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 ...

Core Viewpoint - Southern California Gas Co. (SoCalGas) and other gas utilities have petitioned the California Public Utilities Commission (CPUC) to modify a previous decision requiring a demonstration project for blending hydrogen into natural gas, citing advancements in safety and operational data since 2022 [1][2][3]. Group 1: Petition Details - The petition seeks to remove the requirement for a 5% hydrogen demonstration project before recommending a systemwide blending standard, while still adhering to the CPUC's mandate for projects studying blends in the 5%-20% range [2]. - The utilities argue that the safety case for low-level hydrogen blends has improved, allowing for a more efficient approach to decarbonization [2][4]. Group 2: Research and Demonstration Projects - New research and real-world experiences indicate that blending up to 5% hydrogen into natural gas systems can be done safely and reliably without modifying customer appliances [3][5]. - States like Utah and companies like Hawai'i Gas have successfully implemented hydrogen blending, demonstrating its safety and effectiveness over decades [5][6]. Group 3: Industry Perspectives - Industry leaders emphasize that hydrogen blending is a practical step towards decarbonizing the natural gas system, leveraging existing infrastructure to reduce emissions while planning for a cleaner energy future [4][6]. - The blending of hydrogen is seen as essential for achieving sustainability and cost goals in California's energy transition [4][6]. Group 4: SoCalGas Initiatives - SoCalGas has been at the forefront of hydrogen blending initiatives, having completed the first power-to-gas hydrogen blending project in the U.S. in 2016 and several other demonstration projects since then [7]. - The company has proposed two hydrogen blending demonstration projects, one of which aims to blend up to 5% hydrogen, which may be affected by the outcome of the current petition [4][7].

Financial Performance & Guidance - Southwest Gas Holdings (SWX) expects 2025 Utility net income toward the top end of the $265 - $275 million guidance range[19] - The Utility is targeting 60% to 80% net income growth and 60% to 80% rate base growth from 2025-2029[19] - Q3 2025 net income was approximately $55 million, a significant improvement over Q3 2024, and year-to-date net income reached $1821 million, an 111% increase compared to the same period in 2024[26] - Capital expenditure for 2025 is projected to be around $880 million, supporting customer growth, system improvements, and pipe replacement programs[73] - The company reaffirms its forward-looking guidance for 2025-2029, with a capital expenditure plan of $43 billion[74] Strategic Initiatives & Regulatory Updates - SWX completed the full separation of Centuri (CTRI), generating approximately $135 billion of total net sales proceeds[19, 23] - The company expects no near-term equity needs through the end of 2025 and finished the quarter with approximately $779 million in consolidated cash and nearly $15 billion in available liquidity[27] - Great Basin is pursuing a potential expansion project in 2028, which could add up to approximately 176 BCF/day of incremental capacity, with a potential capital expenditure of approximately $12 billion - $16 billion[34] - The company anticipates rate case filings in the first half of 2026, requesting alternative forms of rate making in Arizona (AZ) and Nevada (NV)[26] Regulatory Outcomes - The Arizona Corporation Commission (ACC) approved an increase in rates effective in March 2025, resulting in an approximately $802 million revenue increase[108] - The Public Utilities Commission of Nevada authorized an approximately $59 million revenue increase, with rates effective in April 2024[117] - The Federal Energy Regulatory Commission (FERC) approved an increase in rates for Great Basin Gas Transmission Company (GBGTC) effective March 3, 2025, estimating an annual margin increase of approximately $96 million[120, 124]

Core Insights - The company emphasizes its commitment to safety, renewable energy investments, and emissions reduction in its 2024 Sustainability Report titled "Fueling a Sustainable Energy Future" [1][3] - The report highlights the company's operational excellence and strong safety culture, contributing to economic development through innovative energy solutions [1][4] Sustainability Commitment - The company focuses on creating a safe, inclusive, and sustainable workplace while positively impacting its service territories [2] - Key areas of focus include employee safety, respect for human rights, and fostering an inclusive workplace environment [2] Environmental, Social, and Governance (ESG) Achievements - The report outlines significant progress in reducing greenhouse gas emissions, investing in renewable energy technologies, and fostering resilient communities [3] - These efforts align with the company's broader commitment to a sustainable energy future and driving long-term stakeholder value [3] Leadership and Oversight - The company's ESG activities are overseen by the Nominating and Corporate Governance Committee of the Board of Directors, ensuring the adoption of ESG practices throughout the organization [6] Customer Satisfaction and Community Engagement - For the fifth consecutive year, the company ranked No. 1 in Customer Satisfaction with Residential Natural Gas Service in the West among large utilities according to J.D. Power [7] - In 2024, the Southwest Gas Foundation distributed $2.17 million across its service territory, and employees pledged $2.44 million to local nonprofit organizations [7] - The company allocated $408 million in utility capital expenditures for infrastructure modernization and pipeline replacement programs [7] Performance Metrics - The company maintained emergency response times, responding to 76.4% of emergencies within 30 minutes, exceeding the industry average and ranking in the top 25% [7] - Climate-related disclosures were expanded, including results from a climate risk assessment for Southwest Gas Corporation [7]

Financial Performance & Strategic Focus - Southwest Gas Holdings (SWX) reported Q2 2025 net income of approximately $34 million, a 22% increase compared to Q2 2024, and year-to-date net income of approximately $177 million, an 8.1% increase compared to the same period in 2024[26] - SWX is committed to a pure-play, fully regulated natural gas business strategy through the disposition of its remaining interest in Centuri[22] - SWX expects 2025 Utility net income to fall within the $265 - $275 million guidance range[22] - The company is targeting 6% to 8% net income growth and 6% to 8% rate base growth from 2025-2029[22] Centuri Separation & Financing - Secondary offerings in Q2 2025 reduced SWX ownership in Centuri to approximately 52.1%[23] - Net proceeds of approximately $470 million from the Centuri secondary offerings were used to repay debt and strengthen the balance sheet[23] - SWX no longer expects to issue equity in 2025 due to proceeds from Centuri follow-on offerings[70] Regulatory & Operational Updates - Approximately 40,000 new meter sets were added during the last 12 months, leading to a 1.8% customer growth rate[26] - The company received approval to accelerate the return to Nevada customers of over-collected purchased gas costs, beginning July 1, 2025[26] - Great Basin successfully completed its binding open season, identifying potential incremental capacity of up to 1.76 billion cubic feet (Bcf)/day[26] - The potential incremental capital expenditure opportunity for the Great Basin expansion is approximately $1.2 - $1.6 billion[36]

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]

Core Insights - Southwest Gas Holdings reported a net income of $113.9 million for Q1 2025, an increase of $26.2 million compared to Q1 2024, driven by higher operating margins and improved performance at Centuri [4][7][20] - The company achieved a utility return on equity (ROE) of 8.2% over the last twelve months, with a 5.2% earnings growth in Q1 2025 [6][24] - An annual revenue increase of approximately $80.2 million was approved in Arizona, which included an increase in the allowed return on equity to 9.84% [6][25] Financial Performance - Net income for Q1 2025 was $113.9 million, compared to $87.7 million in Q1 2024, reflecting a significant improvement [4][20] - Adjusted net income for Q1 2025 was $119.4 million, up from $98.5 million in the same period last year, marking a 21% increase [7][22] - Diluted earnings per share rose to $1.58 in Q1 2025 from $1.22 in Q1 2024 [4][22] Operational Highlights - The utility added approximately 40,000 new meter sets, resulting in a 1.8% customer growth rate over the past twelve months [6][12] - The operating margin increased by $38.9 million, with combined rate relief in Nevada, California, and Arizona contributing approximately $27 million [12][20] - Operations and maintenance expenses decreased by $1.5 million, primarily due to reduced external contractor costs [12][20] Strategic Developments - The company is committed to fully separating Centuri and is evaluating market conditions for optimal timing and value [3][11] - A constructive outcome on the revenue phase of the Arizona general rate case has bolstered the company's regulatory strategy [2][6] - The company anticipates a final decision on the proposed system integrity mechanism settlement in the third quarter of 2025 [2][11] Guidance and Outlook - The company reaffirmed its 2025 net income guidance of $265 million to $275 million and projected capital expenditures of approximately $880 million [10] - The expected compound annual growth rate (CAGR) for adjusted net income from 2025 to 2029 is estimated to be between 6.0% and 8.0% [10] - The authorized rate base across various jurisdictions totals approximately $5.81 billion, with an average authorized return on common equity of 9.89% [25][26]

Core Viewpoint - Southwest Gas Holdings, Inc. has rescheduled its financial results release and conference call for the first quarter of fiscal year 2025 to May 12, 2025, from the previously scheduled date of May 7, 2025 [1]. Financial Guidance and Outlook - The company affirms its full year 2025 net income guidance to be between $265 million and $275 million [4]. - Capital expenditures for 2025 are estimated to be approximately $880 million, aimed at customer growth, system improvements, and pipe replacement programs [4]. - The compound annual growth rate (CAGR) for adjusted net income from 2025 to 2029 is projected to be between 6.0% and 8.0% [4]. - Total capital expenditures from 2025 to 2029 are expected to reach $4.3 billion [4]. - The rate base CAGR for the same period (2025-2029) is also projected to be between 6.0% and 8.0% [4]. Company Overview - Southwest Gas Holdings, Inc. operates through its subsidiary, Southwest Gas Corporation, which is involved in the purchasing, distributing, and transporting of natural gas [6]. - The company serves over 2 million customers across Arizona, Nevada, and California, focusing on safe and reliable service while promoting sustainable energy solutions [6]. - Southwest Gas Holdings is the majority owner of Centuri Holdings, Inc., which provides utility infrastructure services across North America [6][5].