Q1 2022 Southwest Gas Holdings Inc Earnings Call
Yeah.
Ladies and gentlemen, good day and welcome to the southwest Gas Holdings first quarter 2022 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 the star and one on your telephone.
Key pad.
A reminder, today's conference is being recorded I would now like to turn the call over to Boyd Nelson Vice President strategy and Investor Relations for southwest gas. Please go ahead Sir.
Thank you David.
Good afternoon, everyone and welcome to the southwest gas Holdings first quarter 2022 earnings call.
Throughout the call, we will be referencing presentation slides, which were posted on our IR website.
I am joined on today's call by sharing our new President and CEO of southwest gas Holdings.
Daly, President and CEO of century.
Greg Peterson Senior Vice President and Chief Financial Officer, and Justin Brown, Senior Vice President and General Counsel of Southwest Gas Corporation.
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.
Payments are based on management's assumptions, which may or may not come true and you should refer to the language on slides 34, and 35 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 statements.
I'll now turn the call over to Karen.
Thanks, Boyd and good afternoon, everyone I'm pleased to join you today as president and CEO of southwest gas to discuss the company's first quarter results and provide an update on your strategic alternatives process and the announcement, we made last week.
First off turning to slide five.
John Hester has retired as president CEO and board member of the company.
Had been appointed by the board to serve as President and CEO I've worked with John for many years.
No I speak for all southwestern and thanks again for his leadership and service to our communities.
Looking to the future I'm excited to step into this role at such an important time for the company.
Before I begin discussing the company would like to briefly cover our agreement to settle the proxy contest with Mr. Icahn and its affiliates covered on slide six.
Our board received valuable feedback from our stockholders and determined the best course of action was to eliminate the uncertainty of the proxy contest.
Concentrate on the strategic alternatives review process.
We are committed to continuing valuable engaged our investors as we work to execute on our strategy to maximize value for all stockholders.
Some of the key terms of our settlement agreement with Mr. Icahn are outlined here.
First off at least three and up to four new directors will join the southwest gas Board.
He tells brown desk are as follows Mrs.
Mr. Icahn has the right to appoint at least three directors effective immediately following the annual meeting.
These directors are Andrew Evans rough.
Russell Bisbee junior and embracing themselves, they're important structure well joined the board in the event that the company has determined not to spinoff century.
The sports director will be Andrew Chino, unless otherwise already appointed to the board in which case one of Mr. Evans, Mr. <unk> and Mr. Mainland Seltzer will be appointed instead.
The decision on whether the spinoff century will be made within 90 days after the date of the settlement agreement.
Mr. Icahn may also elect to have Mr. Keenan replace one of the three new directors within 90 days after the date of the settlement agreement.
Board members bought Boatner and Thomas Thomas have resigned effective immediately following the annual meeting.
Current board member Jose hardness, but resigned from the board, yes and win a fourth new director joins the board.
Our.
Current board member Renee Conley will be appointed as chair of the board following the annual meeting.
Taken together with my addition to the board following the annual meeting the portable comprised 11 directors 10 of whom won't be independent.
Also the board strategic transactions Committee will be expanded following the annual meeting comprised six new members.
These members won't be three current directors and existing too many members Anne Mariucci, Carlos with Sanchez, Jean Louis Raymond and three New directors, Mr. Evans, Mr. Frank <unk> and Mr. Lindeman filter in.
And Mr. Tino joins the board he may replace one of the New Committee members at Mr. Icahn's discretion.
Some other key terms of the agreement are as follows Mr. Icahn has agreed to withdraw his slate of director nominees with respect to the annual meeting and will vote in favor of our nominees.
We've agreed to amend the terms of the southwest gas stockholder rights plan to increase the shrink rate percentage from 10% to 24, 9%.
Mr. Icahn more mentioned any $2.50 tender offer to extend the expiration date to the date that its 10 business days following the date of the amendment as.
As part of that amendment will purchase shares validly tendered and not withdrawn as of that date subject to the 24, 9% ceiling.
Mr. Icahn and will further extend our will not further extend or niches tender offer.
The agreement also includes customary standstill and Celgene commitments. These will extend until 30 days prior to the end of the advance notice periods for the 2024 annual meeting in the event. There is a definitive agreement for the sale of the entire company.
Our natural gas utility.
Otherwise the extent until 30 days prior to the end of the advance notice periods for the 2023 annual meeting.
While the standstill is in effect Mr. Icahn has agreed to do all of these shares in favor of any border to sell the entire company for its natural gas utility southwest gas Corporation.
Finally in order to provide stockholders with adequate time to review the terms of the settlement agreement, we rescheduled the companys upcoming annual meeting may 19th.
Date of March 21, 2022 remains unchanged.
Now turning to slide seven I can provide an update on the strategic alternatives process.
As we previously talked about on April 10, 2022, the board you see the incredible attractive written proposal to acquire the whole company.
After our legal and financial advisors engaged in follow up discussions with a potential acquirer over the next several days to clarify certain elements of the proposal.
Our board concluded that commencing a formal process to review strategic alternatives would be in the best interest of all our stock holders.
Read the process our board formed a dedicated strategic transactions Committee, which as I mentioned, well now comprise six tractors.
Band It strategic transactions Committee has deep collected regulatory and M&A experience and expertise.
Part of the strategic alternatives review process, we will consider all available alternatives and pursuing the option that will create the most value.
These include considering the sale of the company.
A separate salad, one or more of its business units and towards the spinoff of century, which is expected to be tax free to stockholders.
The committee also engaged its own independent financial advisor Moelis <unk> company to work with companies lead financial advisor Lazard to conduct a thorough auction process.
We are confident that there will be significant interest in southwest gas.
Moving on slide eight as you can see we have three independently strong businesses under a consolidated platform. This.
This provides a position of strength and offers many paths for value creation for all our stockholders southwest gas utility delivered $187 million and net income in 2021.
Positioned for value creation with stable long term rate base growth of 5% to 7% driven by two and a half to $3 5 billion of investments over the next five years.
Mountain West with its unique structurally advantaged critical infrastructure has deep long term customer relationships.
More than 90% of mountain West revenue is contracted and over 70% of revenues are backed by investment grade customers.
Finally, synchrony has been completely transformed from a low growth infrastructure services company focused primarily on gas utility customers to us.
Scaled pure play utility services platform and attractive end markets with a high quality business model.
We are confident in <unk> long term prospects founded on a proven performance track record of a 17% compound annual revenue growth rate over the last 10 years.
I'll now turn the call over to Justin to discuss our utility business and our rate case activity.
Okay.
Thank you Darren.
Starting on slide 10, we continue to focus on working with all stakeholders to secure a positive regulatory outcomes.
Most recently this was in the form of a settlement in our Nevada rate case that was approved by the commission with rates effective April one 2022.
The settlement resulted in an increase in revenues of just over 14 million relative to an increase in rate base of nearly $250 million for total authorized rate base in Nevada, a $1 7 billion.
The settlement also provides for an improved Roe of.
Nine 4% relative to a 50% equity ratio.
We also received approval to continue our decoupling mechanism, which included a proposal to add certain large commercial customers, which incrementally improved revenue stability and the amount of revenue we have under our decoupled rate structures.
We continue to make progress on our $90 million, Arizona General rate case that was filed in December 2021.
If approved we expect this will result in a nearly 40% increase in rate base or $711 million of which.
$190 million as part of our proposed 12 month post test year plant adjustment.
The proposed $90 million increase in revenues is also reflective of our proposed nine 9% ROE and 51% target equity ratio.
Yeah.
Another component to the case, we are really excited about is our mid to zero carbon offset program.
Similar to the program that was recently approved in Nevada, whereby customers, who would like to move toward becoming net zero carbon neutral will be given an option to purchase carbon offsets that will offset their individual combustible related greenhouse gas emissions.
We continue to meet periodically with staff and wrote go to discuss the filing any questions. They may have we are scheduled to receive their testimony in July with hearings beginning in late September 2022.
Turning to slide 11.
A common theme in our rate case activity has been a significant rate base growth. We continued to experience our investments in our system have been driven by new customer growth robust pipeline replacement efforts and capital tracker programs, where we have partnered with our regulators on different investment opportunities as well as a variety of services.
Territory expansions.
These various investments and constructive regulatory mechanisms have supported a 79% increase in rate base since 2016.
As shown on this slide we have a strong track record of working with stakeholders to ensure we have the necessary regulatory or legislative frameworks in place to continue to make the capital investments necessary to meet and exceed the expectations of our customers and regulators and when it comes to delivering safe reliable affordable and sustainable gas.
Louis.
We remain focused and committed to continuing to work with all stakeholders to identify and execute on additional opportunities that will be presented by the attractive service territories that we serve.
Now I'll turn the call back to Karen to discuss mountain West.
Thanks, Justin turning to slide 12 to discuss mountain west and attractive asset with incredibly strong customer base evidenced by deep long term relationships and solid customer credit profile.
Service at these customers mountain West has proven itself as a critical platform and key intermediary for its customer base.
We believe this substantially minimizes re contracting risk and we believe there is more value to be unlocked and mountain west as I mentioned, we also have investment opportunities that offer the potential for significant growth.
Turning to Slide 13. One example is our carbonate tap expansion, which held a successful open season, we're targeting at July one 2023 target in service date and expected to deliver capacity of 47000 deaths per day volume over a 15 year term.
We also have other expansion projects that would provide additional delivery and receipt points for increased capacity ranging from approximately 30000 to 325000 barrels per day.
Summary mountain West is expected to deliver significant value for our stockholders now I will turn the call over to Paul to talk about century. Thank.
Thank you Karen now turning to slide 14 and century.
Southwest gas acquired century for $25 million in 1996 and <unk>.
Since then has built century into the scale business that it is today a business that generated record revenues of $2 5 billion on a pro forma basis in 2021.
Having delivered sustained organic growth and with the addition of successful acquisitions like link line Newco line Tech and most recently reached Destler century has substantial scale capabilities and geographic diversity.
With our North American focused on utility infrastructure investment.
Long term multi decade relationships with blue chip customers century is well positioned to deliver consistently strong earnings and cash flow.
As Greg Peterson, well known during the full company guidance century reaffirms its guidance for 2022.
And it's also expecting strong sustained growth during the 2022 to 2025 year period, including revenue compound annual growth rate of 7% to 8%.
Adjusted EBITDA compound annual growth rate of 9% to 11%.
Adjusted EBITDA margin of 11, 5% to 13% by 2026 and beyond.
And a more diversified growth gross profit by work time.
A more even split between gas and our electric business.
Moving to slide 15, you can see the century is very well positioned to benefit from what many trade sources forecast to be decades has has a heavy investment across our end markets are electric gas fired <unk> datacom and energy transition.
<unk> offshore wind renewables.
Before I turn the call over to Greg I'd like to highlight just a few of the very recent contract awards extension or expansion that support our long term growth expectations. These include $125 million of offshore wind support contracts that are in backlog and that we are mobilizing for.
Later this quarter.
Several additional offshore contracts are pending award there would be performed over a multiyear period.
Be noted that the magnitude of these contracts is very significant in comparison to the existing offshore wind contracts, we already have in backlog.
Our new multiyear MSA contract was recently signed for five G.
Datacom work with a new client in the northeast.
Cross selling between rigs disparate in line check resulted in an expansion of an existing bricks contract and two additional <unk> data com work over the next five years throughout the southeast United States.
<unk> electric transmission and distribution crew count is expanded by over 25% and the <unk>.
<unk> two quarters alone providing additional work for existing customers.
And we negotiated contract modifications and extensions with two of our largest gas LDC customers for increased scope and higher rates spanning multiyear durations with that I will turn it over to Greg to discuss first quarter 2020 to business results and performance highlights.
Thanks, Paul earlier this afternoon, we announced our first quarter 2022 earnings and provided segment financials and some additional statistical information.
We will file our first quarter 2022 Form 10-Q tomorrow with the SEC.
Please refer to these documents for a comprehensive analysis of our first quarter results.
As shown on slide 17, adjusted consolidated EPS was $1 74 per diluted share for the first quarter of 2022.
We're focused on delivering value to our stockholders, providing excellent service to our customers and enhancing opportunities for our employees let.
Let me touch on some of the highlights at our operating segments.
At southwest gas or natural gas distribution utility, we continued the trend of growing our customer base, adding 38000 customers over the past 12 months.
Those new customers provided about half of the $14 million margin increase between quarters.
With the other half coming primarily from recoveries under the BSP and coil programs in Arizona as well as rate relief in California.
For the quarter, we invested $141 million and the expansion in safety and reliability of our natural gas distribution system to better serve our customers.
We also completed a $600 million debt financing for 10 years.
4.05%.
Our mountain West we recorded $67 million of revenue during our first quarter of ownership and recognize the adjusted net income of $23 5 million.
Both were consistent with our internal expectations.
In March 2022, southwest gas holdings issued $468 million.
Common stock as part of the permanent financing for our acquisition of Mountain West. This is about half of our originally estimated equity raise and completes the equity components of the mountain West Finance.
At century first quarter revenues were $524 million, reflecting 13% organic growth.
Coupled with the addition of rigs disorder total revenue growth was 44% when compared to the first quarter of 2021.
Century bottom line results were hampered by higher fuel cost for its significant fleet of trucks and equipment.
Acquisition related incremental interest expense and the intangible amortization expense also impacted net income.
As a reminder, the first quarter as centuries lowest performing quarter due to seasonality of work availability, especially in the Midwest and colder climate areas in the east.
Century remains on track to meet full year, 2022 revenue and EBITDA margin guidance.
With that let's move to the next slide in a comparative summary of the results from our three operating segments.
As shown on slide 18, consolidated adjusted net income was $106 million in the first quarter of 2022.
Compared to a $117 million in the first quarter of 2021.
The $8 million increase in net corporate and administrative costs between quarters consists primarily of incremental interest associated with the acquisition of mountain West.
It also includes about $3 $8 million pre tax of proxy contest and related litigation costs.
The components of the $10 million adjustments line item.
I will touch upon each of the operating segments in the next several slides.
Slide 19 depicts the comparative results of the natural gas distribution segment.
Despite a $14 million increase in operating margin 2022 quarterly results declined from the record first quarter results of 2021.
The cash surrender values of coli policies declined by $2 million during the current quarter due to the overall decline in the stock market, while the prior year quarter reflected a $2.7 million increase.
The $13 5 million dollar O&M increase includes three and a half million dollars related to a higher cost per customer service support systems.
Higher service related pension and employee benefit costs as well as increased insurance and other inflationary impacts were also experienced dupree.
Depreciation was up $3 4 million or 5% between quarters due to a $564 million or 7% increase in gas plant in service.
As indicated we began recognizing incremental rate relief in Nevada in April that will bolster our results for full year 2022.
As Justin indicated earlier incremental rate relief in Arizona is expected in early 2023.
Slide 20 shows the first quarter results of mountain West since we acquired them on December 31, 2021, both adjusted net income and adjusted EBITDA were consistent with our internal expectations.
Slide 21 provides a comparative view of the seasonal net losses for the quarters and adjusted EBITDA levels at century.
Let's move to slide 22, which provides some additional details.
This waterfall chart depicts the major components of the change in centuries results between quarters.
As shown in the first quarter of last year had about $6 million or $4 5 million net of tax of favorable items, including timing of a change order and work on some larger gas projects due to favorable weather conditions.
Our acquisition of rigs discipline in August resulted in a $5 million increase in noncash amortization of intangibles.
Interest expense increased nearly $10 million between quarters, including incremental amounts associated with the expanded secured term loan and credit facility.
Fuel cost increase between quarters, primarily due to a significant spike in retail fuel prices to which we attribute $5 million of the cost increase.
Moving to slide 23, we outlined some of the items shaping our view for centuries results for full year 2022.
As indicated previously century's business is seasonal and the first quarter is generally the lowest performing quarter and is not an indication of full year results.
We are excited about the growth prospects of rigs disorder, but some of the anticipated work has been delayed due a combination of customer specification changes and supply chain issues overall, our backlog has increased 12% since the acquisition of rigs this quarter.
Over $125 million of offshore wind support work is on tap to begin in the second half of this year and we are anticipating other multi year awards.
<unk> continues to experience growth with both existing customers and new customers.
We expect a ramp up of work with our large gas utility projects.
May contract modifications to shore up our profit margins.
Let me now move to slide 25, and our company guidance for 2022 and beyond.
For our utility operations at southwest gas, we estimate net income will be $200 million to $210 million.
Operating margin will continue to benefit from ongoing customer growth recoveries of previously deferred amounts in Arizona, a refreshed rates in Nevada.
We continue to estimate coli income of $3 million to $5 million in 2022.
Investments in our natural gas distribution will be $650 million to $700 million. During 2022 and are expected to be two and a half to $3 $5 billion through 2026, resulting in rate base, increasing at a compound annual growth rate of 5% to 7%.
Additionally, return on equity at the utility for 2023 forward is expected to be eight plus percent and our five year O&M for customer compound annual growth rate is targeted at less than 1%.
At our newest subsidiary Mountain West, we anticipate revenues will be $240 million to $245 million in 2022, with a run rate EBITDA margin of 68% to 72%.
We are on track and our integration plan of mountain West and are already benefiting from strong operating cash flows from this acquisition.
Adjusting for one time integration and overlapping costs, we reiterate the mountain west will be accretive to EPS in 2022 and beyond.
As Karen previously discussed we have identified $100 million in incremental growth Capex investment at mountain West over the next three years.
At century, we expect 2022 revenues to be $2 65 to $2 $8 billion driven by growth in all facets of the business and especially at recently acquired rigs discipline.
While we expect some incremental cost during this potential separation transition periods.
Normalized EBITDA margins are anticipated to be 11% to 12%.
For 2022 to 2026, we are forecasting an adjusted EBITDA compound annual growth rate of 9% to 11%.
Let me conclude by saying that overall, we reaffirm our 2022 guidance.
Before we turn the call over to the operator for Q&A Karen has some closing remarks.
Thank you Greg I wanted to touch on a couple of the key points. We've made to date, we have compelling opportunities each of our businesses that we continue to pursue we are pleased to settle the proxy contest with Mr. Icahn. So we can focus on completing a well run.
First the strategic alternatives process to maximize value for all stockholders and we are confident that there will be strong interest in southwest gas as we conduct an expeditious review of strategic alternatives.
With that I'll turn it over to the operator to explain the process for asking questions.
Okay.
At this time, if you wish to ask a question. Please press the star and one on your telephone keypad, you may remove yourself from the queue by pressing the pound key.
And we will take our first question from Richard Sunderland with Jpmorgan. Please.
Please go ahead your line is open.
Hi, good afternoon, and thanks for the time today we.
I appreciate the updated kind of across the board here.
Maybe wanted to start on some of the settlement language.
<unk>.
Particularly around the century spin and the 90 day window is that indicative of a kind of a 90 day decision around interest and a whole company sale with centuries being kind of the alternative path forward in terms of the tax free spin or just any high level color you can.
Lay out around the process for the company versus century would be helpful.
This is Karen and yes with respect to the the 90 days, we are looking to make some type of determination with respect to whether the best alternative is to spend century, and we're really looking at all alternatives at this point so that the idea is to maximize value for all shareholders.
We don't know what that is at this point and so the 90 days is to giving us the opportunity to make a determination as to whether the best alternative is spend century or not.
Understood. So just.
In terms of 90 days, then is that kind of process wise. The next timeframe to look at for an update you know absent some sort of announcement sooner.
You know, we really want it to be as transparent as possible with all of our stockholders and so as soon as we have additional information to update we will do so it may be prior to that and it may not may not be depending upon the process. We're really focused on running a well you know really well run.
Ross asked at this point and we don't know you know it'll be timely.
And focused but we don't know exactly the timing on all of that.
Got it that's helpful.
Maybe just turning to the results themselves could you speak a little bit more to the inflation impact on the quarter and I guess, what offsets you seem to stay within the 22 range.
Yeah. This is Greg.
Inflation has had an impact and I think for not only for us but for all companies.
Certainly in the United States and we are working with that I personally think and I think as we look forward.
We anticipate that the inflationary impacts will somewhat diminish as we move throughout the year, we know that our interest rates on the other hand, we'll feel some of the impact as those rates are being moved upwards by the fed.
But we think that we are still on track for our 2022 guidance.
We're working to mitigate the impacts of inflation on our operations.
Got it so are you.
You're targeting kind of a catch up over the balance of the year or did you have some cushion already baked in that that's basically bearing be inflation now.
You know as I mentioned or as well, we're monitoring and certainly working to minimize the impacts of inflation I don't think we ever really have cushion in our expectations, but we do have a range of expectations and were working to stay within that range.
Got it very helpful. Thank you for the time.
Thanks.
Okay.
And we will take our next question from Julien Dumoulin Smith with Bank of America. Please go ahead. Your line is open.
Hey, good afternoon team thanks for the time.
Congrats.
Darren.
So the promotion here.
Okay.
If I can jump into the process here, where this carefully just given the.
The parameters of the call but.
Broadly speaking what level of interest have you received already can you speak to would be the inbounds. It seems if you you've affirmed at least some level of interest already and then given.
The backdrop of rising rates and you've been running a process for a bit can.
Can you can you talk a little bit about.
How that could be impacting the process all together here.
I'll, let you guys respond is open is open ended as possible here, just given the sensitivity of and your ability to respond.
Thank you and I appreciate that very much first of all we have received multiple inbound interests already our financial advisors.
Really at the direction of our strategic transaction midyear, making outbound calls to ensure our process is robust and.
We believe there'll be significant interest in southwest gas and its businesses.
I'm not going to go beyond our beyond that with respect to what inbound calls we have our financial advisors.
Our reaching out trying to make sure that we're looking at all possible.
Sellers or buyers I should say at least and we sent out process letters containment process details.
Which provides for a confidential information.
Parties will need some time to conduct their preliminary due diligence after which we'll expect non binding proposal from there, we'll analyze the proposals and determined which alternative.
Will create the most value for our stockholders.
Got it alright fair enough I wish you the best on that effort and if I can just follow up on a couple of more mundane items here, specifically, you're just capturing the 5% to 7% rate base CAGR. Your gross capex range of two and a half to three 5 billion.
No that's a particularly wide range here can you kind of capture how do we think about what that rate base and earnings growth could be at the lower and higher end of that Capex. If you will again understanding that there's obviously a range of recovery scenarios and earned returns that might accompany those scenarios as well.
Yes. This is Greg I will certainly start and if Justin I have some additional commentary.
But certainly by having a five year range of two and a half to $3 $5 billion that is what drives as you are well aware.
Julian the rate base CAGR that we have we have a solid and a quite a large rate base currently existing and when we finalize the Arizona rate case, we expect to add a significant amount to that so that will be the big thing. There is not really much in the way of deferred taxes that come into play when we calculate <unk>.
Rate base. So the rate base growth is a direct correlation to the amount of capex that we have when we're just providing ourselves.
Some flexibility to focus our capex and both the amounts and the timing to the areas will provide the best benefit for our stockholders and allow us to provide safe and reliable service to our customers.
Fair enough and then the last one just squeezing you didn't hear if I can on offshore.
As you talk about the various opportunities you alluded to.
How substantive could that become as a part of rigs here is there any kind of framework or range that you could offer to the extent to which that youre awarded any number of these opportunities how meaningful it was a percent of total business on any metric could you speak to.
Okay.
Julien This is Paul.
We have framework agreements in place with the with.
With the client that we're working with and they basically just issue noticed just those to proceeds often they called callouts.
Really the thing that would.
Hold any of them up as more environmental.
Fisherman or lobster.
Sue and they are successful, but they are sending their very material.
I don't think I should be saying more than that as far as what percent of rigs as business it would be but it's.
It's a very bright future.
Okay.
Excellent well I wish you all the best speak soon.
Thank you.
And our next question comes from Ryan Levine with Citi. Please go ahead. Your line is open.
Hi, Thank you for taking my question I guess on the utility process are you open to selling utilities in pieces or on a state by state basis and is there a certain ownership for threat. The ownership percentage that are that would trigger a certain regulatory reviews in the states that you operate.
This is Karen so we really have been focused on the process of looking at either to sell the entire company or at each one of the individual businesses. So the utility.
The mountain west or century, and not on breaking at the utility in two pieces at this point.
You had a follow up question what was what was that.
In terms of ownership percentages.
And the 25% that was in the recent settlement can elaborate as to why it was 25%.
Tax rate.
Sorry, Yeah. This is Greg Ryan So you're asking why is 25% is that that is the Nevada threshold.
If you have the change in ownership that requires then nevada to be involved or allows them to be involved in that process.
So I think you can find some correlation between that and the 24, 9% that we are a 40% through the poison pill.
To all of our shareholders that's right each one of the states where quite would require approval and the 24, 9% would require regulatory approval. If we go beyond that.
Okay, and what's your tax basis in century has been through the quarter.
We did not disclose that at this point it will not be disclosing that but the tax is it is.
An important issue with respect to looking at how we.
Separate century going forward and why we've been focused on the spend and doing it in a tax free manner.
Okay, and then last topic for me in terms of the midstream Capex 100 million dollar number that you put out there I went through with what portion of the Capex is carbonate.
And can you provide additional color on the drivers of the other projects.
Yeah. The carbonate is a very small portion of that Capex. The primary piece is related to a project that will be going to open season on shortly it's the over express pipeline Overdress pipeline.
Theres a lot of demand for expansion there'll be a compression project that will be going out on an open season for that will take several years to put in place.
But it is a very significant project and allows our guests to be to flow from east to west and so we've had a lot of demand from customers for that project.
Appreciate the color. Thank you.
Thanks Ryan.
And as a reminder, if you'd like to ask a question today. Please press the star and one keys on your telephone keypad.
And we can compose for a moment to allow further questions to queue.
Yeah.
[noise] and there are no further questions on the line at this time. So this will conclude the Q&A portion of today's conference I would now like to turn the call back over to Mr. Boyd Nelson for any closing remarks.
Thank you David and thank you all for joining US today. This concludes our conference call. Thank you for your interest in southwest gas holdings have a good evening.
Okay.
This does concludes today's southwest gas holdings first quarter 2022 earnings call and webcast. You may disconnect. Your lines at this time and have a wonderful day.
[music].
Okay.
[music].
Hum.
[music].
Okay.
[music].
Sure.
Uh huh.
Yes.
Hum.
Yeah.
Yes.
Yeah.
[music].
Okay.
[music].
Uh huh.
Yeah.
[music].
Okay.
[music].
Okay.
Yes.
Uh huh.
Mhm.
Uh huh.
[music].
Okay.
[music].
Okay.
[music].
Yeah.
[music].