LAS VEGAS, Nov. 5 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) recorded a net loss of $0.38 per share for the third quarter of
2008, compared to a loss of $0.22 per share recorded during the third quarter
of 2007. Net loss for the third quarter of 2008 was $16.7 million, compared
to a loss of $9.3 million in the prior-year quarter. 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, "A significant
component of the downturn in quarterly results was the negative return on
long-term investments -- a stock market-related, but non-operating,
phenomenon. The current quarter reflects a $3.7 million decline in investment
values while the prior-year quarter included a $355,000 increase in the value
of investments underlying the cash surrender value of company-owned life
insurance ("COLI") policies. This change accounted for $0.09 per share of the
decline between periods." From an operations standpoint, Shaw noted that
"Excluding COLI, operating results declined $3.3 million, or $0.07 per share,
between periods, principally in the gas operations segment, as a modest
increase in operating margin and lower financing costs were not sufficient to
offset higher operating costs. The slowdown in the new construction market
coupled with an increasing inventory of vacant existing homes has clearly
impacted operating results." Shaw concluded by saying, "We know we are in
challenging economic times and there is no 'quick fix' available. However,
many of our underlying fundamentals are strong and should allow us to 'weather
the storm.' We have an improving capital structure, strong liquidity
position, stable work force, moderate long-term cost increases, and general
rate increase requests in Arizona and California which are nearing conclusion.
As a result, we continue to believe we are positioned for future long-term
improvements."
For the twelve months ended September 30, 2008, consolidated net income
was $72.9 million, or $1.69 per basic share, compared to $86.8 million, or
$2.06 per basic share, during the twelve-month period ended September 30,
2007.
Natural Gas Operations Segment Results
Third Quarter
Operating margin, defined as operating revenues less the cost of gas sold,
increased $1.5 million, or one percent, in the third quarter of 2008 compared
to the third quarter of 2007. Customer growth contributed $1 million toward
the operating margin increase as the Company added 19,000 net new customers
during the last twelve months, an increase of one percent. Rate changes
accounted for the remainder of the increase.
Operating expenses for the quarter increased $6.4 million, or five
percent, compared to the third quarter of 2007 primarily due to general cost
increases and incremental operating costs (including depreciation) associated
with serving additional customers and facilities upgrades. Other income,
which principally includes interest income, long-term investment returns, and
non-utility expenses, decreased $5 million between periods. This was
primarily due to a $4.1 million decline in returns on long-term investments
between periods. Net financing costs decreased $1.5 million due principally
to a reduction in outstanding debt.
Twelve Months to Date
Operating margin increased $10 million, or one percent, between periods.
Customer growth accounted for $8 million of the increase and rate changes
contributed $2 million. Warmer-than-normal temperatures were experienced
during both twelve-month periods (each with estimated negative impacts to
operating margin of approximately $7 million), resulting in no incremental
impact between the periods.
Operating expenses increased $7.7 million, or one percent, between periods
primarily due to general cost increases, partially offset by labor
efficiencies resulting from the conversion to electronic meter reading.
Other income decreased $16.3 million between periods primarily due to a
$10.8 million decrease in returns on long-term investments ($7.3 million loss
in the current twelve-month period versus a $3.5 million gain in the prior-
year period) and a $2.4 million reduction in interest income primarily due to
the full recovery of previously deferred purchased gas cost receivables. Net
financing costs between periods decreased $1.2 million, or one percent, due
principally to lower average debt outstanding.
Southwest Gas Corporation provides natural gas service to approximately
1,819,000 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, conditions in the housing market, the effects of
regulation/deregulation, the timing and amount of rate relief, and changes in
rate design.
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)
QUARTER ENDED SEPTEMBER 30, 2008 2007
Consolidated Operating Revenues $374,422 $371,524
Net Loss $16,686 $9,318
Average Number of Common Shares Outstanding 43,581 42,448
Loss Per Share $0.38 $0.22
NINE MONTHS ENDED SEPTEMBER 30, 2008 2007
Consolidated Operating Revenues $1,635,333 $1,591,777
Net Income $29,741 $40,109
Average Number of Common Shares Outstanding 43,307 42,219
Basic Earnings Per Share $0.69 $0.95
Diluted Earnings Per Share $0.68 $0.94
TWELVE MONTHS ENDED SEPTEMBER 30, 2008 2007
Consolidated Operating Revenues $2,195,644 $2,156,892
Net Income $72,878 $86,816
Average Number of Common Shares Outstanding 43,150 42,060
Basic Earnings Per Share $1.69 $2.06
Diluted Earnings Per Share $1.68 $2.04
