Southwest Gas Q2 Earnings Call Highlights

Southwest Gas Q2 Earnings Call Highlights Second-quarter adjusted EPS rose to $0.45 from $0.37 a year earlier, supported by approximately $8.6 million in lower parent-level interest expense, rate relief and customer growth. Reported EPS was $0.58, including $9.7 million of net income from California rate-case revenue recognized in the quarter. Regulatory proceedings advanced in California, Nevada and Arizona. California’s decision is expected to add about $40 million in annual revenue, while Nevada’s rate case seeks approximately $74 million and remains on track for an October 2026 effective date. Southwest Gas expanded its Great Basin project after contracted demand reached about 1 billion cubic feet per day, raising projected investment to $2.3 billion and expected annual incremental margin to $270 million–$300 million. The company plans to seek federal approval before year-end and targets a fourth-quarter 2028 in-service date. Southwest Gas NYSE: SWX reported second-quarter 2026 adjusted earnings per share from continuing operations of $0.45, up from $0.37 in the prior-year period, as lower parent-level interest expense and regulatory progress supported results. Reported earnings per share from continuing operations were $0.58, including revenue recognized following a California rate-case decision. President and CEO Justin Brown said the adjusted result excluded the retroactive portion of California revenue that had been deferred in a memorandum account since the first quarter because of the timing of the rate-case approval. He said the company is reaffirming its 2026 and long-term guidance ranges. Our regulatory strategy doesn't depend on any single outcome, giving us multiple credible paths to achieve our objectives regardless of how individual cases unfold, Brown said. Interest Savings and Utility Results Jay Ford, senior vice president of financial planning, said the year-over-year earnings improvement was driven primarily by the holding company’s performance, partially offset by slightly lower utility earnings. The holding company benefited from the repayment of all outstanding parent-level debt, reducing interest expense by approximately $8.6 million from the second quarter of 2025. Higher interest income on elevated cash balances also contributed. Operating margin increased $12.7 million from a year earlier, including $6.7 million of incremental margin from rate relief and $1.4 million from customer growth, Ford said. Debt recovery-related items added $4.9 million to operating margin, though that benefit was offset by comparable depreciation and amortization expense. Operations and maintenance expense declined $3.7 million, or nearly 3%, reflecting lower outside services, bad debt expense, and lease and rental costs. Depreciation and amortization increased $8.7 million, driven principally by a 7% rise in gas plant and service versus the prior-year quarter. Other income declined $9.4 million, with Ford citing lower utility interest income, reduced non-service pension gains, weaker corporate-owned life insurance investment performance, the absence of a prior-year gain on sale, and higher charitable contributions. The company ended the quarter with approximately $270 million in cash and nearly $1 billion in available liquidity, Brown said. Rate Cases Advance in Three States Southwest Gas said its 12-month ended return on equity at the utility was 8.1%, or 8% on an adjusted basis, compared with a weighted-average authorized return of 9.89%. Management said pending rate cases and recovery mechanisms are intended to improve earned returns over time. In California, a recent commission decision resolved all matters except cost of capital and is expected to p.