Good day, ladies and gentlemen, and welcome to the Southwest Gas 2015 First Quarter Earnings Conference Call. My name is Alex, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of this conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Ken Kenny, Vice President of Finance and Treasurer. Please proceed sir.

Thank you, Alex. Welcome to Southwest Gas Corporation 2015 First Quarter Earnings Conference Call. As Alex stated, my name is Ken Kenny, and I am Vice President, 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 Web site 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. John P. Hester Southwest President and Chief Executive Officer Mr. Roy R. Centrella, Senior Vice President and Chief Financial Officer; and Mr. Justin L. Brown Vice President Regulation and Public Affairs and other members of senior management to provide a brief overview of the Company's operations and earnings ended March 2015 and full year outlook for 2015. Our general practice is not to provide earnings projections. Therefore, no attempt will be made to project earnings for 2015. 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's assumptions, which may or may not come true, and you should refer to the language on Slide 2 in the press release and also our SEC filings for description of the factors that may cause actual results to differ from our forward-looking statements. All forward-looking statements are made as of today, and we assume no obligation to update any such statement. With that said, I'd like to turn the time over to John.

Thanks Ken. Moving to Slide Number 3 we are pleased to report the consolidated net income for the quarter total approximately $72 million, an increase from that same quarter last year. For our natural gas operations we saw the operating margin for the quarter increase by $4 million to just over $299 million. Our growth in operating margin is partially attributable to our growing customer base, Southwest added 26,000 customers in the past year moving forward we will continue to invest capital to increase safety and liability of our system and look to deploy an increased percentage of that capital in conjunction with regulatory recovery mechanisms. On the construction services side of our business our integration efforts to bring Link-Line into the Centuri Construction Group continue on pace. From a financial perspective overall the construction services group lost $6.9 million in the first quarter while it is not uncommon to see a first quarter loss in this segment of the business year-on-year the loss was greater due impart to a pre-tax loss reserve Southwest made to reflect the lays experienced in a Canadian industrial construction project as is often the case was for such projects change order request for additional revenue have been submitted for the project. We believe the change order request will narrow or reverse the current quarter loss and we will be able to report on the net final result of the project in a future quarter that said we remain very enthusiastic about the construction services business and believe it is on track to contribute over $950 million of revenue this year. Turning to Slide Number 4 for the balance of today's call Roy Centrella will further review first quarter consolidated earnings along with additional detail for the natural gas and constructions services group. After that Justin Brown will report on our regulatory activities and I'll conclude with an overview on our capital expenditures as well as our outlook for 2015. With that I will turn the call over to Roy.

Thank you John, I will spend a few minutes reviewing our first quarter and rolling 12 month operating results starting on Slide 5. This slide provides a summary by segment of operating results for the three and 12 month periods and in March 2015 and 2014. Net income for the first quarter improved modestly between periods from $71 million to $72 million while basic earnings per share increased $1.51 to $1.54 and improvement in operating results of the gas segment was largely offset by lower results at the construction services segment. For the 12 month period consolidated net income increased from $135 million to $142 million and basic earnings per share increased from $2.99 to $2.06 with operating segment experiencing improvement. Let's now go through each segment beginning with gas operations on slide 6. Net income was $78.9 million during the first quarter of 2015 versus 72.6 million during last year's first quarter. This improvement was driven by growth in operating margin with $4 million coupled with $3 million net reduction in total operating expenses additionally both other income and that is interest deduction have modest favorable variances between period. Slide 7 breakdowns to change in operating margin between the quarters. The primary cause of the increase is 3 million of incremental margin from the position of 26,000 net new customers since March 2014. This equates to 1.4% customer growth rate we also receive rate relief in our California and Paiute rate jurisdictions. Slide 9 O&M expenses decreased nearly 7% between periods driven mainly by lower legal cost recall that in 2014 we had a $5 million legal accrual there is no similar accrual in 2015. Depreciation expense in property taxes both increase between periods as a result of construction expenditures. Although we are off to a great start we…

Thanks Roy, turning to Slide 15 we have an update on several regulatory activities. First you may recall that we’re on a five year rate cycle in California and as part of our most recent California general rate case we were authorized annual post test year attrition margin increases of 2.75% per year for calendar 2015 through 2018. We made a filing in November of last year requesting a $2.5 million margin increase for 2015. The request was approved by the California commission in December 2014 and new rates become effective at the beginning of this year. One of our key regulatory initiatives has been established infrastructure replacement mechanism in each of our jurisdiction in order to facilitate replacement of qualifying facilities to enhance safety, service and reliability to our customers. In Nevada the public utilities commission approved regulations in January 2014 that authorized Southwest gas to make annual filings was indentified qualifying project that would replaced in the following year. In 2014 the commission approved $14.4 million of early vintage plastic pipe replacement to be performed during calendar year 2015. We look forward to making another filing pursuant to the Nevada regulations within the next month where we will identify qualifying projects for replacement in 2016. The regulations is also authorizes to make a spate annual filing to implement a surcharge to recovery the revenue requirement associated with previously approved projects. You may recall in the fall of 2014 we submitted a gas infrastructure rate applications and we’re authorized the institute of surcharges effective January of this year to collect $2.2 million annually. Similar to last year we plan to make a proposal for an updated recovery surcharge later this year. In Arizona we continue to make progress with our customer-owned yard-line or COYL program. The program was approved…

Thanks Justin. Now turning to Slide 16 we will continue to look for ways to improve the safety and reliability of our natural gas distribution system. For 2015 we expect to make capital expenditures and support of that effort totaling $445 million. In the coming three year period those same capital expenditures are expected to total $1.3 billion. The pie chart on Page 16 shows a breakdown of that capital investment among several categories. Note worthy is the $23 million portion that is associated with the pipe of regulatory tracking mechanism that Justin just described. We expect that portion to grow over the time. We think the tracking mechanism offer a great partnership between regulators, customers, investors and so far as they facilitate the cost recovery of investments made in safety and reliability without acquiring the lumpy increase this in rates that may come as part of traditional rate case filings. Moving to Slide 17 looking forward for the rest of the -- this on our construction services group we will continue our ongoing integration efforts to bring the Link line group of companies into the Centuri Construction Group. We continue to believe that 2015 revenues will range between $950 million and $1 billion with operating income approximating 6% of revenues. Net interest productions are expected to be $6.5 million and $7.5 million. Our expectations are before considering a 3.4% non-controlling interest retailed by Link lines previous owners. Also please keep in mind that results can be influenced by both foreign exchange rates and interest rate. Turning to slide 18 on the natural gas side of the house we expect net customer growth in 2015 to approximate 1.5% 2015 operating margin is expected to increase by 2%. As we have previously indicated operating cost increases should track our growth rate cost inflation which we believe will be in the 3% to 4% range. Our operating cost increase assumption includes a net pension expense increase of $ 8 million as a result of our actuary's updated mortality tables. As for net interest reductions we believe 2015 figures will be equal to a lesser than 2014 results. 2015 COLI returns are expected to fall in the $3 million to $5 million range. And again our 2015 capital expenditures for the year should total about $445 million. With that I will return the call back to Ken.

Thanks, John. That concludes our prepared presentation. For those of you who have accessed our slides, we have also provided an appendix to the slides, which includes other pertinent information about Southwest Gas and can be reviewed at your convenience. Our operator, Alex, will now explain the process for asking questions. Alex?

[Operator Instruction] Your first question comes from the line of Matt Tucker with KeyBanc Capital Markets. Please proceed.

I just wanted to ask a little bit more about this project loss in Canada and the change orders you're expecting to get. Do you anticipate getting the change orders this year? And would the cost -- or would the recovery be coming from your customer or from a third-party contractor that is responsible for those delays?

Yes we're actively those change orders right now that we've submitted several. So we do expect that to play out over the next perhaps led into the third quarter. But certainly clearly our anticipation is ramp up this year and we were sub contractor on this job. So we're negotiating with the primary contractor.

And it looks like your operating-income margin guidance for the year is consistent with what you provided on the fourth-quarter call. Was this project loss already reflected in that, or does the intact guidance suggest that you're assuming that you get those change orders this year?

No we did not anticipate this occurred was a very short duration project occurred at and we're starting project after the forecast is made. But it does reflect our confidence I guess going forward.

And how confident are you that there are no similar projects at Link-Line that could see similar types of issues?

This was first of all wasn’t a Link line project and Link line group of companies. The Link Line itself has pipeline replacement where much like NPL this was at some of the other subsidiaries that tend the fabrication work. So they tend to do work on a project basis and we don’t have another project like this in the wings that said Nickels company does do mostly project oriented work and so that add some level or risk or have release a different risk profile than they link line in NPL types of projects.

And this project aside, can you just comment on how the performance of the Link-Line group of companies has compared to your expectations over these past two quarters?

At this point two quarters in they are meeting our expectations. Certainly the work we had anticipated with Enbridge and Union gas was a bit of two primary customer and coming to fruition. And we're receiving the kinds of margins that we were expect and so we very confident and very positive about what's going to happen over the remaining nine months of year.

And just one last one, on your expectations for operating expenses -- the natural gas operations to increase 3% to 4% year over year. It looks like you're down almost 2% in the first quarter. So was that in line with your expectations, or would it be fair to say that you are tracking towards the low end of the expected increase in costs?

We had anticipated the first quarter one of the better ones because of last year having that legal accrual in there yes that was a $5 million not – we're hoping we wouldn’t have anything similar this year and that did not. So we did sort of expected the first quarter to be favorable I think at this point we are doing maybe even a little better than we've expected been it as early as it is in the year it's kind of hard to tell which are those year or how much of that is timing and how much is there to savings. I will definitely have a clearer picture after the second quarter.

Your next question comes from the line of Chris Sighinolfi with Jefferies. Please proceed.

Roy, I was curious on the balance sheet side of things, kind of really the science inside understanding that we're getting ready for the rating filing. But I saw the equity distribution rate that was put in place earlier in the year, a little bit shy of $10 million raised in the first quarter. Just wondering if you had any guidance for us how to think about the magnitude of what might be raised this year or sort of a target if we were to think about the balance sheet for the equity component as we come into the rate filing?

Yes program is a$100 million equity shelf program has a three year life. We expect and may not be issued rabidly over the three year you might see it little bit more on the front end that first year as we look to make sure our capital is strong as possible heading into the rate case. Ken you want to add something.

The whole idea of putting that 200 million out there on the equity show, it is a tool for the financial departments tool box and essences we want to maintain our cash structure that gives us strong credit rating. Those strong credit ratings as you eluted to does certainly help in the situation of the regulatory environment which is that what they look for. But also it also in company and ultimately the shareholders as well and so that really the compliment of this program it's not drove return of shares out on the market. And undercut the existing shareholders but more so, again as a tool to manage the process.

If, as it pertains -- staying with the next AG rate case for a moment -- I apologize if it's ignorance, but were you -- just remind me, if that case were to go settlement track as opposed to litigation track, is it possible to have rates effective in any part of 2015? Or is the prior settlement that was entered into -- does that delay any implementation till May of 2017?

The last settlement agreement we entered into actually specifically provide that rates will not go in sooner than May 1 of 2017. But notwithstanding I would say that there are procedural things that occur if the parties negotiate to have rates going sooner and out of process whereby you would go back and open up the prior case to make modification it's not a possibility but the existing agreement does provides for May 1, 2017 day.

Okay, understood. So it's established in the last case but not necessarily set in stone if all parties were in agreement?

Correct.

And then this is somewhat of an unnecessary question, but just wondering -- we are reading so much in the East about California drought conditions. I'm just wondering if that had any -- or is likely to have any impact on your service territory out there or anything within your plan for those northern and southern California jurisdictions.

I don’t think that the type of water rationing and restrictions that they're talking about being in place from California I don’t really think that is going to impact our revenues or our expected profitability from those jurisdictions.

[Operator Instructions] There no additional questions in queue at this time.

Thank you, Alex. This concludes our conference call, and we appreciate your participation and interest in Southwest Gas Corporation. Thank you.