Good day, ladies and gentlemen, and welcome to the 2012 year-end earnings conference call. My name is Chanel, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Ken Kenny, VP, Finance and Treasurer. Please proceed.

Thank you, Chanel. Welcome to the Southwest Gas Corporation 2012 Earnings Conference Call. As Chanel mentioned, my name is Ken Kenny, and I am Vice President of Finance and Treasurer. Our conference call is being broadcast live over the Internet. For those of you who would like to access the webcast, please visit our website at www.swgas.com and click on the conference call link. We will have slides on the Internet, which can be accessed to follow our presentation. Today, we have Mr. Jeffrey W. Shaw, Southwest's President and Chief Executive Officer; Mr. Roy R. Centrella, Senior Vice President and Chief Financial Officer; and Mr. John P. Hester, Senior Vice President, Regulatory Affairs and Energy Resources; and other members of senior management to provide a brief overview of 2012 earnings and an outlook for 2013. Our general practice is not to provide earnings projections. Therefore, no attempt will be made to project the earnings for 2013. Rather, the company will address those factors that may impact this coming year's earnings. Further, our lawyers have asked me to remind you that some of the information that will be discussed contains forward-looking statements. These statements are based on management assumptions, which may or may not come true, and you should refer to the language in the press release, our SEC filings and also Slide #2 presented today for a description of the factors that may cause actual results to differ from our forward-looking statements. All forward-looking statements are made as of today. We assume no obligation to update any such statement. With that said, I'd like to turn the time over to Jeff.

Thank you, Ken. We thank you for joining us today on the call and spending a few minutes with us as we discuss the year 2012 and speak a little bit to what our expectations are for the future. I'm on -- we'll go -- move to Slide 3. We're pleased to report for 2012 that earnings reached a record level. Our stock price is trading today, as last time I looked, about $45 a share. Our financial position, our credit ratings have continued to improve. And earlier this week, the board increased the dividend on our common shares by nearly 12% from $1.18 to $1.32 on an annualized basis, the seventh consecutive year of dividend growth. With respect to highlights in Slide 3, what I wanted to talk about, first of all, is our earnings reached $2.89 per share, again, the seventh consecutive year that we've increased our dividend. We have experienced now full decoupled rate designs in all of our jurisdictions as of the full year 2012. Nevada, we have new rate release in Nevada. Some portions of that rate case continue, and we will speak to that in just a few moments. This has -- this was the second highest year of earnings for our Construction Services company, and we will speak to NPL as part of this call today as well. And we did have, and it's part of NPL, an improvement in the contract loss that we spoke of at the midyear conference call and have disclosed in our public filings. We did see some improvement in that contract in the fourth quarter, and we will speak to that. Now for the call outline on Slide 4, we'd like to address 2012 consolidated earnings. Roy Centrella, our Chief Financial Officer, will speak to that, as he will, NPL Construction Co., and what has been going on in that company over the last year. We will speak to Natural Gas Operations. Regulatory proceedings will be addressed by John Hester, who runs our pricing and energy services area. I will then come back and speak to customer growth, what we are seeing, what we expect, and talk -- I will speak to construction expenditures. And we will speak to -- I will speak to dividends and then deliver some expectations for 2013 and going forward. So with that, what I'd like to do then is move to Slide 5 and turn sometime over to Roy Centrella, our Chief Financial Officer, to address this portion of the presentation.

Thank you, Jeff, and let me also welcome those of you joining us today. I plan to provide a summary of 2012 operating results, recap the primary factors impacting the change from 2011 and review some financing-related activities. And I'll also comment on some expectations around 2013. So let's move to the slides. As Jeff mentioned, we're on Slide 5, consolidated net income increased from $112 million in 2011 to $133 million in 2012. As a result, basic earnings per share increased from $2.45 to $2.89. The earnings improvement was driven by strong performance in the Natural Gas segment, while NPL, our wholly owned construction subsidiary, declined from last year's record contribution but still posted their second best year. Most of today's discussion is going to focus on the Gas segment of the business, so let me first spend a few minutes on NPL. Slide 6, NPL highlights for the year included a 25% improvement in operating revenues, $8 million in gains on equipment sales and an improvement in the fixed-price contract loss during the fourth quarter. Additionally, good progress was made towards the structural changes necessary for NPL operations given their increased size. On Slide 7, NPL revenue totaled $606 million in 2012, up from $484 million during 2011. The revenue increase resulted mainly from additional pipe replacement work, as many of their existing customers have embarked on significant multi-year infrastructure replacement programs. In fact, about 75% of the 2012 revenue was derived from pipe replacement activity, which is similar to the percentage that was achieved in 2011. Despite the revenue increase, operating income declined from $35 million in 2011 to $27 million in 2012. The primary cause of the decline was a $15 million loss on a large pipe fixed-price contract, which I'll discuss next, partially offset by…

Thanks, Roy. Turning to Slide 17 for the regulatory portion of today's call, I'd like to provide an update on a few key ongoing matters before our state commissions: first, in Nevada, an update on our continuing rate case proceeding; second, in California, a report on our 2013 attrition revenue change and our pending 2014 rate case; next, a summary of the company's activities related to infrastructure recovery mechanism; and finally, a brief update on our purchased gas balances. Moving to Slide 18, a final decision on our Nevada rate case remains to be issued by the Public Utilities Commission of Nevada. Recall that when Southwest's original application was filed in April of last year and the Commission issued its original decision in that proceeding with new rates effective this past November, the original decision provided a $7 million revenue increase, which results in an $11.4 million operating income increase after accounting for depreciation and tax changes. Southwest also requested establishment of an infrastructure recovery mechanism in its original application. But the Commission decided that the mechanism request should be addressed in a separate expedited rule-making, which I'll talk about in a few minutes. Continuing with the Nevada rate case on Slide 19, Southwest objected to the capital structure that was included in the Commission's original decision by filing a petition for reconsideration shortly after the order was issued. Specifically, Southwest was troubled by the fact that the order adopted a capital structure that was materially different from the company's recommendation. Southwest's recommendation was supported by both Commission Staff and the Consumer Advocate at the initial hearing. Southwest also requested reconsideration of a variety of disallowed costs in the original order. In addition to Southwest filing, the Commission Staff filed a petition for rehearing as a result of questions it…

Thank you, John. Next, on Slide 26, I'd like to speak to customer growth just for a couple of moments. For the 12 months ended -- you'll see for 2010, '11 and '12, customer growth has hovered around 1%, sometimes slightly above, sometimes slightly below. What we have seen is that we're no longer eroding by having customers turn off, but rather, in fact, we have seen years such as 2011, where we had customers -- the customer homes that were vacant had been turned back on. And that's the $9,000 -- or 9,000 number that you see there in the 2011 column. We didn't see that phenomenon in 2012. It could've possibly been because the weather was somewhat warm in December, and maybe some customers that would've turned on didn't need to turn on their gas service yet. So we're not quite -- we're not concerned about this. The good news is you didn't see any erosion. We added 17,000 customers, new meter sets and that customers in 2012. That's kind of what we expect. We don't see any great huge growth numbers, kind of a similar trajectory probably on a going -forward basis. Total excess inactive meters as of December 31, we approximated about 37,000. Slide 27, you can see the economic overview here in terms of the unemployment rate. Nevada still remained -- has the dubious honor of having the higher of the unemployment rates, still hovering just below 12% -- in 11% to 12% range. It's -- there's nothing fundamentally that suggests to us that, that's going to ramp up -- or ramp down, I guess, I should say, depending on your perspective. But you can see, I think, a positive trend, generally speaking, in our company there. It's going to be -- we believe it…

Thanks, Jeff. Just a reminder, in our deck of slides, we also have an appendix with additional slides on there. We won't discuss those today, but I would recommend that you -- when you have a chance to take a look at those, as there's a lot of pertinent information in those slides as well. With that, that concludes our prepared presentation. Our operator, Chanel, will now explain the process of asking questions.

[Operator Instructions] Our first question comes from the line of Dan Fidell, U.S. Capital Advisors.

Just a couple of questions on my side. I guess, first, can you give us, Jeff, maybe a little more color on the inactive meter set returns kind of low-hanging fruit, 37,000 customers or so by your estimate. I thought that was pretty much tied to foreclosed homes being reoccupied. Is that right? And I guess, secondarily, if you can just remind us again in your prepared remarks what your thoughts are for 2013.

Sure. It -- we expected at the end of the year to probably see a similar trend that we saw in 2011, where you actually had more meters coming on than you had first-time meter sets. We didn't see that occur. And so we've looked at it and said why? Our impression is that because the weather was warm in the fourth quarter, that we didn't -- in the desert in particular, people to have a tendency to wait to turn on until they don't have -- until they absolutely have to or maybe they don't come -- the snowbirds don't come as early. So it can have an impact on when customers hook up, and it kind of straddles that year-end. We did see some more people hook up than maybe normal would occur in the January timeframe. So you might've seen a similar trend in 2012 as you did in 2011. Roy, do you have anything to add on that?

Yes, let's say, Dan, all throughout the year, we were building on average 20,000, 21,000 customers more per month than what we did in the prior year. It wasn't until December that you had this phenomenon. I think, as Jeff has hit it right on, that it was fairly warm through most of December. And then we got a really cold spell in early January, and we saw our customer count picked up. So it's probably like a one-month lag in there in terms of what we saw in December, that came in, in January instead. I would have put the customer count for the year more at 20,000, 21,000 as being more representative of the kind of growth level we had.

And Dan, I would follow up to just kind of complete your question. I think from a 2013 standpoint, probably something similar. I don't -- I think you're going to see that 37,000 inactive number gradually trickle downward. I don't see a significant change in 1 year. We are seeing growth, which is positive. We're seeing homes being built, which is positive. But from someone that's been at the company for 25 years, and many around this table the same or near that or longer, we saw our growth rates, as you'd recall, somewhere 5% to 6% one time. I'm not sure in my career we'll see that again, I don't know. I mean, it -- but it's -- I think it's -- at least the trends are suggesting that, that won't be anytime soon.

And then maybe just another question, switching topics to the just kind of a long-term outlook for construction growth. You're guiding to kind of flat year-over-year on revenue growth, but are you still viewing the long-term fundamental dynamics pretty favorable for beyond that year-over-year revenue growth?

You're talking about NPL, correct?

Correct.

Yes, I think NPL is very well poised to take advantage of growth. And I think that growth opportunity exists for a number of years. And the reason is many companies have announced long-term pipeline replacement projects. And we have offices coast to coast. When I say we, NPL. I think with the restructuring that we've done, part of that includes a new senior marketing level-type person, the corporate development-type person, for that entity. We split the country -- excuse me, the company into 2 regions from an operating standpoint, so we no more have just 1 officer over the whole operations of the company. Now we have 2. There are more contacts being made with these companies. And I think the infrastructure that we've got in place now provides us the opportunity, we think, to go out and make sure that we're at the table, bidding on the work that we want to bid on throughout the country. That being said, I think you want to grow smart, and you want to make sure that the business that you take on, that you have the opportunity to be profitable. And so I think that we are well situated to continue to grow. I would expect us to hopefully recover to something similar to what we had in 2011 in the year 2013. And beyond that, I would still stand by my 5% to 8% growth rate that we want to try to achieve over time, over the next, let's say, 3 to 5 years.

That's great. And the last question for you, John, just quickly. Jeff, you've mentioned kind of the CapEx guide, $320 million to $360 million. Kind of higher end of that is the Nevada trackers approved. I guess, John, any kind of comment you could give us in terms of just confidence level on approval of the tracker in Nevada, things seem to be going in the right direction?

Yes, Dan, I think they are going in the right direction. There've been some discussions among the parties about exactly how the rate-making mechanism works. Do you put a rate in place prospectively, while you're actually making the investments, or do you put a rate in after you have 1 year of experience and recover those types of costs. But I think that it's a pretty positive discussion with the Commission Staff. The Consumer Advocate isn't quite as supportive of this. But I think directionally, the Commission itself will be supportive of it as well because if they weren't, they didn't really have to create an additional expedited docket to address this outside the rate case. They could've just said, "It's part of the rate case. We don't think this is a good idea." So I think there's a pretty good cause for optimism.

[Operator Instructions] And there are no questions at this time. I'd now like to turn the call back over to management for closing remarks.

Thank you, Chanel. This concludes our conference call, and we appreciate your participation and interest in Southwest Gas Corporation. Hope everyone have a great day and a wonderful weekend.

Ladies and gentlemen, that concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day.