Southwest Gas Holdings (SWX) Q2 2024 earnings summary

Executive summary

• Completed Centuri IPO in April 2024, raising $328 million, with proceeds used to reduce Centuri's debt; Southwest Gas Holdings retains 81% ownership post-IPO and is evaluating further separation options.

• Achieved record operating margin and strong customer growth, adding 40,000 new meter sets over the past 12 months.

• Ended Q2 2024 with nearly $600 million in cash, following collection of deferred purchased gas costs and maintaining a strong balance sheet.

• Raised 2024 utility net income guidance by $5 million to $233–$243 million, reflecting strong performance and regulatory outcomes.

• Net income for Q2 2024 was $18.3 million (GAAP), with adjusted net income of $22.5 million and adjusted EPS of $0.31, down from Q2 2023.

Financial highlights

• Consolidated adjusted EPS for Q2 2024 was $0.31, down from $0.54 in Q2 2023, mainly due to lower Centuri volumes and higher holdco interest expense.

• Utility net income increased by $8 million year-over-year in Q2 2024, with natural gas distribution segment reporting $27.6 million net income.

• Utility operating margin rose by nearly $11 million, driven by increased recovery on prior investments and customer growth.

• O&M expenses up less than 2% year-over-year for the first six months of 2024.

• Consolidated Q2 2024 operating revenues were $1.18 billion, down from $1.29 billion in Q2 2023.

Outlook and guidance

• 2024 utility net income guidance raised to $233–$243 million, with net income CAGR expected at 9.25%–11.25% from 2024 to 2026.

• Utility CapEx for 2024 reaffirmed at approximately $830 million; $2.4 billion planned for 2024–2026.

• Rate base CAGR guidance reaffirmed at 6.5%–7.5% for 2024–2026.

• Limited equity needs: less than $100 million in 2024, $150 million over two years, and no significant debt refinancing needs.

• Board intends to reevaluate the dividend after full Centuri separation, aiming for a payout consistent with industry peers.