Good day, ladies and gentlemen, and welcome to the Southwest Gas Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Mr. Ken Kenny, Vice President of Finance and Treasurer. Sir, you may begin.

Thank you, Kelly. Welcome to the Southwest Gas Corporation’s 2016 third quarter conference call. As Kelly stated, my name is Ken Kenny, and I’m 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 website at www.swgas.com, and click on the conference call link. We 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; 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 September 30, 2016 and an outlook for the remainder of 2016. Our general practice is not to provide earnings projections. Therefore, no attempt will be made to project earnings for 2016. 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 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, 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. Turning to Slide 3, to start off today’s call, I’d like to touch on some recent highlights for this year; first, from a consolidated results perspective, we have slightly refined our full year projections and they're substantially in line with our previously communicated expectations for 2016. In addition, our effort to move towards a holding company structure is on track and expected to be implemented effective January 2017. Looking at the natural gas segment in particular, we added 29,000 net new customers over the last 12 months. These additions are in line with our previously expressed expectations for 1.5% customer growth. We also saw the Public Utilities Commission of Nevada approved $57.3 million of accelerated pipe replacement work. The work is expected to be completed under our gas infrastructure replacement mechanism next year. In addition, on the heels of completing a $35 million expansion earlier this year, our federally regulated Paiute Pipeline subsidiary has announced a new $17 million expansion, that’s expected to be completed by the end of 2018. Also, recent highlights at our construction services subsidiary Centuri included a record quarterly net income contribution of $14.9 million. We’ve also refined our projection for 2016 construction segment year-end revenue to $1.1 billion. Moving to Slide number 4, our outline for today’s call will include an overview of consolidated earnings along with utility and construction segment detail by Roy Centrella, Justin Brown will provide a review of Southwest current regulatory initiatives including our pending Arizona rate case proceeding and our holding company restructuring. And I will close with an update on customer growth, capital expenditures and our outlook for year end results. With that, I will turn the call over to Roy.

Thank you, John. Welcome to those of you joining us today. I’ll provide a comparative summary of third quarter and rolling 12 months operating results for both operating segments and identify the factors which we expect to impact full year 2016 results. Starting with Slide 5, during the third quarter 2016, we reported net income of $0.05 per share versus a net loss of $0.10 per share during the third quarter of 2015. Small profit levels or losses are common in the third quarter, which is typically the lowest for the gas segment and the best for the construction services segment. The gas segment experienced the loss of $12.4 million in the quarter and improvements from last year’s third quarter loss of $18.9 million. Income related to company-owned life insurance or COLI policies was a principle factor effecting the net change. Centuri experienced record quarterly net income of 14.9 million versus $14.2 million previously. For the 12 months period, we earned $153 million or $3.22 per basic share. Notable increase from the $2.80 per share earned during the prior period. Next, we’ll look at results by segment starting with the gas operation segment on Slide 6. The gas segment operating loss during the quarter increased slightly to $10.2 million this year from $9.3 million last year. Operating margin grew by $6 million, but was offset by higher operating expenses particularly depreciation and amortization. Other income improved from the loss of $3.5 million last year to income of 2.5 million this year with returns associated with COLI responsible for the entirety of the change. Slide 7 provides a summary of operating margin growth of $6 million between quarters. We experienced small increases from customer growth, rate release, infrastructure tracker mechanisms and recovery conservation surcharges. Moving to Slide 8, you’ll see that…

Thanks, Roy. Slide 17 highlights four areas that will be the focus of my comments today starting with an update on our Arizona rate case, then progress on our infrastructure replacement program specifically our Arizona COYL program and our Nevada GIR mechanisms as well as an update on our LNG project, and an overview of a new Paiute expansion project as John mentioned previously. Lastly, I will briefly touch on the status of our holding company reorganization. Turning to Slide 18, as we’ve discussed previously our Arizona rate case application was filed on May 2nd, you may recall this filing mark the end of our 5-year rate case moratorium that was agreed to as part of our last general rate case settlement. Our rate application consists of several key components, first to request update rates to reflect our current level revenues and operating expenses, and capture the various capital investments that have been made since our last generation rate case. This request results in a proposed increase and annual revenues of $32 million. The $32 million increase is based upon a proposed rate base of 1.3 billion, which is a 25% increase over our currently authorized rate base of 1.07 billion. We are also proposing to increase our authorized cost of common equity capital from the currently authorized 9.5% to 10.25% relative to a capital structure consisting of approximately 52% equity. The increase in revenues is net of the corresponding proposed decrease in depreciation expenses of $42 million. When you combine the proposed increase in revenues with the proposed decrease in depreciation expense, the rate filings seeks total requested increase in operating income of $74 million. In addition to requesting to update rates to reflect our current cost of service, we’re also proposing several key regulatory initiatives. First, we’re proposing…

Thanks, Justin. Turning to Slide 24, as I mentioned at the outset of the call, Southwest Gas added 29,000 new customers in the past 12 months which represents a growth rate of approximately 1.5%. The additional customers came primarily from new meter sets with the slow increment coming from net existing meter turn-outs. Our customer found across our three state service territories now totaled just under 2 million customers. On Slide 25, we present data illustrating the improving economic conditions in our various operating jurisdictions. Unemployment rates are generally down year-on-year, and we continue to observe new job creation. Turning to Slide 26, three-year estimate of capital expenditures for years 2016 to 2018 in our natural gas segment continue to range from between $1.4 and $1.6 billion. Our 2016 capital expenditures are now estimated at $470 million by year end up only slightly from our prior estimate of $460 million. The accompanying pie chart shows the breakdown of those investments amongst several categories including an increased portion that is covered under infrastructure replacement mechanisms. Moving to Slide 27, our continuing capital investments to ensure a safe and reliable distribution system for our customers as resulting in our net utility plants growing, over the past four years, this metric grew at a compounded annual growth rate of 5.9%. Now turning to Slide 28 and our outlook for 2016. In the natural gas side, we anticipate margin growth of 3%. This amount includes some additional $11 million of Nevada conservation program cost recovery, which has an accompanying similar amortization expense. We expect a modest increase in O&M expense which reflects higher, general and incremental costs are partially offset by a pension cost decrease. Depreciation and general taxes are expected to increase consistent with gas plant growth of 5% to 6% along with…

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

[Operator Instructions] Our first question comes from the line of Matthew Tucker with KeyBanc. Your line is now open.

I guess I'll just start by addressing the elephant in room that's probably on everyone’s mind today. I’m not sure how much the election outcome really affects things for you guys, one way or another, but I guess one thing I was thinking of is, it has clearly been a lot of regulatory scrutiny or emphasis on pipeline integrity in that’s been a driver in particular at Centuri and also some extend at your utility. Do you see any, I don’t know if risk is the right word, but I guess risk of the regulatory emphasis being changed on that side of things under the Trump administration.

Hi, Matt, this is John. I don't think so. I think that the safety focus that has been a priority for companies over the past couple of years has been certainly a focus of federal levels, that has also been a focus of the state level; and I would anticipate that, that focus on continuing to operate safe and reliable distribution system and to be pretty aggressive for distributors to replace ageing infrastructure will continue. I think, actually, that’s one of things that stayed up late last night and listen to the acceptance speech of Mr. Trump, he mentioned infrastructure for the country. So, I don’t think that there will be any negative impacts of the elections results.

Got it. I think that makes sense. I mean, I guess, he's also talked about removing some regulations for the oil and gas industry. Probably didn’t mean for gas utility pipeline safety to your point, I guess just more specifically, are there any regulations that may be aiming more at the upstream oil and gas industry that has been also a driver for utility pipeline integrity?

Matt, this is John, again. I think that when I look at that, I look at that as probably directionally, and this is a personal opinion, probably just continuing to allow the development of domestically produced energy into the extent that we have continued abundant supplies at reasonable prices for our customers. Again, I think that’s going to be directionally positive for our business.

Thanks and I think that makes sense too. And then I guess just wanted to follow up on the comment about the mix of work as Centuri affecting the margins in the quarter. Any more color you can provide on what’s going on there and is that something you expect to continue. I know you’ve brought the full year margin guidance down, but I wasn’t sure if that was just kind of reflecting what you’ve seen year-to-date or you see this mix continuing to trend the same way going forward?

Hi, Matt, this is Roy. When we talk about mix of work, you can view that a number of things that go into that like on our blanket contracts for instance, dependent on and in particular quarter you may have lot of let’s say, service replacement work, which tends to be scattered more. And your proper margins are going to be little lower and those kind of jobs, as opposed to say, a main replacement where you have a longer run of work. And so, there is that kind of thing, and then in terms of bid jobs, when we’re bidding on work sometimes you have very good conditions that you’re working in, weather cooperates. And you're not in tight quarter quarters and things like that. And so, you end up with some good profit margins. The last year, we just had some jobs that kind of fell in the sweet spot. This year, we had good profitability, obviously good work, but perhaps just a little bit more of the scattered service-type network. So, we don’t see there being any issue relative to our profitability trend, just a quarter-over-quarter kind of anomaly in the nature of the work.

Got it. Thanks, Roy. And then, last question for me, on the LNG project, I guess could you just discuss little bit more the potential, the outcomes there and what you would do? I assume, if the increased $30 million is approved, you move forward. But, if that isn’t, what you do then? Is there a potential outcome that’s kind of compromised there?

Matt, this is Justin. I think that's why we made the filing was in light of kind of the process from where we have the original conceptual design and kind of the cost estimates to the three years later where we actually have the current market price in associated with utility. Why we wanted to make the filing to make sure that, we’re on the same page with the regulator because again one of the permits for that facility was. It’s a way to incrementally enhance the service reliability for that Southern part of our service territory in Arizona. And we just want to make sure that the regulators still on board with that. The only difference really and what we originally proposed now is just the price. All the benefits remained in the same. The bill impacts relatively the same as well. And so, we don’t anticipate given the back that everything is pretty much the same, other than the ultimate cost of the facility is different that there should be too much issue with it.

I guess just a follow-up for that. So it sounds like this shouldn’t come as a huge surprise that the commission because that 50 million always presented as kind of estimate and it was expected that you'd come back with a formal price, once you have more information, is that fair?

Yes and we've had ongoing discussions with them through the process. So, again it’s, we try to work very collaboratively with our regulators. And it’s something, we’ve had ongoing discussions with and we’re making them aware of things as the information became available to us as well.

Thank you. And I’m showing no further questions at this time. I’d like to turn the call back to Mr. Kenny for closing remarks.

Thank you, Kelly. This concludes our conference call, and we appreciate your participation and interest in Southwest Gas Corporation. Thank you and have a great day.

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude the program. You may all disconnect. Everyone have a wonderful day.