Commission File Number | Exact name of registrant as specified in its charter and principal office address and telephone number | State of Incorporation | I.R.S. Employer Identification No. | |||
001-37976 | Southwest Gas Holdings, Inc. | California | 81-3881866 | |||
5241 Spring Mountain Road | ||||||
Post Office Box 98510 | ||||||
Las Vegas, Nevada 89193-8510 | ||||||
(702) 876-7237 | ||||||
1-7850 | Southwest Gas Corporation | California | 88-0085720 | |||
5241 Spring Mountain Road | ||||||
Post Office Box 98510 | ||||||
Las Vegas, Nevada 89193-8510 | ||||||
(702) 876-7237 |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
1 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
2 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
September 30, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Utility plant: | ||||||||
Gas plant | $ | 6,928,471 | $ | 6,629,644 | ||||
Less: accumulated depreciation | (2,275,376 | ) | (2,231,242 | ) | ||||
Construction work in progress | 216,735 | 125,248 | ||||||
Net utility plant | 4,869,830 | 4,523,650 | ||||||
Other property and investments | 466,500 | 428,180 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | 69,170 | 43,622 | ||||||
Accounts receivable, net of allowances | 347,571 | 347,375 | ||||||
Accrued utility revenue | 34,600 | 78,200 | ||||||
Income taxes receivable | 49,603 | 7,960 | ||||||
Deferred purchased gas costs | — | 14,581 | ||||||
Prepaids and other current assets | 220,249 | 165,294 | ||||||
Total current assets | 721,193 | 657,032 | ||||||
Noncurrent assets: | ||||||||
Goodwill | 176,059 | 179,314 | ||||||
Deferred income taxes | 1,185 | 1,480 | ||||||
Deferred charges and other assets | 419,829 | 447,410 | ||||||
Total noncurrent assets | 597,073 | 628,204 | ||||||
Total assets | $ | 6,654,596 | $ | 6,237,066 | ||||
CAPITALIZATION AND LIABILITIES | ||||||||
Capitalization: | ||||||||
Common stock, $1 par (authorized - 60,000,000 shares; issued and outstanding - 49,422,938 and 48,090,470 shares) | $ | 51,053 | $ | 49,720 | ||||
Additional paid-in capital | 1,045,840 | 955,332 | ||||||
Accumulated other comprehensive income (loss), net | (53,390 | ) | (47,682 | ) | ||||
Retained earnings | 902,730 | 857,398 | ||||||
Total Southwest Gas Holdings, Inc. equity | 1,946,233 | 1,814,768 | ||||||
Noncontrolling interest | (452 | ) | (2,365 | ) | ||||
Total equity | 1,945,781 | 1,812,403 | ||||||
Long-term debt, less current maturities | 2,123,641 | 1,798,576 | ||||||
Total capitalization | 4,069,422 | 3,610,979 | ||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | 33,429 | 25,346 | ||||||
Short-term debt | 31,500 | 214,500 | ||||||
Accounts payable | 172,237 | 228,315 | ||||||
Customer deposits | 68,100 | 69,781 | ||||||
Income taxes payable | 2,572 | 5,946 | ||||||
Accrued general taxes | 51,734 | 43,879 | ||||||
Accrued interest | 30,594 | 17,870 | ||||||
Deferred purchased gas costs | 93,023 | 6,841 | ||||||
Other current liabilities | 229,521 | 203,403 | ||||||
Total current liabilities | 712,710 | 815,881 | ||||||
Deferred income taxes and other credits: | ||||||||
Deferred income taxes and investment tax credits | 519,146 | 476,960 | ||||||
Accumulated removal costs | 322,000 | 315,000 | ||||||
Other deferred credits and other long-term liabilities | 1,031,318 | 1,018,246 | ||||||
Total deferred income taxes and other credits | 1,872,464 | 1,810,206 | ||||||
Total capitalization and liabilities | $ | 6,654,596 | $ | 6,237,066 |
3 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Operating revenues: | ||||||||||||||||||||||||
Gas operating revenues | $ | 217,523 | $ | 213,059 | $ | 987,515 | $ | 935,823 | $ | 1,354,000 | $ | 1,276,308 | ||||||||||||
Construction revenues | 450,623 | 380,094 | 1,105,844 | 872,536 | 1,479,792 | 1,173,576 | ||||||||||||||||||
Total operating revenues | 668,146 | 593,153 | 2,093,359 | 1,808,359 | 2,833,792 | 2,449,884 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Net cost of gas sold | 49,903 | 45,539 | 319,101 | 261,839 | 412,307 | 334,888 | ||||||||||||||||||
Operations and maintenance | 105,508 | 97,422 | 313,294 | 299,920 | 406,137 | 394,725 | ||||||||||||||||||
Depreciation and amortization | 62,156 | 58,529 | 185,941 | 189,089 | 247,803 | 260,457 | ||||||||||||||||||
Taxes other than income taxes | 15,036 | 14,046 | 44,959 | 43,325 | 59,580 | 56,221 | ||||||||||||||||||
Construction expenses | 395,862 | 342,629 | 1,007,485 | 806,586 | 1,349,862 | 1,073,090 | ||||||||||||||||||
Total operating expenses | 628,465 | 558,165 | 1,870,780 | 1,600,759 | 2,475,689 | 2,119,381 | ||||||||||||||||||
Operating income | 39,681 | 34,988 | 222,579 | 207,600 | 358,103 | 330,503 | ||||||||||||||||||
Other income and (expenses): | ||||||||||||||||||||||||
Net interest deductions | (24,548 | ) | (19,494 | ) | (70,831 | ) | (56,863 | ) | (92,032 | ) | (76,423 | ) | ||||||||||||
Other income (deductions) | 889 | (1,980 | ) | (6,151 | ) | (5,780 | ) | (6,401 | ) | (8,007 | ) | |||||||||||||
Total other income and (expenses) | (23,659 | ) | (21,474 | ) | (76,982 | ) | (62,643 | ) | (98,433 | ) | (84,430 | ) | ||||||||||||
Income before income taxes | 16,022 | 13,514 | 145,597 | 144,957 | 259,670 | 246,073 | ||||||||||||||||||
Income tax expense | 3,691 | 3,094 | 33,421 | 47,411 | 51,098 | 82,833 | ||||||||||||||||||
Net income | 12,331 | 10,420 | 112,176 | 97,546 | 208,572 | 163,240 | ||||||||||||||||||
Net income (loss) attributable to noncontrolling interest | — | 216 | (797 | ) | 170 | (866 | ) | 684 | ||||||||||||||||
Net income attributable to Southwest Gas Holdings, Inc. | $ | 12,331 | $ | 10,204 | $ | 112,973 | $ | 97,376 | $ | 209,438 | $ | 162,556 | ||||||||||||
Basic earnings per share | $ | 0.25 | $ | 0.21 | $ | 2.31 | $ | 2.05 | $ | 4.30 | $ | 3.42 | ||||||||||||
Diluted earnings per share | $ | 0.25 | $ | 0.21 | $ | 2.31 | $ | 2.03 | $ | 4.29 | $ | 3.39 | ||||||||||||
Dividends declared per share | $ | 0.520 | $ | 0.495 | $ | 1.560 | $ | 1.485 | $ | 2.055 | $ | 1.935 | ||||||||||||
Average number of common shares | 49,493 | 47,628 | 48,916 | 47,577 | 48,728 | 47,553 | ||||||||||||||||||
Average shares (assuming dilution) | 49,553 | 47,986 | 48,968 | 47,912 | 48,781 | 47,896 |
4 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Net income | $ | 12,331 | $ | 10,420 | $ | 112,176 | $ | 97,546 | $ | 208,572 | $ | 163,240 | ||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||||
Defined benefit pension plans: | ||||||||||||||||||||||||
Net actuarial gain (loss) | — | — | — | — | (32,701 | ) | (14,118 | ) | ||||||||||||||||
Amortization of prior service cost | 254 | 207 | 762 | 621 | 969 | 828 | ||||||||||||||||||
Amortization of net actuarial loss | 6,387 | 3,944 | 19,161 | 11,832 | 23,105 | 16,027 | ||||||||||||||||||
Regulatory adjustment | (5,746 | ) | (3,555 | ) | (17,236 | ) | (10,667 | ) | 6,021 | (2,741 | ) | |||||||||||||
Net defined benefit pension plans | 895 | 596 | 2,687 | 1,786 | (2,606 | ) | (4 | ) | ||||||||||||||||
Forward-starting interest rate swaps: | ||||||||||||||||||||||||
Amounts reclassified into net income | 636 | 518 | 1,907 | 1,554 | 2,426 | 2,073 | ||||||||||||||||||
Net forward-starting interest rate swaps | 636 | 518 | 1,907 | 1,554 | 2,426 | 2,073 | ||||||||||||||||||
Foreign currency translation adjustments | 599 | 1,012 | (1,002 | ) | 1,861 | (1,092 | ) | 1,408 | ||||||||||||||||
Total other comprehensive income (loss), net of tax | 2,130 | 2,126 | 3,592 | 5,201 | (1,272 | ) | 3,477 | |||||||||||||||||
Comprehensive income | 14,461 | 12,546 | 115,768 | 102,747 | 207,300 | 166,717 | ||||||||||||||||||
Comprehensive income (loss) attributable to noncontrolling interests | — | 198 | (797 | ) | 181 | (866 | ) | 679 | ||||||||||||||||
Comprehensive income attributable to Southwest Gas Holdings, Inc. | $ | 14,461 | $ | 12,348 | $ | 116,565 | $ | 102,566 | $ | 208,166 | $ | 166,038 |
5 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Nine Months Ended September 30, | Twelve Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income | $ | 112,176 | $ | 97,546 | $ | 208,572 | $ | 163,240 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 185,941 | 189,089 | 247,803 | 260,457 | ||||||||||||
Deferred income taxes | 36,210 | 49,409 | 50,190 | 74,439 | ||||||||||||
Changes in current assets and liabilities: | ||||||||||||||||
Accounts receivable, net of allowances | (1,659 | ) | (15,330 | ) | (27,276 | ) | (13,765 | ) | ||||||||
Accrued utility revenue | 43,600 | 42,100 | (500 | ) | (1,100 | ) | ||||||||||
Deferred purchased gas costs | 100,763 | (79,127 | ) | 84,282 | (114,658 | ) | ||||||||||
Accounts payable | (48,618 | ) | (26,771 | ) | (1,886 | ) | 19,866 | |||||||||
Accrued taxes | (9,840 | ) | 4,689 | (12,417 | ) | 38,084 | ||||||||||
Other current assets and liabilities | 1,245 | 43,044 | (50,002 | ) | 3,590 | |||||||||||
Gains on sale | (997 | ) | (1,452 | ) | (3,741 | ) | (4,483 | ) | ||||||||
Changes in undistributed stock compensation | 4,686 | 9,199 | 6,375 | 10,308 | ||||||||||||
AFUDC | (1,034 | ) | (2,077 | ) | (1,253 | ) | (2,473 | ) | ||||||||
Changes in other assets and deferred charges | (10,497 | ) | (14,470 | ) | (18,296 | ) | (1,436 | ) | ||||||||
Changes in other liabilities and deferred credits | (4,583 | ) | 3,395 | (3,747 | ) | (10,239 | ) | |||||||||
Net cash provided by operating activities | 407,393 | 299,244 | 478,104 | 421,830 | ||||||||||||
CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||||||||||
Construction expenditures and property additions | (560,165 | ) | (449,998 | ) | (733,816 | ) | (575,141 | ) | ||||||||
Acquisition of businesses, net of cash acquired | (4,209 | ) | — | (98,413 | ) | — | ||||||||||
Changes in customer advances | 11,051 | (1,951 | ) | 13,325 | 504 | |||||||||||
Miscellaneous inflows | 3,827 | 9,160 | 11,312 | 14,234 | ||||||||||||
Net cash used in investing activities | (549,496 | ) | (442,789 | ) | (807,592 | ) | (560,403 | ) | ||||||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||||||||||
Issuance of common stock, net | 92,234 | 11,563 | 121,826 | 11,505 | ||||||||||||
Dividends paid | (74,535 | ) | (68,503 | ) | (98,162 | ) | (89,870 | ) | ||||||||
Centuri distribution to redeemable noncontrolling interest | — | (204 | ) | — | (544 | ) | ||||||||||
Issuance of long-term debt, net | 480,993 | 104,308 | 783,748 | 119,308 | ||||||||||||
Retirement of long-term debt | (143,757 | ) | (100,240 | ) | (382,486 | ) | (159,162 | ) | ||||||||
Change in credit facility and commercial paper | — | 145,000 | — | 150,000 | ||||||||||||
Change in short-term debt | (183,000 | ) | 110,500 | (79,000 | ) | 110,500 | ||||||||||
Principal payments on capital lease obligations | (422 | ) | (796 | ) | (606 | ) | (1,025 | ) | ||||||||
Redemption of Centuri shares from noncontrolling parties | — | (23,000 | ) | — | (23,000 | ) | ||||||||||
Withholding remittance - share-based compensation | (2,880 | ) | (3,176 | ) | (2,880 | ) | (3,176 | ) | ||||||||
Other | (1,121 | ) | (1,104 | ) | (3,091 | ) | (2,068 | ) | ||||||||
Net cash provided by financing activities | 167,512 | 174,348 | 339,349 | 112,468 | ||||||||||||
Effects of currency translation on cash and cash equivalents | 139 | 283 | 157 | 103 | ||||||||||||
Change in cash and cash equivalents | 25,548 | 31,086 | 10,018 | (26,002 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 43,622 | 28,066 | 59,152 | 85,154 | ||||||||||||
Cash and cash equivalents at end of period | $ | 69,170 | $ | 59,152 | $ | 69,170 | $ | 59,152 | ||||||||
Supplemental information: | ||||||||||||||||
Interest paid, net of amounts capitalized | $ | 49,568 | $ | 45,771 | $ | 75,740 | $ | 66,077 | ||||||||
Income taxes paid (received) | $ | 18,261 | $ | 3,687 | $ | 20,247 | $ | (21,875 | ) |
6 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
September 30, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Utility plant: | ||||||||
Gas plant | $ | 6,928,471 | $ | 6,629,644 | ||||
Less: accumulated depreciation | (2,275,376 | ) | (2,231,242 | ) | ||||
Construction work in progress | 216,735 | 125,248 | ||||||
Net utility plant | 4,869,830 | 4,523,650 | ||||||
Other property and investments | 125,204 | 119,114 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | 49,065 | 37,946 | ||||||
Accounts receivable, net of allowances | 70,094 | 119,748 | ||||||
Accrued utility revenue | 34,600 | 78,200 | ||||||
Income taxes receivable | 46,250 | — | ||||||
Deferred purchased gas costs | — | 14,581 | ||||||
Prepaids and other current assets | 202,705 | 153,771 | ||||||
Total current assets | 402,714 | 404,246 | ||||||
Noncurrent assets: | ||||||||
Goodwill | 10,095 | 10,095 | ||||||
Deferred charges and other assets | 403,505 | 425,564 | ||||||
Total noncurrent assets | 413,600 | 435,659 | ||||||
Total assets | $ | 5,811,348 | $ | 5,482,669 | ||||
CAPITALIZATION AND LIABILITIES | ||||||||
Capitalization: | ||||||||
Common stock | $ | 49,112 | $ | 49,112 | ||||
Additional paid-in capital | 1,041,310 | 948,767 | ||||||
Accumulated other comprehensive income (loss), net | (51,779 | ) | (47,073 | ) | ||||
Retained earnings | 681,284 | 659,193 | ||||||
Total Southwest Gas Corporation equity | 1,719,927 | 1,609,999 | ||||||
Long-term debt, less current maturities | 1,818,621 | 1,521,031 | ||||||
Total capitalization | 3,538,548 | 3,131,030 | ||||||
Current liabilities: | ||||||||
Short-term debt | 9,000 | 191,000 | ||||||
Accounts payable | 98,956 | 158,474 | ||||||
Customer deposits | 68,100 | 69,781 | ||||||
Income taxes payable | — | 4,971 | ||||||
Accrued general taxes | 51,734 | 43,879 | ||||||
Accrued interest | 30,481 | 17,171 | ||||||
Deferred purchased gas costs | 93,023 | 6,841 | ||||||
Payable to parent | 380 | 194 | ||||||
Other current liabilities | 111,658 | 108,785 | ||||||
Total current liabilities | 463,332 | 601,096 | ||||||
Deferred income taxes and other credits: | ||||||||
Deferred income taxes and investment tax credits, net | 485,072 | 445,243 | ||||||
Accumulated removal costs | 322,000 | 315,000 | ||||||
Other deferred credits and other long-term liabilities | 1,002,396 | 990,300 | ||||||
Total deferred income taxes and other credits | 1,809,468 | 1,750,543 | ||||||
Total capitalization and liabilities | $ | 5,811,348 | $ | 5,482,669 |
7 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Continuing operations: | ||||||||||||||||||||||||
Gas operating revenues | $ | 217,523 | $ | 213,059 | $ | 987,515 | $ | 935,823 | $ | 1,354,000 | $ | 1,276,308 | ||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Net cost of gas sold | 49,903 | 45,539 | 319,101 | 261,839 | 412,307 | 334,888 | ||||||||||||||||||
Operations and maintenance | 104,657 | 97,359 | 312,055 | 298,827 | 404,549 | 393,632 | ||||||||||||||||||
Depreciation and amortization | 47,924 | 46,194 | 145,549 | 153,643 | 193,828 | 212,693 | ||||||||||||||||||
Taxes other than income taxes | 15,036 | 14,046 | 44,959 | 43,325 | 59,580 | 56,221 | ||||||||||||||||||
Total operating expenses | 217,520 | 203,138 | 821,664 | 757,634 | 1,070,264 | 997,434 | ||||||||||||||||||
Operating income | 3 | 9,921 | 165,851 | 178,189 | 283,736 | 278,874 | ||||||||||||||||||
Other income and (expenses): | ||||||||||||||||||||||||
Net interest deductions | (20,399 | ) | (17,421 | ) | (59,803 | ) | (51,622 | ) | (77,914 | ) | (69,464 | ) | ||||||||||||
Other income (deductions) | 836 | (1,775 | ) | (5,861 | ) | (5,824 | ) | (6,425 | ) | (9,200 | ) | |||||||||||||
Total other income and (expenses) | (19,563 | ) | (19,196 | ) | (65,664 | ) | (57,446 | ) | (84,339 | ) | (78,664 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | (19,560 | ) | (9,275 | ) | 100,187 | 120,743 | 199,397 | 200,210 | ||||||||||||||||
Income tax expense (benefit) | (5,890 | ) | (5,251 | ) | 20,886 | 38,307 | 45,714 | 65,887 | ||||||||||||||||
Income (loss) from continuing operations | (13,670 | ) | (4,024 | ) | 79,301 | 82,436 | 153,683 | 134,323 | ||||||||||||||||
Discontinued operations - construction services: | ||||||||||||||||||||||||
Income before income taxes | — | — | — | — | — | 21,649 | ||||||||||||||||||
Income tax expense | — | — | — | — | — | 7,842 | ||||||||||||||||||
Income | — | — | — | — | — | 13,807 | ||||||||||||||||||
Noncontrolling interests | — | — | — | — | — | 514 | ||||||||||||||||||
Income - discontinued operations | — | — | — | — | — | 13,293 | ||||||||||||||||||
Net income (loss) | $ | (13,670 | ) | $ | (4,024 | ) | $ | 79,301 | $ | 82,436 | $ | 153,683 | $ | 147,616 |
8 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Continuing operations: | ||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | (13,670 | ) | $ | (4,024 | ) | $ | 79,301 | $ | 82,436 | $ | 153,683 | $ | 134,323 | ||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||||
Defined benefit pension plans: | ||||||||||||||||||||||||
Net actuarial gain (loss) | — | — | — | — | (32,701 | ) | (14,118 | ) | ||||||||||||||||
Amortization of prior service cost | 254 | 207 | 762 | 621 | 969 | 828 | ||||||||||||||||||
Amortization of net actuarial loss | 6,387 | 3,944 | 19,161 | 11,832 | 23,105 | 16,027 | ||||||||||||||||||
Regulatory adjustment | (5,746 | ) | (3,555 | ) | (17,236 | ) | (10,667 | ) | 6,021 | (2,741 | ) | |||||||||||||
Net defined benefit pension plans | 895 | 596 | 2,687 | 1,786 | (2,606 | ) | (4 | ) | ||||||||||||||||
Forward-starting interest rate swaps: | ||||||||||||||||||||||||
Amounts reclassified into net income | 636 | 518 | 1,907 | 1,554 | 2,426 | 2,073 | ||||||||||||||||||
Net forward-starting interest rate swaps | 636 | 518 | 1,907 | 1,554 | 2,426 | 2,073 | ||||||||||||||||||
Total other comprehensive income (loss), net of tax from continuing operations | 1,531 | 1,114 | 4,594 | 3,340 | (180 | ) | 2,069 | |||||||||||||||||
Comprehensive income (loss) from continuing operations | (12,139 | ) | (2,910 | ) | 83,895 | 85,776 | 153,503 | 136,392 | ||||||||||||||||
Discontinued operations - construction services: | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 13,293 | ||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | (453 | ) | |||||||||||||||||
Comprehensive income | — | — | — | — | — | 12,840 | ||||||||||||||||||
Comprehensive income (loss) attributable to noncontrolling interests | — | — | — | — | — | (16 | ) | |||||||||||||||||
Comprehensive income attributable to discontinued operations - construction services | — | — | — | — | — | 12,856 | ||||||||||||||||||
Comprehensive income (loss) | $ | (12,139 | ) | $ | (2,910 | ) | $ | 83,895 | $ | 85,776 | $ | 153,503 | $ | 149,248 |
9 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Nine Months Ended September 30, | Twelve Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net Income | $ | 79,301 | $ | 82,436 | $ | 153,683 | $ | 148,130 | ||||||||
Income from discontinued operations | — | — | — | 13,807 | ||||||||||||
Income from continuing operations | 79,301 | 82,436 | 153,683 | 134,323 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 145,549 | 153,643 | 193,828 | 212,693 | ||||||||||||
Deferred income taxes | 33,239 | 44,621 | 55,787 | 72,627 | ||||||||||||
Changes in current assets and liabilities: | ||||||||||||||||
Accounts receivable, net of allowances | 49,654 | 43,818 | (2,066 | ) | (7,131 | ) | ||||||||||
Accrued utility revenue | 43,600 | 42,100 | (500 | ) | (1,100 | ) | ||||||||||
Deferred purchased gas costs | 100,763 | (79,127 | ) | 84,282 | (114,658 | ) | ||||||||||
Accounts payable | (53,217 | ) | (45,972 | ) | (2,700 | ) | 17,271 | |||||||||
Accrued taxes | (16,026 | ) | 4,092 | (9,735 | ) | 29,143 | ||||||||||
Other current assets and liabilities | (35,154 | ) | 32,453 | (81,333 | ) | (224 | ) | |||||||||
Changes in undistributed stock compensation | 4,269 | 7,999 | 5,558 | 9,108 | ||||||||||||
AFUDC | (1,034 | ) | (2,077 | ) | (1,253 | ) | (2,473 | ) | ||||||||
Changes in other assets and deferred charges | (11,025 | ) | (14,861 | ) | (19,082 | ) | (1,914 | ) | ||||||||
Changes in other liabilities and deferred credits | 7,550 | 2,883 | 8,208 | (10,751 | ) | |||||||||||
Net cash provided by operating activities | 347,469 | 272,008 | 384,677 | 336,914 | ||||||||||||
CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||||||||||
Construction expenditures and property additions | (486,037 | ) | (395,463 | ) | (651,022 | ) | (514,661 | ) | ||||||||
Changes in customer advances | 11,051 | (1,951 | ) | 13,325 | 504 | |||||||||||
Miscellaneous inflows | 1,316 | 2,407 | 1,650 | 2,925 | ||||||||||||
Dividends received | — | — | — | 9,660 | ||||||||||||
Net cash used in investing activities | (473,670 | ) | (395,007 | ) | (636,047 | ) | (501,572 | ) | ||||||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||||||||||
Issuance of common stock, net | — | — | — | (58 | ) | |||||||||||
Contributions from parent | 90,644 | 11,659 | 120,344 | 11,659 | ||||||||||||
Dividends paid | (65,000 | ) | (60,497 | ) | (86,000 | ) | (81,864 | ) | ||||||||
Issuance of long-term debt, net | 297,495 | — | 297,495 | — | ||||||||||||
Retirement of long-term debt | — | (25,000 | ) | — | (25,000 | ) | ||||||||||
Change in credit facility and commercial paper | — | 145,000 | — | 150,000 | ||||||||||||
Change in short-term debt | (182,000 | ) | 83,000 | (74,000 | ) | 83,000 | ||||||||||
Withholding remittance - share-based compensation | (2,880 | ) | (3,176 | ) | (2,880 | ) | (3,176 | ) | ||||||||
Other | (939 | ) | (544 | ) | (991 | ) | (1,508 | ) | ||||||||
Net cash provided by financing activities | 137,320 | 150,442 | 253,968 | 133,053 | ||||||||||||
Net cash provided by discontinued operating activities | — | — | — | 57,680 | ||||||||||||
Net cash used in discontinued investing activities | — | — | — | (11,049 | ) | |||||||||||
Net cash used in discontinued financing activities | — | — | — | (44,491 | ) | |||||||||||
Effects of currency translation on cash and cash equivalents | — | — | — | (180 | ) | |||||||||||
Change in cash and cash equivalents | 11,119 | 27,443 | 2,598 | (29,645 | ) | |||||||||||
Change in cash and cash equivalents of discontinued operations included in discontinued operations construction services assets | — | — | — | (1,960 | ) | |||||||||||
Change in cash and cash equivalents of continuing operations | 11,119 | 27,443 | 2,598 | (31,605 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 37,946 | 19,024 | 46,467 | 78,072 | ||||||||||||
Cash and cash equivalents at end of period | $ | 49,065 | $ | 46,467 | $ | 49,065 | $ | 46,467 | ||||||||
Supplemental information: | ||||||||||||||||
Interest paid, net of amounts capitalized | $ | 42,986 | $ | 40,751 | $ | 67,025 | $ | 59,448 | ||||||||
Income taxes paid (received) | $ | 11,286 | $ | 4 | $ | 3,428 | $ | (27,952 | ) |
10 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
11 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
12 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
(Thousands of dollars) | Natural Gas Operations | Infrastructure Services | Consolidated | ||||||||
December 31, 2017 | $ | 10,095 | $ | 169,219 | $ | 179,314 | |||||
Additional goodwill from Neuco acquisition | — | 182 | 182 | ||||||||
Foreign currency translation adjustment | — | (3,437 | ) | (3,437 | ) | ||||||
September 30, 2018 | $ | 10,095 | $ | 165,964 | $ | 176,059 |
September 30, 2018 | December 31, 2017 | ||||||
Centuri accounts receivable for services provided to Southwest | $ | 13,566 | $ | 12,987 |
13 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
September 30, 2018 | December 31, 2017 | ||||||
Southwest Gas Corporation: | |||||||
Net cash surrender value of COLI policies | $ | 123,476 | $ | 117,341 | |||
Other property | 1,728 | 1,773 | |||||
Total Southwest Gas Corporation | 125,204 | 119,114 | |||||
Centuri property, equipment, and intangibles | 613,365 | 554,730 | |||||
Centuri accumulated depreciation/amortization | (287,396 | ) | (258,906 | ) | |||
Other property | 15,327 | 13,242 | |||||
Total Southwest Gas Holdings, Inc. | $ | 466,500 | $ | 428,180 |
Three Months Ended | Nine Months Ended | Twelve Months Ended | |||||||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Southwest Gas Corporation - natural gas operations segment: | |||||||||||||||||||||||
Change in COLI policies | $ | 4,700 | $ | 2,100 | $ | 6,000 | $ | 6,800 | $ | 9,500 | $ | 8,800 | |||||||||||
Interest income | 1,506 | 670 | 4,301 | 1,848 | 5,237 | 2,417 | |||||||||||||||||
Equity AFUDC | 448 | 968 | 1,034 | 2,077 | 1,253 | 2,473 | |||||||||||||||||
Other components of net periodic benefit cost | (5,265 | ) | (4,856 | ) | (15,794 | ) | (14,568 | ) | (20,650 | ) | (19,508 | ) | |||||||||||
Miscellaneous income and (expense) | (553 | ) | (657 | ) | (1,402 | ) | (1,981 | ) | (1,765 | ) | (3,382 | ) | |||||||||||
Southwest Gas Corporation - total other income (deductions) | 836 | (1,775 | ) | (5,861 | ) | (5,824 | ) | (6,425 | ) | (9,200 | ) | ||||||||||||
Infrastructure services segment: | |||||||||||||||||||||||
Interest income | 4 | 1 | 6 | 2 | 7 | 2 | |||||||||||||||||
Foreign transaction gain (loss) | (91 | ) | (442 | ) | 258 | (640 | ) | 144 | (640 | ) | |||||||||||||
Miscellaneous income and (expense) | 125 | 231 | (595 | ) | 676 | (175 | ) | 1,825 | |||||||||||||||
Centuri - total other income (deductions) | 38 | (210 | ) | (331 | ) | 38 | (24 | ) | 1,187 | ||||||||||||||
Corporate and administrative | 15 | 5 | 41 | 6 | 48 | 6 | |||||||||||||||||
Consolidated Southwest Gas Holdings, Inc. - total other income (deductions) | $ | 889 | $ | (1,980 | ) | $ | (6,151 | ) | $ | (5,780 | ) | $ | (6,401 | ) | $ | (8,007 | ) |
• | A lease liability for the obligation to make lease payments, measured on a discounted basis; and |
• | A right-of-use asset for the right to use, or control the use of, a specified asset for the lease term. |
14 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
• | To elect to use the “package”, which is a set of three practical expedients that must be elected as a package and applied consistently to all of the Company’s and Southwest’s leases. These include: not reassessing whether any expired or existing contracts are or contain leases; not reassessing the lease classification for expired or existing leases (that is, existing operating and capital leases in accordance with current lease guidance will in each case be classified as operating and finance leases, respectively, under the updated guidance); and not reassessing initial direct costs for any existing leases. |
• | To elect to adopt the practical expedient to exclude all easements in place prior to January 1, 2019 from treatment under Topic 842. However, the Company and Southwest will evaluate any new easements entered into after the effective date of the standard to determine if the arrangements should be accounted for as leases. |
• | To make an accounting policy election by asset class to include both the lease and non-lease components (as defined in the guidance) as a single component. |
• | To make an accounting policy election to not apply Topic 842 to short-term leases, as permitted. |
15 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
16 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
17 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Qualified Retirement Plan | |||||||||||||||||||||||
Period Ended September 30, | |||||||||||||||||||||||
Three Months | Nine Months | Twelve Months | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Service cost | $ | 7,139 | $ | 5,848 | $ | 21,417 | $ | 17,544 | $ | 27,265 | $ | 23,252 | |||||||||||
Interest cost | 11,043 | 11,520 | 33,130 | 34,561 | 44,652 | 46,068 | |||||||||||||||||
Expected return on plan assets | (14,689 | ) | (13,799 | ) | (44,066 | ) | (41,397 | ) | (57,865 | ) | (55,536 | ) | |||||||||||
Amortization of net actuarial loss | 8,029 | 6,001 | 24,086 | 18,003 | 30,087 | 24,319 | |||||||||||||||||
Net periodic benefit cost | $ | 11,522 | $ | 9,570 | $ | 34,567 | $ | 28,711 | $ | 44,139 | $ | 38,103 | |||||||||||
SERP | |||||||||||||||||||||||
Period Ended September 30, | |||||||||||||||||||||||
Three Months | Nine Months | Twelve Months | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Service cost | $ | 61 | $ | 77 | $ | 183 | $ | 232 | $ | 260 | $ | 315 | |||||||||||
Interest cost | 415 | 471 | 1,244 | 1,413 | 1,714 | 1,878 | |||||||||||||||||
Amortization of net actuarial loss | 375 | 361 | 1,126 | 1,081 | 1,486 | 1,426 | |||||||||||||||||
Net periodic benefit cost | $ | 851 | $ | 909 | $ | 2,553 | $ | 2,726 | $ | 3,460 | $ | 3,619 | |||||||||||
PBOP | |||||||||||||||||||||||
Period Ended September 30, | |||||||||||||||||||||||
Three Months | Nine Months | Twelve Months | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Service cost | $ | 368 | $ | 367 | $ | 1,105 | $ | 1,101 | $ | 1,472 | $ | 1,476 | |||||||||||
Interest cost | 687 | 808 | 2,061 | 2,424 | 2,869 | 3,218 | |||||||||||||||||
Expected return on plan assets | (929 | ) | (839 | ) | (2,789 | ) | (2,518 | ) | (3,629 | ) | (3,305 | ) | |||||||||||
Amortization of prior service costs | 334 | 333 | 1,002 | 1,001 | 1,336 | 1,335 | |||||||||||||||||
Amortization of net actuarial loss | — | — | — | — | — | 105 | |||||||||||||||||
Net periodic benefit cost | $ | 460 | $ | 669 | $ | 1,379 | $ | 2,008 | $ | 2,048 | $ | 2,829 |
18 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
19 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended | Nine Months Ended | Twelve Months Ended | |||||||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||||||||
(Thousands of dollars) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Residential | $ | 120,249 | $ | 123,459 | $ | 631,562 | $ | 624,638 | $ | 864,128 | $ | 854,840 | |||||||||||
Small commercial | 40,020 | 41,656 | 183,616 | 173,799 | 253,330 | 237,430 | |||||||||||||||||
Large commercial | 11,360 | 11,475 | 39,934 | 37,851 | 54,462 | 50,397 | |||||||||||||||||
Industrial/other | 5,390 | 5,024 | 17,391 | 15,518 | 23,899 | 20,946 | |||||||||||||||||
Transportation | 19,818 | 20,545 | 64,591 | 64,235 | 88,115 | 86,528 | |||||||||||||||||
Revenue from contracts with customers | 196,837 | 202,159 | 937,094 | 916,041 | 1,283,934 | 1,250,141 | |||||||||||||||||
Alternative revenue program revenues (deferrals) | 9,094 | 9,123 | 46,696 | 15,026 | 67,017 | 21,300 | |||||||||||||||||
Other revenues (a) | 11,592 | 1,777 | 3,725 | 4,756 | 3,049 | 4,867 | |||||||||||||||||
Total Gas operating revenues | $ | 217,523 | $ | 213,059 | $ | 987,515 | $ | 935,823 | $ | 1,354,000 | $ | 1,276,308 |
(a) | Includes various other revenues, and during the first six months of 2018, included $12.5 million as a reserve against revenue associated with a tax reform savings adjustment. During the third quarter of 2018, amounts previously recognized were reclassified to the various categories of revenue from contracts with customers when incorporated in tariff rates. Refer to Income Taxes in Note 1 – Nature of Operations and Basis of Presentation. |
20 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
(Thousands of dollars) | Three Months Ended | Nine Months Ended | Twelve Months Ended | ||||||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Service Types: | |||||||||||||||||||||||
Replacement gas construction | $ | 305,177 | $ | 238,957 | $ | 718,598 | $ | 540,907 | $ | 965,757 | $ | 765,068 | |||||||||||
New gas construction | 50,544 | 43,216 | 131,017 | 116,521 | 179,872 | 180,093 | |||||||||||||||||
Other construction | 94,902 | 97,921 | 256,229 | 215,108 | 334,163 | 228,415 | |||||||||||||||||
Total Construction revenues | $ | 450,623 | $ | 380,094 | $ | 1,105,844 | $ | 872,536 | $ | 1,479,792 | $ | 1,173,576 |
21 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
(Thousands of dollars) | Three Months Ended | Nine Months Ended | Twelve Months Ended | ||||||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Contract Types: | |||||||||||||||||||||||
Master services agreement | $ | 348,274 | $ | 261,576 | $ | 832,813 | $ | 617,129 | $ | 1,101,216 | $ | 831,465 | |||||||||||
Bid contract | 102,349 | 118,518 | 273,031 | 255,407 | 378,576 | 342,111 | |||||||||||||||||
Total Construction revenues | $ | 450,623 | $ | 380,094 | $ | 1,105,844 | $ | 872,536 | $ | 1,479,792 | $ | 1,173,576 | |||||||||||
Unit priced contracts | $ | 368,918 | $ | 332,462 | $ | 948,593 | $ | 782,560 | $ | 1,286,059 | $ | 993,294 | |||||||||||
Fixed priced contracts | 81,705 | 47,632 | 157,251 | 89,976 | 193,733 | 180,282 | |||||||||||||||||
Total Construction revenues | $ | 450,623 | $ | 380,094 | $ | 1,105,844 | $ | 872,536 | $ | 1,479,792 | $ | 1,173,576 |
(Thousands of dollars) | September 30, 2018 | December 31, 2017 | |||||
Contracts receivable, net | $ | 191,923 | $ | 221,859 | |||
Revenue earned on contracts in progress in excess of billings | 85,554 | 5,768 | |||||
Amounts billed in excess of revenue earned on contracts | 7,192 | 9,602 |
22 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
(Thousands of dollars) | September 30, 2018 | ||
Billed on completed contracts and contracts in progress | $ | 189,619 | |
Other receivables | 2,424 | ||
Contracts receivable, gross | 192,043 | ||
Allowance for doubtful accounts | (120 | ) | |
Contracts receivable, net | $ | 191,923 | |
23 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Natural Gas Operations | Infrastructure Services | Other | Total | ||||||||||||
Three Months Ended September 30, 2018 | |||||||||||||||
Revenues from external customers | $ | 217,523 | $ | 414,175 | $ | — | $ | 631,698 | |||||||
Intersegment revenues | — | 36,448 | — | 36,448 | |||||||||||
Total | $ | 217,523 | $ | 450,623 | $ | — | $ | 668,146 | |||||||
Segment net income (loss) | $ | (13,670 | ) | $ | 26,798 | $ | (797 | ) | $ | 12,331 | |||||
Three Months Ended September 30, 2017 | |||||||||||||||
Revenues from external customers | $ | 213,059 | $ | 351,850 | $ | — | $ | 564,909 | |||||||
Intersegment revenues | — | 28,244 | — | 28,244 | |||||||||||
Total | $ | 213,059 | $ | 380,094 | $ | — | $ | 593,153 | |||||||
Segment net income (loss) | $ | (4,024 | ) | $ | 14,335 | $ | (107 | ) | $ | 10,204 | |||||
Natural Gas Operations | Infrastructure Services | Other | Total | ||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||
Revenues from external customers | $ | 987,515 | $ | 1,009,166 | $ | — | $ | 1,996,681 | |||||||
Intersegment revenues | — | 96,678 | — | 96,678 | |||||||||||
Total | $ | 987,515 | $ | 1,105,844 | $ | — | $ | 2,093,359 | |||||||
Segment net income (loss) | $ | 79,301 | $ | 35,034 | $ | (1,362 | ) | $ | 112,973 | ||||||
Nine Months Ended September 30, 2017 | |||||||||||||||
Revenues from external customers | $ | 935,823 | $ | 800,073 | $ | — | $ | 1,735,896 | |||||||
Intersegment revenues | — | 72,463 | — | 72,463 | |||||||||||
Total | $ | 935,823 | $ | 872,536 | $ | — | $ | 1,808,359 | |||||||
Segment net income (loss) | $ | 82,436 | $ | 15,717 | $ | (777 | ) | $ | 97,376 | ||||||
Natural Gas Operations | Infrastructure Services | Other | Total | ||||||||||||
Twelve Months Ended September 30, 2018 | |||||||||||||||
Revenues from external customers | $ | 1,354,000 | $ | 1,358,418 | $ | — | $ | 2,712,418 | |||||||
Intersegment revenues | — | 121,374 | — | 121,374 | |||||||||||
Total | $ | 1,354,000 | $ | 1,479,792 | $ | — | $ | 2,833,792 | |||||||
Segment net income (loss) | $ | 153,683 | $ | 57,677 | $ | (1,922 | ) | $ | 209,438 | ||||||
Twelve Months Ended September 30, 2017 | |||||||||||||||
Revenues from external customers | $ | 1,276,308 | $ | 1,078,195 | $ | — | $ | 2,354,503 | |||||||
Intersegment revenues | — | 95,381 | — | 95,381 | |||||||||||
Total | $ | 1,276,308 | $ | 1,173,576 | $ | — | $ | 2,449,884 | |||||||
Segment net income (loss) | $ | 134,323 | $ | 29,010 | $ | (777 | ) | $ | 162,556 |
24 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
September 30, 2018 | December 31, 2017 | ||||
Contract notional amounts | 14,157 | 10,929 |
(Thousands of dollars) | |||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
Location of Gain or (Loss) Recognized in Income on Derivative | September 30, | September 30, | September 30, | ||||||||||||||||||||||||
Instrument | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
Swaps | Net cost of gas sold | $ | 511 | $ | (546 | ) | $ | (3,815 | ) | $ | (6,851 | ) | $ | (8,536 | ) | $ | (4,098 | ) | |||||||||
Swaps | Net cost of gas sold | (511 | ) | * | 546 | * | 3,815 | * | 6,851 | * | 8,536 | * | 4,098 | * | |||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
* | Represents the impact of regulatory deferral accounting treatment under U.S. GAAP for rate-regulated entities. |
25 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
September 30, 2018 | Asset | Liability | ||||||||||||
Instrument | Balance Sheet Location | Derivatives | Derivatives | Net Total | ||||||||||
Swaps | Deferred charges and other assets | $ | 24 | $ | — | $ | 24 | |||||||
Swaps | Other current liabilities | 1,038 | (5,735 | ) | (4,697 | ) | ||||||||
Swaps | Other deferred credits and other long-term liabilities | 57 | (188 | ) | (131 | ) | ||||||||
Total | $ | 1,119 | $ | (5,923 | ) | $ | (4,804 | ) | ||||||
December 31, 2017 | Asset | Liability | ||||||||||||
Instrument | Balance Sheet Location | Derivatives | Derivatives | Net Total | ||||||||||
Swaps | Other current liabilities | $ | 11 | $ | (4,468 | ) | $ | (4,457 | ) | |||||
Swaps | Other deferred credits and other long-term liabilities | 19 | (1,342 | ) | (1,323 | ) | ||||||||
Total | $ | 30 | $ | (5,810 | ) | $ | (5,780 | ) |
Three Months Ended | Nine Months Ended | Twelve Months Ended | |||||||||
(Thousands of dollars) | September 30, 2018 | September 30, 2018 | September 30, 2018 | ||||||||
Paid to counterparties | $ | 866 | $ | 4,797 | $ | 6,343 | |||||
Received from counterparties | $ | — | $ | 6 | $ | 6 |
September 30, 2018 | ||||||
Instrument | Balance Sheet Location | Net Total | ||||
Swaps | Other deferred credits and other long-term liabilities | $ | (24 | ) | ||
Swaps | Prepaids and other current assets | 4,697 | ||||
Swaps | Deferred charges and other assets | 131 | ||||
December 31, 2017 | ||||||
Instrument | Balance Sheet Location | Net Total | ||||
Swaps | Prepaids and other current assets | $ | 4,457 | |||
Swaps | Deferred charges and other assets | 1,323 |
26 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
(Thousands of dollars) | September 30, 2018 | December 31, 2017 | |||||
Assets at fair value: | |||||||
Deferred charges and other assets - Swaps | $ | 24 | $ | — | |||
Liabilities at fair value: | |||||||
Other current liabilities - Swaps | (4,697 | ) | (4,457 | ) | |||
Other deferred credits and other long-term liabilities - Swaps | (131 | ) | (1,323 | ) | |||
Net Assets (Liabilities) | $ | (4,804 | ) | $ | (5,780 | ) |
27 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
28 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
September 30, 2018 | December 31, 2017 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
(Thousands of dollars) | ||||||||||||||||
Southwest Gas Corporation: | ||||||||||||||||
Debentures: | ||||||||||||||||
Notes, 4.45%, due 2020 | $ | 125,000 | $ | 126,808 | $ | 125,000 | $ | 129,273 | ||||||||
Notes, 6.1%, due 2041 | 125,000 | 147,874 | 125,000 | 158,304 | ||||||||||||
Notes, 3.875%, due 2022 | 250,000 | 251,003 | 250,000 | 256,163 | ||||||||||||
Notes, 4.875%, due 2043 | 250,000 | 262,023 | 250,000 | 283,243 | ||||||||||||
Notes, 3.8%, due 2046 | 300,000 | 273,843 | 300,000 | 302,970 | ||||||||||||
Notes, 3.7%, due 2028 | 300,000 | 293,304 | — | — | ||||||||||||
8% Series, due 2026 | 75,000 | 93,836 | 75,000 | 96,063 | ||||||||||||
Medium-term notes, 7.78% series, due 2022 | 25,000 | 27,686 | 25,000 | 28,714 | ||||||||||||
Medium-term notes, 7.92% series, due 2027 | 25,000 | 29,693 | 25,000 | 31,542 | ||||||||||||
Medium-term notes, 6.76% series, due 2027 | 7,500 | 8,596 | 7,500 | 8,882 | ||||||||||||
Unamortized discount and debt issuance costs | (12,037 | ) | (9,350 | ) | ||||||||||||
1,470,463 | 1,173,150 | |||||||||||||||
Revolving credit facility and commercial paper | 150,000 | 150,000 | 150,000 | 150,000 | ||||||||||||
Industrial development revenue bonds: | ||||||||||||||||
Variable-rate bonds: | ||||||||||||||||
Tax-exempt Series A, due 2028 | 50,000 | 50,000 | 50,000 | 50,000 | ||||||||||||
2003 Series A, due 2038 | 50,000 | 50,000 | 50,000 | 50,000 | ||||||||||||
2008 Series A, due 2038 | 50,000 | 50,000 | 50,000 | 50,000 | ||||||||||||
2009 Series A, due 2039 | 50,000 | 50,000 | 50,000 | 50,000 | ||||||||||||
Unamortized discount and debt issuance costs | (1,842 | ) | (2,119 | ) | ||||||||||||
198,158 | 197,881 | |||||||||||||||
Less: current maturities | — | — | ||||||||||||||
Long-term debt, less current maturities - Southwest Gas Corporation | $ | 1,818,621 | $ | 1,521,031 | ||||||||||||
Centuri: | ||||||||||||||||
Centuri term loan facility | $ | 189,002 | $ | 195,247 | $ | 199,578 | $ | 207,588 | ||||||||
Unamortized debt issuance costs | (941 | ) | (1,111 | ) | ||||||||||||
188,061 | 198,467 | |||||||||||||||
Centuri secured revolving credit facility | 78,217 | 78,277 | 56,472 | 56,525 | ||||||||||||
Centuri other debt obligations | 72,171 | 71,966 | 47,952 | 48,183 | ||||||||||||
Less: current maturities | (33,429 | ) | (25,346 | ) | ||||||||||||
Long-term debt, less current maturities - Centuri | $ | 305,020 | $ | 277,545 | ||||||||||||
Consolidated Southwest Gas Holdings, Inc.: | ||||||||||||||||
Southwest Gas Corporation long-term debt | $ | 1,818,621 | $ | 1,521,031 | ||||||||||||
Centuri long-term debt | 338,449 | 302,891 | ||||||||||||||
Less: current maturities | (33,429 | ) | (25,346 | ) | ||||||||||||
Long-term debt, less current maturities - Southwest Gas Holdings, Inc. | $ | 2,123,641 | $ | 1,798,576 |
29 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
30 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Southwest Gas Holdings, Inc. Equity | |||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non-controlling Interest | |||||||||||||||||||||||
(In thousands, except per share amounts) | Shares | Amount | Total | ||||||||||||||||||||||||
December 31, 2017 | 48,090 | $ | 49,720 | $ | 955,332 | $ | (47,682 | ) | $ | 857,398 | $ | (2,365 | ) | $ | 1,812,403 | ||||||||||||
Common stock issuances | 1,333 | 1,333 | 93,218 | — | — | — | 94,551 | ||||||||||||||||||||
Net income (loss) | — | — | — | — | 112,973 | (797 | ) | 112,176 | |||||||||||||||||||
Foreign currency exchange translation adjustment | — | — | — | (1,002 | ) | — | — | (1,002 | ) | ||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||
Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax | — | — | — | 2,687 | — | — | 2,687 | ||||||||||||||||||||
Amounts reclassified to net income, net of tax (FSIRS) | — | — | — | 1,907 | — | — | 1,907 | ||||||||||||||||||||
Reclassification of excess deferred taxes (a) | — | — | — | (9,300 | ) | 9,300 | — | — | |||||||||||||||||||
Change in ownership of noncontrolling interest (b) | — | — | (2,710 | ) | — | — | 2,710 | — | |||||||||||||||||||
Dividends declared | |||||||||||||||||||||||||||
Common: $1.56 per share | — | — | — | — | (76,941 | ) | — | (76,941 | ) | ||||||||||||||||||
September 30, 2018 | 49,423 | $ | 51,053 | $ | 1,045,840 | $ | (53,390 | ) | $ | 902,730 | $ | (452 | ) | $ | 1,945,781 |
(a) | Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, which permitted such release. |
(b) | Centuri, through its subsidiary, NPL, has historically held a 65% ownership interest in IntelliChoice Energy, LLC (“ICE”). A residual interest of 35% has been held by a third party. During the second quarter of 2018, an additional $1 million of capital was contributed by NPL, thereby increasing NPL’s ownership interest to 95%. The carrying amount of the noncontrolling interest has been adjusted with a corresponding charge to Additional paid-in capital on the Company’s Condensed Consolidated Balance Sheet. |
Southwest Gas Corporation Equity | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | ||||||||||||||||||||
(In thousands) | Shares | Amount | Total | ||||||||||||||||||||
December 31, 2017 | 47,482 | $ | 49,112 | $ | 948,767 | $ | (47,073 | ) | $ | 659,193 | $ | 1,609,999 | |||||||||||
Net income | — | — | — | — | 79,301 | 79,301 | |||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax | — | — | — | 2,687 | — | 2,687 | |||||||||||||||||
Amounts reclassified to net income, net of tax (FSIRS) | — | — | — | 1,907 | — | 1,907 | |||||||||||||||||
Reclassification of excess deferred taxes (a) | — | — | — | (9,300 | ) | 9,300 | — | ||||||||||||||||
Stock-based compensation (b) | — | — | 1,899 | — | (510 | ) | 1,389 | ||||||||||||||||
Dividends declared to Southwest Gas Holdings, Inc. | — | — | — | — | (66,000 | ) | (66,000 | ) | |||||||||||||||
Contributions from Southwest Gas Holdings, Inc. | — | — | 90,644 | — | — | 90,644 | |||||||||||||||||
September 30, 2018 | 47,482 | $ | 49,112 | $ | 1,041,310 | $ | (51,779 | ) | $ | 681,284 | $ | 1,719,927 |
(a) | Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, which permitted such release. |
(b) | Stock-based compensation is based on stock awards of Southwest Gas Corporation to be issued in shares of Southwest Gas Holdings, Inc. |
31 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | |||||||||||||||||||||||
Before- Tax Amount | Tax (Expense) or Benefit (1) | Net-of- Tax Amount | Before- Tax Amount | Tax (Expense) or Benefit (1) | Net-of- Tax Amount | |||||||||||||||||||
Defined benefit pension plans: | ||||||||||||||||||||||||
Amortization of prior service cost | $ | 334 | $ | (80 | ) | $ | 254 | $ | 333 | $ | (126 | ) | $ | 207 | ||||||||||
Amortization of net actuarial (gain)/loss | 8,404 | (2,017 | ) | 6,387 | 6,362 | (2,418 | ) | 3,944 | ||||||||||||||||
Regulatory adjustment | (7,560 | ) | 1,814 | (5,746 | ) | (5,734 | ) | 2,179 | (3,555 | ) | ||||||||||||||
Pension plans other comprehensive income | 1,178 | (283 | ) | 895 | 961 | (365 | ) | 596 | ||||||||||||||||
FSIRS (designated hedging activities): | ||||||||||||||||||||||||
Amounts reclassified into net income | 836 | (200 | ) | 636 | 835 | (317 | ) | 518 | ||||||||||||||||
FSIRS other comprehensive income | 836 | (200 | ) | 636 | 835 | (317 | ) | 518 | ||||||||||||||||
Total other comprehensive income - Southwest Gas Corporation | 2,014 | (483 | ) | 1,531 | 1,796 | (682 | ) | 1,114 | ||||||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||||||||||
Translation adjustments | 599 | — | 599 | 1,012 | — | 1,012 | ||||||||||||||||||
Foreign currency other comprehensive income (loss) | 599 | — | 599 | 1,012 | — | 1,012 | ||||||||||||||||||
Total other comprehensive income - Southwest Gas Holdings, Inc. | $ | 2,613 | $ | (483 | ) | $ | 2,130 | $ | 2,808 | $ | (682 | ) | $ | 2,126 | ||||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | |||||||||||||||||||||||
Before- Tax Amount | Tax (Expense) or Benefit (1) | Net-of- Tax Amount | Before- Tax Amount | Tax (Expense) or Benefit (1) | Net-of- Tax Amount | |||||||||||||||||||
Defined benefit pension plans: | ||||||||||||||||||||||||
Amortization of prior service cost | $ | 1,002 | $ | (240 | ) | $ | 762 | $ | 1,001 | $ | (380 | ) | $ | 621 | ||||||||||
Amortization of net actuarial (gain)/loss | 25,212 | (6,051 | ) | 19,161 | 19,084 | (7,252 | ) | 11,832 | ||||||||||||||||
Regulatory adjustment | (22,679 | ) | 5,443 | (17,236 | ) | (17,204 | ) | 6,537 | (10,667 | ) | ||||||||||||||
Pension plans other comprehensive income | 3,535 | (848 | ) | 2,687 | 2,881 | (1,095 | ) | 1,786 | ||||||||||||||||
FSIRS (designated hedging activities): | ||||||||||||||||||||||||
Amounts reclassified into net income | 2,509 | (602 | ) | 1,907 | 2,507 | (953 | ) | 1,554 | ||||||||||||||||
FSIRS other comprehensive income | 2,509 | (602 | ) | 1,907 | 2,507 | (953 | ) | 1,554 | ||||||||||||||||
Total other comprehensive income - Southwest Gas Corporation | 6,044 | (1,450 | ) | 4,594 | 5,388 | (2,048 | ) | 3,340 | ||||||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||||||||||
Translation adjustments | (1,002 | ) | — | (1,002 | ) | 1,861 | — | 1,861 | ||||||||||||||||
Foreign currency other comprehensive income (loss) | (1,002 | ) | — | (1,002 | ) | 1,861 | — | 1,861 | ||||||||||||||||
Total other comprehensive income - Southwest Gas Holdings, Inc. | $ | 5,042 | $ | (1,450 | ) | $ | 3,592 | $ | 7,249 | $ | (2,048 | ) | $ | 5,201 | ||||||||||
32 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Twelve Months Ended | Twelve Months Ended | |||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | |||||||||||||||||||||||
Before- Tax Amount | Tax (Expense) or Benefit (1) | Net-of- Tax Amount | Before- Tax Amount | Tax (Expense) or Benefit (1) | Net-of- Tax Amount | |||||||||||||||||||
Defined benefit pension plans: | ||||||||||||||||||||||||
Net actuarial gain/(loss) | $ | (43,027 | ) | $ | 10,326 | $ | (32,701 | ) | $ | (22,770 | ) | $ | 8,652 | $ | (14,118 | ) | ||||||||
Amortization of prior service cost | 1,336 | (367 | ) | 969 | 1,335 | (507 | ) | 828 | ||||||||||||||||
Amortization of net actuarial (gain)/loss | 31,573 | (8,468 | ) | 23,105 | 25,850 | (9,823 | ) | 16,027 | ||||||||||||||||
Regulatory adjustment | 6,865 | (844 | ) | 6,021 | (4,420 | ) | 1,679 | (2,741 | ) | |||||||||||||||
Pension plans other comprehensive income (loss) | (3,253 | ) | 647 | (2,606 | ) | (5 | ) | 1 | (4 | ) | ||||||||||||||
FSIRS (designated hedging activities): | ||||||||||||||||||||||||
Amounts reclassified into net income | 3,346 | (920 | ) | 2,426 | 3,344 | (1,271 | ) | 2,073 | ||||||||||||||||
FSIRS other comprehensive income | 3,346 | (920 | ) | 2,426 | 3,344 | (1,271 | ) | 2,073 | ||||||||||||||||
Total other comprehensive income (loss) - Southwest Gas Corporation | 93 | (273 | ) | (180 | ) | 3,339 | (1,270 | ) | 2,069 | |||||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||||||||||
Translation adjustments | (1,092 | ) | — | (1,092 | ) | 1,408 | — | 1,408 | ||||||||||||||||
Foreign currency other comprehensive income (loss) | (1,092 | ) | — | (1,092 | ) | 1,408 | — | 1,408 | ||||||||||||||||
Total other comprehensive income (loss) - Southwest Gas Holdings, Inc. | $ | (999 | ) | $ | (273 | ) | $ | (1,272 | ) | $ | 4,747 | $ | (1,270 | ) | $ | 3,477 |
(1) | Tax amounts are calculated using a 24% rate following the December 22, 2017 enactment date of the TCJA. For periods prior to the enactment date (and included in specific line items of the tables for the twelve months ended September 30, 2018 and 2017), tax amounts were calculated using a 38% rate. The tax effect of before-tax amounts remaining in the balance of Accumulated other comprehensive income (loss) as of September 30, 2018 is effectively computed using a 24% tax rate overall after the reclassification of previously stranded excess deferred taxes existing as a result of the TCJA (see table for Accumulated other comprehensive income (loss), including the balance, below). With regard to foreign currency translation adjustments, the Company has elected to indefinitely reinvest the earnings of Centuri’s Canadian subsidiaries in Canada, thus preventing deferred taxes on such earnings. As a result of this assertion, the Company is not recognizing any tax effect or presenting a tax expense or benefit for the currency translation adjustment amount reported in Other comprehensive income (loss), as repatriation of earnings is not anticipated. |
33 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Defined Benefit Plans | FSIRS | Foreign Currency Items | ||||||||||||||||||||||||||||||||||||||||||
Before-Tax | Tax (Expense) Benefit (5) | After-Tax | Before-Tax | Tax (Expense) Benefit (5) | After-Tax | Before-Tax | Tax (Expense) Benefit | After-Tax | Other | AOCI | ||||||||||||||||||||||||||||||||||
Beginning Balance AOCI December 31, 2017 | $ | (61,520 | ) | $ | 22,293 | $ | (39,227 | ) | $ | (12,655 | ) | $ | 4,809 | $ | (7,846 | ) | $ | (609 | ) | $ | — | $ | (609 | ) | $ | — | $ | (47,682 | ) | |||||||||||||||
Translation adjustments | — | — | — | — | — | — | (1,002 | ) | — | (1,002 | ) | — | (1,002 | ) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | — | — | — | — | — | — | (1,002 | ) | — | (1,002 | ) | — | (1,002 | ) | ||||||||||||||||||||||||||||||
FSIRS amounts reclassified from AOCI (1) | — | — | — | 2,509 | (602 | ) | 1,907 | — | — | — | — | 1,907 | ||||||||||||||||||||||||||||||||
Amortization of prior service cost (2) | 1,002 | (240 | ) | 762 | — | — | — | — | — | — | — | 762 | ||||||||||||||||||||||||||||||||
Amortization of net actuarial loss (2) | 25,212 | (6,051 | ) | 19,161 | — | — | — | — | — | — | — | 19,161 | ||||||||||||||||||||||||||||||||
Regulatory adjustment (3) | (22,679 | ) | 5,443 | (17,236 | ) | — | — | — | — | — | — | — | (17,236 | ) | ||||||||||||||||||||||||||||||
Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc. | 3,535 | (848 | ) | 2,687 | 2,509 | (602 | ) | 1,907 | (1,002 | ) | — | (1,002 | ) | — | 3,592 | |||||||||||||||||||||||||||||
Reclassification of excess deferred taxes (4) | — | — | — | — | — | — | — | — | — | (9,300 | ) | (9,300 | ) | |||||||||||||||||||||||||||||||
Ending Balance AOCI September 30, 2018 | $ | (57,985 | ) | $ | 21,445 | $ | (36,540 | ) | $ | (10,146 | ) | $ | 4,207 | $ | (5,939 | ) | $ | (1,611 | ) | $ | — | $ | (1,611 | ) | $ | (9,300 | ) | $ | (53,390 | ) |
(1) | The FSIRS reclassification amounts are included in Net interest deductions on the Company’s Condensed Consolidated Statements of Income. |
(2) | These AOCI components are included in the computation of net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost for additional details). |
(3) | The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in Deferred charges and other assets on the Company’s Condensed Consolidated Balance Sheets). |
(4) | Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, which permitted such release. |
(5) | Tax amounts related to the before-tax balance at September 30, 2018 are calculated using a 24% rate after the release of previously stranded excess deferred taxes existing as a result of the TCJA; amounts prior to the December 22, 2017 enactment of the TCJA were calculated using a 38% rate. |
34 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Defined Benefit Plans | FSIRS | |||||||||||||||||||||||||||||||
Before-Tax | Tax (Expense) Benefit (10) | After-Tax | Before-Tax | Tax (Expense) Benefit (10) | After-Tax | Other | AOCI | |||||||||||||||||||||||||
Beginning Balance AOCI December 31, 2017 | $ | (61,520 | ) | $ | 22,293 | $ | (39,227 | ) | $ | (12,655 | ) | $ | 4,809 | $ | (7,846 | ) | $ | — | $ | (47,073 | ) | |||||||||||
FSIRS amounts reclassified from AOCI (6) | — | — | — | 2,509 | (602 | ) | 1,907 | — | 1,907 | |||||||||||||||||||||||
Amortization of prior service cost (7) | 1,002 | (240 | ) | 762 | — | — | — | — | 762 | |||||||||||||||||||||||
Amortization of net actuarial loss (7) | 25,212 | (6,051 | ) | 19,161 | — | — | — | — | 19,161 | |||||||||||||||||||||||
Regulatory adjustment (8) | (22,679 | ) | 5,443 | (17,236 | ) | — | — | — | — | (17,236 | ) | |||||||||||||||||||||
Net current period other comprehensive income attributable to Southwest Gas Corporation | 3,535 | (848 | ) | 2,687 | 2,509 | (602 | ) | 1,907 | — | 4,594 | ||||||||||||||||||||||
Reclassification of excess deferred taxes (9) | — | — | — | — | — | — | (9,300 | ) | (9,300 | ) | ||||||||||||||||||||||
Ending Balance AOCI September 30, 2018 | $ | (57,985 | ) | $ | 21,445 | $ | (36,540 | ) | $ | (10,146 | ) | $ | 4,207 | $ | (5,939 | ) | $ | (9,300 | ) | $ | (51,779 | ) |
(6) | The FSIRS reclassification amounts are included in Net interest deductions on Southwest’s Condensed Consolidated Statements of Income. |
(7) | These AOCI components are included in the computation of net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost for additional details). |
(8) | The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in Deferred charges and other assets on Southwest’s Condensed Consolidated Balance Sheets). |
(9) | Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, which permitted such release. |
(10) | Tax amounts related to the before-tax balance at September 30, 2018 are calculated using a 24% rate after the release of previously stranded excess deferred taxes existing as a result of the TCJA; amounts prior to the December 22, 2017 enactment of the TCJA were calculated using a 38% rate. |
September 30, 2018 | December 31, 2017 | |||||||
Net actuarial (loss) gain | $ | (423,343 | ) | $ | (448,555 | ) | ||
Prior service cost | (3,366 | ) | (4,368 | ) | ||||
Less: amount recognized in regulatory assets | 368,724 | 391,403 | ||||||
Recognized in AOCI | $ | (57,985 | ) | $ | (61,520 | ) |
35 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
(Thousands of dollars) | Twelve Months Ended September 30, 2017 | ||
Construction revenues | $ | 301,040 | |
Operating expenses: | |||
Construction expenses | 266,504 | ||
Depreciation and amortization | 12,318 | ||
Operating income | 22,218 | ||
Other income (deductions) | 1,149 | ||
Net interest deductions | 1,718 | ||
Income before income taxes | 21,649 | ||
Income tax expense | 7,842 | ||
Net income | 13,807 | ||
Net income attributable to noncontrolling interests | 514 | ||
Discontinued operations - construction services - income | $ | 13,293 | |
36 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
37 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Period Ended September 30, | ||||||||||||||||||||||||
Three Months | Nine Months | Twelve Months | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||
Contribution to net income | ||||||||||||||||||||||||
Natural gas operations | $ | (13,670 | ) | $ | (4,024 | ) | $ | 79,301 | $ | 82,436 | $ | 153,683 | $ | 134,323 | ||||||||||
Infrastructure services | 26,798 | 14,335 | 35,034 | 15,717 | 57,677 | 29,010 | ||||||||||||||||||
Corporate and administrative | (797 | ) | (107 | ) | (1,362 | ) | (777 | ) | (1,922 | ) | (777 | ) | ||||||||||||
Net income | $ | 12,331 | $ | 10,204 | $ | 112,973 | $ | 97,376 | $ | 209,438 | $ | 162,556 | ||||||||||||
Average number of common shares | 49,493 | 47,628 | 48,916 | 47,577 | 48,728 | 47,553 | ||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||
Consolidated | $ | 0.25 | $ | 0.21 | $ | 2.31 | $ | 2.05 | $ | 4.30 | $ | 3.42 | ||||||||||||
Natural Gas Operations | ||||||||||||||||||||||||
Reconciliation of Revenue to Operating Margin (Non-GAAP measure) | ||||||||||||||||||||||||
Gas operating revenues | $ | 217,523 | $ | 213,059 | $ | 987,515 | $ | 935,823 | $ | 1,354,000 | $ | 1,276,308 | ||||||||||||
Less: Net cost of gas sold | 49,903 | 45,539 | 319,101 | 261,839 | 412,307 | 334,888 | ||||||||||||||||||
Operating margin | $ | 167,620 | $ | 167,520 | $ | 668,414 | $ | 673,984 | $ | 941,693 | $ | 941,420 |
• | 33,000 net new customers (1.6% growth rate) |
• | Received $49 million refund from El Paso Natural Gas rate settlement |
• | Operating margin reflects regulatory impacts of tax reform |
• | Record quarterly earnings |
• | Revenues increased $71 million compared to the prior-year quarter |
• | Construction expenses increased $53 million compared to the prior-year quarter |
38 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Gas operating revenues | $ | 217,523 | $ | 213,059 | ||||
Net cost of gas sold | 49,903 | 45,539 | ||||||
Operating margin | 167,620 | 167,520 | ||||||
Operations and maintenance expense | 104,657 | 97,359 | ||||||
Depreciation and amortization | 47,924 | 46,194 | ||||||
Taxes other than income taxes | 15,036 | 14,046 | ||||||
Operating income | 3 | 9,921 | ||||||
Other income (deductions) | 836 | (1,775 | ) | |||||
Net interest deductions | 20,399 | 17,421 | ||||||
Income (loss) before income taxes | (19,560 | ) | (9,275 | ) | ||||
Income tax expense (benefit) | (5,890 | ) | (5,251 | ) | ||||
Contribution to consolidated net income (loss) | $ | (13,670 | ) | $ | (4,024 | ) |
39 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
40 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Nine Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Gas operating revenues | $ | 987,515 | $ | 935,823 | ||||
Net cost of gas sold | 319,101 | 261,839 | ||||||
Operating margin | 668,414 | 673,984 | ||||||
Operations and maintenance expense | 312,055 | 298,827 | ||||||
Depreciation and amortization | 145,549 | 153,643 | ||||||
Taxes other than income taxes | 44,959 | 43,325 | ||||||
Operating income | 165,851 | 178,189 | ||||||
Other income (deductions) | (5,861 | ) | (5,824 | ) | ||||
Net interest deductions | 59,803 | 51,622 | ||||||
Income before income taxes | 100,187 | 120,743 | ||||||
Income tax expense | 20,886 | 38,307 | ||||||
Contribution to consolidated net income | $ | 79,301 | $ | 82,436 |
41 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
42 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Twelve Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Gas operating revenues | $ | 1,354,000 | $ | 1,276,308 | ||||
Net cost of gas sold | 412,307 | 334,888 | ||||||
Operating margin | 941,693 | 941,420 | ||||||
Operations and maintenance expense | 404,549 | 393,632 | ||||||
Depreciation and amortization | 193,828 | 212,693 | ||||||
Taxes other than income taxes | 59,580 | 56,221 | ||||||
Operating income | 283,736 | 278,874 | ||||||
Other income (deductions) | (6,425 | ) | (9,200 | ) | ||||
Net interest deductions | 77,914 | 69,464 | ||||||
Income before income taxes | 199,397 | 200,210 | ||||||
Income tax expense | 45,714 | 65,887 | ||||||
Contribution to consolidated net income | $ | 153,683 | $ | 134,323 |
43 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
44 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Three Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Construction revenues | $ | 450,623 | $ | 380,094 | ||||
Operating expenses: | ||||||||
Construction expenses | 395,862 | 342,629 | ||||||
Depreciation and amortization | 14,232 | 12,335 | ||||||
Operating income | 40,529 | 25,130 | ||||||
Other income (deductions) | 38 | (210 | ) | |||||
Net interest deductions | 3,945 | 1,962 | ||||||
Income before income taxes | 36,622 | 22,958 | ||||||
Income tax expense | 9,824 | 8,407 | ||||||
Net income | 26,798 | 14,551 | ||||||
Net income attributable to noncontrolling interest | — | 216 | ||||||
Contribution to consolidated net income attributable to Centuri | $ | 26,798 | $ | 14,335 |
45 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Nine Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Construction revenues | $ | 1,105,844 | $ | 872,536 | ||||
Operating expenses: | ||||||||
Construction expenses | 1,007,485 | 806,586 | ||||||
Depreciation and amortization | 40,392 | 35,446 | ||||||
Operating income | 57,967 | 30,504 | ||||||
Other income (deductions) | (331 | ) | 38 | |||||
Net interest deductions | 10,448 | 5,095 | ||||||
Income before income taxes | 47,188 | 25,447 | ||||||
Income tax expense | 12,951 | 9,560 | ||||||
Net income | 34,237 | 15,887 | ||||||
Net income (loss) attributable to noncontrolling interest | (797 | ) | 170 | |||||
Contribution to consolidated net income attributable to Centuri | $ | 35,034 | $ | 15,717 |
46 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Twelve Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Construction revenues | $ | 1,479,792 | $ | 1,173,576 | ||||
Operating expenses: | ||||||||
Construction expenses | 1,349,862 | 1,073,090 | ||||||
Depreciation and amortization | 53,975 | 47,764 | ||||||
Operating income | 75,955 | 52,722 | ||||||
Other income (deductions) | (24 | ) | 1,187 | |||||
Net interest deductions | 13,339 | 6,813 | ||||||
Income before income taxes | 62,592 | 47,096 | ||||||
Income tax expense | 5,781 | 17,402 | ||||||
Net income | 56,811 | 29,694 | ||||||
Net income (loss) attributable to noncontrolling interest | (866 | ) | 684 | |||||
Contribution to consolidated net income attributable to Centuri | $ | 57,677 | $ | 29,010 |
47 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
48 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
49 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
50 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
51 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
September 30, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||
Arizona | $ | (70,863 | ) | $ | 5,069 | $ | 1,324 | |||||
Northern Nevada | (1,287 | ) | 8,189 | 4,906 | ||||||||
Southern Nevada | (16,125 | ) | (6,841 | ) | (13,711 | ) | ||||||
California | (4,748 | ) | 1,323 | (1,260 | ) | |||||||
$ | (93,023 | ) | $ | 7,740 | $ | (8,741 | ) |
52 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
53 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
54 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
55 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
56 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
57 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Exhibit 31.01 | - | |
Exhibit 31.02 | - | |
Exhibit 32.01 | - | |
Exhibit 32.02 | - | |
Exhibit 101.INS | - | XBRL Instance Document |
Exhibit 101SCH | - | XBRL Schema Document |
Exhibit 101.CAL | - | XBRL Calculation Linkbase Document |
Exhibit 101.DEF | - | XBRL Definition Linkbase Document |
Exhibit 101.LAB | - | XBRL Label Linkbase Document |
Exhibit 101.PRE | - | XBRL Presentation Linkbase Document |
58 |
SOUTHWEST GAS HOLDINGS, INC. | Form 10-Q | |
SOUTHWEST GAS CORPORATION | September 30, 2018 |
Southwest Gas Holdings, Inc. |
(Registrant) |
/s/ LORI L. COLVIN |
Lori L. Colvin |
Vice President/Controller and Chief Accounting Officer |
Southwest Gas Corporation |
(Registrant) |
/s/ LORI L. COLVIN |
Lori L. Colvin |
Vice President/Controller and Chief Accounting Officer |
59 |
1. | I have reviewed this quarterly report on Form 10-Q of Southwest Gas Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 7, 2018 |
/s/ JOHN P. HESTER | |
John P. Hester | |
President and Chief Executive Officer | |
Southwest Gas Holdings, Inc. |
1. | I have reviewed this quarterly report on Form 10-Q of Southwest Gas Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 7, 2018 |
/s/ GREGORY J. PETERSON | |
Gregory J. Peterson | |
Senior Vice President/Chief Financial Officer | |
Southwest Gas Holdings, Inc. |
1. | I have reviewed this quarterly report on Form 10-Q of Southwest Gas Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 7, 2018 |
/s/ JOHN P. HESTER | |
John P. Hester | |
President and Chief Executive Officer | |
Southwest Gas Corporation |
1. | I have reviewed this quarterly report on Form 10-Q of Southwest Gas Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a.) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b.) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c.) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d.) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 7, 2018 |
/s/ GREGORY J. PETERSON | |
Gregory J. Peterson | |
Senior Vice President/Chief Financial Officer | |
Southwest Gas Corporation |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
/s/ John P. Hester | |
John P. Hester President and Chief Executive Officer |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
/s/ Gregory J. Peterson | |
Gregory J. Peterson Senior Vice President/Chief Financial Officer |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Southwest Gas Corporation at the dates and for the periods indicated. |
/s/ John P. Hester | |
John P. Hester President and Chief Executive Officer |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Southwest Gas Corporation at the dates and for the periods indicated. |
/s/ Gregory J. Peterson | |
Gregory J. Peterson Senior Vice President/Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par (in USD per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock, issued (in shares) | 49,422,938 | 48,090,470 |
Common stock, outstanding (in shares) | 49,422,938 | 48,090,470 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Operating revenues: | ||||||
Gas operating revenues | $ 217,523 | $ 213,059 | $ 987,515 | $ 935,823 | $ 1,354,000 | $ 1,276,308 |
Construction revenues | 450,623 | 380,094 | 1,105,844 | 872,536 | 1,479,792 | 1,173,576 |
Total operating revenues | 668,146 | 593,153 | 2,093,359 | 1,808,359 | 2,833,792 | 2,449,884 |
Operating expenses: | ||||||
Net cost of gas sold | 49,903 | 45,539 | 319,101 | 261,839 | 412,307 | 334,888 |
Operations and maintenance | 105,508 | 97,422 | 313,294 | 299,920 | 406,137 | 394,725 |
Depreciation and amortization | 62,156 | 58,529 | 185,941 | 189,089 | 247,803 | 260,457 |
Taxes other than income taxes | 15,036 | 14,046 | 44,959 | 43,325 | 59,580 | 56,221 |
Construction expenses | 395,862 | 342,629 | 1,007,485 | 806,586 | 1,349,862 | 1,073,090 |
Total operating expenses | 628,465 | 558,165 | 1,870,780 | 1,600,759 | 2,475,689 | 2,119,381 |
Operating income | 39,681 | 34,988 | 222,579 | 207,600 | 358,103 | 330,503 |
Other income and (expenses): | ||||||
Net interest deductions | (24,548) | (19,494) | (70,831) | (56,863) | (92,032) | (76,423) |
Other income (deductions) | 889 | (1,980) | (6,151) | (5,780) | (6,401) | (8,007) |
Total other income and (expenses) | (23,659) | (21,474) | (76,982) | (62,643) | (98,433) | (84,430) |
Income before income taxes | 16,022 | 13,514 | 145,597 | 144,957 | 259,670 | 246,073 |
Income tax expense | 3,691 | 3,094 | 33,421 | 47,411 | 51,098 | 82,833 |
Net income | 12,331 | 10,420 | 112,176 | 97,546 | 208,572 | 163,240 |
Net income (loss) attributable to noncontrolling interest | 0 | 216 | (797) | 170 | (866) | 684 |
Net income (loss) | $ 12,331 | $ 10,204 | $ 112,973 | $ 97,376 | $ 209,438 | $ 162,556 |
Basic earnings per share (in USD per share) | $ 0.25 | $ 0.21 | $ 2.31 | $ 2.05 | $ 4.30 | $ 3.42 |
Diluted earnings per share (in USD per share) | 0.25 | 0.21 | 2.31 | 2.03 | 4.29 | 3.39 |
Dividends declared per share (in USD per share) | $ 0.52 | $ 0.495 | $ 1.56 | $ 1.485 | $ 2.055 | $ 1.935 |
Average number of common shares (in shares) | 49,493 | 47,628 | 48,916 | 47,577 | 48,728 | 47,553 |
Average shares (assuming dilution) (in shares) | 49,553 | 47,986 | 48,968 | 47,912 | 48,781 | 47,896 |
Southwest Gas Corporation | ||||||
Operating revenues: | ||||||
Gas operating revenues | $ 217,523 | $ 213,059 | $ 987,515 | $ 935,823 | $ 1,354,000 | $ 1,276,308 |
Operating expenses: | ||||||
Net cost of gas sold | 49,903 | 45,539 | 319,101 | 261,839 | 412,307 | 334,888 |
Operations and maintenance | 104,657 | 97,359 | 312,055 | 298,827 | 404,549 | 393,632 |
Depreciation and amortization | 47,924 | 46,194 | 145,549 | 153,643 | 193,828 | 212,693 |
Taxes other than income taxes | 15,036 | 14,046 | 44,959 | 43,325 | 59,580 | 56,221 |
Total operating expenses | 217,520 | 203,138 | 821,664 | 757,634 | 1,070,264 | 997,434 |
Operating income | 3 | 9,921 | 165,851 | 178,189 | 283,736 | 278,874 |
Other income and (expenses): | ||||||
Net interest deductions | (20,399) | (17,421) | (59,803) | (51,622) | (77,914) | (69,464) |
Other income (deductions) | 836 | (1,775) | (5,861) | (5,824) | (6,425) | (9,200) |
Total other income and (expenses) | (19,563) | (19,196) | (65,664) | (57,446) | (84,339) | (78,664) |
Income before income taxes | (19,560) | (9,275) | 100,187 | 120,743 | 199,397 | 200,210 |
Income tax expense | (5,890) | (5,251) | 20,886 | 38,307 | 45,714 | 65,887 |
Net income | 79,301 | 82,436 | 153,683 | 148,130 | ||
Income (loss) from continuing operations | (13,670) | (4,024) | 79,301 | 82,436 | 153,683 | 134,323 |
Discontinued operations-construction services, income before income taxes | 0 | 0 | 0 | 0 | 0 | 21,649 |
Discontinued operations-construction services, Income tax expense | 0 | 0 | 0 | 0 | 0 | 7,842 |
Net income from discontinued operations | 0 | 0 | 0 | 0 | 0 | 13,807 |
Discontinued operations-construction services - Noncontrolling interests | 0 | 0 | 0 | 0 | 0 | 514 |
Discontinued operations - construction services - income | 0 | 0 | 0 | 0 | 0 | 13,293 |
Net income (loss) | $ (13,670) | $ (4,024) | $ 79,301 | $ 82,436 | $ 153,683 | $ 147,616 |
Nature of Operations and Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations and Basis of Presentation | Note 1 – Nature of Operations and Basis of Presentation Nature of Operations. Southwest Gas Holdings, Inc. is a holding company, owning all of the shares of common stock of Southwest Gas Corporation (“Southwest” or the “natural gas operations segment”) and all of the shares of common stock of Centuri Construction Group, Inc. (“Centuri,” the “construction services” or “infrastructure services” segment). Prior to August 2017, only 96.6% of Centuri shares were owned by Southwest Gas Holdings, Inc. During August 2017, Southwest Gas Holdings, Inc. acquired the remaining 3.4% equity interest in Centuri that was held by the previous owners. Southwest Gas Corporation is engaged in the business of purchasing, distributing, and transporting natural gas for customers in portions of Arizona, Nevada, and California. Public utility rates, practices, facilities, and service territories of Southwest are subject to regulatory oversight. The timing and amount of rate relief can materially impact results of operations. Natural gas purchases and the timing of related recoveries can materially impact liquidity. Results for the natural gas operations segment are higher during winter periods due to the seasonality incorporated in its regulatory rate structures. Centuri is a comprehensive infrastructure services enterprise dedicated to meeting the growing demands of North American utilities, energy, and industrial markets. Centuri derives revenue from installation, replacement, repair, and maintenance of energy distribution systems, and developing industrial infrastructure solutions. Centuri operations are generally conducted under the business names of NPL Construction Co. (“NPL”), Canyon Pipeline Construction, Inc. (“Canyon”), NPL Canada Ltd. (“NPL Canada”), W.S. Nicholls Construction, Inc. (“W.S. Nicholls”), and Canyon Special Projects, Inc. (“Special Projects,” formerly Brigadier Pipelines Inc.). Typically, Centuri revenues are lowest during the first quarter of the year due to unfavorable winter weather conditions. Operating revenues typically improve as more favorable weather conditions occur during the summer and fall months. In November 2017, Centuri acquired New England Utility Constructors, Inc. (“Neuco”) for $99 million, less assumed debt, thereby expanding its core services in the Northeast region of the United States. See the Southwest Gas Holdings, Inc. March 31, 2018 Form 10-Q for additional information about this acquisition, including final purchase accounting. Basis of Presentation. The condensed consolidated financial statements for Southwest Gas Holdings, Inc. and subsidiaries (the “Company”) and Southwest included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In connection with a holding company reorganization in January 2017, Centuri ceased to be a subsidiary of Southwest and became a subsidiary of Southwest Gas Holdings, Inc. To give effect to this change, the separate condensed consolidated financial statements related to Southwest Gas Corporation, which are included in this Form 10-Q, depict Centuri-related amounts for periods prior to January 1, 2017 as discontinued operations. No substantive change has occurred with regard to the Company’s business segments on the whole, or in the primary businesses comprising those segments as a result of the foregoing organizational changes, or due to the acquisition of Neuco. Following the organizational changes, Centuri operations continue to be part of continuing operations and included in the consolidated financial statements of the Company. The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments, consisting of normal recurring items and estimates necessary for a fair statement of results for the interim periods, have been made. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the 2017 Annual Report to Shareholders, which is incorporated by reference into the 2017 Form 10-K. Early Adoption of Accounting Standards Update (“ASU”) No. 2018-02. In January 2018, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2018-02 “Income Statement—Reporting Comprehensive Income—Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” Early adoption of the amendments in this update was permitted, including adoption in any interim period. Therefore, the Company and Southwest chose to adopt the update early, as permitted, as of January 1, 2018. The adoption of this update is considered a change in accounting principle. The update addressed issues resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act (the “TCJA”). Stakeholders raised a narrow-scope financial reporting issue that arose as a consequence of the TCJA related to the fact that when deferred tax balances were remeasured in December 2017, those deferred tax balances were to be reduced, but related amounts historically accumulated in Accumulated other comprehensive income (“AOCI”) prior to the enactment of the TCJA, were required to be recognized as income tax expense rather than being relieved from AOCI. The amendments in this update allowed a reclassification from AOCI to retained earnings for those otherwise “stranded” tax effects in AOCI following enactment of the TCJA. Accordingly, approximately $9.3 million of previously stranded tax effects resulting from the TCJA were reclassified to retained earnings from AOCI on the Condensed Consolidated Balance Sheets of Southwest and the Company effective with the early adoption date. Also in association with the adoption, the Company and Southwest elected an accounting policy for releasing income tax effects from AOCI, such that the release of any income tax effects from AOCI will occur as individual items in AOCI are sold or liquidated, to the extent that the related income tax effects are material. See Note 9 – Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income for more information. Prepaids and other current assets. Prepaids and other current assets includes gas pipe materials and operating supplies of $53 million at September 30, 2018 and $33 million at December 31, 2017 (carried at weighted average cost), as well as $73 million at September 30, 2018 and $40 million at December 31, 2017 related to a regulatory asset associated with the Arizona decoupling mechanism (an alternative revenue program). Income Taxes. On December 22, 2017, as indicated above, the TCJA legislation was enacted. Substantially all of the provisions of the TCJA are effective for taxable years beginning after December 31, 2017. The TCJA includes extensive changes which significantly impact the taxation of business entities, including specific provisions related to regulated public utilities. A significant change that impacts the Company and Southwest includes the reduction in the corporate federal income tax rate from 35% to 21%. The tax rate reduction created excess deferred taxes, resulting in the required remeasurement of deferred tax balances, which when remeasured during the fourth quarter of 2017, reduced income tax expense. The regulated operations of Southwest experienced other impacts due to the applicable rate-regulation and the accounting treatment prescribed by U.S. GAAP to reflect the economics of that regulation. The remeasurement for Southwest reduced the net deferred income tax liability and caused the creation of a regulatory liability with appropriate tax gross-up. Both the deferred tax liabilities and excess deferred tax liabilities (included within regulatory liabilities) reduce utility rate base. The TCJA includes provisions that stipulate how these excess deferred taxes are to be passed back to customers, and ultimate facilitation will occur in conjunction with appropriate regulatory commissions. During the nine months ended September 30, 2018, tax expense for the Company and Southwest reflects the lower U.S. federal income tax rate now in effect (as applicable to earnings in 2018). Amounts recorded by the Company and Southwest associated with the measurement and accounting for the effects of the TCJA are provisional reasonable estimates. Management is continuing to evaluate and finalize all provisional items during the measurement period permitted by the SEC and the FASB, and will complete its assessment in the fourth quarter of 2018. In July 2018, the Arizona Corporation Commission (the “ACC”) staff issued a recommended opinion and order, and the ACC issued a decision (the “Decision”) based on the staff recommendation, requiring Southwest to return the difference in excess cost-of-service rates due to tax reform. The Decision required Southwest to provide a bill credit in August 2018 for excess taxes collected from January through July 2018. Also as required by the Decision, Southwest began tracking, in a regulatory account, the difference between amounts expected to be returned and the actual amounts returned by these means. As of September 30, 2018, this difference of $2.4 million is reflected in Other current liabilities on the balance sheets of both Southwest and the Company. Other current liabilities. Other current liabilities for Southwest include $22 million of dividends declared by Southwest Gas Corporation, but not yet paid to Southwest Gas Holdings, Inc. at September 30, 2018. Cash and Cash Equivalents. For purposes of reporting consolidated cash flows, cash and cash equivalents include cash on hand and financial instruments with a purchase-date maturity of three months or less. In general, cash and cash equivalents fall within Level 1 (quoted prices for identical financial instruments) of the three-level fair value hierarchy that ranks the inputs used to measure fair value by their reliability. However, cash and cash equivalents for Southwest and the Company also include money market fund investments totaling approximately $38.8 million and $39.6 million, respectively, which fall within Level 2 (significant other observable inputs) of the fair value hierarchy, due to the asset valuation methods used by money market funds. Goodwill. Goodwill is assessed as of October 1st each year for impairment, or more frequently, if circumstances indicate an impairment to the carrying value of goodwill may have occurred. In consideration of the holding company reorganization, management of the Company considered its reporting units and segments and determined that historic judgments regarding its segments and reporting units continue to apply, and that no change was necessary with regard to the level at which goodwill is assessed for impairment. No impairment was deemed to have occurred in the first nine months of 2018.
Intercompany Transactions. Centuri recognizes revenues generated from contracts with Southwest (see Note 4 – Segment Information). Centuri’s accounts receivable for these services are presented in the table below (thousands of dollars):
The accounts receivable balance, revenues, and associated profits are included in the condensed consolidated financial statements of the Company and were not eliminated during consolidation in accordance with accounting treatment for rate-regulated entities. Other Property and Investments. Other property and investments on the Condensed Consolidated Balance Sheets includes (thousands of dollars):
Other Income (Deductions). The following table provides the composition of significant items included in Other income (deductions) in the Condensed Consolidated Statements of Income (thousands of dollars):
Included in the table above is the change in cash surrender values of company-owned life insurance (“COLI”) policies (including net death benefits recognized). These life insurance policies on members of management and other key employees are used by Southwest to indemnify itself against the loss of talent, expertise, and knowledge, as well as to provide indirect funding for certain nonqualified benefit plans. Current tax regulations provide for tax-free treatment of life insurance (death benefit) proceeds. Therefore, changes in the cash surrender values of COLI policies, as they progress towards the ultimate death benefits, are also recorded without tax consequences. Refer also to Note 2 – Components of Net Periodic Benefit Cost. Recently Issued Accounting Standards Updates. In February 2016, the FASB issued the update “Leases (Topic 842).” Under the update, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:
Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, “Revenue from Contracts with Customers.” Though companies have historically been required to make disclosures regarding leases and associated contractual obligations, leases with terms longer than a year will no longer exist off-balance sheet. Early application of the update is permitted. Management will adopt the update for interim and annual reporting periods commencing January 1, 2019 (the required adoption date). In July 2018, the FASB issued narrow-scope improvements to the standard, which include, among other things, guidance on lease classification reassessment and certain circumstances surrounding remeasurement. Also included was clarification that lessor-controlled options to terminate a lease are considered in the lease term. Management expects to elect various practical expedients and accounting policies regarding the transition method used to implement Topic 842. The Company and Southwest plan to elect the new optional transition method included within the recent FASB update “Leases—Targeted Improvements”, also issued in July 2018, which allows for comparative periods not to be restated. In conjunction with this decision, management currently expects that no retained earnings adjustment will be necessary due to the adoption of Topic 842. At a minimum, management expects the following regarding Topic 842 practical expedients and accounting policy elections:
Management is continuing to implement new software systems (one for Southwest and one for Centuri) to facilitate compliance with Topic 842. Management continues to evaluate the guidance in light of its customary leasing arrangements (and other arrangements in association with the new guidance) to determine the effect the new standard, and amendments, will have on its financial position, results of operations, cash flows, and business processes. In June 2016, the FASB issued the update “Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments.” The update amends guidance on reporting credit losses for financial assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, the update eliminates the “probable” threshold for initial recognition of credit losses in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP; however, the update will require that credit losses be presented as an allowance rather than as a write-down. This update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The update affects loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the amendments in this update is permitted for interim and related annual fiscal periods after December 15, 2018. Management is evaluating what impact, if any, this update might have on its consolidated financial statements and disclosures. In August 2018, the FASB issued the update “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The update generally aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement (that is a service contract) with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update also requires the entity to expense the capitalized implementation costs of such hosting arrangements over the term of the hosting arrangement, including reasonably certain renewal periods. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the amendments in this update is permitted for interim and related annual fiscal periods after December 15, 2018. Management is evaluating the impacts this update might have on its consolidated financial statements and disclosures. In August 2018, the FASB issued the update “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” This update removes disclosures that are no longer considered cost-beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant. The update applies to all employers that sponsor defined benefit pension or other post-retirement plans. The update is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. Management is evaluating the impacts this update might have on its disclosures. In August 2018, the FASB issued the update “Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The update is intended to improve the effectiveness of fair value measurement disclosures and removes the following disclosure requirements: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The update also modifies or clarifies for investments in certain entities that calculate net asset value, a requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse (in cases when the timing has been communicated or announced publicly). It also clarifies communication requirements about measurement uncertainty as of the reporting date. Furthermore, the update added requirements to disclose changes in unrealized gains/losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, as well as the range and weighted average value of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if it would be a more reasonable and rational method to reflect the distribution of inputs to the measurements. Management is evaluating the impacts this update might have on its disclosures. |
Components of Net Periodic Benefit Cost |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | Note 2 – Components of Net Periodic Benefit Cost As of January 1, 2018, the Company and Southwest adopted “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The update requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and be appropriately described. The update also allows only the service cost component (and not the other components of periodic benefit costs) to be eligible for capitalization when applicable, making no exception for specialized industries, including rate-regulated industries. This guidance is required to be applied on a retrospective basis for the presentation of the service cost and other components of net benefit cost, and on a prospective basis for the capitalization of only the service cost component of net benefit cost. Amounts capitalized as part of assets prior to the date of adoption were not adjusted through a cumulative effect adjustment. The guidance allows a practical expedient for the retrospective application that permits use of the amounts disclosed for the various components of net benefit cost in the pension and other postretirement benefit plans footnote as the basis for the retrospective application. This is in lieu of determining how much of the various components of net benefit cost were actually reflected in the income statement each period as a result of capitalization of certain costs into assets and their subsequent amortization. The Company and Southwest have elected to utilize the practical expedient. Therefore, upon adoption, amounts presented in the Condensed Consolidated Statements of Income for operations and maintenance for the three-, nine-, and twelve-month periods ended September 30, 2017 were reclassified. The Operations and maintenance line item of the Company’s Condensed Consolidated Statements of Income was revised from $102.3 million to $97.4 million for the three months ended September 30, 2017, from $314.5 million to $299.9 million for the nine months ended September 30, 2017, and from $414.2 million to $394.7 million for the twelve months ended September 30, 2017. The Operations and maintenance line item of Southwest’s Condensed Consolidated Statements of Income was revised from $102.2 million to $97.4 million for the three months ended September 30, 2017, from $313.4 million to $298.8 million for the nine months ended September 30, 2017, and from $413.1 million to $393.6 million for the twelve months ended September 30, 2017. The Other income (deductions) line item of the Company’s Condensed Consolidated Statements of Income was revised from $2.9 million to $(2.0) million for the three months ended September 30, 2017, from $8.8 million to $(5.8) million for the nine months ended September 30, 2017, and from $11.5 million to $(8.0) million for the twelve months ended September 30, 2017. The Other income (deductions) line item of Southwest’s Condensed Consolidated Statements of Income was revised from $3.1 million to $(1.8) million for the three months ended September 30, 2017, from $8.7 million to $(5.8) million for the nine months ended September 30, 2017, and from $10.3 million to $(9.2) million for the twelve months ended September 30, 2017. Net income overall was not impacted by this reclassification for either the Company or Southwest. Southwest has a noncontributory qualified retirement plan with defined benefits covering substantially all employees and a separate unfunded supplemental retirement plan (“SERP”) which is limited to officers. Southwest also provides postretirement benefits other than pensions (“PBOP”) to its qualified retirees for health care, dental, and life insurance. During the first quarter of 2018, qualifying “term-vested” participants were offered a lump-sum present value payout of their pensions. The offer was primarily intended to reduce insurance and ongoing maintenance costs associated with qualifying participant balances. About one-quarter of the approximate 385 eligible participants accepted the offer, resulting in an approximate $6.8 million payment from pension assets in the third quarter of 2018. The lump sum payout will have no impact on net periodic benefit cost or pension funding requirements during 2018. The service cost component of net periodic benefit costs included in the table below are components of an overhead loading process associated with the cost of labor (refer to discussion above related to the update to Topic 715). The overhead process ultimately results in allocation of that portion of overall net periodic benefit costs to the same accounts to which productive labor is charged. As a result, service costs become components of various accounts, primarily operations and maintenance expense, net utility plant, and deferred charges and other assets for both the Company and Southwest. Refer also to the practical expedient elected related to amounts capitalized as part of assets prior to the adoption date.
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Revenue | Note 3 – Revenue Effective January 2018, the Company and Southwest adopted the FASB Accounting Standards Codification update, Topic 606, “Revenue from Contracts with Customers”, using the modified retrospective transition method. Under the modified retrospective approach, the information for periods prior to the adoption date has not been restated and continues to be reported under the accounting standards in effect for those periods. As permitted under the standard, the Company and Southwest have elected to apply the guidance retrospectively only to those contracts that were not completed at January 1, 2018. Management assessed the effects the new guidance has on the Company’s (and Southwest’s, in the case of utility operations) financial position, results of operations, and cash flows. Based on these assessments, the adoption of Topic 606 had no material impact on any of the financial statements of Southwest or the Company. The following information about the Company’s revenues is presented by segment. Southwest encompasses one segment – natural gas operations. Natural Gas Operations Segment: Southwest is engaged in the business of purchasing, distributing, and transporting natural gas for customers in portions of Arizona, Nevada, and California. Public utility rates, practices, facilities, and service territories of Southwest are subject to regulatory oversight. Southwest recognizes revenue when it satisfies its performance by transferring gas to the customer. Revenues also include the net impacts of margin tracker/decoupling accruals based on criteria in U.S. GAAP for rate-regulated entities associated with alternative revenue programs. Revenues from customer arrangements and from alternative revenue programs are described below. Southwest acts as an agent for state and local taxing authorities in the collection and remission of a variety of taxes, including sales and use taxes and surcharges. These taxes are not included in Gas operating revenues. Management uses the net classification method to report taxes collected from customers to be remitted to governmental authorities. Southwest generally offers two types of services to its customers: tariff sales and transportation–only service. Tariff sales encompass sales to many types of customers (primarily residential) under various rate schedules, subject to cost-of-service ratemaking, which is based on the rate-regulation of state commissions and the FERC. Southwest provides both the commodity and the related distribution service to nearly all of its approximate 2 million customers, and only several hundred customers (who are eligible to secure their own gas) subscribe to transportation-only service. Also, only a few hundred customers have contracts with stated periods. Southwest recognizes revenue when it satisfies its performance requirement by transferring volumes of gas to the customer. Natural gas is delivered and consumed by the customer simultaneously. The provision of service is represented by the turn of the meter dial and is the primary representation of the satisfaction of performance obligations of Southwest. The amount billable via regulated rates (both volumetric and fixed monthly rates as part of rate design) corresponds to the value to the customer, and management believes that the amount billable under the “invoice practical expedient” (amount Southwest has the right to invoice) is appropriate to utilize for purposes of recognizing revenue. Estimated amounts remaining unbilled since the last meter read date are restricted from being billed due only to the passage of time and therefore are also recognized for service provided through the balance sheet date. While natural gas service is typically recurring, there is generally not a contract term for utility service. Therefore, the contract term is not generally viewed to extend beyond the service provided to date, and customers can generally terminate service at will. Transportation-only service is also governed by tariff rate provisions. Transportation-only service is generally only available to very large customers under requirements of Southwest’s various tariffs. With this service, customers secure their own gas supply and Southwest provides transportation services to move the customer-supplied gas to the intended location. Southwest concluded that transportation/transmission service is suitable to an “over time” model. Rate structures under Southwest’s regulation for transportation customers include a combination of volumetric charges and monthly “fixed” charges (including charges commonly referred to as capacity charges, demand charges, or reservation charges) as part of the rate design of regulated jurisdictions. These types of fixed charges represent a separate performance obligation associated with standing ready over the period of the month to deliver quantities of gas, regardless of whether the customer takes delivery of any quantity of gas. The performance obligations under these circumstances are satisfied over the course of the month under an output measure of progress based on time, which correlates to the period for which the charges are eligible to be invoiced. Under its regulation, Southwest enters into negotiated rate contracts for those customers located in proximity to another pipeline, which pose a threat of bypassing its distribution system. Southwest may also enter into similar contracts for customers otherwise able to satisfy their energy needs by means of alternative fuel to natural gas. Less than two dozen customers are party to contracts with rate components subject to negotiation. Many rate provisions and terms of service for these less common types of contracts are also subject to regulatory oversight and tariff provisions. The performance obligations for these customers are satisfied similarly to those for other customers by means of transporting/delivering natural gas to the customer. Many or most of the rate components, and structures, for these types of customers are the same as those for similar customers without negotiated rate components; and the negotiated rates are within the parameters of the tariff guidelines. Management determined that these arrangements qualify for the invoice practical expedient for recognizing revenue. Furthermore, while some of these contracts include contract periods extending over time, including multiple years, as amounts billable under the contract are based on rates in effect for the customer for service provided to date, no significant financing component is deemed to exist. As indicated above, revenues also include the net impacts of margin tracker/decoupling accruals. All of Southwest’s service territories have decoupled rate structures (also referred to as alternative revenue programs) that are designed to eliminate the direct link between volumetric sales and revenue, thereby mitigating the impacts of unusual weather variability and conservation on margin. The primary alternative revenue programs involve permissible adjustments for differences between stated tariff benchmarks and amounts billable through revenue from contracts with customers via existing rates. Such adjustments are recognized monthly in revenue and in the associated regulatory asset/liability accounts in advance of rate adjustments intended to collect or return amounts recognized. Revenues recognized for the adjustment to the benchmarks noted are required to be presented separately from revenues from contracts from customers, and as such, are provided below and identified as alternative revenue program revenue. Gas operating revenues on the Condensed Consolidated Statements of Income of both the Company and Southwest include revenue from contracts with customers, which is shown below disaggregated by customer type, and various categories of revenue:
Infrastructure Services Segment: The majority of Centuri contracts are performed under unit-price contracts. Generally, these contracts state prices per unit of installation. Typical installations are accomplished in a few weeks or less. Revenues are recorded as installations are completed. Revenues are recorded for long-term fixed-price contracts in a pattern that reflects the transfer of control of promised goods and services to the customer over time. The amount of revenue recognized on fixed-price contracts is based on costs expended to date relative to anticipated final contract costs. Some unit-price contracts contain caps that if encroached, trigger revenue and loss recognition similar to a fixed-price contract model. Centuri is required to collect taxes imposed by various governmental agencies on the work performed by Centuri for its customers. These taxes are not included in Construction revenues. Management uses the net classification method to report taxes collected from customers to be remitted to governmental authorities. Centuri derives revenue from the installation, replacement, repair, and maintenance of energy distribution systems, and in developing industrial construction solutions. Centuri has operations in the U.S. and Canada. The majority of Centuri’s revenues are related to contracts for natural gas pipeline replacement and installation work for natural gas utilities. In addition, Centuri performs certain industrial construction activities for various customers and industries. Centuri has two types of agreements with its customers: master services agreements (“MSAs”) and bid contracts. Most of Centuri’s customers supply many of their own materials in order for Centuri to complete its work under the contracts. An MSA identifies most of the terms describing each party’s rights and obligations that will govern future work authorizations. An MSA is often effective for multiple years. A work authorization is issued by the customer to describe the location, timing, and any additional information necessary to complete the work for the customer. The combination of the MSA and the work authorization determines when a contract exists and revenue recognition may begin. Each work authorization is generally a single performance obligation as Centuri is performing a significant integration service. Centuri has elected to use the portfolio method practical expedient at the customer level as the terms and conditions of the work performed under MSAs are similar in nature with each customer but vary significantly between customers. A bid contract is typically a one-time agreement for a specific project that has all necessary terms defining each party’s rights and obligations. Each bid contract is evaluated for revenue recognition individually. Control of assets created under bid contracts generally passes to the customer over time. Bid contracts often have a single performance obligation as Centuri is providing a significant integration service. Centuri’s MSA and bid contracts are characterized as either fixed-price contracts or unit-price contracts for revenue recognition purposes. The cost-to-cost input method is used to measure progress towards the satisfaction of a performance obligation for fixed-price contracts. Input methods result in the recognition of revenue based on the entity’s effort to satisfy the performance obligation relative to the total expected effort to satisfy the performance obligation. For unit-price contracts, an output method is used to measure progress towards satisfaction of a performance obligation. Also with regard to unit-price contracts, the output measurement will be the completion of each unit that is required under the contract. Actual revenues and project costs can vary, sometimes substantially, from previous estimates due to changes in a variety of factors, including unforeseen circumstances not originally contemplated. These factors, along with other risks inherent in performing fixed-price contracts may cause actual revenues and gross profit for a project to differ from previous estimates and could result in reduced profitability or losses on projects. Changes in these factors may result in revisions to costs and earnings, the impacts for which are recognized in the period in which the changes are identified. Once identified, these types of conditions continue to be evaluated for each project throughout the project term and ongoing revisions in management’s estimates of contract value, contract cost, and contract profit are recognized as necessary in the period determined. Centuri categorizes work performed under MSAs and bid contracts into three primary service types: replacement gas construction, new gas construction, and other construction. Replacement gas construction includes work involving previously existing gas pipelines. New gas construction involves the installation of new pipelines or service lines to areas that do not already have gas services. Other construction includes all other work and can include industrial installation, water infrastructure installation, electric infrastructure installation, etc. Contracts can have consideration that is variable. For MSAs, variable consideration is evaluated at the customer level as the terms creating variability in pricing are included within the MSA and are not specific to a work authorization. For multi-year MSAs, variable consideration items are typically determined for each year of the contract and not for the full contract term. For bid contracts, variable consideration is evaluated at the individual contract level. The expected value method or most likely amount method is used based on the nature of the variable consideration. Types of variable consideration include liquidated damages, delay penalties, performance incentives, safety bonuses, payment discounts, and volume rebates. Centuri will typically estimate variable consideration and adjust financial information, as necessary. Change orders involve the modification in scope, price, or both to the current contract, requiring approval by both parties. The existing terms of the contract continue to be accounted for under the current contract until such time as a change order is approved. Once approved, the change order is either treated as a separate contract or as part of the existing contract, as appropriate, under the circumstances. When the scope is agreed upon in the change order but not the price, Centuri estimates the change to the transaction price. The following tables display Centuri’s revenue from contracts with customers disaggregated by service type and contract type:
The following table provides information about contracts receivable and revenue earned on contracts in progress in excess of billings (contract asset), which are both included within Accounts receivable, net of allowances, and amounts billed in excess of revenue earned on contracts (contract liability), which are included in Other current liabilities as of September 30, 2018 and December 31, 2017 on the Company’s Condensed Consolidated Balance Sheets:
The revenue earned on contracts in progress in excess of billings (contract asset) primarily relates to Centuri’s rights to consideration for work completed but not billed and/or approved at the reporting date. These contract assets are transferred to contracts receivable when the rights become unconditional. Upon adoption of Topic 606, the Company reclassified $51.7 million to revenue earned on contracts in progress in excess of billings, and during the nine months ended September 30, 2018, recognized an increase of $33.8 million, excluding the impact from the adoption, primarily related to normal operating and billing activities. The amounts billed in excess of revenue earned (contract liability) primarily relates to the advance consideration received from customers for which work has not yet been completed. The change in this contract liability balance from January 1, 2018 to September 30, 2018 is due to revenue recognized of $9.6 million that was included in this item as of January 1, 2018, and to increases due to cash received, net of revenue recognized during the period related to contracts that commenced during the period. Prior to the adoption of Topic 606, revenue earned on contracts in progress in excess of billings was only used to recognize contract assets related to fixed-price contracts under previous accounting guidance. This balance now includes any conditional contract assets for both fixed-price contracts and unit-price contracts. Centuri considers retention and unbilled amounts to customers to be conditional contract assets, as payment is contingent on the occurrence of a future event. Contracts receivable, net, includes only amounts that are unconditional in nature, which means only the passage of time remains and Centuri has invoiced the customer. Similarly, amounts billed in excess of revenue earned on contracts was only used to recognize contract liabilities related to fixed-price contracts under previous accounting guidance. This line item now includes contract liabilities related to both fixed-price contracts and unit-price contracts. In the event a contract asset or contract liability is expected to be recognized for greater than one year from the financial statement date, Centuri classifies those amounts as long-term contract assets or contract liabilities, included in Deferred charges and other assets or Other deferred credits and other long-term liabilities on the Company’s Condensed Consolidated Balance Sheets. For Centuri’s contracts that have an original duration of one year or less, Centuri uses the practical expedient applicable to such contracts and does not consider the time value of money. Further, because of the short duration of these contracts, Centuri has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize the revenue. Centuri has sixteen contracts that had an original duration of more than one year. The aggregate amount of the transaction price allocated to the unsatisfied performance obligations of these contracts as of September 30, 2018 is $71 million. Centuri expects to recognize the remaining performance obligations over the next four years; however, the timing of that recognition is largely within the control of the customer, including when the necessary equipment and materials required to complete the work are provided by the customer. Construction services contracts receivable consists of the following:
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Note 4 – Segment Information The Company has two reportable segments: natural gas operations and infrastructure services. Southwest has a single reportable segment that is referred to herein as the natural gas operations segment of the Company. In order to reconcile to net income as disclosed in the Condensed Consolidated Statements of Income, an Other column is included associated with impacts related to corporate and administrative activities related to Southwest Gas Holdings, Inc. The following tables present revenues from external customers, intersegment revenues, and segment net income for the two reportable segments (thousands of dollars):
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Derivatives and Fair Value Measurements |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Fair Value Measurements | Note 5 – Derivatives and Fair Value Measurements Derivatives. In managing its natural gas supply portfolios, Southwest has historically entered into fixed- and variable-price contracts, which qualify as derivatives. Additionally, Southwest utilizes fixed-for-floating swap contracts (“Swaps”) to supplement its fixed-price contracts. The fixed-price contracts, firm commitments to purchase a fixed amount of gas in the future at a fixed price, qualify for the normal purchases and normal sales exception that is allowed for contracts that are probable of delivery in the normal course of business, and are exempt from fair value reporting. The variable-price contracts qualify as derivative instruments; however, because the contract price is the prevailing price at the future transaction date, the contract has no determinable fair value. The Swaps’ contract prices are determined at the beginning of each month to reflect that month’s published first of month index price and are recorded at fair value. Southwest does not utilize derivative financial instruments for speculative purposes, nor does it have trading operations. The fixed-price contracts and Swaps are utilized by Southwest under its volatility mitigation programs to effectively fix the price on a portion (up to 25% in the Arizona and California jurisdictions) of its natural gas supply portfolios. The maturities of the Swaps highly correlate to forecasted purchases of natural gas, during time frames ranging from October 31, 2018 through October 31, 2019. Under such contracts, Southwest pays the counterparty a fixed rate and receives from the counterparty a floating rate per MMBtu (“dekatherm”) of natural gas. Only the net differential is actually paid or received. The differential is calculated based on the notional amounts under the contracts, which are detailed in the table below (thousands of dekatherms):
The following table sets forth the gains and (losses) recognized on the Swaps (derivatives) for the three-, nine-, and twelve-month periods ended September 30, 2018 and 2017 and their location in the Condensed Consolidated Statements of Income for both the Company and Southwest: Gains (losses) recognized in income for derivatives not designated as hedging instruments:
No gains (losses) were recognized in net income or other comprehensive income during the periods presented for derivatives designated as cash flow hedging instruments. Previously, Southwest entered into two forward-starting interest rate swaps (“FSIRS”), both of which were designated cash flow hedges, to partially hedge the risk of interest rate variability during the period leading up to the planned issuance of debt. The first FSIRS terminated in December 2010. The second FSIRS terminated in March 2012. Losses on both FSIRS are being amortized over ten-year periods from Accumulated other comprehensive income (loss) into interest expense. The following table sets forth the fair values of the Swaps and their location in the Condensed Consolidated Balance Sheets for both the Company and Southwest (thousands of dollars): Fair values of derivatives not designated as hedging instruments:
The estimated fair values of the natural gas derivatives were determined using future natural gas index prices (as more fully described below). Master netting arrangements exist with each counterparty that provide for the net settlement (in the settlement month) of all contracts through a single payment. As applicable, management has elected to reflect the net amounts in its balance sheets. There was no outstanding collateral associated with the Swaps during either period shown in the above table. Pursuant to regulatory deferral accounting treatment for rate-regulated entities, unrealized gains and losses in fair value of the Swaps are recorded as a regulatory asset and/or liability. When the Swaps mature, any prior positions held are reversed and the settled position is recorded as an increase or decrease of purchased gas under the related purchase gas adjustment (“PGA”) mechanism in determining the deferred PGA balances. Neither changes in fair value nor settled amounts of Swaps have a direct effect on earnings or other comprehensive income. The following table shows the amounts Southwest paid to and received from counterparties for settlements of matured Swaps.
The following table details the regulatory assets/(liabilities) offsetting the derivatives at fair value in the Condensed Consolidated Balance Sheets for both the Company and Southwest (thousands of dollars).
Fair Value Measurements. The estimated fair values of Southwest’s Swaps were determined at September 30, 2018 and December 31, 2017 using futures settlement prices, published by the CME Group, for the delivery of natural gas at Henry Hub adjusted by the price of future settlement bases, which reflect the difference between the price of natural gas at a given delivery basin and the Henry Hub pricing points. These Level 2 inputs (inputs, other than quoted prices, for similar assets or liabilities) are observable in the marketplace throughout the full term of the Swaps, but have been credit-risk adjusted with no significant impact to the overall fair value measurement. The following table sets forth, by level within the three-level fair value hierarchy that ranks the inputs used to measure fair value by their reliability, the financial assets and liabilities that were accounted for at fair value by both the Company and Southwest: Level 2 - Significant other observable inputs
No financial assets or liabilities associated with the Swaps, which were accounted for at fair value, fell within Level 1 (quoted prices in active markets for identical financial assets) or Level 3 (significant unobservable inputs) of the fair value hierarchy. With regard to the fair values of assets associated with pension and postretirement benefit plans, asset values were last updated as required as of December 2017. Refer to Note 11 – Pension and Other Post Retirement Benefits in the 2017 Annual Report to Shareholders, which is incorporated by reference into the 2017 Form 10-K. |
Common Stock |
9 Months Ended |
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Sep. 30, 2018 | |
Equity [Abstract] | |
Common Stock | Note 6 – Common Stock On March 29, 2017, the Company filed with the SEC an automatic shelf registration statement on Form S-3 (File No. 333-217018), which became effective upon filing, for the offer and sale of up to $150 million of common stock from time to time in at-the-market offerings under the prospectus included therein and in accordance with the Sales Agency Agreement, dated March 29, 2017, between the Company and BNY Mellon Capital Markets, LLC (the “Equity Shelf Program”). During the three months ended September 30, 2018, the Company sold, through the Equity Shelf Program, an aggregate of 259,473 shares of the Company’s common stock in the open market at a weighted average price of $78.83 per share, resulting in proceeds to the Company of $20,250,309 net of $204,549 in agent commissions. During the nine months ended September 30, 2018, the Company sold, through the Equity Shelf Program, an aggregate of 1,145,705 shares of the Company’s common stock in the open market at a weighted average price of $74.32 per share, resulting in proceeds to the Company of $84,298,476 net of $851,500 in agent commissions. During the twelve months ended September 30, 2018, the Company sold, through the Equity Shelf Program, an aggregate of 1,504,335 shares of the Company’s common stock in the open market at a weighted average price of $76.55 per share, resulting in proceeds to the Company of $113,998,400, net of $1,151,499 in agent commissions. As of September 30, 2018, the Company had up to $23,073,229 of common stock available for sale under the program. Net proceeds from the sale of shares of common stock under the Equity Shelf Program are intended for general corporate purposes, including the acquisition of property for the construction, completion, extension, or improvement of pipeline systems and facilities located in and around the communities served by Southwest. During the nine months ended September 30, 2018, the Company issued approximately 78,000 shares of common stock through the Restricted Stock/Unit Plan and Management Incentive Plan. Also during the nine months ended September 30, 2018, the Company issued 109,000 shares of common stock through the Dividend Reinvestment and Stock Purchase Plan (“DRSPP”), raising approximately $7.8 million. |
Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note 7 – Long-Term Debt Carrying amounts of long-term debt and related estimated fair values as of September 30, 2018 and December 31, 2017 are disclosed in the following table. Southwest’s revolving credit facility (including commercial paper) and the variable-rate Industrial Development Revenue Bonds (“IDRBs”) approximate their carrying values, as they are repaid quickly (in the case of credit facility borrowings) and have interest rates that reset frequently. These are categorized as Level 1 due to Southwest’s ability to access similar debt arrangements at measurement dates with comparable terms, including variable/market rates. The fair values of Southwest’s debentures, senior notes, and fixed-rate IDRBs were determined utilizing a market-based valuation approach, where fair values are determined based on evaluated pricing data, such as broker quotes and yields for similar securities adjusted for observable differences. Significant inputs used in the valuation generally include benchmark yield curves, credit ratings and issuer spreads. The external credit rating, coupon rate, and maturity of each security are considered in the valuation, as applicable. The fair values of debentures and fixed-rate IDRBs are categorized as Level 2 (observable market inputs based on market prices of similar securities). The Centuri secured revolving credit and term loan facility and Centuri other debt obligations (not actively traded) are categorized as Level 3, based on significant unobservable inputs to their fair values. Because Centuri’s debt is not publicly traded, fair values for the secured revolving credit and term loan facility and other debt obligations were based on a conventional discounted cash flow methodology and utilized current market pricing yield curves, across Centuri’s debt maturity spectrum, of other industrial bonds with an assumed credit rating comparable to the Company’s.
Southwest has a $400 million credit facility that is scheduled to expire in March 2022. Southwest designates $150 million of capacity related to the facility as long-term debt and has designated the remaining $250 million for working capital purposes. Interest rates for the credit facility are calculated at either the London Interbank Offered Rate (“LIBOR”) or an “alternate base rate,” plus in each case an applicable margin that is determined based on Southwest’s senior unsecured debt rating. At September 30, 2018, the applicable margin is 1% for loans bearing interest with reference to LIBOR and 0% for loans bearing interest with reference to the alternative base rate. At September 30, 2018, $150 million was outstanding on the long-term portion (including the commercial paper program, discussed below) and $9 million was outstanding on the short-term portion of this credit facility (see Note 8 – Short-Term Debt). Southwest has a $50 million commercial paper program. Any issuance under the commercial paper program is supported by Southwest’s current revolving credit facility and, therefore, does not represent additional borrowing capacity. Borrowings under the commercial paper program are designated as long-term debt. Interest rates for the program are calculated at the then current commercial paper rate. At September 30, 2018, as noted above, $50 million was outstanding under the commercial paper program. In March 2018, Southwest issued $300 million in 3.7% Senior Notes at a discount of 0.185%. The notes will mature in April 2028. A portion of the proceeds were used to repay amounts then outstanding under the revolving portion of the credit facility and the remainder to repay amounts then outstanding under the commercial paper program. Centuri has a $450 million senior secured revolving credit and term loan facility that is scheduled to expire in November 2022. This facility includes a revolving credit facility and a term loan facility. The line of credit portion of the facility is $250 million; amounts borrowed and repaid under the revolving credit facility are available to be re-borrowed. The term loan facility portion has a limit of approximately $200 million. The limit on the term loan facility was reached in November 2017; therefore, no further borrowing is permitted under this term loan facility. The $450 million revolving credit and term loan facility is secured by substantially all of Centuri’s assets except those explicitly excluded under the terms of the agreement (including owned real estate and certain certificated vehicles). Centuri assets securing the facility at September 30, 2018 totaled $675 million. At September 30, 2018, $267 million in borrowings were outstanding under the Centuri facility. Additionally, for the nine months ended September 30, 2018, Centuri entered into equipment loans for approximately $40 million with a maturity date of May 2023 under an existing agreement. |
Short-Term Debt |
9 Months Ended |
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Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Short-Term Debt | Note 8 – Short-Term Debt The Company has a $100 million credit facility that is scheduled to expire in March 2022. The Company had $22.5 million in short-term borrowings outstanding at September 30, 2018 under this facility. As discussed in Note 7 – Long-Term Debt, Southwest has a $400 million credit facility that is scheduled to expire in March 2022, of which $250 million has been designated by management for working capital purposes. Southwest had $9 million in short-term borrowings outstanding at September 30, 2018 under this facility. |
Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income | Note 9 – Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income The table below provides details of activity in equity and the noncontrolling interest for the Company on a consolidated basis during the nine months ended September 30, 2018.
The table below provides details of activity in equity for Southwest during the nine months ended September 30, 2018. Only equity shares of the Company are publicly traded, under the ticker symbol “SWX.”
The following information provides insight into amounts impacting the Company’s Other comprehensive income (loss), both before and after-tax impacts, within the Condensed Consolidated Statements of Comprehensive Income, which also impact Accumulated other comprehensive income in the Condensed Consolidated Balance Sheets and the associated column in the equity table above. See Note 5 – Derivatives and Fair Value Measurements for additional information on the FSIRS. Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) (Thousands of dollars)
Approximately $2.5 million of realized losses (net of tax) related to the FSIRS, reported in Accumulated other comprehensive income (loss) at September 30, 2018, will be reclassified into interest expense within the next 12 months as the related interest payments on long-term debt occur. The following table represents a rollforward of AOCI, presented on the Company’s Condensed Consolidated Balance Sheets: AOCI - Rollforward (Thousands of dollars)
The following table represents a rollforward of AOCI, presented on Southwest’s Condensed Consolidated Balance Sheets: AOCI - Rollforward (Thousands of dollars)
The following table represents amounts (before income tax impacts) included in AOCI (in the tables above), that have not yet been recognized in net periodic benefit cost: Amounts Recognized in AOCI (Before Tax) (Thousands of dollars)
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Reorganization Impacts - Discontinued Operations Solely Related to Southwest Gas Corporation |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization Impacts - Discontinued Operations Solely Related to Southwest Gas Corporation | Note 10 – Reorganization Impacts – Discontinued Operations Solely Related to Southwest Gas Corporation As a result of adopting a holding company structure in January 2017, no substantive change occurred with regard to the Company’s business segments on the whole, or in the primary businesses comprising those segments (Centuri operations continue to be part of continuing operations of the controlled group of companies), and financial information related to Centuri continues to be included in the condensed consolidated financial statements of Southwest Gas Holdings, Inc. However, as part of the holding company reorganization, Centuri is no longer a subsidiary of Southwest; whereas historically, Centuri had been a direct subsidiary of Southwest. To give effect to this change, the condensed consolidated financial statements related to Southwest Gas Corporation, which are separately included in this Form 10-Q, depict Centuri-related amounts as discontinued operations for periods prior to January 2017. Due to the discontinued operations accounting reflection, the following disclosures provide additional information regarding the revenues and expenses of Centuri which are shown as discontinued operations on the condensed consolidated financial statements of Southwest Gas Corporation for periods prior to the beginning of 2017. The following table presents the major income statement components of discontinued operations – construction services reported in the Condensed Consolidated Statements of Income of Southwest Gas Corporation: Results of Infrastructure Services
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Nature of Operations and Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations | Nature of Operations. Southwest Gas Holdings, Inc. is a holding company, owning all of the shares of common stock of Southwest Gas Corporation (“Southwest” or the “natural gas operations segment”) and all of the shares of common stock of Centuri Construction Group, Inc. (“Centuri,” the “construction services” or “infrastructure services” segment). Prior to August 2017, only 96.6% of Centuri shares were owned by Southwest Gas Holdings, Inc. During August 2017, Southwest Gas Holdings, Inc. acquired the remaining 3.4% equity interest in Centuri that was held by the previous owners. Southwest Gas Corporation is engaged in the business of purchasing, distributing, and transporting natural gas for customers in portions of Arizona, Nevada, and California. Public utility rates, practices, facilities, and service territories of Southwest are subject to regulatory oversight. The timing and amount of rate relief can materially impact results of operations. Natural gas purchases and the timing of related recoveries can materially impact liquidity. Results for the natural gas operations segment are higher during winter periods due to the seasonality incorporated in its regulatory rate structures. Centuri is a comprehensive infrastructure services enterprise dedicated to meeting the growing demands of North American utilities, energy, and industrial markets. Centuri derives revenue from installation, replacement, repair, and maintenance of energy distribution systems, and developing industrial infrastructure solutions. Centuri operations are generally conducted under the business names of NPL Construction Co. (“NPL”), Canyon Pipeline Construction, Inc. (“Canyon”), NPL Canada Ltd. (“NPL Canada”), W.S. Nicholls Construction, Inc. (“W.S. Nicholls”), and Canyon Special Projects, Inc. (“Special Projects,” formerly Brigadier Pipelines Inc.). Typically, Centuri revenues are lowest during the first quarter of the year due to unfavorable winter weather conditions. Operating revenues typically improve as more favorable weather conditions occur during the summer and fall months. In November 2017, Centuri acquired New England Utility Constructors, Inc. (“Neuco”) for $99 million, less assumed debt, thereby expanding its core services in the Northeast region of the United States. See the Southwest Gas Holdings, Inc. March 31, 2018 Form 10-Q for additional information about this acquisition, including final purchase accounting. |
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Basis of Presentation | Basis of Presentation. The condensed consolidated financial statements for Southwest Gas Holdings, Inc. and subsidiaries (the “Company”) and Southwest included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In connection with a holding company reorganization in January 2017, Centuri ceased to be a subsidiary of Southwest and became a subsidiary of Southwest Gas Holdings, Inc. To give effect to this change, the separate condensed consolidated financial statements related to Southwest Gas Corporation, which are included in this Form 10-Q, depict Centuri-related amounts for periods prior to January 1, 2017 as discontinued operations. No substantive change has occurred with regard to the Company’s business segments on the whole, or in the primary businesses comprising those segments as a result of the foregoing organizational changes, or due to the acquisition of Neuco. Following the organizational changes, Centuri operations continue to be part of continuing operations and included in the consolidated financial statements of the Company. The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments, consisting of normal recurring items and estimates necessary for a fair statement of results for the interim periods, have been made. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the 2017 Annual Report to Shareholders, which is incorporated by reference into the 2017 Form 10-K. |
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Early Adoption of Accounting Standards Update | Early Adoption of Accounting Standards Update (“ASU”) No. 2018-02. In January 2018, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2018-02 “Income Statement—Reporting Comprehensive Income—Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” Early adoption of the amendments in this update was permitted, including adoption in any interim period. Therefore, the Company and Southwest chose to adopt the update early, as permitted, as of January 1, 2018. The adoption of this update is considered a change in accounting principle. The update addressed issues resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act (the “TCJA”). Stakeholders raised a narrow-scope financial reporting issue that arose as a consequence of the TCJA related to the fact that when deferred tax balances were remeasured in December 2017, those deferred tax balances were to be reduced, but related amounts historically accumulated in Accumulated other comprehensive income (“AOCI”) prior to the enactment of the TCJA, were required to be recognized as income tax expense rather than being relieved from AOCI. The amendments in this update allowed a reclassification from AOCI to retained earnings for those otherwise “stranded” tax effects in AOCI following enactment of the TCJA. Accordingly, approximately $9.3 million of previously stranded tax effects resulting from the TCJA were reclassified to retained earnings from AOCI on the Condensed Consolidated Balance Sheets of Southwest and the Company effective with the early adoption date. Also in association with the adoption, the Company and Southwest elected an accounting policy for releasing income tax effects from AOCI, such that the release of any income tax effects from AOCI will occur as individual items in AOCI are sold or liquidated, to the extent that the related income tax effects are material. See Note 9 – Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income for more information. |
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Prepaids and Other Current Assets | Prepaids and other current assets. Prepaids and other current assets includes gas pipe materials and operating supplies of $53 million at September 30, 2018 and $33 million at December 31, 2017 (carried at weighted average cost), as well as $73 million at September 30, 2018 and $40 million at December 31, 2017 related to a regulatory asset associated with the Arizona decoupling mechanism (an alternative revenue program). |
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Income Taxes | Income Taxes. On December 22, 2017, as indicated above, the TCJA legislation was enacted. Substantially all of the provisions of the TCJA are effective for taxable years beginning after December 31, 2017. The TCJA includes extensive changes which significantly impact the taxation of business entities, including specific provisions related to regulated public utilities. A significant change that impacts the Company and Southwest includes the reduction in the corporate federal income tax rate from 35% to 21%. The tax rate reduction created excess deferred taxes, resulting in the required remeasurement of deferred tax balances, which when remeasured during the fourth quarter of 2017, reduced income tax expense. The regulated operations of Southwest experienced other impacts due to the applicable rate-regulation and the accounting treatment prescribed by U.S. GAAP to reflect the economics of that regulation. The remeasurement for Southwest reduced the net deferred income tax liability and caused the creation of a regulatory liability with appropriate tax gross-up. Both the deferred tax liabilities and excess deferred tax liabilities (included within regulatory liabilities) reduce utility rate base. The TCJA includes provisions that stipulate how these excess deferred taxes are to be passed back to customers, and ultimate facilitation will occur in conjunction with appropriate regulatory commissions. During the nine months ended September 30, 2018, tax expense for the Company and Southwest reflects the lower U.S. federal income tax rate now in effect (as applicable to earnings in 2018). Amounts recorded by the Company and Southwest associated with the measurement and accounting for the effects of the TCJA are provisional reasonable estimates. Management is continuing to evaluate and finalize all provisional items during the measurement period permitted by the SEC and the FASB, and will complete its assessment in the fourth quarter of 2018. In July 2018, the Arizona Corporation Commission (the “ACC”) staff issued a recommended opinion and order, and the ACC issued a decision (the “Decision”) based on the staff recommendation, requiring Southwest to return the difference in excess cost-of-service rates due to tax reform. The Decision required Southwest to provide a bill credit in August 2018 for excess taxes collected from January through July 2018. Also as required by the Decision, Southwest began tracking, in a regulatory account, the difference between amounts expected to be returned and the actual amounts returned by these means. As of September 30, 2018, this difference of $2.4 million is reflected in Other current liabilities on the balance sheets of both Southwest and the Company. |
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Other current liabilities | Other current liabilities. Other current liabilities for Southwest include $22 million of dividends declared by Southwest Gas Corporation, but not yet paid to Southwest Gas Holdings, Inc. at September 30, 2018. |
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Cash and Cash Equivalents | Cash and Cash Equivalents. For purposes of reporting consolidated cash flows, cash and cash equivalents include cash on hand and financial instruments with a purchase-date maturity of three months or less. In general, cash and cash equivalents fall within Level 1 (quoted prices for identical financial instruments) of the three-level fair value hierarchy that ranks the inputs used to measure fair value by their reliability. However, cash and cash equivalents for Southwest and the Company also include money market fund investments totaling approximately $38.8 million and $39.6 million, respectively, which fall within Level 2 (significant other observable inputs) of the fair value hierarchy, due to the asset valuation methods used by money market funds. |
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Goodwill | Goodwill. Goodwill is assessed as of October 1st each year for impairment, or more frequently, if circumstances indicate an impairment to the carrying value of goodwill may have occurred. In consideration of the holding company reorganization, management of the Company considered its reporting units and segments and determined that historic judgments regarding its segments and reporting units continue to apply, and that no change was necessary with regard to the level at which goodwill is assessed for impairment. No impairment was deemed to have occurred in the first nine months of 2018.
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Intercompany Transactions | Intercompany Transactions. Centuri recognizes revenues generated from contracts with Southwest (see Note 4 – Segment Information). Centuri’s accounts receivable for these services are presented in the table below (thousands of dollars):
The accounts receivable balance, revenues, and associated profits are included in the condensed consolidated financial statements of the Company and were not eliminated during consolidation in accordance with accounting treatment for rate-regulated entities. |
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Other Property and Investments | Other Property and Investments. Other property and investments on the Condensed Consolidated Balance Sheets includes (thousands of dollars):
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Other Income (Deductions) | Other Income (Deductions). The following table provides the composition of significant items included in Other income (deductions) in the Condensed Consolidated Statements of Income (thousands of dollars):
Included in the table above is the change in cash surrender values of company-owned life insurance (“COLI”) policies (including net death benefits recognized). These life insurance policies on members of management and other key employees are used by Southwest to indemnify itself against the loss of talent, expertise, and knowledge, as well as to provide indirect funding for certain nonqualified benefit plans. Current tax regulations provide for tax-free treatment of life insurance (death benefit) proceeds. Therefore, changes in the cash surrender values of COLI policies, as they progress towards the ultimate death benefits, are also recorded without tax consequences. Refer also to Note 2 – Components of Net Periodic Benefit Cost. |
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Recently Issued Accounting Standards Updates | Recently Issued Accounting Standards Updates. In February 2016, the FASB issued the update “Leases (Topic 842).” Under the update, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:
Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, “Revenue from Contracts with Customers.” Though companies have historically been required to make disclosures regarding leases and associated contractual obligations, leases with terms longer than a year will no longer exist off-balance sheet. Early application of the update is permitted. Management will adopt the update for interim and annual reporting periods commencing January 1, 2019 (the required adoption date). In July 2018, the FASB issued narrow-scope improvements to the standard, which include, among other things, guidance on lease classification reassessment and certain circumstances surrounding remeasurement. Also included was clarification that lessor-controlled options to terminate a lease are considered in the lease term. Management expects to elect various practical expedients and accounting policies regarding the transition method used to implement Topic 842. The Company and Southwest plan to elect the new optional transition method included within the recent FASB update “Leases—Targeted Improvements”, also issued in July 2018, which allows for comparative periods not to be restated. In conjunction with this decision, management currently expects that no retained earnings adjustment will be necessary due to the adoption of Topic 842. At a minimum, management expects the following regarding Topic 842 practical expedients and accounting policy elections:
Management is continuing to implement new software systems (one for Southwest and one for Centuri) to facilitate compliance with Topic 842. Management continues to evaluate the guidance in light of its customary leasing arrangements (and other arrangements in association with the new guidance) to determine the effect the new standard, and amendments, will have on its financial position, results of operations, cash flows, and business processes. In June 2016, the FASB issued the update “Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments.” The update amends guidance on reporting credit losses for financial assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, the update eliminates the “probable” threshold for initial recognition of credit losses in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP; however, the update will require that credit losses be presented as an allowance rather than as a write-down. This update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The update affects loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the amendments in this update is permitted for interim and related annual fiscal periods after December 15, 2018. Management is evaluating what impact, if any, this update might have on its consolidated financial statements and disclosures. In August 2018, the FASB issued the update “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The update generally aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement (that is a service contract) with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update also requires the entity to expense the capitalized implementation costs of such hosting arrangements over the term of the hosting arrangement, including reasonably certain renewal periods. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the amendments in this update is permitted for interim and related annual fiscal periods after December 15, 2018. Management is evaluating the impacts this update might have on its consolidated financial statements and disclosures. In August 2018, the FASB issued the update “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” This update removes disclosures that are no longer considered cost-beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant. The update applies to all employers that sponsor defined benefit pension or other post-retirement plans. The update is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. Management is evaluating the impacts this update might have on its disclosures. In August 2018, the FASB issued the update “Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The update is intended to improve the effectiveness of fair value measurement disclosures and removes the following disclosure requirements: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The update also modifies or clarifies for investments in certain entities that calculate net asset value, a requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse (in cases when the timing has been communicated or announced publicly). It also clarifies communication requirements about measurement uncertainty as of the reporting date. Furthermore, the update added requirements to disclose changes in unrealized gains/losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, as well as the range and weighted average value of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if it would be a more reasonable and rational method to reflect the distribution of inputs to the measurements. Management is evaluating the impacts this update might have on its disclosures. |
Nature of Operations and Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill |
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Accounts Receivable for Services |
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Schedule of Other Property and Investments | Other Property and Investments. Other property and investments on the Condensed Consolidated Balance Sheets includes (thousands of dollars):
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Other Income (Deductions) | Other Income (Deductions). The following table provides the composition of significant items included in Other income (deductions) in the Condensed Consolidated Statements of Income (thousands of dollars):
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Components of Net Periodic Benefit Cost (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Benefit Costs | The service cost component of net periodic benefit costs included in the table below are components of an overhead loading process associated with the cost of labor (refer to discussion above related to the update to Topic 715). The overhead process ultimately results in allocation of that portion of overall net periodic benefit costs to the same accounts to which productive labor is charged. As a result, service costs become components of various accounts, primarily operations and maintenance expense, net utility plant, and deferred charges and other assets for both the Company and Southwest. Refer also to the practical expedient elected related to amounts capitalized as part of assets prior to the adoption date.
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Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue Disaggregated by Service Type and Contract Type | The following tables display Centuri’s revenue from contracts with customers disaggregated by service type and contract type:
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Summary of Information about Receivables, Revenue Earned on Contracts in Progress in Excess of Billings, Which are Included Within Accounts Receivable, Net of Allowances, and Amounts Billed in Excess of Revenue Earned on Contracts | The following table provides information about contracts receivable and revenue earned on contracts in progress in excess of billings (contract asset), which are both included within Accounts receivable, net of allowances, and amounts billed in excess of revenue earned on contracts (contract liability), which are included in Other current liabilities as of September 30, 2018 and December 31, 2017 on the Company’s Condensed Consolidated Balance Sheets:
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Schedule of Construction Services Contracts Receivable | Construction services contracts receivable consists of the following:
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Accounting Standards Update 2014-09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue Disaggregated by Service Type and Contract Type | Gas operating revenues on the Condensed Consolidated Statements of Income of both the Company and Southwest include revenue from contracts with customers, which is shown below disaggregated by customer type, and various categories of revenue:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information | The following tables present revenues from external customers, intersegment revenues, and segment net income for the two reportable segments (thousands of dollars):
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Derivatives and Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional Amounts under Swaps Contracts | The differential is calculated based on the notional amounts under the contracts, which are detailed in the table below (thousands of dekatherms):
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Amount of Gain or Losses Recognized in Income on Derivatives | The following table sets forth the gains and (losses) recognized on the Swaps (derivatives) for the three-, nine-, and twelve-month periods ended September 30, 2018 and 2017 and their location in the Condensed Consolidated Statements of Income for both the Company and Southwest: Gains (losses) recognized in income for derivatives not designated as hedging instruments:
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Fair Values of Swaps in Consolidated Balance Sheets | The following table sets forth the fair values of the Swaps and their location in the Condensed Consolidated Balance Sheets for both the Company and Southwest (thousands of dollars): Fair values of derivatives not designated as hedging instruments:
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Paid to and Received from Counterparties for Settlements of Matured Swaps | The following table shows the amounts Southwest paid to and received from counterparties for settlements of matured Swaps.
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Regulatory Assets/Liabilities Offsetting Derivatives at Fair Value in Condensed Consolidated Balance Sheets | The following table details the regulatory assets/(liabilities) offsetting the derivatives at fair value in the Condensed Consolidated Balance Sheets for both the Company and Southwest (thousands of dollars).
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Summary of Financial Assets and Liabilities at Fair Value | The following table sets forth, by level within the three-level fair value hierarchy that ranks the inputs used to measure fair value by their reliability, the financial assets and liabilities that were accounted for at fair value by both the Company and Southwest: Level 2 - Significant other observable inputs
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Long-Term Debt (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Amounts and Estimated Fair Values of Long-Term Debt | The Centuri secured revolving credit and term loan facility and Centuri other debt obligations (not actively traded) are categorized as Level 3, based on significant unobservable inputs to their fair values. Because Centuri’s debt is not publicly traded, fair values for the secured revolving credit and term loan facility and other debt obligations were based on a conventional discounted cash flow methodology and utilized current market pricing yield curves, across Centuri’s debt maturity spectrum, of other industrial bonds with an assumed credit rating comparable to the Company’s.
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Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Detailed Activities of Equity and Redeemable Noncontrolling Interest | The table below provides details of activity in equity and the noncontrolling interest for the Company on a consolidated basis during the nine months ended September 30, 2018.
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Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) | Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) (Thousands of dollars)
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Rollforward of Accumulated Other Comprehensive Income | The following table represents a rollforward of AOCI, presented on the Company’s Condensed Consolidated Balance Sheets: AOCI - Rollforward (Thousands of dollars)
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Amount Recognized Before Income Tax in Accumulated Other Comprehensive Income | The following table represents amounts (before income tax impacts) included in AOCI (in the tables above), that have not yet been recognized in net periodic benefit cost: Amounts Recognized in AOCI (Before Tax) (Thousands of dollars)
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Southwest Gas Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Detailed Activities of Equity and Redeemable Noncontrolling Interest | The table below provides details of activity in equity for Southwest during the nine months ended September 30, 2018. Only equity shares of the Company are publicly traded, under the ticker symbol “SWX.”
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Rollforward of Accumulated Other Comprehensive Income | The following table represents a rollforward of AOCI, presented on Southwest’s Condensed Consolidated Balance Sheets: AOCI - Rollforward (Thousands of dollars)
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Reorganization Impacts - Discontinued Operations Solely Related to Southwest Gas Corporation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Discontinued Operations - Construction Services in Condensed Consolidated Balance Sheet and Condensed Consolidated Statements of Income | The following table presents the major income statement components of discontinued operations – construction services reported in the Condensed Consolidated Statements of Income of Southwest Gas Corporation: Results of Infrastructure Services
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Nature of Operations and Basis of Presentation - Schedule of Goodwill (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | $ 179,314 |
Foreign currency translation adjustment | (3,437) |
Goodwill, Ending balance | 176,059 |
Neuco | |
Goodwill [Roll Forward] | |
Additional goodwill from Neuco acquisition | 182 |
Natural Gas Operations | |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | 10,095 |
Additional goodwill from Neuco acquisition | 0 |
Foreign currency translation adjustment | 0 |
Goodwill, Ending balance | 10,095 |
Infrastructure Services | |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | 169,219 |
Foreign currency translation adjustment | (3,437) |
Goodwill, Ending balance | 165,964 |
Infrastructure Services | Neuco | |
Goodwill [Roll Forward] | |
Additional goodwill from Neuco acquisition | $ 182 |
Nature of Operations and Basis of Presentation - Accounts Receivable for Services (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Centuri Construction Group Inc. | ||
Segment Reporting Information [Line Items] | ||
Centuri accounts receivable for services provided to Southwest | $ 13,566 | $ 12,987 |
Nature of Operations and Basis of Presentation - Schedule of Other Property and Investments (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Investment [Line Items] | ||
Other property | $ 15,327 | $ 13,242 |
Total | 466,500 | 428,180 |
Southwest Gas Corporation | ||
Investment [Line Items] | ||
Net cash surrender value of COLI policies | 123,476 | 117,341 |
Other property | 1,728 | 1,773 |
Total | 125,204 | 119,114 |
Centuri Construction Group Inc. | ||
Investment [Line Items] | ||
Centuri property, equipment, and intangibles | 613,365 | 554,730 |
Centuri accumulated depreciation/amortization | $ (287,396) | $ (258,906) |
Nature of Operations and Basis of Presentation - Other Income (Deductions) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Other income (deductions) | ||||||
Total other income (deductions) | $ 889 | $ (1,980) | $ (6,151) | $ (5,780) | $ (6,401) | $ (8,007) |
Southwest Gas Corporation | ||||||
Other income (deductions) | ||||||
Total other income (deductions) | 836 | (1,775) | (5,861) | (5,824) | (6,425) | (9,200) |
Operating Segments | Natural Gas Operations | Southwest Gas Corporation | ||||||
Other income (deductions) | ||||||
Change in COLI policies | 4,700 | 2,100 | 6,000 | 6,800 | 9,500 | 8,800 |
Interest income | 1,506 | 670 | 4,301 | 1,848 | 5,237 | 2,417 |
Equity AFUDC | 448 | 968 | 1,034 | 2,077 | 1,253 | 2,473 |
Other components of net periodic benefit cost | (5,265) | (4,856) | (15,794) | (14,568) | (20,650) | (19,508) |
Miscellaneous income and (expense) | (553) | (657) | (1,402) | (1,981) | (1,765) | (3,382) |
Total other income (deductions) | 836 | (1,775) | (5,861) | (5,824) | (6,425) | (9,200) |
Operating Segments | Infrastructure Services | Centuri Construction Group Inc. | ||||||
Other income (deductions) | ||||||
Interest income | 4 | 1 | 6 | 2 | 7 | 2 |
Foreign transaction gain (loss) | (91) | (442) | 258 | (640) | 144 | (640) |
Miscellaneous income and (expense) | 125 | 231 | (595) | 676 | (175) | 1,825 |
Total other income (deductions) | 38 | (210) | (331) | 38 | (24) | 1,187 |
Corporate and administrative | ||||||
Other income (deductions) | ||||||
Total other income (deductions) | $ 15 | $ 5 | $ 41 | $ 6 | $ 48 | $ 6 |
Components of Net Periodic Benefit Cost - Schedule of Net Periodic Benefit Costs (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Qualified Retirement Plan | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Service cost | $ 7,139 | $ 5,848 | $ 21,417 | $ 17,544 | $ 27,265 | $ 23,252 |
Interest cost | 11,043 | 11,520 | 33,130 | 34,561 | 44,652 | 46,068 |
Expected return on plan assets | (14,689) | (13,799) | (44,066) | (41,397) | (57,865) | (55,536) |
Amortization of net actuarial loss | 8,029 | 6,001 | 24,086 | 18,003 | 30,087 | 24,319 |
Net periodic benefit cost | 11,522 | 9,570 | 34,567 | 28,711 | 44,139 | 38,103 |
SERP | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Service cost | 61 | 77 | 183 | 232 | 260 | 315 |
Interest cost | 415 | 471 | 1,244 | 1,413 | 1,714 | 1,878 |
Amortization of net actuarial loss | 375 | 361 | 1,126 | 1,081 | 1,486 | 1,426 |
Net periodic benefit cost | 851 | 909 | 2,553 | 2,726 | 3,460 | 3,619 |
PBOP | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Service cost | 368 | 367 | 1,105 | 1,101 | 1,472 | 1,476 |
Interest cost | 687 | 808 | 2,061 | 2,424 | 2,869 | 3,218 |
Expected return on plan assets | (929) | (839) | (2,789) | (2,518) | (3,629) | (3,305) |
Amortization of prior service costs | 334 | 333 | 1,002 | 1,001 | 1,336 | 1,335 |
Amortization of net actuarial loss | 0 | 0 | 0 | 0 | 0 | 105 |
Net periodic benefit cost | $ 460 | $ 669 | $ 1,379 | $ 2,008 | $ 2,048 | $ 2,829 |
Revenue - Revenue Performance Obligation (Details) - Centuri Construction Group Inc. - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 $ in Millions |
Sep. 30, 2018
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Transaction price allocated to unsatisfied performance obligations of contracts | $ 71 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 4 years |
Revenue - Summary of Information about Receivables (Detail) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Revenue from Contract with Customer [Abstract] | ||
Contracts receivable, net | $ 191,923 | $ 221,859 |
Revenue earned on contracts in progress in excess of billings | 85,554 | 5,768 |
Amounts billed in excess of revenue earned on contracts | $ 7,192 | $ 9,602 |
Revenue - Schedule of Construction Services Contracts Receivable (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Billed on completed contracts and contracts in progress | $ 189,619 | |
Other receivables | 2,424 | |
Contracts receivable, gross | 192,043 | |
Allowance for doubtful accounts | (120) | |
Contracts receivable, net | $ 191,923 | $ 221,859 |
Segment Information - Additional Information (Detail) |
9 Months Ended |
---|---|
Sep. 30, 2018
Segment
| |
Segment Reporting [Abstract] | |
Number of segments | 2 |
Derivatives and Fair Value Measurements - Notional Amounts under Swaps Contracts (Detail) - MMBTU MMBTU in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Contract notional amounts | 14,157 | 10,929 |
Derivatives and Fair Value Measurements - Amount of Gain or Losses Recognized in Income on Derivatives (Detail) - Cash Flow Hedging - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Amount of gain or (loss) recognized in income on derivative | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Net cost of gas sold | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Amount of gain or (loss) recognized in income on derivative | 511 | (546) | (3,815) | (6,851) | (8,536) | (4,098) |
Regulatory Deferral Accounting Treatment | Net cost of gas sold | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Amount of gain or (loss) recognized in income on derivative | $ (511) | $ 546 | $ 3,815 | $ 6,851 | $ 8,536 | $ 4,098 |
Derivatives and Fair Value Measurements - Paid to and Received from Counterparties for Settlements of Matured Swaps (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2018 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Paid to counterparties | $ 866 | $ 4,797 | $ 6,343 |
Received from counterparties | $ 0 | $ 6 | $ 6 |
Derivatives and Fair Value Measurements - Regulatory Assets/Liabilities Offsetting Derivatives (Detail) - Swaps - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Other deferred credits and other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Net Total | $ (24) | |
Prepaids and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Net Total | 4,697 | $ 4,457 |
Deferred charges and other assets | ||
Derivatives, Fair Value [Line Items] | ||
Net Total | $ 131 | $ 1,323 |
Derivatives and Fair Value Measurements - Summary of Financial Assets and Liabilities (Detail) - Level 2 - Significant Other Observable Inputs - Swaps - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Net Assets (Liabilities) | $ (4,804,000) | $ (5,780,000) |
Deferred charges and other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 24,000 | 0 |
Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | (4,697,000) | (4,457,000) |
Other deferred credits and other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | $ (131,000) | $ (1,323,000) |
Short-Term Debt (Detail) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Short-term Debt [Line Items] | ||
Short term borrowings outstanding | $ 31,500,000 | $ 214,500,000 |
Southwest Gas Credit Facility | ||
Short-term Debt [Line Items] | ||
Credit facility maximum borrowing capacity | 100,000,000 | |
Southwest Gas Credit Facility | Credit Facility | ||
Short-term Debt [Line Items] | ||
Short term borrowings outstanding | 22,500,000 | |
Southwest Gas Corporation | ||
Short-term Debt [Line Items] | ||
Short term borrowings outstanding | 9,000,000 | $ 191,000,000 |
Southwest Gas Corporation | Southwest Gas Credit Facility | ||
Short-term Debt [Line Items] | ||
Credit facility maximum borrowing capacity | 400,000,000 | |
Line of credit designated for working capital purposes | 250,000,000 | |
Short term borrowings outstanding | $ 9,000,000 |
Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income - Additional Information (Detail) $ in Millions |
Sep. 30, 2018
USD ($)
|
---|---|
Equity [Abstract] | |
Amount of FSIRS existing AOCI losses expected to reclassified income in next twelve months | $ 2.5 |
Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income - Amounts Recognized Before Tax, Defined Benefit Plans (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity [Abstract] | ||
Net actuarial (loss) gain | $ (423,343) | $ (448,555) |
Prior service cost | (3,366) | (4,368) |
Less: amount recognized in regulatory assets | 368,724 | 391,403 |
Recognized in AOCI | $ (57,985) | $ (61,520) |
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