Southwest Gas Holdings Analyst Day October 2018

95 Pages·2017·4.12 MB·English

by  Megan Villarreal

Analyst Day
New York
October 1, 2018
Management Participants
John Hester Paul Daily Karen Haller
President and CEO President and CEO EVP/Chief Legal/Administration
Southwest Gas Holdings Centuri Construction Group Southwest Gas Holdings
Greg Peterson Eric DeBonis Justin Brown Kevin Neill
SVP/CFO SVP/Operations SVP/General Counsel EVP/CFO/Treasurer
Southwest Gas Holdings Southwest Gas Corporation Southwest Gas Corporation Centuri Construction Group
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Safe Harbor Statement
This presentation includes “forward-looking statements” as defined by the Securities and Exchange Commission (SEC).We make these forward-
looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements,
other than statements of historical facts, included in this presentation that address activities, events or developments that we expect, believe or
anticipate will or may occur in the future are forward-looking statements. These include, without limitation, our 2018 expectations for our
infrastructure services and natural gas operations segments, as well as statements regarding our expansion projects and other investment
opportunities.
Forward-looking statements are based on assumptions which we believe are reasonable, based on current expectations and projections about
future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our
expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ
materially from those contained in the forward-looking statements, including without limitation, the risk factors described in Part I, Item 1A “Risk
Factors,” and Part II, Item 7 and Item 7A “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and
“Quantitative andQualitative Disclosure aboutMarketRisk”of our2017Annual ReportonForm 10-Kfiled with theSEC,andotherreportsthatwe
filewith theSECfromtimetotime,andthefollowing:
▪ Thetimingandamountofraterelief;
▪ Changesinoperatingexpenses;
▪ Changesinratedesign,infrastructuretrackingmechanisms;
▪ Customergrowth rates;
▪ Conditionsinhousingmarkets;
▪ Theeffectsofregulation/deregulation;
▪ Theimpactsofconstructionactivityatourinfrastructureservicessegment;
▪ Theimpactsfromacquisitions;
▪ Theimpactsofstockmarketvolatility;and
▪ Otherfactorsdiscussedfromtimetotimeinourfilingswith theSEC.
Newfactors thatcould cause actual results to differmateriallyfrom those described in forward-lookingstatements emergefrom time to time,and it
is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ
from those contained in any forward-looking statement. The statements in this presentation are made as of the date hereof, even if subsequently
made available on our Web site or otherwise. We do not assume any obligation to update the forward-looking statements provided to reflect
eventsthatoccurorcircumstancesthatexistafterthedateonwhichtheyweremade.
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Presentation Outline
Regulation strategy
IV
Company overview
Infrastructure services
I
overview
V
Financial overview
II Environmental, Social &
Governance (ESG)
VI
Operations strategy
III
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Value Drivers
Two business
segments with
excellent growth
opportunities
Diversified
Strong financial Attractive service
regulatory footprint
foundation & territory & customer
with constructive
future prospects growth
regulation
Strong rate base
Customer centric Consistently
growth &
focus at both growing infrastructure
an extended
segments services segment
time horizon
Operational
excellence with focus
on safety
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Corporate Platform
Southwest Gas Holdings, Inc
Natural Gas Operations Infrastructure Services
DIVERSIFIED LDC PLATFORM IN THREE STATES ONE OF NORTH AMERICA’S LARGEST FULL-SERVICE
UNDERGROUND PIPELINE CONTRACTORS
▪ Largest LDC in Arizona and Nevada, also distribute and transport
gas in parts of California ▪ Headquartered in Phoenix, AZ
▪ Operate transmission system –Paiute Pipeline ▪ Operates in 25 markets across the U.S. and Canada
▪ Over 2 million customers and growing, of which 99% are residential ▪ Long-term, industry and customer commitments
and small commercial ▪ Over $1.4 billion in revenues –Twelve months ended June 2018
▪ Blended authorized ROE of 9.76%, and $2.6 billion authorized rate
base
▪ Constructive regulatory mechanisms which mitigate lag
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Recent Achievements
• E.P.S. of $4.29 for 12 months ended June 2018
• Dividend increased for the 12th straight year, 9.5% CAGR over past
five years
Consolidated
Results
• Added 33,000 net new customers over the past 12 months
• Nevada general rate case request for $29.7 million
Natural Gas
• Filed Gas Infrastructure Replacement Application with annualized revenue
Segment
requirement of $22 million
• PUCN approved expansion to Mesquite, Nevada
Infrastructure
Services
• Achieved record revenues of over $1.4 billion for twelve months ended
Segment June 2018
• Net income for 12 months June 2018 of $45.2 million
• Neuco acquisition exceeding expectations
• Enthusiastic about full-year Centuri performance
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Return on Common Equity
Twelve months ended June 30
13%
10.1%1
12%
11% 11.4%
9.5%1
10%
10.1%
9%
9.3%
9.1%
8%
8.1%
7.5%
7%
6%
5%
2016 2017 2018
Return on Common Equity - Total Company
Return on Common Equity - Gas Operations
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Dividend Growth
9.52% 5-Year CAGR
$ 2.50
2.00
$2.08
$1.98
$1.80
1.50
$1.62
$1.46
$1.32
1.00
0.50
-
2013 2014 2015 2016 2017 2018
CAGR = compound annual growth rate
▪ Maintain ~ payout ratio between 55% –65%
▪ Expect future dividends to increase at the earnings growth rate 9
Rate Base
Natural Gas Operations
$2 billion capex over
12% annual CAGR
next three years
> 70% of capex with Collaborative
immediate recovery regulation
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