CORPORATE NEWS RELEASEBACK
May 4, 2012
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.”
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.
During the fourth quarter of 2011, consolidated net income was $55.3 million, or $1.20 per basic share, versus $45 million, or $0.99 per basic share, for the fourth quarter of 2010.
Natural Gas Operations Segment Results
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.
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 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.
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)
QUARTER ENDED MARCH 31, 2012 2011
Consolidated Operating Revenues $ 657,645 $ 628,440 Net Income $ 78,919 $ 68,549 Average Number of Common Shares Outstanding 46,068 45,763 Basic Earnings Per Share $ 1.71 $ 1.50 Diluted Earnings Per Share $ 1.70 $ 1.48 TWELVE MONTHS ENDED MARCH 31, 2012 2011
Consolidated Operating Revenues $ 1,916,393 $ 1,790,060 Net Income $ 122,657 $ 107,778 Average Number of Common Shares Outstanding 45,934 45,538 Basic Earnings Per Share $2.67 $ 2.37 Diluted Earnings Per Share $2.65 $ 2.34
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, conditions in the housing market, the effects of regulation/deregulation, the timing and amount of rate relief, changes in rate design, and the impacts of stock market volatility.
# # # #