Southwest Gas Holdings, Inc. Q3 FY2024 earnings call

• Southwest Gas continues its transformational strategy to be a premier regulated natural gas utility. - Completed Nevada general rate case with positive outcome, Arizona rate case progressing, California rate case filed. - Centuri appointed Chris Brown as CEO on Dec 3rd. - Ended third quarter with over $450M cash on hand, no equity issuance expected in 2024. - Executing utility optimization initiatives and cost discipline efforts.

The utility segment performed well with utility operating margin increasing by nearly $23M compared to the same period last year, driven by increased rate relief, customer growth, and infrastructure surcharge components. Centuri's consolidated results were lower due to unforeseen operational issues, equipment breakages, rental/repair costs, self-insurance claim costs, and lower interest expense from IPO-related debt reduction. Revenue contribution: The utility is the main contributor, while Centuri's results impact consolidated numbers.

• Southwest Gas now expects full-year utility net income to finish within the top half of $233 million to $243 million. - Reaffirmed 2024 utility CapEx at approximately $830 million. - Affirmed expected compounded annual growth rate for net income at the utility to fall within 9.25% to 11.25% from 2024 to 2026. - Reaffirmed rate base compounded annual growth rate in the range of 6.5% to 7.5% over 2024-2026. - Dividend held flat while evaluating Centuri's separation options.

• Uncertainties surrounding future economic conditions and regulatory approvals that may impact actual results. - Market conditions affecting the timing and structure of Centuri's separation, which is contingent on favorable market conditions.

Q: Are there any guardrails on the timing of the future separation update?

A: We don't have a specific time frame, but we got the CEO in place and will watch market conditions for timing of next steps.

Q: How do you see the settlement backdrop in Arizona rate case?

A: Staff is supportive of the system improvement mechanism, and we'll continue dialogue with parties, with staff's direct testimony being encouraging.

Q: What drove the change in financing plan?

A: It's been the collection of the PGA, with significant cash on hand at the utility, so no need for equity issuance in 2024; near-term equity needs in 2025 are limited to less than $100M via ATM.

Q: Impact of Arizona election on regulatory environment?

A: No anticipated impact on timing of Arizona rate case or settlement scenario, with election results not out of line with expectations