Good morning and welcome to CenterPoint Energy's Third Quarter 2018 Earnings Conference Call with senior management. [Operator Instructions] I will now turn the call over to David Mordy, Director of Investor Relations. Mr. Mordy?

Thank you, Catherine. Good morning, everyone. Welcome to our third quarter 2018 earnings conference call. Scott Prochazka, President and CEO; and Bill Rogers, Executive Vice President and CFO, will discuss our third quarter 2018 results and provide highlights on other key areas including our pending merger with Vectren. Also with us this morning are several members of the management, who will be available during the Q&A portion of our call. In conjunction with our call, we will be using slides which can be found under the Investors section on our website, centerpointenergy.com. For a reconciliation of the non-GAAP measures used in providing earnings guidance in today’s call, please refer to our earnings news release and our slides. They've been posted on our website as has our Form 10-Q. Please note that we may announce material information using SEC filing, news releases, public conference calls, webcast, and post to the Investors section of our website. In the future, we will continue to use these channels to communicate important information and encourage you to review the information on our website. Today, management will discuss certain topics that will contain projections and forward-looking information that are based on management’s beliefs, assumptions, and information currently available to management. These forward-looking statements are subject to risks or uncertainties. Actual results could differ materially based upon factors including weather variations, regulatory actions, economic conditions and growth, commodity prices, changes in our service territories, and other risk factors noted in our SEC filings. We will also discuss our guidance for 2018. The guidance range considers utility operations performance to-date and certain significant variables that may impact earnings such as weather, regulatory and judicial proceedings, throughput, commodity prices, effective tax rates and non-merger financing activities. In providing this guidance, the company uses a non-GAAP measure of adjusted diluted earnings per share. It does not include other potential impacts such as changes in accounting standards or unusual items. Earnings or losses from the change in the value of the zero premium exchangeable subordinated notes were ZEN securities and the related stocks or the timing effects of mark-to-market accounting in a company's Energy Services business. The guidance range also considers such factors as Enable's most recent public forecast and effective tax rates. During today's call and in the accompanying slide, we’ll refer to public law number 115-97 initially introduced as the Tax Cuts and Jobs Act, as TCJA or simply tax reform. Before Scott begins, I would like to mention that this call is being recorded. Information on how to access the replay can be found on our website. I'd now like to turn the call over to Scott.

Thank you, David, and good morning, ladies and gentlemen. Thank you for joining us today and thank you for your interest in CenterPoint Energy. I will start on slide five with an update on the pending merger with Vectren as well as recent financing activity. In October, we participated in the Indiana Utility Regulatory Commission informal hearing and continue to target closing the pending merger with Vectren in the first quarter of 2019. Our integration planning teams are hard at work as they progress through the design phase. These teams now have targets in place that are in line with our anticipated $50 million to $100 million in pretax earnings from potential merger benefits by 2020. CenterPoint completed both the equity and fixed rate debt components of the merger financing in October. We believe that the strong results of the merger financing will help reduce the equity financing needed for our capital budget. Bill will provide additional color on the financing as well as drivers for our combined 2020 EPS potential. Turning to slide six, we are currently conducting our annual CenterPoint capital review processed and I want to provide a preview. We anticipate a 5% to 10% increase in capital investment for the 2019 to 2023 plan versus the 2018 to 2022 plan. We will provide further detail on our updated capital spending plan in our 2018 Form 10-K and on our fourth quarter earnings call. The increase expected is partially driven by the Freeport master plan project, but we anticipate that the updated plan will also include capital expenditure increases across each of our CenterPoint business segments. We will not be reviewing or updating the Vectren Capital Expenditure plan until after we are one company. Next, I will cover the quarterly results. Turning to Slide seven, this morning,…

Thank you, Scott. I will start with quarter-to-quarter operating income walks for Electric Transmission Distribution and Natural Gas Distribution segments. I will follow this with EPS drivers for utility operations, and our consolidated business on a guidance basis. My intent is to help investors understand the elements that give us confidence in achieving the high end of our 2018 EPS guidance range, excluding impacts associated with the pending merger with Vectren. We have adjusted our GAAP EPS asked for two items to determine guidance EPS. Those adjustments are mark-to-market impacts at our Energy Services business and the net of the mark-to-market assets and liabilities associated with our ZEN securities and related stocks. I will also exclude $15 million of pre-tax costs plus $5 million of Series A Preferred Stock, dividends, requirement associated with the pending merger with Vectren. As we noted in earlier quarters, the adoption of the Accounting Standard for compensation retirement benefits resulted in increased operating income for 2017, as it moves certain amounts below the operating income line. Beginning with Houston Electric's, operating income walk on Slide 13, revenue decreased $22 million as a result of tax reform. When reviewing net income, this revenue impact is offset by lower federal income tax expense. Rate relief translated into a $30 million favorable revenue variance for the quarter and customer growth provides another $9 million in positive revenue variance. O&M had an unfavorable variance of $38 million. O&M increased primarily as a result of increases in vegetation management, preventive maintenance, support services, labor and benefits costs, and third party claims. Much of this is timing related. This is in part influenced by the impact of Hurricane Harvey in the third quarter of 2017. We have been catching up on operating expenses that were deferred, as well as increasing our…

Thank you, Bill. We will now open the call to questions. In the interest of time, I will ask you to limit yourself to one question and a follow-up. Catherine?

At this time we will begin taking question. [Operator Instructions] Your first question comes from the line of Julien Dumoulin-Smith with Bank of America Merrill Lynch. Julien, your line is open. I do apologize. Your next question comes from the line – yes, Julien, your line is open.

Hey, sorry about that. We are having an issue here. This is [Indiscernible]. He is on mute at the moment. Can you hear me?

Yes. We can hear you.

Sorry about that guys. Had a little bit of IT on our side [Indiscernible]. Anyway, just wanted to follow-up here first on the CapEx question if you can. You talk about 5% to 10%. What is above and beyond some of the transmissions spending you all have talked about in terms of the initial plan here?

So, Julie it’s -- as you pointed out, the project we’ve already talked about, but it’s a review of capital expenditure or capital plans with respect to what I would consider more normal business around maintenance and infrastructure replacement and growth. Those are the major themes that will impact the other elements of our capital plan in addition to the Freeport Master Plan.

Got it. Excellent. And then, also wanted to follow-up a little bit here on the Enable side of the business, obviously, we’re seeing some reinvigorated investment opportunities here. Does that shifted all your longer term thinking about Enable? And certainly there’s been a variety of different elements including potentially greater cash flow contributions here?

And when you say reinvigorating, you’re talking about the opportunities that Enable is seeing?

Yes. It was the organic opportunities, the acquisitive opportunities and then ultimate how that translates back into cash flow, back into your pocket?

Look, I would characterize this. We are very pleased to see what Enable is doing. Their recent performance and how they are looking into a 2019 based on the performance of their core business as well as these growth opportunities. We -- as we mentioned earlier we have no need to sell any units over the coming 24-month period. That said, I think that if there were opportunities to opportunistically sell units down the road we may take those opportunities, but we are certainly very pleased to see that Enable is performing well and they are being presented with these growth opportunities.

Excellent. And then just one last quick clarification. You talked about a 1Q close. Would you expect to provide an update pro forma as soon as you close or are we’re going to holding out to like a fuller update with 4Q?

Well, we have to close before we really get access to the information and begin that process. So what we anticipate is there will be a reasonable period of time between close and when we have our fourth quarter call which will give us time to prepare what you described.

Your next question comes from the line of Michael Weinstein with Credit Suisse.

Hi. It’s actually [Indiscernible] for Michael.

Hello, good morning.

Hi. Yes, good morning. Thanks for taking the question. I just want to follow-up quickly on the Vectren merger. So for the integration exercise -- planning exercise that you've had, anything that would point to where you are in that range of 50 to 100, or are you in the position to share that at this point?

Yes. We’re not in the position to share other than say we’re really in the middle of what I’ll call the design phase, and given the target that we've established for the team are level of confidence in that range is perhaps is good or stronger than it was when we share that target earlier. So, what we’re doing is we’re seeing their work in line with what our expectations are. We’ll be in a much better position to describe in some greater detail what we think that looks like when we – after we’ve merger and we have a chance to share that with you.

That's great. So, quickly on that too. So what kind of business outlook for the VISCO VESCO at Vectren that you embed in your 2020 guidance on slide 21? And given their results in the third quarter how – maybe you have you have updated view on that business?

Yes. We have not updated our view other than to believe that what we were using. As we’ve initially described our earnings potential in 2020 is still very appropriate. They just had their earnings call and share their results. And their performance was good and their backlog is good. So we continue to be very optimistic and believe that -- what we had in our -- the basis on which we built our estimates for 2020 so far are still very accurate.

Your next question comes from the line of Abe Azar with Deutsche Bank.

Good morning.

Good morning.

Just following up on the 2020 range. Why is it still so wide given the execution of the financing and when my you updated it or narrow it?

Yes. We’ve obviously answered one of the variables on there. But we know as we’re going through capital planning and we’re thinking about other variables in there, we felt it is best to wait and do a single consolidated new view of 2020 after many of these other variables have been resolved. So you are right. We’ve taken one of the variables out, but there are other things that we want to be able to finalize before we revise or tighten that range.

Your next question comes from the line of Chris Turnure with JPMorgan.

Good morning, Scott and Bill. I have a question on the 2020 guidance slide as well. I think I heard your comments in your prepared remarks on some of the moving pieces within there and your answers to some of the previous questions, but could you maybe walk us through how you can maintain that range, how you can still have confident there despite that the higher equity layer embedded there versus your original estimate?

Chris, good morning, it's Bill. We shared with you on the slide and Scott shared with you in his remarks as well as mine, some of the impacts. You are correct and we’ve completed the equity financing [Indiscernible] and as we look forward to greater rate base investment. But we have yet to complete our capital planning and we have yet to complete our views of the synergies and commercial opportunities associated with the pending merger of Vectren which would be on the top line of that slide. And that's what will need to update and tighten the potential 2020 EPS guidance which will provide for you at our year-end call.

Your next question comes from the line of Ali Agha with SunTrust.

Thank you. Good morning.

Good morning, Ali.

Good morning. I had two unrelated questions. But first off, with regards to Enable, from your commentary and the fact that you don't need as you said any proceeds for the next couple of years, is it fair to assume that your overall strategic thinking on Enable may have changed as well to the sense that, you are no longer a bit push to necessarily exit that business, but over time maybe if the opportunity is there could do that? That's question number one. And question number two, could you also give us some – as you look longer term and as you’re updating your CapEx, can you just remind us how you’re thinking about the growth rate beyond 2020 as well? So two separate questions.

Ali, I’ll start with the latter question because I can answer that one fairly quick. We have not provided any guidance with respect to growth rate beyond 2020, because we get to the end of the year and we merge and we can go through a more integrated planning process, we’ll be in a position to determine when we’re better suited to provide thinking beyond 2020. So that that's the answer I would get to the second question. Your first question I think was about Enable. And in there, you mentioned as our strategic interest in Enable changed. I would say no, it is not. We continue to believe that our objective here is to have less exposure to the Midstream segment. By virtue of this merger we accomplished some of that. We have less percentage exposure to the Midstream segment. But we will continue to look for constructive opportunities to reduce our position over a longer period of time. We’ve said in the past that the considerations around monetization of that investment will be as market conditions allow and as we have the needs and the opportunity to redeploy that capital into other investments, and those are going to be the drivers for us.

Your next question comes from the line of Ashar Khan with Veriton.

Good morning. Can you just for a little bit of -- can just tell us exactly what assumptions have changed apart from the financing assumptions since the guidance was given for 2020?

So, at this point we haven't changed any of the assumptions relative to that. We just addressed or now know what the outcome of the financing is. We still have the Vectren forecast that we've been using all along. That's the information that we have. We do know that our forecast internally will change somewhat in part from the capital update that I described in my comments. So that would be a variable that would change.

Okay. So that is not being input into that analysis yet, right, so…

That is correct.

Okay, okay. Thank you so much. So kind of you.

You’re welcome.

Your next question comes from the line of Michael Lapides with Goldman Sachs.

Hi, guys. Just listening to a lot of the questions it seems as if there's not a lot of focus on what looks like to be a really fast growing utility you have known in Houston. So just curious, can you talk to us about your views for first power demands growth, meaning, how different now that your three quarters into the year? Do you think your weather normalized view is in Houston relative to what it was maybe at the beginning of the year or at the end of last year this time when you gave guidance? That's question one. Question two, what do you see and I don’t mean over the next couple of years with the big transmission project, but I’m trying to think longer term. What do you think the opportunity set is and the size and scale is for distribution investment in Houston relative to the historical last five-year run rate?

Michael, good morning, it’s Bill. I’ll start with demand and then Scott I think will pick up with CapEx and talk about that. So I would begin the comment that we have now worked through most of Harvey with respect to residential housing consideration and residential housing consideration is translating into meters has accelerated in the 12-month period, and it’s September 30th relative to the 12-month period ended June 30th. You’ll see, if you compare those figures, it was 1.5% for end of September 30th and 1.2% end of June 30th. So we are seeing meter count pick up again. We’ve had a normal weather year. We’ve had a modest decline, meaning less than 1% in use per customer in a normal weather year. And if you’ll look at our sales volumes, depending on the period that you want to use, it will be somewhere total increase of 2% to 4%. So industrial and large commercials load continues to be there. That all looks good in the service territory if you've been reading about various economic data and facts on Texas, we continue to add employment at a much faster rate relative to the nation. People are moving here for jobs and our unemployment rate in Texas and in Houston is close to the country as a whole.

Michael, I’ll just add because I think Bill gave a lot of the building blocks that would suggest what's driving capital investment opportunity, but we continue to see strong growth in residential and commercial and even in the industrial space. So much of the capital that we have planned in the Houston area is around growth, as well as investments will make around resiliency and around maintenance, that type of thing. So we, as Bill gave you many of the indicators, we did see a little bit of a slowing in the residential meter account. We believe it was because of two things; one was a slight overbuild in high-rise residential and that wave came to a completion about a year ago in the industry or the environment of the community here is now absorbing those units, and the impact that we had from Harvey, a year ago, and we’re seeing that start to tick back up. So you set those two things aside, all the other indicators suggest the area continues to grow at record pace and that's what drives a lot of our considerations about additional capital needs.

Got it. Thank you guys. Much appreciated.

Thank you, Michael.

Your next question is a follow-up question from the line of Abe Azar with Deutsche Bank.

Great. Thank you. Can you convert the increase in Enable's guidance between 2018 and 2019 into the CNP earnings view? And then, also the -- you exclude the VVC deal close and the dividends, but do you make a change for the shares issued or is that a little bit of dilution this year?

Abe. I'll have Bill answer that question. I think he's got the numbers in front of him.

Abe, Enable announced yesterday, their net income estimate of $435 million to $505 million for 2019. That would translate to us $0.42 to $0.48 per share on a share count of $504 million. And that would be before the interest expense burden at CenterPoint Energy Midstream, but would also include $49 million of basis different secretion.

And what was the second part of your question, if you’re still there.

I am here. You excluded the cost around the impacts of the merger this year. Did you also take out the dilution in your numbers or is that still in from the…?

End of 2018 yes, we’re taking out that dilution as well as other costs of capital.

Got it. Thank you.

Thank you, ladies and gentlemen. I’d like now to turn the call back over to David Mordy for any closing comments.

Thank you everyone for your interest in CenterPoint Energy today. This will conclude our third quarter 2018 earnings call. We look forward to seeing many of you at EEI. Have a great day.

This concludes CenterPoint Energy’s third quarter 2018 earnings conference call. Thank you for your participation.