Southwest Gas 2025 Q1 Earnings Net Income Climbs 24.7% Despite Revenue Dip

Southwest Gas (SWX) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The company's performance showcased a net income increase of 24.7%, reaching $109.19 million compared to $87.56 million in 2024 Q1. The earnings per share (EPS) rose 29.5% from $1.22 to $1.58, reflecting strong earnings growth. Despite the revenue decline, Southwest Gas reaffirmed its guidance, projecting net income between $265-$275 million for 2025, maintaining confidence in its financial outlook.

Revenue

Southwest Gas experienced an 18.0% decline in total revenue, recording $1.30 billion in Q1 2025 from $1.58 billion in Q1 2024. The natural gas distribution segment generated $746.42 million in revenue, while utility infrastructure services contributed $550.08 million, culminating in total operating revenues of $1.30 billion for the quarter.

Earnings/Net Income

Southwest Gas's EPS increased significantly by 29.5% in Q1 2025, rising from $1.22 to $1.58 compared to the same quarter in 2024. This reflects a favorable earnings performance as the company achieved 24.7% growth in net income, reaching $109.19 million from $87.56 million in the previous year. The strong EPS growth indicates robust financial health.

Price Action

The stock price of Southwest Gas edged down 1.37% during the latest trading day, dropped 4.44% over the most recent full trading week, and has slightly decreased by 0.54% month-to-date.

Post-Earnings Price Action Review

The investment strategy involving purchasing SWX shares post-revenue beat and holding them for 30 days has resulted in disappointing returns. This approach yielded a return of -3.12%, starkly underperforming the benchmark return of 95.08%. The strategy's Sharpe ratio was -0.02, indicating a lack of reward for the risk taken. Additionally, the maximum drawdown reached -42.31%, signaling substantial risk exposure. These results highlight the necessity for improved risk management or a reconsideration of the strategy to enhance performance and mitigate potential losses in future trading scenarios.

CEO Commentary

Karen Haller, President and CEO, expressed satisfaction with Southwest Gas's progress toward long-term growth, emphasizing record net income achievements. Haller noted the advancement of regulatory strategies in Arizona and Great Basin, focusing on safety and reliability. She reaffirmed the net income guidance range of $265 million to $275 million for the year, driven by robust capital spending and economic activity in service territories. Haller conveyed optimism about the company's future prospects.

Guidance

Southwest Gas reaffirms its 2025 net income guidance range of $265 million to $275 million. The company plans to invest $4.3 billion over five years to enhance safety, reliability, and economic development, aiming for a rate base compound annual growth rate of 6% to 8%. Operational and maintenance costs per customer are expected to remain flat, with potential impacts from regulatory cycles leading to nonlinear net income growth.

Additional News

Southwest Gas Holdings, Inc. has rescheduled its Q1 2025 earnings release and conference call from May 7 to May 12, 2025, at 11:00 AM ET, due to an issue with Centuri's financial statement finalization. The company affirmed its financial guidance, projecting 2025 net income between $265-$275 million and capital expenditures of approximately $880 million for customer growth and system improvements. In other developments, major shareholder Carl C. Icahn sold 2.1 million shares of Southwest Gas stock in March, reducing his position by 21.8%. Furthermore, Southwest Gas announced a quarterly dividend of $0.62 per share to be paid on September 2nd, with a yield of 3.27%.