Southwest Gas (SWX) Tops Q4 EPS by 21c, Revenues Beat; Offers FY21 EPS Mid-Point Guidance Below Consensus

Southwest Gas (NYSE: SWX) reported Q4 EPS of $1.82, $0.21 better than the analyst estimate of $1.61. Revenue for the quarter came in at $914.08 million versus the consensus estimate of $887.98 million.

Commenting on Southwest Gas Holdings' performance and outlook, John P. Hester, President and Chief Executive Officer, said: "2020 was an unprecedented year globally, including in the communities we serve. I am very proud of the way our employees rose to meet customer needs and their reliance on clean, affordable natural gas, delivered safely and reliably to their homes, during a year in which they would spend more time at home than ever before. Southwest Gas customers recognized this effort with a 96% customer satisfaction rating, comparable to the record rating received a year earlier.

"And 2020 was remarkable for other reasons as well. Not only did we add 37,000 new utility customers in the past year, expand service to Spring Creek, Nevada, and conclude multiple general rate cases, including in Arizona, with rate relief now in place, but our utility infrastructure services business, Centuri, delivered record results again this year. Centuri supported customers with important gas and electric infrastructure projects, and also helped restore customer facilities following regional storms. Safety, service, and reliability have always been part of our core customer commitments; these guiding principles were a beacon for our customers in 2020 and will continue to illuminate the path in the year ahead."

GUIDANCE:

Southwest Gas sees FY2021 EPS of $3.95-$4.20, versus the consensus of $4.18.

Management expects 2021 diluted earnings per share to be between $3.95 and $4.20. Other highlights of 2021 expectations include the following:

Natural Gas Operations Segment

• Operating margin for 2021 is anticipated to benefit from customer growth (1.7%), rate relief in all three states in which we operate, expansion projects, and infrastructure tracker mechanisms. Combined, these items are expected to produce an increase in operating margin of 6% to 8%.
• Total pension costs are expected to be relatively flat compared to 2020 but will be reflected as an increase in operations and maintenance costs of about $6 million, with a comparable decrease to other expense (associated with non-service pension costs).
• Operating income is expected to increase 3% to 5%.
• COLI earnings are estimated at $3 million to $5 million.
• Capital expenditures in 2021 are estimated at approximately $700 million, in support of customer growth, system improvements, and pipe replacement programs.

Utility Infrastructure Services Segment

• Centuri's revenues for 2021 are expected to be 1% to 4% greater than the record 2020 amount (which included $82 million of emergency storm restoration services).
• Operating income is expected to be approximately 5.3% to 5.8% of revenues.
• Interest expense is expected to be $8 million to $9 million.
• Net income expectations reflect earnings attributable to Southwest Gas Holdings, net of earnings attributable to noncontrolling interests (estimated between $5 million and $6 million). Changes in Canadian currency exchange rates could influence results.

For earnings history and earnings-related data on Southwest Gas (SWX) click here.

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