Southwest Gas Q1 2025 Earnings Report

Southwest Gas EPS Results

• Actual EPS: $1.65
• Consensus EPS: $1.61
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $1.37

Southwest Gas Revenue Results

• Actual Revenue: $1.30 billion
• Expected Revenue: $1.50 billion
• Beat/Miss: Missed by -$199.18 million
• YoY Revenue Growth: -18.00%

Southwest Gas Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 11:00AM ET

Southwest Gas (NYSE:SWX) Holdings, Inc., through its subsidiaries, distributes and transports natural gas in Arizona, Nevada, and California. The company operates through Natural Gas Distribution, Utility Infrastructure Services, and Pipeline and Storage segments. It also provides trenching, installation, and replacement of underground pipes, as well as maintenance services for energy distribution systems. As of December 31, 2023, it had 2,226,000 residential, commercial, industrial, and other natural gas customers. Southwest Gas Holdings, Inc. was incorporated in 1931 and is headquartered in Las Vegas, Nevada.

Southwest Gas Q1 2025 Earnings Call Transcript

Key Takeaways

• Constructive regulatory outcomes in Arizona, Nevada and Great Basin rate cases delivered nearly $900 million in combined rate base increases and about $139 million in annual revenue, reflecting ~90–98% of Southwest Gas’ requests.
• Record Q1 net income and slightly lower O&M expenses drove a 5.2% year-over-year increase, and management reaffirmed its full-year net income guidance of $265 million to $275 million.
• Separation of Century remains a strategic priority, with potential options including taxable sell-downs, share exchanges or a tax-free spin-off, but timing and structure depend on market and regulatory conditions.
• A planned $4.3 billion of capital investments over the next five years for safety, reliability and economic development is expected to drive a 6–8% CAGR in rate base, and an Arizona System Integrity Mechanism is pending approval to reduce regulatory lag.
• Nevada’s over-collected PGA balance flipped to a $280 million liability—Southwest Gas requested a July rate reduction—while Great Basin’s binding open season for 2028 expansion is ongoing and SB 417 on alternative rate-making advances.

Presentation

[Operator]

Welcome to Southwest Gas Holdings First Quarter twenty twenty five 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 twelve months on the Southwest Gas Holdings website. All participants are currently in a listen only mode. A question and answer session will follow the prepared remarks.

[Operator]

I will now turn the call over to Justin Forsberg, Vice President of Investor Relations and Treasurer of Southwest Gas Holdings. Please go ahead.

[Justin Forsberg, Vice President of Investor Relations & Treasurer at Southwest Gas Holdings Inc]

Thanks, and hello, everyone. Thanks for joining the call today. This morning, we issued and posted to Southwest Gas Holdings website our first quarter twenty twenty five earnings release and the associated Form 10 Q. 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.

[Justin Forsberg, Vice President of Investor Relations & Treasurer at Southwest Gas Holdings Inc]

Please note that on today's call, we will address certain factors that may impact 2025 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 and regulatory approvals. This cautionary note, as well as a note regarding non GAAP measures, is included on slides two and three of this presentation, in today's press release, and in our filings with the Securities and Exchange Commission, which we encourage you to review. These risks and uncertainties may cause actual results to differ materially from statements made today.

[Justin Forsberg, Vice President of Investor Relations & Treasurer at Southwest Gas Holdings Inc]

We caution against placing undue reliance on any forward looking statements, and we assume no obligation to update any such statement. As shown on slide four, on today's call, we have Karen Holler, President and CEO of Southwest Gas Holdings and Rob Stefani, Chief Financial Officer of Southwest Gas Holdings, as well as Justin Brown, President of Southwest Gas Corporation, and other members of the management team available to answer your questions during the Q and A portion of the call today. I'll now turn the call over to Karen.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

Thanks, Justin. Thank you for joining us today to discuss Southwest Gas Holdings results and outlook. We want to briefly address the delay in the timing for our earnings announcement and call. Century had an issue arising late in the process of finalizing its financial statements for the quarter that caused a delay in the process of issuing the Century financial statements. That delay caused a corresponding delay for us as Century remains a consolidated subsidiary.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

The issue has now been resolved, and we do not intend to go into any further detail on this topic. We look forward to discussing our Q1 results with you today. Starting with slide five. During the first quarter, we continued to make considerable progress positioning Southwest Gas for long term success and growth. We advanced our regulatory strategy with constructive outcomes in our Arizona and Great Basin rate cases, and we continue to work collaboratively with our regulators to implement regulatory frameworks that support the significant growth we are experiencing in the communities we serve.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

We continue to see tangible benefits from our utility optimization strategy. Southwest Gas finished the quarter with record net income and slightly lower quarter over quarter O and M expenses and remains committed to its culture of continuous improvement and optimization. With the Arizona rate case decision now behind us, we are confident in reaffirming each of Southwest Gas' previously communicated guidance ranges, including our net income range of $265,000,000 to $275,000,000 for the full year. We continue to expect robust capital spending driven by the need for safety and reliability as well as economic activity in our service territories. I will discuss guidance in more detail later.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

Following two consecutive years of a return on equity of over 8%, we finished the quarter with a trailing twelve month ROE of 8.2%. Southwest Gas Holdings continues to press forward on our transformational strategy of becoming a premier fully regulated natural gas utility. We continue to monitor market conditions with respect to our separation strategy options for Century, and we remain focused on completing the separation in a manner that is beneficial to our stockholders. As you can see on slide six, we remain on track with achieving our 2025 strategic priorities. As I mentioned earlier, we received final approval of our Great Basin rate case and a constructive decision in our Arizona rate case in March.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

Justin Brown will discuss our regulatory progress and strategy in more detail in a moment, but I will note that we feel confident in our regulatory strategy as we focus our efforts on the system improvement mechanism in Arizona and on our outstanding California rate case proceeding. As it relates to plans for Century, we remain committed to separating Century, and we will provide further updates on timing and structure when available. Of the remaining separation options, we may ultimately separate the business through a series of taxable sell downs or share exchanges, or some combination thereof. We have also preserved the alternative of a tax free spin off of the remaining share position. However, if a taxable transaction is executed, the ability to execute a tax free spin will no longer be possible.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

The successful execution of a sell down or share exchange is contingent on favorable market and other conditions. Now that we are more than a year past the Century IPO, Century is eligible to file a Form S-three to register our remaining Century shares, which we expect will shorten the process of executing a sale transaction in the market. We continue to gauge market conditions for executing on our possible separation options. Regardless of the form of an initial taxable transaction, whether it be a sell down or share exchange, both of those options would remain on the table for further separation steps as we further exit our Century ownership position after the initial transaction. Our 2025 financing plan continues to include the extension of the existing $550,000,000 term loan facility at Southwest Gas Holdings and the issuance of less than 100,000,000 of new equity under our existing ATM program.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

These capital markets efforts are contingent on, among other things, the successful execution of Sentry separation transactions and all of our 2025 equity needs may be avoided depending on the timing and form of the Syntry separation. As noted on slide seven, we have carried our strong balance sheet position into 2025, and it provides us with the flexibility to be thoughtful in our approach to capital investments and our efforts to deliver stockholder value. I'll highlight a few of our team's achievements on slide seven. At the utility, we continue to see robust growth because of strong economic activity in our service area, which has led to about 40,000 additional new meter sets during the last twelve months. As of the first quarter of twenty twenty five, we had more than 400,000,000 of cash on hand across the enterprise with more than $1,000,000,000 of liquidity, which enables us to honor our commitments and execute the remainder of our 2025 strategy.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

We remain excited about the future of the company. Now to Justin.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

Thanks, Karen. On slide nine, you'll see an overview of the progress we've made on our regulatory strategy, as well as what remains open for this year. Rates became effective in Nevada early in the second quarter last year after a positive outcome on our rate case. The commission authorized an increase of nearly 300,000,000 in rate base and a revenue increase of approximately $59,000,000 which represented 98% of our request after consideration to proposals on depreciation expense and cost of capital. At Great Basin, refresh rates that went into effect last September were later adjusted in November to reflect settlement rates, and a final decision was issued this past March.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

I'll discuss our completed Arizona general rate case and our pending California rate case in more detail on the next few slides, but I'm pleased with the progress we've made on refreshing rates and minimizing regulatory lag in each of our jurisdictions as we remain steadfast in our commitment to working collaboratively with our regulators on constructive outcomes that benefit all parties. Before moving to slide 10, I wanted to mention a couple other noteworthy initiatives that we're currently pursuing in Nevada. First, at Great Basin, in response to inquiries about available capacity and the increased demand for natural gas, Great Basin posted a notice of binding open season for potential 2028 system expansion. This open season will remain open through May 28, so we can determine the level of interest of existing and potential new shippers. At Southwest Gas, we are working with policymakers on legislation that supports the use of alternative forms of rate making that would allow the use of formula rates, multi year rate plans, or performance based rates.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

This bill referred to as SB four seventeen was recently passed out of the Senate unanimously and will now be considered by the Assembly. The session ends on June 2, so we should know the outcome of the legislation within the next thirty days. Lastly, we also made a filing last Friday requesting to accelerate the refund of the over collected PGA balance in Nevada, which was approximately $240,000,000 at the end of the first quarter. We've requested that the rate reduction become effective in July of this year. Turning to slide 10, the final decision in our Arizona rate case included a $600,000,000 increase in authorized rate base, which includes a full twelve months of post test year plan consisting of assets placed in service as of the end of last October.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

This resulted in an $80,000,000 revenue revenue increase and an authorized ROE of 9.84% with no fair value increment. Rates became effective in March, and similar to Nevada, after consideration to updating our cost of service to reflect actuals versus proposed and proposals on cost of capital, this outcome reflects nearly 90% of our ask. We believe that the outcome was constructive and we are especially pleased with the collaboration of the commission staff throughout the process with who we stipulated to on a number of issues. Moving to slide 11, as Karen previously mentioned, our application in Arizona included a proposal to implement a capital tracker program, referred to as our system integrity mechanism or SIM. We successfully collaborated on a settlement proposal that included the commission staff and the residential utility consumer office.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

This agreement was presented to the ALJ at the previously scheduled May 1 hearing and no other parties opposed the settlement. As described on slide 11, the proposal will allow us to implement a surcharge each year to recover the qualifying non revenue producing investments we make in our system. These qualifying investments primarily relate to the safety and reliability of our system, which represents approximately 40% of the company's annual infrastructure related capital investments in Arizona. We currently expect a final decision on the SEM within the next ninety days. If approved, the mechanism will become effective immediately, helping to reduce regulatory lag by allowing us to make our first rate filing in March of twenty twenty six to adjust rates effective April 1 to reflect the qualifying investments that we are currently making in calendar year 2025 and to help reduce regulatory lag.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

Slide 12 provides an overview of our filed California rate case, which is progressing on schedule and as expected. We received testimony from the Public Advocate's Office, and they are recommending a $26,000,000 revenue increase relative to a return on equity of 9.5% and an equity ratio of 48%. The primary differences between our request and the public advocate's office relates to cost of capital and the amount of investment we can make annually through our various tracker programs. While the POA supports the continuation of our various tracker programs and the new damage prevention tracker that we proposed, they did take exception to the amount of investment that we should be allowed to make each year. We filed rebuttal testimony last week and are actively engaged in discussions with the POA in hopes of reaching a mutually acceptable resolution.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

But if we're unable to reach an agreement, a hearing is scheduled for early June. We expect new rates to become effective in January of twenty twenty six. Lastly, turning to slide 13. As Karen noted, economic activity and demand for natural gas service remains strong throughout our service territory, and we continue to invest in the communities in which we operate. I've highlighted for you on previous calls the activity in Arizona in the advanced manufacturing space, as well as the potential throughout our service territories for additional data center growth in both Arizona and Nevada.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

The growth in Arizona in these sectors drove the Arizona Commission earlier this year to open a docket to address resource adequacy of natural gas infrastructure and storage in the state. These, along with the continued growth in the entertainment, hospitality, manufacturing, warehouse and logistics, and mining sectors, continue to drive significant in migration throughout our service territories, as evidenced by the additions of 40,000 new meter sets over the past twelve months highlighted on the slide. You'll see on slide 13 the population growth projections for Arizona and Nevada from S and P Global are expected to continue to outpace the national average over the next five years. For Southwest Gas, we believe this economic development and population growth will result in more meter sets and more residential and small commercial customers, which currently represents about 85% of our existing customer mix. We continue to see greater than 90% of all new construction built in our service territories becoming Southwest Gas customers.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

With that growth comes the need for increased infrastructure investments to support new and existing customers as we respond to requests for new gas service and work to ensure the safety and integrity of our entire distribution system. As was noted when we refreshed guidance in February, we expect to invest about $4,300,000,000 over the next five years to support safety, reliability, and economic development across our service territory. We currently expect this capital investment to translate to a compound annual growth rate and rate base of 6% to 8% over that same time period. About 50% of this plan spending is needed for safety and reliability and approximately 30% of the projected plan relates to economic development and new business growth. With that, I'll turn the call over to Rob, who will review our financial performance for the first quarter.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

Thanks, Justin. On slide 15, we provide an adjusted consolidated earnings walk. During the first quarter, the utility Southwest Gas benefited from rate relief in each of our jurisdictions. Nevada rates, as you'll recall, went into effect in April 2024 and Arizona rates went into effect in March 2025. We also saw continued customer growth along with slightly lower O and M expense, all of which contributed to higher net income.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

These benefits were partially offset by increased depreciation and amortization as a result of investment in our system, as well as higher interest expense and lower other income, both of which were primarily driven by changes in regulatory balances associated with the PGA mechanism and separately COLI. I'll provide more detail on Southwest Gas in a moment. Century's results for the quarter benefited from a higher volume of work under master services agreements, increased bid work and storm related activity. Additionally, lower interest expense contributed positively to the quarter. These improvements were partially offset by a reduction in offshore wind project revenues compared to the prior year.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

Century's net income results for the quarter at the consolidated Southwest Gas Holdings level differ from Century's reported standalone net income results on an interim basis, primarily due to the impacts of non controlling interests. Southwest Gas Holdings standalone results for the quarter also reflect lower overall operating expenses and reduced interest expense on outstanding borrowings. Moving on to slide 16, we provide a bridge of quarter over quarter performance drivers for Southwest Gas. In the first quarter twenty twenty five, utility operating margin increased by 38,900,000 This improvement was primarily driven by the benefits of $27,000,000 of combined rate relief throughout our service jurisdictions. Customer growth drove an additional $5,000,000 of margin as approximately 40,000 new meter sets were added over the past twelve months.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

The variable interest expense adjustment mechanism in Nevada added approximately $3,000,000 of margin, but is offset dollar for dollar in interest expense, while the regulatory account balance collections contributed nearly $5,000,000 and that amount is offset in amortization. O and M decreased $1,500,000 compared to the prior year quarter. This decline was largely the result of reduced spending on contractors and professional services, partially offset by increases in insurance costs. We remain confident that we will be able to achieve our goal of keeping O and M costs nearly flat on a per customer basis throughout the forecast period, although we expect these results to be non linear. The nearly $10,000,000 increase in depreciation and amortization plus general taxes was associated with the 7% increase in average gas plant in service compared to the first quarter of twenty twenty four, reflecting continued investment for the benefit of our customers in pipeline reinforcement, pipe replacement and new infrastructure, as well as the offsetting impacts of higher amortization of regulatory account balances, which I mentioned as a driver of margin a moment ago.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

Other income decreased $8,800,000 primarily due to roughly $5,000,000 decrease in values associated with COLI policies and a $4,000,000 reduction in interest income related to lower carrying charges associated with lower regulatory account balances, notably deferred purchased gas cost balances. Deferred purchased gas costs flipped from a receivable balance from customers of nearly $200,000,000 in March of twenty twenty four to a net liability balance of over $280,000,000 at the March. Interest expense at the utility increased by $8,200,000 primarily due to interest incurred on the now over collected balance of the PGA. Additionally, regulatory treatment related to the utilities industrial development revenue bonds via the Nevada VIER mechanism, I noted as an offsetting driver of margin contributed to the increase. Overall, we have seen a strong start to 2025 at the utility with net income coming in just over $7,000,000 or 5.2% higher compared to the last year's first quarter.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

Before the impacts of COLI, the quarter over quarter improvement would be 9.4%. On slide 17, we show our 2025 financing plan for both Southwest Gas Holdings and Southwest Gas Corporation, which for simplicity of presentation assumes consolidation of Century for the entirety of the year. To the extent Century ceases to be consolidated in 2025, we plan to adjust our financing plan as needed depending on the timing execution of further separation market events. We highlight that Southwest Gas Holdings balance sheet and liquidity position could improve further if additional divestiture of Century shares were to result in increased cash at Southwest Gas Holdings. We expect the beginning the year cash on hand balance combined with cash flow from operations to fund the entire capital expenditure program forecasted in 2025.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

In addition, the only capital markets need throughout 2025, depending on the timing and form of Century separation transactions, relates to less than $100,000,000 of equity, which we would expect to be covered through the ATM program. We also plan to extend the Southwest Gas Holdings five fifty million dollars term loan facility to beyond the 07/31/2025 maturity date and to amend and extend Holdings revolving credit facility sometime during the second half of twenty twenty five ahead of the December 2026 maturity date. We still do not currently foresee the need for any significant debt capital markets new issuance activity at the utility until the spring of twenty twenty six. Southwest Gas Holdings remains committed to paying a competitive dividend to our stockholders. Our planned dividend payouts in 2025 are expected to result in a competitive payout ratio.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

We plan to continue to balance factors such as projected capital requirements, impacts to credit ratings, the competitiveness of the dividend yield, economic conditions and other factors, and we'll review the dividend policy for any changes post the separation and deconsolidation of Century. Moving to slide 18, we take a look at the balance sheet strength and our commitment to maintaining an investment grade profile at Southwest Gas and the holding company. On the left hand side of the slide, we walk through net debt by operating company. We finished the quarter with $386,000,000 of cash at Southwest Gas. As I mentioned at the utility, the PGA balance is now flipped to a liability balance of about $280,000,000 We have a more than offsetting amount of cash on the books at the end of the quarter, which is clearly related to the collection of the PGA.

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

In the appendix on Slide 26, additional details are provided on the PGA balance. Net debt levels are generally in line with where we finished 2024 across the enterprise. We reiterate our plan to target a solid investment grade balance sheet And by our estimates at the end of the first quarter, we have achieved our prior guidance of greater than 14% FFO to debt on an LTM basis at Southwest Gas Holdings by 2025. Back to you, Karen.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

Thanks, Rob. We are pleased with our first quarter results and aim to carry this momentum through the rest of 2025. On Slide 20, we reaffirm our 2025 utility net income guidance range of $265,000,000 to $275,000,000 With the completion of the Arizona rate case and strong regional economic outlook in our service area, we remain confident in our previously stated range. Additionally, for 2025 and further out, we reaffirm all of our other guidance metrics. While we continue to expect impacts from the regulatory cycle to result in nonlinear net income growth over the forecast period, our regulatory strategy and our plan to achieve a flat O and M per customer trend over the same period are expected to be important components of our growth story going forward.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

You can find additional long term drivers in the appendix of our presentation on slide 27. As a reminder, each of our forward looking forecasts compounded annual growth rates are calculated off a 2025 base year. Before we open the call up to Q and A, I want to point to slide 21 and emphasize that our team is focused on executing our strategic priorities, delivering strong financial results and providing exceptional service to our customers. At Southwest Gas Holdings, we are confident in our path forward as a premier pure play natural gas utility. We plan to continue delivering steady organic rate based growth through strong regional demand dynamics as well as earnings growth through financial discipline, operational excellence and constructive regulatory relationships.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

We'll continue to execute the next steps to fully separate Sentry to create a more attractive value proposition for stockholders. With that, I'd like to open the call for questions.

[Operator]

Thank you. We will now begin the question and answer session. of Ryan Levine from Citi. Please go ahead.

[Ryan Levine, Analyst at Citigroup]

Good morning.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

Good morning, Ryan.

[Ryan Levine, Analyst at Citigroup]

What's the current status of your plans to exit Century? And more specifically, has there been any change to interest levels from potential investors in the recent weeks?

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

With respect to Century, I think that our plan continues to be what we've indicated before. We're committed to the separation of Century. We have several options there. I think as I noted earlier, we have the ability to file an S-three now that we're a year past the IPO, which allows us you know, will allow us to execute in the market without the delays previously we would have had. And so we will continue to monitor those conditions and look at our options, whether that be a sell down or exchange or some combination thereof.

[Ryan Levine, Analyst at Citigroup]

Okay. And then what are the financial implications of the SIM if the settlement is approved relative to your longer term EPS growth target?

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

Hey, Ryan, it's Justin. I think part of it is we need to wait till it's actually approved. What we've proposed and what the settlement parties agreed to is basically, as we've indicated, represents about 40% of our nonrevenue producing infrastructure investment in the state each year. And so once we get that approved, we'll have better clarity around kind of the timing and what projects are actually approved for '25, and we can probably provide future guidance at that time or as part of our annual earnings guidance that we do in February as well. Because as we've indicated previously, our current plan does not include anything associated with approval of the SAM.

[Ryan Levine, Analyst at Citigroup]

Okay. And then on the PGA, the balance has moved around pretty substantially in recent quarters. And you highlighted in the prepared remarks the opportunity in Nevada to return some of that capital. Is there any meaningful impact to your ATM issuance need as a result of the outcome of that Nevada proceeding or the faster recovery of the PGA balance?

[Robert Stefani, Senior VP & CFO at Southwest Gas Holdings Inc]

Hey, Ryan, this is Rob. As we talked about, I think if we end up returning that cash more rapidly, we have the cash balances on hand right now to support that. And just with respect to the ATM usage that would just continue to reiterate, any ATM usage would be impacted by kind of the form of the next separation step that we take at Century. Obviously, we execute a sell down, then we're bringing cash into the company and that may obviate the need for the ATM usage.

[Ryan Levine, Analyst at Citigroup]

Okay. And then last question for me. I appreciate the comment about the accounting issue. To the extent you're able to answer, has there been any change to Southwest Gas' internal controls or accounting processes in recent quarters or anything to highlight? Because I think it was the first time that the company has ever had a delay in earnings call in decades.

[Karen Haller, President & CEO at Southwest Gas Holdings Inc]

Yes, Ryan. As I mentioned before, an issue arose late in the process at Century, which impacted Southwest Gas as well since we are consolidated, but there have been no changes in controls at Southwest Gas that were related to that or need for those as a result.

[Ryan Levine, Analyst at Citigroup]

Okay. Appreciate the time. Thank you.

[Operator]

Thank you.

[Operator]

Your next question comes from the line of Dylan Lipner from Ladenburg.

[Dylan Lipner, Associate - Equity Research at Ladenburg Thalmann]

Congrats on a great quarter. So the gaining influx of data centers and semiconductor manufacturing at the Arizona, can you guys speak to the incremental CapEx investment opportunities demand presents and potentially how you're engaging with regulators to ensure timely recovery and alignment with long term rate base growth?

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

Hey, Dylan, it's Justin. Yeah, I think from our perspective, we have kind of structures in place to deal with these options, whether it's with Great Basin and kind of the open season process or at the state level. We have line extension policies and practices that the commissions have supported that we believe would address anything. I think a lot of the stuff that we're seeing right now isn't necessarily built into our guidance as we haven't had any kind of material changes to what we were forecasting in terms of our rate base and CapEx spend and rate base growth over our guidance period. But we'll continue to monitor that, and as we get greater interest or kind of firm commitments, we'll obviously note that and make those adjustments as well.

[Dylan Lipner, Associate - Equity Research at Ladenburg Thalmann]

Great. Appreciate it, guys. Thanks.

[Operator]

Thank you. And your next question comes from the line of Richard Sanberlan from JPMorgan. Please go ahead.

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

Hey. Good morning. Thanks for the time today. Just apologies if you just hit this because I was cutting out for a minute. The Great Basin, open season, that is that is that binding?

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

And then how much CapEx would be associated with that and over what timeframe? Thank you.

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

Yeah, Rich, it's Justin. Yeah, so that is binding open season. It's open through the end of the month, So, at that point in time, we'll have a better indication of what to expect in terms of kind of future CapEx changes to the guidance that we've already provided.

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

Okay, got it. So no sense at this point of how much incremental capital could flow through Great Basin?

[Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc]

No, that's a confidential process until that open season closes.

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

Okay, understood. That's all for me. Thank you.

[Operator]

Thank you. There are no further questions at this time. I would now hand the call back to Mr. Justin Forsberg for any closing remarks.

[Justin Forsberg, Vice President of Investor Relations & Treasurer at Southwest Gas Holdings Inc]

Thanks, and thanks everyone for joining us today and for your questions. This concludes our conference call. We appreciate your interest in Southwest Gas Holdings, and we'll see many of you soon at the AGA Financial Conferences and other conferences.

[Operator]

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.

Participants

Executives

• Justin Forsberg, Vice President of Investor Relations & Treasurer
• Karen Haller, President & CEO
• Robert Stefani, Senior VP & CFO

Analysts

• Justin Brown, President - Southwest Gas Corporation at Southwest Gas Holdings Inc
• Ryan Levine, Analyst at Citigroup
• Dylan Lipner, Associate - Equity Research at Ladenburg Thalmann
• Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan