Southwest Gas Rides on Investment, Expanding Customer Base

Core Viewpoint - Southwest Gas Holdings Inc. (SWX) is implementing systematic investment plans and accretive acquisitions to enhance its performance, supported by consistent customer growth in its natural gas segment [1] Group 1: Investment Plans and Financials - The company plans a capital investment of $2.4 billion from 2024 to 2026, with$750 million invested in 2023, reflecting a 6% increase from 2022 [2] - The expected capital expenditure for 2024 is $830 million, aimed at supporting customer growth, system improvements, and pipe replacement programs [2] - New natural gas rates, rising demand from an expanding customer base, and efficient expense management are anticipated to boost net income [4] Group 2: Customer Base and Demand - SWX has a diversified and growing customer base across Arizona, Nevada, and California, having installed 41,000 first-time meter sets in the year ending September 30, 2024 [3] - The ongoing increase in the customer base is expected to drive demand and enhance company performance [3] Group 3: Performance Expectations - The company anticipates a rate base growth of 6.5-7.5% over the next three years, with plans to achieve flat operation and maintenance (O&M) expenses per customer during 2024-2026 [5] - Improvements in economic conditions and strong demographics are expected to further drive performance [5] Group 4: Risks and Dependencies - SWX's reliance on interstate pipelines for natural gas transportation poses risks; any interruption in service could impact its ability to meet customer demand [6] - The company does not own significant assets beyond its operating subsidiaries, making it dependent on these units for financial needs [7] Group 5: Stock Performance - Over the past year, SWX shares have increased by 24.7%, slightly outperforming the industry growth of 24.6% [8]