Q1 2024 Southwest Gas Holdings Inc Earnings Call
Operator: Welcome to Southwest Gas Holdings' first quarter 2024 earnings conference call. Today's call is being recorded, and our webcast will be live. Our replay will be available later today and for the next 12 months on the Southwest Gas Holdings website.
Welcome to southwest gas Holdings first quarter 2024 earnings Conference call today's call is being recorded and our best guess at slides a replay will be available later today and for the next 12 months in the southwest gas Holdings website.
Operator: At this time, all participants are in a listen-only mode. If you would like a question and answer session, we'll follow the prepared remarks. If you would like to ask a question at that time, please press star one on your phone. I will now turn the call over to Justin Forsberg, Vice President of Investor Relations and Treasurer of Southwest Gas Holdings. Please go ahead.
Operator: At this time all participants are in a listen only mode.
Justin S. Forsberg: If you would like a question and answer session will follow the prepared remarks, if you would like to ask a question at that time. He expressed star one on your phone.
Operator: Now I'll turn the call over to Justin Forsberg, Vice President of Investor Relations and Treasurer of southwest Gas Holdings. Please go ahead.
Justin S. Forsberg: Thank you, John, and hello, everyone. We appreciate you joining our call. This morning we issued and posted on the Southwest Gas Holdings website our first quarter of 2024 earnings release and the associated Form 10-Q. The slides accompanying today's call are also available on the 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.
Justin S. Forsberg: Thank you John and Hello, everyone. We appreciate you joining our call.
Justin S. Forsberg: This morning, we issued and posted a southwest gas holdings website, our first quarter of 2024 earnings release and the associated Form 10-Q.
Justin S. Forsberg: Slides accompanying today's call are also available on southwest gas holdings website, where.
Justin S. Forsberg: We will refer to those slides by number throughout the call today.
Justin S. Forsberg: 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.
Justin S. Forsberg: Some of the information that will be discussed today contains forward-looking statements. These statements are based on management's assumptions about what the future holds but are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions and regulatory approval. 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.
Justin S. Forsberg: 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.
Justin S. Forsberg: This cautionary note as well as a note regarding non-GAAP measures is included on slides two and three of this presentation todays press release, and our filings with the Securities and Exchange Commission, which we encourage you to review.
Justin S. Forsberg: These risks and uncertainties may cause actual results to differ materially from statements made today, so we caution against placing undue reliance on any forward-looking statements, and we assume no obligation to update any such statements. 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, along with Justin Brown, President of Southwest Gas Corporation, and other members of the management team who are available to answer your questions during the Q&A portion of the call today. I'll now turn the call over to Karen.
Justin S. Forsberg: 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 statements.
Karen S. Haller: As shown on slide four on today's call. We have carried our president and CEO of southwest gas Holdings, and Rob So funny Chief Financial Officer of Southwest gas Holdings, along with Justin Brown President of Southwest Gas Corporation and other members of the management team who are available to answer your question.
Karen S. Haller: During the Q&A portion of the call today.
Karen S. Haller: I'll now turn the call over to Karen.
Karen S. Haller: Thanks, Justin. Thank you for joining us today to discuss the Southwest Gas Holdings first quarter results. Turning to slide 5, the successful closing of the Century 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 share. We were pleased with the market's reception of the offering, and we look forward to completing the separation of Century in a timely manner.
Karen S. Haller: Thanks, Justin Thank you for joining us today to discuss the southwest gas holdings first quarter results.
Karen S. Haller: Turning to slide five.
Karen S. Haller: Post closing of the century IPO in April marked a significant milestone in our transformation strategy of returning surplus gas to its core foundation, and then premier fully regulated natural gas utility.
Karen S. Haller: We were pleased with the market's reception of the offering and we look forward to completing the separation of centuries in a timely manner.
Karen S. Haller: During the quarter, we continued to make progress, positioning the utility for long-term success and growth. We started the year by executing on our regulatory strategy at Southwest with filings in Arizona and Great Basin, and we received approval of our Nevada case, which was a constructive regulatory outcome. Additionally, we finished the first quarter with another quarter of record operating margin over the last 12 months.
Karen S. Haller: During the quarter, we continued to make progress positioning the utility for long term success and grow which we started the year by executing on our regulatory strategy at southwest with filings in Arizona and Great Basin.
Karen S. Haller: And we received approval of our Nevada case, which was a constructive regulatory outcome.
Karen S. Haller: Additionally, we finished the first quarter with another quarter of record operating margin over the last 12 months.
Karen S. Haller: Customer growth and demand remain strong, and the entire 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 legislators to complement our strong organic rate-based growth.
Karen S. Haller: Customer growth and demand remains strong and the entire 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.
Karen S. Haller: 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 base growth.
Karen S. Haller: We are encouraged by the strong momentum underway. We are affirming our 2024 to 2026 guidance estimates and expect 2024 utility net income to be toward the upper half of our range. The expected revenue increases from rate cases will provide net income growth, which as a result of rate case timing will continue to be non-linear over the forecast period.
Karen S. Haller: We are encouraged by the strong momentum underway, we are affirming our 2024 to 2026 guidance estimates and expect 2020 for utility net income towards the upper half of our range.
Karen S. Haller: Back to revenue increases from rate cases will provide net income growth, which is a result of breakage timing will continue to be non linear over the forecast period we.
Karen S. Haller: We expect our refreshed rate structures to benefit us in catching up with the historic inflationary environment we have experienced and the significant system investments we've made for the benefit of our customers over the past few years. Our confidence in our future is further demonstrated by an affirmed expected rate base compounded annual growth rate over the same period in the range of 6.5% to 7.5% and our commitment to maintain a strong investment grade balance sheet and competitive dividend.
Karen S. Haller: We expect our refresh rate structures benefit benefit us and catching up with the historic inflationary environment, we have experienced and the significant system investments we've made for the benefit of our customers over the past few years.
Karen S. Haller: Our confidence in our future is further demonstrated by an affirmed expected rate base compounded annual growth rate over the same period in.
Karen S. Haller: The range of six and a half to seven 5% and our commitment to maintain a strong investment grade balance sheet and competitive dividend.
Karen S. Haller: An overview of the closing of the Century IPO is included on slide 6. We are pleased that the IPO priced at the top end of the announced price range with an initial price of $21 per share of Century Common Stock. DIPO netted approximately $329 million of net cash profit, which went directly to Century and was used to reduce its debt by $316 million. This result strengthens credit metrics and the balance sheets at both Century and Southwest Gas Holdings. Inclusive of the base offering, the over allotment that was exercised in full by the underwriters and the private placements, Southwest Gas now holds an 81% interest in Century as its majority stockholder.
Karen S. Haller: An overview of the closing of the century I P. O is included on slide six we are pleased that the IPO priced at the top end of the announced price range with an initial price of $21 per share of century common stock.
Karen S. Haller: I P M netted approximately $329 million of net cash proceeds which went directly to century and were used to reduce its debt by $316 million.
Karen S. Haller: This result strengthened credit metrics and balance sheets at both century and southwest gas holdings.
Karen S. Haller: Inclusive of the base offering the over allotment that was exercised in full by the underwriters and the private placement southwest gas now holds an 81% interest in century as its majority stockholder.
Karen S. Haller: The overall success of the transaction reinforces our team's commitment to the separation strategy. I want to thank the team for their focus and hard work and to congratulate Bill Fehrman and the entire team at Century on their successful launch into the public market. On this slide, you will find links to Century's investor materials for the first quarter of 2024, which are also available on Century's investor website. Century is not scheduling an investor call this quarter but expects to begin investor calls following the release of their second quarter 2024 financial results later this summer.
Karen S. Haller: The overall success of the transaction reinforces our team's commitment to the separation strategy.
Karen S. Haller: I want to thank the team for their focus and hard work and congratulate Bill Berman and the entire team at century on their successful launch into the public markets.
Karen S. Haller: On this slide you will find links to century's investor materials for the first quarter of 'twenty 'twenty four which are also available on century's investor website.
Karen S. Haller: Century is not scheduling an investor call this quarter, but expects to begin investor call. Following the release of their second quarter 2024 financial results later this summer.
Karen S. Haller: As you can see on slide seven, we have already made excellent progress on our 2024 strategic priorities, and we are on track to achieve them all. With regard to the Sintry separation path, following the successful execution of the IPO, Southwest Gas Holdings may ultimately separate the business through a series of sell-downs or share exchanges. Depending on market conditions, we retain the ability to distribute the balance of Sintry shares to Southwest Gas Holdings stockholders through a spin. However, any of these strategies need to follow the six-month lock-up period that was required in the IPO because the successful execution of an IPO with sell-downs or share exchange is contingent on market and other conditions.
Karen S. Haller: As you can see on slide seven we have already made excellent progress on our 2024 strategic priorities and we are on track to achieve them all.
Karen S. Haller: With regard to the century separation path following the successful execution of the IPO southwest gas holdings may ultimately separate the business through a series of sell downs or share exchanges or depending on market conditions, we retain the ability to distribute the balance of century shares to southwest gas holdings stockholders.
Karen S. Haller: Through a spin.
Karen S. Haller: Any of these strategies need to follow the six month lockup period that was required in the I P O.
Karen S. Haller: Because the successful execution of an IPO with sell down or share exchange is contingent on market and other conditions. We continued to preserve the potential for a tax free spin, but we expect a significant net operating loss balance could serve as a partial offset to attach transaction.
Karen S. Haller: We continue to preserve the potential for a tax-free spin, but we expect our significant net operating loss balance could serve as a partial offset to a taxable transaction. We remain committed to separating the century, and we believe we have taken the appropriate steps and actions to benefit all stockholders. Our 2024 financing plan includes issuing a modest amount of equity under an ATM program and extending the existing 550 million term loan at Southwest Gas Holdings to allow us the flexibility to pay down or refinance that facility. These plans are dependent upon the Century separation process and timing in 2024.
Karen S. Haller: We remain committed to separating century, and we believe we have taken the appropriate steps and actions to benefit our stockholders.
Karen S. Haller: Our 2020 for financing plan includes issuing a modest amount of equity under an ATM program and extending the existing $550 million term loan at southwest gas holdings to allow us the flexibility to pay down or refinance that facility.
Karen S. Haller: These plans are dependent upon the centuries separation process and timing in 2024.
Karen S. Haller: In terms of our utility and regulatory strategy for 2024, we've already made notable strides. I'll discuss the Nevada rate case outcome in a minute, but we filed a $126 million revenue increase request in Arizona in February, which includes a capital tracker, followed by a rape case at Great Basin in March, and we are on track to file a case in California in the third quarter of this year. You can see details of some of this regulatory activity on slides 25 and 26 in the appendix to this presentation.
Karen S. Haller: In terms of our utilities and regulatory strategy for 2024, we've already made notable strides I'll discuss the Nevada rate case outcome in a minute, but we filed a 126 million revenue increase request in Arizona in February which includes a capital tracker followed.
Karen S. Haller: By a rate case at Great Basin in March and we are on track to file a case in California in the third quarter of this year.
Karen S. Haller: You can see details of some of this regulatory activity on slides 25, and 26 in the appendix to this presentation.
Karen S. Haller: Rate case progress and our cost discipline efforts reinforce our confidence in our net income guidance for 2024. We anticipate the outcomes of all of these regulatory proceedings will result in an increase in our authorized rate base by 20 to 25%. We are very pleased with the progress we are making on our strategic priorities and are confident in our ability to deliver on our objectives in 2024. Turning to slide 8, you can see on this slide we provide an update on our Nevada Raid Case filing which was approved last month by the Nevada Commission.
Karen S. Haller: Rape case progress and our cost discipline efforts reinforce our confidence in our net income guidance for 2024, we anticipate the outcomes of all of these regulatory proceedings will result in an increase in our authorized rate base by 20% to 25%.
Karen S. Haller: We are very pleased with the progress we are making on our strategic priorities and are confident in our ability to deliver on our objectives in 2024.
Karen S. Haller: Turning to slide eight you can see on this slide we provide an update for our Nevada rate case filing which was approved last month by the Nevada Commission.
Karen S. Haller: The Commission authorized an overall $59.1 million annualized revenue increase across our Nevada service areas that became effective in early April of this year. We see the results of the case as a positive outcome and it represents the settlement of several issues with intervenors and staff that were ultimately stipulated in the revenue increase. The cost of capital difference between the stipulated revenue increase on the slide and the authorized revenue increase represents the difference in our requested return on equity and the 9.5% that was authorized. This updated ROE is 10 basis points higher than what had been authorized previously.
Karen S. Haller: The commission authorized an overall $59 1 million dollar annualized revenue increase across our Nevada service areas.
Karen S. Haller: Effective in early April of this year.
Karen S. Haller: We see the results of the case is a positive outcome and represents the settlement of several issues with intervenors and staff that were ultimately stipulated in the revenue increase.
Karen S. Haller: Our cost of capital difference between the stipulated revenue increase on the slide and the author of this revenue increase represents the difference in our requested return on equity and the nine 5% that was authorized.
Karen S. Haller: This updated or are we at 10 basis points higher than what had been authorized previously.
Karen S. Haller: We're appreciative of the strong relationship we have with key stakeholders in Nevada and are pleased that we were able to work with them in a constructive way to finalize the Nevada rate. We are now recovering nearly $300 million of the over $1 billion in rate relief that we are requesting in this rate case cycle, which includes the Nevada, Arizona, Great Basin, and forthcoming California rate cases. The Nevada outcome represents 80% of the original request, which is a significant improvement over prior cases.
Karen S. Haller: We're appreciative of the strong relationship we have with key stakeholders, and Nevada, and I'm pleased that we were able to work with them in a constructive way to finalize the Nevada rate case, we are now recovering nearly $300 million of the over $1 billion in rate base that we are requesting in this rate case cycle, which includes <unk>.
Karen S. Haller: Nevada, Arizona, Great Basin, and forthcoming, California rate case.
Karen S. Haller: The Nevada outcome represents 80% of the original request, which is a significant improvement over prior cases.
Karen S. Haller: On slide nine, we highlight our strong first quarter 2024 performance at Southwest and at Central. The utility is off to a good start for the year with a $1 million increase in net income over the first quarter of last year. We continue to experience strong customer growth, adding more than 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.
Karen S. Haller: On slide nine we highlight our strong first quarter 2020 for performance at southwest and at century.
Karen S. Haller: The utility is off to a good start for the year with a $1 million increase in net income over the first quarter of last year.
Karen S. Haller: We continue to experience strong customer growth, adding more than 40000, new meter sets over the past 12 months.
Karen S. Haller: While continuing to make additional investments to ensure our system remains safe and reliable for the benefit of our customers.
Karen S. Haller: And, as I noted, we also achieved a positive regulatory outcome in Nevada and advanced our strategy in other jurisdictions. Our operations and maintenance expenses were flat compared to the first quarter of 2023, and our balance sheet is strong, having now collected the majority of the deferred purchase gas cost balance, which has been reduced by more than $770 million since Q1 2023 and is reflected in the more than $400 million cash balance as of the end of March 2024.
Karen S. Haller: And as I noted, we also achieved a positive regulatory outcome in Nevada and advanced our strategy in the other jurisdictions.
Karen S. Haller: Our operations and maintenance expenses were flat compared to the first quarter of 2023, and our balance sheet is strong having now collected the majority of the deferred purchase gas cost balance.
Karen S. Haller: The balance has been reduced by more than $770 million since Q1, 'twenty two 'twenty three.
Karen S. Haller: And as reflected in the more than 400 million cash balance as of the end of March 2024.
Karen S. Haller: And you can see Sentry's key highlights on the slide as well, which include deleveraging through the IPO. Again, we're pleased with Century's progress and would refer you to its 10Q and earnings press release that was issued earlier today for more detail on its first quarter performance. With that, I'll turn the call over to Rob, who will review our financial performance for the year.
Karen S. Haller: And you can see Centurys key highlights on the slide as well, which includes deleveraging through the IPO again, we're pleased with centuries progress and with respect prefer you to its 10-Q and earnings press release that was issued earlier today for more detail on its first quarter performance.
Karen S. Haller: With that I'll turn the call over to Rob who will review our financial performance for the year.
Robert J. Stefani: Thanks, Karen. On slide 11, we outline our earnings per share performance for the year. The company's consolidated GAAP and adjusted EPS are shown by each consolidated end. As Karen mentioned earlier, the utility performed on plan during the first quarter, and we saw results at Century that were consistent with what was outlined in the Century S-1. The utility generated its highest quarterly net income on record, and we saw significantly lower losses at the holdings company on a comparative basis as strategic costs were lower this year following the sale of Mountain West in early 2023. On an adjusted basis, Southwest Gas Holdings finished the first quarter of 2024 with EPS of $1.37 a share, a decrease of $0.40 per share when compared to Q1 of 2023.
Rob: Thanks, Karen on Slide 11, we outline our earnings per share performance for the year. The company has consolidated GAAP and adjusted EPS are shown by each consolidated entity.
Robert J. Stefani: As Karen mentioned earlier the utility has performed on plan during the first quarter and we saw results at century that were consistent with what was outlined in the century US one utility generated its highest quarterly net income on record and we saw significantly lower losses at the holdings company on a comparative basis and strategic costs were lower this year a follow.
Robert J. Stefani: The sale of mountain West in early 2000 Twenty's Red.
Robert J. Stefani: On an adjusted basis southwest gas Holdings finished the first quarter of 2024 with EPS of $1 37 tons. This year, a decrease of 40 <unk> per share when compared to Q1 of 2023 in the appendix we provide a reconciliation of adjustments by operating company. The vast majority of the first quarter 2024.
Robert J. Stefani: In the appendix, we provide a reconciliation of adjustments by operating. The vast majority of the first quarter 2024 adjustments relate to the Century separation costs and amortization of intangible assets at Century, while Q1 2023 adjustments also include impacts from the sale of Mountain West that was completed in February of 2023. Note that the amortization of intangible assets at Century is a new adjustment this quarter and is consistent with treatment by other Century peers in the utility infrastructure services sector.
Robert J. Stefani: Our adjustments related to the century separation costs and amortization of intangible assets at century, while Q1 2023 adjustments also include impacts from the sale of mountain West that was completed in February of 2023.
Robert J. Stefani: Note that the amortization of intangible assets at century is a new adjustment this quarter and is consistent with treatment by other century peers and utility infrastructure services sector.
Robert J. Stefani: We have provided that adjustment to help investors better compare Century's performance with other companies in the sector following the Century IPO. This adjustment has been shown for the same period in the first quarter of 2023 for consistency and comparative purposes. Now I'll provide a walkthrough on the performance of Southwest Gas Holdings and the utility.
Robert J. Stefani: We have provided that adjustments to help investors better compare centuries performance with other companies in this sector. Following the century IPO. This adjustment has been shown for the same period in the first quarter 2023 for consistency and comparative purposes.
Robert J. Stefani: Now I will provide a walkthrough on the performance of southwest gas holdings and the utility.
Robert J. Stefani: Turning to slide 12, we depict a consolidated earnings walk on an adjusted basis. It should be noted that post-IPO, so long as Southwest Gas meets the consolidation requirements, we expect to continue to fully consolidate Century's financial results. During the first quarter, the utility benefited from higher margins, which was partially offset by increased depreciation and amortization, as well as reductions in interest income resulting from lower deferred purchase gas cost balances associated with the PGA recovery. Century DPS was lowered due to a lack of storm restoration services work compared to 2023 and reduced volumes of contracts.
Robert J. Stefani: Turning to slide 12, we depict our consolidated earnings walk on an adjusted basis. It should be noted that post IPO. So long as southwest gas meets the consolidation requirements. We expect to continue to fully consolidate centuries financial results. During the first quarter of the utility benefited from higher margin, which was partially offset.
Robert J. Stefani: Increased depreciation and amortization as well as reductions in interest income resulted from lower deferred purchase gas cost balances associated with the PGA recovery.
Robert J. Stefani: Centuries, EPS was lower due to lack of storm restoration services work compared to 2023 and reduced volumes of contract work.
Robert J. Stefani: The first quarter of 2023 also included a month and a half of Mountain West earnings, and the whole co-benefited from lower expenses compared to Q1 2023, primarily related to the Mountain West loss in the prior period, which was not present in the same period in 2024. The remaining change, quarter over quarter, relates to the impacts of share dilution from the equity issuances in 2023. Moving on to slide 13, you'll see the quarter-over-quarter performance drivers for our utilities, Southwest Gas Corporation.
Robert J. Stefani: First quarter of 2023 also included a month and a half mountain West earnings and the whole co benefited from lower expenses compared to Q1 2023, primarily related related to the mountain west loss in the prior period, which was not present in the same period in 2024.
Robert J. Stefani: The remaining change quarter over quarter relates to the impacts of share dilution from the equity issuances in 2020 threat.
Robert J. Stefani: Moving on to slide 13, Youll see the quarter over quarter performance drivers for our utility southwest gas Corporation.
Robert J. Stefani: In the first quarter of 2024, utility operating margin increased by just over $9 million compared to the same period last year. This improvement was driven primarily by $10 million of increased recovery on prior investments in Arizona, as well as a modest increase in recoveries in California, and $7 million of additional recovery associated with regulatory account balance. We also saw $5 million of improved margin as a result of continued customer growth throughout our service area.
Robert J. Stefani: In the first quarter of 2020 for utility operating margin increased by just over $9 million compared to the same period last year. This improvement was driven primarily by $10 million of increased recovery on prior investments in Arizona as well as a modest increase in recoveries in California, and $7 million of additional recovery associated with regulatory.
Robert J. Stefani: Count balances. We also saw a $5 million of improved margin as a result of continued customer growth throughout our service areas you might recall that during last year's first quarter and 8 million out of period adjustment was made related to the net cost of gas. So that benefited 2023 first quarter earnings that did not recur this year.
Robert J. Stefani: You might recall that during last year's first quarter, an $8 million out of period adjustment was made related to the net cost of gas sold that benefited 2023 first quarter earnings that did not recur this year. The remaining difference largely relates to impacts of miscellaneous revenue changes and impacts to margin from decoupled customers.
Robert J. Stefani: The remaining difference largely relates to impacts of Mrs. Miscellaneous revenue changes and impacts to margin from decouple customers.
Robert J. Stefani: O&M was flat quarter over quarter, reflecting our disciplined cost management strategy, and we remain confident that we will be able to achieve our stated goal of continuing to keep O&M costs flat on a per customer basis through 2026. The approximate $10 million increase in depreciation and amortization in general taxes was primarily due to $7 million of increased amortization of regulatory account balances that is offset by a corresponding amount in improved margin, along with the higher depreciation expense associated with a 7% increase in average gas plant and service costs compared to Q1 2023. Other income was flat compared with last year, the net result of a few drivers.
Robert J. Stefani: Well one of them was flat quarter over quarter, reflecting our disciplined cost management strategy and we remain confident that we will be able to achieve our stated goal of continuing to keep O&M costs flat on a per customer basis through 2026.
Robert J. Stefani: The approximate $10 million increase in depreciation amortization and general taxes was primarily due to the $7 million of increased amortization of regulatory account balances that is offset by a corresponding amount and improved margin.
Robert J. Stefani: Along with the higher depreciation expense associated with 7% increase in average gas plant in service compared to Q1 2023.
Robert J. Stefani: Other income was flat compared with last year. The net result of a few drivers we saw nearly $3 million decline in interest income related to carrying charges associated with lower regulatory account balances, notably the differed purchase gas cost balances.
Robert J. Stefani: We saw a nearly $3 million decline in interest income related to carrying charges associated with lower regulatory account balances, notably the deferred purchase gas cost balance. Coley results were $1 million higher than Q1 2023, as we saw an increase in values underlying corresponding life insurance policies, and we saw a nearly $2 million increase in the equity portion of the allowance for funds used during construction or AFUDC this quarter. Interest expense at the utility decreased by approximately $2 million from the prior year's first quarter primarily due to the net impact of additional interest associated with the $300 million of senior notes issued in March 2023, offset by the impacts of an earlier $450 million Southwest Gas Corporation PGA related term loan issued in January of 2023 to support gas purchases, which was repaid in April of 2023. Overall, the performance of the utility was in line with what we had expected for the first quarter.
Robert J. Stefani: Early results were $1 million higher than Q1 2023, as we saw an increase in values underlying corresponding life insurance policies and we saw nearly 2 million dollar increase in the equity portion of allowance for funds used during construction or <unk> this quarter.
Robert J. Stefani: Interest expense at the utility decreased by approximately $2 million from the prior years first quarter, primarily due to the net impact of additional interest associated with the $300 million of senior notes issued in March 2023.
Robert J. Stefani: Offsetting by the impacts of an earlier $450 million southwest gas Corporation PGA related term loan issued in January of 2023 to support gas purchases, which was repaid in April of 2023.
Robert J. Stefani: Overall the performance at the utility was in line with what we had expected for the first quarter Karen.
Karen S. Haller: Karen will discuss our 2024 net income guidance in a moment. On slide 14, we have provided our 2024 financing plan for both Southwest Gas Holdings and Southwest Gas Corporation that has been updated to reflect the IPO outcome and which will still assume consolidation for centuries. To the extent Century ceases to be consolidated in 2024, we will adjust our guidance accordingly. In addition, we would highlight that the whole co-balance sheet could improve further depending on the post-IPO market conditions and the form of separation Southwest Gas Holdings takes with respect to its remaining ownership position in Century.
Robert J. Stefani: Karen will discuss our 2024 net income guidance in a moment.
Karen S. Haller: On slide 14, we have provided our 2020 for financing plan for both southwest gas Holdings and southwest Gas Corporation that has been updated to reflect the IPO outcome, and which will still assume consolidation of century to.
Karen S. Haller: To the extent century ceases to be consolidated in 2024, we will adjust our guidance. Accordingly. In addition, we would highlight that the holdco balance sheet could improve further depending on the post IPO market conditions in the form of separation southwest gas holdings takes with respect to its remaining ownership position and saturate.
Karen S. Haller: We continue to expect cash flow from operations to more than fund the entire capital expenditure program forecast in 2024 at the utility. In addition, based on the strength of our balance sheet and successful refinancing efforts in 2023, we continue to anticipate very modest additional near-term equity needs of approximately $75 million during 2024, again, depending on post-IPO separation execution. And we do not foresee any debt refinancing or financing needs at the utility in 2024.
Karen S. Haller: We continue to expect cash flow from operations to more than fund the entire capital expenditure program forecasted in 2024 at the utility. In addition, based on the strength of our balance sheet and successful refinancing efforts in 2023, we continue to anticipate very modest additional near term equity needs of approximately 75.
Karen S. Haller: During 2024 again, depending on post IPO separation execution for them.
Karen S. Haller: And we do not foresee any debt refinancing or financing needs at the utility in 2024, it's important to note that in addition to our limited equity needs of approximately $150 million in the next two fiscal years inclusive of the $75 million. This year expect it through the ATM, we have very limited debt refinance.
Karen S. Haller: It's important to note that in addition to our limited equity needs of approximately $150 million in the next two fiscal years, inclusive of the $75 million this year expected through the APM, we have very limited debt refinancing needs through the end of 2026 outside of our $550 million Southwest Holdings term loan. We do plan to amend and extend that term loan in either the second or third quarter of 2024, as well as the $400 million revolver at the utility.
Karen S. Haller: He needs through the end of 2026 outside of our $550 million Southwest Holdings Chunghwa.
Karen S. Haller: We do plan to amend and extend that term loan in either the second or third quarter of 2024, as well as the $400 million revolver at the utility.
Karen S. Haller: At Holdings, we reiterate our plan to target a solid investment grade balance sheet. As we have said previously, Southwest Gas Holdings remains committed to paying a competitive dividend to our stockholders. We plan to hold the dividend flat again in 2024, which we would expect would result in a competitive payout ratio. We will continue to balance factors such as projected capital requirements, impacts on credit ratings, the competitiveness of the dividend yield, rate case outcomes, economic conditions, and other factors, and plan to revisit dividend policy for any changes that materialize as we work to fully separate centuries. We should have better clarity regarding the planned separation in the coming quarters.
Karen S. Haller: At whole things, we reiterate reiterate our plan to target a solid investment grade balance sheet.
Karen S. Haller: As we have said previously southwest gas holdings remains committed to paying a competitive dividend to our stockholders. We plan to hold the dividend flat again in 2024 of which we would expect would result in a competitive payout ratio. We will continue to balance factors such as projected capital requirement impacts to credit ratings the competitiveness of the dividend.
Karen S. Haller: Yield rate case outcomes economic conditions, and other factors and plan to revisit dividend policy for any changes that materialize as we work to fully separate century.
Karen S. Haller: We should have better clarity regarding the planned separation in coming quarters.
Karen S. Haller: Moving to slide 15, we take a look at our balance sheet strength and our commitment to maintaining an investment-grade profile. On the left-hand side, we walk through net debt by operating company. When we look at the utility debt levels, we continue to highlight the PGA balance, which represents working capital that Southwest has spent on prior commodity purchases and is owed to Southwest by customers. As expected, we have seen a timely recovery of this PGA balance, and we continue to earn a carrying amount on these balances as reflected in the chart in the appendix on slide 23, which provides additional detail.
Karen S. Haller: Moving to slide 15, we take a look at our balance sheet strength and our commitment to maintaining an investment grade profile on the left hand side, we walked through net debt by operating company and we look at the utility debt levels. We continue to highlight the PGA balance sheets represents working capital that southwest has spent for prior commodity purchases and as always.
Karen S. Haller: Less by customers as expected we have seen a timely recovery of this PGA balance and we continue to earn the carrying amount on these balances as reflected in the chart in the appendix on slide 23, which provides additional detail.
Karen S. Haller: While I noted earlier that interest income is expected to decline this year due to the lower PGA balances, you will see the large utility cash balance on slide 15 that significantly obviates the need for us to pursue additional financing in the near term. On the right-hand side of slide 15, we note that we had no changes to our credit ratings or outlook from three agencies since our fourth quarter 2023 earnings call. In addition, Moody's recently affirmed the ratings at both the holding company and at the utility. I'll now turn the page.
Karen S. Haller: Well I noted earlier the interest income is expected to decline this year due to the lower PGA balances you will see the large utility cash balance on slide 15 that significantly obviates the need for us to pursue additional financing in the near term.
Karen S. Haller: On the right hand side of Slide 15, we note that we had no changes to our credit ratings or outlooks from three agencies since our fourth quarter 2023 earnings call and.
Karen S. Haller: In addition, Moody's recently affirmed the ratings at both the holding company and at the utility.
Karen S. Haller: I'll now turn the call over to Karen and slide 17 to discuss our guidance.
Karen S. Haller: Thanks, Rob. Our first quarter results are evidence of the progress we continue to make in executing our strategy, and we're enthusiastic about the rest of 2024. On slide 17, we are affirming our 2024 Southwest Net Income Guidance to be in the range of $228 to $238 million. We are confident that this strong regional economic outlook in our surface territories. The completion of our Nevada rate case outcome, as well as expected results of our cost management, will drive 2024 results toward the upper half of the net income guidance range. Our team remains focused on optimizing utility operations.
Speaker Change: Thanks, Rob our first quarter results are evidence of the progress we continue to make executing our strategy and we are enthusiastic about the rest of 2024.
Karen S. Haller: Slide 17, we are affirming our 2020 for southwest net income guidance to be in the range of $228 million to $238 million, we're confident that strong regional economic outlook and our best territories. The completion of our Nevada rate case outcome as well as expected results.
Karen S. Haller: Of our cost management efforts will drive 2024 results towards the upper half of the net income guidance range. Our team remains focused on optimizing utility operations.
Karen S. Haller: We affirm our 2024 utility CapEx at approximately $830 million, partly due to expected customer growth in the utility. As a reminder, this would be an increase over 2023 of about $70 million. While nearly 50% of our forecasted capital spending relates to maintaining a safe and reliable system for the benefit of all of our customers, some of this increased 2024 CapEx is a result of the responsibility we have to invest in our infrastructure to meet the better than expected customer growth and favorable new business trends across our service territories, combined with the required investments we make to enhance the safety and integrity of the system.
Karen S. Haller: We affirm our 2024 utility capex at approximately $813 million.
Karen S. Haller: Partly due to expected customer growth utility as a reminder, this would be an increase over 2023 about $70 million on nearly 50% of our forecasted capital spending relates to maintaining a safe and reliable system for the benefit of all of our customers. Some of this increased 2000.
Karen S. Haller: 'twenty four capex as a result of the responsibility we have to invest in our infrastructure to meet the better than expected customer growth and favorable new business trends across our service territories combined with the required investments, we make to enhance the safety and integrity of the system.
Karen S. Haller: Part of the increase is driven by our continuous improvement initiatives, which we expect to lead to future expense savings at the utility. Looking further out, we still expect the compounded annual growth rate for net income at the utility to fall within the range of 10 to 12 percent from 2024 through 2026. While the impact of the regulatory cycle is expected to result in somewhat lumpy net income growth over the forecasted period, our regulatory strategy and our plan to achieve a flat O&M per customer trend over that same period are expected to be important components of our growth story.
Karen S. Haller: Part of the increase is driven by our continuous improvement initiatives, which we expect to lead to future expense savings at the utility.
Karen S. Haller: Looking further out we still expect compounded annual growth rate for net income at the utility to fall within the range of 10% to 12% from 2024 through 2026.
Karen S. Haller: While the impact of the regulatory cycle is expected to result in somewhat lumpy net income growth over the forecasted period.
Karen S. Haller: Our regulatory strategy and our plan to achieve a flat O&M per customer trend over that same period are expected to be important components of our growth story.
Karen S. Haller: Additionally, you can find the 2024 to 2026 drivers in the appendix of our presentation on slide 24. We also affirm our rate-based compound annual growth rate to be in the range of 6.5% to 7.5% over the same 2024 to 2026 period, and we continue to expect to invest about $2.4 billion in total in CapEx over the next three years. Before we open the call up to Q&A, I want to point to slide 18 and emphasize that our teams are focused on executing our strategic priorities, delivering strong financial results, and providing exceptional service to our customers.
Karen S. Haller: Additionally, you can find the 2024 to 2026 drivers and then appendix of our presentation on slide 24.
Karen S. Haller: We also affirm our rate base compound annual growth rate to be in the range of $6 five to seven 5% over the same 2024 to 2026 period and we continue to expect to invest about $2 $4 billion in total of Capex over the next three years.
Karen S. Haller: Before we open the call up to Q&A I want to 0.5 to 18 and emphasize that our teams are focused on executing our strategic priorities delivering strong financial results and providing exceptional service to our customers at southwest gas holdings, we are confident in our path forward as a premier.
Karen S. Haller: At Southwest Gas Holdings, we are confident in our path forward as a premier, pure-play natural gas utility. We plan to continue delivering steady, organic rate-based growth through strong regional demand dynamics, as well as earnings growth through financial discipline, operational excellence, and constructive regulatory relationships. We will continue to execute toward the planned full separation of Century to create an attractive value proposition for stockholders and to de-lever the business organically with healthy cash flow generation.
Karen S. Haller: Pure play natural gas utility, we plan to continue delivering steady organic rate base growth through strong regional demand dynamics as well as earnings growth through financial discipline operational excellence and constructive regulatory relationships.
Karen S. Haller: We'll continue to execute towards the plants full separation of century to create an attractive value proposition for stockholders and to delever the business organically with healthy cash flow generation.
Karen S. Haller: With that, I'd like to open the call for questions. While Sentry remains in a post-IPO quiet period, we'll plan to refer you to Sentry's public materials and, going forward, to their management team for any Sentry-specific operations and financial questions. Thank you.
Karen S. Haller: With that I'd like to open the call for questions. While century remains in a post IPO quiet period or plan to refer you to centuries public materials and going forward to their management team for any century specific operations and financial question.
Karen S. Haller: Yeah.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by number two. If you are using a speakerphone, please leave the handset before pressing any key. We will pause for a moment to compile the Q&A roster. The first question comes from the line of Chris Ellinghaus from Siebert Williams Schenck. Please go ahead.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone, you'll hear a prompt that your hand, that's been raised should you wish the decline from the flooding process. Please press star followed by number two if you are using a speaker phone. Please.
Operator: If the handset before pressing any keys, we will pause for a moment to compile the Q&A roster.
Operator: Yeah.
Christopher Ronald Ellinghaus: The first question comes from the line of Chris <unk> from Siebert Williams sang please go ahead.
Christopher Ronald Ellinghaus: Hey everybody, how are you? Morning, Chris. Um, Rob, is there any color that you can provide in terms of the way you imagine the cadence of, They're reducing the century stake over time?
Christopher Ronald Ellinghaus: Hey, everybody how are you.
Rob: Good morning, Chris.
Christopher Ronald Ellinghaus: Rob.
Christopher Ronald Ellinghaus: Is there any color that you can provide in terms of the way you envision the cadence of reducing the century stake over time.
Robert J. Stefani: Hey, Chris, good morning. You know, I think, at this time, we continue to, you know, evaluate the options with respect to the balance of the century stake. Obviously, as Karen highlighted, we have the net operating loss position, which provides us with the flexibility to potentially pursue a taxable transaction, which could take the form of, you know, sell down or exchanges or some combination thereof. Just, again, we'll continue to evaluate that along with Century performance while continuing to preserve the tax-free option of a spin or a split. So, you know, at this time, we continue to evaluate the post-IPO options, and we'll put more information out as that evaluation unfolds.
Christopher Ronald Ellinghaus: Hey, Chris Good morning.
Robert J. Stefani: And at this time, we continue to evaluate our options with respect to the balance of the century stake obviously, Karen highlighted we have the net operating loss position, which which provides us flexibility to potentially pursue a taxable transaction, which could take the form of <unk>.
Robert J. Stefani: Sell down or exchanges or some combination thereof.
Robert J. Stefani: Just again, we will continue to evaluate that along with century performance, while continuing to preserve the tax free option of.
Robert J. Stefani: Of a spin or a split so you know at this time, we continue to evaluate the <unk>.
Robert J. Stefani: <unk> IPO options that will put more information out as that evaluation unfolds.
Karen S. Haller: Okay, Karen, you didn't talk too much about, you know, the economy this time. Have you got anything that you want to add vis-a-vis, you know, what's going on in Vegas or in the Phoenix area with your, I guess the right words, vibrant economies?
Speaker Change: Okay. Karen you didn't talk too much about you know the economy.
Karen: This time have you got anything that you want to add a visa b you know what's going on in Vegas or in the Phoenix area with your.
Karen: So I guess, the right words vibrant economies.
Karen S. Haller: Yeah, I would agree. A vibrant economy, as we've, you know, last quarter we laid out a number of different things and talked specifically about some of the projects that are going on, and so some of that's in our materials. But you're correct; we continue to have, you know, excellent growth and things going on in our different jurisdictions. You know, the Arizona area continues to have manufacturing and tech growth, and we've opened a number of, you know, a couple of new casinos and different resort areas. We continue to be, you know, entertainment and sports here in Las Vegas and the Nevada area. So, we've seen a number of areas that we continue to grow and expect that to continue.
Karen: Yeah, I would agree vibrant economy as we've.
Karen S. Haller: Last quarter, we laid out a number of different things and talk specifically about some of the projects that are going on and so some of that's in our materials, but you're correct. We continue to have a you know excellent gross and things going on in our different jurisdictions you know the the Arizona area continues with.
Karen S. Haller: With manufacturing and tech growth and we've opened a number of a couple of new casinos and different.
Karen S. Haller: <unk> sort areas.
Karen S. Haller: <unk> to be you know entertainment sports here in Las Vegas, Nevada area. So we've seen a number of areas that we continue to grow and expect that to continue.
Karen S. Haller: Okay, you obviously lost one casino recently, but, you know, is the influx of sports volume affecting your business in any, I assume, positive way, in terms of sort of visitor throughput? But can you sort of just describe how sports are affecting your business in Vegas?
Speaker Change: Okay. You, obviously lost one casino recently, but you know is the influx of sports volume you know affecting your business in any.
Karen S. Haller: <unk> positive way in terms of sort of a visit or throughput, but can you sort of just describe how sports is affecting your business in Vegas.
Karen S. Haller: Well, I think, as you pointed out, we've lost one casino, but that casino will be replaced by a baseball facility here in time, so most of that land, you know, that's right down on the Las Vegas Strip. And so if something does close, we usually see it followed by something bigger and probably greater demand, so we anticipate, so from that standpoint, there are facilities that are going on or will be built on that location where the Tropi I think that there's a number of facilities that sports have brought. I mean, we have the Allegiant Stadium, the T-Mobile Arena. We provide for those different facilities as well, and as you've seen, there's been a great influx of, I think, customers, which supports the economy, provides growth, and provides growth for our residential market. You know, we have strong residential growth which is here and supports all of the commercial growth that's going on.
Karen S. Haller: Well I think as you pointed out we've lost one casino, but that casino will be replaced with a baseball facility here and in time. So most of that lands you know that's right down on the Las Vegas strip and so if something does close we usually see it followed by something bigger.
Karen S. Haller: It probably greater demand. So we anticipate so from that standpoint. There is facilities that are going on are or will be built on that location.
Karen S. Haller: Where the Tropicana are close I think that Theres a number of facilities that supports a broad I mean, we have the Allegiant stadium. The T Mobile arena I mean, we provide to those different facilities as well and as you've seen there's been a great influx of Ah I think customers, which supports the.
Karen S. Haller: Economy.
Karen S. Haller: Provides growth and provides growth for our residential market.
Karen S. Haller: We are have strong residential growth, which is here and supports all of the commercial growth that's going on.
Karen S. Haller:
Karen S. Haller: In terms of new casinos, I think there's one piece of property that looks like you might get another one, has there been an announcement of a... It's down in the... I want to say it's in the Fountain Blue kind of neighborhood. Is there any sort of vision on what's up with that property there?
Karen S. Haller: Arms of <unk>.
Karen S. Haller: New casinos I think there's.
Karen S. Haller: One piece of property that looks like you might get another one has there been an announcement of a stem in the when I say, it's in the fountain Bleu kind of neighborhood.
Karen S. Haller: Is there any sort of vision on what's up with that property there.
Karen S. Haller: I don't have any specifics at this time on that.
Speaker Change: I don't have any specifics at this time on that.
Karen S. Haller: Okay, and lastly, have you got any more updated thoughts on the Arizona tracker process?
Speaker Change: Okay, and lastly have you got any.
Karen S. Haller: More updated thoughts on the Arizona tracker process.
Karen S. Haller: I don't think we have anything that we haven't discussed thus far. We've obviously filed for the tracker in our Arizona rate case. We've had discussions and feel good about the position that we're in on our request for that tracker. We're not going to, as you know what the process and timing in Arizona will be later this year before we even get an intervenor testimony, and a hearing wouldn't be expected until probably November of this year. So we'll know more as the case progresses, but at this point, I don't have anything new on it. Thank you very much.
Karen S. Haller: I don't think we have anything that we havent discussed thus far we've obviously filed for the tracker in our Arizona rate case, we've had discussions and you didn't feel good about the position that we're in.
Karen S. Haller: On our request with that tracker, we're not going to as you know with the process and timing in Arizona will be later this year before we even get intervenor testimony and a hearing wouldn't be expected until probably November of this year. So well, we'll know more as that was the case progress.
Karen S. Haller: But at this point I don't have anything new on it.
Christopher Ronald Ellinghaus: Thank you very much; I appreciate the color.
Speaker Change: Thank you very much appreciate the color.
Operator: The next question comes from the line of Ryan Levine from Citi. Please go ahead.
Christopher Ronald Ellinghaus: The next question comes from the line of Ryan Levine from Citi. Please go ahead.
Ryan Michael Levine: Hi everybody. How does Southwest, or does Southwest Gas have a preference for formula rates for future test years in Arizona? And how could these potential lag-related hearings this summer impact the SREB tracker process or procedure?
Ryan Michael Levine: Hi, everybody.
Ryan Michael Levine: How does it.
Ryan Michael Levine: Where does southwest guys have a preference for formula rates first future test years in Arizona, and how could these potential lag related hearings this summer impact DSA.
Ryan Michael Levine: Tracker process proceedings.
Karen S. Haller: Hi Ryan, Justin's here with me; I'm going to let him respond to that.
Speaker Change: Hi, Ryan I'm, just <unk> here with me I'm going to let him respond to that.
Justin S. Forsberg: Hey Ryan, I don't know that there's a preference.
Justin: Hey, Ryan.
Justin: If there is a preference I mean I think we're just very encouraged that the commission continues to be focused on making structural improvements.
Justin S. Forsberg: I mean, I think we're just very encouraged that the Commission continues to be focused on making structural improvements. You know, I think probably in June, they're going to be having further discussions around kind of next steps on, you know, how this rulemaking or investigative docket is going to proceed. I know we've presented on, you know, kind of the future test year, the kind of rate making model that we experienced in California. They've asked for some additional information on that. I think that's encouraging, and you know, we're just excited to participate and excited that they continue to be focused on making incremental improvements there.
Ryan: I know I think probably in June theyre going to be having further discussions around kind of next steps on.
Justin S. Forsberg: How this rulemaking or investigatory docket is going to proceed.
Justin S. Forsberg: I know we've presented on you know kind of the future test year kind of ratemaking model that we experienced in California, they've asked for some additional information on that so I think that's.
Justin S. Forsberg: Encouraging.
Justin S. Forsberg: We're just excited to participate and excited that they continue to be focused on making incremental improvement there.
Justin S. Forsberg: Thanks, and I heard the story in the last hearing that the request for some additional comparison of California versus states. I mean, it does that. And under what format is that information communicated, or is there a lot of back and forth as they compare different jurisdictions of forecast?
Speaker Change: Thanks, and I heard the biggest during the last hearing request for some of the additional comparison of California versus versus state I mean, it does that.
Justin S. Forsberg: And under what format is that information communicated or is there a lot of back and forth as they compare different jurisdictions with sword testers.
Speaker Change: Yes, I mean, I think it's really kind of describe it like an investigatory docket road I think theres a lot of you.
Justin S. Forsberg: Yeah, I mean, I think it's really kind of describe it like an investigative docket, right? I think there's a lot of, you know, you had the workshop in March, and I think they're going to look to have, you know, kind of another workshop they need to get scheduled. But I think a lot of it is just trying to understand, you know, is there a single model that they want to go to, or do they want to have an approach where, kind of like you mentioned, there's different options for different utilities.
Justin S. Forsberg: The workshop in March and I think theyre going to look to have kind of another workshop they need to get it scheduled.
Justin S. Forsberg: But I think a lot of it is just trying to understand you know is there a single model that they want to go to or do they want to have an approach where kind of like you mentioned you know theres different options for different utilities.
Justin S. Forsberg: So I think that's something they're trying to figure out, and I think that's just going to unfold as we go through the workshop process, and they learn more about the different models that are there.
Justin S. Forsberg: So I think that's something they're trying to figure out and I think that's just going to unfold as we go through the workshop process and they learned more about kind of the different models that are there.
Justin S. Forsberg: Got you.
Karen S. Haller: Gotcha. Unrelated topic, what's the outlook for the NOL balances into next year? And is there any impact of timing on a century sell down with the timing of a potential tax free spin? future in the future.
Speaker Change: Got you.
Speaker Change: Unrelated topic, what's the outlook for the NOL balances into next year and is there any impact or a timing on it century sell down with the <unk>.
Speaker Change: Timing of a potential tax free spin.
Speaker Change: And teacher in the future.
Speaker Change: Ryan as to the timing with respect to what we do with century I think we mentioned we're in a six month lock up following the IPO and so you know that that will impact the timing and following that as I indicated we're committed to continuing with the separation I'll go ahead and let.
Karen S. Haller: I mean, with respect to what we do with Sentry, I think we mentioned we're in a six-month lock-up following the IPO, and so, you know, that will impact the timing, and following that, as I indicated, we're committed to continuing with the separation. I'll go ahead and let Rob answer your question with respect to the NOL. Hey, Ryan.
Karen S. Haller: Rob to answer your question with respect to the NOL.
Robert J. Stefani: Hey, Ryan. Yeah, so we don't provide the full guidance on the NOL position, but we'll just refer you to, you know, we had just about a billion dollars of NOLs as of the end of the year. And, and so, you know, that's obviously a substantive position.
Robert J. Stefani: Yeah, so we don't provide floor guidance on the NOL position, but
Rob: Hey, Ron Yeah. So.
Rob: Don't provide the forward guidance on the NOL position, but would just refer you. We had just about $1 billion of Nols as of the end of the year.
Robert J. Stefani: And.
Robert J. Stefani: And so you know that.
Robert J. Stefani: That's obviously a subset of physician that can be used to offset.
Robert J. Stefani: Taxable form of a transaction, we think that provides us a lot of optionality with what we do with that 81% stake.
Karen S. Haller: Okay, and then last question. Now that the IPO is complete, should we look for more comprehensive financial guidance from Southwest Gas? Given that this section is left.
Ryan: Okay and then last question now that the IPO is complete should we look for more comprehensive financial guidance.
Karen S. Haller: Southwest gas.
Karen S. Haller: Isn't that restriction is lifted.
Karen S. Haller: Ryan, we wouldn't expect to change the longer-term guidance, if that's what you're referring to, until we really understand what the full separation of sentry looks like. So once we've completed that, we'll be in a better position to be able to provide longer-term guidance. Thank you.
Speaker Change: Well, Ryan we wouldn't expect to change the longer term guidance, if that's what you're referring to until we really understand what the full separation of century looks like so once once we've completed that we'll be in a better position to be able to provide longer term guidance.
Karen S. Haller: Yeah.
Ryan Michael Levine: Thank you for taking my question.
Speaker Change: Thank you for taking my questions.
Karen S. Haller: Thanks.
Ryan Michael Levine: Yeah.
Operator: Again, if you would like to ask a question, please press star followed by the number one on your telephone keypad. As there are no further questions at this time, this concludes our Q&A session. I will now turn the call over back to Justin for his closing remarks.
Speaker Change: Again, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Operator: There are no further questions at this time. This concludes our Q&A session I will now turn the call over back to Justine for closing remarks.
Justin S. Forsberg: Thanks, John, and thank you all for joining us today and for your questions. This concludes our conference call, and we look forward to seeing many of you soon as we participate in conference activities next week at the Citi Global Utilities Conference in Boston, followed by the AGA Financial Conference in Palm Desert, California, as well as other events a little further out. I wanted to highlight that we recently launched a new investor website, which is intended to help you to find information about the company more easily.
Justin: Thanks, John and thank you all for joining us today and for your questions. This concludes our conference call and we look forward to seeing many of you soon as we participated in conference activities next week at the Citi Global Utilities conference in Boston, Although by the HCA Financial conference in Palm Desert, California, as well as other events a little further out.
Justin S. Forsberg: Please let us know your thoughts as you navigate the updated site. Slide 19 of today's presentation also includes my contact information, and as always, feel free to reach out at any time. Thank you for your interest in Southwest Gas. Have a great day.
Justin S. Forsberg: I wanted to highlight that we recently launched a new investor website, which is intended to help you to find information about the company more easily. Please let us know your thoughts as you navigate the updated site.
Justin S. Forsberg: Slide 19 of today's presentation also includes my contact information and as always feel free to reach out anytime. Thank you for your interest in southwest gas have a great day.
Justin S. Forsberg: Yeah.
Operator: This concludes today's Southwest Gas Holdings First Quarter 2024 Earnings Calls and Webcast. You may disconnect your line at this time. Have a wonderful day.
Justin S. Forsberg: This concludes today's southwest gas holdings first quarter 2024 earnings calls and webcast. You may disconnect. Your lines at this time have a wonderful day.
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