Southwest Gas Net Income Soars on Discontinued Operations Boost

TL;DR

**SWX's massive net income jump is a one-time win from asset sales, don't expect this growth to continue from core operations.**

AI Summary

Southwest Gas Holdings, Inc. reported a significant increase in net income, reaching $366.8 million for the nine months ended September 30, 2025, a substantial rise from $110.4 million in the same period of 2024. This surge was primarily driven by income from discontinued operations, which contributed $201.8 million in 2025 compared to a loss of $23.7 million in 2024. Operating revenues from regulated operations decreased to $1.46 billion for the nine months ended September 30, 2025, down from $1.92 billion in 2024, largely due to a reduction in the net cost of gas sold from $984.2 million to $429.4 million. Operating income, however, improved to $315.2 million from $255.9 million year-over-year. The company's total assets decreased from $12.07 billion at December 31, 2024, to $10.33 billion at September 30, 2025, primarily due to the reclassification of assets and liabilities related to discontinued operations. Long-term debt remained stable at approximately $3.5 billion. Cash and cash equivalents significantly increased to $778.6 million from $314.8 million, bolstering liquidity.

Why It Matters

This 10-Q reveals Southwest Gas Holdings' strategic shift, with the significant income from discontinued operations indicating a successful divestiture or restructuring, likely related to the Centuri separation. For investors, this suggests a more focused utility business, potentially leading to more predictable earnings and a clearer valuation. Employees might see a more stable core business, while customers could benefit from a company better positioned to invest in its regulated gas infrastructure. In a competitive landscape, shedding non-core assets allows Southwest Gas to concentrate on its natural gas distribution, a sector facing increasing scrutiny over environmental impact but still critical for energy delivery.

Risk Assessment

Risk Level: medium — While net income surged due to discontinued operations, regulated operations revenues decreased from $1.92 billion to $1.46 billion for the nine months ended September 30, 2025. The company also faces ongoing regulatory risks, as highlighted by potential disallowances by the ACC, PUCN, CPUC, and FERC, which could impact future rate relief and cost recovery.

Analyst Insight

Investors should scrutinize the core regulated operations' performance, as the headline net income growth is non-recurring. Focus on the stability of the natural gas distribution segment and regulatory outcomes, rather than being swayed by the one-time gain from discontinued operations.

Financial Highlights

debt To Equity

0.90

revenue

$1.46B

operating Margin

21.59%

total Assets

$10.33B

total Debt

$3.51B

net Income

$366.8M

eps

$3.75

gross Margin

N/A

cash Position

$778.6M

revenue Growth

-23.96%

Revenue Breakdown

Key Numbers

• $366.8M — Net income for nine months ended Sept 30, 2025 (Increased from $110.4M in 2024, largely due to discontinued operations.)
• $201.8M — Income from discontinued operations for nine months ended Sept 30, 2025 (Significant turnaround from a $23.7M loss in 2024, driving overall net income growth.)
• $1.46B — Regulated operations revenues for nine months ended Sept 30, 2025 (Decreased from $1.92B in 2024, indicating a contraction in core revenue.)
• $429.4M — Net cost of gas sold for nine months ended Sept 30, 2025 (Reduced from $984.2M in 2024, contributing to improved operating income despite lower revenues.)
• $315.2M — Operating income for nine months ended Sept 30, 2025 (Increased from $255.9M in 2024, showing improved operational efficiency.)
• $10.33B — Total assets as of Sept 30, 2025 (Decreased from $12.07B at Dec 31, 2024, primarily due to discontinued operations.)
• $778.6M — Cash and cash equivalents as of Sept 30, 2025 (Significantly increased from $314.8M at Dec 31, 2024, enhancing liquidity.)
• $3.51B — Long-term debt as of Sept 30, 2025 (Remained stable compared to $3.50B at Dec 31, 2024.)
• $3.75 — Basic earnings per share for three months ended Sept 30, 2025 (Increased from $0.00 in 2024, largely due to discontinued operations.)
• 72,182,840 — Shares outstanding as of Oct 31, 2025 (Reflects the total common stock shares of Southwest Gas Holdings, Inc.)

Key Players & Entities

• Southwest Gas Holdings, Inc. (company) — registrant and parent company
• Southwest Gas Corporation (company) — wholly-owned subsidiary and distinct registrant
• Centuri Group Inc (company) — discontinued operations prior to April 22, 2024
• Carl C. Icahn (person) — associated with Icahn investment entities
• SEC (regulator) — U.S. Securities and Exchange Commission
• ACC (regulator) — Arizona Corporation Commission
• PUCN (regulator) — Public Utilities Commission of Nevada
• CPUC (regulator) — California Public Utilities Commission
• FERC (regulator) — Federal Energy Regulatory Commission
• New York Stock Exchange (regulator) — exchange where SWX common stock is registered

FAQ

Risk Factors

• Changes in Gas Cost Recovery [medium — regulatory]: The company's profitability is sensitive to the timing and amount of gas cost recovery from customers. Fluctuations in natural gas prices and regulatory approvals for cost adjustments can impact earnings. For the nine months ended September 30, 2025, the net cost of gas sold decreased by $554.8M compared to the prior year, impacting reported revenues.
• Infrastructure Modernization and Investment [medium — operational]: Southwest Gas invests heavily in maintaining and upgrading its gas distribution system. Delays or cost overruns in these capital projects, which totaled $8.49B in net regulated operations plant as of September 30, 2025, could affect financial performance and require additional financing.
• Interest Rate Sensitivity [medium — financial]: With $3.51B in long-term debt as of September 30, 2025, the company is exposed to interest rate fluctuations. Rising interest rates could increase borrowing costs, impacting net income. Accrued interest on debt was $38.5M as of September 30, 2025.
• Impact of Divestitures [high — discontinuedOperations]: The significant increase in net income to $366.8M for the nine months ended September 30, 2025, was largely due to $201.8M in income from discontinued operations. The successful execution and financial outcomes of these divestitures are critical to the company's reported performance.

Industry Context

Southwest Gas operates in the regulated natural gas utility sector, characterized by stable, albeit slow-growing, demand for essential energy services. The industry faces ongoing challenges related to aging infrastructure, the transition to cleaner energy sources, and evolving regulatory landscapes that dictate cost recovery and investment strategies. Competition primarily comes from other utility providers in their service territories and, to a lesser extent, alternative energy sources.

Regulatory Implications

The company's operations are heavily influenced by state public utility commissions that approve rates, service standards, and capital investments. Changes in regulatory policy regarding gas cost recovery, environmental standards, or infrastructure modernization mandates can significantly impact financial results and operational flexibility. The substantial decrease in net cost of gas sold suggests a favorable regulatory environment for cost pass-throughs or a reduction in gas commodity prices.

What Investors Should Do

1. Monitor the financial performance and strategic execution of discontinued operations.
2. Analyze the drivers behind the decrease in regulated operating revenues.
3. Evaluate the company's liquidity and debt management.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 financial results reported — Demonstrated a substantial increase in net income driven by discontinued operations, alongside a decrease in regulated revenue but improved operating income.
• 2025-09-30: Balance Sheet as of September 30, 2025 — Showcased a significant increase in cash and cash equivalents and a decrease in total assets, primarily due to discontinued operations.
• 2024-12-31: Balance Sheet as of December 31, 2024 — Provided the comparative baseline for asset and liability changes in the current period.

Glossary

Discontinued Operations

A component of a business that the reporting entity has disposed of or classified as held for sale, and that represents a separate major line of business or geographical area of operations. (A significant driver of Southwest Gas's net income increase in the nine months ended September 30, 2025, contributing $201.8M.)

Net Regulated Operations Plant

The value of property and equipment used in the company's regulated utility operations, net of accumulated depreciation. (Represents the core infrastructure investment, totaling $8.49B as of September 30, 2025.)

Deferred Purchased Gas Costs

Costs incurred for purchasing natural gas that have not yet been passed on to customers through rates, recorded as an asset or liability depending on the regulatory treatment. (Decreased significantly from $255.4M at year-end 2024 to $356.5M as of September 30, 2025, indicating changes in gas cost recovery mechanisms.)

Accumulated Other Comprehensive Loss

Unrealized gains and losses that bypass the income statement but affect equity, such as foreign currency translation adjustments or pension adjustments. (Showed a reduction from a loss of $49.2M at year-end 2024 to $37.6M as of September 30, 2025, improving total equity.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period ending September 30, 2024, Southwest Gas Holdings, Inc. has reported a dramatic increase in net income, soaring from $110.4 million to $366.8 million. This surge is largely attributable to a significant turnaround in discontinued operations, moving from a loss of $23.7 million to an income of $201.8 million. While regulated operating revenues saw a decline from $1.92 billion to $1.46 billion, primarily due to lower gas costs, operating income improved to $315.2 million from $255.9 million, indicating enhanced operational efficiency. Total assets decreased from $12.07 billion to $10.33 billion, reflecting the impact of discontinued operations, while cash reserves more than doubled to $778.6 million, strengthening the company's liquidity position.

Key Financial Figures

• $1 — thwest Gas Holdings, Inc. Common Stock, $1 Par Value SWX New York Stock Exchange

Filing Documents

• swx-20250930.htm (10-Q) — 1828KB
• swxexhibit310193025.htm (EX-31.01) — 19KB
• swxexhibit310293025.htm (EX-31.02) — 19KB
• swxexhibit320193025.htm (EX-32.01) — 9KB
• swxexhibit320293025.htm (EX-32.02) — 9KB
• 0001692115-25-000149.txt ( ) — 8341KB
• swx-20250930.xsd (EX-101.SCH) — 39KB
• swx-20250930_cal.xml (EX-101.CAL) — 134KB
• swx-20250930_def.xml (EX-101.DEF) — 313KB
• swx-20250930_lab.xml (EX-101.LAB) — 584KB
• swx-20250930_pre.xml (EX-101.PRE) — 479KB
• swx-20250930_htm.xml (XML) — 1233KB

Forward-Looking Statements

Forward-Looking Statements This quarterly report contains statements which constitute "forward-looking statements" within the meaning of the Reform Act, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included or incorporated by reference in this quarterly report are forward-looking statements, including, without limitation, statements regarding the Company's plans, objectives, goals, intentions, projections, strategies, future events or performance, negotiations, and underlying assumptions. The words "may," "if," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "forecast," "intend," "endeavor," "promote," "seek," "pursue," and similar words and expressions are generally used and intended to identify forward-looking statements. For example, statements regarding operating margin patterns, customer growth, the composition of our customer base, price volatility, utility optimization initiatives, the level of expense or cost containment, seasonal patterns, the ability to pay debt, the Company's COLI strategy, the magnitude of future acquisition or divestiture impacts related thereto, the impacts of U.S. tax reform including the OBBBA and disposition in any regulatory proceeding and bonus depreciation tax deductions, tariffs, the impact of any Pipeline and Hazardous Materials Safety Administration rulemaking or proposed rulemaking, the amounts and timing for completion of estimated future capital expenditures, forecasted operating cash flows and results of operations, net earnings impacts or recovery of costs from gas infrastructure replacements, programs and mechanisms, or other mechanisms, funding sources of cash requirements, amounts generally expected to be reflected in future period revenues from regulatory rate proceedings including amounts requested or set

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands of dollars, except par value) (Unaudited) September 30, 2025 December 31, 2024 ASSETS Regulated operations plant: Gas plant $ 11,289,621 $ 10,844,895 Less: accumulated depreciation ( 3,025,110 ) ( 2,914,457 ) Construction work in progress 231,095 178,647 Net regulated operations plant 8,495,606 8,109,085 Other property and investments, net 172,494 165,448 Current assets: Cash and cash equivalents 778,631 314,770 Accounts receivable, net of allowances 110,575 203,012 Accrued utility revenue 51,700 96,600 Deferred purchased gas costs 99 13,807 Materials, supplies, and gas inventories 91,154 93,755 Prepaid and other current assets 211,334 141,017 Current assets classified as discontinued operations — 601,384 Total current assets 1,243,493 1,464,345 Noncurrent assets: Goodwill 11,155 11,155 Deferred charges and other assets 405,831 395,747 Noncurrent assets classified as discontinued operations — 1,927,126 Total noncurrent assets 416,986 2,334,028 Total assets $ 10,328,579 $ 12,072,906 CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $ 1 par (authorized - 120,000,000 shares; issued and outstanding - 72,180,889 and 71,782,756 shares) $ 73,811 $ 73,413 Additional paid-in capital 2,893,066 2,721,343 Accumulated other comprehensive loss, net ( 37,597 ) ( 49,218 ) Retained earnings 999,399 758,649 Total equity attributable to Southwest Gas Holdings, Inc. stockholders 3,928,679 3,504,187 Noncontrolling interest — 177,235 Total equity 3,928,679 3,681,422 Redeemable noncontrolling interest — 7,660 Long-term debt, less current maturities 3,507,120 3,504,477 Total capitalization 7,435,799 7,193,559 6 SOUTHWEST GAS HOLDINGS, INC. Form 10-Q SOUTHWEST GAS CORPORATION September 30, 2025 September 30, 2025 December 31, 2024 Current liabilities: Short-term debt — 680,000 Accounts payable 118,932

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