Welcome to Southwest Gas Holdings Fourth Quarter and Year End 2023 Earnings Conference Call. Today's call is being recorded and our webcast is live. A replay will be available later today and for the next 12 months on the Southwest Gas Holdings website. I will now turn the call over to Justin Forsberg, Vice President of Investor Relations of Southwest Gas Holdings. Please go ahead.

Thank you, Rocco and hello, everyone. We appreciate you joining our call. This morning, we issued and posted to the Southwest Gas Holdings website our fourth quarter and full year 2023 earnings release and the associated Form 10-K. The slides accompanying today's call are also available on Southwest Gas Holdings' website. We'll refer to those slides by number throughout the call today. Please note that on today's call, we will address certain factors that may impact this year's earnings and provide some longer-term guidance. Some of the information that will be discussed today contains forward-looking statements. These statements are based on management's assumptions about what the future holds, but are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions and regulatory approvals. This cautionary note, as well as a note regarding non-GAAP measures, is included on Slides 2 and 3 of this presentation. Today's press release and our filings with the Securities and Exchange Commission, which we encourage you to review. These risks and uncertainties may cause actual results to differ materially from statements made today. We caution you against placing undue reliance on any forward-looking statements, and we assume no obligation to update any such statement. As shown on Slide 4, on today's call, we have Karen Haller, President and CEO of Southwest Gas Holdings; Rob Stefani, Chief Financial Officer of Southwest Gas Holdings; Justin Brown, President of Southwest Gas Corporation; and Bill Fehrman, President and CEO of Centuri Group, along with other members of the management team available to answer your questions during the Q&A portion of the call today. I'll now turn the call over to Karen.

Thanks, Justin. Thank you for joining us today to discuss the Southwest Gas Holdings fourth quarter and full year results. Turning to Slide 5. We are making good progress on our transformational strategy of returning Southwest Gas to its core foundation as a premier, fully regulated natural gas utility. We achieved significant milestones throughout 2023 to position the utility for strength and success while also advancing the separation of Centuri into a standalone utility infrastructure services leader. Notably, we made progress on the regulatory strategy at Southwest during the year and delivered record full year results, which were above our expectations. Customer growth and demand remained strong, and the entire Southwest Gas team is acutely focused on safely addressing the needs of our customers, investing in the communities we serve, and delivering value for our shareholders. We are strategically deploying capital and investing in our operations so that we can meet the demand for safe, reliable, and affordable energy solutions while also working constructively with our regulators and legislators to complement our strong organic rate base growth. We are confident in our momentum at Southwest, which delivered an 8.2% ROE in 2023, a 220 basis point improvement over 2022. Our confidence is also demonstrated by our expected 10% to 12% net income growth rate from 2024 to 2026. While the nature of expected revenue increases from rate cases will cause net income growth to be nonlinear over the forecast period, we are confident in our guidance. We expect to benefit from our refreshed rate structures to catch up with the historic inflationary environment we have experienced and the significant system investments we have made for the benefit of our customers over the past few years. Our confidence in our future is further demonstrated by an increase in our expected rate base CAGR over the same period in the range of 6.5% to 7.5% and our commitment to maintaining a strong investment-grade balance sheet and competitive dividend. Additionally, Centuri has seen improved margins throughout the year as the team executed on their core utility infrastructure services lines of business and overcame much of the previous cost and supply chain headwinds that have been faced during 2022. As you can see on Slide 6, we made excellent progress on our 2023 strategic priorities and we are on track to achieve our 2024 priorities. 2023 was a year of achieving milestone after milestone, starting with the closing of the MountainWest sale a year ago and the completion of our RAS/RES process with the credit rating agencies. The successful execution of our financing plan allowed us to navigate through the balance sheet impacts of historic natural gas prices at the utility, along with eventual regulatory approvals to collect these costs from customers. These were significant achievements. Also, with the utility, we filed a rate case in Nevada and worked through a considerable effort to identify and prioritize initiatives to build an optimization playbook. And finally, we made substantial progress towards the separation of Centuri. We have already made notable strides in 2024 and with the onboarding of new Centuri leadership, our plan to separate Centuri into an independent, utility infrastructure services company remains on track as we seek to unlock value for Southwest Gas shareholders. As you can appreciate, we are in a quiet period with respect to the intended IPO, and we are not in a position to provide specific details on our process. However, we continue to make progress. Following execution of the expected IPO, Southwest Gas Holdings may ultimately separate the business through a series of sell-downs or share exchanges or, depending on market conditions, we could distribute the balance of Centuri shares to Southwest Gas Holdings shareholders through a spin. Any of these would follow any required lockup period associated with an IPO. Because the successful execution of an IPO with sell-downs or share exchange is contingent on market and other conditions, we continue to preserve the potential per tax respent but we expect our significant net operating loss balance could serve as an offset to taxable transactions. We remain committed to separating Centuri, and we believe we have taken the appropriate steps and actions that will benefit all shareholders. At the utility, we continue to execute on our business plan and regulatory strategy. We are nearing the end of the process for establishing new rates in Nevada, which we expect to be in place in April. We have filed to refresh rates in Arizona, and we'll be filing with the FERC for Great Basin shortly and to refresh rates in California later this year. We also continue our focus on utility optimization as we have identified initiatives and are executing our plans. We are very pleased with our continued progress and our strategic plan is on track. On Slide 7, we highlight our strong 2023 performance at Southwest and at Centuri. We are proud to announce that we delivered record performance across the utility. We experienced another year of strong customer growth, adding more than 40,000 new meter sets in 2023, while continuing to make additional investments to ensure our system remains safe and reliable for the benefit of our customers. We also achieved several constructive regulatory outcomes during the year. I'm pleased to highlight that for the fourth consecutive year, Southwest ranked number one in customer satisfaction among business and large residential gas utilities in the West by J.D. Power. I'm proud of our team for their excellent efforts every day that has led to these achievements. At Centuri, we announced strong full year revenue and adjusted EBITDA, resulting in adjusted EBITDA of approximately $283 million. This solid performance was driven by an increase in electric infrastructure services revenues, including storm restoration services, as well as sustainable energy projects. As Bill will discuss later, Centuri continues to win new business based on the strength of its relationships and capabilities and is well-positioned to play a critical role in the replacement of aging electric and gas infrastructure and the continuing energy transition.

Thanks, Karen. On Slide 10, we outline our earnings per share performance for the year. The company's consolidated GAAP and adjusted EPS are shown by each operating company. As Karen mentioned earlier, the utility and Centuri each had an excellent year. The utility generated strong net income and adjusted net income, while Centuri also produced record revenue and adjusted EBITDA. On an adjusted basis, Southwest Gas Holdings ended 2023 with EPS of $3.36 per share, an improvement of $1.26 per share when compared to 2022, which had included 12 months of Mountain West compared to less than two months of Mountain West in 2023. The utility performance during the year was driven by our ability to achieve constructive regulatory outcomes, lower overall non-pension-related costs, and an increase in interest income from the PGA. We also saw unexpected increases in company-owned life insurance, which are difficult to predict and were more than $5 million above the upper end of our guided range. In the fourth quarter, higher-than-expected COLI results, lower O&M expenses, and lower income tax related to higher excess accumulated deferred income taxes resulted in full year 2023 utility net income above what we had forecasted last November. At Centuri, we continue to see significant improvements in GAAP and adjusted earnings. We increased core electric infrastructure services revenues, continued to advance offshore wind projects, and generated margin improvement throughout the year as a result of improved master service agreement terms. In the appendix, we provide a reconciliation of adjustments by operating company. The vast majority of the annual adjustments relate to the Centuri separation costs, consulting fees related to utility optimization, and costs associated with the impairment and sale of Mountain West that was completed in February of 2023. Now I'll provide a walkthrough on the performance of each operating company. Moving on to Slide 11, you will see the year-over-year performance drivers for our utility, Southwest Gas Corporation. In 2023, utility operating margin increased by nearly $107 million compared to last year. This improvement was driven primarily by $56 million of increased recovery on prior investments in our Arizona utility infrastructure, for the first part of the year by our previous Nevada rate change, and $19 million of additional recovery associated with regulatory account balances. The remainder of the increase in margin includes changes in miscellaneous revenue and revenue from customers outside of the decoupling mechanism, partially offset by comparably lower Arizona vintage steel pipe and customer-owned yard line revenue. The increase in O&M was driven by a $10 million increase in external contractor and professional consulting services cost, primarily related to utility optimization planning efforts as well as higher labor, leak survey and line locating activities, along with fuel costs. These increases were partially offset by lower service component of post-retirement benefits and legal claim-related costs. The approximate $37 million increase in depreciation and amortization and general taxes was primarily due to the corresponding 6% increase in average gas plant in service compared to 2022, along with the $19 million of increased amortization of prior investments in our Arizona utility infrastructure and other associated regulatory account balances that offset the corresponding amount of margin improvement I mentioned earlier. We also saw an increase in property taxes in Arizona and California, again driven by higher plant and service. Other income increased about $78 million compared with last year. $35 million of this improvement was driven by increased interest income related to carrying costs associated with regulatory account balances, largely related to the purchased gas cost recovery mechanisms. To contrast this, we expect this source of income to decline by about $30 million in 2024 compared to 2023. The higher interest income earned on the elevated PGA balances was partially offset by the roughly $5 million of higher interest expense at Southwest Gas Holdings year-over-year. COLI results were $16 million higher than in 2022 and favorable year-over-year changes in non-service-related components of employee post-retirement benefits improved other income by $21 million. Recall that a non-recurring $9 million reserve for a software project, deemed non-recoverable from utility operations, was recorded in 2022 and resulted in a favorable other income variance when looking at 2023. Interest expense at the utility increased by approximately $34 million from the prior year, primarily due to the full year impact of interest associated with senior notes issued in March 2022 and December 2022, as well as the impact of $300 million of senior notes issued in March 2023. In addition, for part of the year, the $450 million Southwest Gas Corporation PGA-related term loan, issued in January of 2023 to support gas purchases, was repaid in April 2023, which also contributed to the increase. Overall, this was a significantly improved year for the utility, and as Karen highlighted, resulted in an ROE of approximately 8.2%. Moving on to Slide 12, we review Centuri's results and the drivers behind Centuri's annual GAAP net income. Centuri's 2023 revenues increased by approximately $139 million compared with the prior year. This increase was driven by an increase in core electric infrastructure services work, progress on offshore wind projects, and improved master service agreement terms, partially offset by declines in volume with certain existing gas infrastructure services customers, primarily in Canada. Centuri's revenues were partially offset by corresponding increases in operating expenses driven by the higher volume of utility infrastructure services provided to customers, higher incentive compensation, and increased subcontractor costs on offshore wind projects. Additionally, Centuri saw about $36 million of increased interest expense, primarily due to higher interest rates on approximately $1 billion of outstanding variable rate borrowings that is largely associated with the Riggs Distler acquisition. Overall, we continue to be encouraged by improved EBITDA margins at Centuri over the previous year, as Bill will touch on later.

Thanks, Rob. There are exciting things happening in Las Vegas, Phoenix and other parts of our service area which are driving expansions in both core and new business sectors. We added more than 40,000 first-time meter sets during 2023. And we expect to continue to benefit from strong demographic and economic growth as Phoenix and Las Vegas continue to be among the top destinations for relocation and economic development. In Arizona, particularly in Phoenix, jobs were back to their pre-pandemic trend in 2023 and according to the Arizona Commerce Authority, expansions are occurring throughout the state. We're proud to partner with several of these new large customers including semiconductor, battery and electric vehicle manufacturers as well as expansions among several agricultural and farming customers. Las Vegas continues to be a prime destination for the sports, entertainment and hospitality industry, continuing to drive job growth in the area. Las Vegas hosted the Formula One race last November and Super Bowl XXVIII a couple of weeks ago. 2023 also saw two new casino resorts opening, the opening of the Sphere, and the announcement of a new Oakland A's Stadium. This vast economic activity continues to translate to new customer growth and this is reiterated by S&P Global's projection that between 2024 and 2028, population growth in Arizona and Nevada will continue to outpace the national average. Our investments to support this population growth combined with our investment in safety and integrity management programs are the cornerstones of our $2.4 billion three-year capital expenditure program. These types of investments have translated to double-digit rate base growth since 2017, and our current capital investment plan is expected to translate to rate base growth of 6.5% to 7.5% through 2026. There are two primary drivers supporting our expected 10% to 12% utility income growth that Karen mentioned. First, the need to refresh rates to more closely match the level of O&M expenses we're currently experiencing; and second, to start recovering over $1 billion of capital investments that will be included in our rate case proposals, which we anticipate will result in an increase in our authorized rate base of over 25%. While we focus on working collaboratively with our regulators to get rates refreshed across each of our regulatory jurisdictions, we are also committed to continuing to find ways to collaborate with our regulators to improve the timeliness of the recovery of our investments, so we can continue to partner with our customers and regulators to support the economic growth in our service areas, while also ensuring the safe and reliable operation of our distribution systems.

Thanks, Justin, and good morning to all of you on the call. I really appreciate the chance to talk about Centuri and why I decided to join the company. I've been in this industry for over four decades and for the past 17 years, helped lead the growth of Berkshire Hathaway Energy. I retired from BHE in October of 2023 knowing that after a short break, I would want to dive into a new leadership opportunity. I saw the Centuri President and CEO position and what tipped the scales was the chance to dive into Centuri's separation from Southwest Gas and then be on the ground floor of its new existence as a public company. These leadership opportunities do not come around very often. After meeting with Karen, Rob, and members of the Southwest Board, I decided to jump in, using my business experience to position Centuri for the future. At BHE, we were successful because of the operating discipline, focus on customers, and cost management that was in our DNA. This is the focus I intend to bring to Centuri as we build on a strong foundation and work to grow the business. I was attracted to Centuri because of its great history, long-standing relationships with blue-chip utility customers, and its strong positioning to take advantage of what I know is significant infrastructure spending and progress planned in the sector that can drive long-term growth. As I get started in this role, I'm pleased to have Greg Eisenstark alongside me as our CFO. Greg has been acting CFO over the last several months and previously served as Centuri's Chief Accounting Officer. Greg has a comprehensive understanding of this business, knows the numbers better than anybody, has significant SEC reporting experience in his background, and has a strong passion for what we're trying to do at Centuri. I'm very proud to have Greg as my business partner as we move Centuri forward into the future. On Slide 20, I've provided a high-level overview of the company's strategic framework for 2024. Centuri's leadership team has fully embraced this new direction and is committed to achieving our objectives. One of these objectives is to successfully separate the company from Southwest and begin our journey as a standalone public company. Let's focus on the framework. I believe to be a great company in the gas and electric power business, you have to be great at safety. Centuri has a solid safety record, but we will continue to push for improved performance. My goal is that every one of our employees returns home from work the same way they arrived at the office or job site. Outside of safety, we're focused on reducing costs across all facets of the business, starting with sales, general, and administrative expenses. To that end, I have eliminated two corporate leadership levels, allowing me to get closer to our operating businesses. Each of our business unit presidents now report directly to me. This restructuring will continue as we streamline our cost structure and implement a disciplined accountability model. I've made it clear that we will allocate capital inside the company—both maintenance and growth capital—to those businesses that are the most profitable and well-run. We will focus on optimizing our existing contracts while aligning with our customers on their priorities. Finally, I understand that our stakeholders will look for growth. We are focused on growing revenue and have a number of initiatives underway to grow our electric and gas businesses while diversifying into complementary service lines.

Thanks, Bill. Our 2023 results are evidence of the progress we continue to make executing our strategy and we are enthusiastic about 2024. On Slide 24, we are initiating our 2024 Southwest net income guidance to be in the range of $228 million to $238 million. We are confident that a strong regional economic outlook in our service territories will drive 2024 results within these guidance ranges. Recall that Rob indicated we had more than $15 million of benefits to 2023 in net income that are not expected to recur in 2024, which you can see on the bottom of Slide 24. We expect to lose approximately $30 million in pre-tax interest income largely associated with the PGA balances as well as $6 million of COLI earnings at the midpoint of the range. We are not expecting any further property write-downs in 2024 like the $5 million we saw associated with the sale of our old corporate headquarters in 2023. Additionally, as Rob also pointed out, we saw an $8 million out-of-period adjustment early last year related to net cost of gas sold that benefited 2023 earnings and is not expected to recur. Higher expected average utility plant and service balances, along with higher amortization of regulatory assets, is expected to drive higher depreciation and amortization expense in 2024, and we expect higher pension expenses largely driven by the assumed discount rate change and slightly higher O&M. Other changes assumed are higher income from equity AFUDC driven by higher expected construction spending, and higher overall income and other general taxes. As you can see on the slide, we expect a significant increase in gross margin driven by forecasted customer growth and a rate increase in Nevada, and we expect these changes will provide for strong utility earnings in 2024. Partly due to expected customer growth at the utility, we are expecting 2024 utility CapEx to be approximately $830 million, which would be an increase over 2023 actuals of about $70 million. While nearly 50% of our forecasted capital spending relates to maintaining a safe and reliable system for the benefit of all of our customers, some of this increased 2024 CapEx is a result of the responsibility we have to invest in our infrastructure, to meet better-than-expected customer growth and favorable new business trends across our service territories, combined with the required investments we need to make to enhance the safety and integrity of the system. And part of the increase is driven by our continuous improvement initiatives, which we expect to lead to future cost savings at the utility.

Thank you. And today's first question comes from Richard Sunderland with JPMorgan. Please go ahead.

Hi. Good morning. Can you hear me?

Yes, we can. Good morning, Richard.

Great. Thank you. I appreciate all the utility detail here. I'd like to start with the cost efforts relative to new utility outlook. How do you think about sustainability of earned returns after the current rate case cycle with this new flat O&M per customer target? And then similarly, what would the SIB be worth to that earned return outlook if you're able to secure it in the rate case?

Yes, Rich. So, yes, it's a great question. Obviously, we're looking to implement rates here in 2024 for Nevada and then looking to Arizona in 2025. Given that rates will come in in Arizona in 2025, we build to more of that run rate ROE in 2025 and beyond. So, as Karen and I had highlighted on the call, we had an extensive amount of PGA-related interest income that obviously helped with the ROE. That was the anticipated and we'll see the rate structure in Nevada and Arizona in 2024 and 2025 really bring us to those run rate levels of ROE. With respect to the SIB program, I think it's obviously that was just included in the rate case and we'll have to navigate that with the commission and regulators over the course of this coming year. And we'll obviously, update you and investors as we progress on that front.

And the optimization initiatives that we've talked about will help keep O&M flat, and I think that will help us as well on that ROE and maintaining that as it goes forward. So, that's worked into our plan moving forward is to continue to execute on those optimization initiatives and keep O&M on a flat trend.

Okay. Got it. And I know this goes back a little bit, but maybe a year or two years ago, you had highlighted an 8% earned ROE or being above 8% as one of the metrics in focus. Is that still where you're focused when you say run rate ROE? Or has that thinking evolved at all?

Yes. I think that certainly achieving 8% and beyond 8% we're laser-focused on that between cost optimization, pursuing regulatory strategies including that SIB tracker program. That would reduce flag and benefit ROEs. But what I think you're seeing as far as unfolding the regulatory strategy in Nevada, the cadence of the filing in Arizona, the cadence of the filing and the tracker, our focus on cost optimization efforts will benefit ROEs in the near-term but will also benefit customer bills in the longer term.

Got it. Very helpful. And then for my second question, just digging into this new mechanism a little bit further. It sounds like there's been some early engagement on this process in advance of the application. Could you speak a little bit more to that engagement? How this aligns with local goals around safety and any other considerations around the request and the application?

Yeah. Rich, it's Justin. How are you doing? Yeah. We spent a concerted amount of time working with the Pipeline Safety division at the Arizona Corporation Commission bringing them out, sharing information regarding our system, doing demonstrations that are off centers, just educating them on the challenges we have with our system, right and focused on specific pipe types and that kind of evolved to really kind of just all code and regulatory. I think it's been a very collaborative process where we've tried to solicit their feedback on things they might be comfortable with, based on things they've approved for water companies years ago versus some of the things they've done more recently on some of the electric generation mechanisms. Again, we're just trying to work with them collaboratively on ways to minimize regulatory lag. We're somewhat indifferent on what that looks like as much as trying to find a path forward to make some incremental improvements, we think this mechanism strikes that balance.

Got it. Appreciate the color. And thanks for the time today.

Thanks, Rich.

And our next question comes from Julien Dumoulin-Smith with Bank of America. Please go ahead.

Hey, good morning, congrats Bill on joining here. Maybe just following up on the last question a little bit, just to start on that front. I mean, I hear you guys on the SIB effort. I'd be curious, how do you think about the efforts pushed by the commission around forward-looking mechanisms here? I get it's not quite the same thing, gets at the broader subject of rate lag. How do you think about that pairing up, maybe not necessarily in the current instance? Because as you think about future efforts, how what is reflected ultimately as you think about this 10% to 12% CAGR in terms of earned returns across jurisdictions in the 2026 timeframe? But really emphasis on the ACC efforts on reducing lag via perhaps other forward-looking mechanisms.

Yeah, Julien, it's Justin. And we've talked a lot about this over the last year and some of the commentary coming from the ACC and their sincere commitment to try to make improvements in that regard. Last year, Commissioner Myers opened a docket to look at that. I think just recently they announced a workshop that will happen next month. So again, I think that's great progress. But to your point, the timing of which we've got a rate case pending right now. We need to find a way to bridge those two. And that's how we look at this mechanism as a way to help. We'll continue to participate and work with them around educational efforts, different ideas about things that we can do structurally in Arizona to help, whether that be through future test year constructs, whether it be through formula rate making. There are a lot of different opportunities and again, we're somewhat agnostic to the types of mechanisms or the structure as much as hey, let's work together on making incremental improvements because I think there's a lot of opportunity.

Yeah. But maybe the punch line is given the timeline of the hearings and the present case, I mean even for 2026 that might be a little ambitious to really have that—the full extent of those benefits reflected, right? But maybe it'd be 2027 onwards by the time you actually get a rate case.

Yeah, correct. You're exactly right.

Excellent. And just clarifying a little bit further, earned returns by jurisdiction or as much commentary you can provide? I mean, obviously, the 10% to 12% net income CAGR is better than the updated and improved rate base CAGR of roughly 7%. How do you think about just what's reflected in this call it medium-term 2026 target, if you can speak a little bit to that, and obviously kudos on progress outside of Arizona including Nevada here?

Yeah, Julien, great question. The differential between net income growth and the rate base growth is clearly driven by regulatory outcomes. I think you're seeing us get into rate cases within that period. And so that's why the net income growth associated off of the 2024 base year net income is outpacing the rate base growth. Obviously, these are always significantly impacted in those interim periods. But by 2026, we've got the run rate bill impacts and whatnot associated with Nevada and Arizona filings and having been fully settled by then.

Excellent. And lastly if I can, I mean, Bill, I know a new role for you and obviously great precedent that you're coming from and having engaged with some of the large utilities in the country here. How do you think about the strategy and any enhanced elements that you could bring to the Centuri business? Again, I get that this is a little difficult to comment too much. But as best you can opine on how you think about expanding the scope and or improving the efforts underway already. I'd love to hear.

Sure. Well, clearly, I have a lot of relationships across the industry and I'll use those to reach out to those companies and look for opportunities to grow. Given the various amounts of infrastructure improvements that are going to go on across the country, there's a clear opportunity for us to engage and really go much further than what probably isn't possible right now. But I think if anyone looks at the landscape, it's very clear that there's massive amounts of infrastructure spending going to go on and we're going to try very hard to take a good share of that.

Got it. I’ll leave it there. Look forward to chatting more. All the best guys.

Thanks, Julien.

Thank you. And our next question today comes from Ryan Levine with Citi. Please go ahead.

Good morning. I appreciate the added guidance in terms of longer-term earnings outlook for the core utility recognizing there's ongoing rate proceedings in your jurisdictions. Maybe could you speak to where—what would put you towards the higher and lower end of the ranges outside of maybe cost of capital and rates of that?

Yes. So I think obviously we've got—just starting with some of the easier ones. The—we've modeled a market discount rate on the pension. Obviously, that contributed to about a $6 million decline from 2023. So certain assumptions like the impact of the interest rate environment on the pension. With that, I will call your attention to the 10-K which we highlight changes we've made to the pension fund over this past year of going to a 50-50 allocation and putting a 90% overlay in place there to help dampen some impacts of potential forward interest rate movement. But something like where interest rates ultimately had—obviously, there could be upside or downside from their rate case outcomes clearly. Although in Nevada, we have settled kind of everything but the cost of capital which we can put a bandwidth around that could drive us upward in the range. The—clearly we obviously model in a baseline on taxes if there were to be a tax change that could impact. And then as we've discussed, we are laser-focused on the cost management and we've modeled in a certain level of cost savings that obviously allows us to continue to achieve a flat O&M per customer growth rate over the forecast period. To the extent that we're able to accelerate more cost savings into the front couple of years of the forecast, then that could clearly help on the CAGR as far as what we achieved by 2026. And then overall just we do provide. Obviously, I think our cap structure is well understood at this point. But to a certain extent, the other thing that can clearly impact is just the interest rate assumptions like how quickly the Fed moves on rates. While we don't have a lot of financing requirements, we also generate some interest income from the cash certainly from the PGA this year. So we've made assumptions around kind of the dot plot and whatnot around setting our guidance with respect to interest income. Does that help, Ryan?

Yeah. I appreciate the color. On Centuri, recognizing the sensitivity around providing forecasts but to date, since the management change, there was highlighted a number of operational initiatives underway around contracts and staff. Is there any way of quantifying what impact the recent changes have been to maybe the cost structure or some type of operating metrics? And to date, has there been—is this part of a 100-day plan that the company has underway?

So as I noted in my comments, one of the first things that we did was remove two layers of management that was between me and the operating company presidents. The purpose of that was so that I can get much more into the details of these businesses, understand the opportunities for growth. As you can imagine, I've been in the role for about a month. So that work is just now beginning and will be more clearly articulated as we go through the IPO process here in a few weeks. There isn't a specific 100-day plan. This is the direction of the organization and will be the DNA of the organization, which is to be a very efficient and effective deployer of infrastructure services, and I'm excited to continue to move that forward. But again, as we move into the IPO process, this will be much more articulated in that information.

Great. Thanks for taking my question.

Thank you. This concludes our question-and-answer session. I'd now like to turn the call back over to Justin Forsberg for closing remarks.

Thanks again, Rocco, and thanks, everyone, for joining the call today and for your questions. This concludes our conference call, and we look forward to seeing many of you soon as we participate in conference activities next week in New York, such as the Bank of America Power & Utilities Clean Energy Conference, followed by the West Coast Utilities Conference hosted right here in Las Vegas by Siebert Williams Shank later in March, among other events. Slide 26 continues to include my contact information. As always, feel free to reach out at any time. Thank you for your interest in Southwest Gas Holdings. Have a good day.

This concludes today's Southwest Gas Holdings Fourth Quarter and Full Year 2023 Earnings Call and Webcast. You may now disconnect your lines at this time, and have a wonderful day.