UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Southwest Gas Holdings, Inc. Common Stock, $1 Par Value	SWX	New York Stock Exchange

Indicate by check mark whether each registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that each registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ☐

Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that each registrant was required to submit such files).    Yes  x    No  ☐

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Southwest Gas Holdings, Inc.:

Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Southwest Gas Corporation:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	x	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Southwest Gas Holdings, Inc. Common Stock, $1 Par Value, 53,396,583 shares as of April 30, 2019.

All of the outstanding shares of common stock ($1 par value) of Southwest Gas Corporation were held by Southwest Gas Holdings, Inc. as of April 30, 2019.

SOUTHWEST GAS CORPORATION MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1)(a) and (b) OF FORM 10-Q AND IS THEREFORE FILING THIS REPORT WITH THE REDUCED DISCLOSURE FORMAT AS PERMITTED BY GENERAL INSTRUCTION H(2).

1

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

FILING FORMAT

This quarterly report on Form 10-Q is a combined report being filed by two separate registrants: Southwest Gas Holdings, Inc. and Southwest Gas Corporation. Except where the content clearly indicates otherwise, any reference in the report to “we,” “us” or “our” is to the holding company or the consolidated entity of Southwest Gas Holdings, Inc. and all of its subsidiaries, including Southwest Gas Corporation, which is a distinct registrant that is a wholly owned subsidiary of Southwest Gas Holdings, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representation whatsoever as to any other company.

Part I—Financial information in this Quarterly Report on Form 10-Q includes separate financial statements (i.e., balance sheets, statements of income, statements of comprehensive income, and statements of cash flows) for Southwest Gas Holdings, Inc. and Southwest Gas Corporation, in that order. The Notes to the Condensed Consolidated Financial Statements are presented on a combined basis for both entities. All Items other than Part I – Item 1 are combined for the reporting companies.

2

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of dollars, except par value)

(Unaudited)

	March 31, 2019			December 31, 2018
ASSETS
Utility plant:
Gas plant	$	7,268,255		$	7,134,239
Less: accumulated depreciation	(2,257,017		)	(2,234,029		)
Construction work in progress	204,370			193,028
Net utility plant	5,215,608			5,093,238
Other property and investments	716,722			623,551
Current assets:
Cash and cash equivalents	97,037			85,361
Accounts receivable, net of allowances	429,248			413,926
Accrued utility revenue	47,000			77,200
Income taxes receivable	14,069			14,653
Deferred purchased gas costs	65,242			4,928
Prepaid and other current assets	177,784			243,701
Total current assets	830,380			839,769
Noncurrent assets:
Goodwill	364,482			359,045
Deferred income taxes	1,074			1,264
Deferred charges and other assets	441,166			440,862
Total noncurrent assets	806,722			801,171
Total assets	$	7,569,432		$	7,357,729
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $1 par (authorized - 60,000,000 shares; issued and outstanding - 53,391,731 and 53,026,848 shares)	$	55,021		$	54,656
Additional paid-in capital	1,332,793			1,305,769
Accumulated other comprehensive income (loss), net	(50,623		)	(52,668		)
Retained earnings	1,009,809			944,285
Total Southwest Gas Holdings, Inc. equity	2,347,000			2,252,042
Noncontrolling interest	(452		)	(452		)
Total equity	2,346,548			2,251,590
Redeemable noncontrolling interest	82,406			81,831
Long-term debt, less current maturities	2,106,274			2,107,258
Total capitalization	4,535,228			4,440,679
Current liabilities:
Current maturities of long-term debt	34,915			33,060
Short-term debt	188,000			152,000
Accounts payable	231,343			248,993
Customer deposits	68,593			67,940
Income taxes payable	—			1,083
Accrued general taxes	69,423			43,560
Accrued interest	31,439			21,369
Deferred purchased gas costs	72,213			79,762
Other current liabilities	278,552			290,878
Total current liabilities	974,478			938,645
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits	556,063			529,201
Accumulated removal costs	385,000			383,000
Other deferred credits and other long-term liabilities	1,118,663			1,066,204
Total deferred income taxes and other credits	2,059,726			1,978,405
Total capitalization and liabilities	$	7,569,432		$	7,357,729

The accompanying notes are an integral part of these statements.

3

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,						Twelve Months Ended March 31,
	2019			2018			2019			2018
Operating revenues:
Gas operating revenues	$	520,677		$	494,313		$	1,384,092		$	1,334,019
Utility infrastructure services revenues	312,862			260,017			1,575,130			1,314,366
Total operating revenues	833,539			754,330			2,959,222			2,648,385
Operating expenses:
Net cost of gas sold	192,604			185,732			426,260			393,898
Operations and maintenance	106,245			102,351			410,287			390,819
Depreciation and amortization	77,539			62,478			264,273			240,951
Taxes other than income taxes	16,206			15,257			60,847			58,421
Utility infrastructure services expenses	300,465			258,952			1,429,202			1,215,959
Total operating expenses	693,059			624,770			2,590,869			2,300,048
Operating income	140,480			129,560			368,353			348,337
Other income and (expenses):
Net interest deductions	(26,397		)	(22,631		)	(100,437		)	(81,981		)
Other income (deductions)	6,839			(4,334		)	(6,253		)	(9,374		)
Total other income and (expenses)	(19,558		)	(26,965		)	(106,690		)	(91,355		)
Income before income taxes	120,922			102,595			261,663			256,982
Income tax expense	25,538			24,301			62,921			53,751
Net income	95,384			78,294			198,742			203,231
Net income (loss) attributable to noncontrolling interests	575			(797		)	747			(393		)
Net income attributable to Southwest Gas Holdings, Inc.	$	94,809		$	79,091		$	197,995		$	203,624
Basic earnings per share	$	1.78		$	1.63		$	3.91		$	4.23
Diluted earnings per share	$	1.77		$	1.63		$	3.91		$	4.23
Average number of common shares	53,369			48,416			50,640			48,105
Average shares (assuming dilution)	53,424			48,459			50,701			48,139

The accompanying notes are an integral part of these statements.

4

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Thousands of dollars)

(Unaudited)

	Three Months Ended March 31,						Twelve Months Ended March 31,
	2019			2018			2019			2018
Net income	$	95,384		$	78,294		$	198,742		$	203,231
Other comprehensive income (loss), net of tax
Defined benefit pension plans:
Net actuarial gain (loss)	—			—			(15,524		)	(32,701		)
Amortization of prior service cost	241			254			1,002			875
Amortization of net actuarial loss	4,441			6,387			23,603			18,219
Regulatory adjustment	(4,063		)	(5,746		)	(4,574		)	10,400
Net defined benefit pension plans	619			895			4,507			(3,207		)
Forward-starting interest rate swaps (“FSIRS”):
Amounts reclassified into net income	635			635			2,541			2,190
Net forward-starting interest rate swaps	635			635			2,541			2,190
Foreign currency translation adjustments	791			(911		)	(1,308		)	640
Total other comprehensive income (loss), net of tax	2,045			619			5,740			(377		)
Comprehensive income	97,429			78,913			204,482			202,854
Comprehensive income (loss) attributable to noncontrolling interests	575			(797		)	747			(389		)
Comprehensive income attributable to Southwest Gas Holdings, Inc.	$	96,854		$	79,710		$	203,735		$	203,243

The accompanying notes are an integral part of these statements.

5

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)

	Three Months Ended March 31,						Twelve Months Ended March 31,
	2019			2018			2019			2018
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	95,384		$	78,294		$	198,742		$	203,231
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	77,539			62,478			264,273			240,951
Deferred income taxes	24,923			23,228			52,736			49,372
Changes in current assets and liabilities:
Accounts receivable, net of allowances	(15,562		)	8,858			(40,282		)	(68,978		)
Accrued utility revenue	30,200			30,900			300			(1,400		)
Deferred purchased gas costs	(67,863		)	(10,628		)	25,339			(36,330		)
Accounts payable	(12,643		)	(48,497		)	47,632			26,762
Accrued taxes	25,400			18,776			(5,331		)	491
Other current assets and liabilities	47,848			(643		)	(5,582		)	(29,945		)
Gains on sale	(233		)	(230		)	(1,706		)	(4,087		)
Changes in undistributed stock compensation	3,188			1,861			7,438			6,638
AFUDC	(960		)	(229		)	(4,358		)	(2,050		)
Changes in other assets and deferred charges	(16,328		)	(1,845		)	(20,221		)	(16,941		)
Changes in other liabilities and deferred credits	(2,782		)	18,244			17,420			20,965
Net cash provided by operating activities	188,111			180,567			536,400			388,679
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions	(210,662		)	(154,542		)	(822,034		)	(662,401		)
Acquisition of businesses, net of cash acquired	—			(4,209		)	(247,164		)	(98,413		)
Changes in customer advances	3,078			3,038			13,503			2,304
Miscellaneous inflows	262			1,505			3,200			13,429
Net cash used in investing activities	(207,322		)	(154,208		)	(1,052,495		)	(745,081		)
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock, net	25,879			11,220			369,061			52,375
Dividends paid	(27,602		)	(23,839		)	(104,003		)	(94,572		)
Centuri distribution to redeemable noncontrolling interest	—			(102		)	—			(204		)
Issuance of long-term debt, net	29,666			335,382			259,456			716,165
Retirement of long-term debt	(31,160		)	(21,102		)	(247,816		)	(312,308		)
Change in credit facility and commercial paper	—			(111,000		)	111,000			24,000
Change in short-term debt	36,000			(192,000		)	165,500			22,500
Principal payments on finance lease obligations	(70		)	(165		)	(553		)	(946		)
Redemption of Centuri shares from noncontrolling parties	—			—			—			(23,000		)
Withholding remittance - share-based compensation	(1,838		)	(2,852		)	(2,096		)	(3,510		)
Other	(53		)	(337		)	(2,460		)	(2,498		)
Net cash provided by (used in) financing activities	30,822			(4,795		)	548,089			378,002
Effects of currency translation on cash and cash equivalents	65			(71		)	(72		)	114
Change in cash and cash equivalents	11,676			21,493			31,922			21,714
Cash and cash equivalents at beginning of period	85,361			43,622			65,115			43,401
Cash and cash equivalents at end of period	$	97,037		$	65,115		$	97,037		$	65,115
Supplemental information:
Interest paid, net of amounts capitalized	$	15,850		$	13,294		$	89,118		$	74,949
Income taxes paid (received)	$	454		$	4,418		$	(2,743	)	$	8,264

The accompanying notes are an integral part of these statements.

6

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of dollars)

(Unaudited)

	March 31, 2019			December 31, 2018
ASSETS
Utility plant:
Gas plant	$	7,268,255		$	7,134,239
Less: accumulated depreciation	(2,257,017		)	(2,234,029		)
Construction work in progress	204,370			193,028
Net utility plant	5,215,608			5,093,238
Other property and investments	123,783			116,146
Current assets:
Cash and cash equivalents	75,148			31,962
Accounts receivable, net of allowances	170,471			140,057
Accrued utility revenue	47,000			77,200
Income taxes receivable	10,602			13,444
Deferred purchased gas costs	65,242			4,928
Prepaid and other current assets	165,382			229,562
Total current assets	533,845			497,153
Noncurrent assets:
Goodwill	10,095			10,095
Deferred charges and other assets	423,495			424,952
Total noncurrent assets	433,590			435,047
Total assets	$	6,306,826		$	6,141,584
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock	$	49,112		$	49,112
Additional paid-in capital	1,089,002			1,065,242
Accumulated other comprehensive income (loss), net	(47,795		)	(49,049		)
Retained earnings	797,584			717,155
Total equity	1,887,903			1,782,460
Long-term debt, less current maturities	1,818,959			1,818,669
Total capitalization	3,706,862			3,601,129
Current liabilities:
Short-term debt	188,000			152,000
Accounts payable	148,309			184,982
Customer deposits	68,593			67,940
Accrued general taxes	69,423			43,560
Accrued interest	30,398			20,243
Deferred purchased gas costs	72,213			79,762
Payable to parent	1,038			472
Other current liabilities	100,556			94,136
Total current liabilities	678,530			643,095
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net	517,124			490,458
Accumulated removal costs	385,000			383,000
Other deferred credits and other long-term liabilities	1,019,310			1,023,902
Total deferred income taxes and other credits	1,921,434			1,897,360
Total capitalization and liabilities	$	6,306,826		$	6,141,584

The accompanying notes are an integral part of these statements.

7

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Thousands of dollars)

(Unaudited)

	Three Months Ended March 31,						Twelve Months Ended March 31,
	2019			2018			2019			2018
Gas operating revenues	$	520,677		$	494,313		$	1,384,092		$	1,334,019
Operating expenses:
Net cost of gas sold	192,604			185,732			426,260			393,898
Operations and maintenance	105,542			102,190			408,165			389,687
Depreciation and amortization	57,612			49,961			199,467			190,688
Taxes other than income taxes	16,206			15,257			60,847			58,421
Total operating expenses	371,964			353,140			1,094,739			1,032,694
Operating income	148,713			141,173			289,353			301,325
Other income and (expenses):
Net interest deductions	(23,099		)	(19,255		)	(85,584		)	(71,778		)
Other income (deductions)	5,946			(4,603		)	(6,691		)	(9,747		)
Total other income and (expenses)	(17,153		)	(23,858		)	(92,275		)	(81,525		)
Income from continuing operations before income taxes	131,560			117,315			197,078			219,800
Income tax expense	28,171			26,966			45,196			49,571
Net income	$	103,389		$	90,349		$	151,882		$	170,229

The accompanying notes are an integral part of these statements.

8

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2019

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Thousands of dollars)

(Unaudited)

	Three Months Ended March 31,						Twelve Months Ended March 31,
	2019			2018			2019			2018
Net income	$	103,389		$	90,349		$	151,882		$	170,229
Other comprehensive income (loss), net of tax
Defined benefit pension plans:
Net actuarial gain (loss)	—			—			(15,524		)	(32,701		)
Amortization of prior service cost	241			254			1,002			875
Amortization of net actuarial loss	4,441			6,387			23,603			18,219
Regulatory adjustment	(4,063		)	(5,746		)	(4,574		)	10,400
Net defined benefit pension plans	619			895			4,507			(3,207		)