Construction slowdown, investments hit Southwest Gas hard in third quarter
Southwest Gas Corp. on Wednesday reported that its third-quarter loss ballooned by 80 percent to $16.7 million from $9.3 million a year ago as it lost money on investments and housing construction slowed.
The loss per share increased to 38 cents from 22 cents.
Southwest Gas normally reports a loss in the third quarter, because customers use little gas for space heating during mild autumns in its service territories in Nevada, Arizona and California.
The gas distribution company attributed the bigger number this year to investment losses, which it said weren't related to operations. The value of investments underlying the cash surrender values of company-owned life insurance policies declined $3.7 million in the latest quarter. A year ago, the insurance policy investments increased by $355,000.
In addition, "the slowdown in the new construction market coupled with an increasing inventory in vacant existing homes has clearly impacted operating results," chief executive Jeffrey Shaw said in a statement. "We know we are in challenging economic times, and there is no тquick fix' available.
"However, many of our underlying fundamentals are strong and should allow us to тweather the storm."
Southwest Gas also awaits approval for general rate increases in Arizona and California.
The company's revenues increased to $374.4 million from $371.5 million in the third quarter last year.
Operating margin — operating revenue less the cost of gas sold — rose 1 percent or $1.5 million in the third quarter, compared to the same period last year. Operating expenses grew by $6.4 million or 5 percent during the quarter.
Customer growth contributed $1 million to the operating margin. Southwest Gas added 19,000 net new customers over the last 12 months, a 1 percent increase.
Southwest Gas shares dropped 67 cents, or 2.6 percent, closing at $25.41 on the New York Stock Exchange Wednesday, before the earnings report was released.
Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.
