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, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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.			Delaware	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  ☒    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  ☒    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	☒	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	☒	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  ☒

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, 55,129,976 shares as of April 30, 2020.

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, 2020.

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, 2020

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, statements of cash flows, and statements of equity) 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, 2020

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, 2020			December 31, 2019
ASSETS
Utility plant:
Gas plant	$	7,949,283		$	7,813,221
Less: accumulated depreciation	(2,341,561		)	(2,313,050		)
Construction work in progress	202,935			185,026
Net utility plant	5,810,657			5,685,197
Other property and investments	785,522			784,173
Current assets:
Cash and cash equivalents	60,965			49,539
Accounts receivable, net of allowances	423,013			474,097
Accrued utility revenue	48,100			79,100
Income taxes receivable, net	7,503			31,751
Deferred purchased gas costs	—			44,412
Prepaid and other current assets	133,338			180,957
Total current assets	672,919			859,856
Noncurrent assets:
Goodwill	333,943			343,023
Deferred income taxes	765			856
Deferred charges and other assets	489,419			496,943
Total noncurrent assets	824,127			840,822
Total assets	$	8,093,225		$	8,170,048
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $1 par (authorized - 120,000,000 shares; issued and outstanding - 55,126,386 and 55,007,433 shares)	$	56,756		$	56,637
Additional paid-in capital	1,470,411			1,466,937
Accumulated other comprehensive loss, net	(59,073		)	(56,732		)
Retained earnings	1,079,801			1,039,072
Total equity	2,547,895			2,505,914
Redeemable noncontrolling interest	85,005			84,542
Long-term debt, less current maturities	2,310,084			2,300,482
Total capitalization	4,942,984			4,890,938
Current liabilities:
Current maturities of long-term debt	169,574			163,512
Short-term debt	157,000			211,000
Accounts payable	182,182			238,921
Customer deposits	69,938			69,165
Income taxes payable, net	—			2,069
Accrued general taxes	73,105			48,160
Accrued interest	34,755			21,329
Deferred purchased gas costs	26,498			60,755
Other current liabilities	266,763			264,950
Total current liabilities	979,815			1,079,861
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net	624,888			599,840
Accumulated removal costs	399,000			395,000
Other deferred credits and other long-term liabilities	1,146,538			1,204,409
Total deferred income taxes and other credits	2,170,426			2,199,249
Total capitalization and liabilities	$	8,093,225		$	8,170,048

The accompanying notes are an integral part of these statements.

3

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2020

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,
	2020			2019			2020			2019
Operating revenues:
Gas operating revenues	$	502,827		$	520,677		$	1,351,089		$	1,384,092
Utility infrastructure services revenues	333,493			312,862			1,771,609			1,575,130
Total operating revenues	836,320			833,539			3,122,698			2,959,222
Operating expenses:
Net cost of gas sold	160,821			192,604			353,381			426,260
Operations and maintenance	103,781			106,245			421,686			410,287
Depreciation and amortization	87,653			77,539			313,351			264,273
Taxes other than income taxes	16,378			16,206			62,500			60,847
Utility infrastructure services expenses	319,314			300,465			1,592,076			1,429,202
Total operating expenses	687,947			693,059			2,742,994			2,590,869
Operating income	148,373			140,480			379,704			368,353
Other income and (expenses):
Net interest deductions	(28,380		)	(26,397		)	(111,209		)	(100,437		)
Other income (deductions)	(20,770		)	6,839			(17,524		)	(6,253		)
Total other income and (expenses)	(49,150		)	(19,558		)	(128,733		)	(106,690		)
Income before income taxes	99,223			120,922			250,971			261,663
Income tax expense	26,218			25,538			56,703			62,921
Net income	73,005			95,384			194,268			198,742
Net income attributable to noncontrolling interests	463			575			2,599			747
Net income attributable to Southwest Gas Holdings, Inc.	$	72,542		$	94,809		$	191,669		$	197,995
Earnings per share:
Basic	$	1.31		$	1.78		$	3.50		$	3.91
Diluted	$	1.31		$	1.77		$	3.50		$	3.91
Weighted average shares:
Basic	55,310			53,369			54,726			50,640
Diluted	55,363			53,424			54,792			50,701

The accompanying notes are an integral part of these statements.

4

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2020

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,
	2020			2019			2020			2019
Net income	$	73,005		$	95,384		$	194,268		$	198,742
Other comprehensive income (loss), net of tax
Defined benefit pension plans:
Net actuarial loss	—			—			(54,026		)	(15,524		)
Amortization of prior service cost	220			241			945			1,002
Amortization of net actuarial loss	7,188			4,441			20,513			23,603
Prior service cost	—			—			(1,426		)	—
Regulatory adjustment	(6,380		)	(4,063		)	25,760			(4,574		)
Net defined benefit pension plans	1,028			619			(8,234		)	4,507
Forward-starting interest rate swaps (“FSIRS”):
Amounts reclassified into net income	636			635			2,542			2,541
Net forward-starting interest rate swaps	636			635			2,542			2,541
Foreign currency translation adjustments	(4,005		)	791			(2,758		)	(1,308		)
Total other comprehensive income (loss), net of tax	(2,341		)	2,045			(8,450		)	5,740
Comprehensive income	70,664			97,429			185,818			204,482
Comprehensive income attributable to noncontrolling interests	463			575			2,599			747
Comprehensive income attributable to Southwest Gas Holdings, Inc.	$	70,201		$	96,854		$	183,219		$	203,735

The accompanying notes are an integral part of these statements.

5

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2020

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,
	2020			2019			2020			2019
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	73,005		$	95,384		$	194,268		$	198,742
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	87,653			77,539			313,351			264,273
Deferred income taxes	25,309			24,923			54,548			52,736
Changes in current assets and liabilities:
Accounts receivable, net of allowances	45,837			(15,562		)	7,154			(40,282		)
Accrued utility revenue	31,000			30,200			(1,100		)	300
Deferred purchased gas costs	10,155			(67,863		)	19,527			25,339
Accounts payable	(60,723		)	(12,643		)	(49,945		)	47,632
Accrued taxes	30,377			25,400			10,220			(5,331		)
Other current assets and liabilities	76,453			47,848			102,742			(5,582		)
Gains on sale of equipment	(28		)	(233		)	(5,268		)	(1,706		)
Changes in undistributed stock compensation	2,816			3,188			6,524			7,438
Equity AFUDC	(1,061		)	(960		)	(4,262		)	(4,358		)
Changes in deferred charges and other assets	6,495			(16,328		)	1,772			(20,221		)
Changes in other liabilities and deferred credits	(55,722		)	(2,782		)	(65,704		)	17,420
Net cash provided by operating activities	271,566			188,111			583,827			536,400
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions	(210,655		)	(210,662		)	(938,141		)	(822,034		)
Acquisition of businesses, net of cash acquired	—			—			(47,638		)	(247,164		)
Changes in customer advances	5,434			3,078			21,357			13,503
Other	4,430			262			19,321			3,200
Net cash used in investing activities	(200,791		)	(207,322		)	(945,101		)	(1,052,495		)
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock, net	3,148			25,879			135,215			369,061
Dividends paid	(30,006		)	(27,602		)	(118,531		)	(104,003		)
Issuance of long-term debt, net	99,978			29,666			601,908			259,456
Retirement of long-term debt	(75,168		)	(31,160		)	(257,797		)	(247,816		)
Change in credit facility and commercial paper	—			—			—			111,000
Change in short-term debt	(54,000		)	36,000			(31,000		)	165,500
Principal payments on finance lease obligations	(51		)	(70		)	(193		)	(553		)
Withholding remittance - share-based compensation	(2,736		)	(1,838		)	(2,756		)	(2,096		)
Other	(199		)	(53		)	(1,422		)	(2,460		)
Net cash provided by (used in) financing activities	(59,034		)	30,822			325,424			548,089
Effects of currency translation on cash and cash equivalents	(315		)	65			(222		)	(72		)
Change in cash and cash equivalents	11,426			11,676			(36,072		)	31,922
Cash and cash equivalents at beginning of period	49,539			85,361			97,037			65,115
Cash and cash equivalents at end of period	$	60,965		$	97,037		$	60,965		$	97,037
SUPPLEMENTAL INFORMATION:
Interest paid, net of amounts capitalized	$	13,073		$	15,850		$	99,481		$	89,118
Income taxes paid (received), net	$	(20,064	)	$	454		$	(17,766	)	$	(2,743	)

The accompanying notes are an integral part of these statements.

6

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2020

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share amounts)

(Unaudited)

			Three Months Ended March 31,
			2020			2019
Common stock shares
	Beginning balances		55,007			53,026
		Common stock issuances	119			365
	Ending balances		55,126			53,391
Common stock amount
	Beginning balances		$	56,637		$	54,656
		Common stock issuances	119			365
	Ending balances		56,756			55,021
Additional paid-in capital
	Beginning balances		1,466,937			1,305,769
		Common stock issuances	3,474			27,024
	Ending balances		1,470,411			1,332,793
Accumulated other comprehensive loss
	Beginning balances		(56,732		)	(52,668		)
		Foreign currency exchange translation adjustment	(4,005		)	791
		Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax	1,028			619
		FSIRS amounts reclassified to net income, net of tax	636			635
	Ending balances		(59,073		)	(50,623		)
Retained earnings
	Beginning balances		1,039,072			944,285
		Net income	72,542			94,809
		Dividends declared	(31,813		)	(29,285		)
	Ending balances		1,079,801			1,009,809
Total Southwest Gas Holdings, Inc. equity ending balances			2,547,895			2,347,000
Noncontrolling interest
	Beginning balances		—			(452		)
	Ending balances		—			(452		)
Total equity ending balances			$	2,547,895		$	2,346,548
Dividends declared per common share			$	0.570		$	0.545

The accompanying notes are an integral part of these statements.

7

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2020

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of dollars)

(Unaudited)

	March 31, 2020			December 31, 2019
ASSETS
Utility plant:
Gas plant	$	7,949,283		$	7,813,221
Less: accumulated depreciation	(2,341,561		)	(2,313,050		)
Construction work in progress	202,935			185,026
Net utility plant	5,810,657			5,685,197
Other property and investments	118,547			133,787
Current assets:
Cash and cash equivalents	56,524			40,489
Accounts receivable, net of allowance	148,817			150,793
Accrued utility revenue	48,100			79,100
Income taxes receivable, net	—			25,901
Deferred purchased gas costs	—			44,412
Prepaid and other current assets	119,264			165,639
Total current assets	372,705			506,334
Noncurrent assets:
Goodwill	10,095			10,095
Deferred charges and other assets	456,684			463,333
Total noncurrent assets	466,779			473,428
Total assets	$	6,768,688		$	6,798,746
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock	$	49,112		$	49,112
Additional paid-in capital	1,279,208			1,229,083
Accumulated other comprehensive loss, net	(53,487		)	(55,151		)
Retained earnings	839,443			782,108
Total equity	2,114,276			2,005,152
Long-term debt, less current maturities	1,991,624			1,991,333
Total capitalization	4,105,900			3,996,485
Current liabilities:
Current maturities of long-term debt	125,000			125,000
Short-term debt	97,000			194,000
Accounts payable	108,569			149,368
Customer deposits	69,938			69,165
Income taxes payable	19,241			—
Accrued general taxes	73,105			48,160
Accrued interest	34,714			21,256
Deferred purchased gas costs	26,498			60,755
Payable to parent	174			844
Other current liabilities	147,950			126,573
Total current liabilities	702,189			795,121
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net	547,281			539,050
Accumulated removal costs	399,000			395,000
Other deferred credits and other long-term liabilities	1,014,318			1,073,090
Total deferred income taxes and other credits	1,960,599			2,007,140
Total capitalization and liabilities	$	6,768,688		$	6,798,746

The accompanying notes are an integral part of these statements.

8

SOUTHWEST GAS HOLDINGS, INC.	Form 10-Q
SOUTHWEST GAS CORPORATION	March 31, 2020

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Thousands of dollars)

(Unaudited)

	Three Months Ended March 31,						Twelve Months Ended March 31,
	2020			2019			2020			2019
Gas operating revenues	$	502,827		$	520,677		$	1,351,089		$	1,384,092
Operating expenses:
Net cost of gas sold	160,821			192,604			353,381			426,260
Operations and maintenance	103,088			105,542			419,720			408,165
Depreciation and amortization	64,725			57,612			222,733			199,467
Taxes other than income taxes	16,378			16,206			62,500			60,847
Total operating expenses	345,012			371,964			1,058,334			1,094,739
Operating income	157,815			148,713			292,755			289,353
Other income and (expenses):
Net interest deductions	(25,058		)	(23,099		)	(96,985		)	(85,584		)
Other income (deductions)	(20,536		)	5,946			(16,965		)	(6,691		)
Total other income and (expenses)	(45,594		)	(17,153		)	(113,950		)	(92,275		)
Income before income taxes	112,221