Southwest Gas Holdings, Inc. [SWX] Filings

10-Q 1 swx-20240630.htm 10-Q swx-20240630

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 June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission

File Number

Exact name of registrant as specified in its charter and
principal office address and telephone number

State of
Incorporation

I.R.S.
Employer Identification No.

001-37976

Southwest Gas Holdings, Inc.

Delaware

81-3881866

8360 S. Durango Drive

Post Office Box 98510

Las Vegas,

Nevada

89193-8510

(702)

876-7237

1-7850

Southwest Gas Corporation

California

88-0085720

8360 S. Durango Drive

Post Office Box 98510

Las Vegas,

Nevada

89193-8510

(702)

876-7237

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Southwest Gas Holdings, Inc. Common Stock, $1 Par Value

SWX

New York Stock Exchange

Preferred Stock Purchase Rights

N/A

New York Stock Exchange

Indicate by check mark whether each registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that each registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that each registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Southwest Gas Holdings, Inc.:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Southwest Gas Corporation:

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Southwest Gas Holdings, Inc. Common Stock, $1 Par Value, 71,711,480 shares as of July 26, 2024.

All of the outstanding shares of common stock ($1 par value) of Southwest Gas Corporation were held by Southwest Gas Holdings, Inc. as of July 26, 2024.

SOUTHWEST GAS CORPORATION MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1)(a) and (b) OF FORM 10-Q AND IS THEREFORE FILING THIS REPORT WITH THE REDUCED DISCLOSURE FORMAT AS PERMITTED BY GENERAL INSTRUCTION H(2).


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

FILING FORMAT

This quarterly report on Form 10-Q is a combined report being filed by two separate registrants: Southwest Gas Holdings, Inc. and Southwest Gas Corporation. Except where the content clearly indicates otherwise, any reference in the report to “we,” “us” or “our” is to the holding company or the consolidated entity of Southwest Gas Holdings, Inc. and all of its consolidated subsidiaries, including Southwest Gas Corporation, which is a distinct registrant that is a wholly owned subsidiary of Southwest Gas Holdings, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representation whatsoever as to any other company.

Part I—Financial information in this Quarterly Report on Form 10-Q includes separate financial statements (i.e., balance sheets, statements of income, statements of comprehensive income, statements of cash flows, and statements of equity) for Southwest Gas Holdings, Inc. and Southwest Gas Corporation, in that order. The Notes to the Condensed Consolidated Financial Statements are presented on a combined basis for both entities. All Items other than Part I – Item 1 are combined for the reporting companies.


			2


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of dollars, except par value)

(Unaudited)


	June 30, 2024		December 31, 2023
ASSETS
Regulated operations plant:
Gas plant	$	10,458,923	$	10,140,362
Less: accumulated depreciation	(2,896,703)		(2,822,669)
Construction work in progress	226,210		200,549
Net regulated operations plant	7,788,430		7,518,242
Other property and investments, net	1,234,942		1,266,340
Current assets:
Cash and cash equivalents	599,639		106,536
Accounts receivable, net of allowances	796,238		886,549
Accrued utility revenue	46,400		93,000
Income taxes receivable, net	9,661		1,935
Deferred purchased gas costs	39,777		552,885
Prepaid and other current assets	239,887		218,832
Current assets held for sale	—		21,377
Total current assets	1,731,602		1,881,114
Noncurrent assets:
Goodwill	786,175		789,729
Deferred income taxes	2,171		463
Deferred charges and other assets	442,024		414,008
Total noncurrent assets	1,230,370		1,204,200
Total assets	$	11,985,344	$	11,869,896
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $1 par (authorized - 120,000,000 shares; issued and outstanding - 71,709,298 and 71,563,750 shares)	$	73,339	$	73,194
Additional paid-in capital	2,709,674		2,541,790
Accumulated other comprehensive loss, net	(45,615)		(43,787)
Retained earnings	755,367		738,839
Total equity attributable to Southwest Gas Holdings, Inc. stockholders	3,492,765		3,310,036
Noncontrolling interest	174,199		—
Total equity	3,666,964		3,310,036
Redeemable noncontrolling interest	7,671		104,667
Long-term debt, less current maturities	5,063,577		4,609,838
Total capitalization	8,738,212		8,024,541
Current liabilities:
Current maturities of long-term debt	31,194		42,552
Short-term debt	111,000		628,500
Accounts payable	264,289		346,907
Customer deposits	57,399		48,460
Income taxes payable, net	2,241		817
Accrued general taxes	63,769		58,053
Accrued interest	36,575		36,605
Deferred purchased gas costs	121,323		—
Other current liabilities	408,364		522,953
Total current liabilities	1,096,154		1,684,847
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net	792,244		752,997
Accumulated removal costs	463,000		458,000
Other deferred credits and other long-term liabilities	895,734		949,511
Total deferred income taxes and other credits	2,150,978		2,160,508
Total capitalization and liabilities	$	11,985,344	$	11,869,896

The accompanying notes are an integral part of these statements.


			3


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating revenues:
Regulated operations revenues	$	510,093	$	487,866	$	1,563,026	$	1,437,877
Utility infrastructure services revenues	672,075		805,779		1,200,098		1,459,072
Total operating revenues	1,182,168		1,293,645		2,763,124		2,896,949
Operating expenses:
Net cost of gas sold	242,479		231,053		872,476		738,590
Operations and maintenance	134,623		128,795		269,769		277,703
Depreciation and amortization	96,072		111,705		215,214		224,225
Taxes other than income taxes	21,228		21,604		44,131		45,834
Utility infrastructure services expenses	604,545		715,717		1,120,188		1,319,397
Goodwill impairment and loss on sale	—		—		—		71,230
Total operating expenses	1,098,947		1,208,874		2,521,778		2,676,979
Operating income	83,221		84,771		241,346		219,970
Other income and (expenses):
Net interest deductions	(73,769)		(69,347)		(145,374)		(146,681)
Other income	14,939		19,604		33,060		38,064
Total other income and (expenses)	(58,830)		(49,743)		(112,314)		(108,617)
Income before income taxes	24,391		35,028		129,032		111,353
Income tax expense	4,181		4,769		21,260		33,444
Net income	20,210		30,259		107,772		77,909
Net income attributable to noncontrolling interests	1,877		1,381		1,702		3,120
Net income attributable to Southwest Gas Holdings, Inc.	$	18,333	$	28,878	$	106,070	$	74,789
Earnings per share attributable to Southwest Gas Holdings, Inc.:
Basic	$	0.26	$	0.40	$	1.48	$	1.07
Diluted	$	0.25	$	0.40	$	1.47	$	1.07
Weighted average shares:
Basic	71,839		71,536		71,784		69,901
Diluted	72,015		71,722		71,949		70,072

The accompanying notes are an integral part of these statements.


			4


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Thousands of dollars)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	20,210	$	30,259	$	107,772	$	77,909
Other comprehensive income, net of tax
Defined benefit pension plans:

Amortization of prior service cost	33		33		66		66
Amortization of net actuarial loss	1,452		254		2,903		507
Regulatory adjustment	(1,099)		(90)		(2,199)		(180)
Net defined benefit pension plans	386		197		770		393
Foreign currency translation adjustments	(1,152)		2,294		(3,971)		2,391
Total other comprehensive income (loss), net of tax	(766)		2,491		(3,201)		2,784
Comprehensive income	19,444		32,750		104,571		80,693
Comprehensive income attributable to noncontrolling interests	1,708		1,381		1,533		3,120
Comprehensive income attributable to Southwest Gas Holdings, Inc.	$	17,736	$	31,369	$	103,038	$	77,573

The accompanying notes are an integral part of these statements.


			5


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	107,772	$	77,909
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	215,214		224,225
Impairment of assets and other charges	—		71,230
Deferred income taxes	37,541		44,186
Gains on sale of property and equipment	(1,995)		(1,835)
Changes in undistributed stock compensation	6,794		5,696
Equity AFUDC	(3,674)		(82)
Changes in current assets and liabilities:
Accounts receivable, net of allowances	61,648		(71,206)
Accrued utility revenue	46,600		44,900
Deferred purchased gas costs	634,430		(350,473)
Accounts payable	(82,012)		(349,451)
Accrued taxes	(585)		(1,913)
Other current assets and liabilities	(134,039)		368,464
Changes in deferred charges and other assets	(4,961)		(17,034)
Changes in other liabilities and deferred credits	(32,448)		(32,430)
Net cash provided by operating activities	850,285		12,186
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions	(444,502)		(438,735)
Proceeds from the sale of business, net of cash sold	—		1,050,878
Proceeds from the sale of property	21,377		—
Changes in customer advances	(4,943)		(8,296)
Other	2,181		3,586
Net cash provided by (used in) investing activities	(425,887)		607,433
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock, net	4,804		246,727
Centuri distribution to redeemable noncontrolling interest	(92,839)		(39,894)
Dividends paid	(88,825)		(85,916)
Issuance of long-term debt, net	237,554		1,027,036
Retirement of long-term debt	(346,047)		(102,334)
Change in short-term portion of credit facility	32,500		(157,000)
Change in long-term credit facility and commercial paper	—		(50,000)
Issuance of short-term debt	—		450,000
Repayment of short-term debt	—		(1,822,747)
Withholding remittance - share-based compensation	(2,452)		(1,707)
Proceeds from Centuri initial public offering, net	330,343		—
Other, including principal payments on finance leases	(6,094)		(9,596)
Net cash provided by (used in) financing activities	68,944		(545,431)
Effects of currency translation on cash and cash equivalents	(239)		298
Change in cash and cash equivalents	493,103		74,486
Cash and cash equivalents included in current assets held for sale at beginning of period	—		23,803
Cash and cash equivalents at beginning of period	106,536		123,078
Cash and cash equivalents at end of period	$	599,639	$	221,367
SUPPLEMENTAL INFORMATION:
Interest paid, net of amounts capitalized	$	139,373	$	136,174
Income taxes paid, net	$	5,769	$	4,059

The accompanying notes are an integral part of these statements.


			6


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share amounts)

(Unaudited)


			Three Months Ended June 30,				Six Months Ended June 30,
			2024		2023		2024		2023
Common stock shares
	Beginning balances		71,665		71,331		71,564		67,119
		Common stock issuances	44		142		145		4,354
	Ending balances		71,709		71,473		71,709		71,473
Common stock amount
	Beginning balances		$	73,295	$	72,961	$	73,194	$	68,749
		Common stock issuances	44		142		145		4,354
	Ending balances		73,339		73,103		73,339		73,103
Additional paid-in capital
	Beginning balances		2,547,485		2,524,631		2,541,790		2,287,183
		Common stock issuances	7,902		9,592		9,410		247,040
		Centuri IPO	154,287		—		154,287		—
		Promissory notes in association with redeemable noncontrolling interest	—		—		4,187		—
	Ending balances		2,709,674		2,534,223		2,709,674		2,534,223
Accumulated other comprehensive loss
	Beginning balances		(46,222)		(43,949)		(43,787)		(44,242)
		Centuri IPO	1,204		—		1,204		—
		Foreign currency exchange translation adjustment	(983)		2,294		(3,802)		2,391
		Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax	386		197		770		393
	Ending balances		(45,615)		(41,458)		(45,615)		(41,458)
Retained earnings
	Beginning balances		781,683		742,513		738,839		747,069
		Net income	18,333		28,878		106,070		74,789
		Dividends declared	(44,649)		(44,660)		(89,348)		(89,295)
		Redemption value adjustments	—		(29,773)		(194)		(35,605)
	Ending balances		755,367		696,958		755,367		696,958
Total Southwest Gas Holdings, Inc. equity ending balances			3,492,765		3,262,826		3,492,765		3,262,826
Noncontrolling interest
	Beginning balances		—		—		—		—
		Centuri IPO	172,501		—		172,501		—
		Net income attributable to noncontrolling interest holders	1,867		—		1,867		—
		Foreign currency exchange translation adjustment	(169)		—		(169)		—
	Ending balances		174,199		—		174,199		—
Total equity ending balances			$	3,666,964	$	3,262,826	$	3,666,964	$	3,262,826
Dividends declared per common share			$	0.62	$	0.62	$	1.24	$	1.24

The accompanying notes are an integral part of these statements.


			7


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of dollars)

(Unaudited)


	June 30, 2024		December 31, 2023
ASSETS
Regulated operations plant:
Gas plant	$	10,458,923	$	10,140,362
Less: accumulated depreciation	(2,896,703)		(2,822,669)
Construction work in progress	226,210		200,549
Net regulated operations plant	7,788,430		7,518,242
Other property and investments, net	155,739		152,658
Current assets:
Cash and cash equivalents	564,894		71,154
Accounts receivable, net of allowance	168,845		269,195
Accrued utility revenue	46,400		93,000
Income taxes receivable, net	30		26
Deferred purchased gas costs	39,777		552,885
Receivable from parent	642		—
Prepaid and other current assets	194,340		188,138
Current assets held for sale	—		21,376
Total current assets	1,014,928		1,195,774
Noncurrent assets:
Goodwill	11,155		11,155
Deferred charges and other assets	390,400		390,742
Total noncurrent assets	401,555		401,897
Total assets	$	9,360,652	$	9,268,571
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock	$	49,112	$	49,112
Additional paid-in capital	2,160,535		2,156,577
Accumulated other comprehensive loss, net	(39,778)		(40,548)
Retained earnings	1,087,666		1,018,474
Total equity	3,257,535		3,183,615
Long-term debt, less current maturities	3,503,298		3,501,543
Total capitalization	6,760,833		6,685,158
Current liabilities:

Accounts payable	137,186		215,744
Customer deposits	57,399		48,460

Accrued general taxes	63,769		58,053
Accrued interest	35,007		34,955
Deferred purchased gas costs	121,323		—
Payable to parent	—		1,711
Other current liabilities	221,353		271,899
Total current liabilities	636,037		630,822
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net	797,849		749,836
Accumulated removal costs	463,000		458,000
Other deferred credits and other long-term liabilities	702,933		744,755
Total deferred income taxes and other credits	1,963,782		1,952,591
Total capitalization and liabilities	$	9,360,652	$	9,268,571

The accompanying notes are an integral part of these statements.


			8


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Thousands of dollars)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Regulated operations revenues	$	510,093	$	487,866	$	1,563,026	$	1,402,745
Operating expenses:
Net cost of gas sold	242,479		231,053		872,476		732,222
Operations and maintenance	129,627		124,731		260,493		255,919
Depreciation and amortization	61,687		74,845		146,510		149,495
Taxes other than income taxes	21,228		21,604		44,131		44,344
Total operating expenses	455,021		452,233		1,323,610		1,181,980
Operating income	55,072		35,633		239,416		220,765
Other income and (expenses):
Net interest deductions	(39,839)		(37,104)		(76,283)		(75,726)
Other income	14,211		18,742		32,311		37,185
Total other (expenses)	(25,628)		(18,362)		(43,972)		(38,541)
Income before income taxes	29,444		17,271		195,444		182,224
Income tax expense (benefit)	1,850		(1,849)		32,025		28,408
Net income	$	27,594	$	19,120	$	163,419	$	153,816

The accompanying notes are an integral part of these statements.


			9


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Thousands of dollars)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	27,594	$	19,120	$	163,419	$	153,816
Other comprehensive income, net of tax
Defined benefit pension plans:

Amortization of prior service cost	33		33		66		66
Amortization of net actuarial loss	1,452		254		2,903		507
Regulatory adjustment	(1,099)		(90)		(2,199)		(180)
Net defined benefit pension plans	386		197		770		393
Total other comprehensive income, net of tax	386		197		770		393
Comprehensive income	$	27,980	$	19,317	$	164,189	$	154,209

The accompanying notes are an integral part of these statements.


			10


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	163,419	$	153,816
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	146,510		149,495
Deferred income taxes	47,770		43,668
Changes in undistributed stock compensation	5,331		4,188
Equity AFUDC	(3,674)		—
Changes in current assets and liabilities:
Accounts receivable, net of allowance	100,350		60,879
Accrued utility revenue	46,600		44,900
Deferred purchased gas costs	634,430		(335,469)
Accounts payable	(80,757)		(349,060)
Accrued taxes	5,711		(4,314)
Other current assets and liabilities	(62,943)		349,295
Changes in deferred charges and other assets	(18,578)		(33,384)
Changes in other liabilities and deferred credits	(32,475)		(31,843)
Net cash provided by operating activities	951,694		52,171
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions	(391,347)		(381,193)
Proceeds from the sale of property	21,377		—
Changes in customer advances	(4,943)		(8,297)
Other	206		278
Net cash used in investing activities	(374,707)		(389,212)
CASH FLOW FROM FINANCING ACTIVITIES:
Contribution from parent	—		530,000
Dividends paid	(81,400)		(71,600)
Issuance of long-term debt, net	—		297,759

Change in long-term credit facility and commercial paper	—		(50,000)
Issuance of short-term debt	—		450,000
Repayment of short-term debt	—		(675,000)
Withholding remittance - share-based compensation	(1,801)		(1,494)
Other	(46)		(1,495)
Net cash provided by (used in) financing activities	(83,247)		478,170

Change in cash and cash equivalents	493,740		141,129
Cash and cash equivalents at beginning of period	71,154		51,823
Cash and cash equivalents at end of period	$	564,894	$	192,952
SUPPLEMENTAL INFORMATION:
Interest paid, net of amounts capitalized	$	73,859	$	68,303
Income taxes paid, net	$	—	$	—

The accompanying notes are an integral part of these statements.


			11


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)


			Three Months Ended June 30,				Six Months Ended June 30,
			2024		2023		2024		2023
Common stock shares
	Beginning and ending balances		47,482		47,482		47,482		47,482
Common stock amount
	Beginning and ending balances		$	49,112	$	49,112	$	49,112	$	49,112
Additional paid-in capital
	Beginning balances		2,156,318		1,624,919		2,156,577		1,622,969
		Share-based compensation	4,217		1,107		3,958		3,057
		Contributions from Southwest Gas Holdings, Inc.	—		530,000		—		530,000
	Ending balances		2,160,535		2,156,026		2,160,535		2,156,026
Accumulated other comprehensive loss
	Beginning balances		(40,164)		(38,065)		(40,548)		(38,261)
		Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax	386		197		770		393
	Ending balances		(39,778)		(37,868)		(39,778)		(37,868)
Retained earnings
	Beginning balances		1,112,273		1,030,164		1,018,474		935,355
		Net income	27,594		19,120		163,419		153,816
		Share-based compensation	(100)		(76)		(427)		(363)
		Dividends declared to Southwest Gas Holdings, Inc.	(52,101)		(39,600)		(93,800)		(79,200)
	Ending balances		1,087,666		1,009,608		1,087,666		1,009,608
Total Southwest Gas Corporation equity ending balances			$	3,257,535	$	3,176,878	$	3,257,535	$	3,176,878

The accompanying notes are an integral part of these statements.


			12


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

Note 1 – Background, Organization, and Summary of Significant Accounting Policies

Nature of Operations. Southwest Gas Holdings, Inc. (together with its subsidiaries, the “Company”) is a holding company, owning all of the shares of common stock of Southwest Gas Corporation (“Southwest” or the “natural gas distribution” segment), and until April 22, 2024, all of the shares of common stock of Centuri Group, Inc. (“utility infrastructure services” segment), and until February 14, 2023, all of the shares of common stock of MountainWest Pipelines Holding Company (“MountainWest” or the “pipeline and storage” segment). References throughout this document to “Centuri” relate to Centuri Group, Inc., for periods prior to April 22, 2024, or more recently, to Centuri Holdings, Inc.

In December 2022, the Company announced that its Board of Directors (the “Board”) unanimously determined to take strategic actions to simplify the Company’s portfolio of businesses. These actions included entering into a definitive agreement to sell 100% of MountainWest to Williams Partners Operating LLC (“Williams”) for $1.5 billion in total enterprise value, subject to certain adjustments. The sale closed on February 14, 2023.

Also as part of this simplification strategy, the Company previously communicated that it would pursue a separation of Centuri. In April 2024, the Company and Centuri Holdings, Inc. announced the completion of an initial public offering of Centuri Holdings, Inc. common stock (the “Centuri IPO”). Following the Centuri IPO, the Company owns approximately 81% of Centuri. Through the first quarter of 2024 and leading up to the Centuri IPO, Centuri continued to be wholly owned by Southwest Gas Holdings, Inc. Centuri continues to be consolidated as part of these financial statements, and will continue to be consolidated until such time as the conditions for consolidation are no longer met. Centuri now makes separate filings with the Securities and Exchange Commission (the “SEC”) as a public company. The Company’s common stock continues to trade under the ticker symbol “SWX,” while Centuri’s common stock trades under the ticker symbol “CTRI.” See Note 8 - Centuri Separation.

Southwest is engaged in the business of purchasing, distributing, and transporting natural gas for customers in portions of Arizona, Nevada, and California. Public utility rates, practices, facilities, and service territories of Southwest are subject to regulatory oversight. The timing and amount of rate relief can materially impact results of operations. Natural gas purchases and the timing of related recoveries can materially impact liquidity, highlighted by the significant amount of cash existing as of the end of the second quarter of 2024, reflective of the collection of gas cost under purchased gas cost mechanisms as a component of customer bills. While mechanisms exist in all states in which Southwest operates, which effectively and primarily decouple authorized operating cost recovery and profitability from the volume of natural gas sold, thereby also incentivizing energy conservation, results for the natural gas distribution segment are higher during winter periods due to the seasonality incorporated in its regulatory rate structures.

Centuri is a strategic utility infrastructure services company dedicated to partnering with North America’s gas and electric providers to build and maintain the energy network that powers millions of homes across the United States (“U.S.”) and Canada. Centuri derives revenue primarily from installation, replacement, repair, and maintenance of energy networks. Centuri operates in the U.S., primarily as NPL, Neuco, Linetec, and Riggs Distler, and in Canada, primarily as NPL Canada. Utility infrastructure services activity is seasonal in many of Centuri’s operating areas. Peak periods are the summer and fall months in colder climate areas, such as the northeastern and midwestern U.S. and in Canada. In warmer climate areas, such as the southwestern and southeastern U.S., utility infrastructure services activity continues year round.

Basis of Presentation. The condensed consolidated financial statements of Southwest Gas Holdings, Inc. and subsidiaries, and of Southwest (with its subsidiaries) included herein have been prepared pursuant to the rules and regulations of the SEC. The year-end 2023 condensed balance sheet data was derived from audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. No substantive change, other than the Centuri IPO and the resulting noncontrolling interest in Centuri, has occurred with regard to the Company’s business segments on the whole during the recently completed quarter.

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments, consisting of normal recurring items and estimates necessary for a fair statement of results for the interim periods, have been made.

Centuri and the Company do not always have the same basis of presentation, which could result in differences between the amounts presented in the Company’s financial information related to Centuri, and amounts included in Centuri’s separate publicly filed financial information. The most significant difference during the periods presented in this Form 10-Q were due to Centuri recording income tax expense using an annual effective tax rate methodology, while the Company followed a discrete method consistent with regulated utility accounting.


			13


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Southwest and the Company included in our 2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

In the first quarter of 2023, management identified a misstatement related to its accounting for the cost of gas sold at Southwest, thereby determining that Net cost of gas sold was overstated in 2021 and 2022 by $2.3 million and $5.7 million, respectively. Southwest made an adjustment in the first quarter of 2023 to reduce Net cost of gas sold and to increase its asset balance for Deferred purchased gas cost by $8 million.

Also in the first quarter of 2023, the Company identified an approximately $21 million misstatement related to its initial estimation of the loss recorded upon reclassifying MountainWest as an asset held for sale during the year ended December 31, 2022. Consequently, the impairment loss for the year ended December 31, 2022 was understated by approximately $21 million, which was corrected in the first quarter of 2023.

The Company (and Southwest, with respect to Net cost of gas sold) assessed, both quantitatively and qualitatively, the impact of these items on previously issued financial statements, concluding they were not material to any earlier period or to the period of correction.

Other Property and Investments. Other property and investments on Southwest’s and the Company’s Condensed Consolidated Balance Sheets includes:


(Thousands of dollars)	June 30, 2024		December 31, 2023
Net cash surrender value of COLI policies	$	151,218	$	146,546
Other property	4,521		6,112
Total Southwest Gas Corporation	155,739		152,658
Non-regulated property, equipment, and intangibles	1,751,844		1,752,094
Non-regulated accumulated provision for depreciation and amortization	(711,499)		(675,632)
Other property and investments	38,858		37,220
Total Southwest Gas Holdings, Inc.	$	1,234,942	$	1,266,340

Held for sale. In the first quarter of 2023, the Company and Southwest concluded certain assets associated with their previous corporate headquarters met the criteria to be classified as held for sale. As a result, the Company and Southwest reclassified approximately $27 million from Other property and investments to Current assets held for sale on their respective Condensed Consolidated Balance Sheets in the first quarter of 2023. In 2023, the Company and Southwest recorded an estimated loss of $5.2 million on the assets based upon an updated fair value less costs to sell. The sale was completed in January 2024.

Cash and Cash Equivalents. Cash and cash equivalents of the Company include $314.1 million and $48.9 million of money market fund investments at June 30, 2024 and December 31, 2023, respectively. Of these amounts, $308 million and $38.6 million at June 30, 2024 and December 31, 2023, respectively, were held by Southwest. Refer to discussion above regarding recent collections under Southwest’s purchased gas adjustment mechanisms.

Noncash investing activities include capital expenditures that were not yet paid, thereby remaining in accounts payable, amounts related to which declined by approximately $8.5 million for the Company and increased by approximately $2.2 million for Southwest during the six months ended June 30, 2024; and declined approximately $34 million and $29.7 million during the six months ended June 30, 2023, for the Company and Southwest, respectively.

The Company and Southwest expanded their presentation in the first quarter 2024 to show the Change in short-term portion of credit facility and Repayment of short-term debt as separate line items within their Condensed Consolidated Statements of Cash Flows. The comparable prior-year period has been updated to reflect this change.

Prepaid and other current assets. Prepaid and other current assets for the Company and Southwest include, among other things, materials and operating supplies of $82.7 million at June 30, 2024 and $83.4 million at December 31, 2023 (carried at weighted average cost).

Goodwill. Goodwill is assessed as of October 1 each year for impairment, or more frequently, if circumstances indicate an impairment to the carrying value of goodwill may have occurred. The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments. Since December 31, 2023, management qualitatively assessed whether events during the first six months of 2024 indicated it was more likely than not that the fair value of our reporting units was less than their carrying value, which if the case, could be an indication of a goodwill impairment. Through management’s assessments, no impairment was deemed to have occurred in the continuing segments of the Company. Goodwill in the Natural Gas


			14


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						June 30, 2024

Distribution and Utility Infrastructure Services segments is included in the respective Condensed Consolidated Balance Sheets as follows:


(Thousands of dollars)	Natural Gas Distribution		Utility Infrastructure Services		Total Company
December 31, 2023	$	11,155	$	778,574	$	789,729
Foreign currency translation adjustment	—		(3,554)		(3,554)
June 30, 2024	$	11,155	$	775,020	$	786,175

Other Current Liabilities. Management recognizes in its balance sheets various liabilities that are expected to be settled through future cash payment within the next twelve months, including amounts payable under regulatory mechanisms, customary accrued expenses for employee compensation and benefits, declared but unpaid dividends, and miscellaneous other accrued liabilities. Other current liabilities for the Company include $44.4 million of dividends declared as of both June 30, 2024 and December 31, 2023, respectively. Also included in the balance for the Company and Southwest was $46 million and $87.6 million in accrued purchased gas cost as of June 30, 2024 and December 31, 2023, respectively.

Other Income (Deductions). The following table provides the composition of significant items included in Other income (deductions) in Southwest’s and the Company’s Condensed Consolidated Statements of Income:


	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of dollars)	2024		2023		2024		2023
Southwest Gas Corporation:
Change in COLI policies	$	1,000	$	3,900	$	4,600	$	6,300
Interest income	9,137		14,515		18,913		26,986
Equity AFUDC	1,835		—		3,674		—
Other components of net periodic benefit cost	4,130		5,234		8,261		10,193
Miscellaneous expense	(1,891)		(4,907)		(3,137)		(6,294)
Southwest Gas Corporation - total other income (deductions)	14,211		18,742		32,311		37,185
Centuri, MountainWest, and Southwest Gas Holdings, Inc.:

Foreign transaction gain (loss)	(103)		273		(1)		(417)
Equity AFUDC	—		—		—		82
Equity in earnings (loss) of unconsolidated investments	(44)		89		(157)		449
Miscellaneous income and (expense)	855		521		898		516
Corporate and administrative	20		(21)		9		249
Southwest Gas Holdings, Inc. - total other income (deductions)	$	14,939	$	19,604	$	33,060	$	38,064

Interest income primarily relates to Southwest’s regulatory asset balances, including its deferred purchased gas cost mechanisms, the combined balance of which ranged from an asset balance of $786 million as of June 30, 2023 to a net liability balance of $82 million as of June 30, 2024. Interest income is earned on asset balances and interest expense is incurred on liability balances. Refer also to Note 2 – Components of Net Periodic Benefit Cost for details regarding Other components of net periodic benefit cost.

Noncontrolling Interest. In connection with the Centuri IPO, the Company recorded a noncontrolling interest as part of equity in the Condensed Consolidated Balance Sheet (associated with the interests held by the new investors), and recognized the excess of the fair value of the Centuri IPO proceeds over the carrying value of the noncontrolling interest, in addition to a portion of Accumulated other comprehensive loss relevant to the proportional interest of the noncontrolling parties in Centuri, within Additional paid-in capital. The Condensed Consolidated Statements of Income include multiple components of comprehensive income attributable to noncontrolling interests following the Centuri IPO. These amounts, including those distinguishable from net income attributed to these parties, are separately presented in the Condensed Consolidated Statements of Equity. Refer also to Note 8 - Centuri Separation.

Redeemable Noncontrolling Interests. Separate from the noncontrolling ownership interests in Centuri, in connection with the earlier acquisition of Linetec in November 2018, the previous Linetec owner initially retained a 20% equity interest in that entity, with redemption of that interest being subject to certain rights based on the passage of time or upon the occurrence of certain triggering events. Effective in 2022, the Company, through Centuri, had the right, but no