Southwest Gas Holdings, Inc.

Welcome to Southwest Gas Holdings' second quarter 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'll now turn the call over to Justin Forsberg, Vice President of Investor Relations and Treasurer of Southwest Gas Holdings. Please go ahead.

Thanks, Joanna. And hello, everyone. Thanks for your interest in Southwest Gas. This morning, we issued and posted to Southwest Gas Holdings' website our second quarter 2024 earnings release and the associated Form 10-Q. 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 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 on 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, today's press release, and 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 second quarter results. Starting with slide five, the successful closing of the Sentry IPO in April marked a significant milestone in our transformational strategy of returning Southwest Gas to its core foundation as a premier fully regulated natural gas utility. We are pleased with the market's reception of the offering and we look forward to completing the separation of Sentry in a timely manner. During the quarter, we continue to make progress positioning the utility for long-term success and growth. Following the completion of our general rate case in Nevada, we are seeing the positive impact associated with the recovery of our investments to enhance safety and reliability and meet the needs of our growing customer base. We are looking forward to filing our general rate case in California later this month and continue to work collaboratively with our stakeholders in Arizona. as we look forward to receiving their testimony next month on our pending rate case. Additionally, we finished the second quarter with the extension of record operating margin performance on a trailing 12-month basis. Customer growth and demand remain strong, and the entire Southwest Gas team is intensely 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 legislators to complement our strong organic rate-based growth. We are encouraged by the strong momentum underway, and we are raising utility 2024 net income guidance by $5 million. to now be in the range of $233 to $243 million. We are also adjusting our long-term utility net income growth compound annual growth rate to reflect the now higher 2024 base year expectation. And we're reaffirming our other guidance estimates. As demonstrated with the constructed Nevada regulatory outcome, The nature of expected revenue increases from rate cases will provide net income growth, which as a result of rate case timing will continue to be nonlinear over the forecast period. We expect to benefit from our refreshed rate structures to catch up with the historic inflationary environment we experienced and the significant system investments we have made for the benefit of our customers over the past few years. Our confidence in our future is further demonstrated by a reaffirmed rate-based compound annual growth rate over the same period in the range of 6.5% to 7.5%, and our commitment to maintaining a strong investment-grade balance sheet and competitive dividend. As you can see on slide 6, we have already made excellent progress on our 2024 strategic priorities, and we are on track to achieve them all. Following the successful execution of Sentry's IPO, Southwest Gas Holdings continues to elevate, evaluate its strategic separation options during the current lockup period that was required in the IPO. We may ultimately separate the business through a series of sell-downs or share exchanges. Because the successful execution of a sell-down or share exchange is contingent on market and other conditions, we continue to preserve the potential for a tax-free spend. but we expect our significant net operating loss balance could serve as an offset to a taxable transaction. We remain committed to separating Sentry, and we are confident that we have taken the appropriate steps and actions to preserve flexibility, thereby allowing us to separate in an efficient manner for shareholders in any scenario. As of the end of June, we have nearly $600 million of cash and our financing plan continues to show very limited financing needs over the next couple of years. I'll discuss our regulatory progress in more detail in a moment, and would like to note we are pleased with our progress so far this year and are on track to achieve all of our regulatory priorities. Additionally, we are executing on our planned utility optimization initiatives. Our rate case progress and our cost discipline efforts income guidance for 2024. In terms of our utility and regulatory strategy for 2024, you will see on slide 7 that we have made notable strides. Earlier this year, we completed the general rate case in Nevada with a positive outcome, having received an authorized increase of nearly $300 million in rate base and a revenue increase of about $59 million compared with our original proposal of nearly $74 million. This revenue outcome represents 98% of our request after the depreciation adjustment and before adjustments to cost of capital. Our Arizona rate case of $126 million represents a requested return on nearly $650 million, or 24% of additional rate base in that state. The collection of higher overall costs since our last case, along with the represent about 40% of the company's required safety-related infrastructure investments dedicated to Arizona. Of note, the Arizona Corporation Commission recently highlighted a similar tracker as an important 2024 achievement in its own annual report. At Great Basin, we are expecting refreshed rates to go into effect in September 2024. And we're on track to file a general rate case in California during the third quarter of 2024 that is anticipated to propose an increase in rate base of 60 to 70%. On slide A, we highlight our strong second quarter 2024 performance across our company. The utility has continued its good start to the year with an $8 million increase in net income over the second quarter of last year. We continue to experience strong customer growth, adding approximately 40,000 new meter sets over the past 12 months, while continuing to make additional investments to ensure our system remains safe and reliable for the benefit of our customers. We expect to continue to benefit from a strong demographic and economic growth as Phoenix and Las Vegas continue to be among the top destinations for relocation and economic development. semiconductor, battery, and electric vehicle manufacturers. And as I noted, we also have advanced our regulatory strategy in each of our jurisdictions. Our operations and maintenance expenses were less than 2% higher than in the first six months of 2024 compared to the first six months of 2023. And our balance sheet is strong, having now collected substantially all of the deferred purchase gas costs balanced from customers. This is reflected in the nearly $600 million cash balance across the enterprise as of the end of June 2024. With that, I'll turn the call over to Rob, who will review our financial performance for the year.