LAS VEGAS, April 27 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) announced consolidated earnings of $1.19 per basic share for
the first quarter of 2007, a $0.07 increase from the $1.12 per basic share
earned during the first quarter of 2006. Consolidated net income was $49.8
million, compared to $44.2 million in the prior period.
    According to Jeffrey W. Shaw, Chief Executive Officer, "The increase in
earnings between quarters reflects the recognition of two additional months
of Arizona rate relief that went into effect March 1, 2006 and a return to
more normal temperatures overall. The solid operating performance in the
first quarter of 2007 is a continuation of the improvements made in 2006,
which resulted in the first increase in the common stock dividend in 13
years." Shaw concluded by saying "While we are pleased with first quarter
results, we recognize that managing weather risk continues to be a
challenge for us. We experienced both extremes during the quarter -- a cold
January and hot March -- and remain resolute in our need to continue
working with regulators to improve the level and stability of earnings and
cash flows going forward."
    For the twelve months ended March 31, 2007, consolidated net income was
$89.4 million, or $2.17 per basic share, compared to $55.2 million, or
$1.42 per basic share, during the twelve-month period ended March 31, 2006.
The current twelve-month results include a benefit of approximately $0.07
per share related to a nonrecurring property tax benefit recognized in the
second quarter of 2006. Results for the prior twelve-month period include a
$10 million, or $0.16 per share, nonrecurring charge recorded in the fourth
quarter of 2005 related to an injuries and damages incident.
    Natural Gas Operations Segment Results
    First Quarter
    Operating margin, defined as operating revenues less the cost of gas
sold, increased approximately $22 million, or 11 percent, in the first
quarter of 2007 compared to the first quarter of 2006. Rate relief added a
net $8 million in operating margin compared to the prior year consisting of
$15 million in Arizona general rate relief and $1 million for California
attrition amounts, offset by an $8 million impact of implementing a
California equalized margin tracker mechanism, effective January 2007.
Under this mechanism, margin is earned equally throughout the year.
Differences in heating demand, caused primarily by weather variations
between periods, accounted for an $8 million increase in operating margin
as overall temperatures in the current quarter returned to more normal
levels compared to the warmer-than-normal temperatures experienced in the
first quarter of 2006. New customers contributed an incremental $6 million
in operating margin during the quarter as the Company added 62,000
customers during the last twelve months, an increase of nearly four
percent.
    Operating expenses for the quarter increased $9 million, or seven
percent, compared to the first quarter of 2006 primarily due to general
cost increases and incremental operating costs associated with serving
additional customers. Higher uncollectible and employee-related costs also
contributed to the operating expense increase. Net financing costs
decreased $807,000, or three percent, between periods as strong operating
cash flows were used to reduce average debt outstanding.
    Twelve Months to Date
    Operating margin increased $69 million between periods. Rate relief in
Arizona and California added $40 million (net of the California equalized
margin tracker mechanism impact) and customer growth contributed an
incremental $19 million. Differences in heating demand, caused primarily by
weather variations, accounted for a $10 million increase in operating
margin as warmer-than-normal temperatures were experienced during both
periods (during the current twelve-month period the negative impact was $8
million, while the negative impact to the prior twelve-month period was $18
million).
    Operating expenses increased $14.2 million, or three percent between
periods primarily due to general increases in labor and maintenance costs,
and incremental operating costs associated with serving additional
customers. The impacts of higher uncollectible and employee-related costs
were partially offset by the property tax benefit and lower property tax
rates in Arizona during the current twelve-month period and the impact on
the prior twelve- month period of the previously noted $10 million
nonrecurring injuries and damages charge. Net financing costs between
periods increased one percent as strong operating cash flows and common
stock issued under the Company's various plans mitigated the amount of
additional debt needed to finance customer growth.
    Southwest Gas Corporation provides natural gas service to 1,799,000
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)

    QUARTER ENDED MARCH 31,                             2007           2006

    Consolidated Operating Revenues                 $793,716       $676,941
    Net Income                                       $49,764        $44,180
    Average Number of Common Shares Outstanding       41,979         39,492
    Basic Earnings Per Share                           $1.19          $1.12
    Diluted Earnings Per Share                         $1.17          $1.11

    TWELVE MONTHS ENDED MARCH 31,                       2007           2006

    Consolidated Operating Revenues               $2,141,533     $1,848,344
    Net Income                                       $89,444        $55,174
    Average Number of Common Shares Outstanding       41,179         38,722
    Basic Earnings Per Share                           $2.17          $1.42
    Diluted Earnings Per Share                         $2.15          $1.41

Link to this page: