Southwest Gas Holdings (SWX) Q3 2024 earnings summary

Executive summary

• Achieved record operating margin and strong customer growth, adding 41,000 new meter sets in the last 12 months, driven by robust economic activity in Arizona and Nevada.

• Progressed on strategic transformation to a fully regulated natural gas utility, with continued steps toward full Centuri separation, including completion of Centuri IPO and reduction of ownership to 81%.

• Advanced regulatory strategy with filings and approvals in California, Arizona, Nevada, and GBGTC, supporting constructive rate base growth.

• Ended Q3 2024 with over $450 million in consolidated cash, following collection of deferred purchased gas costs and no equity issuance expected in 2024.

• Extended $550 million term loan to July 2025 and $400 million revolving credit facility to August 2029, with reduced interest spread.

Financial highlights

• Q3 2024 consolidated adjusted EPS was $0.09, with GAAP net income of $0.3 million; utility segment net income was $0.6 million, up from a loss last year.

• Year-to-date consolidated net income was $106.4 million, up from $78 million in 2023; utility segment year-to-date net income was $164 million, up from $150.6 million.

• Utility operating margin increased by nearly $23 million year-over-year in Q3, with $16 million from rate relief and $2 million from customer growth.

• Centuri segment Q3 net income was $10 million (adjusted $16 million), down from $18 million (adjusted $23.4 million) in Q3 2023, due to lower MSA work and reduced offshore wind projects.

• Cash flows from operations increased $956 million year-over-year, mainly from collection of deferred purchased gas costs.

Outlook and guidance

• 2024 utility net income expected in the top half of $233–$243 million guidance range; reaffirmed 2024–2026 utility net income CAGR of 9.25%–11.25%.

• Capital expenditure plan of ~$830 million for 2024 and $2.4 billion over 2024–2026, with rate base CAGR of 6.5%–7.5%.

• No equity issuance expected in 2024; limited capital markets needs through 2025, subject to Centuri separation execution.

• Dividend to remain flat while Centuri separation options are evaluated; policy to be sized post-separation.