Operating loss at Southwest Gas widens

Thursday, Nov. 2, 2000 | 11:23 a.m.

Southwest Gas Corp. of Las Vegas, which requested a big rate increase Wednesday, reported a wider operating loss for its third quarter ending Sept. 30 of 45 cents per share.

The average estimate of two analysts surveyed by Zacks Investment Research had predicted a 40-cent loss for Southwest. Southwest stock fell 12 cents this morning to $19.88.

The stock declined 88 cents Wednesday.

Including one-time events, the utility actually lost $9.7 million or 31 cents per share vs. a loss in the year-ago quarter of $14.2 million or 46 cents. Because of the seasonal nature of the business, losses are normal in the warm September quarter.

The 2000 quarter results include 14 cents per share of income tax benefits resulting from the favorable resolution of federal income tax issues. The 1999 quarter results included $1.7 million or 6 cents per share of after-tax costs associated with the now terminated merger with ONEOK Inc.

Factoring out these special items, Southwest said it lost 45 cents per share in the most recent quarter vs. 40 cents in the year-ago quarter.

Quarterly revenue increased from $166 million to $199 million. Operating margin increased $1.6 million quarter-to-quarter as Southwest served 64,000, or 5 percent, more customers than a year ago in its three-state territory of Arizona, Nevada and California. Operating expenses increased $4.3 million, or 5 percent, as a result of providing service to the larger customer base.

Net financing costs increased $1.5 million, or 9 percent, due to additional borrowings to finance construction and increased interest rates on variable-rate debt instruments.

For the year ended Sept. 30, net income was $34.6 million, or $1.10 per diluted share, compared to $35.5 million, or $1.15 during the year-earlier period. Annual revenue increased from $944 million to $956 million.

Separately, Southwest Gas said an "unprecedented run-up in natural gas prices" forced it to ask the Public Utilities Commission of Nevada for an increase in natural gas rates to take effect Dec. 1. This is the second "purchased gas adjustment" increase request filed this year. If approved, the average residential bill based on winter rates for Southern Nevada would increase $7.81 a month, or 26.5 percent. Bills in Northern Nevada would jump 27.89 percent or an average of $13.29 a month. The company said it would not profit by passing on its higher gas costs to consumers.