TLDR
- Q1 EPS of $1.65 beats estimates, but revenue falls short.
- Shares drop 6.75% to $70.57 amid revenue miss.
- Utility segment posts solid growth with 40,000 new meter sets.
- Cash position improves; long-term debt slightly down.
- 2025 guidance reaffirmed with $880M capex plan.
Southwest Gas Holdings (NYSE: SWX) stock fell 6.75% to $70.57 in afternoon trading on Monday after the company reported mixed first-quarter 2025 results.
Earnings topped expectations, but revenue disappointed. The company also reaffirmed its full-year guidance, signaling confidence in its operational progress.
Earnings Beat but Revenue Miss
The Las Vegas-based natural gas provider posted Q1 adjusted earnings of $1.65 per share, surpassing the Zacks Consensus Estimate of $1.61 and rising 20.4% from $1.37 a year earlier. This strong earnings result was driven by increased operating margins and cost controls. However, total revenue of $1.3 billion came in well below Wall Street’s forecast of $1.7 billion and declined 18% from the $1.58 billion recorded in the year-ago quarter.
Despite missing revenue estimates, operating income rose sharply to $200.4 million, up 26.7% year over year. Expenses for utility infrastructure services also grew modestly by 2.5% to $528.6 million.
Utility Growth and Financial Position
Southwest Gas’ utility business added approximately 40,000 new meter sets over the past year, marking a 1.8% customer growth rate. Total system throughput decreased by 4.8% to 73.12 million dekatherms, reflecting lower volume despite the customer gains.
Financially, Southwest Gas ended the quarter with $406.3 million in cash, up from $363.8 million at the end of 2024. Long-term debt stood at $4.33 billion, slightly down from $4.35 billion three months earlier. However, net cash from operations was $291.3 million, down from $543.7 million in the same period last year.
2025 Outlook Reaffirmed
The company reiterated its 2025 guidance, projecting net income for its Natural Gas Distribution segment to range between $265 million and $275 million. Capital expenditures are expected to reach $880 million this year, supporting customer growth and system upgrades. Over the 2025-2029 period, SWX plans $4.3 billion in capital spending, with a projected utility rate base CAGR of 6-8%.
CEO Karen Haller emphasized ongoing progress with regulatory strategies and highlighted an unopposed settlement agreement in Arizona that is expected to conclude by Q3. Haller also reaffirmed the company’s commitment to separating its Centuri infrastructure unit to optimize value.
Operational Highlights and Drivers
Q1 margin gains were supported by rate relief in Nevada, California, and Arizona, contributing $27 million, along with $5 million from customer growth. Operating expenses decreased slightly, though depreciation and interest costs rose. Other income declined by $8.8 million due to lower returns on company-owned life insurance and reduced interest income.
While the company faces near-term revenue pressure, its reaffirmed guidance and infrastructure investments suggest a steady path for long-term growth.
