UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 4, 2012
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
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California
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1-7850
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88-0085720
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(State or other jurisdiction of
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(Commission
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(I.R.S. Employer
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incorporation or organization)
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File Number)
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Identification No.)
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5241 Spring Mountain Road
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Post Office Box 98510
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Las Vegas, Nevada
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89193-8510
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code: (702) 876-7237
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 4, 2012, Southwest Gas Corporation (the Company) released summary financial information to the general public, including the investment community, regarding the Company’s operating performance for the quarter and twelve months ended March 31, 2012. A copy of the Company’s press release and summary financial information is attached hereto as Exhibit 99.
This Form 8-K and the attached exhibit are provided under Item 2.02 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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SOUTHWEST GAS CORPORATION
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Date: May 4, 2012
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/s/ GREGORY J. PETERSON
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Gregory J. Peterson
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Vice President/Controller and
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Chief Accounting Officer
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EXHIBIT INDEX
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Exhibit
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No.
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Description
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99
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Press Release and summary financial information dated May 4, 2012.
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May 4, 2012
Media Contact: Cynthia Messina, Las Vegas, NV (702) 876-7132
Shareholder Contact: Ken Kenny, Las Vegas, NV (702) 876-7237
For Immediate Release
SOUTHWEST GAS CORPORATION
ANNOUNCES FIRST QUARTER 2012 EARNINGS
Las Vegas, Nev. – Southwest Gas Corporation (NYSE: SWX) announced consolidated earnings of $1.71 per basic share for the first quarter of 2012, a $0.21 increase from the $1.50 per basic share earned during the first quarter of 2011. Consolidated net income was $78.9 million for the first quarter of 2012, compared to $68.5 million for the prior-year quarter. The current quarter includes $5.2 million ($0.11 per share) in other income associated with increases in the cash surrender values of company-owned life insurance (“COLI”) policies. The prior-year quarter included $2.2 million ($0.05 per share) in other income associated with COLI policies.
According to Jeffrey W. Shaw, Chief Executive Officer, “We are pleased with first quarter 2012 operating results when compared to the first quarter of 2011. The improvement in earnings between quarters was largely driven by rate relief in Arizona, effective January 2012. Other highlights during the quarter included an upgrade to our credit rating to Baa1 from Baa2 by Moody’s Investors Service and a successful 10-year debt offering at a very attractive interest rate.” Shaw concluded by stating, “In April 2012, we filed a general rate case in Nevada requesting an overall increase in revenues of approximately $27 million on original cost rate base of $936 million and utilizing a return on common equity of 10.65%. We have requested that the new rates become effective in November 2012.”
-more-
For the twelve months ended March 31, 2012, consolidated net income was $122.7 million, or $2.67 per basic share, compared to $107.8 million, or $2.37 per basic share, during the twelve-month period ended March 31, 2011. The improvement between periods included a $6.2 million increased contribution to net income from the construction services segment.
Natural Gas Operations Segment Results
First Quarter
Operating margin, defined as operating revenues less the cost of gas sold, increased $18 million in the first quarter of 2012 compared to the first quarter of 2011. Rate relief in Arizona provided an approximate $22 million increase in operating margin. New customers contributed an incremental $2 million in operating margin during the first quarter of 2012, as approximately 22,000 net new customers were added during the last twelve months. Offsetting these increases was a reduction of $6 million in operating margin between quarters primarily due to cold weather in Arizona in the first quarter of 2011. With a new rate decoupling mechanism in Arizona, effective January 2012, weather is not expected to be a significant factor in operating margin overall.
Operating expenses for the quarter rose $8.2 million, or 6%, compared to the first quarter of 2011 primarily due to increases in general costs, employee-related benefit costs including pension expense, depreciation expense resulting from additional plant in service, and Arizona property taxes.
-more-
Other income, which principally includes changes in the cash surrender values of COLI policies and non-utility expenses, rose $5.7 million between periods, primarily due to increases in COLI cash surrender values. Net interest deductions decreased $851,000 between quarters primarily due to cost savings from debt refinancing and reduced interest on lower deferred balances payable under the Company’s purchased gas adjustment mechanisms.
Twelve Months to Date
Operating margin increased $24 million between periods primarily due to $23 million of rate relief ($22 million in Arizona and $1 million in California). Customer growth contributed $3 million toward the increase. Other net differences, including weather impacts, accounted for a $2 million decrease in operating margin.
Operating expenses increased $13.1 million, or 2%, between periods principally due to higher general costs and employee-related benefit costs including pension expense. In addition, an increase in depreciation expense resulting from additional plant in service and higher Arizona property tax rates contributed to the increase. Favorable claims experience under Southwest’s self-insured medical plan partially offset the increase.
Other income declined $4 million between periods. The current twelve-month period reflects COLI-related income (including recognized death benefits) of $3.7 million, while the prior year twelve-month period included income of $10.5 million due to an increase in COLI cash surrender values and recognized net death benefits. Net interest
-more-
deductions decreased $7 million between the twelve-month periods primarily due to cost savings from debt refinancing, and reduced interest rates associated with variable-rate debt (including reductions relating to an interest tracking mechanism).
Southwest Gas Corporation provides natural gas service to 1,866,000 customers in Arizona, Nevada, and California.
This press release may contain statements which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (Reform Act). All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. A number of important factors affecting the business and financial results of the Company could cause actual results to differ materially from those stated in the forward-looking statements. These factors include, but are not limited to, the impact of weather variations on customer usage, customer growth rates, the effects of regulation/deregulation, the timing and amount of rate relief, changes in rate design, and the impacts of stock market volatility.
-more-
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)
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QUARTER ENDED MARCH 31,
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2012
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2011
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Consolidated Operating Revenues
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$ | 657,645 | $ | 628,440 | ||||
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Net Income
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$ | 78,919 | $ | 68,549 | ||||
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Average Number of Common Shares Outstanding
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46,068 | 45,763 | ||||||
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Basic Earnings Per Share
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$ | 1.71 | $ | 1.50 | ||||
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Diluted Earnings Per Share
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$ | 1.70 | $ | 1.48 | ||||
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TWELVE MONTHS ENDED MARCH 31,
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2012 | 2011 | ||||||
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Consolidated Operating Revenues
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$ | 1,916,393 | $ | 1,790,060 | ||||
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Net Income
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$ | 122,657 | $ | 107,778 | ||||
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Average Number of Common Shares Outstanding
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45,934 | 45,538 | ||||||
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Basic Earnings Per Share
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$ | 2.67 | $ | 2.37 | ||||
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Diluted Earnings Per Share
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$ | 2.65 | $ | 2.34 | ||||
-end-
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SOUTHWEST GAS CORPORATION
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SUMMARY UNAUDITED OPERATING RESULTS
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(In thousands, except per share amounts)
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THREE MONTHS ENDED
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TWELVE MONTHS ENDED
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MARCH 31,
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MARCH 31,
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2012
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2011
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2012
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2011
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Results of Consolidated Operations
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Contribution to net income - gas operations
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$ | 79,366 | $ | 68,015 | $ | 102,771 | $ | 94,080 | ||||||||
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Contribution to net income (loss) - construction services
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(447 | ) | 534 | 19,886 | 13,698 | |||||||||||
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Net income
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$ | 78,919 | $ | 68,549 | $ | 122,657 | $ | 107,778 | ||||||||
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Basic earnings per share
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$ | 1.71 | $ | 1.50 | $ | 2.67 | $ | 2.37 | ||||||||
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Diluted earnings per share
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$ | 1.70 | $ | 1.48 | $ | 2.65 | $ | 2.34 | ||||||||
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Average outstanding common shares
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46,068 | 45,763 | 45,934 | 45,538 | ||||||||||||
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Average shares outstanding (assuming dilution)
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46,467 | 46,178 | 46,363 | 45,966 | ||||||||||||
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Results of Natural Gas Operations
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Gas operating revenues
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$ | 530,713 | $ | 553,853 | $ | 1,380,226 | $ | 1,451,251 | ||||||||
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Net cost of gas sold
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242,747 | 283,806 | 572,430 | 667,726 | ||||||||||||
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Operating margin
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287,966 | 270,047 | 807,796 | 783,525 | ||||||||||||
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Operations and maintenance expense
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95,850 | 90,950 | 363,398 | 359,188 | ||||||||||||
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Depreciation and amortization
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46,292 | 43,881 | 177,664 | 171,641 | ||||||||||||
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Taxes other than income taxes
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10,731 | 9,869 | 41,811 | 38,972 | ||||||||||||
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Operating income
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135,093 | 125,347 | 224,923 | 213,724 | ||||||||||||
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Other income (deductions)
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5,433 | (236 | ) | 265 | 4,311 | |||||||||||
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Net interest deductions
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16,977 | 17,828 | 67,926 | 74,917 | ||||||||||||
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Income before income taxes
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123,549 | 107,283 | 157,262 | 143,118 | ||||||||||||
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Income tax expense
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44,183 | 39,268 | 54,491 | 49,038 | ||||||||||||
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Contribution to net income - gas operations
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$ | 79,366 | $ | 68,015 | $ | 102,771 | $ | 94,080 | ||||||||
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SOUTHWEST GAS CORPORATION
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SELECTED STATISTICAL DATA
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MARCH 31, 2012
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FINANCIAL STATISTICS
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Market value to book value per share at quarter end
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152 | % | ||||||||||||||
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Twelve months to date return on equity -- total company
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10.0 | % | ||||||||||||||
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-- gas segment
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8.8 | % | ||||||||||||||
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Common stock dividend yield at quarter end
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2.8 | % | ||||||||||||||
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Customer to employee ratio at quarter end (gas segment)
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823 to 1
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GAS OPERATIONS SEGMENT
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Authorized
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Authorized
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Authorized
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Return on
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Rate Base
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Rate of
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Common
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Rate Jurisdiction
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(In thousands)
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Return
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Equity
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Arizona
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$ | 1,070,116 | 8.95 | % | 9.50 | % |
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Southern Nevada
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819,717 | 7.40 | 10.15 | |||||||||||||
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Northern Nevada
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116,584 | 8.29 | 10.15 | |||||||||||||
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Southern California
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143,851 | 6.42 | 9.88 | |||||||||||||
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Northern California
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52,285 | 8.50 | 9.88 | |||||||||||||
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South Lake Tahoe
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11,815 | 8.50 | 9.88 | |||||||||||||
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Paiute Pipeline Company (1)
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84,717 | 9.47 | 12.00 | |||||||||||||
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(1) Estimated amounts based on rate case settlement.
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SYSTEM THROUGHPUT BY CUSTOMER CLASS
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THREE MONTHS ENDED
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TWELVE MONTHS ENDED
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MARCH 31,
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MARCH 31,
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(In dekatherms)
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2012 | 2011 | 2012 | 2011 | ||||||||||||
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Residential
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32,999,266 | 34,733,307 | 70,142,485 | 70,701,175 | ||||||||||||
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Small commercial
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10,556,682 | 11,612,294 | 29,336,738 | 30,106,771 | ||||||||||||
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Large commercial
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4,078,013 | 3,748,373 | 11,555,221 | 11,536,775 | ||||||||||||
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Industrial / Other
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1,438,945 | 1,706,020 | 4,753,712 | 5,893,170 | ||||||||||||
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Transportation
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23,311,463 | 25,420,732 | 92,045,134 | 99,538,898 | ||||||||||||
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Total system throughput
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72,384,369 | 77,220,726 | 207,833,290 | 217,776,789 | ||||||||||||
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HEATING DEGREE DAY COMPARISON
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Actual
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1,055 | 1,123 | 1,934 | 1,992 | ||||||||||||
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Ten-year average
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1,084 | 1,095 | 1,877 | 1,867 | ||||||||||||
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Heating degree days for prior periods have been recalculated using the current period customer mix.
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