Due to much warmer than normal temperatures during the first quarter in California, Nevada and Arizona, Southwest Gas Corp. announced consolidated earnings of $0.76 per share for 1Q2003, a $0.56 decrease from the $1.32 per share earned during the first quarter of 2002. The company’s consolidated net income was $25.5 million, compared to $42.9 million in the prior period.
“As we disclosed last week, operating results were significantly impacted by unseasonably warm temperatures during the first quarter of 2003,” said Michael O. Maffie, CEO. “While the eastern half of the United States was extremely cold and wet, Nevada experienced its warmest January on record and Arizona its second warmest. Warm temperatures continued through March. Although we can’t control the weather, we continue to monitor the expenses associated with our growing business. Cost curbing initiatives have been implemented and we recently completed a debt refinancing — seizing an opportunity in the current low interest rate environment.”
Southwest Gas’ operating margin, defined as operating revenues less the cost of gas sold, decreased $15 million, or 8%, in the first quarter of 2003 compared to the first quarter of 2002. The company attributed the decline to the extreme warm temperatures, which caused a $20 million reduction in margin, partially offset by an incremental $5 million contribution from customer growth. The company noted that it added 59,000 customers during the last 12 months, an increase of 4%.
Operating expenses for the quarter increased $2.6 million, or 3%, compared to the first quarter of 2002 due to general cost increases and costs associated with the continued expansion and upgrading of the gas system to accommodate customer growth. Net financing costs increased $1.3 million, or 7%, between periods primarily due to an increase in average debt outstanding.
Other income declined $10 million resulting from a one-time pretax gain of $8.9 million on the sale of undeveloped property in northern Arizona, recognized in the first quarter of 2002, and a reduction in interest income between quarters.
Southwest Gas provides natural gas service to approximately 1.5 million customers in Arizona, Nevada and California.
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