on slide six, we are making excellent progress on our 2023 strategic priorities, completing several key strategic milestones during the second quarter. At Holdings, we completed our 2023 financing plan with a $550 million term loan in the middle of April. We continue to see limited near-term equity needs for 2024 and 2025 and anticipate equity needs of less than $100 million in total through the end of 2025. At Century, the spend remains well on track. We received ACC approval for a separation of century and confidentially submitted a draft registration statement on Form 10 with the SEC. We look forward to a decision on the tax-free nature of the separation from the IRS, which we anticipate in the fourth quarter to be followed by completion of the SPIN in the first quarter of 2024. Capital activities associated with ultimate SPIN structure options could occur earlier. At the utility, we continue to execute on our business plan. We received ATC approval of the PGA surcharge in Arizona and remain on track with our expected Nevada rate case filing in the third quarter, while also announcing today an expected Arizona rate case filing in the first quarter of 2024. Additionally, we are focused on the utility optimization review and will begin prioritizing initiatives during the remaining months of 2023 as I will cover in more detail later on this call. We are pleased with our continued progress and our strategic plan is on track. On slide seven, we walked through our strong first quarter performance of Southwest and Century. We are proud to announce that at the utility, we delivered the highest second quarter net income on record. We experienced another quarter of strong customer growth. adding approximately 42,000 new meter sets over the last 12 months, while continuing to make investments to ensure our system remains safe and reliable for the benefit of our customers. As mentioned in the previous slide, we also received several constructive regulatory outcomes during the quarter. At Century, we announced record-setting second quarter revenue and EBITDA, which resulted in adjusted last 12-month EBITDA of $285 million. This strong second quarter performance was driven by strong storm restoration services, sustainable energy projects, and nearing the completion of a large gas pipeline contract. As Paul will discuss, Century continues to win new business based on the strength of its relationships and capabilities and is well-positioned to play a critical role in the continuing energy transition. We recently completed a comprehensive full-cost opportunity assessment where we identified areas of opportunity for improvement and optimization, including operations and operations support, information technology, procurement, among others. We also made several leadership and organizational changes, including the formation of the Office of Continuous Improvement and Optimization, led by Senior Vice President Julie Williams. Julie and her team will work with our outside advisors to drive initiatives and positive change throughout the entire organization. We are now taking a deep dive into the opportunity assessment and developing specific initiatives that we believe will help us accomplish our goals of optimizing utility performance and accelerating our pursuit of operational excellence, identifying cost savings and efficiency opportunities for us to execute over the next couple of years. Further, these initiatives will help support the tremendous growth we have across our service territory, help pass on realized savings to our customers, improve ROEs, and result in positive returns for our stockholders. As I mentioned previously, we added 42,000 first-time meter sets during the past 12 months, with approximately 20,000 year to date. We expect to continue to benefit from a strong demographic and economic growth in the Southwest. Between 2023 and 2028, population growth is projected to be 3.76% in Arizona and 3.95% in Nevada. New customer growth combined with our pipeline replacement activities associated with our safety and integrity management programs are the cornerstones of our $2 billion three-year capital expenditure program. The investments we have made to ensure safe and reliable energy service to our customers has translated to double-digit rate-based growth since 2017. With our current capital investment plan, we expect to continue to grow our rate base at a compound annual growth rate of 5% to 7% over the next three years. We are committed to pursuing timely recovery of these investments by working collaboratively with our regulators to reflect these investments in our authorized rate base in a timely manner, either through rate cases or tracker programs. I will now turn the call over to Rob, who will review our financial performance for the quarter.