Friday, natural gas transport and distribution company Southwest Gas Corp. (SWX) reported a rise in the first-quarter profit from the year-ago period, even as revenues declined.
The Las Vegas, Nevada-based company reported a first-quarter net income of $49.98 million, up from $49.15 million in the corresponding quarter last year. On a per share basis, earnings declined to $1.12 from $1.14 in the comparable period of fiscal 2008, due to higher number of outstanding shares. On average, five analysts polled by Thomson Reuters estimated earnings of $1.27 per share for the quarter. Analysts' estimates typically exclude special items.
Consolidated operating revenues for the quarter declined to $689.86 million from $813.61 million in the similar period last year.
According to Jeffrey Shaw, CEO, "We believe we managed the business well in the areas we could control as operating costs were held in check, our liquidity position remained strong, our capital structure improved, and financing costs were reduced. The warm weather coupled with recessionary conditions offset recently granted rate relief and a nearly $12 million margin reallocation in California."
Operating margin decreased a net $1 million in the first quarter of 2009 compared to the first quarter of 2008. Rate relief and rate changes positively impacted margin by approximately $22 million while differences in heating demand, caused primarily by weather variations, negatively impacted operating margin by $17 million. Energy efficiency and conservation resulting from current economic conditions negatively impacted operating margin by $6 million.
Operating expenses for the quarter increased $1.1 million, or 1%, compared to the first quarter of 2008 primarily due to higher depreciation expense, partially offset by labor efficiencies associated with cost containment efforts.
Net financing costs decreased $3.2 million due principally to a reduction in outstanding debt, including the redemption of $75 million of debt in December 2008, and lower interest rates on variable-rate debt.
In April 2009, the company filed a $30.5 million general rate case in Nevada, first in five years, which includes a request to decouple rates from usage under recently established Public Utilities Commission of Nevada rules. Southwest Gas anticipates the case should be concluded before the next heating season.
The company noted that in April, Standard & Poor's upgraded its debt ratings to BBB from BBB-.
Southwest Gas closed Friday's regular trading at $20.28, up $0.07 or 0.35%, on a volume of 0.27 million shares on the NYSE.
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