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Southwest Gas Corporation Announces Third Quarter 2016 Earnings
According to
For the twelve months ended September 30, 2016, consolidated net income was $153 million, or
Natural Gas Operations Segment Results
Third Quarter
Operating margin, defined as operating revenues less the cost of gas sold, increased $6 million between quarters. Combined rate relief in the
Operations and maintenance expenses increased
Other income and deductions improved $6 million between quarters primarily due to the changes in cash surrender values of COLI policies and associated net death benefits recognized.
Twelve Months to Date
Operating margin increased $28 million between periods including $8 million attributable to customer growth and a combined $8 million of rate relief in the
Operations and maintenance expenses increased $15 million, or 4%, between periods primarily due to general cost increases and a $4 million increase in expenses associated with pipeline integrity management and damage prevention programs. Depreciation expense and general taxes (combined) increased
Other income and deductions improved $8 million between periods primarily due to the changes in cash surrender values of COLI policies and associated net death benefits recognized.
Construction Services Segment Results
Third Quarter
Revenues increased $54 million between quarters, primarily due to additional pipe replacement work with existing customers, incremental work from awarded bid contracts, and work with new customers. Construction expenses increased $54 million between quarters primarily due to the additional pipe replacement and bid contract work and higher labor costs experienced due to changes in the mix of work with existing customers. Contained within construction expenses were higher general and administrative costs to support the growth in operations, including approximately $1 million of incremental costs related to management realignment activities.
Depreciation and amortization expense declined
Twelve Months to Date
Both comparative periods were impacted by a previous Canadian industrial construction project (the prior-year period includes a
Depreciation and amortization expense increased
Outlook for 2016 – 3rd Quarter 2016 Update
Natural Gas Segment:
- Operating margin for 2016 is anticipated to benefit from customer growth (similar to 2015), infrastructure tracker mechanisms, expansion projects, and
California attrition. Combined, these items are expected to produce approximately 3% in incremental margin. Additionally, new rates established to recover Nevada CEE program costs are expected to increase margin by approximately $11 million, but will be offset by a similar increase in amortization expense. - Operations and maintenance expense is expected to increase modestly as compared to 2015 due to increased general costs, pipeline integrity management and damage prevention programs, and costs associated with customer growth. These increases will be mitigated by a decrease in pension costs. Depreciation and general taxes should increase consistent with the growth in gas plant in service (approximately 5% to 6%) plus the amortization of Nevada CEE program costs noted above.
- Operating income is expected to increase by 2% to 3% between years.
- Net interest deductions for 2016 are expected to be approximately $2 million to $3 million higher than 2015, including the impact of
$300 million of senior notes issued inSeptember 2016 . - Changes in cash surrender values of COLI policies will continue to be subject to volatility. Management generally anticipates longer term normal increases in COLI cash surrender values to range from $3 million to $5 million on an annual basis.
- Capital expenditures in 2016 are estimated at $470 million, in support of customer growth, system improvements, and accelerated pipe replacement programs.
Construction Services Segment:
- Centuri revenues for 2016 are anticipated to approximate
$1 .1 billion. - Operating income is expected to be approximately 5% of revenues.
- Based on the current interest rate environment, net interest deductions for 2016 are expected to be between
$6 .5 million and$7 .5 million. - These collective expectations are before consideration of the portion of earnings attributable to the noncontrolling interests. Additionally, changes in foreign exchange rates could influence results.
This press release may contain statements which constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (Reform Act). All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. A number of important factors affecting the business and financial results of the Company could cause actual results to differ materially from those stated in the forward-looking statements. These factors include, but are not limited to, the timing and amount of rate relief, changes in rate design, customer growth rates, the effects of regulation/deregulation, the impacts of construction activity at Centuri, future earnings trends, seasonal patterns, and the impacts of stock market volatility. In addition, the Company can provide no assurance that its discussions about future operating margin, operations and maintenance expenses, operating income, depreciation and general taxes, COLI cash surrender values, financing expenses, and capital expenditures of the natural gas segment will occur. Likewise, the Company can provide no assurance that discussions regarding construction services segment revenues, operating income, and net interest deductions will transpire. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its Web site or otherwise. The Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST |
||||
QUARTER ENDED SEPTEMBER 30, |
2016 |
2015 |
||
Consolidated Operating Revenues |
$ 539,969 |
$ 505,396 |
||
Net Income (Loss) |
$ 2,472 |
$ (4,734) |
||
Average Number of Common Shares Outstanding |
47,481 |
47,102 |
||
Earnings (Loss) Per Share |
$ 0.05 |
$ (0.10) |
||
Diluted Earnings (Loss) Per Share |
$ 0.05 |
$ (0.10) |
||
NINE MONTHS ENDED SEPTEMBER 30, |
2016 |
2015 |
||
Consolidated Operating Revenues |
$ 1,818,965 |
$ 1,778,220 |
||
Net Income |
$ 86,861 |
$ 72,198 |
||
Average Number of Common Shares Outstanding |
47,464 |
46,863 |
||
Basic Earnings Per Share |
$ 1.83 |
$ 1.54 |
||
Diluted Earnings Per Share |
$ 1.82 |
$ 1.53 |
||
TWELVE MONTHS ENDED SEPTEMBER 30, |
2016 |
2015 |
||
Consolidated Operating Revenues |
$ 2,504,370 |
$ 2,405,903 |
||
Net Income |
$ 152,980 |
$ 130,944 |
||
Average Number of Common Shares Outstanding |
47,442 |
46,777 |
||
Basic Earnings Per Share |
$ 3.22 |
$ 2.80 |
||
Diluted Earnings Per Share |
$ 3.20 |
$ 2.77 |
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SOURCE
Media Contact: Sonya Headen, Las Vegas, NV, (702) 364-3411, or Shareholder Contact: Ken Kenny, Las Vegas, NV, (702) 876-7237