Southwest Gas Management Discusses Q3 2013 Results - Earnings Call Transcript

| About: Southwest Gas (SWX)

Southwest Gas (NYSE:SWX)

Q3 2013 Earnings Call

November 07, 2013 1:00 pm ET


Kenneth J. Kenny - Vice President of Finance and Treasurer

Jeffrey W. Shaw - Chief Executive Officer, President and Director

Roy R. Centrella - Chief Financial Officer and Senior Vice President

John P. Hester - Senior Vice President of Regulatory Affairs and Energy Resources


Matthew P. Tucker - KeyBanc Capital Markets Inc., Research Division

Michael E. Gaugler - Brean Capital LLC, Research Division

John Hanson


Good day, ladies and gentlemen, and welcome to the Southwest Gas 2013 Third Quarter Earnings Conference Call. My name is Jasmine, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Ken Kenny, Vice President of Finance and Treasurer. Please proceed.

Kenneth J. Kenny

Thank you, Jasmine. Welcome to Southwest Gas Corporation's 2013 Third Quarter Earnings Conference Call. As Jasmine mentioned, my name is Ken Kenny, and I am Vice President, Finance, and Treasurer.

Our conference call is being broadcast live over the Internet. For those of you who would like to access the webcast, please visit our website at and click on the conference call link. We have slides on the Internet, which can be accessed to follow our presentation.

Today, we have Mr. Jeffrey W. Shaw, Southwest's President and Chief Executive Officer; Mr. Roy R. Centrella, Senior Vice President and Chief Financial Officer; Mr. John P. Hester, Senior Vice President, Regulatory Affairs and Energy Resources; and other members of senior management to provide a brief overview of the company's operations and earnings ended September 30, 2013, and a full year outlook for 2013.

Our general practice is not to provide earnings projections, therefore, no attempt will be made to project earnings for 2013. Rather, the company will address those factors that may impact this coming year's earnings.

Further, our lawyers have asked me to remind you that some of the information that will be discussed contains forward-looking statements. These statements are based on management's assumptions, which may or may not come true, and they should refer to the language on Slide 2, in the press release and also our SEC filings for a description of factors that may cause actual results to differ from our forward-looking statements. All forward-looking statements are made as of today, and we assume no obligation to update any such statement.

With that said, I'd like to turn the time over to Jeff.

Jeffrey W. Shaw

Thank you, Ken. Let's first start with the call outline today. I'd like to begin my comments by touching upon the strategic focus of our company. I'd like to then turn the time over to Roy Centrella, our Chief Financial Officer, who'll discuss consolidated earnings through the third quarter ended September 30, 2013, touch upon the Natural Gas segment and also our Pipeline Construction subsidiary. And then we'll have John Hester discuss some of the regulatory developments, including the status of the California rate case currently on file, some infrastructure tracking mechanisms that we have requested and have had some success with and are continuing to prove upon those mechanisms, he'll talk about that, and then I'll conclude with some discussion regarding the full year 2013 outlook in conclusion.

So with respect to strategic focus -- first, let me thank you for being with us today on the call. Let me begin again by saying we're pleased with our third quarter results. For the 12 months ended September 30, 2013, we've posted earnings per share of $3.25, a record for our company. Both the Natural Gas segment and our Pipeline Construction segment posted strong results. And our stock price is trading near its all-time high. In addition, over the past 7 years, we've been able to increase our dividend, making progress towards our stated goal of achieving a payout ratio that is competitive with our industry, which ranges from 55% to 65%.

Now our 12-month operating results do contain some unusual items that we will discuss in this call in both segments. But let me briefly summarize why we are where we are today. If you look at our letters to shareholders over the last decade, you'll see that we laid out our basic strategy, working collaboratively with our regulators to improve the stability of level of revenues and cash flows, controlling our costs, making sound investments in rate base growth and addressing dividend policy. So let me discuss how we did.

Over the last decade, we have made numerous rate filings, and we now earn closer to our authorized rates returns, fully coupled -- fully decoupled rates in all jurisdictions. Our operating costs per customer over the last decade have increased by less than half the rate of inflation, evidence that we are controlling costs. We have continued to grow rate base despite the offsetting deferred tax effects of bonus depreciation. And our credit ratings have improved significantly at the same time.

I should also mention that NPL Construction has been able to grow and stabilize its business by serving the significant pipe replacement activities occurring in our industry.

And as I've previously mentioned, we have raised the annual dividend for 7 straight years from $0.82 per share to $1.32 per share. In fact, the most recent increase was 11.3% this past February.

While our strategy of focusing on the fundamentals may not be novel, it has worked, and we believe it will continue to do so. Remember, given the nature of our business, the growth in our earnings is not linear from year to year. But historically, base rates in Arizona and Nevada, there is some regulatory lag that we must deal with in between rate cases. And as a result, our earnings generally grow in stair-step fashion. We have worked with our regulators and now have certain trackers for safety-related capital investments in Arizona and Nevada, and we are making strides to improve and increase their use going forward. This has helped to mitigate the effects of regulatory lag.

And as you may recall, we agreed to a stay-out provision in our last Arizona rate case, in which we were given fully decoupled rates. While this may have been a concern for some of the outset, we are nearly halfway through that stay-out provision. And we've been able to minimize the effects of regulatory lag through the subsequent refinancing of debt and measures taken to promote operating efficiencies. The settlement provides for our filing of the next Arizona rate case in the first half of 2016.

Now as we manage the business, we will not treat off the long-term shareholder and customer benefits investing in rate base growth with its inherent regulatory lag for short-term positive operating results. We are in this for the long-term benefit of shareholders. Our strategy has worked, and we believe it will continue to do so.

With that, I want to turn the time over to Roy Centrella, our Chief Financial Officer, to discuss our financial results in both segments of our business. And then John Hester, our Senior Vice President of Regulatory Affairs and Energy Services, will discuss regulatory developments. I will then jump back on the call and conclude with some remarks regarding what we foresee the remainder of 2013 to shape out today. So with that, Roy, please.

Roy R. Centrella

Thank you, Jeff. Let me also welcome those of you joining us today. Nice to see a lot of familiar names on the screen. I'll provide a comparative summary of third quarter and rolling 12-month operating results, with most of the emphasis on 12-month data, and identify factors which we expect will impact full year 2013 results.

So Slide 5, we'll start there. During the third quarter of 2013, we incurred a loss of $0.06 per share versus a loss of $0.09 per share during the third quarter 2012. The improved results were attributed to NPL, which reflected income of $9.1 million compared to $7.1 million in the prior period. The Gas segment experienced a loss of $11.9 million in the quarter, down just slightly from last year's third quarter loss of $11.4 million. For the 12-month period, we earned $150 million or $3.25 per basic share versus $126 million or $2.74 per basic share during the prior period.

There were 3 significant favorable factors influencing current period 12-month results. We had outsized returns on our company-owned life insurance, or COLI, policies for the Gas segment. And at NPL, there are large gains on sales of equipment, plus change order revenue recognized in the fourth quarter of 2012 with no related costs on a fixed-price contract. I'll speak to these in greater details as we move forward.

Next, we'll move on to the Gas segment at Slide 6 and third quarter results. Our operating loss widened from $5.7 million last year to $8.3 million this year. Operating margin grew by $5 million, while that was more than offset by a $7.6 million or 5% increase in operating expenses. I wouldn't read anything into the operating expense increase percentage in terms of one quarter being outside of the 3% to 4% range we're projecting for the full year. There are some timing differences, for instance, in some categories of costs, such as pipeline integrity management, travel costs, et cetera. And pension expense accounts for 1% of the cost increase percentage due to the what we would characterize as artificially low interest rate environment, which, by the way, is now turning around.

Also, in conjunction with our decoupling mechanisms, we are spending more on demand side management programs. These costs are deferred and then amortized if expense has recovered, so there's offsetting margin with these programs.

Now favorable between period variances and interest expense resulting from refinancing efforts and other income, due mainly to COLI returns, largely offset the operating loss changes. And as a result, the overall net loss attributable to the Gas segment was only about $500,000 wider in the current quarter than was last year at this time. And note that due to the seasonal nature of our business, losses during the third quarter are normal.

Next, we'll move on to the 12-month period on Slide 7. The Gas segment contribution to net income increased to $121 million from $113 million. There was a $6 million improvement in operating income, as growth in operating margin helped paced our operating cost increases. In addition, other income improved by $2.3 million between periods, while interest costs declined $6.5 million.

Slide 8 provides a breakdown of the $28 million jump in operating margin between the 12-month periods. Rate relief in Arizona from 2012 and the more recent rate relief from Nevada and California contributed $17 million. We also recognized about $7 million in new margin from customer growth, as the company added 25,000 net new customers, a growth rate of 1.3%. The remaining improvement relates to an increase in miscellaneous revenues and incremental margin from customers outside of the decoupling mechanisms.

Slide 9. Operating costs between periods increased by 3.8%. O&M costs were up 3% due to the higher general costs and employee-related benefits, principally the pension expense I mentioned earlier. And then depreciation and general taxes increased by 4% and 8%, respectively, due to plant additions and some changes that came out of our Nevada rate case.

On Slide 10, you'll note that net financing costs decreased $6.5 million between 12-month periods, reflecting refinancing activity, some early debt redemptions and also reduced interest expense associated with deferred PGA balances, as those balances have been brought down.

Slide 11 shows that while interest expense reductions have been substantial over the past few years, we did recently reach a point where an incremental debt offering was necessary. And in early October, we issued $250 million in 30-year notes at a 4.875% coupon. We are pleased to add this low-cost financing into our debt portfolio, but we'll begin to experience rising interest expense next quarter, even though, for all of 2013, net financing costs will still decline.

Moving to Slide 12. Our other income increased $2.3 million between periods. Current period reflects a $9.2 million increase in COLI cash surrender values and debt benefits compared to an $8.1 million increase in value during the prior year period. We would view the results for both periods as being significantly above our expected range of $2 million to $4 million and not likely sustainable at this level for the mid to long term. Additionally, you'll note that pipe replacement costs are down significantly between periods, as the program giving rise to these costs was substantially complete in 2012. In fact, most of the current period costs were from the fourth quarter of 2012.

Let's now turn our attention to NPL. Slide 13 provides a summary income statement for the quarterly and 12-month periods for NPL. The third quarter is traditionally NPL's strongest earnings period in the year, as construction activities are at their peak level in most of their operating areas. You'll note significant improvement in contribution to net income in both the 3- and 12-month periods when compared to the same period ended September 2012. Third quarter net income of $9.1 million is the third highest quarterly result in NPL history. 12-month net income of $29 million is a record level. However, several unusual items occurred during that period, which I'll explain shortly to give context to those results.

Moving to Slide 14. Third quarter revenue of $192 million was $16 million or 9% greater than last year at this time, due mainly to increased replacement construction with a number of existing customers, along with several new customers. Construction expenses also increased 9% to -- or $13.3 million between periods as a result of the incremental work. General and administrative costs included in construction expenses were $1.2 million greater than last year due to structural and transitional changes in response to the increasing size and complexity of NPL's business. Additionally, gains on sales of equipment declined from $1.2 million to $704,000 between periods.

Next, let's review the 12-month periods on Slide 15. Revenue of $643 million is $40 million or 7% greater than during the previous 12 months, largely reflecting increased replacement construction. Current period includes $3 million of change orders received in the fourth quarter of 2012 on a fixed-price contract with no associated costs, as they were previously recorded.

Construction expenses were $545 million in the current period. That's up only $8 million or 1.5% from the prior period. Two notable items impacted the low percentage increase: first, the prior period included a $16 million pretax loss on that fixed-price contract I mentioned; and the current period includes $6.5 million of gains on equipment sales, of which $3.5 million was from the fourth quarter of 2012, when NPL had a very high equipment turnover level. We don't expect that to recur during this year's fourth quarter.

Depreciation expense increased $7.6 million or 22% between periods due to additional equipment purchases last year and earlier this year to support revenue growth.

Let me now turn the time over to John Hester to provide a regulatory update.

John P. Hester

Thank you, Roy. Turning to Slide 16. We filed our most recent California general rate case in December of last year. The rate case incorporates the 2014 future test year. The application requests an overall margin increase of $11.6 million. Our requested California margin increase is based on the capital structure incorporating the 57% common equity component and a 10.7% proposed return on equity. In addition to the 2014 test year margin increase, we're requesting annual attrition margin increases at a rate of 2.95% for years 2015 to 2018. The application also requests establishing an infrastructure reliability and replacement adjustment mechanism. This proposal is similar to mechanisms we have had approved in Arizona and Nevada and would allow Southwest to propose specific infrastructure replacement projects outside of the normal rate case process. The costs of such projects are proposed to be deferred to a regulatory asset account for future annual surcharge recovery.

In June, Southwest received a responsive testimony from the Division of Ratepayer Advocates, or DRA. The DRA's report supports only a $1.1 million margin increase for Southwest, but that margin increase is based on the capital structure using a 51.7% common equity component and a 9.52% return on equity. DRA supports the annual attrition increases but proposes a formulaic approach based on the consumer price index. They do not, however, support establishing an infrastructure replacement mechanism.

Hearings in the application were held in August, and we expect the final decision from the commission by year-end. New rates resulting from the commission's forthcoming decision are requested effective January 1.

Moving to Slide 17. Southwest continues to experience progress in its infrastructure replacement mechanism initiatives in both Arizona and Nevada. In Arizona, our December 2011 rate case decision established a customer-owned yard line replacement program. This program allows replacement of aging customer-owned underground piping systems with utility-owned facilities. Southwest has approximately 100,000 customers with such aging customer-owned piping systems, primarily in our Southern Arizona division.

Our last Arizona rate case decision established a program under which Southwest agreed to survey approximately 1/3 of these lines a year and allows Southwest to offer to replace lines found to be leaking at no direct cost to the customer. Costs for the replacements are deferred to a regulatory asset for recovery through a surcharge approved by the Arizona Corporation Commission. The program has been working extremely well. Southwest is ahead of schedule in evaluating the existing population of customer yard lines and replaced approximately 2,000 lines last year at a cost of $4 million. Southwest submitted its first request to establish a surcharge to recover the costs of this program in March of this year. Effective June, the ACC approved a surcharge of about $0.001 per therm to recover first-year program costs. The new surcharge will produce about $600,000 in annual margin. As the program moves forward, the effective surcharge will be requested to be adjusted annually.

Turning to Slide 18. Southwest is also experiencing further infrastructure replacement mechanism progress for its Nevada customers. In March of this year, Southwest submitted an application to the Public Utilities Commission of Nevada to pursue $15.6 million of early vintage plastic pipe replacement. After several rounds of comments and settlement discussions, the parties in the proceeding reached a settlement, which was approved by the PUCN in June. The settlement provides for Southwest to deferred depreciation and return on investment to regulatory asset for future recovery and a general rate case proceeding. Southwest expects to accomplish the approved pipe replacement projects by year-end.

In a separate docket, Southwest is seeking to establish an ongoing accelerated pipe replacement program effectively for the year 2014 and beyond. The docket where this mechanism is being reviewed is an outgrowth of our 2012 Nevada rate case proceeding, where Southwest proposed to submit annual accelerated pipe replacement filings to the Nevada Commission for projects totaling up to $40 million a year, with costs to be deferred to a regulatory asset account and recovered through annual surcharges. Several rounds of comments were submitted in this docket reviewing this proposed infrastructure replacement mechanism, after which a draft regulation was forwarded to the Nevada Legislative Counsel Bureau for review. The current regulation draft generally reflects the spirit of Southwest's original proposal in our rate case. Final round of comments is now due November 19, after which another workshop will be held on November 25. A hearing on the docket is now scheduled for December 4, after which we expect the matter will be forwarded to the full commission, with a final decision likely to be issued in the first quarter of 2014.

Moving to Slide 19. On the topic of Nevada infrastructure, Southwest federally regulated transmission pipeline has proposed a new lateral line system from Ruby Pipeline to Elko, Nevada to respond to increased regional demands for natural gas related to gold-mining activity. An open season and subsequent open season were held in July and August of this year that confirms substantial customer interest in the project. Initial engineering estimates indicate the lateral is expected to cost approximately $35 million and is projected to have an in-service date of November 2015. A prefiling request for the new lateral project was submitted to the Federal Energy Regulatory Commission on October 24, with a comprehensive application expected to be submitted in June of 2014.

With that, I will return the call to Jeff.

Jeffrey W. Shaw

Thank you, John. Let's go to Slide 20. 2013 revenues for NPL are expected to moderately exceed those we posted in 2012. Construction -- excuse me, the net income, however, will probably be slightly better than that which we posted in 2011, remembering that the effects of the loss on the contract recorded in 2012. So again, 2013 revenues, moderately better than 2012 levels for revenues; and net income, we expect to be moderately better than what we posted in 2011.

With respect to construction expenses, we expect the -- in terms of the percentage of revenues, we expect construction expenses to be consistent with what we have normally experienced. Again, the total expected loss on the large fixed-price contract was recorded in 2012. Gains on equipment sales for 2013, we believe, should be notably lower than 2012 due to the reduction in equipment purchases in the current year. And the depreciation expense trend line is expected to continue.

Now we have charged NPL management to -- as a goal to grow the bottom line by 5% to 8% on an annualized basis. I can't say that that's going to be linear as well, but that's their charge. And the way their compensation packages are structured, they are motivated from that perspective to grow the business as well. So that would be an important point for the audience to consider.

For the year, in the Natural Gas Operations segment of the business, operating margin is expected to be favorably influenced by Nevada rate relief and customer growth. Operating costs are anticipated for the full year to be in that 3% to 4% increase range. Pension expense on a net basis is about $5 million for the year 2013. COLI-related income for the year-to-date and 12-month period ended September 30, 2013, significantly exceeded the expected returns, as Roy mentioned. And we do not believe that it's sustainable at that level for the mid to long term. We expect, on an annual basis, COLI to return, when you consider the market returns and the way we're required to record those from an accounting perspective and also with debt benefits, if they happen to come, somewhere in the $2 million to $4 million range on an annualized basis. Due to debt refinancings, redemptions, offset partially by the $250 million debt offering that Roy mentioned to you, we expect approximately $4 million of interest savings in 2013 compared to 2012.

So with that, those are our prepared comments. And I'll turn the time back to Ken.

Kenneth J. Kenny

Thanks, Jeff. That concludes our prepared presentation. For those of you who have accessed our slides, we have also provided an Appendix with the slides that include other pertinent information about Southwest Gas. You can review that in your convenience.

Our operator, Jasmine, will now explain the process for asking questions.

Question-and-Answer Session


[Operator Instructions] And your first question comes from the line of Matt Tucker from KeyBanc Capital Market.

Matthew P. Tucker - KeyBanc Capital Markets Inc., Research Division

First question on the ALCO expansion project. Could you give us a little more sense for what the milestones are going forward from here in terms of permitting? And I guess, on an open season, I assume that was nonbinding, but if you could just provide a little more color there, please.

John P. Hester

Sure. This is John. The next, I guess, milestones will be, over the next couple of months, having a lot of that initial prefiling work, and we're going to get all that information completed before we can submit the final application to the FERC. We are also currently working on getting Precedent Agreements in place with the customers who expressed interest. There is some capacity that is on the current line that is going to probably be shifted around among customers. But it seems like there's some pretty good interest in the projects, so we're pretty optimistic that that's going to be going forward on a good time frame.

Matthew P. Tucker - KeyBanc Capital Markets Inc., Research Division

And any more color you can give us on the types of customers or, really, where the demand is coming from to drive the need for this project?

John P. Hester

I think we're going to need to wait to get the Precedent Agreements signed before we give any more information on that. But generally speaking, the growth is due to increased mining activity in the area, which is not only creating industrial demand, but it's also creating that residual commercial and residential growth. And we're seeing increased demands from our industrial customers, but also we're seeing that residential and commercial growth in the Elko area, hence, it looks to be pretty impressive. So it's just general increased economic activity in that area.

Matthew P. Tucker - KeyBanc Capital Markets Inc., Research Division

Okay, great. And shifting gears, you've now had, call it, 5 quarters of pretty solid results at NPL after there were some issues there early last year. Did that factor in at all as you think about your dividend going forward? Or should we continue to think about that, just along the lines of the utility operations?

Jeffrey W. Shaw

Yes, it's a good question. This is Jeff. We have stated in our annual report, and we continue to tell the market in our meetings that we intend as a board to address dividend policy and move our dividend more towards that competitive range in our industry somewhere 55% to 65%. Now why do I give a range of that magnitude? It's because we have NPL. When we consider as a board the net income at NPL and how much of that we ought to use for purposes of establishing dividend policy, we would not consider the full amount of those earnings like we would the Natural Gas segment for purposes of establishing dividend policy. So when I give a range of 55% to 65%, we would probably look at 45%, let's say, just as a target of the earnings for NPL that we would look at and consider in the mix for purposes of establishing dividend policy. So it's definitely a favorable positive thing if NPL can grow as we charge them at a 5% to 8% clip for purposes of establishing dividend policy. That will definitely be considered, but probably not at the same percentage payout as the Gas segment would be considered. So, fortunately, we have headroom on our dividend, and we've talked about the fact, within a short -- reasonably short period of time, we'd like to move the dividend for Southwest Gas consolidated up to a more competitive level from a payout ratio standpoint.


[Operator Instructions] And your next question comes from Michael Gaugler from Brean Capital.

Michael E. Gaugler - Brean Capital LLC, Research Division

Just a question on your 2013 outlook. Last bullet on Slide 21, you referenced that you're looking for $4 million of interest savings in '13 versus '12. As I kind of look at where you were in '12 for the year and through the first 3 months of '13, that would be -- I guess, you're kind of suggesting quite a step-up from the third quarter to the fourth quarter in terms of interest expense. Wondering what's behind that specifically.

Roy R. Centrella

Sure. Michael, it's Roy. With the -- we did the $250 million debt offering very early in October, in fact, like within the first 3 days of the month. So we'll have a full quarter's worth of interest on that just under 5%. That's sort of replacing the interest expense from our commercial -- our credit facility, I mean, which had -- we're paying interest roughly 1% on that financing. And so there is an incremental impact from issuing that debt over what we are currently experiencing.


And your next question comes from line of John Hanson from Praesidis.

John Hanson

Just one more thing I wanted to ask about was the pension cost. When -- what time of year do you do those calcs and when does that reflect in the next calculations in the expenses?

Roy R. Centrella

The pension expense -- this is Roy -- is really all predicated on the interest rate, the discount rate at December 31 of each year. So we have -- so expense is set at the beginning, before the year starts, and really only would change for the following year. So we've set our pension level following December 31, 2012, for 2013, and that was, I think, roughly $43 million overall. And we won't change it again until 2014, and that'll be based on interest rates at 12/31/13. I'll tell you if we were doing it today, interest rates would be up at least 100 basis points, and that would certainly lower our pension expense quite a bit. But it's all dependent on that one day.


And we do have a follow-up question from Mr. Matt Tucker from KeyBanc Capital Market.

Matthew P. Tucker - KeyBanc Capital Markets Inc., Research Division

I'm just hoping you could give us a little bit of an update on how you view the regional economic environment where you operate and your customer growth has been gradually accelerating. Do you see any signs that, that could really start to break out? Or are you kind of sticking to your 1% expectation at this point?

Jeffrey W. Shaw

This is Jeff. Everything that we're seeing with respect to housing and job growth suggests there is a recovery underway. However, I can't tell you that we see it accelerating. I don't see a catalyst presently in any of my meetings in either of the major states we serve, Arizona and Nevada, where 90% of our business is. I don't see anything as you termed that would be breakout in nature. It's positive. Customer growth has been moderately improving our service areas over time. Unemployment has been dropping, which is good. But I would tell you that employment growth has somewhat flattened out in the last year, let's say, over the prior year. So that would suggest to me it's a moderate, maybe a more protracted improvement in the economy. That -- and again, that being said, we're pleased to see that builders are returning to market and building homes. And housing prices have come up, which helps them to continue to build. What we need to see is in Las Vegas area, in particular, Nevada, is some more movement towards some diversification. Gaming, as you know, proliferating throughout the country and the world. I just saw on the paper in New York approved 7 Las Vegas-style casinos out there. That's just indicative of the fact that gaming -- the secret on gaming is out. So there are efforts in our economy to diversify. I'll give you one example. In Las Vegas, there is an entity by the name of Switch. Switch is the database processing storage center that is growing game busters, and the governor is very interested in what's happening with that particular facility. It's kind of a segment of high-tech, the high-tech industry, and in the scenario that they're good to focus on and see if they can make some additional progress. The Phoenix market is more diversified. And so we're seeing some nice growth out of Phoenix compared to the rest of the country. That being said, it's certainly not at the levels we saw a few years ago. But directionally positive, probably a little longer-term in nature with respect to the recovery, but we're encouraged, and we're -- as you saw in the slide when Roy was speaking, we did have, on a trailing 12, $7 million in the margin from customer growth. That's a positive. If we didn't have that, it would be a more difficult challenging set of circumstances for us. But we're encouraged by that growth and that margin that we're getting and adding to the mix as we forecast to the business.


There are no remaining questions at this time. I would like to turn the call back over to Mr. Kenny for any closing remarks.

Kenneth J. Kenny

Thank you, Jasmine. This concludes our conference call, and we appreciate you participation and interest in Southwest Gas Corporation. Hope everyone has a great day and a great weekend. Thank you.


Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect. To you all, have a great day.

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