LAS VEGAS, Feb. 27 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) announced consolidated earnings of $2.07 per basic share for
2006, a $0.92 per share increase from the $1.15 per basic share earned in
2005. The current-year results include a benefit of approximately $0.07 per
share related to a nonrecurring property tax settlement reached in the
second quarter of 2006. The 2005 results reflect a $0.16 per share
nonrecurring charge related to an injuries and damages incident.
Consolidated net income for 2006 was $83.9 million, compared to $43.8
million during 2005.
According to Jeffrey W. Shaw, Chief Executive Officer, "2006 was a very
encouraging year for our company. The solid improvement in operating
results principally reflected the realization of much needed rate relief in
Arizona. Of the $49 million annualized Arizona rate relief approved
effective March 2006, approximately $35 million in incremental operating
margin was recognized in 2006." Shaw also cited "continued customer growth,
and a $2.2 million increased contribution to net income from our pipeline
construction subsidiary" as factors in the net change. Shaw noted that "the
operating results confirm that our principal strategies are working,
however, there is still improvement to be made. We hope to continue to work
with regulators to improve the level and stability of earnings and cash
flows going forward."
During the fourth quarter of 2006, consolidated net income was $46.7
million, or $1.12 per basic share, versus $30.3 million, or $0.77 per basic
share, for the fourth quarter of 2005.
Natural Gas Operations Segment Results
Full Year 2006
Operating margin, defined as operating revenues less the cost of gas
sold, increased $66 million in 2006 as compared to 2005. During 2006, the
Company added 71,000 customers, an increase of four percent. New customers
contributed $26 million in incremental operating margin. Rate relief in
Arizona and California added $37 million. Differences in heating demand
caused primarily by weather variations between periods resulted in a $3
million operating margin increase as warmer-than-normal temperatures were
experienced during both periods (during 2006, operating margin was
negatively impacted by $16 million, while the negative impact in 2005 was
$19 million).
Operating expenses increased $11 million, or two percent, in 2006. On a
comparative basis, general increases in operations and maintenance costs as
well as incremental costs (including depreciation) associated with serving
additional customers were substantially offset by the property tax benefit
recognized in 2006 and the effect of a $10 million nonrecurring charge
related to an injuries and damages incident recognized in 2005. Adjusting
for these two items, operating expenses would have increased approximately
five percent.
Other income improved $5 million primarily due to increased interest
income on higher deferred purchased gas cost balances and interest income
on the property tax settlement. Net financing costs rose $4 million, or
four percent, between periods primarily due to higher variable-rate
interest costs and an increase in average debt outstanding to help finance
growth.
Fourth Quarter
Operating margin increased approximately $24 million when compared to
the fourth quarter of 2005. Rate relief in Arizona and California added $13
million and customer growth contributed an incremental $5 million.
Differences in heating demand caused primarily by weather variations
between periods resulted in a $6 million operating margin increase as
temperatures during the fourth quarter of 2006 returned to more normal
levels from the warmer-than-normal temperatures experienced during the
fourth quarter of 2005. Operating expenses increased $1.5 million, or one
percent, primarily due to higher employee-related costs, uncollectible
expenses, and incremental operating costs associated with serving
additional customers. The prior period included a $10 million nonrecurring
charge related to an injuries and damages incident. Net financing costs
between the periods were relatively flat as strong cash flows reduced the
need for short-term borrowings.
Southwest Gas Corporation provides natural gas service to 1,784,000
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, 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.
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)
YEAR ENDED DECEMBER 31, 2006 2005
Consolidated Operating Revenues $2,024,758 $1,714,283
Net Income $83,860 $43,823
Average Number of Common Shares Outstanding 40,566 38,132
Basic Earnings Per Share $2.07 $1.15
Diluted Earnings Per Share $2.05 $1.14
QUARTER ENDED DECEMBER 31,
Consolidated Operating Revenues $565,115 $496,995
Net Income $46,707 $30,255
Average Number of Common Shares Outstanding 41,587 39,174
Basic Earnings Per Share $1.12 $0.77
Diluted Earnings Per Share $1.11 $0.76
SOURCE Southwest Gas Corporation
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Related links:
http://www.swgas.com
CONTACT:
Media, Cynthia Messina, +1-702-876-7132, or
Shareholders, Ken Kenny, +1-702-876-7237, both of Southwest Gas
Corporation
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