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The call presented a predominantly positive outlook anchored by successful strategic simplification (Centuri sale), strong 2025 utility performance (19% EPS increase from continuing operations and 8.7% adjusted net income growth), upgraded credit ratings, ample liquidity, constructive regulatory developments in Arizona and Nevada, and a material growth runway driven by the Great Basin expansion (800 MMcf/d commitments; $215M–$245M incremental margin). Risks were acknowledged but largely framed as manageable: higher O&M, increased D&A and interest costs, near-term earnings moderation during project construction, regulatory/permitting/legal timing uncertainty, and a planned use of HoldCo cash that will reduce year-end HoldCo balances. Overall, highlights substantially outweigh lowlights, supporting a positive sentiment for the company’s transition to a pure regulated utility and its forward-looking growth plan.
Management initiated 2026 adjusted EPS guidance of $4.17–$4.32 (versus a 2025 adjusted EPS base of $3.65) and targets 12%–14% adjusted EPS CAGR through 2030 (with front‑loaded 15%–17% growth through 2028–29), underpinned by a $1.25 billion 2026 capital plan ($925 million to distribution), a five‑year $6.3 billion capex program (73% Southwest Gas / 27% Great Basin), and a 5‑year rate base CAGR of 9.5%–11.5% from a ~ $6.7 billion 2025 base (utility run‑rate growth ~7% excluding Great Basin); the 2028 Great Basin expansion (subject to approvals) represents ~800 MMcf/d of committed capacity, an estimated ~$1.7 billion project cost and $215–$245 million of incremental annual margin when in service, with financing targeted at a 50/50 debt/equity mix. The plan assumes disciplined funding (~$325 million net Southwest Gas bond issuances in 2026), beginning consolidated cash of nearly $600 million and >$1.3 billion liquidity, no equity issuance expected in 2026 under the ATM, maintenance of BBB+ credit metrics with S&P‑adjusted FFO/debt ~19.7% (HoldCo) and 18.6% (utility) versus a 13% downgrade threshold (targeting >17% long‑term and >300 bps of cushion), and a 4% dividend increase to an annualized $2.58 in 2026.
Completed full disposition of Centuri (Sept 2025) generating a ~$260M net gain, enabling full repayment of holding company debt, leaving nearly $600M cash on hand and >$1.3B total liquidity; S&P upgraded Southwest Gas Holdings and Southwest Gas Corp. to BBB+ (stable).
Adjusted EPS from continuing operations rose ~19% year-over-year from $3.07 in 2024 to $3.65 in 2025; Southwest Gas adjusted net income increased 8.7% to $283.9M (from $261.2M), driven by ~ $120M improvement in operating margin (including ~$95.2M rate relief and $11.5M customer growth).
Initiated 2026 adjusted EPS guidance of $4.17–$4.32 and targets a 12%–14% adjusted EPS CAGR through 2030 (with front-loaded growth and an expected ~15%–17% EPS growth rate around 2028–2029).
Great Basin open season secured nearly 800 MMcf/d of capacity commitments, supporting an estimated ~$1.7B project capex and expected incremental annual margin of ~$215M–$245M when placed in service (~late 2028); project remains on schedule with FERC prefiling approval.
Five-year capital plan of ~$6.3B (73% to Southwest Gas utility, 27% to Great Basin) with 2026 capex of ~$1.25B; projected 5-year rate base CAGR of ~9.5%–11.5% (utility run-rate ~7% CAGR excluding Great Basin).
Plan targets balanced 50/50 debt-to-equity for Great Basin financing, expects ~$325M net utility bond issuance in 2026, no anticipated equity issuance in 2026 under current ATM; 2025 S&P-adjusted FFO-to-debt ~19.7% (HoldCo) and ~18.6% (Utility), both comfortably above 13% downgrade threshold.
Board approved a 4% annual dividend increase to an annualized $2.58 per share beginning Q2 2026, with intent to sustain disciplined dividend growth as earnings and cash flow strengthen.
Arizona rate case filed (requested revenue >$100M; proposed rate base ~$3.9B; requested ROE 10.25% +20bps fair value adjustment) with estimated residential bill impact ~$5/month; Nevada SB417 enables alternative ratemaking with rulemaking progressing and potential adjustments as early as 2028.
CEO Karen Haller to retire after ~29 years with planned succession: Justin Brown named next CEO effective May 8, providing leadership continuity as company focuses on a fully regulated natural gas strategy.
Welcome to the Southwest Gas Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being recorded, and our webcast is live. A replay will be available later today and for the next 12 months on the Southwest Gas Holdings website. [Operator Instructions] I will now turn the call over to Tyler Franik Manager of Investor Relations of Southwest Gas Holdings.
Thank you, John, and hello, everyone. We appreciate you joining the call today. This morning, we issued and posted to Southwest Gas Holdings website our Fourth Quarter and Full Year 2025 earnings release and filed the associated Form 10-K. The slides accompanying today's call are also available on Southwest Gas Holdings website. We'll refer to those slides by number throughout the call today. Please note that on today's call, we will address certain factors that may impact 2026 earnings and discuss longer-term guidance. Information that will be discussed today contains forward-looking statements. These statements are based on management's assumptions on what the future holds but are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions, regulatory approvals and a significant capital project at Great Basin Gas Transmission Company.
This cautionary note as well as a note regarding non-GAAP measures is included on Slides 2 and 3 of this presentation, in today's press release and in our filings with the Securities and Exchange Commission, all of which we encourage you to review. These risks and uncertainties may cause actual result...