Forward-looking statements include earnings guidance and estimates or forecasts of operating and financial metrics. These statements reflect current expectations of future conditions and events and as such are subject to a variety of risks, uncertainties and assumptions that could cause actual results to differ materially from current expectations.Slide #2 gives you more information on the assumptions and factors we consider in making these forward-looking statements and where to go to get more information on our risk factors. You'll also find reconciliations of certain non-GAAP financial information on our website at www.nvenergy.com. With us this morning are Michael Yackira, President and Chief Executive Officer; and Dilek Samil, Senior Vice President, Chief Financial Officer and Treasurer. I'll now turn the call over to Michael. Michael W. Yackira Thank you, Max. Good morning, everyone. Thanks for joining us this morning. Today marks an important milestone for NV Energy. This morning, we announced plans for deploying a portion of our free cash flow over the next several years. Those plans include a change in our dividend payout, a dividend growth policy and debt reduction. We also initiated earnings guidance. Dilek and I will discuss these items this morning, and we will also be in New York on Wednesday, May 16, for meetings with the financial community. Invitations to that event will be sent today. For those of you who can't be there in person, it will be available to the public via a live webcast on nvenergy.com. Let me begin with our dividend increase. Yesterday, NV Energy's Board of Directors declared a cash dividend of $0.17 per share payable on June 20, 2012. This is an increase of $0.04 over the quarterly dividend of $0.13 per share paid in March 2012, a 31% increase to our current dividend. Our policy will be to target a dividend payout ratio in the range of 55% to 65%. Given our current expectations for earnings and cash flow, this should allow us to increase dividends by about 10% annually for the next few years. Thereafter, our policy will be to grow dividends in line with sustainable earnings growth.
This is an important step for our company. During a period of high growth and capital investment, we kept our dividend payout low in comparison to the industry since we are raising capital for construction, primarily for our generation fleet. I'm proud of NV Energy's accomplishments in growing a portfolio of clean, efficient-generation assets that are providing benefits to our customers in the form of more stable and affordable power prices. What we experienced is different from the growth in capital spending cycle that utilities typically experience. While generation investment is usually made in anticipation of increasing load, followed by a period of return on and of capital, it was different for NV Energy. Our capital requirements were greater than a normal generation expansion since we were not only building to meet growth but we were also replacing purchased power with highly efficient, self-owned generation as we emerge from the Western energy crisis.Even as we're investing large amounts of capitals to build out our generation portfolio, we recognized the need to return capital to our investors. That is why reinstituted our dividend in 2007. As I mentioned, our payout was below the industry average, reflecting the need to finance our large investment program. With the completion of the generation build-out and the associated increase in and stability of company's earnings power, we believe it is important to provide our investors a dividend payout that is more in line with our peers. We're targeting a dividend payout of 55% to 65% of earnings. We believe our projected cash flow over the next several years will allow us to comfortably pay out at this level while improving our balance sheet and preparing for the next investment cycle. Let me now turn to earnings guidance. As you know, NV Energy had not previously provided such guidance. However, we are entering a period of greater earnings stability. We have said in the past that we will continue to revisit our policy on guidance, and we have done so. Needless to say, this change in policy will not change our business philosophy. We'll always run our business for the long-term benefit of our constituents, customers, employees and our investors. For 2012, we are initiating earnings guidance in the range of $1.15 to $1.25 per share. Our guidance is based on a number of assumptions, as shown on Slide 4. Dilek will provide further details later in this call. Read the rest of this transcript for free on seekingalpha.com