What Southwest Gas (SWX) Said on Its Q3 Earnings Call

Key Points

• Third-quarter adjusted EPS rose to $0.20 from $0.06 a year earlier, and nine-month adjusted EPS increased 18% to $2.69. Southwest Gas reaffirmed its 2026 guidance of $4.17–$4.32 per share and expects results near the midpoint.
• Final California and Nevada rate decisions authorized about $80 million in combined additional annual revenue, with the full Nevada contribution expected in 2027. Southwest Gas lowered its Arizona rate-increase request to $91.3 million; a hearing is scheduled for December, with new rates expected in April 2027.
• The planned $2.3 billion Great Basin expansion has binding agreements for 1 billion cubic feet per day of demand and is expected to add $270 million–$300 million in annual margin once operating in late 2028. The company plans to include the full project estimate in an updated five-year plan in February.

Southwest Gas NYSE: SWX reported higher adjusted earnings from continuing operations for the third quarter of 2026 and reaffirmed its full-year outlook, as new utility rates and customer growth helped lift results.

The company reported adjusted earnings per share from continuing operations of $0.20, up from $0.06 a year earlier. For the first nine months of 2026, adjusted earnings were $2.69 per share, an increase of 18% from the same period in 2025.

President and CEO Justin Brown attributed the improvement primarily to regulatory outcomes and cost management. The company reaffirmed its 2026 adjusted earnings guidance of $4.17 to $4.32 per share and its long-term adjusted earnings growth target of 12% to 14%.

Chief Financial Officer and Treasurer Justin Forsberg said management expects full-year adjusted earnings to center around the midpoint of the guidance range. He said third-quarter operating margin increased by $3.8 million, primarily because of updated California rates and customer growth.

Rate decisions and Arizona case

Southwest Gas received final orders in its California and Nevada rate cases that together authorized approximately $80 million in additional annual revenue, Brown said. He expects the rate relief to further improve results as the company moves into 2027.

California’s final decision authorized just over $32 million in incremental revenue, a 10% return on equity and a 50% equity ratio. The rates were effective retroactively to Jan. 1, 2026.

In Nevada, an Oct. 14 order authorized nearly $48 million in additional annual revenue, maintained a 9.5% authorized return on equity and set an actual equity ratio of 51.35%. New rates took effect in October. Southwest Gas has requested reconsideration of the treatment of certain post-test-year plant investments that it believes should have been included in rate base.

The company expects Nevada regulators to finalize alternative rate-making rules by the end of 2026 and anticipates filing to implement alternative rates by early in the second quarter of 2027. Forsberg said the full run-rate margin contribution from the Nevada decision would be reflected in 2027.

In Arizona, Southwest Gas reduced its requested annual revenue increase to $91.3 million from $101 million after updating investment estimates and other assumptions. Commission staff recommended an increase of $53 million to $58 million, depending on the treatment of the fair value increment, and a 9.75% return on equity.

Staff also supported the company’s proposed transition to formula rates, subject to modifications, while the Residential Utility Consumer Office opposed it, Brown said. A hearing is scheduled to begin Dec. 7, with new rates anticipated to take effect April 1, 2027. Forsberg said Arizona’s rate increase would contribute for part of 2027 and reach a full annual run rate in 2028.

Great Basin expansion

Southwest Gas is preparing to file its Federal Energy Regulatory Commission certificate application for the Great Basin 2028 expansion by year-end. The project is targeted to enter service in the fourth quarter of 2028.

Shippers have signed binding precedent agreements and posted surety supporting 1 billion cubic feet per day of contracted demand. Based on that demand, Brown said the estimated $2.3 billion project is expected to generate $270 million to $300 million in incremental annual margin once in service.

Of the project’s estimated cost, $600 million and its associated margin are not included in the company’s current long-term guidance. Southwest Gas plans to incorporate the full estimate when it updates its five-year plan in February. Project spending is expected to be approximately 15% in 2026, 25% in 2027 and 60% in 2028.

Brown said the company had submitted a draft application for the federal FAST-41 permitting program. He described the program as an opportunity for coordination and greater schedule transparency, rather than a guarantee of a faster review.

Financing and outlook

Southwest Gas ended the quarter with nearly $700 million in available liquidity after investing more than $800 million in capital at the utility and Great Basin during the year to date, Brown said. Consolidated net debt was approximately $3.7 billion when considering purchased gas adjustment balances payable to customers, according to Forsberg.

Forsberg said the company had not issued equity outside its dividend reinvestment plan in 2026 and did not anticipate equity issuances for the remainder of the year. It plans to issue utility debt this year, with the amount to be determined based on liquidity and capital allocation needs.

The company also plans to renew its at-the-market equity program at its existing $340 million capacity. Forsberg characterized the renewal as a housekeeping measure and said the company continues to expect relatively modest external equity issuance, primarily during Great Basin’s construction period.

About Southwest Gas (NYSE:SWX)

Southwest Gas Corporation NYSE: SWX is a regulated natural gas distribution utility serving residential, commercial and industrial customers. The company purchases, transports and delivers natural gas through its distribution networks, while also providing services related to system operations, maintenance, customer support and energy conservation.

Southwest Gas serves communities in Arizona, Nevada and portions of California. Its service territory includes major metropolitan areas such as Las Vegas and Phoenix, as well as numerous smaller communities across the southwestern United States.

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