Southwest Gas Holdings Inc (SWX) Reports Growth in Q3 2023 Earnings
Southwest Gas Holdings Inc (NYSE:SWX) sees a $19 million increase in Utility earnings and a $4 million increase in Centuri earnings for Q3 2023.
Adjusted consolidated net earnings per diluted share reached $0.10, compared to a net loss of $0.05 per diluted share in Q3 2022.
Utility segment raises net income guidance to $215 - $225 million and capital expenditures to $720 - $740 million for 2023.
Centuri segment reports record third-quarter revenues of $775 million, a 2% increase from the previous year.
On November 8, 2023, Southwest Gas Holdings Inc (NYSE:SWX) released its financial results for the third quarter of 2023, showcasing a period of strong growth and strategic advancements. Karen Haller, President and CEO, highlighted the company's progress towards becoming a leading natural gas utility, with robust customer growth driving increased utility net income and capital expenditure guidance for 2023. The company also remains focused on the potential separation of its Centuri segment, having confidentially submitted a draft Registration Statement for an IPO.
Financial Performance Overview
Southwest Gas reported a significant turnaround in its third-quarter performance, with consolidated net earnings of $0.04 per diluted share, a stark improvement from the consolidated net loss of $0.18 per diluted share in the same quarter of the previous year. Adjusted for non-recurring items, the company's adjusted consolidated net earnings were $0.10 per diluted share, compared to an adjusted consolidated net loss of $0.05 per diluted share in Q3 2022.
Utility Segment Growth
The natural gas distribution segment saw a reduction in its seasonal net loss to $3.3 million in Q3 2023, down from a loss of $22.2 million in Q3 2022. This improvement was attributed to a $21 million increase in operating margin, driven by regulatory account balance recoveries, system investments, and customer growth. The company also benefited from a $12.9 million increase in other income, primarily due to higher interest income on deferred purchased gas cost balances and lower non-service components of pension costs.
Centuri Segment Performance
Centuri's utility infrastructure services segment reported net income of $18 million, up from $14 million in the prior year's quarter. This was largely due to a $45 million increase in offshore wind revenues and an $11 million increase in electric infrastructure services revenues. The segment also achieved record third-quarter revenues of $775 million and a 38% increase in adjusted EBITDA over the same twelve-month period of the previous year.
Capital Expenditure and Guidance Updates
Southwest Gas has raised its 2023 net income guidance for the utility segment to $215 - $225 million, assuming $3 - $5 million of COLI earnings. Capital expenditures guidance for 2023 has also been increased to $720 - $740 million, primarily due to higher-than-expected customer growth and system improvements. The utility segment anticipates a 5% - 7% compound annual growth rate in its 3-year utility rate base.
Centuri Separation and Future Outlook
The company is actively pursuing the separation of Centuri, with a confidential draft registration statement submitted for an IPO. The separation process is subject to market conditions, SEC review, and board approval. Southwest Gas is evaluating the best approach for the separation, including a potential tax-free spin-off.
Southwest Gas Holdings Inc (NYSE:SWX) will host a conference call to further discuss the third-quarter results and provide additional insights into the company's performance and strategic initiatives.
For more detailed financial information and analysis, please visit Southwest Gas Holdings Inc's Investor Relations.
Explore the complete 8-K earnings release (here) from Southwest Gas Holdings Inc for further details.
This article first appeared on GuruFocus.
