LAS VEGAS, Feb. 27 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) reported consolidated earnings of $1.97 per basic share for
2007, a $0.10 per share decrease from the $2.07 per basic share earned in
2006. The 2006 results included a nonrecurring benefit of approximately
$0.07 per share related to a property tax settlement. Consolidated net
income for 2007 was $83.2 million, compared to $83.9 million during 2006.
According to Jeffrey W. Shaw, Chief Executive Officer, "We are pleased
to report earnings of $1.97 per share, our second best earnings performance
in 15 years and a noteworthy result in a time when there is turbulence in
the economy. Two main factors prevented us from having a record year: lost
operating margin resulting from warmer-than-normal weather, and a decline
in the rate of customer growth due to the downturn in the housing market.
Warmer-than-normal weather had an estimated impact of $12 million on
operating margin ($0.18 per share) as Arizona experienced its warmest
November in 113 years of recorded history. We have included several
proposed rate design changes in our most recently filed Arizona general
rate case to address this weather-related volatility." Addressing growth,
Shaw said, "For the first time in 15 years, our new customer growth rate
was below 3% ... we have not been immune from the downturn in the housing
markets. While we cannot predict precisely when conditions in the housing
market may return to more normal levels, we believe they will do so in the
next two years. Until then, we anticipate that our growth rate will remain
in the range of 1.5% to 3%." Shaw concluded, "Based on current economic
conditions, we expect that 2008 will present several challenges to address,
but believe our strategy focuses our efforts to meet those challenges."
During the fourth quarter of 2007, consolidated net income was $43.1
million, or $1.01 per basic share, versus $46.7 million, or $1.12 per basic
share, for the fourth quarter of 2006.
Natural Gas Operations Segment Results
Full Year 2007
Operating margin, defined as operating revenues less the cost of gas
sold, increased $35 million between 2006 and 2007. The rate relief
component of the increase was $18 million ($15 million in Arizona and $3
million in California). Customer growth contributed $14 million toward the
operating margin increase as the Company added a net 29,000 customers
during 2007, an increase of about two percent. Differences in heating
demand, caused primarily by weather variations, accounted for the remaining
$3 million increase in operating margin as warmer-than-normal temperatures
were experienced during both years (during 2007 the estimated negative
weather-related impact was about $12 million, while the negative impact
during 2006 was approximately $15 million).
Operating expenses increased $23.4 million, or five percent, between
years primarily due to general increases in labor and maintenance costs,
and incremental operating costs (including depreciation and general taxes)
associated with serving additional customers. Higher uncollectible expenses
also contributed to the increase. A nonrecurring property tax settlement
favorably affected operating expenses in 2006.
Other income decreased $5.2 million primarily as a result of a
reduction in interest income due to the collection of previously deferred
purchased gas adjustment (PGA) receivables and reduced returns on long-term
investments. Net financing costs increased $872,000, or one percent,
between years primarily due to interest expense associated with deferred
PGA balance payables and higher rates on variable-rate debt, partially
offset by lower average debt outstanding.
Fourth Quarter
Operating margin decreased a net $2 million in the fourth quarter of
2007 compared to the fourth quarter of 2006. Differences in heating demand
caused by weather variations between periods accounted for a $5 million
decrease as Arizona experienced its warmest November on record in 2007.
System-wide temperatures in both periods were warmer than normal (during
the current quarter the estimated negative impact was $8 million, while the
negative impact during the prior-year quarter was $3 million). The
weather-related decrease was partially offset by an increase of $3 million
in margin attributable to new customers.
Operating expenses for the quarter decreased $3.6 million, or three
percent, compared to the fourth quarter of 2006 primarily due to timing
differences between periods for certain employee-related costs and lower
customer-related expenses.
Other income decreased $4.1 million when compared to the same period in
2006 resulting from lower returns on long-term investments and a reduction
in interest income associated with deferred PGA balances.
Southwest Gas Corporation provides natural gas service to approximately
1,813,000 customers in Arizona, Nevada, and California.
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, 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)
YEAR ENDED DECEMBER 31, 2007 2006
Consolidated Operating Revenues $2,152,088 $2,024,758
Net Income $83,246 $83,860
Average Number of Common
Shares Outstanding 42,336 40,566
Basic Earnings Per Share $1.97 $2.07
Diluted Earnings Per Share $1.95 $2.05
QUARTER ENDED DECEMBER 31,
Consolidated Operating Revenues $560,311 $565,115
Net Income $43,137 $46,707
Average Number of Common
Shares Outstanding 42,683 41,587
Basic Earnings Per Share $1.01 $1.12
Diluted Earnings Per Share $1.00 $1.11
SOUTHWEST GAS CORPORATION
SUMMARY UNAUDITED OPERATING RESULTS
(In thousands, except per share amounts)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2007 2006 2007 2006
Results of Consolidated
Operations
Contribution to net income -
gas operations $39,584 $43,167 $72,494 $71,473
Contribution to net income -
construction services 3,553 3,540 10,752 12,387
Net income $43,137 $46,707 $83,246 $83,860
Earnings per share - gas
operations $0.93 $1.04 $1.71 $1.76
Earnings per share -
construction services 0.08 0.08 0.26 0.31
Basic earnings per share $1.01 $1.12 $1.97 $2.07
Diluted earnings per share $1.00 $1.11 $1.95 $2.05
Average outstanding common
shares 42,683 41,587 42,336 40,566
Average shares outstanding
(assuming dilution) 43,030 42,058 42,714 40,975
Results of Natural Gas
Operations
Gas operating revenues $468,770 $492,043 $1,814,766 $1,727,394
Net cost of gas sold 251,741 273,141 1,086,194 1,033,988
Operating margin 217,029 218,902 728,572 693,406
Operations and maintenance
expense 80,361 86,087 331,208 320,803
Depreciation and
amortization 39,710 37,642 157,090 146,654
Taxes other than
income taxes 9,300 9,242 37,553 34,994
Operating income 87,658 85,931 202,721 190,955
Other income (expense) (652) 3,482 4,850 10,049
Net interest deductions 21,970 21,552 86,436 85,567
Net interest deductions on
subordinated debentures 1,932 1,931 7,727 7,724
Income before income taxes 63,104 65,930 113,408 107,713
Income tax expense 23,520 22,763 40,914 36,240
Contribution to net income -
gas operations $39,584 $43,167 $72,494 $71,473
SOURCE Southwest Gas Corporation
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Related links:
http://www.swgas.com
CONTACT:
media, Cynthia Messina, +1-702-876-7132, or
investors, Ken Kenny, +1-702-876-7237, both of Southwest Gas
Corporation
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