Overview

• US natural gas distributor's Q1 net income and EPS rose yr/yr

• Company says Q1 results driven by growth, Arizona rate case outcome and lower interest expense

• Delayed California rate case temporarily impacted Q1, but full-year earnings guidance unchanged

Outlook

• Company affirms 2026 EPS guidance of $4.17 to $4.32 per share

• Company maintains 2026 capital expenditures guidance at ~$1.25 bln

• Company expects 2026-2030 EPS CAGR of 12%-14% and rate base CAGR of 9.5%-11.5%

Result Drivers

• OPERATING MARGIN - Higher operating margin was mainly driven by updated rates in Arizona and Nevada and customer growth, partially offset by the end of recovery under the Vintage Steel Pipeline Program

• COST PRESSURES - Higher operations and maintenance, depreciation, and taxes offset margin gains, mainly due to increased insurance, outside services, incentive compensation, and infrastructure investments

• LOWER INTEREST EXPENSE - Corporate and administrative results improved due to lower net interest deductions after debt repayment and higher interest income

Company press release: ID:nPnLNkBka

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 EPS		$1.91
Q1 Net Income		$138.37 mln

Analyst Coverage

• The current average analyst rating on the shares is "strong buy" and the breakdown of recommendations is 7 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the natural gas utilities peer group is "buy."

• Wall Street's median 12-month price target for Southwest Gas Holdings Inc is $95.00, about 2.1% above its May 4 closing price of $93.07

• The stock recently traded at 21 times the next 12-month earnings vs. a P/E of 20 three months ago

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