Warm weather hurts Southwest Gas earnings

Friday, April 28, 2000 | 11:06 a.m.

Southwest Gas Corp. of Las Vegas said warmer weather in its three-state service territory hurt its first-quarter earnings.

The company earned $25.2 million or 80 cents per diluted share, down from $28.3 million or 92 cents in the year-ago quarter.

The stock market showed little reaction to Southwest's earnings announcement. Its shares traded this morning at $18.69, down 69 cents.

"February 2000 was the warmest February in the past 10 years for our three largest operating areas: Phoenix, Las Vegas, and Tucson. However, continued strong customer growth and attention to operating efficiencies and cost controls offset a significant portion of the effects of warm weather," said Chief Executive Michael Maffie.

Revenues fell from $279.1 million to $267 million. First quarter 2000 gas operating margin was $144 million, about even with the prior year's margin. Differences in heating demand caused by weather variations between periods resulted in a $6 million margin decrease, as both periods experienced warmer-than-normal temperatures.

Offsetting the weather-related impacts was an increase of $6 million in operating margin due to customer growth, as the company served 65,000, or 5 percent, more customers than a year ago.

Operating expenses increased $5.7 million due to continued expansion and upgrading of the gas system to accommodate customer growth, Southwest Gas said.

Net financing costs increased $1.8 million, primarily because of additional loans to finance construction and higher interest rates on variable-rate debt.

For the year ended March 31, net income was $36.2 million, or $1.16 per share, compared to $39.9 million, or $1.35 per share, during the previous year.

Operating margin increased $1.9 million between periods, Southwest said. Customer growth contributed $17 million in incremental margin. However, weather during the year was 9 percent warmer than the prior period, resulting in a $15 million offsetting decrease in operating margin from weather-sensitive customers.

Operating expenses increased $17.2 million, or 5 percent, as a result of servicing additional customers. Net financing costs increased $2.5 million, or 4 percent.

Besides Arizona and Nevada, Southwest Gas serves portions of California. In all, it has nearly 1.3 million customers.