Southwest Gas Holdings, Inc. · NYSE:SWX
Southwest Gas — Q2 2024 Earnings Presentation
33 slides from Southwest Gas's earnings presentation, Aug 6, 2024
Slide 1: Earnings Conference Call Second Quarter 2024 Results
Earnings Conference Call Second Quarter 2024 Results August 6, 2024
Slide 2: Safe Harbor Statement
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” or the “Company” or “SWX”) together with its current and former consolidated subsidiaries, whi
Slide 3: Non-GAAP Measures
Non-GAAP Measures This presentation contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP measures include (i) Southwest Gas adjusted earnings (loss) per share, (ii) Southwest Gas adjusted net income
Slide 4: Speakers and Agenda
SPEAKERS Speakers and Agenda KAREN HALLER ROB STEFANI PRESIDENT AND CEO CFO SOUTHWEST GAS HOLDINGS SOUTHWEST GAS HOLDINGS PRESENTATION AGENDA Strategic and Business Update Financial Update Guidance and Outlook August 6, | 4 2024
Slide 5: SWX: Becoming a Premier, Fully Regulated Natural Gas Utility
SWX: Becoming a Premier, Fully Regulated Natural Gas Utility Positioned for Continued Growth and Success » Safely delivering reliable, sustainable, and affordable energy solutions » Significant population growth and strong demand across service territories Committed to Delivering Value for » Clear s
Slide 6: Advancing SWX's 2024 Strategic Priorities
Advancing SWX’s 2024 Strategic Priorities Centuri Separation Public Filing of S-1 Complete ✓ 2Q 2024 Centuri Deleveraging/Refinancing Complete ✓ 2Q 2024 Initial Public Offering (“IPO”) Execution Complete ✓ 2Q 2024 Complete Separation Pending 2024 Financing Plan SWX Equity issuance under ATM2 program
Slide 7: Current Rate Case Activity
Current Rate Case Activity Southwest remains committed to a purposeful regulatory strategy intended to limit regulatory lag Nevada Arizona California Requested Requested Requested Continue to Expect California Docket # 23-09012 Docket # G-01551A-23-0341 Docket # RP24-514-000 Rate Case Filing in 3Q 2
Slide 8: Delivering Strong Results
Delivering Strong Results GAAP Net income of ~$28 million, $8 million year-over-year increase in 2Q 2024 net income Approximately 40,000 new meter sets added during the last 12 months NV general rate case approved (~$59 million revenue increase), including an increase in allowed return on equity (9.
Slide 9: Financial Update
Financial Update
Slide 10: 2Q 2024 SWX Earnings Per Share Results
2Q 2024 SWX Earnings Per Share Results GAAP SWX 2Q 2024 Diluted EPS Results Adj. SWX 2Q 2024 Diluted EPS Results1 Financial Highlights • Consolidated second quarter 2024 adjusted net income of $22.5 million resulting in adjusted earnings per share of $0.311 • Southwest margin improved as a $0.54 res
Slide 11: 2Q 2024 SWX Adjusted Diluted Earnings Per Share Walk
2Q 2024 SWX Adjusted Diluted Earnings Per Share Walk Adjusted Earnings Per Share1 Financial Highlights Favorable Unfavorable • Southwest benefited from higher margin $0.09 from rate relief and customer growth, which was partially offset by modest $0.54 O&M increases and reductions in interest income
Slide 12: 2Q 2024 Southwest GAAP Net Income
Year-over-year net income (loss) drivers include: (parentheses indicate unfavorable net income drivers) 2Q 2024 Southwest GAAP Net Income favorable impact unfavorable impact NATURAL GAS DISTRIBUTION SEGMENT Operating Margin1 • $18 million – Recovery of investments • $2 million – Customer growth • $2
Slide 13: 2024 Financing Plan
2024 Financing Plan Assumptions Sources & Uses Sources & Uses » Centuri IPO completed 2Q 2024; consolidated ($ in billions)1 ($ in billions)1 throughout 2024 $1.6 $1.6 » Significant cash from collection of PGA at CTRI IPO CTRI Debt $1.1 $1.1 Southwest Net Proceeds $0.3 $0.3 Paydown Working » Cash fl
Slide 14: Balance Sheet Strength
Balance Sheet Strength SWX and SWG are committed to maintaining an investment grade profile Net Debt1 ($ in billions) Credit Ratings and Outlook3 Total PGA2 Net Debt Moody’s Standard and Poor’s Fitch Cash Net Debt less Debt Balance PGA Ratings Outlook Ratings Outlook Ratings Outlook $0.7 $0.0 $0.7 n
Slide 15: Guidance and Outlook
Guidance and Outlook > SOUTHWEST GAS
Slide 16: Southwest 2024 and Forward-Looking Financial Guidance
Southwest 2024 and Forward-Looking Financial Guidance 2024 Guidance Current Net Income1 $233 - $243 million Southwest raised 2024 utility CapEx ~$830 million net income guidance range to $233 – $243 million. 2024 – 2026 utility net income Forward-Looking Guidance CAGR guidance updated to 2024 – 2026
Slide 17: Positioned to Unlock Significant Stockholder Value
Positioned to Unlock Significant Stockholder Value Enhancing SWX credit profile through Positive regulatory developments and strong strengthening capital and strategic flexibility by organic rate base growth separation of Centuri Optimizing the utility to deliver value through financial discipline,
Slide 18: Contact Information
Contact Information Investors & Analysts Justin S. Forsberg Vice President of Investor Relations & Treasurer (702) 364-3135 justin.forsberg@swgas.com Media Sean Corbett Manager, Corporate Communications (702) 364-3310 corpcomms@swgas.com August 6, 2024 | 18
Slide 19: Appendix
Appendix
Slide 20: Maintaining a Competitive Dividend
Maintaining a Competitive Dividend Upon completion of the separation of Centuri, Southwest Gas Holdings plans to target a dividend payout ratio in line with gas utility peers SWX Annual Dividend Per Share • Southwest Gas Holdings is committed to paying a competitive dividend $2.48 $2.48 $2.48 • Sout
Slide 21: Utility Optimization Progress
Utility Optimization Progress In 2023 Southwest boosted its culture of continuous improvement and optimization by identifying opportunities to generate long-term benefits for all stakeholders Accelerating our Pursuit of Excellence: Striving to be a leader in safety, quality, customer service, operat
Slide 22: Summary of Gas Cost Balances and Recovery Mechanisms
Summary of Gas Cost Balances and Recovery Mechanisms PGA1 Receivable Balance and Recovery Mechanism Summary June 2024 March 2024 Gas Cost Rate Receivable (Payable) State Receivable Balance Carrying Cost Rate Adjustment Balance ($ in millions) Frequency ($ in millions) AZ $135.9 $31.5 1-Year Treasury
Slide 23: Southwest Net Income Drivers and Assumptions
Southwest Net Income Drivers and Assumptions Drivers 2024 2025 2026 Nevada rates effective April 2024 Arizona rates effective California rates Rate Relief GBGTC rates effective April 2025 effective January 2026 September 2024 Assumes rate case filings and outcomes in line with historical c
Slide 24: Regulatory Update - Nevada
Regulatory Update - Nevada Rate Case Activity Nevada Rate Case Outcome Summary Dollars in millions Proposed Revenue Increase1 $73.9 ~98% of request after Depreciation Expense ($6.8) depreciation adjustment and Authorized $59 million Cost of Service Adjustment ($1.6) before adjustments Stipulated Rev
Slide 25: Regulatory Update - Arizona
Regulatory Update - Arizona Rate Case Activity Arizona Rate Case Filing Summary In February 2024, Southwest filed a rate case requesting a revenue increase of approximately $126 million with rates anticipated to become effective April 2025 Proposed System Improvement Benefit (SIB) Mechanism Encompas
Slide 26: Regulatory Update – GBGTC and California
Regulatory Update – GBGTC and California Rate Case Activity GBGTC Filing Summary Filed GBGTC rate case on March 6, 2024 requesting a revenue increase of approximately $16 million. Motion rates go into effect September 6, 2024, subject to refund. Target Equity Ratio 56% Return on Equity 13.05% Rate B
Slide 27: Strong Demand Dynamics Supporting Value Creation
Strong Demand Dynamics Supporting Value Creation Strong Economic Growth Projected Across Service Areas • From 2024 to 2029, projected population growth of 3.52% in Arizona and 2.61% in Nevada, compared to the 2.40% average growth in the US1 $2.4B 6.5 – 7.5% Capital Investment Rate Base Growth • Cont
Slide 28: Southwest Regulatory Update
Southwest Regulatory Update Other Regulatory Activity Arizona PGA Filing Great Basin 2023 Mainline Replacement Project Received ACC approval to increase the Gas Cost Balancing Account rate (for up to two years) to FERC issued order in February 2023 granting a facilitate timely recovery of an approxi
Slide 29: Legislative Activity - Nevada
Legislative Activity - Nevada Focus Executive Order 2023-07 » Supports an all-of-the-above approach to energy in the state Outlines the state’s energy priorities » Emphasizes the importance of affordability and reliability of energy for consumers and policy objectives for the next » Protects the use
Slide 30: 2Q 2024 Financial Results
2Q 2024 Financial Results CONSOLIDATED Three Months Ended Six months ended Twelve Months Ended Results of Consolidated Operations June 30, June 30, (in millions, except per share items) 2024 2023 2024 2023 Natural gas distribution income $ 27.6 $ 19.1 $ 163.4 $ 153.8 Utility infrastructure services
Slide 31: Summary of Operating Results
Summary of Operating Results NATURAL GAS DISTRIBUTION SEGMENT Three Months Ended Six months ended Twelve Months Ended Results of Natural Gas Distribution June 30, June 30, (in thousands of dollars) 2024 2023 2024 2023 Regulated operations revenues $ 510,093 $ 487,866 $ 1,563,026 $ 1,402,745 Net cost
Slide 32: Non-GAAP Measures
Non-GAAP Measures ($ in thousands, except per share amounts) Three months ended Six months ended June 30, June 30, SWX Adjusted Net Income and Adjusted EPS 2024 2023 2024 2023 Adjusted SWX income and adjusted EPS for the three and six months ended June 30, SWX net income $ 18,333 $ 28,878 $ 106,070
Slide 33: Non-GAAP Measures
Non-GAAP Measures ($ in thousands, except per share amounts) Three months ended Six months ended June 30, June 30, MW Adjusted Net Income and Adjusted EPS 2024 2023 2024 2023 MW net loss $ - $ - $ - $ (16,288) Adjusted MW loss and adjusted EPS for the six months ended June 30, 2023 adjusts Nonrecurr
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