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October 28, 2004
Media Contact: Roger Buehrer, Las Vegas, NV (702) 876-7132
Shareholder Contact: Ken Kenny, Las Vegas, NV (702) 876-7237
SWX-NYSE
For Immediate Release
SOUTHWEST GAS
CORPORATION
REPORTS THIRD QUARTER RESULTS
Las Vegas — Southwest Gas
Corporation recorded a net loss of $0.46 per share for the third quarter of 2004 compared
to a $0.51 per share loss reported for the third quarter of 2003. Net loss for the third
quarter of 2004 was $16.4 million compared to the 2003 third quarter net loss of $17.4
million. Current period results included a nonrecurring income tax benefit of $1.6
million, or $0.05 per share. Average shares outstanding increased by 1.6 million, or
five percent, due to issuances under the Company’s various stock purchase plans and
equity shelf program. Due to the seasonal nature of the business, net losses during the
second and third quarters are normal and not generally indicative of earnings for a
complete twelve-month period.
According to Jeffrey W. Shaw, Chief
Executive Officer, “Natural gas operating results, excluding the tax benefit,
declined between periods as improvements in operating margin were offset by increased
operating costs. However, there were two notable items during the quarter – general
rate relief and record customer growth. In August 2004, we received a decision in the
Nevada general rate case authorizing an annualized rate increase of $13.7 million
effective September 2004. Of equal
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importance, as we head into the winter heating season,
the decision included improvements in rate design to mitigate the impact of weather
variations on margin.”
For the twelve months ended
September 30, 2004, consolidated net income was $50.8 million, or $1.47 per
basic share, compared to $41.8 million, or $1.25 per basic share, during the
twelve-month period ended September 30, 2003. An improvement in weather conditions between
periods was the primary reason for the increase.
Natural Gas
Operations Segment Results
Third Quarter
Operating margin, defined as
operating revenues less the cost of gas sold, increased approximately $8 million, or
eight percent, in the third quarter of 2004 compared to the third quarter of 2003.
Customer growth contributed an incremental $5 million in operating margin during the
quarter and rate relief in California and Nevada added $3 million. During the last twelve
months, the Company added a record 79,000 customers, an increase of five percent. Another
9,000 customers were added in October 2003 with the acquisition of Black Mountain Gas
Company.
Operating expenses for the quarter
increased $11.1 million, or ten percent, compared to the third quarter of 2003 primarily
due to incremental costs associated with record customer growth. Additional factors
include insurance and higher employee-related and regulatory costs. Net financing costs
rose $773,000 between periods due to an increase in average
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debt outstanding to help
finance growth, partially offset by interest savings generated from debt and preferred
securities instrument refinancings and a reduction in interest costs associated with the
purchased gas adjustment account balance.
Twelve Months to Date
Operating margin increased
$53 million, or ten percent, between periods. Differences in heating demand caused by
weather variations between periods resulted in a $20 million margin increase as
warmer-than-normal temperatures were experienced during both periods. During the current
period, operating margin was negatively impacted by $15 million, while in the prior
period the negative impact was $35 million. Customer growth contributed an
incremental $21 million, while rate relief, principally in California, added
$12 million.
Operating expenses increased
$31.9 million, or eight percent, primarily reflecting incremental costs associated
with servicing a growing customer base coupled with factors previously mentioned. Net
financing costs decreased $1.1 million, or one percent. Interest savings generated
from the refinancing of industrial development revenue bonds and preferred securities
instruments were partially offset by costs associated with increased average debt
outstanding.
Other income decreased
$13.3 million between periods. The prior period reflected income of $14.6 million
associated with the timing of merger-related insurance recoveries, net of costs. The
current period includes a $1.8 million improvement in interest income primarily associated
with the unrecovered balance of deferred purchased gas costs.
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Southwest Gas Corporation provides
natural gas service to approximately 1,579,000 customers in Arizona, Nevada and
California. Its service territory is centered in the fastest-growing region of the
country.
This press release may contain
statements which constitute “forward-looking statements” within the meaning of
the 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, changes in natural gas
prices, the ability to recover costs through the PGA mechanism, the effects of
regulation/deregulation, the timing and amount of rate relief, changes in rate design,
changes in gas procurement practices, changes in capital requirements and funding,
resolution of pending litigation, the impact of conditions in the capital markets on
financing costs, changes in construction expenditures and financing, changes in operations
and maintenance expenses, future liability claims, changes in pipeline capacity for the
transportation of gas and related costs, acquisitions and management’s plans related
thereto, competition, and the ability to raise capital in external financings. In
addition, the Company can provide no assurance that its discussions regarding certain
trends relating to its financing, operations, and maintenance expenses will continue in
future periods.
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SOUTHWEST GAS
CONSOLIDATED EARNINGS DIGEST
(In thousands, except
per share amounts)
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