UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form10-Q

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)~~

~~OF THE SECURITIES EXCHANGE ACT OF 1934~~


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

For the quarterly period ended ~~September 30, 2017~~

March 31, 2023


☐			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.

~~California~~

~~81-3881866~~

~~5241 Spring Mountain Road~~

Delaware

81-3881866

8360 S. Durango Drive

Post Office Box 98510

Las Vegas, ~~Nevada 89193-8510~~

Nevada

89193-8510

~~(702) 876-7237~~

~~1-7850~~

~~Southwest Gas Corporation~~

~~California~~

~~88-0085720~~

~~5241 Spring Mountain Road~~

~~Post Office Box 98510~~

(702)

876-7237

~~Las Vegas, Nevada 89193-8510~~

1-7850

Southwest Gas Corporation

California

88-0085720

8360 S. Durango Drive

~~(702) 876-7237~~

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~~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 ~~the~~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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that ~~the~~each registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”~~“non-accelerated~~ “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-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

☐

��

Indicate by check mark whether each registrant is a shell company (as defined in Rule12b-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, ~~47,731,840~~71,336,035 shares as of ~~October 27, 2017.~~

April 28, 2023.

All of the outstanding shares of common stock ($1 par value) of Southwest Gas Corporation were held by Southwest Gas Holdings, Inc. as of ~~January 1, 2017.~~

April 28, 2023.

SOUTHWEST GAS CORPORATION MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1)(a) and (b) OF FORM10-Q AND IS THEREFORE FILING THIS REPORT WITH THE REDUCED DISCLOSURE FORMAT AS PERMITTED BY GENERAL INSTRUCTION H(2).


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

FILING FORMAT

This quarterly report onForm 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 Form10-Q includes separate financial statements (i.e., balance sheets, statements of income, statements of comprehensive income, statements of cash flows, and statements of ~~cash flows)~~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						~~September 30, 2017~~March 31, 2023

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)

   SEPTEMBER 30,
2017 DECEMBER 31,
2016
ASSETS

Utility plant:

Gas plant
   $ 6,440,547 $ 6,193,564
Less: accumulated depreciation
   (2,218,796 ) (2,172,966 )
Acquisition adjustments, net
   81 196
Construction work in progress
   164,030 111,177


Net utility plant
   4,385,862 4,131,971


Other property and investments
   369,303 342,343


Current assets:

Cash and cash equivalents
   59,152 28,066
Accounts receivable, net of allowances
   301,792 285,145
Accrued utility revenue
   34,100 76,200
Income taxes receivable, net
   5,462 4,455
Deferred purchased gas costs
   6,230 2,608
Prepaids and other current assets
   132,182 136,833


Total current assets
   538,918 533,307


Noncurrent assets:

Goodwill
   147,865 139,983
Deferred income taxes
   1,467 1,288
Deferred charges and other assets
   411,655 432,234


Total noncurrent assets
   560,987 573,505


Total assets
   $ 5,855,070 $ 5,581,126


CAPITALIZATION AND LIABILITIES

Capitalization:

Common stock, $1 par (authorized—60,000,000 shares; issued and outstanding—47,731,840 and 47,482,068 shares)
   $ 49,362 $ 49,112
Additionalpaid-in capital
   924,213 903,123
Accumulated other comprehensive income (loss), net
   (42,818 ) (48,008 )
Retained earnings
   784,934 759,263


Total Southwest Gas Holdings, Inc. equity
   1,715,691 1,663,490
Noncontrolling interest
   (2,295 ) (2,217 )


Total equity
   1,713,396 1,661,273
Redeemable noncontrolling interest
   —   22,590
Long-term debt, less current maturities
   1,731,981 1,549,983


Total capitalization
   3,445,377 3,233,846


Current liabilities:

Current maturities of long-term debt
   28,453 50,101
Short-term debt
   110,500 —
Accounts payable
   159,382 184,669
Customer deposits
   70,162 72,296
Income taxes payable
   1,543 1,909
Accrued general taxes
   48,998 42,921
Accrued interest
   24,543 17,939
Deferred purchased gas costs
   14,971 90,476
Other current liabilities
   197,854 168,064


Total current liabilities
   656,406 628,375


Deferred income taxes and other credits:

Deferred income taxes and investment tax credits
   894,011 840,653
Accumulated removal costs
   312,000 308,000
Other deferred credits and other long-term liabilities
   547,276 570,252


Total deferred income taxes and other credits
   1,753,287 1,718,905


Total capitalization and liabilities
   $ 5,855,070 $ 5,581,126


	March 31, 2023		December 31, 2022
ASSETS
Regulated operations plant:
Gas plant	$	9,583,630	$	9,453,907
Less: accumulated depreciation	(2,712,093)		(2,674,157)
Construction work in progress	250,892		244,750
Net regulated operations plant	7,122,429		7,024,500
Other property and investments, net	1,250,327		1,281,172
Current assets:
Cash and cash equivalents	82,085		123,078
Accounts receivable, net of allowances	903,262		866,246
Accrued utility revenue	56,900		88,100
Income taxes receivable, net	8,136		8,738
Deferred purchased gas costs	970,339		450,120
Prepaid and other current assets	210,309		433,850
Current assets held for sale	26,993		1,737,530
Total current assets	2,258,024		3,707,662
Noncurrent assets:
Goodwill	787,334		787,250
Deferred income taxes	115		82
Deferred charges and other assets	391,944		395,948
Total noncurrent assets	1,179,393		1,183,280
Total assets	$	11,810,173	$	13,196,614
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $1 par (authorized - 120,000,000 shares; issued and outstanding - 71,330,991 and 67,119,143 shares)	$	72,961	$	68,749
Additional paid-in capital	2,524,631		2,287,183
Accumulated other comprehensive loss, net	(43,949)		(44,242)
Retained earnings	742,513		747,069
Total equity	3,296,156		3,058,759
Redeemable noncontrolling interests	127,026		159,349
Long-term debt, less current maturities	4,577,600		4,403,299
Total capitalization	8,000,782		7,621,407
Current liabilities:
Current maturities of long-term debt	41,907		44,557
Short-term debt	467,500		1,542,806
Accounts payable	310,748		662,090
Customer deposits	50,350		51,182
Income taxes payable, net	739		2,690
Accrued general taxes	101,579		67,094
Accrued interest	45,641		38,556

Other current liabilities	592,022		369,743
Current liabilities held for sale	—		644,245
Total current liabilities	1,610,486		3,422,963
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net	733,199		682,067
Accumulated removal costs	450,000		445,000
Other deferred credits and other long-term liabilities	1,015,706		1,025,177
Total deferred income taxes and other credits	2,198,905		2,152,244
Total capitalization and liabilities	$	11,810,173	$	13,196,614

The accompanying notes are an integral part of these statements.


			3


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

   THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
   SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
   2017 2016 2017 2016 2017 2016
Operating revenues:

Gas operating revenues
   $ 213,059 $ 200,179 $ 935,823 $ 980,927 $ 1,276,308 $ 1,376,388
Construction revenues
   380,094 339,790 872,536 838,038 1,173,576 1,127,982


Total operating revenues
   593,153 539,969 1,808,359 1,818,965 2,449,884 2,504,370


Operating expenses:

Net cost of gas sold
   45,539 39,056 261,839 324,072 334,888 460,836
Operations and maintenance
   102,278 102,438 314,488 301,979 414,233 400,222
Depreciation and amortization
   58,529 69,845 189,089 217,764 260,457 286,977
Taxes other than income taxes
   14,046 12,480 43,325 39,480 56,221 51,810
Construction expenses
   342,629 300,611 806,586 757,919 1,073,090 1,009,188


Total operating expenses
   563,021 524,430 1,615,327 1,641,214 2,138,889 2,209,033


Operating income
   30,132 15,539 193,032 177,751 310,995 295,337


Other income and (expenses):

Net interest deductions
   (19,494 ) (18,158 ) (56,863 ) (54,100 ) (76,423 ) (71,884 )
Other income (deductions)
   2,876 2,565 8,788 6,756 11,501 10,861


Total other income and (expenses)
   (16,618 ) (15,593 ) (48,075 ) (47,344 ) (64,922 ) (61,023 )


Income (loss) before income taxes
   13,514 (54 ) 144,957 130,407 246,073 234,314
Income tax expense (benefit)
   3,094 (2,961 ) 47,411 43,046 82,833 80,255


Net income
   10,420 2,907 97,546 87,361 163,240 154,059
Net income attributable to noncontrolling interests
   216 435 170 500 684 1,079


Net income attributable to Southwest Gas Holdings, Inc.
   $ 10,204 $ 2,472 $ 97,376 $ 86,861 $ 162,556 $ 152,980


Basic earnings per share
   $ 0.21 $ 0.05 $ 2.05 $ 1.83 $ 3.42 $ 3.22


Diluted earnings per share
   $ 0.21 $ 0.05 $ 2.03 $ 1.82 $ 3.39 $ 3.20


Dividends declared per share
   $ 0.495 $ 0.450 $ 1.485 $ 1.350 $ 1.935 $ 1.755


Average number of common shares outstanding
   47,628 47,481 47,577 47,464 47,553 47,442
Average shares outstanding (assuming dilution)
   47,986 47,830 47,912 47,802 47,896 47,787


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2023		2022		2023		2022
Operating revenues:
Regulated operations revenues	$	950,011	$	743,532	$	2,406,161	$	1,743,390
Utility infrastructure services revenues	653,293		523,877		2,889,743		2,318,563
Total operating revenues	1,603,304		1,267,409		5,295,904		4,061,953
Operating expenses:
Net cost of gas sold	507,537		298,918		1,007,679		573,804
Operations and maintenance	148,908		149,303		636,371		515,759
Depreciation and amortization	112,520		122,646		460,329		400,245
Taxes other than income taxes	24,230		24,816		92,797		84,472
Utility infrastructure services expenses	603,680		503,232		2,629,766		2,123,085
Goodwill impairment and loss on sale	71,230		—		526,655		—
Total operating expenses	1,468,105		1,098,915		5,353,597		3,697,365
Operating income (loss)	135,199		168,494		(57,693)		364,588
Other income and (expenses):
Net interest deductions	(77,334)		(48,363)		(271,721)		(143,597)
Other income (deductions)	18,460		1,244		11,027		(2,703)
Total other income and (expenses)	(58,874)		(47,119)		(260,694)		(146,300)
Income (loss) before income taxes	76,325		121,375		(318,387)		218,288
Income tax expense (benefit)	28,675		24,125		(71,103)		32,681
Net income (loss)	47,650		97,250		(247,284)		185,607
Net income attributable to noncontrolling interests	1,739		1,072		6,273		5,943
Net income (loss) attributable to Southwest Gas Holdings, Inc.	$	45,911	$	96,178	$	(253,557)	$	179,664
Earnings (loss) per share:
Basic	$	0.67	$	1.58	$	(3.76)	$	3.00
Diluted	$	0.67	$	1.58	$	(3.76)	$	2.99
Weighted average shares:
Basic	68,265		60,737		67,413		59,919
Diluted	68,419		60,854		67,413		60,044

The accompanying notes are an integral part of these statements.


			4


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Thousands of dollars)

(Unaudited)

   THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
   SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
   2017 2016 2017 2016 2017 2016
Net income
   $ 10,420 $ 2,907 $ 97,546 $ 87,361 $ 163,240 $ 154,059


Other comprehensive income (loss), net of tax

Defined benefit pension plans:

Net actuarial gain (loss)
   —   —   —   —   (14,118 ) (18,922 )
Amortization of prior service cost
   207 207 621 621 828 828
Amortization of net actuarial loss
   3,944 4,196 11,832 12,586 16,027 17,915
Regulatory adjustment
   (3,555 ) (3,796 ) (10,667 ) (11,388 ) (2,741 ) (404 )


Net defined benefit pension plans
   596 607 1,786 1,819 (4 ) (583 )


Forward-starting interest rate swaps:

Amounts reclassified into net income
   518 518 1,554 1,556 2,073 �� 2,073


Net forward-starting interest rate swaps
   518 518 1,554 1,556 2,073 2,073


Foreign currency translation adjustments
   1,012 (238 ) 1,861 614 1,408 233


Total other comprehensive income, net of tax
   2,126 887 5,201 3,989 3,477 1,723


Comprehensive income
   12,546 3,794 102,747 91,350 166,717 155,782
Comprehensive income attributable to noncontrolling interests
   198 427 181 521 679 1,089


Comprehensive income attributable to Southwest Gas Holdings, Inc.
   $ 12,348 $ 3,367 $ 102,566 $ 90,829 $ 166,038 $ 154,693


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2023		2022		2023		2022
Net income (loss)	$	47,650	$	97,250	$	(247,284)	$	185,607
Other comprehensive income (loss), net of tax
Defined benefit pension plans:
Net actuarial gain (loss)	—		—		3,099		44,974
Amortization of prior service cost	33		33		133		580
Amortization of net actuarial loss	253		6,616		20,098		32,036

Regulatory adjustment	(90)		(5,523)		(16,024)		(65,273)
Net defined benefit pension plans	196		1,126		7,306		12,317
Forward-starting interest rate swaps (“FSIRS”):
Amounts reclassified into net income	—		416		—		1,655
Net forward-starting interest rate swaps	—		416		—		1,655
Foreign currency translation adjustments	97		1,247		(7,283)		444
Total other comprehensive income, net of tax	293		2,789		23		14,416
Comprehensive income (loss)	47,943		100,039		(247,261)		200,023
Comprehensive income attributable to noncontrolling interests	1,739		1,072		6,273		5,943
Comprehensive income (loss) attributable to Southwest Gas Holdings, Inc.	$	46,204	$	98,967	$	(253,534)	$	194,080

The accompanying notes are an integral part of these statements.


			5


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)

   NINE MONTHS ENDED TWELVE MONTHS ENDED
   SEPTEMBER 30 SEPTEMBER 30
   2017 2016 2017 2016
CASH FLOW FROM OPERATING ACTIVITIES:

Net income
   $ 97,546 $ 87,361 $ 163,240 $ 154,059
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
   189,089 217,764 260,457 286,977
Deferred income taxes
   49,409 43,702 74,439 86,526
Changes in current assets and liabilities:

Accounts receivable, net of allowances
   (15,330 ) 28,531 (13,765 ) (17,889 )
Accrued utility revenue
   42,100 41,700 (1,100 ) (800 )
Deferred purchased gas costs
   (79,127 ) 81,389 (114,658 ) 79,460
Accounts payable
   (26,771 ) (24,942 ) 19,866 10,445
Accrued taxes
   4,689 (7,055 ) 38,084 (11,033 )
Other current assets and liabilities
   43,044 12,022 3,590 22,034
Gains on sale
   (1,452 ) (4,117 ) (4,483 ) (4,200 )
Changes in undistributed stock compensation
   9,199 4,347 10,308 5,142
AFUDC
   (2,077 ) (1,893 ) (2,473 ) (2,890 )
Changes in other assets and deferred charges
   (14,470 ) 3,926 (1,436 ) 4,183
Changes in other liabilities and deferred credits
   3,395 (4,813 ) (10,239 ) 702


Net cash provided by operating activities
   299,244 477,922 421,830 612,716


CASH FLOW FROM INVESTING ACTIVITIES:

Construction expenditures and property additions
   (449,998 ) (404,388 ) (575,141 ) (555,819 )
Acquisition of businesses, net of cash acquired
   —   (17,000 ) —   (17,000 )
Changes in customer advances
   (1,951 ) 5,445 504 9,445
Miscellaneous inflows
   9,160 7,965 14,234 4,726


Net cash used in investing activities
   (442,789 ) (407,978 ) (560,403 ) (558,648 )


CASH FLOW FROM FINANCING ACTIVITIES:

Issuance of common stock, net
   11,563 530 11,505 507
Dividends paid
   (68,503 ) (61,950 ) (89,870 ) (81,138 )
Centuri distribution to redeemable noncontrolling interest
   (204 ) (99 ) (544 ) (198 )
Issuance of long-term debt, net
   104,308 408,946 119,308 420,946
Retirement of long-term debt
   (100,240 ) (196,351 ) (159,162 ) (240,999 )
Change in credit facility and commercial paper
   145,000 (150,000 ) 150,000 (97,000 )
Change in short-term debt
   110,500 (18,000 ) 110,500 —
Principal payments on capital lease obligations
   (796 ) (1,125 ) (1,025 ) (1,449 )
Redemption of Centuri shares from noncontrolling parties
   (23,000 ) —   (23,000 ) —
Withholding remittance—share-based compensation
   (3,176 ) (2,119 ) (3,176 ) (2,164 )
Other
   (1,104 ) (605 ) (2,068 ) (60 )


Net cash provided by (used in) financing activities
   174,348 (20,773 ) 112,468 (1,555 )


Effects of currency translation on cash and cash equivalents
   283 (14 ) 103 (318 )


Change in cash and cash equivalents
   31,086 49,157 (26,002 ) 52,195
Cash and cash equivalents at beginning of period
   28,066 35,997 85,154 32,959


Cash and cash equivalents at end of period
   $ 59,152 $ 85,154 $ 59,152 $ 85,154


Supplemental information:

Interest paid, net of amounts capitalized
   $ 45,771 $ 47,134 $ 66,077 $ 68,445
Income taxes paid (received)
   3,687 6,530 (21,875 ) 9,899


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2023		2022		2023		2022
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)	$	47,650	$	97,250	$	(247,284)	$	185,607
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	112,520		122,646		460,329		400,245
Impairment of assets and other charges	71,230		—		526,655		—
Deferred income taxes	36,712		32,346		(67,682)		70,232
Gains on sale of property and equipment	(661)		(1,916)		(6,610)		(7,313)
Changes in undistributed stock compensation	3,436		4,180		8,702		9,816
Equity AFUDC	(82)		(258)		(289)		723
Changes in current assets and liabilities:
Accounts receivable, net of allowances	(40,185)		(44,971)		(188,989)		(139,417)
Accrued utility revenue	31,200		32,900		(4,900)		(1,500)
Deferred purchased gas costs	(535,224)		(82,248)		(600,191)		(134,507)
Accounts payable	(305,272)		(82,952)		71,589		8,621
Accrued taxes	34,950		33,964		18,915		(7,397)
Other current assets and liabilities	371,035		79,680		83,502		(4,274)
Changes in deferred charges and other assets	(1,565)		(297)		15,618		(3,459)
Changes in other liabilities and deferred credits	(11,486)		(3,704)		(34,267)		(26,917)
Net cash provided by (used in) operating activities	(185,742)		186,620		35,098		350,460
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions	(219,124)		(162,796)		(915,749)		(725,713)
Acquisition of businesses, net of cash acquired	—		—		(18,809)		(2,354,260)
Proceeds from the sale of business, net of cash sold	1,058,272		—		1,058,272		—
Changes in customer advances	(6,608)		7,693		7,205		19,381
Other	3,125		893		20,054		15,586
Net cash provided by (used in) investing activities	835,665		(154,210)		150,973		(3,045,006)
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock, net	239,337		453,495		247,670		618,146
Centuri distribution to redeemable noncontrolling interest	—		(39,649)		—		(39,649)
Dividends paid	(41,631)		(35,970)		(166,224)		(141,573)
Issuance of long-term debt, net	305,896		709,927		663,774		2,359,964
Retirement of long-term debt	(84,224)		(143,453)		(440,685)		(574,889)
Change in credit facility and commercial paper	(50,000)		(130,000)		—		(150,000)
Change in short-term debt	(1,527,746)		(435,000)		(1,458,939)		(686,000)
Issuance of short-term debt	450,000		—		450,000		1,850,000
Withholding remittance - share-based compensation	(1,506)		(1,978)		(2,190)		(2,000)
Other, including principal payments on finance leases	(4,949)		(7,898)		(21,223)		(7,274)
Net cash provided by (used in) financing activities	(714,823)		369,474		(727,817)		3,226,725
Effects of currency translation on cash and cash equivalents	104		85		(835)		142
Change in cash and cash equivalents	(64,796)		401,969		(542,581)		532,321
Cash and cash equivalents included in current assets held for sale at beginning of period	23,803		—		—		—
Cash and cash equivalents at beginning of period	123,078		222,697		624,666		92,345
Cash and cash equivalents at end of period	$	82,085	$	624,666	$	82,085	$	624,666
SUPPLEMENTAL INFORMATION:
Interest paid, net of amounts capitalized	$	68,018	$	35,262	$	252,581	$	131,311
Income taxes paid, net	$	2,381	$	1,408	$	12,974	$	3,965

The accompanying notes are an integral part of these statements.


			6


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS ~~CORPORATION~~HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~

STATEMENTS OF EQUITY

(~~Thousands of dollars)~~

In thousands, except per share amounts)

(Unaudited)

   SEPTEMBER 30, DECEMBER 31,
   2017 2016
ASSETS

Utility plant:

Gas plant
   $ 6,440,547 $ 6,193,564
Less: accumulated depreciation
   (2,218,796 ) (2,172,966 )
Acquisition adjustments, net
   81 196
Construction work in progress
   164,030 111,177


Net utility plant
   4,385,862 4,131,971


Other property and investments
   115,841 108,569


Current assets:

Cash and cash equivalents
   46,467 19,024
Accounts receivable, net of allowances
   68,028 111,845
Accrued utility revenue
   34,100 76,200
Income taxes receivable, net
   6,440 4,455
Deferred purchased gas costs
   6,230 2,608
Prepaids and other current assets
   118,587 126,363


Total current assets
   279,852 340,495


Noncurrent assets:

Goodwill
   10,095 10,095
Deferred charges and other assets
   393,942 410,625
Discontinued operations—construction services—assets
   —   579,371


Total noncurrent assets
   404,037 1,000,091


Total assets
   $ 5,185,592 $ 5,581,126


CAPITALIZATION AND LIABILITIES
Capitalization:

Common stock
   $ 49,112 $ 49,112
Additionalpaid-in capital
   917,581 897,346
Accumulated other comprehensive income (loss), net
   (42,299 ) (45,639 )
Retained earnings
   606,007 767,061


Total Southwest Gas Corporation equity
   1,530,401 1,667,880
Discontinued operations—construction servicesnon-owner equity
   —   15,983
Long-term debt, less current maturities
   1,520,790 1,375,080


Total capitalization
   3,051,191 3,058,943


Current liabilities:

Current maturities of long-term debt
   —   25,000
Short-term debt
   83,000 —
Accounts payable
   92,257 138,229
Customer deposits
   70,162 72,296
Accrued general taxes
   48,998 42,921
Accrued interest
   24,406 17,395
Deferred purchased gas costs
   14,971 90,476
Payable to parent
   2,560 —
Other current liabilities
   109,705 95,999


Total current liabilities
   446,059 482,316


Deferred income taxes and other credits:

Deferred income taxes and investment tax credits, net
   853,682 806,109
Accumulated removal costs
   312,000 308,000
Other deferred credits and other long-term liabilities
   522,660 545,143
Discontinued operations—construction services—liabilities
   —   380,615


Total deferred income taxes and other credits
   1,688,342 2,039,867


Total capitalization and liabilities
   $ 5,185,592 $ 5,581,126


			Three Months Ended March 31,
			2023		2022
Common stock shares
	Beginning balances		67,119		60,422
		Common stock issuances	4,212		6,427
	Ending balances		71,331		66,849
Common stock amount
	Beginning balances		$	68,749	$	62,052
		Common stock issuances	4,212		6,427
	Ending balances		72,961		68,479
Additional paid-in capital
	Beginning balances		2,287,183		1,824,216
		Common stock issuances	237,448		449,621
	Ending balances		2,524,631		2,273,837
Accumulated other comprehensive loss
	Beginning balances		(44,242)		(46,761)
		Foreign currency exchange translation adjustment	97		1,247
		Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax	196		1,126
		FSIRS amounts reclassified to net income, net of tax	—		416
	Ending balances		(43,949)		(43,972)
Retained earnings
	Beginning balances		747,069		1,114,313
		Net income	45,911		96,178
		Dividends declared	(44,635)		(41,909)
		Redemption value adjustments	(5,832)		22,156
	Ending balances		742,513		1,190,738
Total equity ending balances			$	3,296,156	$	3,489,082
Dividends declared per common share			$	0.62	$	0.62

The accompanying notes are an integral part of these statements.


			7


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS OF INCOME~~

BALANCE SHEETS

(~~In thousands)~~

Thousands of dollars)

(Unaudited)

   THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
   SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
   2017 2016 2017 2016 2017 2016
Continuing operations:

Gas operating revenues
   $ 213,059 $ 200,179 $ 935,823 $ 980,927 $ 1,276,308 $ 1,376,388


Operating expenses:

Net cost of gas sold
   45,539 39,056 261,839 324,072 334,888 460,836
Operations and maintenance
   102,215 102,438 313,395 301,979 413,140 400,222
Depreciation and amortization
   46,194 56,436 153,643 174,413 212,693 228,609
Taxes other than income taxes
   14,046 12,480 43,325 39,480 56,221 51,810


Total operating expenses
   207,994 210,410 772,202 839,944 1,016,942 1,141,477


Operating income (loss)
   5,065 (10,231 ) 163,621 140,983 259,366 234,911


Other income and (expenses):

Net interest deductions
   (17,421 ) (16,364 ) (51,622 ) (49,155 ) (69,464 ) (65,146 )
Other income (deductions)
   3,081 2,521 8,744 6,712 10,308 9,615


Total other income and (expenses)
   (14,340 ) (13,843 ) (42,878 ) (42,443 ) (59,156 ) (55,531 )


Income (loss) from continuing operations before income taxes
   (9,275 ) (24,074 ) 120,743 98,540 200,210 179,380
Income tax expense (benefit)
   (5,251 ) (11,669 ) 38,307 31,004 65,887 59,544


Income (loss) from continuing operations
   (4,024 ) (12,405 ) 82,436 67,536 134,323 119,836


Discontinued operations—construction services:

Income before income taxes
   —   24,020 —   31,867 21,649 54,934
Income tax expense
   —   8,708 —   12,042 7,842 20,711


Income
   —   15,312 —   19,825 13,807 34,223
Noncontrolling interests
   —   435 —   500 514 1,079


Income—discontinued operations
   —   14,877 —   19,325 13,293 33,144


Net income (loss)
   $ (4,024 ) $ 2,472 $ 82,436 $ 86,861 $ 147,616 $ 152,980


	March 31, 2023		December 31, 2022
ASSETS
Regulated operations plant:
Gas plant	$	9,583,630	$	9,453,907
Less: accumulated depreciation	(2,712,093)		(2,674,157)
Construction work in progress	250,892		244,750
Net regulated operations plant	7,122,429		7,024,500
Other property and investments, net	144,586		169,397
Current assets:
Cash and cash equivalents	63,099		51,823
Accounts receivable, net of allowance	300,897		234,081
Accrued utility revenue	56,900		88,100
Income taxes receivable, net	115		103
Deferred purchased gas costs	970,339		450,120
Receivable from parent	—		2,130
Prepaid and other current assets	183,455		401,789
Current assets held for sale	26,993		—
Total current assets	1,601,798		1,228,146
Noncurrent assets:
Goodwill	11,155		11,155
Deferred charges and other assets	369,495		370,483
Total noncurrent assets	380,650		381,638
Total assets	$	9,249,463	$	8,803,681
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock	$	49,112	$	49,112
Additional paid-in capital	1,624,919		1,622,969
Accumulated other comprehensive loss, net	(38,065)		(38,261)
Retained earnings	1,030,164		935,355
Total equity	2,666,130		2,569,175
Long-term debt, less current maturities	3,497,977		3,251,296
Total capitalization	6,164,107		5,820,471
Current liabilities:

Short-term debt	450,000		225,000
Accounts payable	176,682		497,046
Customer deposits	50,350		51,182

Accrued general taxes	101,579		67,094
Accrued interest	38,489		29,569

Payable to parent	993		—
Other current liabilities	281,597		150,817
Total current liabilities	1,099,690		1,020,708
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net	723,205		683,948
Accumulated removal costs	450,000		445,000
Other deferred credits and other long-term liabilities	812,461		833,554
Total deferred income taxes and other credits	1,985,666		1,962,502
Total capitalization and liabilities	$	9,249,463	$	8,803,681

The accompanying notes are an integral part of these statements.


			8


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE~~ INCOME

(~~In thousands)~~

Thousands of dollars)

(Unaudited)

   THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
   SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
   2017 2016 2017 2016 2017 2016
Continuing operations:

Net income (loss) from continuing operations
   $ (4,024 ) $ (12,405 ) $ 82,436 $ 67,536 $ 134,323 $ 119,836


Other comprehensive income (loss), net of tax

Defined benefit pension plans:

Net actuarial gain (loss)
   —   —   —   —   (14,118 ) (18,922 )
Amortization of prior service cost
   207 207 621 621 828 828
Amortization of net actuarial loss
   3,944 4,196 11,832 12,586 16,027 17,915
Regulatory adjustment
   (3,555 ) (3,796 ) (10,667 ) (11,388 ) (2,741 ) (404 )


Net defined benefit pension plans
   596 607 1,786 1,819 (4 ) (583 )


Forward-starting interest rate swaps:

Amounts reclassified into net income
   518 518 1,554 1,556 2,073 2,073


Net forward-starting interest rate swaps
   518 518 1,554 1,556 2,073 2,073


Total other comprehensive income, net of tax from continuing operations
   1,114 1,125 3,340 3,375 2,069 1,490


Comprehensive income (loss) from continuing operations
   (2,910 ) (11,280 ) 85,776 70,911 136,392 121,326


Discontinued operations—construction services:

Net income
   —   14,877 —   19,325 13,293 33,144
Foreign currency translation adjustments
   —   (238 ) —   614 (453 ) 233


Comprehensive income
   —   14,639 —   19,939 12,840 33,377
Comprehensive income (loss) attributable to noncontrolling interests
   —   (8 ) —   21 (16 ) 10


Comprehensive income attributable to discontinued operations—construction services
   —   14,647 —   19,918 12,856 33,367


Comprehensive income (loss)
   $ (2,910 ) $ 3,367 $ 85,776 $ 90,829 $ 149,248 $ 154,693


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2023		2022		2023		2022
Regulated operations revenues	$	914,879	$	676,539	$	2,173,409	$	1,676,397
Operating expenses:
Net cost of gas sold	501,169		297,121		993,264		572,007
Operations and maintenance	131,188		119,636		503,480		452,051
Depreciation and amortization	74,650		72,114		265,579		256,814
Taxes other than income taxes	22,740		21,652		84,285		81,308
Total operating expenses	729,747		510,523		1,846,608		1,362,180
Operating income	185,132		166,016		326,801		314,217
Other income and (expenses):
Net interest deductions	(38,622)		(26,610)		(127,892)		(102,004)
Other income (deductions)	18,443		1,315		10,244		(3,794)
Total other income and (expenses)	(20,179)		(25,295)		(117,648)		(105,798)
Income before income taxes	164,953		140,721		209,153		208,419
Income tax expense	30,257		28,926		31,872		28,204
Net income	$	134,696	$	111,795	$	177,281	$	180,215

The accompanying notes are an integral part of these statements.


			9


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~

COMPREHENSIVE INCOME

(Thousands of dollars)

(Unaudited)

   NINE MONTHS ENDED TWELVE MONTHS ENDED
   SEPTEMBER 30 SEPTEMBER 30
   2017 2016 2017 2016
CASH FLOW FROM OPERATING ACTIVITIES:

Net Income
   $ 82,436 $ 87,361 $ 148,130 $ 154,059
Income (loss) from discontinued operations
   —   19,825 13,807 34,223


Income from continuing operations
   82,436 67,536 134,323 119,836
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
   153,643 174,413 212,693 228,609
Deferred income taxes
   44,621 39,953 72,627 76,837
Changes in current assets and liabilities:

Accounts receivable, net of allowances
   43,818 91,680 (7,131 ) 8,543
Accrued utility revenue
   42,100 41,700 (1,100 ) (800 )
Deferred purchased gas costs
   (79,127 ) 81,389 (114,658 ) 79,460
Accounts payable
   (45,972 ) (47,060 ) 17,271 1,467
Accrued taxes
   4,092 (5,660 ) 29,143 4,567
Other current assets and liabilities
   32,453 (819 ) (224 ) 9,135
Changes in undistributed stock compensation
   7,999 4,347 9,108 5,142
AFUDC
   (2,077 ) (1,893 ) (2,473 ) (2,890 )
Changes in other assets and deferred charges
   (14,861 ) 3,664 (1,914 ) 3,834
Changes in other liabilities and deferred credits
   2,883 (4,813 ) (10,751 ) 702


Net cash provided by operating activities
   272,008 444,437 336,914 534,442


CASH FLOW FROM INVESTING ACTIVITIES:

Construction expenditures and property additions
   (395,463 ) (337,921 ) (514,661 ) (485,665 )
Changes in customer advances
   (1,951 ) 5,445 504 9,445
Miscellaneous inflows
   2,407 2,464 2,925 3,506
Dividends received
   —   2,801 9,660 5,602


Net cash used in investing activities
   (395,007 ) (327,211 ) (501,572 ) (467,112 )


CASH FLOW FROM FINANCING ACTIVITIES:

Issuance of common stock, net
   —   530 (58 ) 507
Contributions from parent
   11,659 —   11,659 —
Dividends paid
   (60,497 ) (61,950 ) (81,864 ) (81,138 )
Issuance of long-term debt, net
   —   296,469 —   296,469
Retirement of long-term debt
   (25,000 ) (124,855 ) (25,000 ) (124,855 )
Change in credit facility and commercial paper
   145,000 (150,000 ) 150,000 (97,000 )
Change in short-term debt
   83,000 (18,000 ) 83,000 —
Withholding remittance—share-based compensation
   (3,176 ) (2,119 ) (3,176 ) (2,164 )
Other
   (544 ) (605 ) (1,508 ) (9 )


Net cash provided by (used in) financing activities
   150,442 (60,530 ) 133,053 (8,190 )


Net cash provided by discontinued operating activities
   —   33,485 57,680 78,274
Net cash used in discontinued investing activities
   —   (80,767 ) (11,049 ) (91,536 )
Net cash provided by (used in) discontinued financing activities
   —   39,757 (44,491 ) 6,635
Effects of currency translation on cash and cash equivalents
   —   (14 ) (180 ) (318 )


Change in cash and cash equivalents
   27,443 49,157 (29,645 ) 52,195
Change in cash and cash equivalents of discontinued operations included in discontinued operations construction services assets
   —   7,539 (1,960 ) 6,945


Change in cash and cash equivalents of continuing operations
   27,443 56,696 (31,605 ) 59,140
Cash and cash equivalents at beginning of period
   19,024 21,376 78,072 18,932


Cash and cash equivalents at end of period
   $ 46,467 $ 78,072 $ 46,467 $ 78,072


Supplemental information:

Interest paid, net of amounts capitalized
   $ 40,751 $ 42,804 $ 59,448 $ 63,031


Income taxes paid (received)
   $ 4 $ (3,055 ) $ (27,952 ) $ (16,600 )


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2023		2022		2023		2022
Net income	$	134,696	$	111,795	$	177,281	$	180,215
Other comprehensive income, net of tax
Defined benefit pension plans:
Net actuarial gain (loss)	—		—		3,099		44,974
Amortization of prior service cost	33		33		133		580

Amortization of net actuarial loss	253		6,616		20,098		32,036
Regulatory adjustment	(90)		(5,523)		(16,024)		(65,273)
Net defined benefit pension plans	196		1,126		7,306		12,317
Forward-starting interest rate swaps (“FSIRS”):
Amounts reclassified into net income (loss)	—		416		—		1,655
Net forward-starting interest rate swaps	—		416		—		1,655
Total other comprehensive income, net of tax	196		1,542		7,306		13,972
Comprehensive income	$	134,892	$	113,337	$	184,587	$	194,187

The accompanying notes are an integral part of these statements.


			10


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2023		2022		2023		2022
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	134,696	$	111,795	$	177,281	$	180,215
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	74,650		72,114		265,579		256,814
Deferred income taxes	39,194		34,560		47,021		72,845
Gain on sale of property	—		(1,503)		—		(1,503)
Changes in undistributed stock compensation	2,955		3,239		5,492		6,723
Equity AFUDC	—		(76)		76		905
Changes in current assets and liabilities:
Accounts receivable, net of allowance	(66,816)		(55,219)		(76,011)		(50,394)
Accrued utility revenue	31,200		32,900		(4,900)		(1,500)
Deferred purchased gas costs	(520,219)		(76,809)		(602,385)		(129,068)
Accounts payable	(286,164)		(67,584)		24,696		23,256
Accrued taxes	34,473		30,835		25,392		(3,263)
Other current assets and liabilities	351,252		90,558		71,957		(20,731)
Changes in deferred charges and other assets	(12,891)		(6,439)		(8,146)		(21,647)
Changes in other liabilities and deferred credits	(10,942)		(4,033)		(34,599)		(27,637)
Net cash provided by (used in) operating activities	(228,612)		164,338		(108,547)		285,015
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions	(192,097)		(141,123)		(734,105)		(614,562)
Changes in customer advances	(6,608)		7,693		7,205		19,381
Other	119		(918)		7,954		(829)

Net cash used in investing activities	(198,586)		(134,348)		(718,946)		(596,010)
CASH FLOW FROM FINANCING ACTIVITIES:
Contributions from parent	—		—		—		156,599
Dividends paid	(32,000)		(29,200)		(125,000)		(114,600)
Issuance of long-term debt, net	297,759		593,862		595,560		891,180
Retirement of long-term debt	—		(25,000)		(250,000)		(25,000)
Change in credit facility and commercial paper	(50,000)		(130,000)		—		(150,000)
Change in short-term debt	(225,000)		—		(250,000)		(17,000)
Issuance of short-term debt	450,000		—		450,000		—
Withholding remittance - share-based compensation	(1,292)		(1,978)		(1,883)		(1,999)
Other	(993)		(489)		(3,961)		(2,104)
Net cash provided by financing activities	438,474		407,195		414,716		737,076

Change in cash and cash equivalents	11,276		437,185		(412,777)		426,081
Cash and cash equivalents at beginning of period	51,823		38,691		475,876		49,795
Cash and cash equivalents at end of period	$	63,099	$	475,876	$	63,099	$	475,876
SUPPLEMENTAL INFORMATION:
Interest paid, net of amounts capitalized	$	29,007	$	15,757	$	121,230	$	99,045
Income taxes paid (received), net	$	—	$	—	$	5	$	(13,529)

The accompanying notes are an integral part of these statements.


			11


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						March 31, 2023

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)


			Three Months Ended March 31,
			2023		2022
Common stock shares
	Beginning and ending balances		47,482		47,482
Common stock amount
	Beginning and ending balances		$	49,112	$	49,112
Additional paid-in capital
	Beginning balances		1,622,969		1,618,911
		Share-based compensation	1,950		1,705

	Ending balances		1,624,919		1,620,616
Accumulated other comprehensive loss
	Beginning balances		(38,261)		(46,913)
		Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax	196		1,126
		FSIRS amounts reclassified to net income, net of tax	—		416
	Ending balances		(38,065)		(45,371)
Retained earnings
	Beginning balances		935,355		906,827
		Net income	134,696		111,795
		Share-based compensation	(287)		(445)
		Dividends declared to Southwest Gas Holdings, Inc.	(39,600)		(31,000)
	Ending balances		1,030,164		987,177
Total Southwest Gas Corporation equity ending balances			$	2,666,130	$	2,611,534

The accompanying notes are an integral part of these statements.


			12


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						March 31, 2023

Note 1 – ~~Nature~~Background, Organization, and Summary of ~~Operations and Basis of Presentation~~

Significant Accounting Policies

Nature of Operations. Southwest Gas Holdings, Inc. (together with its subsidiaries, the “Company”) is a holding company, owning all of the shares of common stock of Southwest Gas Corporation ~~and, prior to August 2017, 96.6%~~(“Southwest” or the “natural gas distribution” segment), all of the shares of common stock of Centuri Construction Group, Inc. During August 2017, Southwest Gas Holdings, Inc. acquired the remaining 3.4% equity interest in Centuri Construction Group, Inc. that was held by the previous owners (and was previously reflected as a redeemable noncontrolling interest). Refer to ~~Note 9 – Construction Services Redeemable Noncontrolling Interestfor additional information.~~

In January 2017, a previously contemplated and approved reorganization under a holding company structure was made effective. The reorganization was designed to provide further separation between regulated and unregulated businesses, and to provide additional financing flexibility. Coincident with the effective date of the reorganization, existing shareholders of Southwest Gas Corporation became shareholders of Southwest Gas Holdings, Inc., on a~~one-for-one~~ ~~basis, with the same number of shares and same ownership percentage as they held immediately prior to the reorganization. At the same time, Southwest Gas Corporation and Centuri Construction~~ Group, Inc. (“~~Centuri”~~Centuri,” or the ~~“construction~~“utility infrastructure services” segment) ~~each became subsidiaries~~, and until February 14, 2023, all of the shares of common stock of MountainWest Pipelines Holding Company (“MountainWest” or the “pipeline and storage” segment).

In December 2022, the Company announced that its Board of Directors (the “Board”) unanimously determined to take strategic actions to simplify the Company’s portfolio of businesses. These actions included entering into a definitive agreement to sell 100% of MountainWest to Williams Partners Operating LLC (“Williams”) for $1.5 billion in total enterprise value, subject to certain adjustments (collectively, the “MountainWest sale”). Additionally, the Company determined it will pursue a spin-off of Centuri (the “Centuri spin-off”), to form a new independent publicly traded ~~holding company; whereas, historically,~~utility infrastructure services company. The MountainWest sale closed on February 14, 2023. The Centuri ~~had been a direct subsidiary~~spin-off is expected to be completed in the fourth quarter of ~~Southwest Gas Corporation.~~

~~Southwest Gas Corporation (“Southwest”~~2023 or the ~~“natural gas operations segment”)~~first quarter of 2024 and to be tax free to the Company and its stockholders for U.S. federal income tax purposes. See Note 8 - Dispositions for more information.

Southwest is engaged in the business of purchasing, distributing, and transporting natural gas for customers in portions of Arizona, Nevada, and California. Public utility rates, practices, facilities, and service territories of Southwest are subject to regulatory oversight. The timing and amount of rate relief can materially impact results of operations. Natural gas purchases and the timing of related recoveries can materially impact liquidity. Results for the natural gas ~~operations~~distribution segment are higher during winter periods due to the seasonality incorporated in its regulatory rate structures.

Centuri is a ~~comprehensive construction~~strategic utility infrastructure services ~~enterprise~~company dedicated to ~~meeting~~partnering with North America’s gas and electric providers to build and maintain the ~~growing demands~~energy network that powers millions of ~~North American utilities, energy~~homes across the United States (“U.S.”) and ~~industrial markets.~~Canada. Centuri derives revenue primarily from installation, replacement, repair, and maintenance of energy ~~distribution systems,~~networks. Centuri operates in the U.S., primarily as NPL, Neuco, Linetec, and ~~developing industrial construction solutions. Centuri operations~~Riggs Distler, and in Canada, primarily as NPL Canada. Utility infrastructure services activity is seasonal in many of Centuri’s operating areas. Peak periods are generally conducted under the business names of NPL Construction Co. (“NPL”), NPL Canada Ltd. (“NPL Canada”, formerly Link-Line Contractors Ltd.), W.S. Nicholls Construction, Inc. (“W.S. Nicholls”), and Brigadier Pipelines Inc. (“Brigadier”). Typically, Centuri revenues are lowest during the first quarter of the year due to unfavorable winter weather conditions. Operating revenues typically improve as more favorable weather conditions occur during the summer and fall ~~months.~~

months in colder climate areas, such as the northeastern and midwestern U.S. and in Canada. In warmer climate areas, such as the southwestern and southeastern U.S., utility infrastructure services activity continues year round.

Basis of Presentation. The condensed consolidated financial statements ~~for~~of Southwest Gas Holdings, Inc. and subsidiaries ~~(the “Company”)~~ and Southwest (with its subsidiaries) included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end 2022 condensed balance sheet data was derived from audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with ~~United States~~U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. As indicated above, in connection with the holding company reorganization, Centuri ceased to be a subsidiary of Southwest and became a subsidiary of Southwest Gas Holdings, Inc. To give effect to this change, the separate condensed consolidated financial statements related to Southwest Gas Corporation, which are included in this~~Form 10-Q,~~ depict Centuri-related amounts for periods prior to January 1, 2017 as discontinued operations. Because the transfer of Centuri from Southwest Gas Corporation to Southwest Gas Holdings, Inc. was effectuated as an equity transaction and not a sale, assets and liabilities subject to the discontinued operations presentation have been reflected as noncurrent on the Southwest Gas Corporation Condensed Consolidated Balance Sheet. Those assets and liabilities are detailed in~~Note~~ ~~10 – Reorganization Impacts – Discontinued Operations Solely Related to Southwest Gas Corporation~~~~,and include both current andnon-current~~ ~~amounts.~~

No substantive change has occurred with regard to the Company’s business segments on the whole ~~or in~~during the ~~primary businesses comprising those segments as a result~~recently completed quarter, other than the sale of ~~the foregoing organizational changes. Centuri operations continue to be part of continuing operations and included in the consolidated financial statements of Southwest Gas Holdings, Inc.~~

MountainWest, discussed above.

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atas of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

Actual results could differ from those estimates. In the opinion of management, all adjustments, consisting of normal recurring items and estimates necessary for a fair statement of results for the interim periods, have been made. ~~It is suggested that these~~

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and ~~the~~ notes thereto included in the ~~2016~~2022 Annual Report to ~~Shareholders,~~Stockholders, which is incorporated by reference into the ~~2016~~2022 Form 10-K.

~~Prepaids~~

In the first quarter of 2023, management identified a misstatement related to its accounting for the cost of gas sold at Southwest, thereby determining that Net cost of gas sold was overstated in 2021 and ~~other current assets.~~ ~~Prepaids~~2022 by $2.3 million and ~~other current assets includes~~$5.7 million, respectively. Southwest made an adjustment in the first quarter of 2023 to reduce Net cost of gas ~~pipe materials~~sold and ~~operating supplies~~to increase its asset balance for Deferred purchased gas cost by $8 million.

Also in the first quarter of ~~$36~~2023, the Company identified an approximately $21 million ~~at September 30, 2017 and $30 million at~~misstatement related to its initial estimation of the loss recorded upon reclassifying MountainWest as an asset held for sale during the year ended December 31, ~~2016 (carried at weighted average cost) and $24 million at September 30, 2017 and $953,000 at~~2022. Consequently, the impairment loss for the year ended December 31, ~~2016 related to a regulatory asset associated with the Arizona decoupling mechanism (an alternative revenue program).~~

~~Other current liabilities~~~~. Other current liabilities of Southwest Gas Corporation include~~2022 was understated by approximately $21 million, ~~of dividends declared but not yet paid to Southwest Gas Holdings, Inc. at September 30, 2017.~~

~~Cash and Cash Equivalents.~~ For purposes of reporting consolidated cash flows, cash and cash equivalents include cash on hand and financial instruments with a purchase-date maturity of three months or less. In general, cash and cash equivalents fall within Level 1 (quoted prices for identical financial instruments) of the three-level fair value hierarchy that ranks the inputs, used to measure fair value, by their reliability. However, cash and cash equivalents at September 30, 2017 and December 31, 2016 also includes money market fund investments of approximately $19.8 million and $5.3 million, respectively, which ~~fall within Level 2 (significant other observable inputs) of the fair value hierarchy, due to the asset valuation methods used by money market funds.~~

~~Significantnon-cash~~ ~~investing and financing activities included the following: Upon contract expiration, customer advances of approximately $1.9 million and $3.6 million, during~~was corrected in the first ~~nine months~~quarter of ~~2017~~2023.

The Company (and Southwest, with respect to Net cost of gas sold) assessed, both quantitatively and ~~2016, respectively, were applied as contributions toward utility construction activity and representnon-cash~~ ~~investing activity.~~

~~Adoption~~qualitatively, the impact of ~~Accounting Standards Update (“ASU”) No.~~ ~~2016-09.~~ ~~As of January 1, 2017, the Company adopted Financial Accounting Standards Board (“FASB”) ASUNo. 2016-09~~ “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The adoption of this update is considered a change in accounting principle. Among other things, the update clarifies that all cash payments made to taxing authoritiesthese items on the employees’ behalf for withheld shares should be presented as financing activities on the statement of cash flows. This change is required to be presented in the cash flow statement retrospectively. A new category, Withholding remittance – share-based compensation has been added to the Cash Flow from Financing Activities section of the Condensed Consolidated Statements of Cash Flows for both Southwest Gas Holdings, Inc. and Southwest Gas Corporation. The withheld taxes were included in the Other current assets and liabilities line item of the Condensed Consolidated Statements of Cash Flows in previous periods. Therefore, upon adoption, amounts presented as cash inflows from Other current assets and liabilities under the Cash Flow from Operating Activities section of the Southwest Gas Holdings, Inc. Condensed Consolidated Statements of Cash Flows were revised from $9.9 million to $12 million for the nine months ended September 30, 2016 and inflows in the same category for the twelve months ended September 30, 2016 were revised from $19.9 million to $22 million. In addition, while standalonepreviously issued financial statements, concluding they were not ~~previously presented for natural gas operations, for reasons related~~material to any prior period or the holding company reorganization discussed above, they are now presented. Therefore, upon adoption of this standard, the Cash Flow from Operating Activities section of the Southwest Gas Corporation Condensed Consolidated Statements of Cash Flows reflects a reclassification of cash outflows from Other current assets and liabilities from $2.9 million to $819,000 for the nine months ended September 30, 2016 and cash inflows in the same category were revised from $7 million to $9.1 million for the twelve months ended September 30, 2016.

Under the new guidance, the Company can withhold any amount between the minimum and maximum individual statutory tax rates and still treat the entire award as equity. The Company intends to administer withholding such that awards under stock compensation programs will continue to be treated as equity awards.

~~In addition to the above, the update requires all incometax-related~~ cash flows resulting from share-based payments (unrelated to employee withholding) be reported as operating activities on the statement of cash flows, a change from the previous requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities. The Company chose to apply this presentation requirement of the update prospectively as permitted. Therefore, prior periods were not impacted in implementing this provision of the update.

period financial statements.


			13


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value are required to be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. The Company had no previously unrecognized tax benefits as a result of these changes; therefore, no cumulative effect adjustment to the Company’s opening retained earnings was required.

~~Goodwill.~~ Goodwill is assessed as of October each year for impairment (required annually by U.S. GAAP), or otherwise, if circumstances indicate impairment to the carrying value of goodwill may have occurred. In consideration of the holding company reorganization, management of the Company considered its reporting units and segments and determined that historic judgments regarding its segments and reporting units continue to apply, and that no change was necessary with regard to the level at which goodwill is assessed for impairment. No impairment was deemed to have occurred in the first nine months of 2017.

(In thousands of dollars)    Natural Gas
Operations    Construction
Services    Consolidated
December 31, 2016
   $ 10,095    $ 129,888    $ 139,983
Foreign currency translation adjustment
   —      7,882    7,882






September 30, 2017
   $ 10,095    $ 137,770    $ 147,865

~~Intercompany Transactions~~~~. Centuri recognizes revenues generated from contracts with Southwest (see~~~~Note 3—~~~~Segment Information~~~~). Centuri’s accounts receivable for these services are presented in the table below (thousands of dollars):~~

   September 30, 2017    December 31, 2016
Centuri accounts receivable for services provided to Southwest
   $ 11,486    $ 10,585

The accounts receivable balance, revenues, and associated profits are included in the condensed consolidated financial statements of the Company and were not eliminated during consolidation in accordance with accounting treatment for rate-regulated entities.

Other Property and Investments.Other property and investments on Southwest’s and the ~~Southwest Gas Holdings, Inc.~~Company’s Condensed Consolidated Balance Sheets ~~includes (thousands of dollars):~~

   September 30, 2017    December 31, 2016
Centuri property and equipment
   $ 493,599    $ 451,114
Centuri accumulated provision for depreciation and amortization
   (251,831 )    (228,374 )
Net cash surrender value of COLI policies
   114,052    106,744
Other property
   13,483    12,859




Total
   $ 369,303    $ 342,343


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~Other Income (Deductions).~~~~The following table provides the composition of significant items included in Other income (deductions) in the condensed consolidated statements of income (thousands of dollars):~~

   Three Months Ended Nine Months Ended Twelve Months Ended
   September 30 September 30 September 30
   2017 2016 2017 2016 2017 2016
Southwest Gas Corporation—natural gas operations segment:

Change in COLI policies
   $ 2,100 $ 2,300 $ 6,800 $ 5,400 $ 8,800 $ 7,500
Interest income
   670 522 1,848 1,279 2,417 1,664
Equity AFUDC
   968 611 2,077 1,893 2,473 2,890
Miscellaneous income and (expense)
   (657 ) (912 ) (1,981 ) (1,860 ) (3,382 ) (2,439 )


Southwest Gas Corporation—total other income (deductions)
   3,081 2,521 8,744 6,712 10,308 9,615


Construction services segment:

Interest income
   1 —   2 1 2 414
Foreign transaction gain (loss)
   (442 ) (3 ) (640 ) (22 ) (640 ) 28
Miscellaneous income and (expense)
   231 47 676 65 1,825 804


Centuri—total other income (deductions)
   (210 ) 44 38 44 1,187 1,246


Corporate and administrative
   5 —   6 —   6 —


Consolidated Southwest Gas Holdings, Inc.—total other income (deductions)
   $ 2,876 $ 2,565 $ 8,788 $ 6,756 $ 11,501 $ 10,861

includes:


(Thousands of dollars)	March 31, 2023		December 31, 2022
Net cash surrender value of COLI policies	$	138,689	$	136,245
Other property	5,897		33,152
Total Southwest Gas Corporation	144,586		169,397
Non-regulated property, equipment, and intangibles	1,698,327		1,677,218
Non-regulated accumulated provision for depreciation and amortization	(624,693)		(596,518)
Other property and investments	32,107		31,075
Total Southwest Gas Holdings, Inc.	$	1,250,327	$	1,281,172

Included in the table above isare the ~~change in~~net cash surrender values of company-owned life insurance (“COLI”) ~~policies (including net death benefits recognized).~~policies. These life insurance policies on members of management and other key employees are used by Southwest to indemnify itself against the loss of talent, expertise, and knowledge, as well as to provide indirect funding for certain nonqualified benefit plans. The term non-regulated in regard to assets and related balances in the table above is in reference to the non-rate regulated operations of Centuri.

Held for sale. The Company and Southwest have classified certain assets associated with its previous corporate headquarters as held for sale during the first quarter of 2023. An agreement for sale was signed in May 2023, subject to certain closing conditions, including possible extension periods. Amounts to be realized above the carrying value are not expected to be material to the financial statements overall. Management determined that the assets met the criteria to be classified as held for sale as of March 31, 2023. As a result, the Company and Southwest reclassified approximately $27 million from Other property and investments to current assets held for sale on their respective Condensed Consolidated Balance Sheets at March 31, 2023.

Cash and Cash Equivalents. Cash and cash equivalents of the Company include $32.7 million and $30 million of money market fund investments at March 31, 2023 and December 31, 2022, respectively. The money market fund investments for Southwest were $29.6 million at March 31, 2023 and $17.6 million at December 31, 2022, respectively. These investments fall within Level 2 of the fair value hierarchy, due to the asset valuation methods used by money market funds.

Noncash investing activities for the Company and Southwest include capital expenditures that were not yet paid, thereby remaining in accounts payable, the amounts related to which declined by approximately $37.3 million and $34.2 million during the three months ended March 31, 2023, respectively, and increased $5.5 million and $5.7 million during the twelve months ended March 31, 2023, respectively.

Accounts Receivable, net of allowances. Following an earlier moratorium on account disconnections amidst the COVID-19 environment, account collection efforts resumed in 2021 in all jurisdictions in which Southwest operates. Ultimately, some accounts that are receivable at the end of any reporting date may not be collected, and if collection is unsuccessful, such accounts are written off. Estimates as to collectibility are made on an ongoing basis. However, Southwest continues to actively work with customers experiencing financial hardship by means of flexible payment options and partnering with assistance agencies. The cost of gas included in customer rates also influences account balances at each reporting date.

Deferred Purchased Gas Costs. The various regulatory commissions have established procedures to enable rate-regulated companies to adjust billing rates for changes in the cost of natural gas purchased. The difference between the current cost of gas purchased and the cost of gas recovered in billed rates is deferred. Generally, these deferred amounts are recovered or refunded within one year.

Prepaid and other current assets. Prepaid and other current assets for Southwest include, among other things, materials and operating supplies of $79 million at March 31, 2023 and $77.3 million at December 31, 2022 (carried at weighted average cost). Also included in the balance was $207 million as of December 31, 2022 in accrued purchased gas cost, with no corresponding asset balance as of March 31, 2023.

Goodwill. Goodwill is assessed as of October 1st each year for impairment, or more frequently, if circumstances indicate it may be more likely than not that the fair value of a reporting unit is less than its carrying value. The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments. Since December 31, 2022, management qualitatively assessed whether events during the first three months of 2023 indicated it was more likely than not that the fair value of our reporting units was less than their carrying value, which if the case, could be an indication of a goodwill impairment. Through management’s assessments during first quarter of 2023, no impairment was deemed to have occurred in the continuing segments of the Company. However, there can be no assurances that future assessments of goodwill will not


			14


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						March 31, 2023

result in an impairment, and various factors, including changes in the business, strategic initiatives, economic conditions, governmental monetary policies, interest rates, or others, on their own or in combination with each other, could result in the fair value of reporting units being lower than their carrying values. Goodwill in the Natural Gas Distribution and Utility Infrastructure Services segments is included in their respective Condensed Consolidated Balance Sheets as follows:


(Thousands of dollars)	Natural Gas Distribution		Utility Infrastructure Services		Total Company
December 31, 2022	$	11,155	$	776,095	$	787,250
Foreign currency translation adjustment	—		84		84
March 31, 2023	$	11,155	$	776,179	$	787,334

Other Current Liabilities. Management recognizes in its balance sheets various liabilities that are expected to be settled through future cash payment within the next twelve months, including amounts payable under regulatory mechanisms, customary accrued expenses for employee compensation and benefits, declared but unpaid dividends, and miscellaneous other accrued liabilities. Other current liabilities for the Company include $44.2 million and $41.6 million of dividends declared as of March 31, 2023 and December 31, 2022, respectively. Also included in the balance was $68 million as of March 31, 2023 in accrued purchased gas cost, with no corresponding liability balance as of December 31, 2022.

Other Income (Deductions). The following table provides the composition of significant items included in Other income (deductions) in Southwest’s and the Company’s Condensed Consolidated Statements of Income:


	Three Months Ended March 31,				Twelve Months Ended March 31,
(Thousands of dollars)	2023		2022		2023		2022
Southwest Gas Corporation:
Change in COLI policies	$	2,400	$	(2,000)	$	(1,000)	$	4,100
Interest income	12,471		2,801		25,853		7,198
Equity AFUDC	—		76		(76)		(905)
Other components of net periodic benefit cost	4,959		(188)		4,396		(10,704)
Miscellaneous income and (expense)	(1,387)		626		(18,929)		(3,483)
Southwest Gas Corporation - total other income (deductions)	18,443		1,315		10,244		(3,794)
Centuri, MountainWest, and Southwest Gas Holdings, Inc.:

Foreign transaction gain (loss)	(690)		3		284		(16)
Equity AFUDC	82		182		365		182
Equity in earnings of unconsolidated investments	360		515		2,474		749
Miscellaneous income and (expense)	(5)		(651)		(2,467)		303
Corporate and administrative	270		(120)		127		(127)
Southwest Gas Holdings, Inc. - total other income (deductions)	$	18,460	$	1,244	$	11,027	$	(2,703)

Included in the table above is the change in cash surrender values of COLI policies (including net death benefits recognized). Current tax regulations provide fortax-free treatment of life insurance (death benefit) proceeds. Therefore, changes in the cash surrender values of COLI policies, as they progress towards the ultimate death benefits, are also recorded without tax consequences.

~~Recently Issued Accounting Standards Updates.~~ Interest income primarily relates to Southwest’s regulatory asset balances, including its deferred purchased gas cost mechanisms. Interest income includes carrying charges on regulatory account balances, including deferred purchased gas cost balances, which increased from $368 million as of March 31, 2022 to $970 million as of March 31, 2023. Refer also to Note 2 – Components of Net Periodic Benefit Cost.

Redeemable Noncontrolling Interests. In ~~May 2014,~~connection with the ~~FASB issued~~acquisition of Linetec in November 2018, the ~~update “Revenue from Contracts~~previous owner initially retained a 20% equity interest in that entity, with ~~Customers (Topic 606).” The update replaces much~~redemption being subject to certain rights based on the passage of time or upon the occurrence of certain triggering events. Effective in 2022, the Company, through Centuri, had the right, but not the obligation, to purchase at fair value (subject to a floor) a portion of the ~~current guidance regarding revenue recognition including~~interest held by the previous owner, and in incremental amounts each year thereafter. In March 2022, the parties agreed to a partial redemption, reducing the noncontrolling interest to 15%, and in March 2023, agreeing once again to a 5% redemption (of the 15% then remaining), and to thereby reduce the noncontrolling interest to 10% under the terms of the original agreement. As a result of this most industry-specific guidance. In accordance with the update, an entity will be required to identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction pricerecent election, Centuri accrued $39.9 million as of March 31, 2023, which was paid to the ~~performance obligations~~previous owner of Linetec in April 2023. The impact of this transaction has been excluded from the contract, and recognize revenue when (or as) the entity satisfies a performance obligation. In addition to the new revenue recognition requirements, entities will be required to disclose sufficient information to enable usersCompany’s Condensed Consolidated Statement of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Entities may choose between two retrospective transition methods when applying the update. In July 2015, the FASB approved a~~one-year~~ deferral of the effective date (annual periods beginning after December 15, 2017). In March, April, May, and December of 2016, the FASB issued updates to Topic 606 related to “Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, “Identifying Performance Obligations and Licensing,” “Narrow-Scope Improvements and Practical Expedients”, and certain “Technical Corrections and Improvements.” The amendments in the first two updates, respectively, provide guidance when another party, along with the entity, is involved in providing a good or service to a customer, and provide clarification with regard to identifying performance obligations and of the licensing implementation guidance in Topic 606. The third update includes improvements to the guidance on collectibility, noncash consideration, and completed contracts at transition. In addition, a practical expedient is providedCash Flows for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The fourth update affects narrow aspects of the guidance as issued to date. Management plans to adopt all of these updates at the required adoption date, which is for interim and annual reporting periods commencing January 2018.

Deliberations have been ongoing by the utility industry, notably in connection with efforts to produce an accounting guide intended to be developed by the American Institute of Certified Public Accountants (“AICPA”). In association with this undertaking, the AICPA formed a number of industry task forces, including a Power & Utilities (“P&U”) Task Force, on which Company personnel actively participate via formal membership. Industry representatives and organizations, the largest auditing firms, the AICPA’s Revenue Recognition Working Group and its Financial Reporting Executive Committee have undertaken, and continue to undertake, consideration of several items relevant to the utility industry. Where applicable or necessary, the FASB’s Transition Resource Group (“TRG”) has also participated. Through the P&U Task Force undertakings, general determinations were made that contributions received in aid of construction (“CIAC”) efforts related to the industry’s pipe distribution and transmission systems are reimbursements of expenditures rather than revenue (consistent with current accounting practices). Furthermore, regarding the “collectibility” criterion in the update that must be met for revenue recognition, general determinations have been made that contracts for utility service (including service to lower income or lower credit quality customers)


			15


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

~~represent genuine and valid contracts for which revenue is able~~

2023 due to its noncash nature in advance of the April 2023 payment. The remaining balance continuing to be ~~recognized when service~~redeemable as of March 31, 2023 is ~~rendered (consistent~~10% under the terms of the original agreement, with ~~current accounting practices)~~Centuri now owning a 90% stake in Linetec. ~~These determinations by the P&U industry are~~

Certain members of Riggs Distler management have a 1.42% interest in Drum, which is redeemable, subject to certain rights based on the ~~various measures~~passage of time or upon the occurrence of certain triggering events.

Significant changes in the value of the redeemable noncontrolling interests, above a floor determined at the establishment date, are recognized as they occur, and the carrying value is adjusted as necessary at each reporting date. The fair value is estimated using a market approach that utilizes certain financial metrics from guideline public companies of similar industry ~~takes to help ensure collectibility (e.g., proof~~and operating characteristics. Based on the fair value model employed, the estimated redemption value of ~~creditworthiness, customer deposits, late fee assessment, disconnection, servicere-establishment~~ ~~fees, collection processes, etc.),~~the Linetec redeemable noncontrolling interest increased approximately $5.8 million during the three months ended March 31, 2023, notwithstanding the change resulting from the partial redemption noted above. Valuation adjustments also impact retained earnings, as reflected in ~~addition~~the Company’s Condensed Consolidated Statement of Equity, but do not impact net income. The following depicts changes to the ~~regulatory mechanisms established under rate regulation~~balances of the redeemable noncontrolling interests:


(Thousands of dollars):	Linetec		Drum		Total
Balance, December 31, 2022	$	146,765	$	12,584	$	159,349
Net income attributable to redeemable noncontrolling interests	1,683		56		1,739
Redemption value adjustments	5,832		—		5,832
Redemption of equity interest from noncontrolling party	(39,894)		—		(39,894)
Balance, March 31, 2023	$	114,386	$	12,640	$	127,026

Earnings Per Share. Basic earnings per share (“EPS”) in each period of this report were calculated by dividing net income attributable to ~~mitigate~~Southwest Gas Holdings, Inc. by the ~~impacts~~weighted-average number of ~~individual customer nonpayment. Southwest has also actively worked with its peers~~shares during those periods. Diluted EPS includes additional weighted-average common stock equivalents (performance shares and restricted stock units). Unless otherwise noted, the term “Earnings Per Share” refers to Basic EPS. A reconciliation of the denominator used in Basic and Diluted EPS calculations is shown in the ~~rate-regulated~~following table:


	Three Months Ended March 31,		Twelve Months Ended March 31,
(In thousands)	2023	2022	2023	2022
Weighted average basic shares	68,265	60,737	67,413	59,919
Effect of dilutive securities:
Restricted stock units (1)(2)	154	117	—	125
Weighted average diluted shares	68,419	60,854	67,413	60,044

(1) The number of anti-dilutive restricted stock units excluded from the calculation of diluted shares during the twelve months ended March 31, 2023 is 166,000.

(2) The number of securities included 132,000 and 112,000 performance shares during the three months ended March 31, 2023 and 2022, and 149,000 and 114,000 performance shares during the twelve months ended March 31, 2023 and 2022, respectively, the total of which was derived by assuming that target performance will be achieved during the relevant performance period.

Income Taxes. The Company’s effective tax rate was 37.6% for the three months ended March 31, 2023, compared to 19.9% for the corresponding period in 2022. The effective tax rate increase was primarily due to the MountainWest sale, and includes the impact of book versus tax basis differences related to the transaction (See Note 8 - Dispositions).

Southwest’s effective tax rate was 18.3% for the three months ended March 31, 2023, compared to 20.6% in the prior year quarter. These amounts varied from the statutory rate primarily as the result of the amortization of excess deferred income taxes.

In April 2023, the Internal Revenue Service (“IRS”) issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether expenditures to repair, maintain, replace, or improve natural gas ~~industry~~transmission and ~~with~~distribution property must be capitalized for tax purposes. The Company and Southwest are currently reviewing this revenue procedure to determine the ~~public accounting profession to finalize the accounting treatment for several other issues not separately addressed by the P&U Task Force.~~

With regard to the construction services segment, the principles of the new revenue recognition guidance are very similar to existing guidance for construction contractors. Similar to the P&U Task Force noted above, the AICPA formed the Engineering and Construction Contractors Task Force to assist the construction industry with implementing the new guidance. The accounting guide the AICPA intends to release is expected to provide implementation guidance related to several issues including 1) combining contracts and separating performance obligations; 2) estimating change orders, incentives, penalties, liquidated damages and other variable consideration items and 3) acceptable measures of progress when recognizing revenue over time.

~~Management of both segments of the Company has substantially completed assessments of sources of revenue and the effects that adoption of the new guidance will have~~potential impact on ~~the Company’s (and Southwest’s in the case of utility operations)~~their financial position, results of operations, and cash flows. Based on assessments completed to date, management believes that such impacts will not be material overall. Presentation and disclosure requirements of the new guidance will have the most impact on the Company’s financial statements and note disclosures. The Company is currently planning to adopt the new guidance in 2018 under the modified retrospective transition method, as permissible.

~~In January 2016, the FASB issued the update “Financial Instruments – Overall (Subtopic825-10):~~ Recognition and Measurement of Financial Assets and Financial Liabilities” in order to improve the recognition and measurement of financial instruments. The update makes targeted improvements to existing U.S. GAAP by: 1) requiring equity investments to be measured at fair value with changes in fair value recognized in net income; 2) requiring the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; 3) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; 4) eliminating the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and 5) requiring a reporting entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in instrument-specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. All entities can early adopt the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Management believes this update will not have a material impact on its consolidated financial statements and disclosures.

In February 2016, the FASB issued the update “Leases (Topic 842).” Under the update, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

~~A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and~~

A~~right-of-use~~ ~~asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.~~

Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. Though companies have historically been required to make disclosures regarding leases and of associated contractual obligations, leases (with terms longer than a year) will no longer exist~~off-balance~~ sheet. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply


			16


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

Recent Accounting Standards Updates.

Accounting pronouncements effective or adopted in 2023:

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The update provides optional guidance for a ~~full retrospective transition approach. Early application is permitted. Management currently plans~~limited time to ~~adopt~~ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting, including when modifying a contract (during the eligibility period covered by the update atto the ~~required adoption date, which is for interim~~topic) to replace a reference rate affected by reference rate reform. The update applies only to contracts and ~~annual reporting periods commencing January 1, 2019. Existing leases have been historically documented under traditional leasing arrangements by both segments. Management is in~~hedging relationships that reference the ~~process of evaluating other types of arrangements that have the potential~~London Interbank Offered Rate (“LIBOR”) or another reference rate expected to ~~meet the definition of a lease under the new standard, and is also in the process of selecting software~~be discontinued due to efficiently implement the standard for its natural gas operations segment. The FASB recently issued proposed guidance that will allow the election of a practical expedient to not apply the new standard to existing easement contracts that were not previously assessed as leases under historic guidance. However, the Company would still be required to evaluate any new easements entered into after the effective date of the standard to determine if the arrangements should be accounted for as leases. Management is currently evaluating the new and proposed guidance in light of its customary leasing arrangements (and other arrangements in association with the new guidance) to determine the effect the new standard will have on its financial position, results of operations, cash flows, and business processes.

reference rate reform. In ~~June 2016,~~December 2022, the FASB issued ASU 2022-06 “Reference Rate Reform (Topic 848): Deferral of the ~~update “Financial Instruments—Credit Losses (Topic 326): Measurement~~Sunset Date of ~~Credit Losses on Financial Instruments.~~Topic 848.” The update amends guidance on reporting credit losses for financial assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, the update eliminates the “probable” threshold for initial recognition of credit losses in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basisprovides deferral of the ~~financial asset~~sunset date of Topic 848 from December 31, 2022 to ~~present~~December 31, 2024. Management will continue to monitor the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however the update will require that credit losses be presented as an allowance rather than as a write-down. This update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The update affects loans, debt securities, trade receivables, net investments in leases,~~off-balance~~ sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this update earlier as of fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating what impact, if any,impacts this update might have on ~~its~~the Company’s and Southwest’s consolidated financial statements and ~~disclosures.~~

~~In August 2016,~~disclosures, and will reflect such appropriately, in the ~~FASB~~event that the optional guidance is elected. See also LIBOR discussion in Note 5 – Debt.

There are no other recently issued ~~the update “Classification of Certain Cash Receipts and Cash Payments.” This update addresses the following specific cash flow issues: debt prepayment or debt extinguishment costs; settlement ofzero-coupon~~ ~~debt instruments or other debt instruments with coupon interest rates~~accounting standards updates that are ~~insignificant in relation~~expected to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance (“COLI”) policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows, including identification of the predominant nature in cases where cash receipts and payments have aspects of more than one class of cash flows. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. Management believes this update will not have a material impact on its consolidated cash flow statements and disclosures.

In October 2016, the FASB issued the update “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory.” This update eliminates the current U.S. GAAP exception for all intra-entity sales of assets other than inventory. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the~~pre-tax~~ effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted; however, the guidance can only be adopted or material to Southwest or the Company effective in the first interim period of a fiscal year. No such election to adopt early was made by management. The modified retrospective approach will be required for transition to the new guidance, with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. Management believes this update will not have a material impact on its consolidated financial statements and disclosures.

In January 2017, the FASB issued the update “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The update eliminates Step 2 from the goodwill impairment test. The annual,2023 or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s

thereafter.


~~SOUTHWEST GAS HOLDINGS, INC.~~		17	~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~	~~September 30, 2017~~

~~fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from anytax-deductible~~ goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The update also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments should be applied on a prospective basis. The update is effective for fiscal and interim periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Management has determined that this update would have had no impact on the consolidated financial statements for the periods presented if it had been effective during those periods.

In March 2017, the FASB issued the update “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The update applies to all employers that offer employee benefits under defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation – Retirement Benefits. The update requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, and be appropriately described. The update also allows only the service cost component (and not the other components of periodic benefit costs) to be eligible for capitalization when applicable, making no exception for specialized industries, including~~rate-regulated~~ ~~industries.~~

Southwest is a rate-regulated utility offering pension and postretirement benefits to retired employees. It is anticipated that Southwest would continue to request recovery of the total costs of defined benefit plans in rate applications filed with its various regulatory bodies. Rate-regulated entities providing utility and transmission services have historically capitalized a portion of periodic benefit costs (including~~non-service~~ cost components) in utility infrastructure (for instance, when productive labor is also charged to capital work orders). The portion capitalized has historically been a component of depreciation and related rate development through efforts of companies and their regulatory commissions. The Federal Energy Regulatory Commission (“FERC”) regulates interstate transmission pipelines and also establishes, via its Uniform System of Accounts, accounting practices of rate-regulated entities. Accounting guidelines by the FERC are typically also upheld by state commissions. Historically, those guidelines have been generally consistent with guidance in U.S. GAAP (including U.S. GAAP for rate-regulated entities). While formal guidance has not yet been published by the FERC, it is currently believed that the FERC will permit an election to either continue to capitalize~~non-service~~ benefit costs for regulatory reporting purposes or to cease capitalizing such costs and implement the Topic 715 update capitalization provisions “as is,” for regulatory purposes. Assuming the FERC formalizes the above elections, Southwest currently anticipates adopting the provisions of Topic 715 for both SEC reporting and regulatory purposes. Industry deliberations continue and management will be evaluating the various impacts this update will have on its consolidated financial statements and disclosures. It is estimated that approximately $3 million in~~non-service~~ ~~costs were capitalized as a component of gas plant during 2016. Totalnon-service~~ ~~costs were approximately $20 million in 2016.~~


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

Note 2 – Components of Net Periodic Benefit Cost

Southwest has a noncontributory qualified retirement plan with defined benefits covering substantially all employees for employees hired before 2022 and a separate unfunded supplemental retirement plan (“SERP”), which is limited to ~~officers.~~officers also hired before 2022. Southwest also provides limited postretirement benefits other than pensions (“PBOP”) to its qualified retirees for health care, dental, and life insurance.

~~Net~~

The service cost component of net periodic benefit costs included in the table below ~~are components~~is a component of an overhead loading process associated with the cost of labor. The overhead process ultimately results in allocation of ~~net periodic benefit costs~~service cost to the same accounts to which productive labor is charged. As a result, ~~net periodic benefit~~service costs become components of various accounts, primarily operations and maintenance expense, net ~~utility~~regulated operations plant, and deferred charges and other assets for both the Company and Southwest.

   Qualified Retirement Plan
   Period Ended September 30,
   Three Months Nine Months Twelve Months
   2017 2016 2017 2016 2017 2016
(Thousands of dollars)

Service cost
   $ 5,848 $ 5,708 $ 17,544 $ 17,125 $ 23,252 $ 23,406
Interest cost
   11,520 11,507 34,561 34,520 46,068 45,577
Expected return on plan assets
   (13,799 ) (14,140 ) (41,397 ) (42,419 ) (55,536 ) (56,871 )
Amortization of net actuarial loss
   6,001 6,317 18,003 18,950 24,319 27,136


Net periodic benefit cost
   $ 9,570 $ 9,392 $ 28,711 $ 28,176 $ 38,103 $ 39,248


   SERP
   Period Ended September 30,
   Three Months Nine Months Twelve Months
   2017 2016 2017 2016 2017 2016
(Thousands of dollars)

Service cost
   $ 77 $ 83 $ 232 $ 248 $ 315 $ 328
Interest cost
   471 464 1,413 1,394 1,878 1,818
Amortization of net actuarial loss
   361 346 1,081 1,038 1,426 1,361


Net periodic benefit cost
   $ 909 $ 893 $ 2,726 $ 2,680 $ 3,619 $ 3,507


   PBOP
   Period Ended September 30,
   Three Months Nine Months Twelve Months
   2017 2016 2017 2016 2017 2016
(Thousands of dollars)

Service cost
   $ 367 $ 375 $ 1,101 $ 1,124 $ 1,476 $ 1,534
Interest cost
   808 795 2,424 2,386 3,218 3,136
Expected return on plan assets
   (839 ) (787 ) (2,518 ) (2,362 ) (3,305 ) (3,228 )
Amortization of prior service costs
   333 333 1,001 1,001 1,335 1,335
Amortization of net actuarial loss
   —   104 —   312 105 398


Net periodic benefit cost
   $ 669 $ 820 $ 2,008 $ 2,461 $ 2,829 $ 3,175


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~Note 3 – Segment Information~~

The ~~Company has two reportable segments: natural gas operations and construction services. Southwest has a single reportable segment that is referred to herein as the natural gas operations segment~~other components of ~~the Company. In order to reconcile to~~ net periodic benefit cost are reflected in Other income ~~as disclosed in~~(deductions) on the Condensed Consolidated Statements of Income ~~an Other column~~of each entity. Variability in total net periodic benefit cost between periods, especially with regard to the Qualified Retirement Plan, is ~~included associated with impacts related~~subject to ~~corporate and administrative activities related to Southwest Gas Holdings, Inc. The following tables present revenues from external customers, intersegment revenues, and segment net income for~~changes in underlying actuarial assumptions between periods, notably the ~~two reportable segments (thousands of dollars):~~

   Natural Gas
Operations    Construction
Services    Other    Total
Three months ended September 30, 2017

Revenues from external customers
   $ 213,059    $ 351,850    $ —      $ 564,909
Intersegment revenues
   —      28,244    —      28,244








Total
   $ 213,059    $ 380,094    $ —      $ 593,153








Segment net income (loss)
   $ (4,024 )    $ 14,335    $ (107 )    $ 10,204








Three months ended September 30, 2016

Revenues from external customers
   $ 200,179    $ 312,531    $ —      $ 512,710
Intersegment revenues
   —      27,259    —      27,259








Total
   $ 200,179    $ 339,790    $ —      $ 539,969








Segment net income (loss)
   $ (12,405 )    $ 14,877    $ —      $ 2,472








   Natural Gas
Operations    Construction
Services    Other    Total
Nine months ended September 30, 2017

Revenues from external customers
   $ 935,823    $ 800,073    $ —      $ 1,735,896
Intersegment revenues
   —      72,463    —      72,463








Total
   $ 935,823    $ 872,536    $ —      $ 1,808,359








Segment net income (loss)
   $ 82,436    $ 15,717    $ (777 )    $ 97,376








Nine months ended September 30, 2016

Revenues from external customers
   $ 980,927    $ 762,835    $ —      $ 1,743,762
Intersegment revenues
   —      75,203    —      75,203








Total
   $ 980,927    $ 838,038    $ —      $ 1,818,965








Segment net income
   $ 67,536    $ 19,325    $ —      $ 86,861








   Natural Gas
Operations    Construction
Services    Other    Total
Twelve months ended September 30, 2017

Revenues from external customers
   $ 1,276,308    $ 1,078,195    $ —      $ 2,354,503
Intersegment revenues
   —      95,381    —      95,381








Total
   $ 1,276,308    $ 1,173,576    $ —      $ 2,449,884








Segment net income (loss)
   $ 134,323    $ 29,010    $ (777 )    $ 162,556








Twelve months ended September 30, 2016

Revenues from external customers
   $ 1,376,388    $ 1,022,416    $ —      $ 2,398,804
Intersegment revenues
   —      105,566    —      105,566








Total
   $ 1,376,388    $ 1,127,982    $ —      $ 2,504,370








Segment net income
   $ 119,836    $ 33,144    $ —      $ 152,980

~~Note 4 – Derivatives and Fair Value Measurements~~

~~Derivatives.~~ ~~In managing its natural gas supply portfolios, Southwest has historically entered into fixed- and variable-price contracts, which qualify as derivatives. Additionally, Southwest utilizesfixed-for-floating~~ swap contracts (“Swaps”) to supplement its fixed-price contracts. The fixed-price contracts, firm commitments to purchase a fixed amount of gas in the future at a fixed price, qualify for the normal purchases and normal sales exception that is allowed for contracts that are probable of delivery in the normal course of business, and are exempt from fair value reporting.

discount rate.


	Qualified Retirement Plan
	March 31,
	Three Months				Twelve Months
	2023		2022		2023		2022
(Thousands of dollars)
Service cost	$	6,460	$	11,028	$	39,542	$	41,897
Interest cost	14,791		11,251		48,546		41,575
Expected return on plan assets	(21,015)		(19,978)		(80,950)		(74,242)
Amortization of net actuarial loss	84		8,117		24,435		39,583
Net periodic benefit cost	$	320	$	10,418	$	31,573	$	48,813

	SERP
	March 31,
	Three Months				Twelve Months
	2023		2022		2023		2022
(Thousands of dollars)
Service cost	$	62	$	106	$	380	$	501
Interest cost	531		360		1,612		1,433
Amortization of net actuarial loss	249		588		2,011		2,570
Net periodic benefit cost	$	842	$	1,054	$	4,003	$	4,504

	PBOP
	March 31,
	Three Months				Twelve Months
	2023		2022		2023		2022
(Thousands of dollars)
Service cost	$	317	$	485	$	1,773	$	1,753
Interest cost	825		613		2,664		2,258
Expected return on plan assets	(606)		(807)		(3,027)		(3,236)
Amortization of prior service costs	44		44		175		763

Net periodic benefit cost	$	580	$	335	$	1,585	$	1,538


			18


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

Note 3 – Revenue

The ~~variable-price contracts have no significant market value. The Swaps are recorded at fair value.~~

~~The fixed-price contracts and Swaps are utilized~~following information about the Company’s revenues is presented by segment. Southwest ~~under its volatility mitigation programs to effectively fix~~encompasses the ~~price on a portion (up to 25% in the Arizona and California jurisdictions) of its~~ natural gas ~~supply portfolios. The maturities of~~distribution segment. Centuri encompasses the ~~Swaps highly correlate to forecasted purchases of natural gas, during time frames ranging from October 2017 through March 2019. Under such contracts, Southwest pays~~utility infrastructure services segment. MountainWest, commencing January 2022 (following its acquisition) and until its sale in mid-February 2023, encompassed the ~~counterparty a fixed rate~~pipeline and ~~receives from the counterparty a floating rate per MMBtu (“dekatherm”) of natural gas. Only the net differential is actually paid or received. The differential is calculated based~~storage segment.

Natural Gas Distribution Segment:

Southwest’s operating revenues included on ~~the notional amounts under the contracts, which are detailed in the table below (thousands of dekatherms):~~

   September 30, 2017    December 31, 2016
Contract notional amounts
   10,936    10,543

~~Southwest does not utilize derivative financial instruments for speculative purposes, nor does it have trading operations.~~

~~The following table sets forth the gains and (losses) recognized on the Swaps (derivatives) for the three-, nine-, and twelve-month periods ended September 30, 2017 and 2016 and their location in~~ the Condensed Consolidated Statements of Income ~~for both the Company and Southwest:~~

~~Gains (losses) recognized in income for derivatives not designated as hedging instruments:~~

~~(Thousands~~ of ~~dollars)~~

      Three Months Ended Nine Months Ended Twelve Months Ended
   Location of Gain or (Loss)    September 30 September 30 September 30
Instrument

Recognized in Income on Derivative
   2017 2016 2017 2016 2017 2016
Swaps
   Net cost of gas sold    $ (546 ) $ (2,072 ) $ (6,851 ) $ 2,253 $ (4,098 ) $ (656 )
Swaps
   Net cost of gas sold    546 * 2,072 * 6,851 * (2,253 )* 4,098 * 656 *


Total
      $ —   $ —   $ —   $ —   $ —   $ —

*	~~Represents the impact of regulatory deferral accounting treatment under U.S. GAAP for rate-regulated entities.~~

No gains (losses) were recognized in net income or other comprehensive income during the periods presented for derivatives designated as cash flow hedging instruments. Previously, Southwest entered into two forward-starting interest rate swaps (“FSIRS”), both of which were designated cash flow hedges, to partially hedge the risk of interest rate variability during the period leading up to the planned issuance of debt. The first FSIRS terminated in December 2010. The second FSIRS terminated in March 2012. Losses on both FSIRS are being amortized over~~ten-year~~ ~~periods from Accumulated other comprehensive income (loss) into interest expense.~~

~~The following table sets forth the fair values of the Swaps and their location in the Condensed Consolidated Balance Sheets for~~ both the Company and Southwest ~~(thousands~~include revenue from contracts with customers, which is shown below, disaggregated by customer type, in addition to other categories of ~~dollars):~~

~~Fair values~~revenue:

Three Months Ended
March 31, Twelve Months Ended March 31,
(Thousands of dollars) 2023 2022 2023 2022
Residential $ 739,313 $ 514,586 $ 1,549,521 $ 1,147,055
Small commercial 174,184 123,984 428,720 312,800
Large commercial 31,091 20,161 96,164 64,859
Industrial/other 21,114 9,972 62,036 38,515
Transportation 30,543 26,632 104,553 94,336
Revenue from contracts with customers 996,245 695,335 2,240,994 1,657,565
Alternative revenue program revenues (deferrals) (86,204) (23,499) (81,183) 6,055
Other revenues (1) 4,838 4,703 13,598 12,777
Total Regulated operations revenues $ 914,879 $ 676,539 $ 2,173,409 $ 1,676,397

(1) Amounts include late fees and other miscellaneous revenues, and may also include the impact of ~~derivatives not designated~~certain regulatory mechanisms. Also includes the impacts of a temporary moratorium on late fees and disconnection for nonpayment during the COVID-19 pandemic.

Utility Infrastructure Services Segment:

The following tables display Centuri’s revenue, reflected as ~~hedging instruments:~~

September 30, 2017
Instrument

Balance Sheet Location
   Asset
Derivatives    Liability
Derivatives    Net
Total
Swaps
   Prepaids and other current assets    $ 56    $ (22 )    $ 34
Swaps
   Other current liabilities    27    (1,899 )    (1,872 )
Swaps
   Other deferred credits    1    (768 )    (767 )






Total
      $ 84    $ (2,689 )    $ (2,605 )






December 31, 2016
Instrument

Balance Sheet Location
   Asset
Derivatives    Liability
Derivatives    Net
Total
Swaps
   Deferred charges and other assets    $ 899    $ (54 )    $ 845
Swaps
   Prepaids and other current assets    3,551    (19 )    3,532






Total
      $ 4,450    $ (73 )    $ 4,377

Utility infrastructure services revenues on the Condensed Consolidated Statements of Income of the Company, representing revenue from contracts with customers disaggregated by service and contract types:


	Three Months Ended March 31,				Twelve Months Ended March 31,
(Thousands of dollars)	2023		2022		2023		2022
Service Types:
Gas infrastructure services	$	297,408	$	260,682	$	1,568,544	$	1,341,185
Electric power infrastructure services	233,640		181,968		829,796		613,209
Other	122,245		81,227		491,403		364,169
Total Utility infrastructure services revenues	$	653,293	$	523,877	$	2,889,743	$	2,318,563


	Three Months Ended March 31,				Twelve Months Ended March 31,
(Thousands of dollars)	2023		2022 *		2023		2022*
Contract Types:
Master services agreement	$	547,606	$	445,345	$	2,444,481	$	1,804,643
Bid contract	105,687		78,532		445,262		513,920
Total Utility infrastructure services revenues	$	653,293	$	523,877	$	2,889,743	$	2,318,563

Unit price contracts	$	328,527	$	302,523	$	1,634,135	$	1,437,156
Fixed price contracts	166,915		86,537		578,417		319,685
Time and materials contracts	157,851		134,817		677,191		561,722
Total Utility infrastructure services revenues	$	653,293	$	523,877	$	2,889,743	$	2,318,563

*The Company identified a misstatement in the first quarter 2022 disclosure which resulted in an understatement of $88.8 million in the master services agreement category and an overstatement by the same amount in the bid contract category. Management concluded this


~~SOUTHWEST GAS HOLDINGS, INC.~~		19	~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~	~~September 30, 2017~~

The estimated fair values of the natural gas derivatives were determined using future natural gas index prices (as more fully described below). Master netting arrangements exist with each counterparty that provide for the net settlement (in the settlement month) of all contracts through a single payment. As applicable, management has elected to reflect the net amounts in its balance sheets. There was no outstanding collateral associated with the Swaps during either period shown in the above table.

Pursuant to regulatory deferral accounting treatment for rate-regulated entities, unrealized gains and losses in fair value of the Swaps are recorded as a regulatory asset and/or liability. When the Swaps mature, any prior positions held are reversed and the settled position is recorded as an increase or decrease of purchased gas under the related purchased gas adjustment (“PGA”) mechanism in determining its deferred PGA balances. Neither changes in fair value, nor settled amounts, of Swaps have a direct effect on earnings or other comprehensive income.

~~The following table shows the amounts Southwest paid to and received from counterparties for settlements of matured Swaps.~~

   Three Months Ended    Nine Months Ended    Twelve Months Ended
(Thousands of dollars)    September 30, 2017    September 30, 2017    September 30, 2017
Paid to counterparties
   $ 143    $ 1,555    $ 2,655






Received from counterparties
   $ —      $ 1,685    $ 2,060

The following table details the regulatory assets/(liabilities) offsetting the derivatives at fair value in the Condensed Consolidated Balance Sheets for both the Company and Southwest (thousands of dollars).

September 30, 2017
Instrument

Balance Sheet Location
   Net Total
Swaps    Other current liabilities    $ (34 )
Swaps    Prepaids and other current assets    1,872
Swaps    Deferred charges and other assets    767
December 31, 2016
Instrument

Balance Sheet Location
   Net Total
Swaps    Other deferred credits    $ (845 )
Swaps    Other current liabilities    (3,532 )

~~Fair Value Measurements.~~ The estimated fair values of Southwest’s Swaps were determined at September 30, 2017 and December 31, 2016 using New York Mercantile Exchange (“NYMEX”) futures settlement prices for delivery of natural gas at Henry Hub adjusted by the price of NYMEX ClearPort basis Swaps, which reflect the difference between the price of natural gas at a given delivery basin and the Henry Hub pricing points. These Level 2 inputs (inputs, other than quoted prices, for similar assets or liabilities) are observable in the marketplace throughout the full term of the Swaps, but have been credit-risk adjusted with no significant impact to the overall fair value measurement.

The following table sets forth, by level within the three-level fair value hierarchy that ranks the inputs used to measure fair value by their reliability, the financial assets and liabilities that were accounted for at fair value by both the Company and Southwest:


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

~~Level 2—Significant other observable inputs~~

(Thousands of dollars)    September 30, 2017    December 31, 2016
Assets at fair value:

Prepaids and other current assets—Swaps
   $ 34    $ 3,532
Deferred charges and other assets—Swaps
   —      845
Liabilities at fair value:

Other current liabilities—Swaps
   (1,872 )    —
Other deferred credits—Swaps
   (767 )    —




Net Assets (Liabilities)
   $ (2,605 )    $ 4,377

item was not material to the previously issued financial statements and revised the disclosures for the three- and twelve- months ended March 31, 2022.

The following table provides information about contracts receivable and revenue earned on contracts in progress in excess of billings (contract assets), both of which are included within Accounts receivable, net of allowances, as well as amounts billed in excess of revenue earned on contracts (contract liabilities), which are included in Other current liabilities as of March 31, 2023 and December 31, 2022 on the Company’s Condensed Consolidated Balance Sheets:


(Thousands of dollars)	March 31, 2023		December 31, 2022
Contracts receivable, net	$	322,558	$	394,022
Revenue earned on contracts in progress in excess of billings	279,624		238,059
Amounts billed in excess of revenue earned on contracts	39,595		35,769

The revenue earned on contracts in progress in excess of billings (contract asset) primarily relates to Centuri’s right to consideration for work completed but not billed and/or approved for billing at the reporting date. These contract assets are transferred to contracts receivable when the rights become unconditional. The amounts billed in excess of revenue earned (contract liability) primarily relate to the advance consideration received from customers for which work has not yet been completed. The change in this contract liability balance from December 31, 2022 to March 31, 2023 increased due to amounts received for services not yet performed, net of revenue recognized.

For contracts that have an original duration of one year or ~~liabilities associated with~~less, Centuri uses the ~~Swaps, which were accounted for at fair~~practical expedient applicable to such contracts and does not consider/compute an interest component based on the time value ~~fell within Level 1 (quoted prices in active markets for identical financial assets) or Level 3 (significant unobservable inputs)~~of money. Furthermore, because of the ~~fair value hierarchy.~~

~~With regard~~short duration of these contracts, Centuri has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize the revenue.

As of March 31, 2023, Centuri had 62 fixed price contracts with an original duration of more than one year. The aggregate amount of the transaction price allocated to the ~~fair values~~unsatisfied performance obligations of ~~assets associated with pension and postretirement benefit plans, asset values were last updated as required~~these contracts as of ~~December 2016. Refer~~March 31, 2023 was $458.2 million. Centuri expects to recognize the remaining performance obligations over approximately the next two years; however, the timing of that recognition is largely within the control of the customer, including when the necessary materials required to complete the work are provided by the customer.

Utility infrastructure services contracts receivable consists of the following:


(Thousands of dollars)	March 31, 2023		December 31, 2022
Billed on completed contracts and contracts in progress	$	325,528	$	395,771
Other receivables	1,738		2,569
Contracts receivable, gross	327,266		398,340
Allowance for doubtful accounts	(4,708)		(4,318)
Contracts receivable, net	$	322,558	$	394,022

Pipeline and Storage Segment:

MountainWest Regulated operations revenues on the Condensed Consolidated Statements of Income of the Company include revenue from contracts with customers, which is shown below, disaggregated by categories of sales and service activities. The information for 2023 reflects activity from January 1, 2023 through February 13, 2023 (the last full day of ownership).


	Three Months Ended March 31,
(Thousands of dollars)	2023		2022
Regulated gas transportation and storage revenues	$	34,225	$	61,977
NGL revenues	441		1,493
Other revenues	466		3,479
Revenue from contracts with customers	35,132		66,949
Other revenues	—		44
Total Regulated operations revenues	$	35,132	$	66,993


			20


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						March 31, 2023

Note ~~10 – Pension and Other Post Retirement Benefits in the 2016 Annual Report to Shareholders on Form10-K.~~

~~Note 5~~4 – Common Stock

~~In January 2017,~~

Shares of the ~~holding company reorganization was made effective and each outstanding share of Southwest Gas Corporation~~Company’s common stock ~~was converted into a share of common stock in Southwest Gas Holdings, Inc.,~~are publicly traded on a~~one-for-one~~ ~~basis. The~~the New York Stock Exchange, under the ticker symbol ~~of the~~“SWX.” Share-based compensation related to Southwest and Centuri is based on stock ~~“SWX,” remained unchanged, and Southwest Gas Corporation became a wholly owned subsidiary~~awards to be issued in shares of Southwest Gas Holdings, Inc.

On ~~March 29, 2017,~~April 8, 2021, the Company ~~filed with the Securities Exchange Commission (“SEC”) an automatic shelf registration statement on FormS-3~~ ~~(FileNo. 333-217018),~~ ~~which became effective upon filing, for the offer and sale of up to $150 million of common stock from time to time inat-the-market~~ ~~offerings under the prospectus included therein and in accordance with the~~entered into a Sales Agency Agreement ~~dated March 29, 2017,~~ between the Company and BNY Mellon Capital Markets, LLC and J.P. Morgan Securities LLC (the “Equity Shelf Program”)~~. During~~ for the ~~three months~~offer and ~~nine months ending September 30, 2017, the Company sold, through the continuous equity~~sale of up to $500 million of common stock from time to time in an at-the-market offering ~~program with BNY Mellon Capital Markets, LLC as agent, an aggregate of 147,077~~program. The shares ofare issued pursuant to the Company’s ~~common stock in~~automatic shelf registration statement on Form S-3 (File No. 333-251074), or “the Universal Shelf.” There was no activity under the ~~open market at a weighted average price of $80.07 per share, resulting in proceeds to~~Equity Shelf Program during the ~~Company of $11,659,104, net of $117,769 in agent commissions.~~ quarter ended March 31, 2023. The following table provides the life-to-date activity under that program through March 31, 2023:




Gross proceeds	$	158,180,343
Less: agent commissions	(1,581,803)
Net proceeds	$	156,598,540
Number of shares sold	2,302,407
Weighted average price per share	$	68.70

As of ~~September 30, 2017,~~March 31, 2023, the Company had ~~up to $138,223,127 of~~approximately $342 million in common stock available for sale under the program. ~~Net proceeds from~~

In March 2023, the ~~sale~~Company issued, through a separate prospectus supplement under the Universal Shelf, an aggregate of 4.1 million shares of common stock, at an underwritten public offering price of $60.12 per share, resulting in net proceeds to the Company of $238.4 million, net of an underwriter’s discount of $8.3 million and estimated expenses of the offering. Approximately $140 million (2.3 million shares) of the offering was purchased by certain funds affiliated with Carl C. Icahn, a significant stockholder beneficially owning more that 10% of the outstanding stock of the Company. The Company used the net proceeds to repay outstanding amounts under the ~~Equity Shelf Program are intended for general corporate purposes, including~~Company’s credit facility, with the remaining proceeds used to pay off residual amounts outstanding under the loan entered into in November 2021 in connection with the acquisition of ~~property~~MountainWest and the remainder, for ~~the construction, completion, extension or improvement of pipeline systems~~working capital and ~~facilities located in and around the communities served by Southwest. Commensurate with these intentions, proceeds during the 3~~^rd ~~quarter of 2017 were contributed to, and reflected in the records of, Southwest (as a capital contribution from the parent holding company).~~

general corporate purposes.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, the Company issued approximately ~~103,000~~54,000 shares of common stock through the Restricted Stock/Unit Plan and ~~Management~~Omnibus Incentive Plan.

~~Note 6 – Long-Term Debt~~

~~Carrying amounts~~

Additionally, during the three months ended March 31, 2023, the Company issued 46,000 shares of ~~long-term debt~~common stock through the Dividend Reinvestment and related estimated fair values as of September 30, 2017 and December 31, 2016 are disclosed in the following table. Southwest’s revolving credit facility (including commercial paper) and the variable-rate Industrial Development Revenue Bonds (“IDRBs”) approximate their carrying values, as they are repaid quickly (in the case of credit facility borrowings) and have interest rates that reset frequently. These are categorized as Level 1 due to Southwest’s ability to access similar debt arrangements at measurement dates with comparable terms, including variable/market rates. The fair values of Southwest’s debentures, senior notes, and fixed-rate IDRBs were determined utilizing a market-based valuation approach, where fair values are determined based on evaluated

Stock Purchase Plan, raising approximately $2.7 million.


~~SOUTHWEST GAS HOLDINGS, INC.~~		21	~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~	~~September 30, 2017~~

pricing data, such as broker quotes and yields for similar securities adjusted for observable differences. Significant inputs used in the valuation generally include benchmark yield curves, credit ratings and issuer spreads. The external credit rating, coupon rate, and maturity of each security are considered in the valuation, as applicable. The fair values of debentures and fixed-rate IDRBs are categorized as Level 2 (observable market inputs based on market prices of similar securities). The Centuri secured revolving credit and term loan facility and Centuri other debt obligations (not actively traded) are categorized as Level 3, based on significant unobservable inputs to their fair values. Because Centuri’s debt is not publicly traded, fair values for the secured revolving credit and term loan facility and other debt obligations were based on a conventional discounted cash flow methodology and utilized current market pricing yield curves, across Centuri’s debt maturity spectrum, of other industrial bonds with an assumed credit rating comparable to the Company’s.

   September 30, 2017    December 31, 2016
   Carrying    Market    Carrying    Market
   Amount    Value    Amount    Value
(Thousands of dollars)

Southwest Gas Corporation:

Debentures:

Notes, 4.45%, due 2020
   $ 125,000    $ 130,325    $ 125,000    $ 129,703
Notes, 6.1%, due 2041
   125,000    154,434    125,000    149,734
Notes, 3.875%, due 2022
   250,000    258,943    250,000    254,900
Notes, 4.875%, due 2043
   250,000    275,168    250,000    266,793
Notes, 3.8%, due 2046
   300,000    292,578    300,000    283,029
8% Series, due 2026
   75,000    97,218    75,000    94,691
Medium-term notes, 7.59% series, due 2017
   —      —      25,000    25,040
Medium-term notes, 7.78% series, due 2022
   25,000    29,174    25,000    29,290
Medium-term notes, 7.92% series, due 2027
   25,000    31,964    25,000    31,905
Medium-term notes, 6.76% series, due 2027
   7,500    8,920    7,500    8,769
Unamortized discount and debt issuance costs
   (9,498 )       (9,931 )





   1,173,002       1,197,569





Revolving credit facility and commercial paper
   150,000    150,000    5,000    5,000





Industrial development revenue bonds:

Variable-rate bonds:

Tax-exempt Series A, due 2028
   50,000    50,000    50,000    50,000
2003 Series A, due 2038
   50,000    50,000    50,000    50,000
2008 Series A, due 2038
   50,000    50,000    50,000    50,000
2009 Series A, due 2039
   50,000    50,000    50,000    50,000
Unamortized discount and debt issuance costs
   (2,212 )       (2,489 )





   197,788       197,511





Less: current maturities
   —         (25,000 )





Long-term debt, less current maturities - Southwest Gas Corporation
   $ 1,520,790       $ 1,375,080





Centuri:

Centuri term loan facility
   $ 107,250    107,403    $ 106,700    106,819
Unamortized debt issuance costs
   (383 )       (516 )





   106,867       106,184
Centuri secured revolving credit facility
   81,250    81,402    41,185    41,292
Centuri other debt obligations
   51,527    51,978    52,635    52,840
Less: current maturities
   (28,453 )       (25,101 )





Long-term debt, less current maturities - Centuri
   $ 211,191       $ 174,903





Consolidated Southwest Gas Holdings, Inc.:

Southwest Gas Corporation long-term debt
   $ 1,520,790       $ 1,400,080
Centuri long-term debt
   239,644       200,004
Less: current maturities
   (28,453 )       (50,101 )





Long-term debt, less current maturities - Southwest Gas Holdings, Inc.
   $ 1,731,981       $ 1,549,983


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

~~In March 2017,~~

Note 5 – Debt

Long-Term Debt

Long-term debt is recognized in the Company’s and Southwest’s Condensed Consolidated Balance Sheets generally at the carrying value of the obligations outstanding. Details surrounding the fair value and individual carrying values of instruments are provided in the table that follows.


	March 31, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
(Thousands of dollars)
Southwest Gas Corporation:
Debentures:
Notes, 6.1%, due 2041	$	125,000	$	125,376	$	125,000	$	113,184
Notes, 4.05%, due 2032	600,000		552,972		600,000		527,052
Notes, 4.875%, due 2043	250,000		210,990		250,000		195,703
Notes, 3.8%, due 2046	300,000		229,644		300,000		209,169
Notes, 3.7%, due 2028	300,000		282,960		300,000		275,043
Notes, 5.45%, due 2028	300,000		303,159		—		—
Notes, 4.15%, due 2049	300,000		238,821		300,000		218,712
Notes, 2.2%, due 2030	450,000		372,380		450,000		353,763
Notes, 3.18%, due 2051	300,000		198,390		300,000		185,523
Notes, 5.8%, due 2027	300,000		310,653		300,000		305,913
8% Series, due 2026	75,000		80,121		75,000		80,027
Medium-term notes, 7.92% series, due 2027	25,000		27,069		25,000		26,840
Medium-term notes, 6.76% series, due 2027	7,500		7,803		7,500		7,662
Unamortized discount and debt issuance costs	(32,893)				(29,471)
	3,299,607				3,003,029
Revolving credit facility and commercial paper	—		—		50,000		50,000
Industrial development revenue bonds:
Tax-exempt Series A, due 2028	50,000		50,000		50,000		50,000
2003 Series A, due 2038	50,000		50,000		50,000		50,000
2008 Series A, due 2038	50,000		50,000		50,000		50,000
2009 Series A, due 2039	50,000		50,000		50,000		50,000
Unamortized discount and debt issuance costs	(1,630)				(1,733)
	198,370				198,267
Less: current maturities	—				—
Southwest Gas Corporation total long-term debt, less current maturities	$	3,497,977			$	3,251,296
Southwest Gas Holdings, Inc.:
Centuri secured term loan facility	$	1,002,825	$	997,832	$	1,008,550	$	995,852
Centuri secured revolving credit facility	19,212		19,297		81,955		82,315
Other debt obligations	119,362		112,863		126,844		118,314
Unamortized discount and debt issuance costs	(19,869)				(20,789)
Less: current maturities	(41,907)				(44,557)
Southwest Gas Holdings, Inc. total long-term debt, less current maturities	$	4,577,600			$	4,403,299


			22


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						March 31, 2023

Southwest ~~amended its~~has a $400 million credit facility ~~increasing the borrowing capacity from $300 million to $400 million. Also, the facility was previously~~that is scheduled to expire in ~~March 2021 and was extended to March 2022.~~April 2025. Southwest ~~continues to designate~~designates $150 million of associated capacity ~~related to the facility~~ as long-term debt and ~~with the total capacity now available, has designated~~ the remaining $250 million for working capital purposes. Interest rates for the credit facility are calculated at either the ~~London Interbank Offered~~Secured Overnight Financing Rate (“~~LIBOR”~~SOFR”) or an “alternate base rate,” plus in each case an applicable margin that is determined based on ~~the~~ Southwest’s senior unsecured debt rating. At ~~September 30, 2017,~~March 31, 2023, the applicable ~~margin~~margin is 1%1.125% for loans bearing interest with reference to ~~LIBOR~~SOFR and 0%0.125% for loans bearing interest with reference to the alternative base rate. At ~~September 30, 2017, $150 million was~~March 31, 2023, no borrowings were outstanding on the ~~long-term~~long-term portion ~~and $83 million was outstanding on~~(including under the commercial paper program), nor under the short-term portion of ~~this credit facility (See~~~~Note 7 – Short-Term Debt~~).

~~At September 30, 2017,~~ the facility.

Centuri has a ~~$300 million~~$1.545 billion secured revolving credit and term loan multi-currency facility. Amounts can be borrowed in either Canadian or U.S. dollars. The revolving credit facility matures on August 27, 2026 and the term loan facility matures on August 27, 2028. Interest rates for the revolving credit facility are based on SOFR, plus an applicable margin; the term loan facility is based on LIBOR, plus an applicable margin. The capacity of the line of credit portion of the facility is $400 million; related amounts borrowed and repaid are available to be re-borrowed. The term loan portion of the facility has a limit of $1.145 billion. The obligations under the credit agreement are secured by present and future ownership interests in substantially all direct and indirect subsidiaries of Centuri, substantially all of the tangible and intangible personal property of each borrower, certain of their direct and indirect subsidiaries, and all products, profits, and proceeds of the foregoing. Centuri’s assets securing the facility at March 31, 2023 totaled $2.4 billion. At March 31, 2023, $1.022 billion in borrowings were outstanding under Centuri’s combined secured revolving credit and term loan facility.

In March 2023, Southwest issued $300 million aggregate principal amount of 5.450% Senior Notes (the “March 2023 Notes”). The notes will mature in March 2028. Southwest used the net proceeds to repay amounts outstanding under its credit facility and the remainder for general corporate purposes.

In April 2023, Southwest Gas Holdings, Inc. entered into a $550 million Term Loan Credit Agreement that matures in October 2024. Southwest Gas Holdings, Inc. utilized a majority of the proceeds to make an equity contribution to Southwest. On April 17, 2023, Southwest utilized the equity contribution to repay, in full, amounts outstanding under its $450 million 364-day term loan entered into in January 2023 (discussed below), with the remainder of the equity contribution used for working capital and general corporate purposes.

Short-Term Debt

Southwest Gas Holdings, Inc. has a $300 million credit facility that is scheduled to expire in ~~October 2019. This facility includes a revolving credit facility~~December 2026 and a term loan facility. The term loan facility portion had an initial limit of approximately $150 million, which was reached in 2014 and had $107 million outstanding (after repayments) at September 30, 2017. The $300 million revolving credit and term loan facility is secured by substantially all of Centuri’s assets except those explicitly excluded under the terms of the agreement (including owned real estate and certain certificated vehicles). Centuri assets securing the facility at September 30, 2017 totaled $526 million. At September 30, 2017, $189 million in borrowings were outstanding under the Centuri facility.

~~Note 7 – Short-Term Debt~~

~~In March 2017, Southwest Gas Holdings, Inc. entered into a credit facility with a borrowing capacity of $100 million that expires in March 2022. The Company intends to utilize this facility~~primarily used for short-term financing needs. Interest rates for ~~this~~the credit facility are calculated at either ~~the LIBOR~~SOFR or the “alternate base rate,” plus in each case an applicable ~~margin that is determined based~~margin. There was $18 million outstanding under this credit facility as of March 31, 2023.

As indicated above, under Southwest’s $400 million credit facility, no short-term borrowings were outstanding at March 31, 2023.

In March 2022, Southwest amended its $250 million Term Loan (the “March 2021 Term Loan”), extending the maturity date to March 21, 2023 and replacing LIBOR interest rate benchmarks with SOFR interest rate benchmarks. The proceeds were originally used to fund the increased cost of natural gas supply during the month of February 2021, caused by extreme weather conditions in the central U.S. During the first quarter of 2023, the March 2021 Term Loan was repaid in full by use of Southwest’s credit facility, prior to the issuance of the March 2023 Notes, proceeds from which were used to pay down indebtedness then outstanding under the credit facility, as indicated.

On September 26, 2022, Southwest Gas Holdings, Inc. entered into Amendment No. 1 to the 364-day Term Loan Credit Agreement, initially borrowed to fund the acquisition of the equity interests in MountainWest, of which $1.147 billion was outstanding as of December 31, 2022. The Credit Agreement initially provided for a $1.6 billion delayed-draw term loan (the “Term Loan Facility”). In connection with the close of the MountainWest sale on February 14, 2023, $1.075 billion of the ~~Company’s senior unsecured~~proceeds were used to pay down the Term Loan Facility. During the first quarter of 2023, the Company paid down the remaining balance of the Term Loan Facility of approximately $72 million.

In January 2023, Southwest entered into a 364-day $450 million term loan agreement. Southwest initially used the proceeds to fund higher than expected natural gas costs for the November 2022 through March 2023 winter period, caused by numerous market forces, including historically low storage levels, unexpected upstream pipeline maintenance events, and cold weather conditions across the western region. As indicated above, the term loan was repaid in full on April 17, 2023.


			23


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						March 31, 2023

LIBOR

Certain rates established at LIBOR were scheduled to be discontinued after 2021 as part of reference rate reform, while other LIBOR-based rates are scheduled to be discontinued after June 2023. As of March 31, 2023, the Company had $1.003 billion in outstanding borrowings under Centuri’s term loan facility with reference to LIBOR. Southwest and Southwest Gas Holdings, Inc. had no outstanding borrowings or variable rate debt ~~rating. The applicable margin ranges from 0.75% to 1.50% for loans bearing interest~~agreements with reference to LIBOR ~~and from 0% to 0.5% for loans bearing interest with reference to the alternative base rate. The Company is also required to pay a commitment fee on the unfunded portion~~as of the commitments based on its senior unsecured long-term debt rating. The commitment fee ranges from 0.075% to 0.200% per annum. At September 30, 2017, $27.5 million was outstanding under this facility.

~~As discussed in~~March 31, 2023.

Note 6 – ~~Long-Term Debt~~, Southwest has a $400 million credit facility that is scheduled to expire in March 2022, of which $250 million has been designated by management for working capital purposes. Southwest had $83 million in short-term borrowings outstanding at September 30, 2017 under this facility.


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~Note 8 – Equity,~~ Other Comprehensive Income and Accumulated Other Comprehensive Income

The table below provides details of activity in equity and the redeemable noncontrolling interest for Southwest Gas Holdings, Inc. on a consolidated basis during the nine months ended September 30, 2017.

Southwest Gas Holdings, Inc. Equity
Accumulated Redeemable
Additional Other Non- Noncontrolling
Common Stock Paid-in Comprehensive Retained controlling Interest
(In thousands, except per share amounts)
Shares Amount Capital Income (Loss) Earnings Interest Total (Temporary
Equity)
DECEMBER 31, 2016
47,482 $ 49,112 $ 903,123 $ (48,008 ) $ 759,263 $ (2,217 ) $ 1,661,273 $ 22,590
Common stock issuances
250 250 21,090 21,340
Net income (loss)
97,376 (78 ) 97,298 248
Redemption value adjustments
(355 ) (355 ) 355
Foreign currency exchange translation adj.
1,850 1,850 11
Redemption of Centuri shares from noncontrolling parties
(23,000 )
Other comprehensive income (loss):

Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax
1,786 1,786
Amounts reclassified to net income, net of tax (FSIRS)
1,554 1,554
Centuri dividend to redeemable noncontrolling interest
(204 )
Dividends declared

Common: $1.485 per share
(71,350 ) (71,350 )

SEPTEMBER 30, 2017
47,732 $ 49,362 $ 924,213 $ (42,818 ) $ 784,934 $ (2,295 ) $ 1,713,396 $ —

The table below provides details of activity in equity for Southwest Gas Corporation during the nine months ended September 30, 2017. Effective in January 2017, Southwest became a subsidiary of Southwest Gas Holdings, Inc., and only equity shares of the latter are publicly traded, under the ticker symbol “SWX.”

   Southwest Gas Corporation Equity
            Accumulated
         Additional    Other
   Common Stock    Paid-in    Comprehensive Retained
(In thousands, except per share amounts)
   Shares    Amount    Capital    Income (Loss) Earnings Total
DECEMBER 31, 2016
   47,482    $ 49,112    $ 897,346    $ (45,639 ) $ 767,061 $ 1,667,880
Net income
            82,436 82,436
Other comprehensive income (loss):

Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax
            1,786 1,786
Amounts reclassified to net income, net of tax (FSIRS)
            1,554 1,554
Distribution to Southwest Gas Holdings, Inc. investment in discontinued operations
            (182,773 ) (182,773 )
Stock-based compensation (a)
         8,576    (587 ) 7,989
Dividends declared to Southwest Gas Holdings, Inc.
            (60,130 ) (60,130 )
Contributions from Southwest Gas Holdings, Inc.
         11,659    11,659








SEPTEMBER 30, 2017
   47,482    $ 49,112    $ 917,581    $ (42,299 ) $ 606,007 $ 1,530,401

~~(a)~~

Stock-based compensation is based on stock awards of Southwest Gas Corporation to be issued in shares of Southwest Gas Holdings, Inc. The table above gives effect to the holding company reorganization whereby Southwest and Centuri became subsidiaries of the Company. The historic investment in Centuri was distributed to the parent holding company. This presentation is only applicable to Southwest and not to the Company overall, as Centuri continues to be included in


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

the continuing operations of the Company. Also in connection with the holding company creation, compensation plans of Southwest include programs that will be settled with equity shares issued by Southwest Gas Holdings, Inc. Management has determined that when no consideration is directly exchanged for these programs between Southwest and the Company, the accounting impact at Southwest for these programs is reflected both as compensation expense and as an equity contribution (of the parent) in Southwest.

The following information ~~provides insight into amounts impacting~~presents the Company’s Other ~~Comprehensive Income (Loss)~~comprehensive income (loss), both before and ~~after tax~~after-tax impacts, within the Condensed Consolidated Statements of Comprehensive Income, which also impact Accumulated ~~Other Comprehensive Income~~other comprehensive income (“AOCI”) in the Condensed Consolidated Balance Sheets and the ~~associated column in the equity table above, as well as the Redeemable Noncontrolling Interest. See~~ ~~Note 4 – Derivatives and Fair Value Measurements~~ ~~for additional information on the FSIRS.~~

Condensed Consolidated Statements of Equity.

Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss)

~~(Thousands~~


	Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
(Thousands of dollars)	Before- Tax Amount		Tax (Expense) or Benefit (1)		Net-of- Tax Amount		Before- Tax Amount		Tax (Expense) or Benefit (1)		Net-of- Tax Amount
Defined benefit pension plans:
Amortization of prior service cost	$	44	$	(11)	$	33	$	44	$	(11)	$	33
Amortization of net actuarial (gain)/loss	333		(80)		253		8,705		(2,089)		6,616
Regulatory adjustment	(119)		29		(90)		(7,268)		1,745		(5,523)
Pension plans other comprehensive income (loss)	258		(62)		196		1,481		(355)		1,126
FSIRS (designated hedging activities):
Amounts reclassified into net income	—		—		—		545		(129)		416
FSIRS other comprehensive income (loss)	—		—		—		545		(129)		416
Total other comprehensive income (loss) - Southwest Gas Corporation	258		(62)		196		2,026		(484)		1,542
Foreign currency translation adjustments:
Translation adjustments	97		—		97		1,247		—		1,247
Foreign currency other comprehensive income (loss)	97		—		97		1,247		—		1,247
Total other comprehensive income (loss) - Southwest Gas Holdings, Inc.	$	355	$	(62)	$	293	$	3,273	$	(484)	$	2,789


	Twelve Months Ended March 31, 2023						Twelve Months Ended March 31, 2022
(Thousands of dollars)	Before- Tax Amount		Tax (Expense) or Benefit (1)		Net-of- Tax Amount		Before- Tax Amount		Tax (Expense) or Benefit (1)		Net-of- Tax Amount
Defined benefit pension plans:
Net actuarial gain/(loss)	$	4,079	$	(980)	$	3,099	$	59,176	$	(14,202)	$	44,974
Amortization of prior service cost	175		(42)		133		763		(183)		580
Amortization of net actuarial (gain)/loss	26,446		(6,348)		20,098		42,153		(10,117)		32,036

Regulatory adjustment	(21,083)		5,059		(16,024)		(85,887)		20,614		(65,273)
Pension plans other comprehensive income (loss)	9,617		(2,311)		7,306		16,205		(3,888)		12,317
FSIRS (designated hedging activities):
Amounts reclassified into net income	—		—		—		2,175		(520)		1,655
FSIRS other comprehensive income (loss)	—		—		—		2,175		(520)		1,655
Total other comprehensive income (loss) - Southwest Gas Corporation	9,617		(2,311)		7,306		18,380		(4,408)		13,972
Foreign currency translation adjustments:
Translation adjustments	(7,283)		—		(7,283)		444		—		444
Foreign currency other comprehensive income (loss)	(7,283)		—		(7,283)		444		—		444
Total other comprehensive income (loss) - Southwest Gas Holdings, Inc.	$	2,334	$	(2,311)	$	23	$	18,824	$	(4,408)	$	14,416

(1)Tax amounts are calculated using a 24% rate. The Company has elected to indefinitely reinvest, in Canada, the earnings of ~~dollars)~~

   Three Months Ended
September 30, 2017 Three Months Ended
September 30, 2016
   Before- Tax Net-of- Before- Tax Net-of-
   Tax (Expense) Tax Tax (Expense) Tax
   Amount or Benefit (1) Amount Amount or Benefit (1) Amount
Defined benefit pension plans:

Amortization of prior service cost
   $ 333 $ (126 ) $ 207 $ 333 $ (126 ) $ 207
Amortization of net actuarial (gain)/loss
   6,362 (2,418 ) 3,944 6,767 (2,571 ) 4,196
Regulatory adjustment
   (5,734 ) 2,179 (3,555 ) (6,122 ) 2,326 (3,796 )


Pension plans other comprehensive income (loss)
   961 (365 ) 596 978 (371 ) 607
FSIRS (designated hedging activities):

Amounts reclassifed into net income
   835 (317 ) 518 835 (317 ) 518


FSIRS other comprehensive income
   835 (317 ) 518 835 (317 ) 518


Total other comprehensive income (loss) - Southwest Gas Corporation
   1,796 (682 ) 1,114 1,813 (688 ) 1,125


Foreign currency translation adjustments:

Translation adjustments
   1,012 —   1,012 (238 ) —   (238 )


Foreign currency other comprehensive income (loss)
   1,012 —   1,012 (238 ) —   (238 )


Total other comprehensive income (loss) - Southwest Gas Holdings, Inc.
   $ 2,808 $ (682 ) $ 2,126 $ 1,575 $ (688 ) $ 887


   Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017
   Before- Tax Net-of- Before- Tax Net-of-
   Tax (Expense) Tax Tax (Expense) Tax
   Amount or Benefit (1) Amount Amount or Benefit (1) Amount
Defined benefit pension plans:

Amortization of prior service cost
   $ 1,001 $ (380 ) $ 621 $ 1,001 $ (380 ) $ 621
Amortization of net actuarial (gain)/loss
   19,084 (7,252 ) 11,832 20,300 (7,714 ) 12,586
Regulatory adjustment
   (17,204 ) 6,537 (10,667 ) (18,368 ) 6,980 (11,388 )


Pension plans other comprehensive income (loss)
   2,881 (1,095 ) 1,786 2,933 (1,114 ) 1,819
FSIRS (designated hedging activities):

Amounts reclassifed into net income
   2,507 (953 ) 1,554 2,508 (952 ) 1,556


FSIRS other comprehensive income
   2,507 (953 ) 1,554 2,508 (952 ) 1,556


Total other comprehensive income (loss)—Southwest Gas Corporation
   5,388 (2,048 ) 3,340 5,441 (2,066 ) 3,375


Foreign currency translation adjustments:

Translation adjustments
   1,861 —   1,861 614 —   614


Foreign currency other comprehensive income (loss)
   1,861 —   1,861 614 —   614


Total other comprehensive income (loss)
   $ 7,249 $ (2,048 ) $ 5,201 $ 6,055 $ (2,066 ) $ 3,989

Centuri’s Canadian subsidiaries, thus precluding deferred taxes on such earnings. As a result of this assertion, and no repatriation of earnings anticipated, the Company is not recognizing a tax effect or presenting a tax expense or benefit for currency translation adjustments reported in Other comprehensive income (loss).


			24


SOUTHWEST GAS HOLDINGS, INC.						Form 10-Q
SOUTHWEST GAS CORPORATION						~~September 30, 2017~~March 31, 2023

   Twelve Months Ended
September 30, 2017 Twelve Months Ended
September 30, 2016
   Before- Tax Net-of- Before- Tax Net-of-
   Tax (Expense) Tax Tax (Expense) Tax
   Amount or Benefit (1) Amount Amount or Benefit (1) Amount
Defined benefit pension plans:

Net actuarial gain/(loss)
   $ (22,770 ) $ 8,652 $ (14,118 ) $ (30,519 ) $ 11,597 $ (18,922 )
Amortization of prior service cost
   1,335 (507 ) 828 1,335 (507 ) 828
Amortization of net actuarial (gain)/loss
   25,850 (9,823 ) 16,027 28,895 (10,980 ) 17,915
Regulatory adjustment
   (4,420 ) 1,679 (2,741 ) (653 ) 249 (404 )


Pension plans other comprehensive income (loss)
   (5 ) 1 (4 ) (942 ) 359 (583 )
FSIRS (designated hedging activities):

Amounts reclassifed into net income
   3,344 (1,271 ) 2,073 3,344 (1,271 ) 2,073


FSIRS other comprehensive income (loss)
   3,344 (1,271 ) 2,073 3,344 (1,271 ) 2,073


Total other comprehensive income (loss)—Southwest Gas Corporation
   3,339 (1,270 ) 2,069 2,402 (912 ) 1,490


Foreign currency translation adjustments:

Translation adjustments
   1,408 —   1,408 233 —   233


Foreign currency other comprehensive income (loss)
   1,408 —   1,408 233 —   233


Total other comprehensive income (loss)—Southwest Gas Holdings, Inc.
   $ 4,747 $ (1,270 ) $ 3,477 $ 2,635 $ (912 ) $ 1,723

~~(1)~~

Tax amounts are calculated using a 38% rate. The Company has elected to indefinitely reinvest the earnings of Centuri’s Canadian subsidiaries in Canada, thus preventing deferred taxes on such earnings. As a result of this assertion, the Company is not recognizing any tax effect or presenting a tax expense or benefit for the currency translation adjustment amount reported in Other Comprehensive Income, as repatriation of earnings is not anticipated.

Approximately $2.1 million of realized losses (net of tax) related to the FSIRS, reported in Accumulated other comprehensive income (“AOCI”) at September 30, 2017, will be reclassified into interest expense within the next 12 months as the related interest payments on long-term debt occur.

The following table represents a rollforward of AOCI, presented on the Company’s Condensed Consolidated Balance ~~Sheets:~~

~~AOCI—Rollforward~~

~~(Thousands~~Sheets and its Condensed Consolidated Statements of ~~dollars)~~

   Defined Benefit Plans FSIRS Foreign Currency Items
   Before-Tax Tax
(Expense)
Benefit (4) After-Tax Before-Tax Tax
(Expense)
Benefit (4) After-Tax Before-Tax Tax
(Expense)
Benefit    After-Tax AOCI
Beginning Balance AOCI December 31, 2016
   $ (57,613 ) $ 21,893 $ (35,720 ) $ (15,999 ) $ 6,080 $ (9,919 ) $ (2,369 ) $ —      $ (2,369 ) $ (48,008 )




Translation adjustments
   —   —   —   —   —   —   1,861 —      1,861 1,861




Other comprehensive income before reclassifications
   —   —   —   —   —   —   1,861 —      1,861 1,861
FSIRS amounts reclassified from AOCI (1)
   —   —   —   2,507 (953 ) 1,554 —   —      —   1,554
Amortization of prior service cost (2)
   1,001 (380 ) 621 —   —   —�� —   —      —   621
Amortization of net actuarial loss (2)
   19,084 (7,252 ) 11,832 —   —   —   —   —      —   11,832
Regulatory adjustment (3)
   (17,204 ) 6,537 (10,667 ) —   —   —   —   —      —   (10,667 )




Net current period other comprehensive income (loss)
   2,881 (1,095 ) 1,786 2,507 (953 ) 1,554 1,861 —      1,861 5,201
Less: Translation adjustment attributable to redeemable noncontrolling interest
   —   —   —   —   —   —   11 —      11 11




Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc.
   2,881 (1,095 ) 1,786 2,507 (953 ) 1,554 1,850 —      1,850 5,190




Ending Balance AOCI September 30, 2017
   $ (54,732 ) $ 20,798 $ (33,934 ) $ (13,492 ) $ 5,127 $ (8,365 ) $ (519 ) $ —      $ (519 ) $ (42,818 )

~~(1)~~

~~The FSIRS reclassification amounts are included in the Net interest deductions line item on the Company’s Condensed Consolidated Statements of Income.~~

~~(2)~~

~~These AOCI components are included in the computation of net periodic benefit cost (see~~~~Note 2 – Components of Net Periodic Benefit Cost~~~~for additional details).~~

~~(3)~~

The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in the Deferred charges and other assets line item on the Company’s Condensed Consolidated Balance Sheets).

~~(4)~~

~~Tax amounts are calculated using a 38% rate.~~


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

Equity:


	Defined Benefit Plans						Foreign Currency Items
(Thousands of dollars)	Before-Tax		Tax (Expense) Benefit (3)		After-Tax			Before-Tax		Tax (Expense) Benefit		After-Tax		AOCI
Beginning Balance AOCI December 31, 2022	$	(50,342)	$	12,081	$	(38,261)		$	(5,981)	$	—	$	(5,981)	$	(44,242)
Translation adjustments	—		—		—			97		—		97		97
Other comprehensive income (loss) before reclassifications	—		—		—			97		—		97		97
Amortization of prior service cost (1)	44		(11)		33			—		—		—		33
Amortization of net actuarial loss (1)	333		(80)		253			—		—		—		253
Regulatory adjustment (2)	(119)		29		(90)			—		—		—		(90)
Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc.	258		(62)		196			97		—		97		293
Ending Balance AOCI March 31, 2023	$	(50,084)	$	12,019	$	(38,065)		$	(5,884)	$	—	$	(5,884)	$	(43,949)

(1)These AOCI components are included in the computation of net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost for additional details).

(2)The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in Deferred charges and other assets on the Company’s Condensed Consolidated Balance Sheets).

(3)Tax amounts are calculated using a 24% rate.

The following table represents a rollforward of AOCI, presented on Southwest’s Condensed Consolidated Balance Sheets:

~~AOCI—Rollforward~~

~~(Thousands~~


	Defined Benefit Plans
(Thousands of dollars)	Before-Tax		Tax (Expense) Benefit (6)		After-Tax
Beginning Balance AOCI December 31, 2022	$	(50,342)	$	12,081	$	(38,261)
Amortization of prior service cost (4)	44		(11)		33
Amortization of net actuarial loss (4)	333		(80)		253
Regulatory adjustment (5)	(119)		29		(90)
Net current period other comprehensive income attributable to Southwest Gas Corporation	258		(62)		196
Ending Balance AOCI March 31, 2023	$	(50,084)	$	12,019	$	(38,065)

(4)These AOCI components are included in the computation of ~~dollars)~~

   Defined Benefit Plans FSIRS
   Before-Tax Tax
(Expense)
Benefit (8) After-Tax Before-Tax Tax
(Expense)
Benefit (8) After-Tax AOCI
Beginning Balance AOCI December 31, 2016
   $ (57,613 ) $ 21,893 $ (35,720 ) $ (15,999 ) $ 6,080 $ (9,919 ) $ (45,639 )


FSIRS amounts reclassified from AOCI (5)
   —   —   —   2,507 (953 ) 1,554 1,554
Amortization of prior service cost (6)
   1,001 (380 ) 621 —   —   —   621
Amortization of net actuarial loss (6)
   19,084 (7,252 ) 11,832 —   —   —   11,832
Regulatory adjustment (7)
   (17,204 ) 6,537 (10,667 ) —   —   —   (10,667 )


Net current period other comprehensive income (loss) attributable to Southwest Gas Corporation
   2,881 (1,095 ) 1,786 2,507 (953 ) 1,554 3,340


Ending Balance AOCI September 30, 2017
   $ (54,732 ) $ 20,798 $ (33,934 ) $ (13,492 ) $ 5,127 $ (8,365 ) $ (42,299 )

~~(5)~~

~~The FSIRS reclassification amounts are included in the Net interest deductions line item on Southwest’s Condensed Consolidated Statements of Income.~~

~~(6)~~

~~These AOCI components are included in the computation of net periodic benefit cost (see~~~~Note 2 – Components of Net Periodic Benefit Cost~~~~for additional details).~~

~~(7)~~

The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in the Deferred charges and other assets line item on Southwest’s Condensed Consolidated Balance Sheets).

~~(8)~~

~~Tax amounts are calculated using a 38% rate.~~

net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost for additional details).

(5)The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in Deferred charges and other assets on Southwest’s Condensed Consolidated Balance Sheets).

(6)Tax amounts are calculated using a 24% rate.

The following table represents amounts (before income tax impacts) included in AOCI (in the tables above), that have not yet been recognized in net periodic benefit cost:

~~Amounts Recognized in AOCI (Before Tax)~~

~~(Thousands of dollars)~~

   September 30, 2017    December 31, 2016
Net actuarial (loss) gain
   $ (411,889 )    $ (430,973 )
Prior service cost
   (4,702 )    (5,703 )
Less: amount recognized in regulatory assets
   361,859    379,063




Recognized in AOCI
   $ (54,732 )    $ (57,613 )

~~Note 9 – Construction Services Redeemable Noncontrolling Interest~~

In conjunction with the acquisition of the Canadian construction businesses in October 2014, the previous owners of the acquired companies retained a 3.4% equity interest in Centuri, which, subject to an eligibility timeline, would have been redeemable at the election of the noncontrolling parties (in its entirety) beginning in July 2022. In August 2017, in advance of when otherwise eligible, the parties agreed to a current redemption. Southwest Gas Holdings, Inc. paid $23 million to the previous owners, thereby acquiring the remaining 3.4% equity interest in Centuri in accordance with an early redemption agreement. Accordingly, Centuri is now a wholly owned subsidiary of the Company.


(Thousands of dollars)	March 31, 2023		December 31, 2022
Net actuarial loss	$	(359,780)	$	(360,113)
Prior service cost	(1,309)		(1,353)
Less: amount recognized in regulatory assets	311,005		311,124
Recognized in AOCI	$	(50,084)	$	(50,342)


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~The following depicts changes to the balance of the redeemable noncontrolling interest between the indicated periods.~~

   Redeemable
Noncontrolling
Interest
(Thousands of dollars):
Balance, December 31, 2016
   $ 22,590
Net income attributable to redeemable noncontrolling interest
   248
Foreign currency exchange translation adjustment
   11
Centuri dividend to redeemable noncontrolling interest
   (204 )
Adjustment to redemption value
   355
Redemption of Centuri shares from noncontrolling parties
   (23,000 )


Balance, September 30, 2017
   $ —

~~Note 10 – Reorganization Impacts – Discontinued Operations Solely Related to Southwest Gas Corporation~~

No substantive change has occurred with regard to the Company’s business segments on the whole, or in the primary businesses comprising those segments (Centuri operations continue to be part of continuing operations of the controlled group of companies), and financial information related to Centuri continues to be included in condensed consolidated financial statements of Southwest Gas Holdings, Inc.

However, as part of the holding company reorganization effective January 2017, Centuri is no longer a subsidiary of Southwest; whereas historically, Centuri had been a direct subsidiary of Southwest. To give effect to this change, the condensed consolidated financial statements related to Southwest Gas Corporation, which are separately included in this~~Form 10-Q,~~ ~~depict Centuri-related amounts as discontinued operations for periods prior to January 2017.~~

Due to the discontinued operations accounting reflection, the following disclosures provide additional information regarding the assets, liabilities, equity, revenues, and expenses of Centuri which are shown as discontinued operations on the condensed consolidated financial statements of Southwest Gas Corporation for periods prior to the beginning of 2017.

The following table presents the major categories of assets and liabilities within the amounts reported as discontinued operations – construction services in the Condensed Consolidated Balance Sheet of Southwest Gas Corporation:


~~(Thousands of dollars)~~			25			~~December 31, 2016~~

Note 7 – Segment Information

The Company had three reportable segments during the first quarter, prior to the MountainWest sale. Southwest comprises the natural gas distribution segment, Centuri comprises the utility infrastructure services segment, and MountainWest comprised the pipeline and storage segment. As a result of the MountainWest sale in February 2023, the information for 2023 presented below for MountainWest reflects activity from January 1, 2023 through February 13, 2023 (the last full day of its ownership by the Company).

Centuri accounts for services provided to Southwest at contractual prices. Accounts receivable for these services, which are not eliminated during consolidation, are presented in the table below:


(Thousands of dollars)	March 31, 2023		December 31, 2022
Centuri accounts receivable for services provided to Southwest	$	14,966	$	18,067

In order to reconcile (below) to net income (loss) as disclosed in the Condensed Consolidated Statements of Income, an Other column is included associated with impacts of corporate and administrative activities related to Southwest Gas Holdings, Inc. The financial information pertaining to the natural gas distribution, utility infrastructure services, and pipeline and storage segments are as follows:


(Thousands of dollars)	Natural Gas Distribution		Utility Infrastructure Services		Pipeline and Storage		Other		Total
Three Months Ended March 31, 2023
Revenues from external customers	$	914,879	$	624,489	$	35,132	$	—	$	1,574,500
Intersegment revenues	—		28,804		—		—		28,804
Total	$	914,879	$	653,293	$	35,132	$	—	$	1,603,304
Segment net income (loss)	$	134,696	$	(11,872)	$	(16,288)	$	(60,625)	$	45,911

Three Months Ended March 31, 2022
Revenues from external customers	$	676,539	$	495,544	$	66,993	$	—	$	1,239,076
Intersegment revenues	—		28,333		—		—		28,333
Total	$	676,539	$	523,877	$	66,993	$	—	$	1,267,409
Segment net income (loss)	$	111,795	$	(23,486)	$	16,930	$	(9,061)	$	96,178


(Thousands of dollars)	Natural Gas Distribution		Utility Infrastructure Services		Pipeline and Storage		Other		Total
Twelve Months Ended March 31, 2023
Revenues from external customers	$	2,173,409	$	2,754,614	$	232,752	$	—	$	5,160,775
Intersegment revenues	—		135,129		—		—		135,129
Total	$	2,173,409	$	2,889,743	$	232,752	$	—	$	5,295,904
Segment net income (loss)	$	177,281	$	13,679	$	(316,951)	$	(127,566)	$	(253,557)

Twelve Months Ended March 31, 2022
Revenues from external customers	$	1,676,397	$	2,212,087	$	66,993	$	—	$	3,955,477
Intersegment revenues	—		106,476		—		—		106,476
Total	$	1,676,397	$	2,318,563	$	66,993	$	—	$	4,061,953
Segment net income (loss)	$	180,215	$	17,793	$	16,930	$	(35,274)	$	179,664

The corporate and administrative activities for Southwest Gas Holdings, Inc. in the three-month period ended March 31, 2023 include, among other things, additional amounts related to commitments under the sale agreement with Williams in regard to MountainWest, including a charge of $28.4 million from the post-closing rate case settlement agreement for MountainWest Overthrust Pipeline (pending Federal Energy Regulatory Commission (the “FERC” approval)); and an additional $21 million


~~Assets:~~
~~Other property and investments~~	26	$	~~233,774~~
~~Cash and cash equivalents~~	~~9,042~~
~~Accounts receivable, net of allowances~~	~~173,300~~
~~Prepaids and other current assets~~	~~10,470~~
~~Goodwill~~	~~129,888~~
~~Other noncurrent assets~~	~~22,897~~

reflects the final accrued post-closing payment of $7.4 million related to cash and net working capital balances above/below a contract benchmark, with the remaining charge associated with other changes in the assets and liabilities that were not subject to post-closing payment true-up provisions. The post-closing payment of $7.4 million will effectively return approximately the same amount initially paid by Williams to the Company at closing. Other corporate and administrative amounts during this same quarter also reflect residual costs associated with or as a result of the MountainWest sale, as well as $12 million of interest expense, primarily under the loan entered into by Southwest Gas Holdings, Inc. in November 2021 in connection with the acquisition of MountainWest prior to it being paid in full in March 2023 (including $2.5 million in debt issuance costs written off when the debt was repaid). The twelve-month period ended March 31, 2023 included more than $47 million of interest expense under the aforementioned MountainWest acquisition loan, the other items noted above, as well as $35 million in combined costs associated with stockholder activism and the associated proxy contest, the May 2022 settlement with the Icahn group, and costs of a strategic review initiative initiated in 2022. The amounts related to the MountainWest sale, including the rate case settlement, and post-closing adjustments, are included in Goodwill impairment and loss on sale on the Company’s Condensed Consolidated Statement of Income.

Note 8 - Dispositions

Dispositions

In December 2022, the Company announced that the Board unanimously determined to take strategic actions to simplify the Company’s portfolio of businesses. These actions included entering into a definitive agreement to sell 100% of MountainWest to Williams for $1.5 billion in total enterprise value, subject to certain adjustments. The MountainWest sale closed on February 14, 2023. The Company is expected to provide certain services to Williams under a transition services agreement for a brief period, generally not beyond six months from the sale closing date. Additionally, the Company determined it will pursue a spin-off of Centuri to form a new independent publicly traded utility infrastructure services company. The Centuri spin-off is currently expected to be completed by the fourth quarter of 2023 or the end of the first quarter of 2024 and to be tax free to the Company and its stockholders for U.S. federal income tax purposes. The separation of Centuri will be subject to, among other things, finalizing the transaction structure, final approval by the Board, approval by the Arizona Corporation Commission (the “ACC”), the receipt of a favorable private letter ruling by the IRS relating to the tax-free nature of the transaction, and the effectiveness of a registration statement to be filed with the SEC. The application for the private letter ruling was filed with the IRS in March 2023 and the application to the ACC was filed in April 2023.

The fair value of the MountainWest assets held-for-sale was previously estimated based on the preliminary closing statement and subject to certain adjustments, including a post-closing payment between the parties related to final working capital balances. The amount of the post-closing payment was finalized in May 2023, prior to the issuance of these financial statements. The Company recognized an additional loss on sale of approximately $21 million during the quarter ended March 31, 2023. This reflects the accrued post-closing payment of $7.4 million related to cash and net working capital balances above/below a contractual benchmark, with the remaining charge associated with other changes in the assets and liabilities that were not subject to post-closing payment true-up provisions. The post-closing payment of $7.4 million will effectively return approximately the same amount initially paid by Williams to the Company at closing.

As referred to in Note 7 – Segment Information, on September 22, 2022, the FERC issued an order initiating an investigation, pursuant to section 5 of the Natural Gas Act, to determine whether rates charged by MountainWest Overthrust Pipeline, LLC, a subsidiary of MountainWest, were just and reasonable and setting the matter for hearing (the “Section 5 Rate Case”). Unless earlier settled by the parties, a hearing on the matter was to commence on August 1, 2023 with an initial decision from the presiding administrative law judge due by November 14, 2023. Under the terms of the purchase and sale agreement entered into in connection with the MountainWest sale, the Company is obligated, for a period of four years following the closing of the MountainWest sale, to indemnify Williams and MountainWest for any damages and liabilities resulting from the Section 5 Rate Case, including any reduction to the current applicable rate, up to a cap of $75 million. Williams agreed not to enter into any settlement of the Section 5 Rate Case that would result in damages being paid by the Company under the indemnity arrangement without prior written consent of the Company. In March 2023, the parties agreed to a settlement, which is pending approval by the FERC. As a result, the Company recorded an additional estimated loss of $28.4 million from the disposal of MountainWest in the first quarter of 2023, which is included in Goodwill impairment and loss on sale in the Company’s Condensed Consolidated Statement of Income. Other contingent commitments were part of the agreement as well, which are currently expected to be immaterial.


~~Discontinued operations - construction services - assets~~	$	~~579,371~~

~~Liabilities:~~
~~Current maturities of long-term debt~~			$	~~25,101~~
~~Accounts payable~~		~~46,440~~
~~Other current liabilities~~		~~74,518~~
~~Long-term debt, less current maturities~~		~~174,903~~
~~Deferred income taxes and other deferred credits~~		~~59,653~~

~~Discontinued operations—construction services—liabilities~~	$	~~380,615~~

	27
~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~The following table presents the components of the Discontinued operations – construction servicesnon-owner~~ ~~equity amount shown in the Southwest Gas Corporation Condensed Consolidated Balance Sheet:~~

(Thousands of dollars)    December 31, 2016
Construction services equity
   $ (4,390 )
Construction services noncontrolling interest
   (2,217 )
Construction services redeemable noncontrolling interest
   22,590


Discontinued operations - construction servicesnon-owner equity
   $ 15,983

The following table presents the major income statement components of discontinued operations – construction services reported in the Condensed Consolidated Income Statements of Southwest Gas Corporation:

~~Results of Construction Services~~

   Three    Nine    Twelve    Twelve
   Months Ended    Months Ended    Months Ended    Months Ended
(Thousands of dollars)    September 30, 2016    September 30, 2016    September 30, 2017    September 30, 2016
Construction revenues
   $ 339,790    $ 838,038    $ 301,040    $ 1,127,982
Operating expenses:

Construction expenses
   300,611    757,919    266,504    1,009,188
Depreciation and amortization
   13,409    43,351    12,318    58,368








Operating income
   25,770    36,768    22,218    60,426
Other income (deductions)
   44    44    1,149    1,246
Net interest deductions
   1,794    4,945    1,718    6,738








Income before income taxes
   24,020    31,867    21,649    54,934
Income tax expense
   8,708    12,042    7,842    20,711








Net income
   15,312    19,825    13,807    34,223
Net income attributable to noncontrolling interests
   435    500    514    1,079








Discontinued operations - construction services - net income
   $ 14,877    $ 19,325    $ 13,293    $ 33,144


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Southwest Gas Holdings, Inc. is a holding company that owns all of the shares of common stock of Southwest Gas Corporation (“Southwest” or the “natural gas ~~operations”~~distribution” segment) ~~and prior to August 2017, 96.6%~~, all of the shares of common stock of Centuri ~~Construction~~ Group, Inc. (“~~Centuri”~~Centuri,” or the ~~“construction~~“utility infrastructure services” segment). During August 2017, Southwest Gas Holdings, Inc. acquired the remaining 3.4% equity interest in Centuri that was held by the previous owners (and reflected as a redeemable noncontrolling interest). Therefore, Centuri is now a wholly owned subsidiary of Southwest Gas Holdings, Inc. Also, as part, and until February 14, 2023, all of the ~~holding company reorganization effective January 2017, Centuri~~common stock of MountainWest Pipelines Holding Company (“MountainWest,” or the “pipeline and ~~Southwest are now subsidiaries of Southwest Gas Holdings, Inc.; whereas historically, Centuri had been a direct subsidiary of Southwest.~~storage” segment). Southwest Gas Holdings, Inc. and its subsidiaries are collectively referred to as the “Company.”

In December 2022, the Company announced that its Board of Directors (the ~~“Company”~~“Board”) ~~have two business segments (natural gas operations~~unanimously determined to take strategic actions to simplify the Company’s portfolio of businesses. These actions included entering into a definitive agreement to sell 100% of MountainWest in an all-cash transaction to Williams Partners Operating LLC (“Williams”) for $1.5 billion in total enterprise value, subject to certain adjustments (collectively, the “MountainWest sale”). The MountainWest sale closed on February 14, 2023. Additionally, the Company determined it will pursue a spin-off of Centuri (the “Centuri spin-off”), to form a new independent publicly traded utility infrastructure services company. The Centuri spin-off is currently expected to be completed in the fourth quarter of 2023 or the first quarter of 2024 and ~~construction services)~~to be tax free to the Company and its stockholders for U.S. federal income tax purposes. The Centuri spin-off will be subject to, among other things, finalizing the transaction structure, final approval by the Board, approval by the Arizona Corporation Commission (the “ACC”), ~~which are discussed below.~~

the receipt of a favorable Internal Revenue Service (“IRS”) private letter ruling relating to the tax-free nature of the transaction, and the effectiveness of a registration statement that will be filed with the U.S. Securities and Exchange Commission (the “SEC”). The application for the private letter ruling was filed with the IRS in March 2023 and the application to the ACC was filed in April 2023. See Note 8 - Dispositions for more information.

Southwest is engaged in the business of purchasing, distributing, and transporting natural gas for customers in portions of Arizona, Nevada, and California. Southwest is the largest distributor of natural gas in Arizona ~~selling~~ and ~~transporting natural gas in most of central~~Nevada, and southern Arizona, including the Phoenix and Tucson metropolitan areas. Southwest is also the largest distributor of natural gas in Nevada, serving the Las Vegas metropolitan area and northern Nevada. In addition, Southwest distributes and transports natural gas for customers in portions of ~~California, including the Lake Tahoe area and the high desert and mountain areas in San Bernardino County.~~

California. Additionally, through its subsidiaries, Southwest operates two regulated interstate pipelines serving portions of Southwest’s service territories.

As of ~~September 30, 2017 (on a seasonally adjusted basis),~~March 31, 2023, Southwest had ~~1,999,000~~2,206,000 residential, commercial, industrial, and other natural gas customers, of which ~~1,065,000~~1,182,000 customers were located in Arizona, ~~741,000~~819,000 in Nevada, and ~~193,000~~205,000 in California. ~~Residential~~Over the past twelve months, first-time meter sets were approximately 42,000, compared to 38,000 for the twelve months ended March 2022. Residential and small commercial customers represented over 99% of ~~the~~the total customer base. During the twelve months ended ~~September 30, 2017,~~ March 31, 2023, 54% of operating margin ~~was earned in Arizona, 35% in Nevada, and 11% in California. During this same period, Southwest earned 85% of its operating margin (gas operating~~(Regulated operations revenues less the net cost of gas sold) was earned in Arizona, 35% in Nevada, and 11% in California. During this same period, Southwest earned 84% of its operating margin from residential and small commercial customers, 3%5% from other sales customers, and ~~12%~~11% from transportation customers. These ~~general~~ patterns are expected to remain materially consistent for the foreseeable future.

Southwest recognizes operating revenues from the distribution and transportation of natural gas (and related services) to customers. Operating margin is a financial measure defined by management as ~~gas operating~~Regulated operations revenues less the net cost of gas sold. However, operating margin is not specifically defined in accounting principles generally accepted in the United States (“U.S. GAAP”). Thus, operating margin is considered anon-GAAP measure. Management uses this financial measure because ~~natural gas operating~~Regulated operations revenues include the net cost of gas sold, which is a tracked cost that is passed through to customers without markup under purchased gas adjustment (“PGA”) mechanisms. Fluctuations in the net cost of gas sold impact revenues on adollar-for-dollar basis, but do not impact operating margin or operating income. Therefore, management believes operating margin provides investors and other interested parties with useful and relevant information to analyze Southwest’s financial performance in a rate-regulated environment. The principal factors affecting changes in operating margin are general rate relief (including impacts of infrastructure trackers) and customer growth.

Commission decisions on the amount and timing of relief may impact our earnings. Refer to the Summary Operating Results table below for a reconciliation of gross margin to operating margin, and refer to Rates and Regulatory Proceedings in this Management’s Discussion and Analysis, for details of various rate proceedings.

The demand for natural gas is seasonal, with greater demand in the colder winter months and decreased demand in the warmer summer months. All of Southwest’s service territories have decoupled rate structures (alternative revenue programs), which are designed to eliminate the direct link between volumetric sales and revenue, thereby mitigating the impacts of unusual weather variability and conservation on operating margin, allowing Southwest to pursue energy efficiency initiatives.

Centuri is a ~~comprehensive construction~~strategic infrastructure services ~~enterprise dedicated~~company that partners with regulated utilities to ~~meeting~~build and maintain the ~~growing demands~~energy network that powers millions of ~~North American~~homes and businesses across the United States (“U.S.”) and Canada. With an unwavering commitment to serve as long-term partners to customers and communities, Centuri’s employees enable regulated utilities ~~energy~~to safely and ~~industrial markets.~~reliably deliver natural gas and electricity, as well as achieve their goals for environmental sustainability. Centuri ~~derives revenue from installation, replacement, repair,~~


			28

operates in 83 primary locations across 45 states and ~~maintenance of energy distribution systems,~~provinces in the U.S. and ~~developing industrial construction solutions.~~Canada. Centuri operates in ~~24 major markets in~~ the ~~United States (primarily~~U.S., primarily as ~~NPL)~~NPL, Neuco, Linetec, and Riggs Distler, and in ~~3 major markets in~~ Canada, ~~(as~~primarily as NPL ~~Canada (formerly Link-Line Contractors Ltd.), and W.S. Nicholls).~~

~~Construction~~Canada.

Utility infrastructure services activity ~~is cyclical and~~ can be ~~significantly~~ impacted by changes in ~~weather, general and local economic conditions (including the housing market), interest rates, employment levels, job growth, pipe~~infrastructure replacement programs of utilities, weather, and local and federal regulation (including tax rates and incentives). ~~During the past few years, utilities~~


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~have implemented~~Utilities continue to implement or ~~modified pipeline~~modify system integrity management programs to enhance safety pursuant to federal and state mandates. These programs ~~coupled with recent bonus depreciation tax deduction incentives,~~ have resulted in ~~a significant increase in~~ multi-year ~~pipeline~~utility system replacement projects throughout the U.S. Likewise, there has been similar attention placed on electric grid modernization through national infrastructure legislation and related initiatives. The Department of Energy estimates more than 70% of the nation’s grid transmission lines and power transformers are over 25 years old, creating vulnerability exacerbated by seasonal storm and extreme weather events.Generally, Centuri revenues are lowest during the first quarter of the year due to less favorable winter weather conditions. Revenues typically improve as more favorable weather conditions occur during the summer and fall months. ~~This is expected~~In cases of severe weather, such as following a regional storm, Centuri may be engaged to perform restoration activities related to above-ground utility infrastructure, and related results impacts are not solely within the control of management. In addition, in ~~both the U.S. and Canadian markets. In~~ certain circumstances, such as with large bid contracts (especially those of a longer duration), or unit-price contracts with revenue caps, results may be impacted by differences between costs incurred and those anticipated when the work was originally bid. Work awarded, or failing to be awarded, by individual large customers can impact operating results.

MountainWest, which was sold on February 14, 2023, is an interstate natural gas transmission pipeline company that provides transportation and underground storage services to customers in Utah, Wyoming, and Colorado. During the period of ownership by the Company, its operations included a substantial portion of its revenue being derived from reservation charges, with variable rates also included as part of its primarily rate-regulated rate structures.

All of our businesses may be impacted by economic conditions that impact businesses generally, such as inflationary impacts on goods and services consumed in the business, rising interest rates, labor markets and costs (including in regard to contracted or professional services), and the availability of those resources. Certain of these impacts may be more predominant in certain of our operations, such as with regard to fuel costs for work equipment and skilled/trade labor costs at Centuri.

This Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto, as well as the MD&A included in the ~~2016~~2022 Annual Report to ~~Shareholders,~~Stockholders, which is incorporated by reference into Southwest’s and the ~~2016~~Company’s Annual Report on Form~~10-K.~~

10-K for the fiscal year ended December 31, 2022 (the “2022 Form 10-K), in addition to the Risk Factors included in these documents, and as updated from time to time.


			29

Executive Summary

The items discussed in this Executive Summary are intended to provide an overview of the results of the Company’s ~~operations. As needed, certain items~~and Southwest’s operations and are covered in greater detail in later sections of ~~management’s discussion~~the MD&A.

Summary Operating Results

Period Ended March 31,
Three Months Twelve Months
(In thousands, except per share amounts) 2023 2022 2023 2022
Contribution to net income (loss)
Natural gas distribution $ 134,696 $ 111,795 $ 177,281 $ 180,215
Utility infrastructure services (11,872) (23,486) 13,679 17,793
Pipeline and storage (16,288) 16,930 (316,951) 16,930
Corporate and administrative (60,625) (9,061) (127,566) (35,274)
Net income (loss) $ 45,911 $ 96,178 $ (253,557) $ 179,664
Weighted average common shares 68,265 60,737 67,413 59,919
Basic earnings (loss) per share
Consolidated $ 0.67 $ 1.58 $ (3.76) $ 3.00
Natural Gas Distribution
Reconciliation of Gross Margin to Operating Margin (Non-GAAP measure)
Utility Gross Margin $ 259,364 $ 233,882 $ 597,222 $ 571,051
Plus:
Operations and maintenance (excluding Admin. & General) expense 79,696 73,422 317,344 276,525
Depreciation and amortization expense 74,650 72,114 265,579 256,814
Operating margin $ 413,710 $ 379,418 $ 1,180,145 $ 1,104,390

1st Quarter 2023 Overview

Southwest Gas Holdings highlights include the following:

•Completed the MountainWest sale and ~~analysis.~~ ~~As reflected in~~paid down the ~~table below,~~remaining balance of the ~~natural~~term loan used to initially fund the MountainWest acquisition

•Corporate and administrative expenses include additional loss on sale of MountainWest, including $28.4 million MountainWest Overthrust Pipeline settlement (pending FERC approval), and interest on the aforementioned MountainWest acquisition term loan

•Issued 4.1 million shares of common stock for net proceeds of $238.4 million

Natural gas ~~operations segment accounted for an average of 81% oftwelve-month-to-date~~ ~~consolidated net income~~distribution highlights include the following:

•42,000 first-time meters sets occurred over the past ~~two years. As such, management’s discussion and analysis is primarily focused on that segment. Natural gas sales are seasonal, peaking~~12 months

•Operating margin increased $34 million in the first quarter of 2023, including Arizona rate relief

•$192 million capital investment during the ~~winter months; therefore,~~quarter

•COLI results increased $4.4 million compared to the prior-year quarter

Utility infrastructure services highlights include the following:

•Record revenues of ~~operations for interim periods are not necessarily indicative~~$653 million in the first quarter of ~~results for a full year.~~

~~Summary Operating Results~~

   Period Ended September 30,
   Three Months Nine Months    Twelve Months
   2017 2016 2017 2016    2017 2016
   (In thousands, except per share amounts)
Contribution to net income

Natural gas operations
   $ (4,024 ) $ (12,405 ) $ 82,436 $ 67,536    $ 134,323 $ 119,836
Construction services
   14,335 14,877 15,717 19,325    29,010 33,144
Corporate and administrative
   (107 ) —   (777 ) —      (777 ) —




Net income
   $ 10,204 $ 2,472 $ 97,376 $ 86,861    $ 162,556 $ 152,980




Average number of common shares outstanding
   47,628 47,481 47,577 47,464    47,553 47,442




Basic earnings per share

Consolidated
   $ 0.21 $ 0.05 $ 2.05 $ 1.83    $ 3.42 $ 3.22




Natural Gas Operations

Gas operating revenues
   $ 213,059 $ 200,179 $ 935,823 $ 980,927    $ 1,276,308 $ 1,376,388
Net cost of gas sold
   45,539 39,056 261,839 324,072    334,888 460,836




Operating margin
   $ 167,520 $ 161,123 $ 673,984 $ 656,855    $ 941,420 $ 915,552

2023, an increase of $129 million, or 25%, compared to the first quarter of 2022

•Signed over $311 million of offshore wind and large gas customer contracts

•Costs continued to be impacted by inflation, including higher fuel, subcontractor, and equipment rental costs


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~	~~September~~ 30 ~~2017~~

~~3rd Quarter 2017 Overview~~

~~Natural gas operations highlights:~~

~~Benefits of Arizona rate case reflected in quarterly operating results~~

~~32,000 net new customers in last 12 months (1.6% growth rate)~~

~~Depreciation and amortization expense declined $10 million compared to the prior-year quarter~~

~~Operating income increased $15.3 million compared to the prior-year quarter~~

~~Targeting $27 million of vintage steel pipe replacement in Arizona during 2017~~

~~Achieved 2 million natural gas utility customers in early November 2017~~

~~Construction services highlights:~~

~~Revenues increased $40.3 million compared to the prior-year quarter~~

~~Construction expenses increased $42 million compared to the prior-year quarter~~

~~Depreciation and amortization expense declined $1.1 million compared to the prior-year quarter~~

~~The Company acquired the residual 3.4% interest in Centuri in August 2017~~

~~Southwest Gas Holdings highlights:~~

~~Amended and restated bylaws to eliminate cumulative voting and enact majority voting~~


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

Results of Natural Gas Distribution

Quarterly Analysis


	Three Months Ended March 31,
(Thousands of dollars)	2023		2022
Regulated operations revenues	$	914,879	$	676,539
Net cost of gas sold	501,169		297,121
Operating margin	413,710		379,418
Operations and maintenance expense	131,188		119,636
Depreciation and amortization	74,650		72,114
Taxes other than income taxes	22,740		21,652
Operating income	185,132		166,016
Other income (deductions)	18,443		1,315
Net interest deductions	(38,622)		(26,610)
Income before income taxes	164,953		140,721
Income tax expense	30,257		28,926
Contribution to consolidated results	$	134,696	$	111,795

Results from natural gas distribution operations improved $23 million between the first quarters of 2023 and 2022. The improvement was primarily due to an increase in Operating margin and Other income (deductions), offset by an increase in Operations

   Three Months Ended
September 30,
   2017    2016
   (Thousands of dollars)
Gas operating revenues
   $ 213,059    $ 200,179
Net cost of gas sold
   45,539    39,056




Operating margin
   167,520    161,123
Operations and maintenance expense
   102,215    102,438
Depreciation and amortization
   46,194    56,436
Taxes other than income taxes
   14,046    12,480




Operating income (loss)
   5,065    (10,231 )
Other income (deductions)
   3,081    2,521
Net interest deductions
   17,421    16,364




Income (loss) before income taxes
   (9,275 )    (24,074 )
Income tax expense (benefit)
   (5,251 )    (11,669 )




Contribution to consolidated net income (loss)
   $ (4,024 )    $ (12,405 )

and maintenance, Depreciation and amortization, and Net interest deductions.

Operating margin increased $6$34.3 million ~~between quarters. Rate relief in Arizona (effective April 2017) and California provided $4~~quarter over quarter. Approximately $5 million ~~in operating margin (see~~~~Rates and Regulatory Proceedings~~~~). Approximately $2 million in increased operating~~of incremental margin was attributable to customer growth, ~~as 32,000 net new customers were added~~including 42,000 first-time meter sets during the last twelve months.

Combined rate relief added approximately $14 million of combined margin. Amounts collected from customers associated with previously unrecovered Vintage Steel Pipe (“VSP”) and Customer-Owned Yard Line (“COYL”) programs in Arizona ($4 million) also contributed to the improvement. Additionally, an $8 million out-of-period adjusting entry in the current quarter was made, which reduced Net cost of gas sold (See Basis of Presentation in Note 1 – Background, Organization, and Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q). Other differences include customer-provided fuel required for pipeline operations (offset in Operations and maintenance expense), and miscellaneous revenue and margin from customers outside the decoupling mechanisms.

Operations and maintenance expense ~~was relatively flat~~increased $11.6 million between ~~quarters. Decreases~~quarters, including approximately $4 million in ~~employee-related benefit~~fuel-related costs ~~more than offset~~($3 million of which is customer-provided fuel for pipeline operations, discussed above), $1.7 million in combined leak survey and line locating costs, $2.6 million primarily related to outside services/contractor costs in various areas of the business, as well as increases in ~~other general costs.~~

insurance related claims ($1 million).

Depreciation and amortization ~~expense decreased $10~~expense increased $2.5 million, ~~between~~or 4%, between quarters, primarily ~~due~~due to ~~reduced depreciation rates in Arizona,~~ a ~~result of the recent Arizona general rate case decision. Partially offsetting the decline was increased depreciation associated with a $317~~$533 million, or 5%6%, increase in average gas plant in service ~~for~~since the corresponding first quarter of 2022, offset by $647,000 in reduced amortization expense related to regulatory account balances. The increase in plant was attributable to pipeline capacity reinforcement work, franchise requirements, scheduled pipe replacement activities, and new infrastructure.

Other income increased $17 million. Interest income increased $9.7 million between quarters related to carrying charges associated with regulatory account balances, notably deferred purchased gas cost balances, which increased from $368 million existing as of March 31, 2022 to $970 million existing as of March 31, 2023. The non-service-related components of employee pension and other postretirement benefit costs decreased $5.3 million between quarters. Southwest also recognized a $4.4 million increase in COLI results in the current quarter compared to the comparable quarter in the prior year.

Net interest deductions increased $12 million in the first quarter of 2023, as compared to the prior-year quarter, primarily due to interest associated with $600 million of Senior Notes issued in March 2022, $300 million of Senior Notes issued in December 2022, and $300 million of Senior Notes issued in March 2023. Additionally, increased interest resulted from an increase in short-term debt, including a $450 million term loan issued in January 2023 (paid off in full in April 2023).


			31

Results of Natural Gas Distribution

Twelve-Month Analysis


	Twelve Months Ended March 31,
(Thousands of dollars)	2023		2022
Regulated operations revenues	$	2,173,409	$	1,676,397
Net cost of gas sold	993,264		572,007
Operating margin	1,180,145		1,104,390
Operations and maintenance expense	503,480		452,051
Depreciation and amortization	265,579		256,814
Taxes other than income taxes	84,285		81,308
Operating income	326,801		314,217
Other income (deductions)	10,244		(3,794)
Net interest deductions	(127,892)		(102,004)
Income before income taxes	209,153		208,419
Income tax expense	31,872		28,204
Contribution to consolidated results	$	177,281	$	180,215

Contribution to consolidated net income from natural gas distribution operations decreased approximately $3 million between the twelve-month periods ended March 2023 and 2022. The decline was due primarily to increases in Operations and maintenance expense, Depreciation and amortization, and Net interest deductions, offset by an increase in Operating margin and Other income.

Operating margin increased $76 million between periods. Customer growth provided $15 million, and combined rate relief provided $27 million of incremental operating margin. Also contributing to the increase were customer late fees that were $2.4 million greater in the current period due to lifting the earlier moratorium on such fees in all jurisdictions. Approved VSP and COYL revenue in Arizona also contributed to the improvement between periods ($21 million). The $8 million out-of-period adjustment to Net cost of gas sold, noted earlier, also contributed to the increase. Offsetting these increases were lower recoveries associated with regulatory account balances ($4 million); an associated comparable decrease is also reflected in amortization expense between periods (discussed below).

Operations and maintenance expense increased $51 million between periods. In addition to general inflationary impacts and labor market challenges overall, specific increases include pipeline integrity, reliability, line location, and engineering services costs ($12 million), increased cost of fuel (nearly $8 million, almost half of which is used in our operations), an increase in the reserve for customer accounts deemed uncollectible ($7.8 million), approximately $8 million in contractor/professional services in various areas of the business, higher legal and claim-related costs ($6 million), employee travel and training costs ($2.5 million), and higher labor-related costs ($2.6 million).

Depreciation and amortization expense increased $8.8 million, or 3%, between periods primarily due to a $531 million, or 6%, increase in average gas plant in service since the corresponding ~~quarter~~period in the prior year, offset by a ~~year ago.~~reduction ($4 million) in amortization of regulatory account balances, as discussed in regard to Operating margin above. The increase in gas plant was attributable to pipeline capacity reinforcement work, franchise requirements, scheduled ~~and accelerated~~ pipe replacement activities, and new infrastructure.

~~Taxes~~

Other income increased $14 million between the twelve-month periods of 2023 and 2022. Interest income increased $18.7 million between periods related to carrying charges associated with regulatory account balances, notably deferred purchased gas cost balances, which have increased substantially since the comparable period in the the prior year. Non-service-related components of employee pension and other ~~than~~postretirement benefit costs decreased $15.1 million between periods. Offsetting these impacts was a $5.1 million decline in COLI results between periods, a $9 million reserve for a software project deemed non-recoverable from utility operations, and a $3 million market adjustment on other property in 2022.

Net interest deductions increased $26 millionbetween periods primarily due to $600 million of Senior Notes issued in March 2022, $300 million of Senior Notes issued in December 2022, and, to a lesser extent, $300 million of Senior Notes issued in March 2023. Other impacts include increased interest associated with a higher amount of short-term debt and higher rates on variable-rate debt overall, including under Southwest’s credit facility.


			32

Income tax expense increased $3.7 million between the twelve-month periods ended March 31, 2023 and 2022, primarily due to amortization of excess accumulated deferred income taxes (“EADIT”) ($5.3 million), changes in Arizona and California state apportionment percentages of $3.2 million, and return to provision differences of $5.1 million. Income tax expense in both periods reflects that COLI results are recognized without tax consequences.

Results of Utility Infrastructure Services

Quarterly Analysis


	Three Months Ended March 31,
(Thousands of dollars)	2023		2022
Utility infrastructure services revenues	$	653,293	$	523,877
Operating expenses:
Utility infrastructure services expenses	603,680		503,232
Depreciation and amortization	37,870		37,612
Operating income (loss)	11,743		(16,967)
Other income (deductions)	(680)		(486)
Net interest deductions	22,376		11,131
Loss before income taxes	(11,313)		(28,584)
Income tax benefit	(1,180)		(6,170)
Net loss	(10,133)		(22,414)
Net income attributable to noncontrolling interests	1,739		1,072
Contribution to consolidated results	$	(11,872)	$	(23,486)

Utility infrastructure services revenues increased ~~$1.6~~$129.4 million in the first quarter of 2023 when compared to the prior-year quarter, driven primarily by a $51.7 million increase in electric infrastructure revenues and a $43.3 million increase in offshore wind revenue, which is reflected as a component of other revenues (refer to Note 3 – Revenue in this Quarterly Report on Form 10-Q). Offshore wind revenue stems from three multi-year contracts whereby Riggs Distler provides materials, subcontracts manufacturing, and self performs fabrication and assembly of secondary steel components onshore, with delivery at a port facility. The increase in electric infrastructure services revenues was due to growth from both new and existing customers as well as revenues of $30.6 million from emergency restoration services following tornado and other storm damage to customers’ above-ground utility infrastructure in and around the Gulf Coast and eastern regions of the U.S., compared to $14.1 million in storm restoration work in the prior-year quarter. Centuri’s revenues derived from storm-related services vary from period to period due to the unpredictable nature of weather-related events, and when this type of work is performed, it typically generates a higher profit margin than core infrastructure services, due to improved operating efficiencies related to equipment utilization and absorption of fixed costs. The current quarter also included increased gas infrastructure services revenues of $36.7 million primarily resulting from $29.7 million of revenue related to a new bid contract that commenced during the first quarter of 2023, as well as favorable weather in several operating locations, which allowed projects in those areas to be completed during an otherwise seasonally slow period.

Utility infrastructure services expenses increased $100.4 million in the first quarter of 2023 when compared to the prior year quarter, driven primarily by a higher volume of work. Subcontractor costs increased during the first quarter of 2023 compared to the prior-year quarter primarily due to increased work under offshore wind projects. Despite continued inflationary pressures, operating margin in the first quarter of 2023 improved due to changes in the mix of work and increased operating efficiencies related to emergency restoration services, as well as favorable weather conditions in other locations. Also included in total Utility infrastructure services expenses were general and administrative costs, which decreased approximately $0.1 million between quarters due to the full integration of Riggs Distler as well as the impact of cost saving measures implemented in 2022. Gains on sale of equipment in the first quarter of 2023 and 2022 (reflected as an offset to Utility infrastructure services expenses) were approximately $661,000 and $413,000, respectively.

The increase in net interest deductions of $11.2 million was primarily due to higher interest rates on outstanding variable-rate borrowings.

Income tax benefit decreased $5 million between quarters, primarily due to ~~higher property taxes associated with net plant additions~~a reduction in pre-tax loss in 2023 and ~~increased property taxes~~changes in ~~Arizona, including the impact of a property tax tracking mechanism enacted as part of the recently settled Arizona general rate case.~~

Other income increased $560,000 between quarters primarily due to an increase in the equity portion of the allowance for funds used during construction (“AFUDC”) associated with higher construction expenditures. The equity portion of AFUDC represents the cost of equity funds used to finance utility construction. The equity AFUDC improvement was partially offset by a decline between quarters in income from company-owned life insurance (“COLI”) policies. The current quarter reflects $2.1 million of income associated with COLI policy cash surrender value increases, while the prior-year quarter reflected $2.3 million of COLI-related income. COLI amounts in each quarter were greater than expected.

Net interest deductions increased $1.1 million between quarters, primarily due to the September 2016 issuance of $300 million of senior notes, partially offset by reductions associated with the redemption of debt ($24.9 million of 4.75% IDRBs in September 2016) and lower interest expense associated with PGA balances as compared to the prior-year quarter.

state apportionment rates.


~~SOUTHWEST GAS HOLDINGS, INC.~~		33	~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~	~~September 30, 2017~~

Results of ~~Natural Gas Operations~~

~~Nine-Month~~Utility Infrastructure Services

Twelve-Month Analysis

   Nine Months Ended September 30,
   2017    2016
   (Thousands of dollars)
Gas operating revenues
   $ 935,823    $ 980,927
Net cost of gas sold
   261,839    324,072




Operating margin
   673,984    656,855
Operations and maintenance expense
   313,395    301,979
Depreciation and amortization
   153,643    174,413
Taxes other than income taxes
   43,325    39,480




Operating income
   163,621    140,983
Other income (deductions)
   8,744    6,712
Net interest deductions
   51,622    49,155




Income before income taxes
   120,743    98,540
Income tax expense
   38,307    31,004




Contribution to consolidated net income
   $ 82,436    $ 67,536

~~The contribution~~


	Twelve Months Ended March 31,
(Thousands of dollars)	2023		2022
Utility infrastructure services revenues	$	2,889,743	$	2,318,563
Operating expenses:
Utility infrastructure services expenses	2,629,766		2,123,085
Depreciation and amortization	155,611		130,511
Operating income	104,366		64,967
Other income (deductions)	(1,081)		683
Net interest deductions	72,616		30,508
Income before income taxes	30,669		35,142
Income tax expense	10,717		11,406
Net income	19,952		23,736
Net income attributable to noncontrolling interests	6,273		5,943
Contribution to consolidated results	$	13,679	$	17,793

Utility infrastructure services revenues increased $571.2 million in the current twelve-month period compared to ~~consolidated net income~~the corresponding period of 2022, including a $408.4 million increase at Riggs Distler (acquired in August 2021), of which $132.9 million related to offshore wind projects that are reflected as a component of other revenues. Revenues from ~~natural gas operations~~electric infrastructure services overall increased ~~$14.9~~$216.6 million between the first nine months of 2017 and 2016. The improvement was primarily due to higher operating margin and lower depreciation expense, partially offset by an increase in operations and maintenance expenses.

~~Operating margin increased $17 million between the comparative nine-month periods. Rate relief~~ in the ~~Arizona and California jurisdictions provided $10 million in operating margin (see~~~~Rates and Regulatory Proceedings~~~~). The remaining $7 million increase was attributable to customer growth.~~

Operations and maintenance expense increased $11.4 million, or 4%, between periods due primarily to higher general cost increases. Approximately $5 million of the incremental costs recognized were associated with the amount and timing of employee incentive plan grants (including accelerated recognition for retirement eligible employees).

Depreciation and amortization expense decreased $20.8 million between periods primarily due to reduced depreciation rates in Arizona, a result of the recent Arizona general rate case decision. The depreciation decrease also included a decline of approximately $3.7 million in amortization related to the recovery of regulatory assets. Partially offsetting these declines was depreciation associated with a $325 million, or 5%, increase in average gas plant in service for the current twelve-month period aswhen compared to the prior ~~period.~~year, with $125.6 million attributable to Riggs Distler. Included in the incremental electric infrastructure revenues during the twelve-month period of 2023 was $86.1 million from emergency restoration services following storm damage to customers’ above-ground utility infrastructure in and around the Gulf Coast and eastern regions of the U.S. and Canada, as compared to $70.5 million in similar services during the twelve-month period in 2022. The remaining increase in ~~gas plant~~revenue was attributable to ~~pipeline capacity reinforcement~~continued growth with existing gas infrastructure customers under master service and bid agreements.

Utility infrastructure services expenses increased $506.7 million between periods. The overall increase included $373.7 million from Riggs Distler, and incremental costs related to the generally higher volume of work. Changes in the mix of work ~~franchise requirements, scheduled~~caused by customers’ supply chain challenges, as well as inflation, led to higher input costs including fuel and ~~accelerated pipe replacement activities,~~subcontractor expenses, as well as increased project-related travel and ~~new infrastructure.~~

~~Taxes other than income taxes increased $3.8~~equipment rental costs incurred to fulfill electric infrastructure services. A loss of $7.5 million ~~between periods primarily~~was incurred on a gas infrastructure bid project during the current twelve-month period due to higher ~~property taxes associated with net plant additions~~costs than anticipated and ~~increased property taxes~~scheduling delays. General and administrative costs, included in ~~Arizona, including the impact of the Arizona property tax tracking mechanism.~~

~~Other income, which principally includes returns on COLI policies andnon-utility~~total Utility infrastructure services expenses, ~~increased $2~~decreased approximately $3.4 million between ~~periods. The current period reflects $6.8~~comparative periods attributable to $13.9 million of ~~income associated~~professional fees incurred during the twelve-month period of 2022 in connection with ~~COLI policy cash surrender value increases, while~~ the ~~prior-year period reflected $5.4~~Riggs Distler acquisition that did not recur in 2023, offset by $6.1 million of ~~COLI-related income. COLI amounts~~strategic review and severance costs incurred in ~~each period were greater than expected.~~

~~Net interest deductions~~the current twelve-month period. Other administrative costs increased ~~$2.5 million between periods, primarily~~ due to the September 2016 issuance of $300 million of senior notes, partially offset by reductions associated with debt redemptions ($100 million of 4.85% IDRBs in July 2016 and $24.9 million of 4.75% IDRBs in September 2016) and lower interest expense associated with PGA balances as compared to the prior-year period.


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~Results of Natural Gas Operations~~

~~Twelve-Month Analysis~~

   Twelve Months Ended September 30,
   2017    2016
   (Thousands of dollars)
Gas operating revenues
   $ 1,276,308    $ 1,376,388
Net cost of gas sold
   334,888    460,836




Operating margin
   941,420    915,552
Operations and maintenance expense
   413,140    400,222
Depreciation and amortization
   212,693    228,609
Taxes other than income taxes
   56,221    51,810




Operating income
   259,366    234,911
Other income (deductions)
   10,308    9,615
Net interest deductions
   69,464    65,146




Income before income taxes
   200,210    179,380
Income tax expense
   65,887    59,544




Contribution to consolidated net income
   $ 134,323    $ 119,836

Contribution to consolidated net income from natural gas operations increased by $14.5 million between the twelve-month periods of 2017 and 2016. The improvement was primarily due to higher operating margin and lower depreciation expense, partially offset by an increase in operations and maintenance expenses and interest expense.

~~Operating margin increased $26 million between periods including a combined $13 million of rate relief~~growth in the Arizona and California jurisdictions, as well as Paiute Pipeline Company. Customer growth provided $9 million in operating margin, while operating margin associated with recoveries of regulatory assets, infrastructure replacement mechanisms, customers outside the decoupling mechanisms, and other miscellaneous revenues improved $4 million.

Operations and maintenance expense increased $12.9 million, or 3%, between periods primarily due to general cost increases, partially offset by lower pension expense. Approximately $5.6 million of thebusiness, including incremental costs recognized were associated with the amount and timing of employee incentive plan grants (including accelerated recognition for retirement-eligible employees). Pipeline integrity management and damage prevention programs collectively increased $500,000.

Depreciation and amortization expense decreased $15.9 million between periods primarily due to reduced depreciation rates in Arizona, a result of the recent Arizona general rate case decision. Partially offsetting the decline was depreciation associated with a $335 million, or 6%, increase in average gas plant in service for the current period as compared to the prior period. The increase in gas plant was attributable to pipeline capacity reinforcement work, franchise requirements, scheduled and accelerated pipe replacement activities, and new infrastructure.

Taxes other than income taxes increased $4.4 million between periods primarily due to higher property taxes associated primarily with net plant additions and increased property taxes in Arizona, including the impact of a property tax regulatory tracking mechanism resulting from the recent Arizona general rate case.

Other income increased $693,000 between the twelve-month periods of 2017 and 2016. The current period reflects an $8.8 million increase in COLI policy cash surrender values, while the prior-year period reflected $7.5 million of combined COLI-related income and recognized death benefits. COLI amounts in each period were greater than expected.

~~Net interest deductions increased $4.3 million between periods, primarily due to the September 2016 issuance of $300 million of senior notes. The increase was partially offset~~incurred by reductions associated with the redemption of debt ($100 million of 4.85% IDRBs in July 2016 and $24.9 million of 4.75% IDRBs in September 2016) and lower interest expense associated with PGA balances as compared to the prior-year period.


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~Results of Construction Services~~

~~Quarterly Analysis~~

   Three Months Ended
September 30,
   2017    2016
   (Thousands of dollars)
Construction revenues
   $ 380,094    $ 339,790
Operating expenses:

Construction expenses
   342,629    300,611
Depreciation and amortization
   12,335    13,409




Operating income
   25,130    25,770
Other income (deductions)
   (210 )    44
Net interest deductions
   1,962    1,794




Income before income taxes
   22,958    24,020
Income tax expense
   8,407    8,708




Net income
   14,551    15,312
Net income attributable to noncontrolling interests
   216    435




Contribution to consolidated net income attributable to Centuri
   $ 14,335    $ 14,877

Contribution to consolidated net income from construction services in the current quarter decreased by $542,000 when compared to the prior-year quarter. The decrease is primarily due to higher construction costs relative to increased revenues, resulting from a~~pre-tax~~ ~~loss on a project described below, partially offset by a decline in depreciation and amortization.~~

Revenues increased $40.3 million, or 12%, between quarters primarily due to an increase in pipe replacement work with existing customers. A significant portion of the increase relates to bid jobs that are expected to be substantially complete by year end.

Construction expenses increased $42 million, or 14%, between quarters due to additional pipe replacement work. Results were negatively impacted by higher construction costs for a water pipe replacement project, for which Centuri has requested increased cost recovery. No additional work orders will be accepted on the project pending resolution of Centuri’s request.Riggs Distler. Gains on sale of equipment (reflected as an offset to ~~construction~~Utility infrastructure services expenses) were ~~approximately $25,000 and $1.4 million for the third quarters of 2017 and 2016, respectively.~~

Depreciation and amortization decreased $1.1 million between quarters, primarily due to a $2 million reduction associated with the extension of the estimated useful lives of certain depreciable equipment during the past 12 months, partially offset by an increase in depreciation for additional equipment purchased to support the growing volume of work being performed.


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~Results of Construction Services~~

~~Nine-Month Analysis~~

   Nine Months Ended
September 30,
   2017    2016
   (Thousands of dollars)
Construction revenues
   $ 872,536    $ 838,038
Operating expenses:

Construction expenses
   806,586    757,919
Depreciation and amortization
   35,446    43,351




Operating income
   30,504    36,768
Other income (deductions)
   38    44
Net interest deductions
   5,095    4,945




Income before income taxes
   25,447    31,867
Income tax expense
   9,560    12,042




Net income
   15,887    19,825
Net income attributable to noncontrolling interests
   170    500




Contribution to consolidated net income attributable to Centuri
   $ 15,717    $ 19,325

Contribution to consolidated net income from construction services for the first nine months of 2017 declined by $3.6 million when compared to the prior-year period. The decrease is primarily due to higher construction costs relative to increased revenues, partially offset by a decline in depreciation and amortization.

Revenues increased $34.5 million, or 4%, in the first nine months of 2017 when compared to the prior-year period primarily due to increased pipe replacement work. Partially offsetting increases in revenues was a temporary work stoppage by a significant customer that began in the first quarter of 2017 and continued through part of the second quarter of 2017 resulting in a $26.3 million reduction in revenues, compared to the prior-year period, and a $3.7 million~~pre-tax~~ loss in the current nine-month period. The temporary work stoppage was initiated due to state-mandated requalification of employees of all contractors working within the jurisdictional boundary of one state. Operations resumed gradually following the requalification of Centuri’s employees during the second quarter of 2017. Additionally, inclement weather in several operating areas negatively impacted revenues and reduced productivity in the first quarter of 2017.

Construction expenses increased $48.7 million, or 6%, between periods. The increase in construction expenses is disproportionate to revenues noted above due in part to logistics surrounding the timing and length of the temporary work stoppage with the significant customer and to higher labor costs incurred to complete work during inclement weather conditions in the first quarter. In addition, results were negatively impacted by higher construction and~~start-up~~ ~~costs related to the water pipe replacement project, for which Centuri is pursuing cost recovery. Gains on sale of equipment (reflected as an offset to construction expenses) were approximately $1.5~~approximately $6.6 million and ~~$4.1 million for the first nine months of 2017 and 2016, respectively.~~

Depreciation and amortization decreased $7.9 million between periods, primarily due to an $8.2 million reduction in depreciation associated with the extension of the estimated useful lives of certain depreciable equipment during the past 12 months, partially offset by an increase in depreciation for additional equipment purchased to support the growing volume of work being performed.


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~Results of Construction Services~~

~~Twelve-Month Analysis~~

   Twelve Months Ended
September 30,
   2017    2016
   (Thousands of dollars)
Construction revenues
   $ 1,173,576    $ 1,127,982
Operating expenses:

Construction expenses
   1,073,090    1,009,188
Depreciation and amortization
   47,764    58,368




Operating income
   52,722    60,426
Other income (deductions)
   1,187    1,246
Net interest deductions
   6,813    6,738




Income before income taxes
   47,096    54,934
Income tax expense
   17,402    20,711




Net income
   29,694    34,223
Net income attributable to noncontrolling interests
   684    1,079




Contribution to consolidated net income attributable to Centuri
   $ 29,010    $ 33,144

Contribution to consolidated net income from construction services for the twelve-month period ended September 30, 2017 decreased $4.1 million compared to the same period of 2016. The decrease is primarily due to higher construction costs relative to increased revenues, resulting in~~pre-tax~~ ~~losses on certain projects, partially offset by a decline in depreciation and amortization.~~

Revenues increased $45.6 million, or 4%, in the current twelve-month period compared to the same period of 2016 primarily due to additional pipe replacement work for existing natural gas distribution customers. During the past several years, Centuri has focused its efforts on obtaining replacement work under both blanket contracts and incremental bid projects. For both twelve-month periods ended September 30, 2017 and 2016, revenues from replacement work provided over 60% of total revenues.

Construction expenses increased $63.9 million, or 6%, between periods, due to additional pipe replacement work, higher labor costs experienced due to changes in the mix of work with existing customers, and higher operating expenses to support increased growth in operations. The logistics surrounding the timing and length of a temporary work stoppage with a significant customer during the first six months of 2017 and higher labor costs incurred to complete work during inclement weather conditions in the first quarter of 2017 resulted in costs disproportionate to revenues. Results were negatively impacted by higher~~start-up~~ and construction costs for a water pipe replacement project, for which Centuri has requested increased cost recovery. No additional work orders will be accepted on the project pending resolution of Centuri’s request. Gains on sale of equipment (reflected as an offset to construction expenses) were $4.5 million and $4.2$5.8 million for the twelve-month periods ~~ended September 30, 2017~~of 2023 and ~~2016,~~2022, respectively.

Depreciation and amortization ~~decreased $10.6~~expense increased $25.1 million ~~between~~between the current and prior-year twelve-month periods, ~~primarily~~of which $23.3 million relates to Riggs Distler.

Net interest deductions increased $42.1 million between periods due to ~~an $11.1 million reduction associated with~~incremental outstanding borrowings under Centuri’s $1.545 billion amended and restated secured revolving credit and term loan facility which funded the ~~extension~~2021 acquisition of ~~the estimated useful lives of certain depreciable equipment over the last twelve months, partially offset by an increase~~Riggs Distler, in ~~depreciation for additional equipment purchased~~addition to ~~support the growing volume of work being performed.~~

higher interest rates on outstanding variable-rate borrowings.


~~SOUTHWEST GAS HOLDINGS, INC.~~		34	~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~	~~September 30, 2017~~

Results of Pipeline and Storage

Quarterly Analysis


	Three Months Ended March 31,
(Thousands of dollars)	2023		2022
Regulated operations revenues	$	35,132	$	66,993
Operating expenses:
Net cost of gas sold	6,368		1,797
Operations and maintenance expense	11,378		24,312
Depreciation and amortization	—		12,920
Taxes other than income taxes	1,490		3,164
Goodwill impairment	21,215		—
Operating income (loss)	(5,319)		24,800
Other income (deductions)	486		543
Net interest deductions	2,200		4,382
Income (loss) before income taxes	(7,033)		20,961
Income tax expense	9,255		4,031
Contribution to consolidated results	$	(16,288)	$	16,930

Operating results for the pipeline and storage segment for the first quarter of 2023 reflect activity from January 1, 2023 through February 13, 2023 (the last full day of ownership by the Company). Operating results included rate-regulated transmission and subscription storage revenues of $34 million and $62 million during the three months ended March 31, 2023 and 2022, respectively. Operating expenses include $2.6 million during the current quarter related to integration/stand-up costs leading up to the sale date. Depreciation and amortization was not recorded in 2023 as MountainWest was classified as held for sale during the holding period. Income tax expense includes the impact of book versus tax basis differences related to the sale completed in 2023. A discussion of the twelve months ended March 31, 2023 to the comparable prior-year period is omitted as the Company owned MountainWest for only three months of the twelve-month period ended March 31, 2022. For further impacts from the sale on MountainWest to Southwest Gas Holdings, Inc. in the post-closing period, refer to Note 7 – Segment Information.

Rates and Regulatory Proceedings

~~Arizona Jurisdiction~~

~~Arizona General Rate Case.~~

Southwest ~~filed a general rate application with~~is subject to the regulation of the Arizona Corporation Commission (“ACC”), the Public Utilities Commission of Nevada (the “PUCN”), the California Public Utilities Commission (the “CPUC”), and the Federal Energy Regulatory Commission (the “FERC”).

General Rate Relief and Rate Design

Rates charged to customers vary according to customer class and rate jurisdiction and are set by the individual state and federal regulatory commissions that govern Southwest’s service territories. Southwest makes periodic filings for rate adjustments as the cost of providing service changes (including the cost of natural gas purchased), and as additional investments in new or replacement pipeline and related facilities are made. Rates are intended to provide for recovery of all commission-approved costs and a reasonable return on investment. The mix of fixed and variable components in rates assigned to various customer classes (rate design) can significantly impact the operating margin actually realized by Southwest. Management has worked with its regulatory commissions in designing rate structures that strive to provide affordable and reliable service while mitigating volatility in prices to customers and stabilizing returns to investors. Such rate structures were in place in all of Southwest’s operating areas during all periods for which results of natural gas distribution operations are disclosed above.

Arizona Jurisdiction

Arizona General Rate Case. Southwest filed a general rate case application in December 2021, primarily to reflect in rates the substantial capital investments that were made since the end of the test year in an earlier case, including investments in a customer information system implemented in May ~~2016 requesting an increase~~2021. At a hearing held in ~~authorized annual operating revenues~~September 2022, Southwest, the Utilities Division Staff (the “Staff”), and the Residential Utility Consumer Office jointly stipulated to several issues, including a target capital structure consisting of ~~approximately $32 million, or 4.2%, to reflect existing levels of expense~~50% equity and requested returns, in addition to reflecting capital investments made by Southwest since June 2010. The application requested an overall rate of return of 7.82% on an original cost rate base of $1.336 billion,50% debt; a ~~10.25%~~9.30% return on ~~common equity,~~equity; and ~~a capital structure utilizing 52% common equity. The filing included a depreciation study~~foregoing an acquisition premium related to the


			35

recent Graham County acquisition as well as recovery of $12 million of waived late fees on customer account balances that ~~supported a proposal~~would have otherwise applied to ~~reduce currently effective depreciation expense by approximately $42 million, which was considered~~delinquent accounts in the ~~overall requested amount. This expense reduction coupled with~~absence of a COVID-19 moratorium on such fees. Among the ~~requested~~uncontested issues identified prior to the hearing were the continuation of the Delivery Charge Adjustment (“DCA”), Southwest’s full revenue ~~increase, resulted in a net annual operating income increase request~~decoupling mechanism, the continuation of ~~$74 million. A settlement was reached among several parties in December 2016 and a formal draft settlement was filed in January 2017. Hearings were held in February 2017, and~~ the ACC approved the settlement agreement in April 2017. The settlement provides for an overall operating revenue increase of $16 million and the capital structure and cost of capital as proposed by Southwest, withexisting rate design (with the exception of the return on common equity, which was set at 9.50%. Depreciation expense is expected to be reduced by $44.7 million, for a combined net annual operating income increase of $60.7 million. Other key elements of the settlement include approval of the continuationan updated year-round Low Income Ratepayer Assistance program), and expansion of the current Customer-Owned Yard Line (“COYL”) program (adding the ability to seek out COYLs through a targeted approach and mobilization of work crews for replacement), implementation of a vintage steel pipe replacement program, and a continuation of the current decoupled rate design, excluding a winter-period adjustment to rates, making the mechanism fundamentally similar to that which exists in Nevada. The settlement also included a property tax tracking mechanism to defer changes inSouthwest’s alternate property tax expense ~~for recovery~~calculation, reflecting actual incurred property tax expense in 2021, instead of a pro-forma adjustment reflecting forecasted property tax expense. Approximately $12 million in costs related to the Liquefied Natural Gas facility deferred in an authorized regulatory asset will be amortized over four years. The ACC’s final order authorized a $54.3 million increase, with new rates effective February 1, 2023.

Delivery Charge Adjustment. The DCA is filed each April, which along with other reporting requirements, contemplates a rate to recover/return the over- or under-collected margin tracker (decoupling mechanism) balance. An April 2022 request proposed a rate to return $10.5 million, the over-collected balance existing at the end of the first quarter 2022, which became effective July 1, 2022. A filing was made prior to the end of April 2023 to request a rate to address the over-collected balance of $53.5 million as of March 31, 2023.

Tax Reform. A Tax Expense Adjustor Mechanism (“TEAM”) was approved in Southwest’s 2019 general rate case to timely recognize tax rate changes resulting from federal or state tax legislation following the TEAM implementation. In addition, the TEAM tracks and returns/recovers the revenue requirement impact of changes in amortization of EADIT (including that which resulted from 2017 U.S. federal tax reform) compared to the amount authorized in the ~~next general~~most recently concluded rate case. ~~New rates were effective April 2017. The settlement also includes a three-year~~Following inaugural surcredit rate ~~case moratorium prohibiting a new application to adjust base rates from being filed prior to May 2019.~~

~~LNG (“Liquefied Natural Gas”) Facility~~~~. In January 2014,~~establishment under the TEAM mechanism, in December 2022, Southwest filed anits most recent TEAM rate application, with the ACC seeking preapproval to construct, operate and maintain a 233,000 dekatherm LNG facility in southern Arizona. This facility is intended to enhance service reliability and flexibility in natural gas deliveries in the southern Arizona area by providing a local storage option, to be operated by Southwest and connected directly to its distribution system. In December 2014, Southwest received an order from the ACC granting~~pre-approval~~ of Southwest’s application to construct the LNG facility and the deferral of costs, up to $50 million. Following the December 2014 preapproval, Southwest purchased the site for the facility and completed detailed engineering design specifications for the purpose of soliciting bids for the engineering, procurement and construction (“EPC”) of the facility. Southwest solicited requests for proposals for the EPC phase of the project, and in October 2016 made a filing with the ACC to modify the previously issued Orderproposing to update the~~pre-approved~~ ~~costs~~ TEAM surcredit to ~~reflect anot-to-exceed~~ ~~amount~~refund $6.5 million of ~~$80 million,~~estimated net EADIT savings, which was approved by the ACC ~~in December 2016. Through September 2017,~~and will be effective May 1, 2023.

Customer-Owned Yard Line (“COYL”) Program. Southwest has incurred approximately $21.7 million in capital expenditures toward the project (including land acquisition costs). Construction commenced during the third quarter of 2017 and is expected to be completed by the end of 2019.

~~COYL Program.~~ ~~Southwest~~originally received approval, in connection with ~~an earlier~~its 2010 Arizona general rate case, to implement a program to conduct leak surveys, and if leaks were present, to replace and relocate service lines and meters for Arizona customers whose meters were set off from the customer’s home, ~~which is not~~representing a ~~traditional~~non-traditional configuration. ~~Customers with this configuration were previously responsible for the cost of maintaining these lines and were~~The COYL program has been subject to ~~the immediate cessation of natural gas service iflow-pressure~~ ~~leaks occurred. Effective June 2013, the ACC authorized a surcharge~~proceedings to recover investments since that time. In February 2023, Southwest requested approval to recover the ~~costs~~outstanding revenue requirement of ~~depreciation andpre-tax~~ return on the costs incurred to replace and relocate service lines and meters. The surcharge is revised annually as the program progresses. In 2014, Southwest received approval to add a “Phase II” component toapproximately $4.3 million associated with 2022 COYL investments, which will increase the COYL ~~program~~recovery rate. The new rate is anticipated to ~~include the replacement ofnon-leaking~~ COYLs. In the most recent annual COYL filing made in February 2017, Southwest requested to establish an annual surcharge to collect $1.8 million related to the revenue requirement associated with $12.1 million in capital projects completed under both Phase I and Phase II during 2016. Inbecome effective June 2017, the ACC issued a decision approving the surcharge application. All capital work completed in earlier years was incorporated in Southwest’s Arizona rate base in connection with the recently completed general rate case proceeding, as discussed above.


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

1, 2023.

Vintage Steel Pipe ~~Program~~.(“VSP”) Program. Southwest received approval, in connection with its ~~most recent~~2016 Arizona general rate case, to implement a ~~vintage steel pipe (“VSP”)~~VSP replacement ~~program. Southwest currently has approximately 6,000 miles~~program, due to having a substantial amount ofpre-1970s vintage steel pipe in Arizona. ~~Southwest proposed to start replacing the pipe on an accelerated basis and to recover the costs through an annual surcharge filing that will be made in February~~However, as part of each year. The surcharge is designed to be revised annually as the program progresses. A Plan of Administration (“POA”), which was filed in March of 2017 and was approved in conjunction with the general rate case, outlined the VSP program requirements and established the timeline for future project plans and surcharge requests. Southwest is currently targeting the replacement of nearly 40 miles of VSP during 2017 totaling approximately $27 million and replacement projects during 2018 of approximately $100 million.

~~California Jurisdiction~~

~~Attrition Filing.~~ In November 2016, Southwest made its latest annual post-test year (“PTY”) attrition filing with the California Public Utilities Commission (“CPUC”), requesting annual revenue increases of $2.1 million in southern California, $513,000 in northern California, and $256,000 for South Lake Tahoe. This filing was approved in December 2016 and rates were made effective in January 2017. At the same time, rates were updated to recover the regulatory asset associated with the revenue decoupling mechanism, or margin tracker.

~~California General Rate Case~~~~. In December 2016, Southwest filed to modify the most recent~~Southwest’s 2020 general rate case decision, the ACC ultimately decided to discontinue the accelerated VSP program. A filing in May 2021 proposed the recovery of previously unrecovered surcharge revenue relating to investments during 2019 and 2020, with approximately $60 million to be recovered over a three-year period. In November 2021, the ACC approved full recovery over the proposed three-year timeline with updated rates, which became effective in March 2022.

Graham County Utilities. In April 2021, Southwest and Graham County Utilities, Inc. (“GCU”) filed a joint application with the ACC for approval to transfer assets of GCU to Southwest and extend Southwest’s Certificate of Public Convenience and Necessity to serve the more than 5,000 associated customers, for a purchase price of $3.5 million. Approval of the application by the ACC was received in December 2021, with final transfer in mid-January 2022. Former GCU customers retained their existing rates while Southwest’s most recent rate case was processed; the customers moved to Southwest’s rates effective March 1, 2023.

PGA Modification. On March 1, 2023, Southwest filed a request to adjust the interest rate applicable to the outstanding Purchased Gas Adjustment (“PGA”) balance to more closely match the interest expense incurred to finance the balance. In the alternative, the filing requests an expansion of the current ~~rate case cycle by two years, including extension~~gas cost balancing account (“GCBA”) adjustment to clear the then existing $351 million balance over one year, which would result in an increase of the ~~annual PTY attrition adjustments through 2020 from 2018. That latest~~current GCBA adjustment rate ~~case decision~~of $0.10 per therm to more than $0.50 per therm until the balance drops below $10 million, at which time the GCBA adjustment rate would ~~have required Southwest~~be set to ~~file its next general rate application by September 2017.~~$0.00 per therm. The GCBA is in addition to ongoing deferred energy rates updated monthly. Expedited ~~consideration~~treatment was requested ~~and in~~with a proposed June ~~2017,~~1, 2023 implementation.

California Jurisdiction

Attrition Filing. Following the CPUC approved the request, thereby extending the rate case filing deadline. Southwest believes this extension is in the public interest as it provides rate stability to customers for two additional years consistent with the current reasonable2021 implementation of rates approved as part of the ~~last~~ general rate case, and the ~~current~~continuing annual Post Test Year (“PTY”) attrition increases of 2.75% indicated above, the first such increase following the rate case effective date began in January 2022, with the most recent annual attrition increase effective January 1, 2023. The PTY increase associated with the North Lake Tahoe Lateral revenue requirement became effective February 1, 2023.


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Customer Data Modernization Initiative (“CDMI”). In April 2019, Southwest filed an application with the CPUC seeking authority to establish a two-way, interest-bearing balancing account to record costs associated with the CDMI to mitigate adverse financial implications related to the earlier multi-year project (including a new customer information system, ultimately implemented in May 2021). Effective October 2019, the CPUC granted a memorandum account, which allowed Southwest to track costs, including operations and maintenance costs and capital-related costs, such as depreciation, taxes, and return associated with California’s portion of the CDMI (initially estimated at $19 million). The balance tracked in the memorandum account was transferred to the two-way balancing account in July 2020. A rate to begin recovering the balance accumulated through June 30, 2020 was established and made effective September 1, 2020, and updated multiple times since, including in January 2023. This rate is expected to be updated at least annually.

Carbon Offset Program. In March 2022, Southwest filed an application to seek approval to offer a voluntary program to California customers to purchase carbon offsets in an effort to provide customers additional options to offset their respective greenhouse gas (“GHG”) emissions. A request to establish a two-way balancing account to track program-related costs and revenues was included as part of the application. The CPUC issued a decision dismissing Southwest’s application without prejudice. Southwest anticipates filing a new application in 2023 addressing concerns raised by third parties as part of the earlier request, which included a request to demonstrate that purchased offsets would result in GHG emissions reductions.

Building Decarbonization. A CPUC decision was issued regarding the elimination of monetary allowances for gas line extensions, a 10-year refundable payment option, and the 50% discount payment option for both residential and non-residential customers of all California gas utilities. This applies to new applications for gas line extensions submitted on or after July 1, 2023. Although this decision eliminates the various allowances related to line extensions, it does not preclude extending natural gas service to customers.

Residential Disconnection Protections. A decision was issued by the CPUC establishing disconnection protections for residential customers of small and multi-jurisdictional utilities, including Southwest. A similar decision was adopted for four large California utilities in 2020. This decision imposes an annual disconnection cap and prohibits the utility from assessing credit deposits for residential customers establishing or re-establishing service, and prohibits the assessment of reconnection fees for residential customers, among other provisions. The decision, however, also provides authorization to establish a two-way balancing account to track residential uncollectible charges with the first rates expected to be implemented January 1, 2024. The decision also authorized a memorandum account to track uncollected reconnection charges for possible future recovery in Southwest’s next general rate case.

Nevada Jurisdiction

Nevada General Rate Case. Southwest concluded its most recent Nevada general rate case in February 2022, providing for a statewide revenue increase of $14.05 million, a return ~~are not in need~~on common equity of ~~adjustment (with the~~9.40% relative to a 50% target equity ratio, and continuation of ~~the currently approved 2.75% PTY attrition adjustment for the two additional years).~~

~~Nevada Jurisdiction~~

~~General Revenues Adjustment.~~~~In June 2016, Southwest requested authorization from the Public Utilities Commission of Nevada (“PUCN”) to adjust rates associated with its~~Southwest’s full revenue decoupling mechanism, ~~(General~~the General Revenues Adjustment ~~or “GRA”~~(“GRA”). The filing was approved in December 2016, with rates effective January 2017. The rate adjustment is expected to refund approximately $16.7 million during 2017. In June 2017, Southwest filed to adjust the GRA surcharge effective January 2018, whichstipulation was approved by the PUCN, during the third quarter of 2017. This will result in a decrease in collections from customers of $15.4 million, based on the over-recovered balance in the account at the end of April 2017. While there is no impact to net income overall from this rate adjustment, operating cash flows will be reduced as the regulatory liability balance is refunded.

~~Infrastructure Replacement Mechanisms.~~In January 2014, the PUCN approved final rules for a mechanism to defer and recover certain costs associated with accelerated replacement of infrastructure that does not otherwise currently provide incremental revenues. Associated with such mechanism, each year, Southwest files a Gas Infrastructure Replacement (“GIR”) Advance Application requesting authority to replace qualifying infrastructure and files separately as part of an annual GIR filing to reset the recovery surcharge, related to previously approved and completed projects. For projects approved in 2015 and completed in 2016, the annualized revenue was approximately $4.5 million. In September 2016, Southwest filed to adjust the GIR surcharge to recover the annual revenue requirement for amounts previously deferred. This filing was approved in December 2016 and new rates became effective ~~January 2017. In June 2016, Southwest filed an Advance Application for projects expected~~April 1, 2022. The PUCN’s order did not include recovery of the approximate $6.6 million in deferred late payment charges related to ~~be completed during 2017, proposing approximately $60 million of accelerated pipe replacement to include early vintage plastic, early vintage steel, and~~ a ~~COYL program. The COYL program, while not large~~regulatory asset associated with a COVID-19 moratorium on disconnections previously in magnitude, represents the first of its kind in Nevada, modeled after the program in place for several years in Southwest’s Arizona jurisdiction. The PUCN issued an Order on the Advance Application in October 2016, approving approximately $57.3 million of replacement work with an annualized revenue requirement estimated at approximately $5.3 million. With regard to the proposed COYL program, approval was granted for the northern Nevada rate jurisdiction, but consideration for the southern Nevada rate jurisdiction was deferred until 2020, at which time certain early vintage plastic pipe programs are expected to be completed. In September 2017, Southwest filed to adjust the GIR surcharge to recover the annual revenue requirement for amounts previously deferred. For projects approved in 2016 and completed by July of 2017


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~, the deferred annualized revenue requirement is approximately $8.7 million. This filing is expected to be approved in December 2017 with rates becoming effective January 2018.~~

In May 2017, Southwest filed a GIR Advance Application with the PUCN for projects totaling approximately $66 million that are expected to be completed during 2018. Similar to previous years, the proposed projects consist of early vintage plastic and early vintage steel pipe, as well asplace.

General Revenues Adjustment. As noted above, the continuation of the ~~previously approved COYL program~~GRA was affirmed as part of Southwest’s most recent general rate case with an expansion to include a large customer class (with average monthly throughput requirements greater than 15,000 therms), effective April 2022. Southwest makes Annual Rate Adjustment (“ARA”) filings to update rates to recover or return amounts associated with various regulatory mechanisms, including the GRA. Southwest made its most recent ARA filing in ~~northern Nevada. Southwest entered into~~November 2022 related to balances as of September 30, 2022. Given the magnitude of the outstanding balances, further discussion with the parties resulted in a settlement ~~agreement~~of the issues and utilizing a more current balance as of January 2023 to better align the rates implemented with the ~~intervening parties~~existing balance. Recovery rates and ~~filed a proposed stipulation requesting~~adjustments thereto as part of the ~~Commission approve the settlement agreement. The settlement agreement proposed that the request be approved as filed~~ARA primarily impact cash flows but not net income overall.

Conservation and ~~that Southwest be authorized to start replacing COYLs in southern Nevada in certain situations, and to recover costs through the GIR mechanism.~~Energy Efficiency. The PUCN ~~issued an Order on the GIR Advance Application~~allows deferral (and later recovery) of approved conservation and energy efficiency costs, recovery rates for which are adjusted in ~~September 2017, approving approximately $65.7 million of replacement work (with~~association with ARA filings. In its November 2022 ARA filing, Southwest proposed an annualized revenue ~~requirement estimated at approximately $6 million)~~increase of $139,000 and a decrease of $290,000 for southern and northern Nevada, respectively. A stipulation related to the ~~COYL provisions in southern Nevada.~~

Subsequent to three GIR rate applications, the GIR regulations require Southwest to either file a general rate case or a request for waiver before it can file another GIR advance application. The October 2016 approved rate applicationconservation and energy efficiency costs and other ARA-related mechanisms was ~~the third such filing by Southwest subject to these regulations, necessitating a request for waiver to permit Southwest to proceed~~reached with the ~~GIR program without filing~~parties and approved by the PUCN with rates effective July 1, 2023. Separately, in May 2022, Southwest filed an application seeking approval of its annual Conservation and Energy Efficiency Plan Report for 2021, with no proposed modifications to the previously approved $1.3 million annual budget for years 2022-2024. The parties reached a ~~general rate case in 2017. This waiver~~stipulation that was approved by the PUCN in ~~January 2017; however, in order to continue the GIR program in 2018 (for projects recommended for completion under the program after 2018), a general rate case will need to be filed before June 2018.~~

~~Conservation and Energy Efficiency (“CEE”).~~July 2022.

Carbon Offset Program. In June ~~2015,~~2021, Southwest ~~requested recovery of energy efficiency~~filed an application to seek approval to offer a voluntary program to northern and ~~conservation development~~southern Nevada customers to purchase carbon offsets in an effort to provide customers additional options to offset their


			37

respective GHG emissions. A request to establish a regulatory asset to track program-related costs and ~~implementation costs, including promotions and incentives for various programs, as originally approved for deferral by the PUCN effective November 2009. While recovery of initial program costs~~revenues was ~~approved~~included as part of the ~~most recent general rate case, amounts incurred subsequent to May 2012 (the certification period) continued to be deferred. Approved rates for thepost-May~~ 2012 costs deferred (including previously expected program expenditures for 2016) became effective January 2016 and resulted in annualized margin increases of $2 million in northern Nevada and $8.5 million in southern Nevada. Then, as part of the ARA filing approved in December 2016, Southwest modified rates, effective January 2017, expected to result in annualized margin decreases of $1.4 million in northern Nevada and $1.3 million in southern Nevada to return over-collected balances. There is, however, no anticipated impact to net income overall from these decreases as amortization expense will also be reduced.

~~Expansion and Economic Development Legislation.~~~~In February 2015, legislation (“SB 151”)~~application. The parties reached a stipulation that was introduced in Nevada directing the PUCN to adopt regulations authorizing natural gas utilities to expand their infrastructure consistent with a program of economic development. This includes providing gas service to unserved and underserved areas in Nevada, as well as attracting and retaining utility customers and accommodating the expansion of existing business customers. SB 151 was signed into law in May 2015. The draft regulations were reviewed by the Legislative Council Bureau and final regulations were approved by the PUCN in ~~January 2016.~~

~~In November 2017, Southwest filed~~December 2021, approving Southwest’s proposal. The program opened for preapproval of a project to extend service to include the service territory of Mesquite, Nevada, in accordance with the SB 151 regulations. This project proposes the extension of existing facilities to Mesquite at an estimated cost of approximately $30 million. The cost is proposed to be recovered through a volumetric surcharge on all southern Nevada customers. A second phase is then proposed to convert existing homes to natural gas service, which will be charged as a separate surcharge to Mesquite customers only. A decision on this proposal is expected within the required~~210-day~~ ~~time period for filings of this type.~~

~~Federal Energy Regulatory Commission (“FERC”) Jurisdiction~~

~~2018 Expansion.~~ ~~In response to growing demand~~customer participation in the Carson City and South Lake Tahoe areas of northern California and northern Nevada, Paiute Pipeline Company (“Paiute”) evaluated shipper interest in acquiring additional transportation capacity and executed precedent agreements for incremental transportation capacity with Southwest during the thirdfourth quarter of ~~2016. In October 2016, Paiute initiated~~2022.

FERC Jurisdiction

General Rate Case. Great Basin Gas Transmission Company (“Great Basin”), a~~pre-filing~~ ~~review process~~ wholly owned subsidiary of Southwest, reached an agreement in principle with the FERC ~~for an expansion project, which was approved~~Staff providing that its three largest transportation customers and all storage customers would be required to have primary service agreement terms of at least five years, that term-differentiated rates would continue generally, and included a 9.90% pre-tax rate of return. Interim rates were made effective February 2020. As part of the settlement, Great Basin will not file a rate case later than May 31, 2025.

MountainWest Overthrust Pipeline. On September 22, 2022, during the ~~same month. In July 2017,~~period of Southwest Gas Holdings’ ownership of the MountainWest entities, the FERC issued an order initiating an investigation, pursuant to section 5 of the Natural Gas Act, to determine whether rates charged by MountainWest Overthrust Pipeline, LLC, a ~~certificate application was filed, which included an applicant environmental assessment. The project is anticipated to consist~~subsidiary of ~~8.5 miles of additional transmission pipeline infrastructure at an approximate cost of $18 million. If~~MountainWest, were just and reasonable and setting the ~~process progresses as planned, a decision should be received by April 2018 and the additional facilities could be in place~~matter for hearing (the “Section 5 Rate Case”). Unless earlier settled by the ~~end~~parties, a hearing on the matter was to commence in August 2023 with an initial decision from the presiding administrative law judge due by November 14, 2023. Under the terms of ~~2018.~~


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

the purchase and sale agreement entered into in connection with the MountainWest sale, the Company became obligated, for a period of four years following the closing of the MountainWest sale, to indemnify Williams and MountainWest for any damages and liabilities resulting from the Section 5 Rate Case, including any reduction to the current applicable rate, up to a cap of $75 million. Williams, in collaboration with the Company, agreed to a settlement of the Section 5 Rate Case, which is pending approval by the FERC. As a result of the settlement, the Company recorded a charge of $28.4 million, an amount for which it is now expected to be obligated, which is included in Goodwill impairment and loss on sale on the Company’s Consolidated Statements of Income for the three- and twelve- months ended March 31, 2023.

PGA Filings

The rate schedules in all of Southwest’s service territories contain provisions that permit ~~adjustments~~adjustment to rates as the cost of purchased gas changes. These deferred energy provisions and purchased gas adjustment clauses are collectively referred to as “PGA” clauses. Differences between gas costs recovered from customers and amounts paid for gas by Southwest result in over- or under-collections. ~~At September 30, 2017,~~Balances are recovered from or refunded to customers on an ongoing basis with interest. As of March 31, 2023, under-collections in ~~Arizona and Northern Nevada~~each of Southwest’s service territories resulted in an asset of ~~approximately $6.2 million and over-collections in Southern Nevada and California resulted in a liability of $15~~$970 million on the Company’s and Southwest’s ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets. See also Deferred Purchased Gas ~~cost rates paid to suppliers have been higher than amounts recovered from customers during the first nine months~~Costs in Note 1 – Background, Organization, and Summary of ~~2017, resulting~~Significant Accounting Policies in ~~fluctuations since December 31, 2016. Tariff rates have been adjusted in all jurisdictions during~~ this ~~period.~~ quarterly report on Form 10-Q.

Filings to change rates in accordance with PGA clauses are subject to audit by state regulatory commission staffs. PGA changes impact cash flows but have no direct impact on ~~profit~~operating margin. However, gas cost deferrals and recoveries can impact comparisons between periods of individual consolidated income statement components. These include ~~Gas operating~~Regulated operations revenues, Net cost of gas sold, Net interest deductions, and Other income (deductions).

The following table presents Southwest’s outstanding PGA balances receivable/(payable) ~~(thousands of dollars)~~:

   September 30, 2017    December 31, 2016    September 30, 2016
Arizona
   $ 1,324    $ (20,349 )    $ (34,425 )
Northern Nevada
   4,906    (3,339 )    (10,326 )
Southern Nevada
   (13,711 )    (66,788 )    (77,402 )
California
   (1,260 )    2,608    (1,246 )






   $ (8,741 )    $ (87,868 )    $ (123,399 )


(Thousands of dollars)	March 31, 2023		December 31, 2022		March 31, 2022
Arizona	$	417,931	$	292,472	$	255,472
Northern Nevada	80,540		27,384		13,700
Southern Nevada	415,146		122,959		93,153
California	56,722		7,305		5,629
	$	970,339	$	450,120	$	367,954

Capital Resources and Liquidity

~~Cash~~

Historically, cash on hand and cash flows from operations ~~in the past twelve months~~ have ~~generally~~ provided ~~the majority~~a substantial portion of cash used in investing activities (primarily for construction expenditures and property additions). In recent years, ~~certain~~Southwest has undertaken significant pipe replacement ~~has been accelerated to take advantage of bonus depreciation tax incentives and~~activities to fortify system integrity and reliability, ~~notably~~including on an accelerated basis in association with ~~new~~certain gas infrastructure replacement ~~programs~~programs. This activity has necessitated the issuance of both debt and equity securities to supplement cash flows from operations. More recently, a number of conditions, such as ~~discussed above. During this same time, benefits were derived from debt refinancing~~winter storms and ~~strategic debt redemptions.~~market forces (including historically low storage levels) have caused gas prices to spike and remain higher than previous historical levels. The


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Company’s capitalization strategy is to maintain an appropriate balance of equity and debt to ~~maintain strong~~preserve investment-grade credit ratings, which ~~should~~help minimize interest costs.

Cash Flows

Southwest Gas Holdings, Inc.:

Operating Cash Flows.Cash flows ~~provided by~~from consolidated operating activities decreased ~~$179~~$372 million in the first ~~nine~~three months of ~~2017~~2023 as compared to the same period of ~~2016.~~2022. The decline in cash flows primarily resulted from the change in purchased gas costs for Southwest, including amounts incurred and deferred, as well as impacts related to when amounts are incorporated in customer bills to recover or return deferred balances. Gas costs recovered from customers were higher in both periods compared to earlier historical periods, but amounts expended for gas purchases substantially increased in the first quarter of 2023, reflected also as higher Deferred purchased gas cost balances in advance of rates to recover the balance. Other impacts include changes in components of working capital overall.

Corporate and administrative expenses/outflows for Southwest Gas Holdings, Inc. in the three- and twelve-month periods ended March 31, 2023 mainly include charges related to the MountainWest sale that closed in February 2023.

Investing Cash Flows. Cash flows from consolidated investing activities increased $1 billion in the first three months of 2023 as compared to the same period of 2022. The overall increase related to $1.06 billion in proceeds received in connection with the MountainWest sale (which amount is net of cash sold), partially offset by an increase in capital expenditures in both the natural gas distribution and utility infrastructure services segments.

Financing Cash Flows. Cash flows from consolidated financing activities decreased $1.1 billion in the first three months of 2023 as compared to the same period of 2022. The overall decrease was primarily due to the repayment ($1.1 billion) of the term loan entered into by Southwest Gas Holdings, Inc. in November 2021 in connection with the acquisition of MountainWest. Other impacts that offset this decrease were proceeds from the issuance of common stock in an underwritten public offering in March 2023 and debt proceeds by Southwest from the 364-day $450 million term loan to address an escalation in gas purchases (entered into in January 2023 and repaid in full in April 2023). The first quarter of 2023 also included $300 million of Senior Notes (the “March 2023 Notes”) issued by Southwest compared to $600 million in the first quarter of 2022. Other cash flows relate to borrowings and repayment under the companies’ credit facilities.

The capital requirements and resources of the Company generally are determined independently for the individual business segments. Each business segment is generally responsible for securing its own debt financing sources. However, the holding company may raise funds through stock issuances or other external financing sources in support of each business segment.

Southwest Gas Corporation:

Operating Cash Flows. Cash flows from operating activities decreased $393 million in the first three months of 2023 as compared to the same period of 2022. The decline in operating cash flows was primarily attributable to ~~the change in deferred~~Deferred purchased gas costs ~~noted above. Refer~~changes (as discussed above), as well as to~~Results of Natural Gas Operations~~ ~~and~~~~Rates and Regulatory Proceedings~~.

other working capital changes.

Investing Cash Flows.Cash used in ~~consolidated~~ investing activities increased ~~$35~~$64 million in the first ~~nine~~three months of ~~2017~~2023 as compared to the same period of ~~2016.~~2022. The change was primarily due to ~~increased construction~~increases in capital expenditures in 2023 and decreases related to customer advances for construction (amounts collected and/or returned) as compared to the ~~natural gas operations segment, including scheduled~~same period in the prior year. See also Gas Segment Construction Expenditures, and ~~accelerated replacement activity. The prior period included an outflow of $17 million to facilitate a construction services acquisition.~~

Debt Maturities, and Financing below.

Financing Cash Flows.Net cash provided by ~~consolidated~~ financing ~~activities~~activities increased ~~$195~~$31 million in the first ~~nine~~three months of ~~2017~~2023 as compared to the same period of ~~2016.~~2022. The increase was primarily due to Southwest’s $450 million term loan borrowing in January 2023 offset by $225 million payment of the term loan entered into in March 2021, along with the issuance of the March 2023 Notes noted above, and borrowing and repayment activity under the credit facility and commercial paper program (an increase in borrowings in the current-year nine-month period and the repayment of borrowings in the prior-year nine-month period). The prior period included proceeds in utility operations from the issuance of $300 million in senior notes. The Company also issued approximately $12 million during 2017 in stock under its Equity Shelf Program.facility. See ~~also~~Note 5 – ~~Common Stock~~~~, and the discussion below. The first nine months of 2017 includes the August 2017 $23 million purchase of the previous owners’ interest in Centuri. See also~~~~Note 9 – Construction Services Redeemable Noncontrolling Interest~~ ~~for additional information.~~


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

Dividends paid increased in the first nine months of 2017 as compared to the same period of 2016 as a result of an increase in the quarterly dividend rate and an increase in the number of shares outstanding.

~~The Company issued approximately 103,000 additional shares of common stock collectively through the Restricted Stock/Unit Plan and the Management Incentive Plan.~~

~~Southwest Gas Corporation:~~

~~Operating Cash Flows.~~Cash flows provided by operating activities decreased $172 million in the first nine months of 2017 as compared to the same period of 2016. The decline in operating cash flows was primarily attributable to the change in deferred purchased gas costs as discussed above. Refer to~~Results of Natural Gas Operations~~ ~~and~~~~Rates and Regulatory Proceedings~~Debt.

~~Investing Cash Flows.~~Cash used in investing activities increased $68 million in the first nine months of 2017 as compared to the same period of 2016. The change was primarily due to additional construction expenditures, as indicated above.

~~Financing Cash Flows.~~Net cash provided by financing activities increased $211 million in the first nine months of 2017 as compared to the same period of 2016. The increase was primarily due to activity under the credit facility and commercial paper program (an increase in borrowings in the current-year nine-month period and the repayment of borrowings in the prior-year nine-month period). The prior period included proceeds from the issuance of $300 million in senior notes as discussed above. The current period included capital contributions from Southwest Gas Holdings, Inc.

The capital requirements and resources of the Company generally are determined independently for the natural gas operations and construction services segments. Each business activity is generally responsible for securing its own financing sources.

Gas Segment Construction Expenditures, Debt Maturities, and Financing

During the twelve-month period ended ~~September 30, 2017,~~March 31, 2023, construction expenditures for the natural gas ~~operations~~distribution segment were ~~$515 million.~~$734 million (not including amounts incurred for capital expenditures not yet paid). The majority of these expenditures represented costs associated with ~~scheduled and accelerated~~the replacement of existing transmission and distribution pipeline facilities to fortify system integrity and reliability, as well as other general ~~plant. Cash flows from operating activities of Southwest were $337 million during this time and provided approximately 57% of construction expenditures and dividend requirements.~~

~~Southwest~~plant expenditures.

Management estimates natural gas segment construction expenditures during the three-year period ending December 31, ~~2019~~2025 will be ~~between $1.6 billion and $1.8~~approximately $2.0 billion. Of this amount, approximately ~~$570~~$665 million to $685 million is expected to be incurred ~~in 2017.~~during calendar year 2023. Southwest plans to continue ~~as appropriate,~~ to request regulatory support to undertake projects, or to accelerate projects ~~that improve~~as necessary for the improvement of system flexibility and reliability, ~~(including replacement of early vintage plastic and steel pipe). This includes the recent approval~~or to complete accelerated replacement projects in Nevada of $57.3 million and $65.7 million in 2017 and 2018, respectively. It also incorporates programs included in the recently approved Arizona general rate case settlement (the continuation of the COYL program and implementation of a vintage steel pipe replacement program).expand, where relevant, to unserved or underserved areas. Southwest may expand existing, or initiate new, programs. ~~If efforts continue to be successful, significant~~Significant replacement activities are expected to


			39

continue well beyond the next few years. See alsoRates and Regulatory Proceedings ~~for discussion of Nevada infrastructure, Arizona COYL, and an LNG facility.~~. During the three-year period ending December 31, 2025, cash flows from operating activities of Southwest are expected to provide approximately ~~60% to 70%~~77% of the funding for gas operations of Southwest and total construction expenditures and dividend requirements. ~~Any additional~~During the quarter ended March 31, 2023, Southwest entered into a 364-day $450 million term loan agreement, and also fully paid off the March 2021 term loan, each of which were initiated to fund spikes in natural gas purchases. Additional cash requirements, including construction-related, and pay down or refinancing of debt, are expected to be provided by existing credit facilities, equity contributions from the Company, and/or other external financing sources. The timing, types, and amounts of ~~any~~ additional external financings will be dependent on a number of factors, including the cost of gas purchases, conditions in ~~the~~ capital markets, timing and ~~amounts~~amount of rate relief, timing and amount of surcharge collections from, or amounts returned to, customers related to other regulatory mechanisms and programs, as well as growth levels in Southwest’s service areas and earnings. External financings ~~could~~may include the issuance of debt securities, bank and other short-term borrowings, and other forms of financing.

In March 2017, the Company filed with the Securities Exchange Commission (“SEC”) an automatic shelf registration statement for the offer and sale of up to $150 million of common stock from time to time in~~at-the-market~~ offerings under the prospectus included therein and in accordance with the Sales Agency Agreement, dated March 29, 2017, between the Company and BNY Mellon Capital Markets, LLC (the “Equity Shelf Program”). Sales of the shares will


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

continue to be made at market prices prevailing at the time of sale. Net proceeds from the sale of shares of common stock under the Equity Shelf Program are intended for general corporate purposes, including the acquisition of property for the construction, completion, extension or improvement of pipeline systems and facilities located in and around the communities Southwest serves.

~~During the nine months ended September 30, 2017, 147,077 shares were issued inat-the-market~~ ~~offerings at an average price of $80.07 per share with gross proceeds of $11.8 million, agent commissions of $118,000, and net proceeds of $11.7 million. See~~~~Note 5 – Common Stock~~ ~~for more information.~~

~~Bonus Depreciation~~

In December 2015, the Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”) was enacted extending the 50% bonus depreciation tax deduction for qualified property acquired or constructed and placed~~in-service~~ during 2015 (and additional years as noted below) as well as other tax deductions, credits, and incentives. The bonus depreciation tax deduction will be phased out over five years. The PATH Act provides for a 50% bonus depreciation tax deduction in 2015 through 2017, 40% in 2018, 30% in 2019, and no deduction after 2019. Based on forecasted qualifying construction expenditures, Southwest estimates the bonus depreciation provision of the PATH Act will defer the payment of approximately $29 million of federal income taxes for 2017, resulting in a minimal amount of federal income tax being paid.

Dividend Policy

Dividends are payable on the Company’s common stock at the discretion of the ~~Board of Directors (“Board”).~~Board. In setting the dividend rate, the Board considers, among other factors, current and expected future earnings levels, our ongoing capital expenditure plans, ~~and~~ expected external funding needs, ~~our payout ratio,~~ and our ability to maintain ~~strong~~investment-grade credit ratings and liquidity. The Company has paid dividends on its common stock since 1956 ~~and has increased that dividend each year since 2007.~~. In February ~~2017,~~2023, the Board ~~elected~~determined to ~~increase~~maintain the quarterly dividend ~~from $0.45 to $0.495~~at $0.62 per share ~~representing a 10% increase,~~, effective with the June ~~2017~~2023 payment. ~~The Board currently targets a payout ratio of 55% to 65% of consolidated earnings per share.~~

Liquidity

~~Liquidity refers to the ability of an enterprise to generate sufficient amounts of cash through its operating activities and external financing to meet its cash requirements.~~

Several ~~general~~ factors (some of which are out of the control of the Company) that could significantly affect liquidity in the future ~~years~~ include: variability of natural gas prices, changes in ~~the~~ ratemaking policies of regulatory commissions, regulatory lag, customer growth in the natural gas ~~segment’s service territories,~~distribution segment, the ability to access and obtain capital from external sources, interest rates, changes in income tax laws, pension funding requirements, inflation, and the level of earnings. Natural gas prices and related gas cost recovery rates, as well as plant investment, have historically had the most significant impact on liquidity.

On an interim basis, Southwest defers over- or under-collections of gas costs to PGA balancing accounts. In addition, Southwest uses this mechanism to either refund amounts over-collected or recoup amounts under-collected as compared to the price paid for natural gas during the period since the last PGA rate change went into effect. At ~~September 30, 2017,~~March 31, 2023, the combined balance in the PGA accounts totaled an ~~over-collection~~under-collection of ~~$8.7~~$970 million. ~~See~~See PGA Filingsfor more information.

The market price of natural gas spiked as a result of numerous market forces including historically low storage levels, unexpected upstream pipeline maintenance events, and cold weather conditions across the western region in the latter part of 2022 and continuing into January 2023. As a result of this increase in pricing, in January 2023, Southwest entered into a 364-day $450 million term loan in order to fund the incremental cost. This indebtedness was repaid in April 2023 (refer to Note 5 – Debt in this Quarterly Report on Form 10-Q). We may be required to incur additional indebtedness in connection with future spikes in natural gas prices as a result of extreme weather events or otherwise.

In March ~~2017,~~2023, Southwest issued $300 million aggregate principal amount of 5.450% Senior Notes. The notes will mature in March 2028. Southwest used the net proceeds to repay amounts outstanding under Southwest’s credit facility and the remainder for general corporate purposes.

In April 2023, Southwest Gas Holdings, Inc. entered into a $550 million Term Loan Credit Agreement that matures in October 2024. Southwest Gas Holdings, Inc. utilized a majority of the proceeds to make an equity contribution to Southwest. On April 17, 2023, Southwest utilized the equity contribution to repay, in full, amounts outstanding under its $450 million 364-day term loan entered into in January 2023, with the remainder of the equity contribution used for working capital and general corporate purposes.

Southwest Gas Holdings, Inc. has a credit facility with a borrowing capacity of ~~$100~~$300 million that expires in ~~March 2022. The Company intends to utilize this~~December 2026. This facility is intended for short-term financing needs. At ~~September 30, 2017, $27.5~~March 31, 2023, $18 million was outstanding onunder this facility.

~~In March 2017,~~

Southwest ~~Gas Corporation amended its~~has a credit facility ~~increasing the~~with a borrowing capacity ~~from $300 million to~~of $400 million, ~~and extended the term of the facility from March 2021 to March 2022.~~which expires in April 2025. Southwest ~~continues to designate~~designates $150 million of the facility for long-term borrowing needs and the remaining $250 million for working capital purposes. The maximum amount outstanding on the long-term portion of the credit facility (including a commercial paper ~~program, as noted below)~~program) during the first ~~nine~~three months of ~~2017 was~~2023 was $150 million. ~~At September 30, 2017, $150 million was outstanding on the long-term and $83 million was~~The maximum amount outstanding on the short-term portion of ~~this~~the credit facility during the first three months of 2023 was $75 million. At March 31, 2023, no borrowings were outstanding on the long-term portion or the short-term portion of the facility. The ~~credit~~credit facility can be used as necessary to meet ~~liquidity~~liquidity requirements, including temporarily financing under-collected PGA balances, ~~if any,~~ or meeting the refund needs of over-collected balances. ~~This~~The credit facility has generally been


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

adequate for Southwest’s working capital needs outside of funds raised through operations and


			40

other types of external financing.

Any additional cash requirements would include the existing credit facility, equity contributions from the Company, and/or other external financing sources.

Southwest has a $50 million commercial paper program. Any issuance under the commercial paper program is supported by Southwest’s current revolving credit facility and, therefore, does not represent additional borrowing capacity. Any borrowing under the commercial paper program ~~will be~~is designated as long-term debt. Interest rates for the commercial paper program are calculated at the current commercial paper rate during the borrowing term. At ~~September 30, 2017,~~March 31, 2023, there were no borrowings ~~were~~ outstanding under this program.

Centuri has a ~~$300 million~~senior secured revolving credit and term loan ~~facility that is scheduled~~multi-currency facility. The line of credit portion comprises $400 million; associated amounts borrowed and repaid are available to ~~expire in October 2019.~~be re-borrowed. The term loan facility portion ~~had~~ provided approximately $1.145 billion in financing. The term loan ~~initial limit of approximately $150 million, which was reached in 2014 and; $107 million was outstanding (after repayments) at September 30, 2017. The secured~~facility expires on August 27, 2028 and the revolving credit facility ~~portion also has a limit~~expires on August 27, 2026. This multi-currency facility allows the borrower to request loan advances in either Canadian dollars or U.S. dollars. The obligations under the credit agreement are secured by present and future ownership interests in substantially all direct and indirect subsidiaries of ~~$150 million; amounts borrowed and repaid under this portion~~Centuri, substantially all of the tangible and intangible personal property of each borrower, certain of their direct and indirect subsidiaries, and all products, profits, and proceeds of the foregoing. Centuri assets securing the facility ~~are available to bere-borrowed.~~at March 31, 2023 totaled $2.4 billion. The maximum amount outstanding on the ~~credit~~combined facility during the first ~~nine~~three months of ~~2017~~2023 was ~~$104 million. At September 30, 2017, $81.3~~$1.074 billion. As of March 31, 2023, $19 million was outstanding on the ~~secured~~ revolving credit facility, in addition to $1.003 billion that was outstanding on the term loan portion of the facility. Also at ~~September 30, 2017,~~March 31, 2023, there was approximately ~~$52~~$312 million, net ofof letters of credit, available for borrowing under the line of credit.

In the first quarter of 2023, the Company paid down (primarily with proceeds from the MountainWest sale) the remaining balance on the $1.6 billion term loan entered into in November 2021 in connection with the acquisition of MountainWest.

In March 2023, the Company issued through a separate prospectus supplement under the Universal Shelf, an aggregate of 4.1 million shares of common stock, at an underwritten public offering price of $60.12 per share, resulting in net proceeds to the Company of $238.4 million, net of an underwriter’s discount of $8.3 million and estimated expenses of the offering. The ~~following table sets forth~~Company used the ~~ratios~~net proceeds to repay outstanding amounts under the Company’s credit facility, with remaining amounts used to pay a residual portion of ~~earnings to fixed charges~~amounts outstanding under the term loan entered into in connection with the MountainWest acquisition, and the remainder of the proceeds were used for working capital and other general corporate purposes.

In April 2021, the Company entered into a Sales Agency Agreement between the Company and BNY Mellon Capital Markets, LLC and J.P. Morgan Securities LLC (the “Equity Shelf Program”) for the ~~Company. Due~~offer and sale of up to $500 million of common stock from time to time in at-the-market offerings under the ~~seasonal nature~~related prospectus supplement filed with the SEC. There was no activity under this multi-year program during the first quarter of 2023. Net proceeds from the ~~Company’s business, these ratios~~sale of shares of common stock under the Equity Shelf Program are ~~computed on a twelve-month basis:~~

   For the Twelve Months Ended
   September 30,
2017    December 31,
2016
Ratio of earnings to fixed charges
   3.50    3.46

~~Earnings are defined~~intended for general corporate purposes, including the acquisition of property for the construction, completion, extension, or improvement of pipeline systems and facilities located in and around the communities served by Southwest, as well as for repayment or repurchase of indebtedness (including amounts outstanding from time to time under the ~~sum of pretax income plus fixed charges. Fixed charges consist of all interest expense including capitalized interest,one-third~~ ~~of rent expense (that approximates the interest component of such expense)~~credit facilities, senior notes, or other indebtedness), and ~~net amortized debt costs.~~

to provide for working capital. The Company had approximately $341.8 million available under the program as of March 31, 2023. See Note 4 – Common Stock for more information.

Interest rates for Centuri’s term loan contain LIBOR-based rates. Certain LIBOR-based rates were discontinued as a benchmark or reference rate after 2021, while other LIBOR-based rates are scheduled to be discontinued after June 2023. As of March 31, 2023, the Company had $1.003 billion in aggregate outstanding borrowings under Centuri’s term loan facility. The conversion to an alternate rate is not expected to have a material impact on its financial condition or results of operations; however, the alternative rate may be less predictable or less attractive than LIBOR.

Forward-Looking Statements

This quarterly report contains statements which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“Reform Act”). All statements other than statements of historical fact included or incorporated by reference in this quarterly report are forward-looking statements, including, without limitation, statements regarding the Company’s plans, objectives, goals, intentions, projections, strategies, future events or performance, negotiations, and underlying assumptions. The words “may,” “if,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “continue,” “forecast,” “intend,” “endeavor,” “promote,” “seek,” and similar words and expressions are generally used and intended to identify forward-looking statements. For example, statements regarding plans to refinance near-term maturities, to spin-off Centuri from the Company, those regarding operating margin patterns, customer growth, the composition of our customer base, price volatility, seasonal patterns, ~~payment of~~the ability to pay debt, ~~interest savings,~~ the Company’s COLI strategy, the magnitude of future acquisition or divestiture purchase price true-ups or post-closing payments and related impairments or losses related thereto, estimates regarding contractual commitments for the MountainWest Overthrust Pipeline


			41

rate case settlement, replacement market and new construction market, impacts from pandemics, including on our employees, customers, business, financial position, earnings, bad debt expense, work deployment and related uncertainties, expected impacts of valuation adjustments associated with any redeemable noncontrolling interests, the profitability of storm work, mix of work, or absorption of fixed costs by larger infrastructure services customers including Southwest, the impacts of U.S. tax reform including disposition in any regulatory proceeding and bonus depreciation tax deductions, ~~amount~~the impact of recent Pipeline and Hazardous Materials Safety Administration rulemaking, the amounts and timing for completion of estimated future construction expenditures, ~~including the LNG facility in southern Arizona, the cost of the 2018 Paiute expansion project in northern Nevada and northern California,~~plans to pursue infrastructure programs or programs under SB 151 legislation, forecasted operating cash flows and results of operations, net earnings impacts or recovery of costs from gas infrastructure replacement and VSP programs and surcharges, funding sources of cash requirements, amounts generally expected to be reflected in ~~2017 or~~ future period revenues from regulatory rate proceedings including amounts ~~resulting~~requested or settled from ~~the settled Arizona~~recent and ongoing general rate ~~case,~~cases or other regulatory proceedings, rates and surcharges, PGA administration, recovery and timing, and other rate adjustments, sufficiency of working capital and current credit facilities or the ability to cure negative working capital balances, bank lending practices, the Company’s views regarding its liquidity position, ability to raise funds and receive external financing capacity and the intent and ability to issue ~~common~~various financing instruments and stock under the ~~Equity Shelf Program,~~existing at-the-market equity program or otherwise, future ~~dividend~~dividends or increases and the Board’s current ~~target dividend~~ payout ~~ratio,~~strategy, pension and ~~post-retirement~~postretirement benefits, certain ~~benefits~~impacts of tax acts, the effect of any other rate changes or regulatory proceedings, contract or construction change order negotiations, impacts of accounting standard updates, ~~infrastructure replacement mechanisms and the COYL program,~~ statements regarding future gas prices, gas purchase contracts and ~~derivative financial instruments,~~pipeline imbalance charges or claims related thereto, recoverability of regulatory assets, the impact of certain legal proceedings or claims, and the timing and results of future rate hearings, including any ongoing or future general rate cases and other proceedings, and statements regarding pending approvals are forward-looking


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

statements. All forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act.

A number of important factors affecting the business and financial results of the Company could cause actual results to differ materially from those stated in the forward-looking statements. These factors include, but are not limited to, customer growth rates, conditions in the housing market, inflation, interest rates and related government actions, sufficiency of labor markets and ability to timely hire qualified employees or similar resources, acquisition and divestiture decisions including prices paid or received, adjustments related thereto, and their impacts to impairments, write-downs, or losses generally, the impacts of pandemics including that which may result from a restriction by government officials or otherwise, including impacts on employment in our territories, the health impacts to our customers and employees, the ability to collect on customer accounts due to the suspension or lifted moratorium on late fees or service disconnection or otherwise in any or all jurisdictions, the ability to obtain regulatory recovery of related costs, the ability of the infrastructure services business to conduct work and the impact of a delay or termination of work, and decisions of Centuri customers (including Southwest) as to whether to pursue capital projects due to economic impacts resulting from a pandemic or otherwise, the ability to recover and timing thereof related to costs ~~through~~associated with the PGA mechanisms or other regulatory assets or programs, the effects of regulation/deregulation, governmental or regulatory policy regarding pipeline safety, greenhouse gas emissions, natural gas, including potential prohibitions on the use of natural gas by customers or potential customers, including related to electric generation or natural gas appliances, or regarding alternative energy, the regulatory support for ongoing infrastructure programs or expansions, the timing and amount of rate relief, the impact of other regulatory proceedings, including with regard to the MountainWest Overthrust Section 5 rate case before the FERC, the timing and methods determined by regulators to refund amounts to customers resulting from U.S. tax reform, changes in rate design, variability in volume of gas or transportation service sold to customers, changes in gas procurement practices, changes in capital requirements and funding, the impact of credit rating actions and conditions in the capital markets on financing costs, the impact of variable rate indebtedness with a discontinuance of LIBOR including in relation to amounts of indebtedness then outstanding, changes in construction expenditures and financing, levels of or changes in operations and maintenance expenses, or other costs, including fuel costs and other costs impacted by inflation or otherwise, geopolitical influences on the business or its costs, effects of pension or other postretirement benefit expense forecasts or plan modifications, accounting changes and regulatory treatment related thereto, currently unresolved and future liability claims and disputes, changes in pipeline capacity for the transportation of gas and related costs, results of Centuri bid work, the impact of weather on Centuri’s operations, projections about acquired business’ earnings, or those that may be planned, future acquisition-related costs, differences between the actual experience and projections in costs to integrate or stand-up portions of newly acquired business operations, impacts of changes in the value of any redeemable noncontrolling interests if at other than fair value, Centuri ~~construction~~utility infrastructure expenses, differences between actual and originally expected outcomes of Centuri bid or other fixed-price construction agreements, outcomes from contract and change order negotiations, ~~and~~ ability to successfully procure new work and impacts from work awarded or failing to be awarded from significant customers (collectively, including from Southwest) or related to significant projects, the mix of work awarded, the amount of work awarded to Centuri following the lifting of work stoppages or reduction, the ~~recent work stoppage,~~result of productivity inefficiencies from regulatory requirements, customer supply chain challenges, or otherwise, delays or challenges in commissioning individual projects, acquisitions and management’s plans related thereto, the ability of management to


			42

successfully finance, close, and assimilate any acquired businesses, the timing and ability of management to successfully consummate the Centuri spin-off, the impact on our stock price or our credit ratings due to undertaking or failing to undertake acquisition or divestiture activities or other strategic endeavors, the impact on our stock price, costs, actions or disruptions or continuation thereof related to significant stockholders and their activism, competition, our ability to raise capital in external financings, our ability to continue to remain within the ratios and other limits subject to our debt covenants, and ongoing evaluations in regard to goodwill and other intangible assets. In addition, the Company can provide no assurance that its discussions regarding certain trends or plans relating to its financing and operating expenses will continue, proceed as planned, or cease to continue, or fail to be alleviated, in future periods. For additional information on the risks associated with the Company’s business, seeItem 1A. Risk FactorsandItem 7A. Quantitative and Qualitative Disclosures About Market Risk in the Annual Report onForm 10-K for the year ended December 31, ~~2016.~~

2022.

All forward-looking statements in this quarterly report are made as of the date hereof, based on information available to the Company and Southwest as of the date hereof, and the Company ~~assumes~~and Southwest assume no obligation to update or revise any of its forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized.We caution you not to unduly rely on any forward-looking statement(s).

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SeeItem 7A. Quantitative and Qualitative Disclosures about Market Risk in the ~~2016~~2022 Annual Report on Form10-K filed with the SEC. No material changes have occurred related to the disclosures about market risk.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Management of Southwest Gas Holdings, Inc. and Southwest Gas Corporation has established disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in their respective reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to management of each company, including each respective Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and benefits of controls must be considered relative to their costs. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the control. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Based on the most recent evaluation, as of ~~September 30, 2017,~~March 31, 2023, management of Southwest Gas Holdings, Inc.~~, including the Chief Executive Officer~~ and ~~Chief Financial Officer, believe the Company’s disclosure controls and procedures are effective at attaining the level of reasonable assurance noted above.~~


~~SOUTHWEST GAS HOLDINGS, INC.~~		~~Form 10-Q~~
~~SOUTHWEST GAS CORPORATION~~		~~September 30, 2017~~

~~There have been no changes in the Company’s internal controls over financial reporting (as defined in Rules13a-15(f)~~ ~~and15d-15(f)~~ ~~of the Exchange Act) during the third quarter of 2017 that have materially affected, or are likely to materially affect, the Company’s internal controls over financial reporting.~~

~~Based on the most recent evaluation, as of September 30, 2017, management of~~ Southwest Gas Corporation, including the Chief Executive Officer and Chief Financial Officer, ~~believe~~believes the Company’s and Southwest’s disclosure controls and procedures are effective at attaining the level of reasonable assurance noted above.

There have been no changes in the Company’s or Southwest’s internal ~~controls~~control over financial reporting (as defined in Rules13a-15(f) and15d-15(f) of the Exchange Act) during the ~~third~~first quarter of ~~2017~~2023 that have materially affected, or are likely to materially affect ~~Southwest’s~~the Company’s internal ~~controls~~control over financial reporting.

PART ~~II—~~II - OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

The Company isand Southwest are named as ~~a defendant~~defendants in various legal proceedings. The ultimate dispositions of these proceedings are not presently determinable; however, it is the opinion of management that none of ~~this litigation~~these legal proceedings individually or in the aggregate will have a material adverse impact on the Company’s or Southwest’s financial position or results of operations.

ITEM 1Athrough 3. None.

ITEM 4. MINE SAFETY DISCLOSURES Not applicable.

ITEM 5. OTHER INFORMATION None.

~~ITEMS 1A through 3.~~ ~~None.~~
			43

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~~~Not applicable.~~

~~ITEM 5.~~

~~OTHER INFORMATION~~~~None.~~

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6. EXHIBITS

The following documents are filed, or furnished, as applicable, as part of this report onForm 10-Q:

Exhibit 4.01

Fifth Supplemental Indenture, dated March 23, 2023, by and between Southwest Gas Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee. Incorporated herein by reference to Exhibit 4.1 to Form 8-K dated March 21, 2023. File Nos. 001-37976 and 001-07850.

Exhibit ~~3(i)~~4.02

—

Form of 5.450% Senior Note due 2028 . Incorporated herein by reference to Exhibit 4.2 to Form 8-K dated March 21, 2023. File Nos. 001-37976 and 001-07850.

Exhibit 10.1

~~Amendment to Articles~~Term Loan Credit Agreement, dated as of ~~Incorporation of~~April 17, 2023, by and among Southwest Gas Holdings, Inc., the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. as Syndication Agent, JPMorgan Chase Bank, N.A., BofA Securities, Inc., Wells Fargo Bank, N.A. and U.S. Bank, National Association as Joint Lead Arrangers and Joint Bookrunners, and Wells Fargo Bank, N.A. and U.S. Bank, National Association as Co-Documentation Agents. Incorporated herein by reference to Exhibit 10.1 to Form 8-K dated April 17, 2023. File Nos. 001-37976 and 001-07850.

Exhibit ~~3(ii)~~10.2

—

~~Amended and Restated Bylaws of~~Grant Agreement for Time-Lapse Restricted Stock Units Under the Southwest Gas Holdings, Inc. Omnibus Incentive Plan. Incorporated herein by reference to Exhibit 10.1 to Form 8-K dated March 29, 2023. File Nos. 001-37976 and 001-07850.

Exhibit 10.01*

—

~~Centuri 2017 Short-Term Incentive Plan.~~

Exhibit ~~12.01~~10.3

—

~~Computation of Ratios of Earnings to Fixed Charges –~~Performance Share Unit Grant Agreement Under the Southwest Gas Holdings, Inc. Omnibus Incentive Plan (UNI/ROE Shares). Incorporated herein by reference to Exhibit 10.2 to Form 8-K dated March 29, 2023. File Nos. 001-37976 and 001-07850.

Exhibit ~~31.01~~10.4

—

Performance Share Unit Grant Agreement Under the Southwest Gas Holdings, Inc. Omnibus Incentive Plan (EPS/ROE Shares). Incorporated herein by reference to Exhibit 10.3 to Form 8-K dated March 29, 2023. File Nos. 001-37976 and 001-07850.

Exhibit 10.5

Centuri Grant Agreement for Time-Lapse Restricted Stock Units Under the Southwest Gas Holdings, Inc. Omnibus Incentive Plan. Incorporated herein by reference to Exhibit 10.4 to Form 8-K dated March 29, 2023. File Nos. 001-37976 and 001-07850.

Exhibit 10.6

Centuri Performance Share Unit Grant Agreement Under the Southwest Gas Holdings, Inc. Omnibus Incentive Plan. Incorporated herein by reference to Exhibit 10.5 to Form 8-K dated March 29, 2023. File Nos. 001-37976 and 001-07850.

Exhibit 10.7

Amendment No. 2 to the Southwest Gas Holdings, Inc. Credit Facility. Incorporated herein by reference to Exhibit 10.1 to Form 8-K dated April 25, 2023. File Nos. 001-37976 and 001-07850.

Exhibit 31.01#

Section 302 Certifications–Southwest Gas Holdings, Inc.

Exhibit ~~31.02~~31.02#

—

Section 302 Certifications–Southwest Gas ~~Corporation.~~Corporation

Exhibit ~~32.01~~32.01#

—

Section 906 Certifications–Southwest Gas Holdings, Inc.

Exhibit ~~32.02~~32.02#

—

Section 906 Certifications–Southwest Gas ~~Corporation.~~Corporation

~~Exhibit 101.INS~~

—

~~XBRL Instance Document~~

~~Exhibit 101SCH~~

—

~~XBRL Schema Document~~

~~Exhibit 101.CAL~~

—

~~XBRL Calculation Linkbase Document~~

~~Exhibit 101.DEF~~

—

~~XBRL Definition Linkbase Document~~

~~Exhibit 101.LAB~~

—

~~XBRL Label Linkbase Document~~

~~Exhibit101.PRE~~

—

~~XBRL Presentation Linkbase Document~~

*	~~Management Incentive Plan~~

~~SOUTHWEST GAS HOLDINGS, INC.~~Exhibit 101#

The following materials from the Quarterly Report on Form 10-Q of Southwest Gas Holdings, Inc. and Southwest Gas Corporation for the quarter ended March 31, 2023, were formatted in Inline XBRL (Extensible Business Reporting Language): (1) Southwest Gas Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets, (ii) Southwest Gas Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Income, (iii) Southwest Gas Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income, (iv) Southwest Gas Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows, (v) Southwest Gas Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Equity, (vi) Southwest Gas Corporation and Subsidiaries Condensed Consolidated Balance Sheets, (vii) Southwest Gas Corporation and Subsidiaries Condensed Consolidated Statements of Income, (viii) Southwest Gas Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income, (ix) Southwest Gas Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows, (x) Southwest Gas Corporation and Subsidiaries Condensed Consolidated Statements of Equity. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

~~SOUTHWEST GAS CORPORATION~~

~~September 30, 2017~~

104#

Cover Page Interactive Data File (embedded within the Inline XBRL document).

# Filed herewith.


			44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Southwest Gas Holdings, Inc.
(Registrant)

~~Date: November 7, 2017~~

Dated: May 9, 2023



/s/ ~~GREGORY J. PETERSON~~ LORI L. COLVIN
~~Gregory J. Peterson~~Lori L. Colvin
Vice President/Controller and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Southwest Gas Corporation
(Registrant)

Dated: May 9, 2023

~~Date: November 7, 2017~~

/s/ LORI L. COLVIN
~~/s/ GREGORY J. PETERSON~~ Lori L. Colvin
~~Gregory J. Peterson~~
Vice President/Controller and Chief Accounting Officer


			45


	SEPTEMBER 30, 2017			DECEMBER 31, 2016
ASSETS
Utility plant:
Gas plant	$	6,440,547		$	6,193,564
Less: accumulated depreciation		(2,218,796	)		(2,172,966	)
Acquisition adjustments, net		81			196
Construction work in progress		164,030			111,177

Net utility plant		4,385,862			4,131,971

Other property and investments		369,303			342,343

Current assets:
Cash and cash equivalents		59,152			28,066
Accounts receivable, net of allowances		301,792			285,145
Accrued utility revenue		34,100			76,200
Income taxes receivable, net		5,462			4,455
Deferred purchased gas costs		6,230			2,608
Prepaids and other current assets		132,182			136,833

Total current assets		538,918			533,307

Noncurrent assets:
Goodwill		147,865			139,983
Deferred income taxes		1,467			1,288
Deferred charges and other assets		411,655			432,234

Total noncurrent assets		560,987			573,505

Total assets	$	5,855,070		$	5,581,126

CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $1 par (authorized—60,000,000 shares; issued and outstanding—47,731,840 and 47,482,068 shares)	$	49,362		$	49,112
Additionalpaid-in capital		924,213			903,123
Accumulated other comprehensive income (loss), net		(42,818	)		(48,008	)
Retained earnings		784,934			759,263

Total Southwest Gas Holdings, Inc. equity		1,715,691			1,663,490
Noncontrolling interest		(2,295	)		(2,217	)

Total equity		1,713,396			1,661,273
Redeemable noncontrolling interest		—			22,590
Long-term debt, less current maturities		1,731,981			1,549,983

Total capitalization		3,445,377			3,233,846

Current liabilities:
Current maturities of long-term debt		28,453			50,101
Short-term debt		110,500			—
Accounts payable		159,382			184,669
Customer deposits		70,162			72,296
Income taxes payable		1,543			1,909
Accrued general taxes		48,998			42,921
Accrued interest		24,543			17,939
Deferred purchased gas costs		14,971			90,476
Other current liabilities		197,854			168,064

Total current liabilities		656,406			628,375

Deferred income taxes and other credits:
Deferred income taxes and investment tax credits		894,011			840,653
Accumulated removal costs		312,000			308,000
Other deferred credits and other long-term liabilities		547,276			570,252

Total deferred income taxes and other credits		1,753,287			1,718,905


Total capitalization and liabilities	$	5,855,070		$	5,581,126


	THREE MONTHS ENDED						NINE MONTHS ENDED						TWELVE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,						SEPTEMBER 30,
	2017			2016			2017			2016			2017			2016
Operating revenues:
Gas operating revenues	$	213,059		$	200,179		$	935,823		$	980,927		$	1,276,308		$	1,376,388
Construction revenues		380,094			339,790			872,536			838,038			1,173,576			1,127,982

Total operating revenues		593,153			539,969			1,808,359			1,818,965			2,449,884			2,504,370

Operating expenses:
Net cost of gas sold		45,539			39,056			261,839			324,072			334,888			460,836
Operations and maintenance		102,278			102,438			314,488			301,979			414,233			400,222
Depreciation and amortization		58,529			69,845			189,089			217,764			260,457			286,977
Taxes other than income taxes		14,046			12,480			43,325			39,480			56,221			51,810
Construction expenses		342,629			300,611			806,586			757,919			1,073,090			1,009,188

Total operating expenses		563,021			524,430			1,615,327			1,641,214			2,138,889			2,209,033

Operating income		30,132			15,539			193,032			177,751			310,995			295,337

Other income and (expenses):
Net interest deductions		(19,494	)		(18,158	)		(56,863	)		(54,100	)		(76,423	)		(71,884	)
Other income (deductions)		2,876			2,565			8,788			6,756			11,501			10,861

Total other income and (expenses)		(16,618	)		(15,593	)		(48,075	)		(47,344	)		(64,922	)		(61,023	)

Income (loss) before income taxes		13,514			(54	)		144,957			130,407			246,073			234,314
Income tax expense (benefit)		3,094			(2,961	)		47,411			43,046			82,833			80,255

Net income		10,420			2,907			97,546			87,361			163,240			154,059
Net income attributable to noncontrolling interests		216			435			170			500			684			1,079

Net income attributable to Southwest Gas Holdings, Inc.	$	10,204		$	2,472		$	97,376		$	86,861		$	162,556		$	152,980

Basic earnings per share	$	0.21		$	0.05		$	2.05		$	1.83		$	3.42		$	3.22

Diluted earnings per share	$	0.21		$	0.05		$	2.03		$	1.82		$	3.39		$	3.20

Dividends declared per share	$	0.495		$	0.450		$	1.485		$	1.350		$	1.935		$	1.755

Average number of common shares outstanding		47,628			47,481			47,577			47,464			47,553			47,442
Average shares outstanding (assuming dilution)		47,986			47,830			47,912			47,802			47,896			47,787


	NINE MONTHS ENDED						TWELVE MONTHS ENDED
	SEPTEMBER 30						SEPTEMBER 30
	2017			2016			2017			2016
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	97,546		$	87,361		$	163,240		$	154,059
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		189,089			217,764			260,457			286,977
Deferred income taxes		49,409			43,702			74,439			86,526
Changes in current assets and liabilities:
Accounts receivable, net of allowances		(15,330	)		28,531			(13,765	)		(17,889	)
Accrued utility revenue		42,100			41,700			(1,100	)		(800	)
Deferred purchased gas costs		(79,127	)		81,389			(114,658	)		79,460
Accounts payable		(26,771	)		(24,942	)		19,866			10,445
Accrued taxes		4,689			(7,055	)		38,084			(11,033	)
Other current assets and liabilities		43,044			12,022			3,590			22,034
Gains on sale		(1,452	)		(4,117	)		(4,483	)		(4,200	)
Changes in undistributed stock compensation		9,199			4,347			10,308			5,142
AFUDC		(2,077	)		(1,893	)		(2,473	)		(2,890	)
Changes in other assets and deferred charges		(14,470	)		3,926			(1,436	)		4,183
Changes in other liabilities and deferred credits		3,395			(4,813	)		(10,239	)		702

Net cash provided by operating activities		299,244			477,922			421,830			612,716

CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions		(449,998	)		(404,388	)		(575,141	)		(555,819	)
Acquisition of businesses, net of cash acquired		—			(17,000	)		—			(17,000	)
Changes in customer advances		(1,951	)		5,445			504			9,445
Miscellaneous inflows		9,160			7,965			14,234			4,726

Net cash used in investing activities		(442,789	)		(407,978	)		(560,403	)		(558,648	)

CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock, net		11,563			530			11,505			507
Dividends paid		(68,503	)		(61,950	)		(89,870	)		(81,138	)
Centuri distribution to redeemable noncontrolling interest		(204	)		(99	)		(544	)		(198	)
Issuance of long-term debt, net		104,308			408,946			119,308			420,946
Retirement of long-term debt		(100,240	)		(196,351	)		(159,162	)		(240,999	)
Change in credit facility and commercial paper		145,000			(150,000	)		150,000			(97,000	)
Change in short-term debt		110,500			(18,000	)		110,500			—
Principal payments on capital lease obligations		(796	)		(1,125	)		(1,025	)		(1,449	)
Redemption of Centuri shares from noncontrolling parties		(23,000	)		—			(23,000	)		—
Withholding remittance—share-based compensation		(3,176	)		(2,119	)		(3,176	)		(2,164	)
Other		(1,104	)		(605	)		(2,068	)		(60	)

Net cash provided by (used in) financing activities		174,348			(20,773	)		112,468			(1,555	)

Effects of currency translation on cash and cash equivalents		283			(14	)		103			(318	)

Change in cash and cash equivalents		31,086			49,157			(26,002	)		52,195
Cash and cash equivalents at beginning of period		28,066			35,997			85,154			32,959

Cash and cash equivalents at end of period	$	59,152		$	85,154		$	59,152		$	85,154

Supplemental information:
Interest paid, net of amounts capitalized	$	45,771		$	47,134		$	66,077		$	68,445
Income taxes paid (received)		3,687			6,530			(21,875	)		9,899


	SEPTEMBER 30,			DECEMBER 31,
	2017			2016
ASSETS
Utility plant:
Gas plant	$	6,440,547		$	6,193,564
Less: accumulated depreciation		(2,218,796	)		(2,172,966	)
Acquisition adjustments, net		81			196
Construction work in progress		164,030			111,177

Net utility plant		4,385,862			4,131,971

Other property and investments		115,841			108,569

Current assets:
Cash and cash equivalents		46,467			19,024
Accounts receivable, net of allowances		68,028			111,845
Accrued utility revenue		34,100			76,200
Income taxes receivable, net		6,440			4,455
Deferred purchased gas costs		6,230			2,608
Prepaids and other current assets		118,587			126,363

Total current assets		279,852			340,495

Noncurrent assets:
Goodwill		10,095			10,095
Deferred charges and other assets		393,942			410,625
Discontinued operations—construction services—assets		—			579,371

Total noncurrent assets		404,037			1,000,091

Total assets	$	5,185,592		$	5,581,126

CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock	$	49,112		$	49,112
Additionalpaid-in capital		917,581			897,346
Accumulated other comprehensive income (loss), net		(42,299	)		(45,639	)
Retained earnings		606,007			767,061

Total Southwest Gas Corporation equity		1,530,401			1,667,880
Discontinued operations—construction servicesnon-owner equity		—			15,983
Long-term debt, less current maturities		1,520,790			1,375,080

Total capitalization		3,051,191			3,058,943

Current liabilities:
Current maturities of long-term debt		—			25,000
Short-term debt		83,000			—
Accounts payable		92,257			138,229
Customer deposits		70,162			72,296
Accrued general taxes		48,998			42,921
Accrued interest		24,406			17,395
Deferred purchased gas costs		14,971			90,476
Payable to parent		2,560			—
Other current liabilities		109,705			95,999

Total current liabilities		446,059			482,316

Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net		853,682			806,109
Accumulated removal costs		312,000			308,000
Other deferred credits and other long-term liabilities		522,660			545,143
Discontinued operations—construction services—liabilities		—			380,615

Total deferred income taxes and other credits		1,688,342			2,039,867

Total capitalization and liabilities	$	5,185,592		$	5,581,126


(In thousands of dollars)	Natural Gas Operations		Construction Services		Consolidated
December 31, 2016	$	10,095	$	129,888	$	139,983
Foreign currency translation adjustment		—		7,882		7,882

September 30, 2017	$	10,095	$	137,770	$	147,865


	September 30, 2017			December 31, 2016
Centuri property and equipment	$	493,599		$	451,114
Centuri accumulated provision for depreciation and amortization		(251,831	)		(228,374	)
Net cash surrender value of COLI policies		114,052			106,744
Other property		13,483			12,859

Total	$	369,303		$	342,343


	Qualified Retirement Plan
	Period Ended September 30,
	Three Months						Nine Months						Twelve Months
	2017			2016			2017			2016			2017			2016
(Thousands of dollars)
Service cost	$	5,848		$	5,708		$	17,544		$	17,125		$	23,252		$	23,406
Interest cost		11,520			11,507			34,561			34,520			46,068			45,577
Expected return on plan assets		(13,799	)		(14,140	)		(41,397	)		(42,419	)		(55,536	)		(56,871	)
Amortization of net actuarial loss		6,001			6,317			18,003			18,950			24,319			27,136

Net periodic benefit cost	$	9,570		$	9,392		$	28,711		$	28,176		$	38,103		$	39,248


	SERP
	Period Ended September 30,
	Three Months						Nine Months						Twelve Months
	2017			2016			2017			2016			2017			2016
(Thousands of dollars)
Service cost	$	77		$	83		$	232		$	248		$	315		$	328
Interest cost		471			464			1,413			1,394			1,878			1,818
Amortization of net actuarial loss		361			346			1,081			1,038			1,426			1,361

Net periodic benefit cost	$	909		$	893		$	2,726		$	2,680		$	3,619		$	3,507


	PBOP
	Period Ended September 30,
	Three Months						Nine Months						Twelve Months
	2017			2016			2017			2016			2017			2016
(Thousands of dollars)
Service cost	$	367		$	375		$	1,101		$	1,124		$	1,476		$	1,534
Interest cost		808			795			2,424			2,386			3,218			3,136
Expected return on plan assets		(839	)		(787	)		(2,518	)		(2,362	)		(3,305	)		(3,228	)
Amortization of prior service costs		333			333			1,001			1,001			1,335			1,335
Amortization of net actuarial loss		—			104			—			312			105			398

Net periodic benefit cost	$	669		$	820		$	2,008		$	2,461		$	2,829		$	3,175


	September 30, 2017		December 31, 2016
Contract notional amounts		10,936		10,543


September 30, 2017 Instrument	Balance Sheet Location	Asset Derivatives		Liability Derivatives			Net Total
Swaps	Prepaids and other current assets	$	56	$	(22	)	$	34
Swaps	Other current liabilities		27		(1,899	)		(1,872	)
Swaps	Other deferred credits		1		(768	)		(767	)

Total		$	84	$	(2,689	)	$	(2,605	)


December 31, 2016 Instrument	Balance Sheet Location	Asset Derivatives		Liability Derivatives			Net Total
Swaps	Deferred charges and other assets	$	899	$	(54	)	$	845
Swaps	Prepaids and other current assets		3,551		(19	)		3,532

Total		$	4,450	$	(73	)	$	4,377


September 30, 2017 Instrument	Balance Sheet Location	Net Total
Swaps	Other current liabilities	$	(34	)
Swaps	Prepaids and other current assets		1,872
Swaps	Deferred charges and other assets		767

December 31, 2016 Instrument	Balance Sheet Location	Net Total
Swaps	Other deferred credits	$	(845	)
Swaps	Other current liabilities		(3,532	)


	September 30, 2017					December 31, 2016
	Carrying			Market		Carrying			Market
	Amount			Value		Amount			Value
(Thousands of dollars)
Southwest Gas Corporation:
Debentures:
Notes, 4.45%, due 2020	$	125,000		$	130,325	$	125,000		$	129,703
Notes, 6.1%, due 2041		125,000			154,434		125,000			149,734
Notes, 3.875%, due 2022		250,000			258,943		250,000			254,900
Notes, 4.875%, due 2043		250,000			275,168		250,000			266,793
Notes, 3.8%, due 2046		300,000			292,578		300,000			283,029
8% Series, due 2026		75,000			97,218		75,000			94,691
Medium-term notes, 7.59% series, due 2017		—			—		25,000			25,040
Medium-term notes, 7.78% series, due 2022		25,000			29,174		25,000			29,290
Medium-term notes, 7.92% series, due 2027		25,000			31,964		25,000			31,905
Medium-term notes, 6.76% series, due 2027		7,500			8,920		7,500			8,769
Unamortized discount and debt issuance costs		(9,498	)				(9,931	)

		1,173,002					1,197,569

Revolving credit facility and commercial paper		150,000			150,000		5,000			5,000

Industrial development revenue bonds:
Variable-rate bonds:
Tax-exempt Series A, due 2028		50,000			50,000		50,000			50,000
2003 Series A, due 2038		50,000			50,000		50,000			50,000
2008 Series A, due 2038		50,000			50,000		50,000			50,000
2009 Series A, due 2039		50,000			50,000		50,000			50,000
Unamortized discount and debt issuance costs		(2,212	)				(2,489	)

		197,788					197,511

Less: current maturities		—					(25,000	)

Long-term debt, less current maturities - Southwest Gas Corporation	$	1,520,790				$	1,375,080

Centuri:
Centuri term loan facility	$	107,250			107,403	$	106,700			106,819
Unamortized debt issuance costs		(383	)				(516	)

		106,867					106,184
Centuri secured revolving credit facility		81,250			81,402		41,185			41,292
Centuri other debt obligations		51,527			51,978		52,635			52,840
Less: current maturities		(28,453	)				(25,101	)

Long-term debt, less current maturities - Centuri	$	211,191				$	174,903

Consolidated Southwest Gas Holdings, Inc.:
Southwest Gas Corporation long-term debt	$	1,520,790				$	1,400,080
Centuri long-term debt		239,644					200,004
Less: current maturities		(28,453	)				(50,101	)

Long-term debt, less current maturities - Southwest Gas Holdings, Inc.	$	1,731,981				$	1,549,983


	Southwest Gas Holdings, Inc. Equity
							Accumulated												Redeemable
					Additional		Other						Non-						Noncontrolling
	Common Stock				Paid-in		Comprehensive			Retained			controlling						Interest
(In thousands, except per share amounts)	Shares		Amount		Capital		Income (Loss)			Earnings			Interest			Total			(Temporary Equity)
DECEMBER 31, 2016		47,482	$	49,112	$	903,123	$	(48,008	)	$	759,263		$	(2,217	)	$	1,661,273		$	22,590
Common stock issuances		250		250		21,090											21,340
Net income (loss)											97,376			(78	)		97,298			248
Redemption value adjustments											(355	)					(355	)		355
Foreign currency exchange translation adj.								1,850									1,850			11
Redemption of Centuri shares from noncontrolling parties																				(23,000	)
Other comprehensive income (loss):
Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax								1,786									1,786
Amounts reclassified to net income, net of tax (FSIRS)								1,554									1,554
Centuri dividend to redeemable noncontrolling interest																				(204	)
Dividends declared
Common: $1.485 per share											(71,350	)					(71,350	)

SEPTEMBER 30, 2017		47,732	$	49,362	$	924,213	$	(42,818	)	$	784,934		$	(2,295	)	$	1,713,396		$	—


	Southwest Gas Corporation Equity
							Accumulated
					Additional		Other
	Common Stock				Paid-in		Comprehensive			Retained
(In thousands, except per share amounts)	Shares		Amount		Capital		Income (Loss)			Earnings			Total
DECEMBER 31, 2016		47,482	$	49,112	$	897,346	$	(45,639	)	$	767,061		$	1,667,880
Net income											82,436			82,436
Other comprehensive income (loss):
Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax								1,786						1,786
Amounts reclassified to net income, net of tax (FSIRS)								1,554						1,554
Distribution to Southwest Gas Holdings, Inc. investment in discontinued operations											(182,773	)		(182,773	)
Stock-based compensation (a)						8,576					(587	)		7,989
Dividends declared to Southwest Gas Holdings, Inc.											(60,130	)		(60,130	)
Contributions from Southwest Gas Holdings, Inc.						11,659								11,659

SEPTEMBER 30, 2017		47,482	$	49,112	$	917,581	$	(42,299	)	$	606,007		$	1,530,401


	Three Months Ended September 30, 2017									Three Months Ended September 30, 2016
	Before-			Tax			Net-of-			Before-			Tax			Net-of-
	Tax			(Expense)			Tax			Tax			(Expense)			Tax
	Amount			or Benefit (1)			Amount			Amount			or Benefit (1)			Amount
Defined benefit pension plans:
Amortization of prior service cost	$	333		$	(126	)	$	207		$	333		$	(126	)	$	207
Amortization of net actuarial (gain)/loss		6,362			(2,418	)		3,944			6,767			(2,571	)		4,196
Regulatory adjustment		(5,734	)		2,179			(3,555	)		(6,122	)		2,326			(3,796	)

Pension plans other comprehensive income (loss)		961			(365	)		596			978			(371	)		607
FSIRS (designated hedging activities):
Amounts reclassifed into net income		835			(317	)		518			835			(317	)		518

FSIRS other comprehensive income		835			(317	)		518			835			(317	)		518

Total other comprehensive income (loss) - Southwest Gas Corporation		1,796			(682	)		1,114			1,813			(688	)		1,125

Foreign currency translation adjustments:
Translation adjustments		1,012			—			1,012			(238	)		—			(238	)

Foreign currency other comprehensive income (loss)		1,012			—			1,012			(238	)		—			(238	)

Total other comprehensive income (loss) - Southwest Gas Holdings, Inc.	$	2,808		$	(682	)	$	2,126		$	1,575		$	(688	)	$	887


	Nine Months Ended September 30, 2017									Nine Months Ended September 30, 2017
	Before-			Tax			Net-of-			Before-			Tax			Net-of-
	Tax			(Expense)			Tax			Tax			(Expense)			Tax
	Amount			or Benefit (1)			Amount			Amount			or Benefit (1)			Amount
Defined benefit pension plans:
Amortization of prior service cost	$	1,001		$	(380	)	$	621		$	1,001		$	(380	)	$	621
Amortization of net actuarial (gain)/loss		19,084			(7,252	)		11,832			20,300			(7,714	)		12,586
Regulatory adjustment		(17,204	)		6,537			(10,667	)		(18,368	)		6,980			(11,388	)

Pension plans other comprehensive income (loss)		2,881			(1,095	)		1,786			2,933			(1,114	)		1,819
FSIRS (designated hedging activities):
Amounts reclassifed into net income		2,507			(953	)		1,554			2,508			(952	)		1,556

FSIRS other comprehensive income		2,507			(953	)		1,554			2,508			(952	)		1,556

Total other comprehensive income (loss)—Southwest Gas Corporation		5,388			(2,048	)		3,340			5,441			(2,066	)		3,375

Foreign currency translation adjustments:
Translation adjustments		1,861			—			1,861			614			—			614

Foreign currency other comprehensive income (loss)		1,861			—			1,861			614			—			614

Total other comprehensive income (loss)	$	7,249		$	(2,048	)	$	5,201		$	6,055		$	(2,066	)	$	3,989


	Defined Benefit Plans									FSIRS									Foreign Currency Items
	Before-Tax			Tax (Expense) Benefit (4)			After-Tax			Before-Tax			Tax (Expense) Benefit (4)			After-Tax			Before-Tax			Tax (Expense) Benefit		After-Tax			AOCI
Beginning Balance AOCI December 31, 2016	$	(57,613	)	$	21,893		$	(35,720	)	$	(15,999	)	$	6,080		$	(9,919	)	$	(2,369	)	$	—	$	(2,369	)	$	(48,008	)

Translation adjustments		—			—			—			—			—			—			1,861			—		1,861			1,861

Other comprehensive income before reclassifications		—			—			—			—			—			—			1,861			—		1,861			1,861
FSIRS amounts reclassified from AOCI (1)		—			—			—			2,507			(953	)		1,554			—			—		—			1,554
Amortization of prior service cost (2)		1,001			(380	)		621			—			—			—��			—			—		—			621
Amortization of net actuarial loss (2)		19,084			(7,252	)		11,832			—			—			—			—			—		—			11,832
Regulatory adjustment (3)		(17,204	)		6,537			(10,667	)		—			—			—			—			—		—			(10,667	)

Net current period other comprehensive income (loss)		2,881			(1,095	)		1,786			2,507			(953	)		1,554			1,861			—		1,861			5,201
Less: Translation adjustment attributable to redeemable noncontrolling interest		—			—			—			—			—			—			11			—		11			11

Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc.		2,881			(1,095	)		1,786			2,507			(953	)		1,554			1,850			—		1,850			5,190

Ending Balance AOCI September 30, 2017	$	(54,732	)	$	20,798		$	(33,934	)	$	(13,492	)	$	5,127		$	(8,365	)	$	(519	)	$	—	$	(519	)	$	(42,818	)


	September 30, 2017			December 31, 2016
Net actuarial (loss) gain	$	(411,889	)	$	(430,973	)
Prior service cost		(4,702	)		(5,703	)
Less: amount recognized in regulatory assets		361,859			379,063

Recognized in AOCI	$	(54,732	)	$	(57,613	)


	Redeemable Noncontrolling Interest
(Thousands of dollars):
Balance, December 31, 2016	$	22,590
Net income attributable to redeemable noncontrolling interest		248
Foreign currency exchange translation adjustment		11
Centuri dividend to redeemable noncontrolling interest		(204	)
Adjustment to redemption value		355
Redemption of Centuri shares from noncontrolling parties		(23,000	)

Balance, September 30, 2017	$	—


(Thousands of dollars)	December 31, 2016
Construction services equity	$	(4,390	)
Construction services noncontrolling interest		(2,217	)
Construction services redeemable noncontrolling interest		22,590

Discontinued operations - construction servicesnon-owner equity	$	15,983


	Three		Nine		Twelve		Twelve
	Months Ended		Months Ended		Months Ended		Months Ended
(Thousands of dollars)	September 30, 2016		September 30, 2016		September 30, 2017		September 30, 2016
Construction revenues	$	339,790	$	838,038	$	301,040	$	1,127,982
Operating expenses:
Construction expenses		300,611		757,919		266,504		1,009,188
Depreciation and amortization		13,409		43,351		12,318		58,368

Operating income		25,770		36,768		22,218		60,426
Other income (deductions)		44		44		1,149		1,246
Net interest deductions		1,794		4,945		1,718		6,738

Income before income taxes		24,020		31,867		21,649		54,934
Income tax expense		8,708		12,042		7,842		20,711

Net income		15,312		19,825		13,807		34,223
Net income attributable to noncontrolling interests		435		500		514		1,079

Discontinued operations - construction services - net income	$	14,877	$	19,325	$	13,293	$	33,144


	Period Ended March 31,
	Three Months				Twelve Months
(In thousands, except per share amounts)	2023		2022		2023		2022
Contribution to net income (loss)
Natural gas distribution	$	134,696	$	111,795	$	177,281	$	180,215
Utility infrastructure services	(11,872)		(23,486)		13,679		17,793
Pipeline and storage	(16,288)		16,930		(316,951)		16,930
Corporate and administrative	(60,625)		(9,061)		(127,566)		(35,274)
Net income (loss)	$	45,911	$	96,178	$	(253,557)	$	179,664

Weighted average common shares	68,265		60,737		67,413		59,919
Basic earnings (loss) per share
Consolidated	$	0.67	$	1.58	$	(3.76)	$	3.00

Natural Gas Distribution
Reconciliation of Gross Margin to Operating Margin (Non-GAAP measure)
Utility Gross Margin	$	259,364	$	233,882	$	597,222	$	571,051
Plus:
Operations and maintenance (excluding Admin. & General) expense	79,696		73,422		317,344		276,525
Depreciation and amortization expense	74,650		72,114		265,579		256,814
Operating margin	$	413,710	$	379,418	$	1,180,145	$	1,104,390


	Three Months Ended September 30,
	2017			2016
	(Thousands of dollars)
Gas operating revenues	$	213,059		$	200,179
Net cost of gas sold		45,539			39,056

Operating margin		167,520			161,123
Operations and maintenance expense		102,215			102,438
Depreciation and amortization		46,194			56,436
Taxes other than income taxes		14,046			12,480

Operating income (loss)		5,065			(10,231	)
Other income (deductions)		3,081			2,521
Net interest deductions		17,421			16,364

Income (loss) before income taxes		(9,275	)		(24,074	)
Income tax expense (benefit)		(5,251	)		(11,669	)

Contribution to consolidated net income (loss)	$	(4,024	)	$	(12,405	)


	Nine Months Ended September 30,
	2017		2016
	(Thousands of dollars)
Gas operating revenues	$	935,823	$	980,927
Net cost of gas sold		261,839		324,072

Operating margin		673,984		656,855
Operations and maintenance expense		313,395		301,979
Depreciation and amortization		153,643		174,413
Taxes other than income taxes		43,325		39,480

Operating income		163,621		140,983
Other income (deductions)		8,744		6,712
Net interest deductions		51,622		49,155

Income before income taxes		120,743		98,540
Income tax expense		38,307		31,004

Contribution to consolidated net income	$	82,436	$	67,536


	Twelve Months Ended September 30,
	2017		2016
	(Thousands of dollars)
Gas operating revenues	$	1,276,308	$	1,376,388
Net cost of gas sold		334,888		460,836

Operating margin		941,420		915,552
Operations and maintenance expense		413,140		400,222
Depreciation and amortization		212,693		228,609
Taxes other than income taxes		56,221		51,810

Operating income		259,366		234,911
Other income (deductions)		10,308		9,615
Net interest deductions		69,464		65,146

Income before income taxes		200,210		179,380
Income tax expense		65,887		59,544

Contribution to consolidated net income	$	134,323	$	119,836


	Nine Months Ended September 30,
	2017		2016
	(Thousands of dollars)
Construction revenues	$	872,536	$	838,038
Operating expenses:
Construction expenses		806,586		757,919
Depreciation and amortization		35,446		43,351

Operating income		30,504		36,768
Other income (deductions)		38		44
Net interest deductions		5,095		4,945

Income before income taxes		25,447		31,867
Income tax expense		9,560		12,042

Net income		15,887		19,825
Net income attributable to noncontrolling interests		170		500

Contribution to consolidated net income attributable to Centuri	$	15,717	$	19,325


	Twelve Months Ended September 30,
	2017		2016
	(Thousands of dollars)
Construction revenues	$	1,173,576	$	1,127,982
Operating expenses:
Construction expenses		1,073,090		1,009,188
Depreciation and amortization		47,764		58,368

Operating income		52,722		60,426
Other income (deductions)		1,187		1,246
Net interest deductions		6,813		6,738

Income before income taxes		47,096		54,934
Income tax expense		17,402		20,711

Net income		29,694		34,223
Net income attributable to noncontrolling interests		684		1,079

Contribution to consolidated net income attributable to Centuri	$	29,010	$	33,144


	For the Twelve Months Ended
	September 30, 2017		December 31, 2016
Ratio of earnings to fixed charges		3.50		3.46