Core Viewpoint - Southwest Gas (SWX) is making strategic investments to enhance its infrastructure and operations, benefiting from consistent customer growth, making it a solid investment option in the utility sector [1] Growth Projections & Surprise History - The Zacks Consensus Estimate for 2025 earnings per share (EPS) has increased by 5.4% to $3.73 over the past 30 days [2] - The Zacks Consensus Estimate for 2025 sales is projected at $5.25 billion, reflecting a year-over-year growth of 2.8% [2] - The long-term earnings growth rate for SWX is estimated at 9.5%, with an average earnings surprise of 6% over the past four quarters [2] Dividend Yield - The company plans to align its dividend payout ratio with that of its gas utility peers post-separation of Centuri [3] - Currently, SWX's quarterly dividend is 62 cents per share, leading to an annualized dividend of $2.48 and a dividend yield of 3.55%, which is significantly higher than the Zacks S&P 500 Composite's yield of 1.53% [3] Debt Position - Southwest Gas has a total debt to capital ratio of 57.88%, which is better than the sector average of 59.9%, indicating a stronger financial position and reduced reliance on borrowed funds [4] Focus on Strategic Investments - The company plans to invest $4.3 billion from 2025 to 2029, with an expected capital expenditure of $880 million in 2025 to support customer growth and system improvements [5] Consistent Customer Growth - SWX has a diversified customer base across Arizona, Nevada, and California, having installed 40,000 first-time meter sets in the year ending March 31, 2025 [6] - The company anticipates a 1.4% annual growth in customers through 2029, which will drive demand and enhance performance [6] Stock Price Performance - Over the past two years, SWX shares have increased by 22%, outperforming the industry's growth of 5.7% [7]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Southwest Gas (SWX) as a strong value stock based on various financial metrics [2][3][7]. Group 1: Value Metrics - Southwest Gas (SWX) has a Zacks Rank of 2 (Buy) and an "A" grade in the Value category, indicating it is among the strongest value stocks currently available [3]. - The PEG ratio for SWX is 2.06, which is lower than the industry average of 2.14, suggesting it may be undervalued relative to its expected earnings growth [4]. - The P/S ratio for SWX is 1.04, compared to the industry's average P/S of 1.56, further indicating potential undervaluation [5]. - SWX has a P/CF ratio of 8.57, which is slightly below the industry average of 8.66, reinforcing the notion of it being undervalued based on cash flow [6]. Group 2: Performance Indicators - Over the past 52 weeks, SWX's PEG ratio has fluctuated between a high of 3.56 and a low of 1.84, with a median of 3.26, indicating variability in its valuation [4]. - The P/CF ratio for SWX has ranged from a high of 9.28 to a low of 7.57, with a median of 8.47, suggesting stable cash flow performance [6]. - The combination of these metrics positions Southwest Gas as a potentially strong investment opportunity for value investors, particularly given its favorable earnings outlook [7].

Core Insights - Southwest Gas Holdings Inc. (SWX) reported first-quarter 2025 operating earnings of $1.65 per share, exceeding the Zacks Consensus Estimate of $1.61 by 2.5% and increasing 20.4% from $1.37 in the same quarter last year [1] - Total operating revenues were $1.30 billion, falling short of the Zacks Consensus Estimate of $1.70 billion by 23.5% and decreasing 18% from $1.58 billion in the prior-year quarter [1] Financial Performance - Utility infrastructure service expenses reached $528.6 million, up 2.5% from $515.6 million in the year-ago quarter [2] - Total operating income was $200.4 million, reflecting a 26.7% increase from $158.1 million in the same quarter last year [2] - Total system throughput for the first three months of 2025 was 73.12 million dekatherms, down 4.8% from 76.81 million dekatherms in the first three months of 2024 [2] Cash Flow and Debt - Cash and cash equivalents as of March 31, 2025, were $406.3 million, compared to $363.8 million as of December 31, 2024 [3] - Long-term debt, less current maturities, was $4.33 billion as of March 31, 2025, slightly down from $4.35 billion as of December 31, 2024 [3] - Net cash provided by operating activities in the first three months of 2025 was $291.3 million, down from $543.7 million in the year-ago period [3] Future Guidance - Southwest Gas anticipates the Natural Gas Distribution segment's net income for 2025 to be in the range of $265-$275 million [4] - Capital expenditures are expected to be $880 million for 2025, aimed at supporting customer growth, system improvements, and pipe replacement programs [4] - Projected capital expenditures for the 2025-2029 period are $4.3 billion, with a utility rate base CAGR of 6-8% [4] Market Position - Southwest Gas currently holds a Zacks Rank 1 (Strong Buy) [5]

Financial Data and Key Metrics Changes - The company reported record net income for the first quarter of 2025, with a trailing twelve-month return on equity (ROE) of 8.2% [9][10] - The net income guidance for the full year is reaffirmed at $265 million to $275 million [35] - Operating margin increased by $38.9 million, driven by $27 million of combined rate relief and customer growth [27][30] Business Line Data and Key Metrics Changes - The utility segment benefited from rate relief in Nevada and Arizona, contributing to higher net income [25] - Approximately 40,000 new meter sets were added over the past twelve months, indicating strong customer growth [27][22] - Century's results improved due to higher volumes under master services agreements and lower interest expenses, although offshore wind project revenues decreased [26] Market Data and Key Metrics Changes - Economic activity and demand for natural gas service remain strong, particularly in Arizona and Nevada, with significant growth in sectors like advanced manufacturing and data centers [21][22] - The Arizona Commission opened a docket to address resource adequacy of natural gas infrastructure due to increased demand [22] Company Strategy and Development Direction - The company is focused on becoming a premier fully regulated natural gas utility and is committed to separating Century to enhance shareholder value [10][11] - A capital investment plan of approximately $4.3 billion over the next five years is expected to support safety, reliability, and economic development [24] - The company aims to maintain a flat O&M cost per customer trend while achieving net income growth through regulatory strategies [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory strategy and the positive outcomes from recent rate cases in Arizona and Great Basin [10][18] - The company anticipates continued robust capital spending driven by safety, reliability, and economic activity in service territories [9][35] - Management noted that the successful execution of separation options for Century is contingent on favorable market conditions [12] Other Important Information - The company has over $400 million in cash on hand and more than $1 billion in liquidity, providing flexibility for capital investments [13] - The balance sheet remains strong, with a commitment to maintaining an investment-grade profile [33][34] Q&A Session Summary Question: What is the current status of your plans to exit Century? - Management reiterated their commitment to the separation of Century and mentioned the ability to file an S-three to facilitate market execution [42] Question: What are the financial implications of the SIM if the settlement is approved? - Management indicated that clarity on timing and projects would come once the SIM is approved, which represents about 40% of non-revenue producing infrastructure investment [43] Question: Has there been any change to Southwest Gas' internal controls or accounting processes? - Management confirmed that there have been no changes in internal controls related to the recent accounting issue that caused a delay in the earnings call [46] Question: Can you speak to the incremental CapEx investment opportunities from the influx of data centers? - Management stated that current guidance does not include material changes due to new demand but will monitor and adjust as necessary [49] Question: Is the Great Basin open season binding? - Management confirmed that the open season is binding and will provide better indications of future CapEx changes once it closes [53]

Financial Data and Key Metrics Changes - The company reported record net income for the first quarter of 2025, with a trailing twelve-month return on equity (ROE) of 8.2% [9][10] - Net income for the utility Southwest Gas increased by over $7 million or 5.2% compared to the first quarter of the previous year [30] - The utility operating margin increased by $38.9 million, driven by $27 million of combined rate relief across jurisdictions and customer growth [27] Business Line Data and Key Metrics Changes - Century's results benefited from higher volumes under master services agreements and storm-related activity, although there was a reduction in offshore wind project revenues compared to the prior year [26] - The utility saw approximately 40,000 new meter sets added over the past twelve months, contributing to customer growth [27][22] Market Data and Key Metrics Changes - Economic activity and demand for natural gas service remain strong, particularly in Arizona and Nevada, with significant growth in sectors such as advanced manufacturing and data centers [21][22] - Population growth projections for Arizona and Nevada are expected to outpace the national average over the next five years, driving demand for new gas service [23] Company Strategy and Development Direction - The company is focused on becoming a premier fully regulated natural gas utility and is committed to separating Century in a manner beneficial to stockholders [10][11] - The company plans to invest approximately $4.3 billion over the next five years to support safety, reliability, and economic development across its service territory [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming the net income guidance range of $265 million to $275 million for 2025, supported by strong regional economic outlook and completed rate cases [35] - The company aims to maintain a flat O&M cost per customer trend while navigating regulatory cycles that may impact net income growth [35] Other Important Information - The company has over $400 million in cash on hand and more than $1 billion in liquidity, providing flexibility for capital investments [13] - The company is pursuing a binding open season for potential system expansion in Great Basin, which will help gauge interest from existing and potential new shippers [16] Q&A Session Summary Question: What is the current status of your plans to exit Century? - Management reiterated their commitment to the separation of Century and mentioned the ability to file an S-three to facilitate market execution [42] Question: What are the financial implications of the SIM if the settlement is approved? - Management indicated that clarity on timing and projects would come once the SIM is approved, which represents about 40% of non-revenue producing infrastructure investment [43] Question: Has there been any change to Southwest Gas' internal controls or accounting processes? - Management confirmed that there have been no changes in internal controls related to the recent accounting issue that caused a delay in the earnings call [47] Question: Can you speak to the incremental CapEx investment opportunities from the influx of data centers? - Management stated that current guidance has not changed significantly due to the new demand, but they will monitor and adjust as necessary [50] Question: Is the Great Basin open season binding, and what CapEx is associated with it? - Management confirmed that the open season is binding and will provide better indications of future CapEx changes once it closes [54]

Financial Data and Key Metrics Changes - The company reported record net income for Q1 2025, with a trailing twelve-month return on equity (ROE) of 8.2%, following two consecutive years of over 8% ROE [9][25] - The net income guidance for the full year 2025 is reaffirmed at $265 million to $275 million [8][35] - Operating and maintenance (O&M) expenses were slightly lower quarter over quarter, contributing to higher net income [25][29] Business Line Data and Key Metrics Changes - The utility segment benefited from rate relief across jurisdictions, with combined rate relief contributing approximately $27 million to the operating margin [25][27] - Customer growth added approximately $5 million to the margin, with 40,000 new meter sets added over the past twelve months [27][29] - Century's results improved due to higher volumes under master services agreements and lower interest expenses, although offshore wind project revenues decreased compared to the prior year [26] Market Data and Key Metrics Changes - Economic activity and demand for natural gas service remain strong, particularly in Arizona and Nevada, driving significant in-migration and infrastructure investment needs [22][24] - The company expects to invest about $4.3 billion over the next five years to support safety, reliability, and economic development across its service territory [24] Company Strategy and Development Direction - The company is focused on becoming a premier fully regulated natural gas utility and is committed to separating Century in a manner beneficial to stockholders [10][11] - The regulatory strategy includes implementing a system integrity mechanism (SIM) in Arizona to recover non-revenue producing investments, which represents about 40% of annual infrastructure-related capital investments [20][21] - The company plans to continue delivering steady organic rate-based growth through strong regional demand dynamics and operational excellence [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory strategy and the positive outcomes from recent rate cases in Arizona and Great Basin [7][10] - The company anticipates that ongoing economic development and population growth will lead to more meter sets and residential customers, which currently represent about 85% of the customer mix [23][24] - Management remains optimistic about the future, emphasizing the importance of regulatory relationships and financial discipline in achieving growth [36] Other Important Information - The company has over $400 million in cash on hand and more than $1 billion in liquidity, providing flexibility for capital investments [13] - The balance sheet remains strong, with a commitment to maintaining an investment-grade profile [33][34] Q&A Session Summary Question: Current status of plans to exit Century and interest levels from potential investors - Management reiterated commitment to the separation of Century and noted the ability to file an S-three to facilitate market execution [42] Question: Financial implications of the SIM if approved - Management indicated that clarity on timing and projects would come once the SIM is approved, which is not currently included in guidance [43] Question: Impact of PGA balance changes on ATM issuance needs - Management stated that faster recovery of the PGA balance could reduce the need for ATM issuance, depending on the form of the next separation step [44] Question: Changes to internal controls or accounting processes - Management confirmed that there were no changes to internal controls at Southwest Gas related to the recent delay in earnings call [46] Question: Incremental CapEx investment opportunities from data centers and semiconductor manufacturing - Management noted that current guidance does not include material changes related to new demand but will monitor and adjust as necessary [50] Question: Binding nature of the Great Basin open season and associated CapEx - Management confirmed that the open season is binding and will provide better indications of future CapEx after it closes [54]

Southwest Gas (SWX) came out with quarterly earnings of $1.65 per share, beating the Zacks Consensus Estimate of $1.61 per share. This compares to earnings of $1.37 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 2.48%. A quarter ago, it was expected that this natural gas company would post earnings of $1.15 per share when it actually produced earnings of $1.39, delivering a surprise of 20.87%.Over the last four quarters, the ...

Financial Performance - GAAP net income was approximately $143 million, a $7.1 million increase quarter-over-quarter[21] - Adjusted diluted earnings per share increased from $1.37 in Q1 2024 to $1.65 in Q1 2025[48] - Southwest Gas expects to issue less than $100 million of equity in 2025 through the existing ATM program, pending Centuri exit path[56] - Southwest Gas reaffirmed its 2025 net income guidance of $265 - $275 million and CapEx of ~$880 million[19, 61] - The company is targeting a 6.0% to 8.0% net income growth and 6.0% to 8.0% rate base growth from 2025-2029[19] Regulatory Updates - Arizona general rate case approved, resulting in ~$80.2 million revenue increase, a 9.84% allowed return on equity, and a 48.5% allowed equity capitalization[21, 25] - GBGTC rate case approved, leading to a revenue increase of ~$9.6 million[25] - California rate case filed in September 2024, requesting a revenue increase of ~$44 million, with rates anticipated to become effective January 2026[25, 37] Growth and Operations - Approximately 40,000 new meter sets were added during the last 12 months, resulting in a 1.8% customer growth rate[21] - Operations and maintenance expense decreased by 1.1% over the first three months of 2025 compared with the same period in 2024[21] - The company projects a population growth of 4.40% in Arizona and 3.42% in Nevada from 2025 to 2030[42]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | Commission | Exact name of registrant as specified in its charter and | | | State of | I.R.S. | | --- | --- | --- | --- | --- | --- | | File Number | principal of ice address and telephone number | ...

Southwest Gas Holdings, Inc. Reports First Quarter 2025 Financial Results, Reaffirms Guidance Delivers a Last-Twelve-Months' Utility ROE of 8.2% and Earnings Growth of 5.2% over 1Q 2024 Receives ~$80.2 Million Annual Revenue Increase from Completed Arizona Rate Case LAS VEGAS – May 12, 2025 – Southwest Gas Holdings, Inc. (NYSE: SWX) ("Southwest Gas Holdings" or "Company") today reported results for its first quarter ended March 31, 2025. This earnings press release should be read in conjunction with the For ...