Southwest Gas (US:SWX)2025-11-05 13:14Financial Performance - For the three months ended September 30, 2025, operating revenues decreased to $316,911 thousand from $359,131 thousand in the same period of 2024, representing a decline of approximately 11.1%[20] - Net income for the nine months ended September 30, 2025, was $366,817 thousand, significantly higher than $110,435 thousand for the same period in 2024, marking an increase of approximately 231.5%[24] - The company reported an operating income of $37,008 thousand for Q3 2025, compared to $20,122 thousand in Q3 2024, reflecting a year-over-year increase of approximately 83.9%[20] - The basic earnings per share for continuing operations was $0.06 for Q3 2025, compared to a loss of $0.13 in Q3 2024, showing a turnaround in performance[20] - Net income for Q3 2025 was $5,520, compared to $572 in Q3 2024, representing a significant increase[34] - Net income for the three months ended September 30, 2025, was $5,520,000, compared to $135,825,000 for the same period in 2024, reflecting a significant decrease[51] - Net income attributable to Southwest Gas Holdings for the three months ended September 30, 2025, was $270.5 million, compared to $289,000 in the same period of 2024[98] - Net income attributable to Southwest Gas Holdings, Inc. for the nine months ended September 30, 2025, was $371,463,000, compared to $106,359,000 for the same period in 2024, indicating a significant increase[88][89] Cash Flow and Liquidity - Cash and cash equivalents at the end of the period increased to $778,631 thousand from $456,643 thousand year-over-year, representing a growth of approximately 70.5%[24] - The company reported net cash provided by operating activities of $474,508 thousand for the nine months ended September 30, 2025, compared to $1,154,336 thousand in 2024, a decrease of about 58.9%[24] - Cash and cash equivalents decreased to $181,996 at the end of Q3 2025 from $311,073 at the end of 2024, a decline of 41.5%[32] - Operating cash flows for Southwest Gas Holdings decreased by $553.3 million in the first nine months of 2025 compared to the same period in 2024, primarily due to reduced collection of previously deferred purchased gas costs[134] - Cash flows used in investing activities decreased by $66.5 million in the first nine months of 2025, driven by reduced capital expenditures and property additions[135] - Cash flows used in financing activities increased by $705.5 million in the first nine months of 2025, including a full payment of a $550 million term loan and a $130 million paydown on the revolving credit facility[136] Expenses and Liabilities - Total operating expenses for the nine months ended September 30, 2025, were $1,144,425 thousand, down from $1,666,222 thousand in 2024, indicating a reduction of about 31.2%[20] - The company incurred net interest deductions of $49,003 thousand for Q3 2025, down from $53,806 thousand in Q3 2024, reflecting a decrease of about 8.4%[20] - Total current liabilities decreased to $804,703 thousand as of September 30, 2025, from $1,831,967 thousand at the end of 2024, a reduction of approximately 56.1%[17] - The total capitalization and liabilities as of September 30, 2025, stood at $10,328,579 thousand, down from $12,072,906 thousand at the end of 2024, indicating a decrease of approximately 14.5%[17] - Interest expense for the nine months ended September 30, 2025, was $156,787,000, an increase from $152,452,000 for the same period in 2024[89] Equity and Shareholder Returns - As of September 30, 2025, total equity for Southwest Gas Holdings, Inc. was $3,928,679,000, reflecting an increase from $3,504,187,000 on December 31, 2024[28] - The balance of retained earnings increased to $999,399,000 as of September 30, 2025, up from $758,649,000 on March 31, 2025[28] - The balance of retained earnings as of September 30, 2025, was $1,233,196,000, up from $1,096,149,000 as of December 31, 2024[51] - Dividends declared remained consistent at $0.62 per share, totaling $45,016,000 for the quarter ending June 30, 2025[28] - The quarterly dividend was maintained at $0.62 per share, effective June 2025, reflecting the company's commitment to consistent dividend payments[145] Capital Expenditures and Investments - Capital expenditures for the nine months ended September 30, 2025, were $570,351, down from $643,720 in the same period of 2024[40] - Capital expenditures for the Natural Gas Distribution segment were $570.4 million during the nine-month period ended September 30, 2025, associated with new construction and pipeline replacements[143] - Management estimates capital expenditures will total approximately $2.6 billion over the three years ending December 31, 2027, with about $880 million expected in 2025[144] Strategic Operations and Changes - The Company completed the sale of its remaining shares of Centuri on September 5, 2025, marking a strategic shift in operations[45] - Following the deconsolidation of Centuri, the Company recognized a gain of $230.4 million, resulting in a net gain of $220.7 million related to the disposition of its retained interest in Centuri[74] - The Company completed a final public offering of Centuri common stock on September 5, 2025, generating net proceeds of approximately $524.0 million after deducting fees of about $900,000[75] - The Company completed the divestiture of its ownership in Centuri, utilizing $1.3 billion in proceeds for debt repayment and general corporate purposes[153] Regulatory and Tax Matters - The effective tax rate for the three months ended September 30, 2025, was (23.8)%, compared to 46.0% for the same period in 2024[54] - The Company recorded a tax expense of $14.4 million for the three-month period ended September 30, 2025, related to the recognition of outside basis differences[79] - For the nine months ended September 30, 2025, the effective tax rate was 18.4%, up from 14.2% in the same period of 2024[55] Customer and Market Insights - As of September 30, 2025, Southwest Gas had approximately 2,276,000 customers, with 54% of operating margin earned in Arizona, 34% in Nevada, and 12% in California[93] - The demand for natural gas is seasonal, with greater demand in colder months, and the company utilizes decoupled rate structures to mitigate weather impacts on revenue[95] - The company added approximately 40,000 first-time meter sets over the past twelve months, a slight decrease from 41,000 during the previous twelve months[93] - The company added approximately 40,000 first-time meter sets over the past twelve months, resulting in a 1.8% growth rate in customer base[103] Miscellaneous - The Company plans to adopt ASU 2023-09 for enhanced income tax disclosures starting Q4 2025, with no material impact expected on disclosures[57] - The company has a $400 million revolving credit facility expiring in August 2029, with no borrowings outstanding as of September 30, 2025[64] - The Arizona General Rate Case resulted in an authorized annual rate increase of approximately $80.2 million, effective March 2025[112] - The Nevada General Rate Case resulted in an approved annual revenue increase of $59 million, with a return on common equity set at 9.5%[119] - The California General Rate Case updated its revenue increase request to $43.7 million, with a return on common equity of 11.35%[125]