2014 First Quarter Earnings Conference Call May 8, 2014
2014 First Quarter Highlights Third highest quarterly earnings in history Earnings for the first quarter negatively impacted by: Delay in the final outcome of the California general rate case Legal accruals and expenses Extreme…
Call Outline I. Consolidated earnings March 31, 2014 II. Natural gas segment III. NPL Construction Co. (NPL) IV. Regulation V. 2014 outlook update 4
Summary Operating Results (In thousands, except per share amounts) THREE MONTHS ENDED MARCH 31, TWELVE MONTHS ENDED MARCH 31, 2014 2013 2014 2013 Results of Consolidated Operations Gas operations income 72,599 79,292 117,476…
Summary Operating Results Natural Gas Operations (In thousands) THREE MONTHS ENDED MARCH 31, 2014 2013 Results of Natural Gas Operations Gas operating revenues 486,493 493,600 Net cost of gas sold 191,377 200,608 Operating margin…
Three Months Ended March 31, 2014 Increase in Operating Margin Natural Gas Operations (In millions) Customer growth 3 Other (1) Increase 2 Expected margin increase associated with rate relief was not realized due to delay in…
Three Months Ended March 31, 2014 Operating Expenses and Net Financing Costs Natural Gas Operations Operating expenses increased by 8.1 million or 5.2% O&M expense increased 5% due primarily to 5 million in legal accruals and expenses…
Other Income and Deductions Natural Gas Operations (In thousands) THREE MONTHS ENDED MARCH 31, 2014 2013 Change in COLI policies 900 3,800 Pipe replacement costs - (85) Miscellaneous income and (expense) 712 348 Total other income…
Summary Operating Results Natural Gas Operations (In thousands) TWELVE MONTHS ENDED MARCH 31, 2014 2013 Results of Natural Gas Operations Gas operating revenues 1,293,047 1,284,615 Net cost of gas sold 426,770 437,463 Operating…
Twelve Months Ended March 31, 2014 Natural Gas Operations Operating income declined 11.3 million between periods as growth in operating margin was more than offset by operating cost increases First quarter 2014 legal accrual and high…
Summary Operating Results Construction Services (In thousands) THREE MONTHS ENDED MARCH 31, 2014 2013 Construction revenues 121,903 119,905 Construction expenses 113,199 106,688 Depreciation and amortization 11,408 10,614…
Three Months Ended March 31, 2014 Construction Services Revenues increased 2 million Primarily due to the several bid projects that were started in late 2013 and an increase in the amount of work with several customers Increase…
Summary Operating Results Construction Services (In thousands) TWELVE MONTHS ENDED MARCH 31, 2014 2013 Construction revenues 652,626 599,023 Construction expenses 579,795 528,680 Depreciation and amortization 43,763 40,130…
Twelve Months Ended March 31, 2014 Construction Services Revenues increased 53.6 million primarily due to an increase in utility customer contracts for pipe replacement work Partially offset by adverse weather conditions during first…
Regulation - California General Rate Case Natural Gas Operations Application Filed December 20, 2012 Revised Proposed Alternative Proposed Decision Decision Proposed Decision Revenue Increase 7.5 million 7.2 million 7.2 million…
Regulation Other Regulatory Matters Nevada infrastructure mechanisms Arizona COYL program Proposed Arizona LNG facility Paiute Pipeline Company (FERC ) Expansion General rate case 18
2014 Outlook Update Construction Services Weather delays are now behind us Moving forward in an expedited fashion to complete work awarded under contracts Remain cautiously optimistic that NPL earnings for the full year 2014 will be…
2014 Outlook Update Natural Gas Operations Incremental margin from rate relief will be less than originally expected due to delay in California rate case decision Net customer growth of approximately 1.5% Operating cost increase of…
2014 Outlook Update Natural Gas Operations Capital Expenditures (In millions) 2014 total estimate Replacements General Plant 375 million under trackers Growth 47 31 107 8 Other 182 Franchise & other replacements 21
APPENDIX 22
Two Business Segments Southwest Gas consists of two business segments Natural gas operations Construction services (NPL) TMTD 3/31/14 Net Income 135MM 13% Natural gas operations 117MM net income Construction services 18MM net…
Customer Growth Breakdown (In thousands) Twelve Months Ended March 31, 2012 2013 2014 Beginning period 1,844 1,866 1,886 New meter sets 14 19 21 Meter turn-on/turn-offs 8 1 5 Ending period 1,866 1,886 1,912 For 2014, Company is…
Stable Customer Base Natural Gas Operations TMTD March 31, 2014 Customer & Operating Margin Distribution 4% Other Sales By State 11% Customers Transportation Customers Margin Customers 10% Arizona 10% Nevada 85% 36% 54%…
Natural Gas Operations Customers by State As of March 31, 2012 2013 2014 Arizona 1,006 1,016 1,027 Nevada 675 684 697 California 185 186 188 Total 1,866 1,886 1,912 1,100 825 550 275 - 2012 2013 2014 California…
Natural Gas Operations Capital Expenditures (In millions) 400 375 350 309 315 300 250 200 150 2012 2013 2014 Estimated 2014 - 2016 Estimate: 1.1 billion 27
Capital Structure (In millions) Capitalization at March 31, 2010 2011 2012 2013 2014 Common Equity 1,162 1,231 1,295 1,379 1,470 Long-Term Debt1 1,123 1,123 1,393 1,256 1,380 Total Permanent Capital 2,285 2,354 2,688 2,635 2,850…
Stock Performance NYSE: SWX Common Stock Closing Price March 31, 2004 March 31, 2014 60 55 50 45 40 35 30 25 20 15 30
Comparative Total Returns Total Returns for Periods Ended March 31, 2014 1-Year 3-Year 5-Year 10-Year Southwest Gas 15.53% 14.11% 24.08% 11.91% S&P 600 Small Gas Index 11.27% 8.49% 13.51% 10.92% Dow Jones Utilities 8.85% 13.33%…
Authorized Rate Base and Rates of Return Natural Gas Operations Authorized Authorized Authorized Return on Rate Base Rate of Common Rate Jurisdiction (In thousands) Return Equity Arizona 1,070,116 8.95 % 9.50 % Southern Nevada 825,190…
Return on Common Equity Twelve months ended March 31, 12% 11% 10.4% 10.0% 9.7% 10% 9.5% 8.8% 8.9% 9% 8% 7% 6% 2012 2013 2014 Return on Common Equity - Total Company Return on Common Equity - Gas Operations 34
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