Southwest Gas Holdings, Inc. Reports Third Quarter 2024 Financial Results; Expects Utility Net Income Within Top Half of Guidance Range
Southwest Gas Holdings reported Q3 2024 consolidated net income of $0.3M ($0.00 per diluted share) and adjusted net income of $6.8M ($0.09 per diluted share), compared to $3.2M ($0.04 per share) and $12.6M ($0.17 per share) in Q3 2023. The utility segment showed improvement with $0.6M net income versus a $3.3M loss last year. Key highlights include strong utility performance with 9% year-to-date earnings growth, filing of California rate case, advancement of Arizona rate case, and margin improvements from Nevada rate case. The company has over $450M in cash and expects no equity issuance in 2024, with capital needs through 2025.
Southwest Gas Holdings ha riportato un reddito netto consolidato nel terzo trimestre del 2024 di $0.3M ($0.00 per azione diluita) e un reddito netto rettificato di $6.8M ($0.09 per azione diluita), rispetto ai $3.2M ($0.04 per azione) e $12.6M ($0.17 per azione) nel terzo trimestre del 2023. Il segmento utility ha mostrato miglioramenti con un reddito netto di $0.6M rispetto a una perdita di $3.3M dello scorso anno. I punti salienti includono una forte performance del segmento utility con una crescita degli utili dell'9% dall'inizio dell'anno, la presentazione di un caso tariffario in California, i progressi nel caso tariffario dell'Arizona e miglioramenti nei margini derivanti dal caso tariffario del Nevada. L'azienda ha oltre $450M in contante e non prevede emissioni di capitale nel 2024, con necessità di capitale fino al 2025.
Southwest Gas Holdings reportó un ingreso neto consolidado en el tercer trimestre de 2024 de $0.3M ($0.00 por acción diluida) y un ingreso neto ajustado de $6.8M ($0.09 por acción diluida), en comparación con $3.2M ($0.04 por acción) y $12.6M ($0.17 por acción) en el tercer trimestre de 2023. El segmento de servicios públicos mostró mejoras con un ingreso neto de $0.6M frente a una pérdida de $3.3M el año anterior. Los aspectos destacados incluyen un sólido rendimiento del servicio público con un crecimiento del 9% en los ingresos desde principios de año, la presentación de un caso tarifario en California, el avance del caso tarifario de Arizona y mejoras en los márgenes del caso tarifario de Nevada. La compañía tiene más de $450M en efectivo y no espera emisiones de capital en 2024, con necesidades de capital hasta 2025.
Southwest Gas Holdings는 2024년 3분기 통합 순이익이 $0.3M ($0.00 주당 희석자산)이며 조정 순이익은 $6.8M ($0.09 주당 희석자산)이라고 보고했습니다. 이는 2023년 3분기의 $3.2M ($0.04 주당) 및 $12.6M ($0.17 주당)과 비교됩니다. 공공 서비스 부문은 $0.6M의 순이익을 기록하며 지난해의 $3.3M 손실에 비해 개선되었습니다. 주요 하이라이트로는 연초 대비 9%의 수익 성장률을 보인 공공 서비스의 강력한 성과, 캘리포니아 요금 사례 제출, 애리조나 요금 사례의 진전, 그리고 네바다 요금 사례에서의 마진 개선이 있습니다. 이 회사는 $450M 이상의 현금을 보유하고 있으며 2024년에는 자본 조달을 계획하고 있지 않으며, 2025년까지 자본 필요를 예상하고 있습니다.
Southwest Gas Holdings a annoncé un revenu net consolidé de 0,3 million de dollars au troisième trimestre 2024 (0,00 $ par action diluée) et un revenu net ajusté de 6,8 millions de dollars (0,09 $ par action diluée), par rapport à 3,2 millions de dollars (0,04 $ par action) et 12,6 millions de dollars (0,17 $ par action) au troisième trimestre 2023. Le segment des services publics a montré une amélioration avec un revenu net de 0,6 million de dollars contre une perte de 3,3 millions de dollars l'année dernière. Les principaux points forts incluent une performance solide des services publics avec une croissance des bénéfices de 9 % depuis le début de l'année, le dépôt d'une affaire tarifaire en Californie, l'avancement de l'affaire tarifaire en Arizona, et les améliorations des marges résultant de l'affaire tarifaire du Nevada. L'entreprise dispose de plus de 450 millions de dollars en liquidités et ne prévoit aucune émission d'actions en 2024, avec des besoins en capital jusqu'en 2025.
Southwest Gas Holdings meldete im dritten Quartal 2024 einen konsolidierten Nettogewinn von 0,3 Millionen USD (0,00 USD pro verwässerter Aktie) und einen bereinigten Nettogewinn von 6,8 Millionen USD (0,09 USD pro verwässerter Aktie), verglichen mit 3,2 Millionen USD (0,04 USD pro Aktie) und 12,6 Millionen USD (0,17 USD pro Aktie) im dritten Quartal 2023. Der Versorgungsbereich zeigte eine Verbesserung mit einem Nettogewinn von 0,6 Millionen USD im Vergleich zu einem Verlust von 3,3 Millionen USD im Vorjahr. Zu den wichtigen Highlights gehören die starke Leistung der Versorgungsunternehmen mit einem Ergebniswachstum von 9 % seit Jahresbeginn, die Einreichung eines Tarifsaktes in Kalifornien, die Fortschritte im Tariffall von Arizona und die Verbesserung der Margen aus dem Tariffall von Nevada. Das Unternehmen verfügt über mehr als 450 Millionen USD in bar und erwartet 2024 keine Eigenkapitalemissionen, mit Kapitalbedarf bis 2025.
- 9% year-to-date earnings growth in utility segment
- Strong balance sheet with over $450M cash on hand
- No equity issuance needed in 2024
- 41,000 new meter sets (1.9% growth) in last 12 months
- $644M capital investment year-to-date
- Successful recovery of previously deferred gas costs from 2022-2023
- Q3 2024 consolidated net income decreased to $0.3M from $3.2M in Q3 2023
- Adjusted EPS declined to $0.09 from $0.17 year-over-year
- Higher operations and maintenance expenses
- Increased depreciation and interest expenses
Insights
The Q3 2024 results show mixed performance with several noteworthy developments. The utility segment demonstrates strong year-to-date growth of
- Operating margin increased by
$43 million , primarily driven by rate relief and customer growth - Added approximately 41,000 new meter sets, representing
1.9% customer base growth - Successfully recovered previously deferred gas costs from 2022-2023
- Strong cash position with over
$450 million on hand - No expected equity issuance in 2024
However, challenges include increased operations and maintenance expenses, higher depreciation costs and increased interest expenses. The company's regulatory progress in Nevada, California and Arizona suggests potential for continued growth and margin improvement.
The infrastructure development aspects of Southwest Gas show robust fundamentals. Notable achievements include:
- Significant capital investment of
$644 million year-to-date for infrastructure safety and reliability - Secured
$350 million in new multi-year revenue potential - Impressive backlog of
$4.3 billion , with87% from stable Master Service Agreements - Strategic supply chain optimization with 14 renegotiated contracts
The company's focus on infrastructure modernization and expansion, combined with successful regulatory outcomes, positions it well for sustainable growth. The reduction in applicable spread by 17.5 basis points on the term loan and extension of credit facilities further strengthen its financial flexibility.
Delivers Strong Utility Earnings with
Utility Files California Rate Case; Advances Arizona Rate Case
Margin Improvement From Nevada Rate Case Outcome
"Performance at the utility has been strong in 2024. We are on track to finish within the top half of our full-year utility net income guidance range," said Karen Haller, President and Chief Executive Officer at Southwest Gas Holdings. "Our performance is a direct result of successfully delivering on our regulatory priorities and executing on our disciplined business management efforts to optimize utility performance," added Haller.
"In Nevada, we continue to see the positive impact associated with the recovery of our investments to enhance safety and reliability and better meet the needs of our growing customer base. In addition, during the quarter, we filed our rate case in
"Our balance sheet remains strong, especially following full recovery of previously deferred purchased gas costs from the winter of 2022-2023. We continue to expect limited equity needs through the end of 2025. Looking ahead, we see attractive opportunities for profitable growth by safely delivering reliable, affordable, and sustainable energy solutions as a premier, fully regulated natural gas utility," concluded Haller.
Recent Southwest Gas Holdings Operational and Financial Highlights
- Southwest Gas no longer expects to issue equity in 2024, and continues to expect limited capital markets needs through the end of 2025; the Company finished the third quarter of 2024 with more than
of cash on a consolidated basis;$450 million - Extended the
term loan credit agreement in the third quarter of 2024, which now matures on July 31, 2025 with a 17.5 basis point reduction in applicable spread;$550 million - Lower overall expense levels compared to 2023; and
- Non-GAAP adjustments to third quarter of 2024 earnings primarily related to the amortization of intangible assets at Centuri.
SOUTHWEST GAS HOLDINGS, INC. SUMMARY UNAUDITED OPERATING RESULTS (In thousands, except per share items) | |||||||
Three Months Ended | Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Results of Consolidated Operations | |||||||
Contribution to net income (loss) - natural gas distribution | $ 572 | $ (3,251) | $ 163,991 | $ 150,565 | |||
Contribution to net income (loss) - utility infrastructure services | 9,956 | 17,956 | (21,220) | 24,902 | |||
Contribution to net loss - pipeline and storage | — | — | — | (16,288) | |||
Contribution to net loss - corporate and administrative | (10,239) | (11,474) | (36,412) | (81,159) | |||
Net income | $ 289 | $ 3,231 | $ 106,359 | $ 78,020 | |||
Non-GAAP adjustments - consolidated(1) | 6,540 | 9,332 | 21,464 | 94,309 | |||
Adjusted net income(1) | $ 6,829 | $ 12,563 | $ 127,823 | $ 172,329 | |||
Diluted earnings per share | $ — | $ 0.04 | $ 1.48 | $ 1.10 | |||
Diluted adjusted earnings per share | $ 0.09 | $ 0.17 | $ 1.78 | $ 2.44 | |||
Weighted average diluted shares | 72,086 | 71,851 | 71,994 | 70,676 | |||
(1) Beginning with first quarter 2024, we adapted our calculation of adjusted net income by adding an adjustment for the amortization of certain intangible assets at our utility infrastructure services segment. Such adjustments are common in the infrastructure services industry. For comparative purposes, we have also recast adjusted net income for the three and nine months ended September 30, 2023 to align with this approach. See "Non-GAAP Measures" below for more information and reconciliations of our non-GAAP financial measures. |
Business Segment Highlights
Highlights for Southwest / Natural Gas Distribution Segment Include:
- Following earlier refreshed
Nevada rates in effect in April 2024, Great Basin rates were in effect September 2024 (subject to refund), filedCalifornia rate case in September 2024, and advancedArizona rate case; - Achieved twelve-month utility gross margin of
and record utility operating margin of$0.7 billion ;$1.3 billion - Approximately 41,000, or
1.9% , new meter sets added to customer count during the last 12 months; - Fully collected from our customers the previously deferred purchased gas costs from the winter of 2022-2023;
capital investment year-to-date to support demand for natural gas and for safety and reliability of the distribution infrastructure for the benefit of our customers; and,$644 million - Extended the
revolving credit facility in the third quarter of 2024, now expiring in August of 2029.$400 million
Highlights for Centuri / Utility Infrastructure Services Segment Include:
- Secured customer awards reflecting total multi-year estimated revenue potential of approximately
from a combination of new and extending Master Service Agreements ("MSA") as well as strategic bid work; exited the third quarter of 2024 with a backlog totaling$350 million , of which$4.3 billion 87% is related to MSA revenue; - Third quarter 2024 revenue of
; and$720.1 million - Continued strong focus on using scale to drive down supply chain costs and improve fleet asset utilization; renegotiated a total of 14 supply chain contracts, comprising
21% of the spend among top 100 vendors contracted, as of the end of October 2024.
Southwest / Natural Gas Distribution - Third Quarter 2024
The natural gas distribution segment recorded GAAP net income of
Key drivers of third quarter 2024 performance as compared to third quarter 2023 include:
- Increased operating margin contributed
. Combined rate relief in$22.9 million Nevada andCalifornia added approximately of incremental margin, and an additional$16 million was attributable to customer growth, as approximately 41,000 first-time meter sets were added during the last twelve months. The combined impacts of increases in recovery/return associated with regulatory account balances ($2 million ), and the variable interest expense adjustment mechanism in$1 million Nevada ( ) (for which amortization is recognized in interest expense), also resulted in incremental margin between comparable periods. The remaining variance primarily relates to changes in other miscellaneous revenue and revenue from customers outside of the decoupling mechanisms;$2 million - Operations and maintenance expense increased
between quarters. General cost increases (net of amounts capitalized in Gas plant, where relevant, to support construction efforts) were experienced in a variety of areas, including$7.5 million (combined) of incremental labor-related and benefit costs, including incentive compensation costs,$3.2 million (combined) of incremental leak survey and line locating costs,$1.6 million of higher insurance costs, and$1.1 million of increased reserves for customer accounts deemed uncollectible. These increases, and others, were partially offset by a reduction in certain external contractor and professional services expenses;$1.2 million - Depreciation and amortization expense increased
, largely related to an increase in depreciation on gas plant, reflective of an$4.9 million 8% increase in average gas plant in service since the corresponding third quarter of 2023 for the benefit of our customers. Additionally, a increase in regulatory account amortization associated with the recovery of regulatory program balances, which is offset in operating margin, further contributed to the increase;$1 million - Other income improved
, driven primarily by a$2.1 million increase in values associated with company-owned life insurance and a$4.7 million increase in the equity portion of the allowance for funds used during construction between periods. Partially offsetting these increases was a$1.9 million decline in interest income related to carrying charges associated with regulatory account balances, notably, deferred purchased gas cost balances, which on a combined basis decreased from an asset balance of$4.5 million as of September 30, 2023 to a net liability balance of$687 million as of September 30, 2024. Additionally, a$180 million increase in the non-service-related components of employee pension and other postretirement benefit costs between periods offset the increases; and$1 million - Interest expense increased
compared to the third quarter of 2023, which included the regulatory treatment related to Southwest's industrial development revenue bonds (the variable interest expense mechanism noted above), which incorporates the impacts of deferrals and return/recoveries included in revenue/operating margin that are amortized through interest expense. Additionally, interest incurred on the over-collected balance of the PGA, and a lower level of debt-related allowance for funds used during construction ("AFUDC") further contributed to the increase.$6.5 million
Southwest / Natural Gas Distribution - Year-To-Date 2024
The natural gas distribution segment recorded GAAP net income of
Key drivers of year-to-date 2024 performance as compared to the corresponding period in 2023 include:
- Operating margin increased
. Approximately$43 million of incremental margin was attributable to customer growth, including approximately 41,000 first-time meter sets during the last twelve months. Combined rate relief added approximately$9 million of incremental margin. Favorable impacts in connection with certain rate components of infrastructure trackers and the$44 million Nevada variable interest expense adjustment mechanism ( , combined) were also realized. Offsetting these increases was a decrease in recoveries associated with other regulatory programs, totaling$6.4 million , for which an associated comparable decrease is also reflected in amortization expense between periods (discussed below). Furthermore, an$8.6 million out-of-period favorable gas cost adjustment in the prior-year period did not recur in 2024. Customary gas used in operations (the effects of which are offset in operations and maintenance expense) also reduced operating margin ($8 million ) in the current period. Changes in miscellaneous revenue and customers outside of the decoupling mechanisms comprise the remaining variance;$3.8 million - Operations and maintenance expense increased
, or$12 million 3.2% , between periods. General cost increases (net of amounts capitalized in Gas plant, where relevant, to support construction efforts) were experienced in a variety of areas, including of (combined) incremental employee labor-related and benefit costs, including incentive compensation costs,$7.6 million (combined) of incremental leak survey and line locating costs, and$5.3 million in higher insurance costs. These increases, along with others, were partially offset by impacts from the cost of fuel used in operations (as noted above) and a reduction in other contractor and professional services;$2 million - Depreciation and amortization increased
between periods, due primarily to an increase in depreciation on gas plant, reflective of a$1.9 million , or$710 million 7% , increase in average gas plant in service since the corresponding period of 2023. The increase in plant was attributable to pipeline capacity reinforcement work, franchise requirements, scheduled pipe replacement activities, and new infrastructure to serve growth across our service territory. This increase was largely offset by a decrease of in amortization associated with the recovery of regulatory program balances, including a sizeable difference in the amount of the California Climate Credit between periods;$8.6 million - Other income (which is net of other deductions) decreased
. Interest income declined$2.7 million between periods primarily reflecting a reduction in carrying charges associated with regulatory account balances, notably, deferred purchased gas cost balances, which decreased from an asset balance of$12.6 million as of September 30, 2023 to a net liability balance of$687 million as of September 30, 2024. Also, non-service-related costs associated with employee pension and other postretirement benefits increased by$180 million . Offsetting these were a$3 million increase in the equity portion of the allowance for funds used during construction, a$5.5 million increase in values (including net death benefits) associated with company-owned life insurance ("COLI") policies, and$3 million related to nonrecoverable software write-offs and market adjustments on other property in the prior year period that did not recur in 2024; and$3.8 million - Interest expense increased
in the first nine months of 2024, as compared to the prior-year period, including the impacts of regulatory treatment associated with Southwest's industrial development revenue bonds, a decrease in the debt portion of AFUDC, offset by a decrease in interest related to the payoff in April 2023 of a$7.1 million term loan.$450 million
Southwest / Natural Gas Distribution Segment Guidance and Outlook:
The Company expects 2024 utility net income to finish within the top half of the current range and re-affirms its forward-looking guidance for Southwest, as follows:
(in millions, except percentages) | Current Estimates | |
2024 Southwest net income guidance(1) | ||
2024 Capital expenditures in support of customer growth, system improvements, and pipe replacement programs | ||
2024 - 2026 Southwest adjusted net income CAGR(2) | ||
2024 - 2026 Capital expenditures | ||
2024 - 2026 Southwest rate base CAGR(2) | ||
(1) Assumes | ||
(2) Net income and rate base compound annual growth rate: base year 2024. |
Centuri / Utility Infrastructure Services - Third Quarter 2024
The utility infrastructure services segment recorded net income of
Key drivers of Centuri's third quarter performance in 2024 as compared to third quarter performance in 2023 include:
, or$54.8 million 7% , decrease in revenues, driven by a reduction in offshore wind revenues of , partially offset by an increase in emergency restoration services revenue of approximately$38 million . The remaining decrease primarily relates to a reduction in net volumes under existing customer MSAs;$22.5 million , or$41 million 6% , decrease in utility infrastructure services expenses, primarily related to a lower volume of work under MSAs;- Depreciation and amortization expense decreased
between periods, primarily due to the full depreciation of certain tools/equipment within Electric operations in 2023 and more efficient utilization of existing fixed assets;$3 million - Interest expense decreased
compared to the third quarter of 2023, reflective of a reduction in the average debt balance from proceeds from Centuri's IPO and concurrent private placement; and$2.2 million - Non-GAAP adjustments to recorded third quarter 2024 earnings included
( of net after-tax strategic review and Centuri IPO costs, while the third quarter of 2023 included$0.1) million of such after-tax costs. Adjustments for the amortization of acquired intangible assets ($0.4 million , after tax) were lower when compared to the third quarter of 2023 ($4.0 million , after tax). Additionally, an adjustment for accounts receivable securitization fees and debt extinguishment loss ($5.0 million , after-tax) was made in the third quarter of 2024, while no such cost was incurred nor adjusted in the comparable period of 2023.$1.9 million
Centuri / Utility Infrastructure Services - Year-To-Date 2024
The utility infrastructure services segment recorded a net loss of
Key drivers of Centuri's year-to-date 2024 performance as compared to the corresponding period in 2023 include:
, or$314 million 14% , decrease in revenues driven by a reduction in offshore wind revenues of , partially offset by an increase in emergency restoration services revenue of approximately$71.4 million . The remaining decrease primarily relates to a reduction in net volumes under existing customer MSAs;$3.6 million , or$240 million 12% , decrease in utility infrastructure services expenses, primarily related to lower volume of infrastructure services provided under MSAs;- Depreciation and amortization expense decreased
between periods driven by a number of small tools becoming fully depreciated and more efficient utilization of existing fixed assets in recent periods; and$9 million - Non-GAAP adjustments to recorded year-to-date 2024 earnings included
of net after-tax strategic review and Centuri IPO costs, while year-to-date 2023 earnings included$2.4 million of such after-tax costs. Amortization of acquired intangible assets for the year-to-date 2024 period included$1.3 million of after-tax costs and$13.4 million of after-tax costs for the comparable 2023 period. Additionally, an adjustment was recorded for accounts receivable securitization fees and debt extinguishment loss ($15.1 million , after-tax) for the year-to-date 2024 period, while no such cost was incurred nor adjusted in the comparable 2023 period.$1.9 million
Centuri Separation Update
Southwest Gas will update investors on its plans with respect to the balance of its
Conference Call and Webcast
Southwest Gas will host a conference call on Wednesday, November 6, 2024 at 11:00 a.m. ET to discuss its third quarter 2024 results. The associated press releases and presentation slides are available at swgasholdings.com.
The call will be webcast live on the Company's website at swgasholdings.com. The telephone dial-in numbers in the
Southwest Gas Holdings, Inc., through its primary operating subsidiary Southwest Gas Corporation, engages in the business of purchasing, distributing and transporting natural gas. In addition, Southwest Gas Holdings, Inc. is the majority owner of Centuri Holdings, Inc., which provides comprehensive utility infrastructure services across
Forward-Looking Statements: This press release contains forward-looking statements within the meaning of the
Non-GAAP Measures. This press release contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the
Management also uses the non-GAAP measure, operating margin, related to its natural gas distribution operations. Southwest recognizes operating revenues from the distribution and transportation of natural gas (and related services) to customers. Gas cost is a tracked cost, which is passed through to customers without markup under purchased gas adjustment ("PGA") mechanisms, impacting revenues and net cost of gas sold on a dollar-for-dollar basis, thereby having no impact on Southwest's profitability. Therefore, management routinely uses operating margin, defined by management as regulated operations revenues less the net cost of gas sold, in its analysis of Southwest's financial performance. Operating margin also forms a basis for Southwest's various regulatory decoupling mechanisms. Management believes supplying information regarding operating margin provides investors and other interested parties with useful and relevant information to analyze Southwest's financial performance in a rate-regulated environment.
The Southwest Gas Holdings, Inc. Consolidated Earnings Digest included herein provides reconciliations for these non-GAAP measures.
We do not provide a reconciliation of forward-looking Non-GAAP Measures to the corresponding forward-looking GAAP measure due to our inability to project special charges and certain expenses. Following the Centuri IPO, we are no longer reporting Utility Infrastructure Services EBITDA and Adjusted EBITDA. Centuri will report those metrics in its own earnings materials.
SOUTHWEST GAS HOLDINGS, INC. CONSOLIDATED EARNINGS (In thousands, except per share amounts)
| ||||
QUARTER ENDED SEPTEMBER 30, | 2024 | 2023 | ||
Consolidated Operating Revenues | $ 1,079,184 | $ 1,169,492 | ||
Net Income applicable to Southwest Gas Holdings | $ 289 | $ 3,231 | ||
Weighted Average Common Shares | 71,880 | 71,626 | ||
Basic Earnings Per Share | $ — | $ 0.05 | ||
Diluted Earnings Per Share | $ — | $ 0.04 | ||
Reconciliation of Gross Margin to Operating Margin (non-GAAP measure) | ||||
Utility Gross Margin | $ 91,650 | $ 80,852 | ||
Plus: | ||||
Operations and maintenance (excluding Admin & General) expense | 81,616 | 74,427 | ||
Depreciation and amortization expense | 74,153 | 69,268 | ||
Operating Margin | $ 247,419 | $ 224,547 | ||
NINE MONTHS ENDED SEPTEMBER 30, | 2024 | 2023 | ||
Consolidated Operating Revenues | $ 3,842,308 | $ 4,066,441 | ||
Net Income applicable to Southwest Gas Holdings | $ 106,359 | $ 78,020 | ||
Weighted Average Common Shares | 71,816 | 70,488 | ||
Basic Earnings Per Share | $ 1.48 | $ 1.11 | ||
Diluted Earnings Per Share | $ 1.48 | $ 1.10 | ||
Reconciliation of Gross Margin to Operating Margin (non-GAAP measure) | ||||
Utility Gross Margin | $ 471,235 | $ 443,005 | ||
Plus: | ||||
Operations and maintenance (excluding Admin & General) expense | 246,071 | 233,302 | ||
Depreciation and amortization expense | 220,663 | 218,763 | ||
Operating Margin | $ 937,969 | $ 895,070 |
Reconciliation of non-GAAP financial measures of Adjusted net income (loss) and Adjusted diluted earnings (loss) per share and their comparable GAAP measures of Net income (loss) and Diluted earnings (loss) per share. Note that the comparable GAAP measures of Net income (loss) are also included in Note 7 - Segment Information in the Company's September 30, 2024 Form 10-Q. As noted above, under "Non-GAAP Measures," beginning with the first quarter of 2024, we have added an adjustment to adjusted net income (loss) applicable to Utility Infrastructure Services, which accordingly applies to adjusted net income (loss) applicable to Southwest Gas Holdings on a consolidated basis. In order to provide a consistent comparative presentation, we have recast Adjusted net income (loss) for the three and nine months ended September 30, 2023.
Amounts in thousands, except per share amounts | ||||||||
Three Months Ended | Nine Months Ended | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Reconciliation of Net income (loss) to non-GAAP measure of Adjusted net income (loss) | ||||||||
Net income (loss) applicable to Natural Gas Distribution (GAAP) | $ 572 | $ (3,251) | $ 163,991 | $ 150,565 | ||||
Plus: | ||||||||
Consulting fees related to optimization opportunity identification, benchmarking, and assessment | — | 1,573 | — | 3,609 | ||||
Income tax effect of adjustment above(1) | — | (378) | — | (867) | ||||
Adjusted net income (loss) applicable to Natural Gas Distribution | $ 572 | $ (2,056) | $ 163,991 | $ 153,307 | ||||
Net income (loss) applicable to Utility Infrastructure Services (GAAP) | $ 9,956 | $ 17,956 | $ (21,220) | $ 24,902 | ||||
Plus: | ||||||||
Strategic review, including Centuri separation | 189 | 549 | 2,595 | 1,777 | ||||
Income tax effect of adjustment above(1) | (46) | (137) | (177) | (444) | ||||
Accounts receivable securitization fees and debt extinguishment loss | 2,525 | — | 2,525 | — | ||||
Income tax effect of adjustment above(1) | (620) | — | (620) | — | ||||
Amortization of intangible assets(2) | 5,394 | 6,669 | 17,747 | 20,007 | ||||
Income tax effect of adjustment above(1) | (1,324) | (1,636) | (4,355) | (4,908) | ||||
Adjusted net income (loss) applicable to Utility Infrastructure Services | $ 16,074 | $ 23,401 | $ (3,505) | $ 41,334 | ||||
Net loss applicable to Pipeline and Storage (GAAP)(3) | $ — | $ — | $ — | $ (16,288) | ||||
Plus: | ||||||||
Goodwill impairment and loss on sale | — | — | — | 21,215 | ||||
Income tax effect of adjustment above(1) | — | — | — | 6,196 | ||||
Nonrecurring stand-up costs associated with integrating MountainWest | — | — | — | 2,565 | ||||
Income tax effect of adjustment above(1) | — | — | — | (616) | ||||
Adjusted net income applicable to Pipeline and Storage | $ — | $ — | $ — | $ 13,072 | ||||
Three Months Ended | Nine Months Ended | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Net loss - Corporate and administrative (GAAP) | $ (10,239) | $ (11,474) | $ (36,412) | $ (81,159) | ||||
Plus: | ||||||||
Goodwill impairment and loss on sale and sale-related expenses(4) | — | 183 | — | 52,053 | ||||
Income tax effect of adjustment above(1) | — | (44) | — | (12,493) | ||||
MountainWest stand-up, integration, and transaction-related costs | — | — | — | 291 | ||||
Income tax effect of adjustment above(1) | — | — | — | (70) | ||||
Consulting fees related to optimization opportunity identification, benchmarking, and assessment | — | 278 | — | 637 | ||||
Income tax effect of adjustment above(1) | — | (67) | — | (153) | ||||
Centuri separation cost | 555 | 3,082 | 4,932 | 7,251 | ||||
Income tax effect of adjustment above(1) | (133) | (740) | (1,183) | (1,741) | ||||
Adjusted net loss applicable to Corporate and administrative | $ (9,817) | $ (8,782) | $ (32,663) | $ (35,384) | ||||
Net income applicable to Southwest Gas Holdings (GAAP) | $ 289 | $ 3,231 | $ 106,359 | $ 78,020 | ||||
Plus: | ||||||||
Goodwill impairment and loss on sale and sale-related expenses(4) | — | 183 | — | 73,268 | ||||
Accounts receivable securitization fees and debt extinguishment loss | 2,525 | — | 2,525 | — | ||||
MountainWest stand-up, integration, and transaction-related costs | — | — | — | 2,856 | ||||
Consulting fees related to optimization opportunity identification, benchmarking, and assessment | — | 1,851 | — | 4,246 | ||||
Strategic review and Centuri separation | 744 | 3,631 | 7,527 | 9,028 | ||||
Amortization of intangible assets(2) | 5,394 | 6,669 | 17,747 | 20,007 | ||||
Income tax effect of adjustments above(1) | (2,123) | (3,002) | (6,335) | (15,096) | ||||
Adjusted net income applicable to Southwest Gas Holdings | $ 6,829 | $ 12,563 | $ 127,823 | $ 172,329 | ||||
Weighted average shares - diluted | 72,086 | 71,851 | 71,994 | 70,676 | ||||
Earnings per share: | ||||||||
Diluted earnings per share | $ — | $ 0.04 | $ 1.48 | $ 1.10 | ||||
Adjusted consolidated earnings per diluted share | $ 0.09 | $ 0.17 | $ 1.78 | $ 2.44 | ||||
(1) Calculated using the Company's blended statutory tax rate of | ||||||||
(2) The Company has determined that the adjustment for intangible asset amortization is appropriate as such is a non-cash expense and the valuation of acquired intangibles is inherently subjective. The Company owned all of Centuri prior to the IPO and owns approximately | ||||||||
(3) The information for 2023 reflects activity related to the period from January 1, 2023 to February 13, 2023 (the last full day of ownership). | ||||||||
(4) Amount includes approximately | ||||||||
SOUTHWEST GAS HOLDINGS, INC. SUMMARY UNAUDITED OPERATING RESULTS (In thousands, except per share amounts) | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Results of Consolidated Operations | |||||||
Contribution to net income (loss) - natural gas distribution | $ 572 | $ (3,251) | $ 163,991 | $ 150,565 | |||
Contribution to net income (loss) - utility infrastructure services | 9,956 | 17,956 | (21,220) | 24,902 | |||
Contribution to net income (loss) - pipeline and storage | — | — | — | (16,288) | |||
Corporate and administrative | (10,239) | (11,474) | (36,412) | (81,159) | |||
Net income | $ 289 | $ 3,231 | $ 106,359 | $ 78,020 | |||
Basic earnings per share | $ — | $ 0.05 | $ 1.48 | $ 1.11 | |||
Diluted earnings per share | $ — | $ 0.04 | $ 1.48 | $ 1.10 | |||
Weighted average common shares | 71,880 | 71,626 | 71,816 | 70,488 | |||
Weighted average diluted shares | 72,086 | 71,851 | 71,994 | 70,676 | |||
Results of Natural Gas Distribution | |||||||
Regulated operations revenues | $ 359,131 | $ 394,603 | |||||
Net cost of gas sold | 111,712 | 170,056 | 984,188 | 902,278 | |||
Operating margin | 247,419 | 224,547 | 937,969 | 895,070 | |||
Operations and maintenance expense | 129,736 | 122,270 | 390,229 | 378,189 | |||
Depreciation and amortization | 74,153 | 69,268 | 220,663 | 218,763 | |||
Taxes other than income taxes | 22,283 | 21,147 | 66,414 | 65,491 | |||
Operating income | 21,247 | 11,862 | 260,663 | 232,627 | |||
Other income, net | 16,665 | 14,537 | 48,976 | 51,722 | |||
Net interest deductions | 42,312 | 35,772 | 118,595 | 111,498 | |||
Income (loss) before income taxes | (4,400) | (9,373) | 191,044 | 172,851 | |||
Income tax expense (benefit) | (4,972) | (6,122) | 27,053 | 22,286 | |||
Contribution to net income (loss) - natural gas distribution | $ 572 | $ (3,251) | $ 163,991 | $ 150,565 | |||
Three Months Ended September 30, | Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Results of Utility Infrastructure Services | |||||||
Utility infrastructure services revenues | $ 720,053 | $ 774,889 | |||||
Operating expenses: | |||||||
Utility infrastructure services expenses | 644,928 | 685,687 | 1,765,116 | 2,005,084 | |||
Depreciation and amortization | 33,208 | 36,252 | 101,912 | 110,982 | |||
Operating income | 41,917 | 52,950 | 53,123 | 117,895 | |||
Other income (deductions) | 160 | 108 | 900 | 311 | |||
Net interest deductions | 23,925 | 26,131 | 70,653 | 73,032 | |||
Income (loss) before income taxes | 18,152 | 26,927 | (16,630) | 45,174 | |||
Income tax expense | 5,822 | 8,235 | 514 | 16,416 | |||
Net income (loss) | 12,330 | 18,692 | (17,144) | 28,758 | |||
Net income attributable to noncontrolling interests | 2,374 | 736 | 4,076 | 3,856 | |||
Contribution to consolidated results attributable to Centuri | $ 9,956 | $ 17,956 | $ (21,220) | $ 24,902 |
FINANCIAL STATISTICS | |||
Market value to book value per share at quarter end | 153 % | ||
Twelve months to date return on equity | -- total company | 5.3 % | |
-- gas segment | 8.0 % | ||
Common stock dividend yield at quarter end | 3.4 % | ||
Customer to employee ratio at quarter end (gas segment) | 929 to 1 |
GAS DISTRIBUTION SEGMENT | ||||||
Authorized Rate Base | Authorized Rate of | Authorized Return on | ||||
Rate Jurisdiction | ||||||
$ 2,607,568 | 6.73 % | 9.30 % | ||||
1,780,756 | 7.00 | 9.50 | ||||
227,060 | 7.01 | 9.50 | ||||
285,691 | 8.02 | 11.16 | ||||
92,983 | 7.91 | 11.16 | ||||
56,818 | 7.91 | 11.16 | ||||
Great Basin Gas Transmission Company(3) | 135,460 | 8.30 | 11.80 | |||
(1) Effective April 2024. | ||||||
(2) Authorized returns updated effective January 1, 2024, due to an Automatic Rate of Return Trigger Mechanism. | ||||||
(3) Estimated amounts based on 2019/2020 rate case settlement. |
SYSTEM THROUGHPUT BY CUSTOMER CLASS | ||||
Nine Months Ended | ||||
(In dekatherms) | 2024 | 2023 | ||
Residential | 59,302,419 | 69,762,210 | ||
Small commercial | 24,960,189 | 27,004,908 | ||
Large commercial | 8,196,460 | 8,340,182 | ||
Industrial / Other | 4,226,423 | 4,938,037 | ||
Transportation | 69,946,232 | 65,541,135 | ||
Total system throughput | 166,631,723 | 175,586,472 | ||
HEATING DEGREE DAY COMPARISON | ||||
Actual | 1,243 | 1,566 | ||
Ten-year average | 1,214 | 1,189 | ||
Heating degree days for prior periods have been recalculated using the current period customer mix. |
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SOURCE Southwest Gas Holdings, Inc.
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