Southwest Gas Holdings, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance

• Consolidated net income attributable to Southwest Gas Holdings was $12.8 million for the three months ended September 30, 2026, compared to $262.6 million in the prior year period; year-to-date net income was $193.3 million compared to $336.4 million in 2025.
• Income from continuing operations was $12.8 million for the quarter and $193.3 million year-to-date, representing increases of $16.5 million and $63.4 million, respectively, compared to the same periods in 2025.
• Adjusted net income from continuing operations was $14.7 million for the quarter and $195.4 million year-to-date, up $10.5 million and $30.4 million, respectively, from 2025.
• Consolidated earnings per diluted share from continuing operations were $0.18 for the quarter and $2.66 year-to-date, compared to a loss of $0.05 and $1.79 in 2025, respectively.
• Adjusted consolidated earnings per diluted share from continuing operations were $0.20 for the quarter and $2.69 year-to-date, compared to $0.06 and $2.28 in 2025, respectively.
• Operating margin was $278.1 million for the quarter and $1.1 billion year-to-date, compared to $274.2 million and $1.03 billion in 2025, respectively.
• Gross margin was $115.1 million for the quarter and $571.1 million year-to-date, compared to $118.1 million and $546.0 million in 2025, respectively.
• The Natural Gas Distribution segment contributed $13.3 million to net income for the quarter and $191.8 million year-to-date, compared to $6.3 million and $194.9 million in 2025, respectively.
• Corporate and administrative results improved from a net loss of $10.0 million in the quarter and $65.0 million year-to-date in 2025 to a net loss of $0.5 million and net income of $1.5 million in 2026, respectively.
• Discontinued operations, related to the disposition of Centuri, generated $266.3 million in net gain for the quarter and $206.5 million year-to-date in 2025, compared to zero in 2026.
• The company ended the quarter with nearly $0.7 billion in available liquidity.
• Twelve-month-ended Utility Return on Equity (ROE) was 8.0% for the period ended September 30, 2026.

Guidance and Future Outlook

• The company reaffirmed its 2026 adjusted earnings per share from continuing operations guidance of $4.17 to $4.32 per share.
• 2026 capital expenditures are estimated at approximately $1.25 billion.
• The company reaffirmed a 2026-2030 adjusted earnings per share CAGR guidance of 12.0% to 14.0%.
• 2026-2030 capital expenditures are estimated at $6.3 billion.
• 2026-2030 rate base CAGR guidance is reaffirmed at 9.5% to 11.5%.
• The Great Basin 2028 expansion project is on track for a FERC CPCN filing in the fourth quarter of 2026.
• The project is expected to generate $270 million to $300 million in incremental annual margin beginning in the fourth quarter of 2028.
• Long-term guidance metrics are based on $1.7 billion of incremental capital related to the Great Basin 2028 expansion project over the five-year period and do not reflect the updated $2.3 billion capital estimate.
• The company expects to update long-term guidance with its annual five-year plan in February 2027.

Business Segments and Product Lines

• Natural Gas Distribution:
  • Completed the Nevada general rate case, effective October 2026, providing nearly $48 million in incremental annual revenue and maintaining a 9.5% authorized ROE with a 51.35% equity / 48.65% debt capital structure.
  • Concluded the California rate case, effective January 1, 2026, resulting in $32.6 million in incremental annual revenue, a 10% ROE, and a 50% equity / 50% debt capital structure.
  • Arizona Commission Staff recommended $58 million in incremental annual revenue, a 9.75% ROE, and a transition to a formula-rate model; a hearing is scheduled for December with new rates anticipated to become effective in April 2027.
  • Combined annual revenue increases from completed Nevada and California rate cases total approximately $80 million.
  • Year-to-date O&M remained relatively flat, with a target of flat O&M on a per-customer basis.
  • Invested nearly $806 million in infrastructure modernization and expansion during the first nine months of 2026, including $148 million for the Great Basin 2028 expansion project.
  • Gas plant in service increased by $788.2 million (7%) compared to the prior year period.
• Great Basin 2028 Expansion Project:
  • Shippers have executed binding precedent agreements (BPAs) and posted surety supporting 1 Bcf per day of contracted demand.
  • The 48-inch pipe design serves the contracted 1 Bcf per day and can accommodate nearly 2 Bcf per day with modest additional investment.
  • Capital spending distribution is expected to be 15% in 2026, 25% in 2027, and 60% in 2028.
  • Continued economic growth in Northern Nevada has generated approximately 1.8 Bcf per day of additional non-binding expressions of interest for in-service dates from 2029 through 2035.
  • With added compression, the pipeline can be expanded to approximately 4 Bcf per day.

Market and Competitive Landscape

• The company serves over 2 million customers throughout Arizona, Nevada, and California.
• Customer to employee ratio at quarter end was 956 to 1 for the gas segment.
• Market value to book value per share at quarter end was 144%.
• Common stock dividend yield at quarter end was 3.1%.
• System throughput for the nine months ended September 30, 2026, was 155.3 million dekatherms, down from 159.8 million in 2025, driven by decreases in residential and small commercial classes.
• Transportation class throughput increased to 73.3 million dekatherms in 2026 from 66.1 million in 2025.

Risks and Challenges

• Forward-looking statements note that actual results could differ materially due to factors including timing and amount of rate case filings, approvals, and rate relief; changes in rate design; net customer growth rates; regulatory decisions; tax reform; credit rating downgrades; inflation; labor market sufficiency; and litigation.
• Specific risks include the potential for, and impact of, a credit rating downgrade, future earnings trends, and the impacts of stock market volatility.
• The company cannot provide assurance regarding segment revenues, margin, or growth rates, or that projects expected to be undertaken will occur as stated.
• The Great Basin 2028 expansion project is subject to regulatory approvals, capital construction costs, and construction schedules.

Management Commentary and Tone

• President and CEO Justin Brown stated that strong results give confidence in achieving full-year guidance and highlighted regulatory milestones as reinforcing support for infrastructure investments.
• Management described the quarter as demonstrating disciplined execution of strategy, positioning the company to deliver sustainable growth while maintaining operational excellence.
• The tone regarding the Great Basin 2028 project is focused on project delivery by the fourth quarter of 2028.
• Management noted that the improvement in corporate and administrative results was driven by the repayment of term loans and revolving credit facility balances.

Other Key Points

• The company completed the disposition of Centuri Holdings, Inc., with all related items included in discontinued operations.
• Southwest Gas filed a petition for reconsideration in Nevada regarding approximately $50 million of Certification Plant deferred to a future proceeding.
• The California Public Utilities Commission reduced the Automatic Trigger Mechanism adjustment factor from 50 basis points to 20 basis points based on interest-rate changes.
• The company repaid a $225.0 million term loan in the prior year's quarter and the remaining balance on the revolving credit facility, contributing to lower net interest deductions.
• A $2.0 million one-time incentive award was included in employee-related labor costs for the quarter and adjusted as a non-GAAP measure.
• The company does not provide a reconciliation of forward-looking Non-GAAP measures to GAAP measures due to the inability to project unexpected non-recurring charges.