LAS VEGAS, Aug. 6 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) recorded a net loss of $0.01 per basic share for the second
quarter of 2007, compared to net income of $0.09 per basic share earned
during the second quarter of 2006. The second quarter of 2006 results
included a benefit of approximately $0.07 per share related to a
nonrecurring property tax settlement. Net loss for the second quarter of
2007 was $337,000, compared to net income of $3.7 million in the prior
period. 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, "Excluding the
nonrecurring item, quarterly results declined slightly compared to the same
period in 2006 primarily due to a decrease in contribution from our
construction services segment, which had experienced record second quarter
earnings in 2006." Shaw also noted that "the torrid customer growth levels
experienced in recent years have moderated. During the past twelve months,
Southwest added 57,000 customers, an increase of three percent. We
anticipate this more moderate growth level will continue throughout the
second half of 2007."
For the twelve months ended June 30, 2007, consolidated net income was
$85.4 million, or $2.05 per basic share, compared to $61.7 million, or
$1.57 per basic share, during the twelve-month period ended June 30, 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, partially offset by the
favorable property tax settlement.
Natural Gas Operations Segment Results
Second Quarter
Operating margin, defined as operating revenues less the cost of gas
sold, increased $6.5 million, or five percent, in the second quarter of
2007 compared to the second quarter of 2006. Rate relief added $3 million
in operating margin compared to the prior year (consisting of $1 million in
California attrition amounts and a $2 million increase from implementing a
California equalized margin tracker mechanism, effective January 2007). New
customers accounted for the remaining incremental operating margin during
the quarter as the Company added 57,000 customers during the last twelve
months, an increase of three percent. Warmer-than-normal temperatures were
experienced during both quarters, but had no incremental impact between
quarters.
Operating expenses for the quarter increased $13 million, or 11
percent, compared to the second quarter of 2006 primarily due to general
cost increases and incremental operating costs associated with serving
additional customers. Higher uncollectible and employe-related costs also
contributed to the operating expense increase. The increase also reflects
the impact of the favorable nonrecurring property tax benefit recognized in
the second quarter of 2006.
Other income improved $1.7 million primarily due to higher returns on
long-term investments. Net financing costs were relatively unchanged
between periods as strong operating cash flows, collection of construction
advances, and common stock issuances mitigated the need for incremental
borrowings to finance construction activities.
Twelve Months to Date
Operating margin increased $67 million between periods. Rate relief in
Arizona and California added $34 million (net of the California equalized
margin tracker mechanism year-to-date decrease of $6 million). Customer
growth contributed an incremental $19 million. Differences in heating
demand, caused primarily by weather variations, accounted for a $14 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 $7 million, while the negative impact during the prior
twelve-month period was $21 million).
Operating expenses increased $27 million, or six percent, between
periods primarily due to general increases in labor and maintenance costs,
and incremental operating costs associated with serving additional
customers. Higher uncollectible and employee-related costs also contributed
to the increase. The prior twelve-month period included the impact of the
previously noted $10 million nonrecurring injuries and damages charge,
partially offset by the favorable property tax settlement. Net financing
costs decreased slightly between periods due to strong operating cash
flows.
Southwest Gas Corporation provides natural gas service to approximately
1,800,000 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 JUNE 30, 2007 2006
Consolidated Operating Revenues $426,537 $430,902
Net Income (Loss) $(337) $3,709
Average Number of Common Shares Outstanding 42,226 40,174
Basic Earnings (Loss) Per Share $(0.01) $0.09
Diluted Earnings (Loss) Per Share $(0.01) $0.09
SIX MONTHS ENDED JUNE 30, 2007 2006
Consolidated Operating Revenues $1,220,253 $1,107,843
Net Income $49,427 $47,889
Average Number of Common Shares Outstanding 42,103 39,835
Basic Earnings Per Share $1.17 $1.20
Diluted Earnings Per Share $1.16 $1.19
TWELVE MONTHS ENDED JUNE 30, 2007 2006
Consolidated Operating Revenues $2,137,168 $1,918,116
Net Income $85,398 $61,700
Average Number of Common Shares Outstanding 41,691 39,339
Basic Earnings Per Share $2.05 $1.57
Diluted Earnings Per Share $2.03 $1.55
SOURCE Southwest Gas Corporation
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Related links:
http://www.swgas.com
CONTACT:
media, Cynthia Messina, +1-702-876-7132, or
shareholder, Ken Kenny, +1-702-876-7237, both of Southwest Gas
Corporation
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