Key Takeaways SWX gains from rising customer base, new rates and economic growth, supporting stable revenue flow. Southwest Gas plans $6.3B capital spending through 2030 to boost infrastructure and reliability. SWX projects 9.5-11.5% annual net income growth, aided by efficiency and financial flexibility. Southwest Gas (SWX) benefits from contributions from an expanding customer base, driven by regional economic development and new rates. Debt management and systematic capital investment to strengthen infra ...

Core Viewpoint - Southwest Gas Holdings reported a modest Q4 EPS miss on February 25, but the focus for investors is on future developments [1] Financial Performance - The company experienced a slight earnings per share (EPS) miss in Q4, indicating potential challenges in meeting market expectations [1] Future Outlook - Investors are particularly interested in the company's strategic plans and potential growth opportunities moving forward, beyond the recent earnings report [1]

Core Insights - Southwest Gas Holdings Inc. (SWX) reported fourth-quarter 2025 operating earnings of $1.36 per share, missing the Zacks Consensus Estimate of $1.40 by 2.9% and down from $1.39 in the same quarter last year [1] - For the full year 2025, SWX's earnings per share were $3.65, reflecting a 15.5% increase from $3.16 in 2024 [1] Revenue Performance - Operating revenues for Q4 2025 totaled $0.48 billion, falling short of the Zacks Consensus Estimate of $0.58 billion by 17.7% and down 62.2% from $1.27 billion in the prior-year quarter [2] - Total revenues for 2025 were $1.94 billion, a significant decrease of 62% compared to $5.11 billion in 2024 [2] Expense and Income Analysis - Operations and maintenance expenses in 2025 were $544.1 million, an increase of 3.3% from $526.7 million in the previous year [3] - Total operating income for 2025 was $473.9 million, up 16.6% year over year [3] - Total system throughput in 2025 was 204.69 million dekatherms, down 6.7% from 219.43 million dekatherms in 2024 [3] Financial Position - As of December 31, 2025, cash and cash equivalents were $576.6 million, up from $314.8 million a year earlier [4] - Long-term debt, less current maturities, was $3.43 billion as of December 31, 2025, down from $3.50 billion as of December 31, 2024 [4] - Net cash provided by operating activities for 2025 was $0.56 billion, compared to $1.36 billion in the previous year [4] Future Guidance - For 2026, Southwest Gas expects earnings per share to be in the range of $4.17-$4.32, with the Zacks Consensus Estimate at $4.13 [5] - The company anticipates a rate base compound annual growth rate of 9.5-11.5% for the period from 2026 to 2030 [5] - Projected capital expenditure for 2026 is $1.25 billion, with total capital expenditure expected to reach $6.3 billion from 2026 to 2030 [5]

Karen Haller: Thanks, Tyler. Good morning, everyone, and thank you for joining us today. Last year, we turned the page on our transformational strategy with the successful disposition of Century in September. An important milestone that completed our transition to a fully regulated natural gas business. This strategic step enabled us to fully pay down the remaining holding company debt, strengthened our balance sheet, and unlocked meaningful capital to reinvest in our core operations. With our focus now ful ...

Core Viewpoint - Southwest Gas reported quarterly earnings of $1.36 per share, missing the Zacks Consensus Estimate of $1.4 per share, representing an earnings surprise of -2.86% [1] - The company posted revenues of $480.74 million for the quarter, missing the Zacks Consensus Estimate by 17.73%, compared to year-ago revenues of $1.27 billion [2] Financial Performance - Earnings per share (EPS) for the previous year was $1.39, indicating a slight decline year-over-year [1] - Over the last four quarters, the company has surpassed consensus EPS estimates two times [2] - The current consensus EPS estimate for the upcoming quarter is $1.97, with expected revenues of $897.07 million, and for the current fiscal year, the estimate is $4.13 on $2.71 billion in revenues [7] Market Performance - Southwest Gas shares have increased by approximately 10% since the beginning of the year, outperforming the S&P 500's gain of 0.7% [3] - The company's stock is currently rated Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Industry Outlook - The Utility - Gas Distribution industry is currently in the bottom 41% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

Financial Data and Key Metrics Changes - In 2025, the company reported adjusted earnings per diluted share from continuing operations increased nearly 19%, from $3.07 in 2024 to $3.65 in 2025, representing a $0.58 improvement year-over-year [27] - Adjusted net income increased by 8.7% from $261.2 million in 2024 to $283.9 million in 2025, exceeding guidance by nearly $9 million [29] - Consolidated GAAP earnings per diluted share for 2025 were $6.08, which included discontinued operations from the sale of Centuri [26] Business Line Data and Key Metrics Changes - The utility's substantial net income growth was primarily driven by positive regulatory outcomes and strong economic activity in the service area, further enhanced by cost optimization efforts [12] - The company achieved a nearly $120 million improvement in operating margin, reflecting combined rate relief and continued customer growth [30] Market Data and Key Metrics Changes - The company expects significant earnings per share growth of 12%-14% from 2025-2030, driven by anticipated improvements in the regulatory environment [9] - The company anticipates filing rate cases in Arizona and Nevada, which are expected to be catalysts for better aligning capital recovery with investments [15] Company Strategy and Development Direction - The company has transitioned to a fully regulated natural gas business, allowing for a stronger foundation and greater flexibility to execute strategic priorities [5] - The 2026 strategy is anchored in operational excellence, financial discipline, and regulatory progress, with a focus on improving returns and advancing customer-focused investments [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the introduction of 2026 and long-term guidance ranges, with a focus on sustainable value for customers and shareholders [8] - The company is confident in its ability to execute its plan with discipline and create long-term value for stockholders while driving meaningful outcomes for all stakeholders [14] Other Important Information - The board approved a 4% increase in the annual dividend, bringing it to an annualized $2.58 per share for 2026 [41] - The company has a significant cash balance of nearly $600 million, expected to be utilized for dividend payments and reinvestment in the utility business [12] Q&A Session Summary Question: Discussion on equity and timing - Management indicated that they do not anticipate needing equity in 2026 and plan to utilize holding company leverage capacity to offset capital needs [55][56] Question: Scope of the Great Basin project - Management confirmed that there is strong demand for the Great Basin project, with potential for additional capacity based on future customer interest [60][62] Question: Earnings contribution post-Great Basin in-service - Management expects the Great Basin project to contribute significantly to margin, with full benefits anticipated in 2029 and 2030 [72] Question: Rate case outcomes and historical experience - Management acknowledged the importance of historical success in rate case outcomes and the potential for formula rate adjustments to enhance earnings contributions [74] Question: Progress in Nevada workshops - Management reported positive progress in Nevada workshops, with expectations for draft regulations to be released soon [79]

Financial Data and Key Metrics Changes - In 2025, the company reported adjusted net income of $283.9 million, an increase of 8.7% from $261.2 million in 2024, exceeding guidance by nearly $9 million [29][30] - Adjusted earnings per diluted share from continuing operations rose nearly 19% to $3.65 in 2025 from $3.07 in 2024, driven by utility optimization and lower financing costs [27][28] - The adjusted return on equity for the year was 8.3%, supported by effective cost management and regulatory outcomes [8] Business Line Data and Key Metrics Changes - The utility's substantial net income growth was primarily driven by positive regulatory outcomes and strong economic activity in the service area [12] - Operating margin improved by nearly $120 million, reflecting combined rate relief and customer growth [30] - O&M expenses increased by $16.8 million, with a focus on managing costs while delivering natural gas service [31] Market Data and Key Metrics Changes - The company anticipates significant earnings per share growth of 12%-14% from 2025 to 2030, driven by improvements in the regulatory environment [9][45] - The expected revenue increase in the Arizona rate case is over $100 million, with a proposed rate base of $3.9 billion [18] Company Strategy and Development Direction - The company has transitioned to a fully regulated natural gas business, allowing for a stronger focus on core operations and strategic priorities [5][11] - The 2026 strategy emphasizes operational excellence, financial discipline, and regulatory progress, with a capital plan of approximately $1.25 billion for 2026 [10][36] - The company is initiating a five-year capital guidance of approximately $6.3 billion, with 73% directed towards Southwest Gas and 27% towards Great Basin [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities, particularly with the anticipated improvements in regulatory frameworks in Arizona and Nevada [9][15] - The company expects to maintain a disciplined strategy focused on investing in capital plans while sustaining responsible annual dividend growth [10][41] - Management highlighted the importance of reducing regulatory lag and aligning capital recovery with investments to improve long-term earnings visibility [15][63] Other Important Information - The board approved a 4% increase in the annual dividend, bringing it to an annualized $2.58 per share for 2026 [10][41] - The company achieved an S&P credit rating upgrade to BBB+ with stable outlooks following the completion of the Centuri disposition [11][12] Q&A Session Summary Question: Discussion on equity needs and timing - Management indicated that they do not anticipate equity needs in 2026 and plan to utilize holding company leverage capacity to offset capital needs [55][56] Question: Details on the Great Basin project and customer interest - Management confirmed strong demand for the Great Basin project, with nearly 800 MCF subscribed, and indicated potential for future open seasons to accommodate additional interest [60][62] Question: Earnings contribution post-Great Basin in-service - Management expects significant margin contributions from the Great Basin project, estimated at $215 million-$245 million annually once operational [72] Question: Rate case outcomes and historical success - Management acknowledged the importance of historical success in rate case outcomes and the potential for formula rate adjustments to enhance earnings contributions [74][75] Question: Progress in Nevada workshops and ROE considerations - Management reported positive progress in Nevada workshops and indicated that recent regulatory decisions could provide a constructive framework for future rate cases [78][80]

Financial Data and Key Metrics Changes - In 2025, the company achieved an adjusted net income of $283.9 million, an increase of 8.7% from $261.2 million in 2024, exceeding guidance by nearly $9 million [26][27] - Adjusted earnings per diluted share from continuing operations rose nearly 19% from $3.07 in 2024 to $3.65 in 2025 [25] - The adjusted return on equity for the year was 8.3%, supported by utility optimization efforts and effective cost management [6] Business Line Data and Key Metrics Changes - The utility's substantial net income growth was primarily driven by positive regulatory outcomes and strong economic activity in the service area [11] - Rate relief and continued customer growth contributed approximately $0.30 per share to EPS, while increased depreciation and amortization, along with higher interest expenses, partially offset these gains [25][27] Market Data and Key Metrics Changes - The company anticipates significant earnings per share growth of 12%-14% from 2025 to 2030, driven by improvements in the regulatory environment and the Great Basin project [8][41] - The expected revenue increase in the Arizona rate case is over $100 million, with a proposed rate base of $3.9 billion [17] Company Strategy and Development Direction - The company has transitioned to a fully regulated natural gas business following the successful disposition of Centuri, allowing for a stronger balance sheet and focus on core operations [4] - The strategic priorities for 2026 include improving returns, advancing customer-focused investments, and strengthening regulatory frameworks [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities, particularly with the anticipated improvements in regulatory frameworks in Arizona and Nevada [8][41] - The company plans to maintain a disciplined strategy focused on investing in capital plans while sustaining responsible annual dividend growth [9][39] Other Important Information - The board approved a 4% increase in the annual dividend, bringing it to an annualized $2.58 per share for 2026 [39] - The company has a cash balance of nearly $600 million, expected to fund current year dividend payments and be redeployed into utility business investments [11][33] Q&A Session Summary Question: Discussion on equity timing and engagement with rating agencies - Management indicated that they do not anticipate equity needs in 2026 and plan to utilize holding company leverage capacity to minimize equity requirements [50][53] Question: Inquiry about the Great Basin project capacity and customer interest - Management confirmed strong demand for the Great Basin project, with nearly 800 MCF subscribed, and indicated potential for future open seasons to capture additional interest [56][58] Question: Clarification on earnings uplift cadence and regulatory lag reduction - Management highlighted that upcoming rate cases in Arizona and Nevada are expected to be catalysts for reducing regulatory lag and improving earnings visibility [60][62] Question: Earnings contribution from Great Basin post-in-service - Management projected that the Great Basin project would contribute an incremental margin of approximately $215 million-$245 million once in service [70] Question: Progress in Nevada workshops and ROE considerations - Management reported positive progress in Nevada workshops and indicated that recent regulatory decisions could provide a constructive framework for future rate cases [76][79]

EARNINGS CONFERENCE CALL Full Year 2025 Results F E B R U A R Y 2 5 , 2 0 2 6 Safe Harbor Statement Forward-Looking Statements Unless context otherwise requires, in this presentation, references to "we", "us" and "our" are to Southwest Gas Holdings, Inc. (NYSE: SWX) ("Southwest Gas Holdings" or the "Company" or "SWX") together with its current consolidated subsidiaries, which include, among others, Southwest Gas Corporation ("Southwest Gas", "SWG", "Utility" or "Natural Gas Distribution" segment), Great Bas ...

Regulatory and Compliance - Southwest Gas filed a general rate case in California in September 2024, requesting rates effective January 1, 2026[38]. - California's legislation requires Southwest Gas to comply with the GHG Emissions Reporting Program and aims to reduce GHG emissions to 40% below 1990 levels by 2030, with an extension to 2045[64]. - Southwest Gas successfully met its three-year compliance obligation ending in 2023 by surrendering a sufficient number of allowances and carbon offsets[66]. - In December 2025, the CPUC conditionally approved Southwest Gas' purchasing agreement for RNG supplies, which was filed for approval on July 28, 2025[67]. Market and Supply - For the 2025/2026 heating season, firm fixed-price physical commodity purchases ranged from approximately $4.02 to approximately $5.37 per dekatherm[44]. - Southwest Gas acquired natural gas from 44 suppliers in 2025, ensuring competitive pricing and reliability in its supply portfolio[41]. - The natural gas market has shown stability in 2024 and 2025, with prices competitive compared to other energy forms[52]. - The company has limited market area storage services availability, impacting its operational flexibility[49]. Infrastructure and Capacity - Southwest Gas operates a 233,000 dekatherm above-ground LNG regasification facility in southern Arizona to enhance service reliability[50]. - Great Basin, a subsidiary of Southwest Gas, is undertaking an expansion project to increase system capacity and better serve customer demand[59]. Energy Initiatives and Sustainability - Southwest Gas is actively involved in energy efficiency initiatives and supports renewable energy efforts in response to state policies[57]. - The company does not anticipate any material adverse impact on operating margin from fuel switching or alternative energy initiatives over the near term[57]. - Southwest Gas is committed to providing safe, reliable, sustainable, and affordable natural gas service while supporting renewable initiatives and the use of RNG and CNG as transportation fuels[61]. - In 2025, Southwest Gas held a public hearing for its 2024 hydrogen blending application in California to establish a hydrogen injection standard[61]. - The company is actively working with California natural gas distribution companies to meet requirements for incorporating RNG produced from diverted waste into its gas supply portfolios[67]. Workforce and Culture - The average tenure of Southwest Gas employees is approximately 11 years, contributing to knowledge transfer and succession processes[73]. - As of December 31, 2025, Southwest Gas had 2,453 regular full-time equivalent employees, emphasizing the importance of a skilled workforce for safety performance and customer satisfaction[73]. - Southwest Gas is committed to a culture of continuous improvement in operations and efficiency, with safety metrics forming part of incentive compensation programs for leaders[72]. Financial Impact - The California Climate Credit, implemented in October 2018, represents a return of auction proceeds, updated annually and distributed each April, with no expected direct impact on earnings[66].