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Southwest Gas Holdings, Inc. - Quarter Report: 2022 June (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
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.Delaware81-3881866
8360 S. Durango Drive
Post Office Box 98510
Las Vegas,Nevada89193-8510
(702) 876-7237
1-7850Southwest Gas CorporationCalifornia88-0085720
8360 S. Durango Drive
Post Office Box 98510
Las Vegas,Nevada89193-8510
(702) 876-7237
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Southwest Gas Holdings, Inc. Common Stock, $1 Par ValueSWXNew York Stock Exchange
Preferred Stock Purchase RightsN/ANew York Stock Exchange
Indicate by check mark whether each 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 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that each registrant was required to submit such files).    Yes      No  
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-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    
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.  
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-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, 67,007,222 shares as of July 29, 2022.
All of the outstanding shares of common stock ($1 par value) of Southwest Gas Corporation were held by Southwest Gas Holdings, Inc. as of July 29, 2022.
SOUTHWEST GAS CORPORATION MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1)(a) and (b) OF FORM 10-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  June 30, 2022

FILING FORMAT
This quarterly report on Form 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 Form 10-Q includes separate financial statements (i.e., balance sheets, statements of income, statements of comprehensive income, statements of cash flows, and statements of 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  June 30, 2022

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)
June 30, 2022December 31, 2021
ASSETS
Regulated operations plant:
Gas plant$11,049,050 $10,789,690 
Less: accumulated depreciation(3,496,191)(3,397,736)
Construction work in progress218,638 202,068 
Net regulated operations plant7,771,497 7,594,022 
Other property and investments, net1,312,701 1,316,479 
Current assets:
Cash and cash equivalents215,963 222,697 
Accounts receivable, net of allowances750,794 707,127 
Accrued utility revenue40,000 84,900 
Income taxes receivable, net19,147 16,816 
Deferred purchased gas costs354,571 291,145 
Prepaid and other current assets263,363 292,082 
Total current assets1,643,838 1,614,767 
Noncurrent assets:
Goodwill1,750,472 1,781,332 
Deferred income taxes168 121 
Deferred charges and other assets444,332 458,536 
Total noncurrent assets2,194,972 2,239,989 
Total assets$12,923,008 $12,765,257 
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $1 par (authorized - 120,000,000 shares; issued and outstanding - 67,003,792 and 60,422,081 shares)
$68,634 $62,052 
         Additional paid-in capital2,279,493 1,824,216 
Accumulated other comprehensive loss, net(45,528)(46,761)
Retained earnings1,156,253 1,114,313 
Total equity3,458,852 2,953,820 
Redeemable noncontrolling interests122,656 196,717 
Long-term debt, less current maturities4,588,454 4,115,684 
Total capitalization8,169,962 7,266,221 
Current liabilities:
         Current maturities of long-term debt41,276 297,324 
Short-term debt1,462,747 1,909,000 
Accounts payable306,753 353,365 
Customer deposits53,991 59,327 
Income taxes payable, net1,725 6,734 
Accrued general taxes55,883 53,473 
Accrued interest35,697 30,964 
Deferred purchased gas costs4,986 5,736 
Other current liabilities387,359 396,126 
Total current liabilities2,350,417 3,112,049 
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net785,258 768,868 
Accumulated removal costs494,554 480,583 
Other deferred credits and other long-term liabilities1,122,817 1,137,536 
Total deferred income taxes and other credits2,402,629 2,386,987 
Total capitalization and liabilities$12,923,008 $12,765,257 
The accompanying notes are an integral part of these statements.
3

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
 202220212022202120222021
Operating revenues:
Regulated operations revenues$440,030 $292,796 $1,183,562 $814,728 $1,890,624 $1,400,052 
Utility infrastructure services revenues706,090 528,625 1,229,967 892,600 2,496,028 2,012,582 
Total operating revenues1,146,120 821,421 2,413,529 1,707,328 4,386,652 3,412,634 
Operating expenses:
Net cost of gas sold147,860 76,496 446,778 232,517 645,168 347,060 
Operations and maintenance175,791 104,833 325,094 211,523 586,717 416,439 
Depreciation and amortization108,010 82,848 230,656 176,290 425,407 343,447 
Taxes other than income taxes22,606 19,338 47,422 40,025 87,740 71,765 
Utility infrastructure services expenses646,193 478,640 1,149,425 814,254 2,290,638 1,794,145 
Total operating expenses1,100,460 762,155 2,199,375 1,474,609 4,035,670 2,972,856 
Operating income45,660 59,266 214,154 232,719 350,982 439,778 
Other income and (expenses):
Net interest deductions(53,206)(25,939)(101,569)(49,903)(170,864)(106,550)
Other income (deductions)(2,835)(1,311)(1,591)(863)(4,227)5,193 
Total other income and (expenses)(56,041)(27,250)(103,160)(50,766)(175,091)(101,357)
Income (loss) before income taxes(10,381)32,016 110,994 181,953 175,891 338,421 
Income tax expense (benefit)(4,300)5,542 19,825 36,634 22,839 67,003 
Net income (loss)(6,081)26,474 91,169 145,319 153,052 271,418 
Net income attributable to noncontrolling interests494 1,355 1,566 2,907 5,082 7,189 
Net income (loss) attributable to Southwest Gas Holdings, Inc.$(6,575)$25,119 $89,603 $142,412 $147,970 $264,229 
Earnings (loss) per share:
Basic $(0.10)$0.43 $1.40 $2.45 $2.39 $4.61 
Diluted $(0.10)$0.43 $1.40 $2.45 $2.38 $4.60 
Weighted average shares:
Basic 67,045 58,607 63,909 58,106 62,022 57,348 
Diluted 67,190 58,710 64,041 58,197 62,157 57,440 
The accompanying notes are an integral part of these statements.

4

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Thousands of dollars)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
 202220212022202120222021
Net income (loss)$(6,081)$26,474 $91,169 $145,319 $153,052 $271,418 
Other comprehensive income (loss), net of tax
Defined benefit pension plans:
Net actuarial gain (loss)— — — — 44,974 (43,730)
Amortization of prior service cost33 182 66 364 431 802 
Amortization of net actuarial loss6,615 8,472 13,231 16,946 30,179 31,322 
Regulatory adjustment(5,524)(7,277)(11,047)(14,554)(63,520)3,856 
Net defined benefit pension plans1,124 1,377 2,250 2,756 12,064 (7,750)
Forward-starting interest rate swaps (“FSIRS”):
Amounts reclassified into net income — 414 416 827 1,241 2,023 
Net forward-starting interest rate swaps— 414 416 827 1,241 2,023 
Foreign currency translation adjustments(2,680)909 (1,433)1,732 (3,145)5,656 
Total other comprehensive income (loss), net of tax(1,556)2,700 1,233 5,315 10,160 (71)
Comprehensive income (loss)(7,637)29,174 92,402 150,634 163,212 271,347 
Comprehensive income attributable to noncontrolling interests494 1,355 1,566 2,907 5,082 7,189 
Comprehensive income (loss) attributable to Southwest Gas Holdings, Inc.$(8,131)$27,819 $90,836 $147,727 $158,130 $264,158 
The accompanying notes are an integral part of these statements.

5

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
Six Months Ended
June 30,
Twelve Months Ended
June 30,
 2022202120222021
CASH FLOW FROM OPERATING ACTIVITIES:
Net income$91,169 $145,319 $153,052 $271,418 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization230,656 176,290 425,407 343,447 
Deferred income taxes30,163 44,178 47,197 63,774 
Changes in current assets and liabilities:
Accounts receivable, net of allowances(42,212)10,005 (103,771)(29,021)
Accrued utility revenue44,900 43,900 (1,500)(2,700)
Deferred purchased gas costs(64,176)(287,687)(120,217)(305,043)
Accounts payable(33,356)(41,075)58,145 (1,571)
Accrued taxes(5,023)(3,164)(8,584)2,988 
Other current assets and liabilities16,480 (31,928)(40,801)(3,039)
Gains on sale of property and equipment(3,475)(4,033)(6,348)(5,572)
Changes in undistributed stock compensation7,036 5,736 10,594 8,518 
Equity AFUDC(575)— (575)(2,543)
Changes in deferred charges and other assets13,736 (11,171)11,366 (35,494)
Changes in other liabilities and deferred credits(21,705)(45,013)(50,321)(52,865)
Net cash provided by operating activities263,618 1,357 373,644 252,297 
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions(367,932)(338,049)(745,509)(739,719)
Acquisition of businesses, net of cash acquired(18,809)— (2,373,069)— 
Changes in customer advances17,051 7,507 25,518 17,442 
Other3,905 9,159 13,002 13,367 
Net cash used in investing activities(365,785)(321,383)(3,080,058)(708,910)
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock, net456,280 121,302 548,619 205,049 
Centuri distribution to redeemable noncontrolling interest(39,649)— (39,649)— 
Dividends paid(77,419)(67,130)(148,511)(131,189)
Issuance of long-term debt, net759,602 82,245 2,338,053 124,319 
Retirement of long-term debt(412,263)(60,500)(804,427)(299,370)
Change in credit facility and commercial paper(130,000)— (150,000)150,000 
Change in short-term debt(446,253)211,000 (705,253)260,000 
Issuance of short-term debt— — 1,850,000 — 
Withholding remittance - share-based compensation(2,089)(1,243)(2,110)(1,243)
Other(12,811)(1,623)(11,917)(3,565)
Net cash provided by financing activities95,398 284,051 2,874,805 304,001 
Effects of currency translation on cash and cash equivalents35 188 586 
Change in cash and cash equivalents(6,734)(35,787)168,398 (152,026)
Cash and cash equivalents at beginning of period222,697 83,352 47,565 199,591 
Cash and cash equivalents at end of period$215,963 $47,565 $215,963 $47,565 
SUPPLEMENTAL INFORMATION:
Interest paid, net of amounts capitalized$92,297 $47,475 $149,174 $101,227 
Income taxes paid (received), net$8,300 $6,659 $5,849 $15,118 
The accompanying notes are an integral part of these statements.
6

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Common stock shares
Beginning balances66,849 57,995 60,422 57,193 
Common stock issuances155 1,093 6,582 1,895 
Ending balances67,004 59,088 67,004 59,088 
Common stock amount
Beginning balances$68,479 $59,625 $62,052 $58,823 
Common stock issuances155 1,093 6,582 1,895 
Ending balances68,634 60,718 68,634 60,718 
Additional paid-in capital
Beginning balances2,273,837 1,660,108 1,824,216 1,609,155 
Common stock issuances5,656 73,464 455,277 124,417 
Ending balances2,279,493 1,733,572 2,279,493 1,733,572 
Accumulated other comprehensive loss
Beginning balances(43,972)(58,388)(46,761)(61,003)
Foreign currency exchange translation adjustment(2,680)909 (1,433)1,732 
Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax
1,124 1,377 2,250 2,756 
FSIRS amounts reclassified to net income, net of tax— 414 416 827 
Ending balances(45,528)(55,688)(45,528)(55,688)
Retained earnings
Beginning balances1,190,738 1,112,377 1,114,313 1,067,978 
Net income (loss)(6,575)25,119 89,603 142,412 
Dividends declared(41,732)(35,329)(83,641)(70,205)
Redemption value adjustments13,822 6,112 35,978 (31,906)
Ending balances1,156,253 1,108,279 1,156,253 1,108,279 
Total equity ending balances$3,458,852 $2,846,881 $3,458,852 $2,846,881 
Dividends declared per common share$0.62 $0.595 $1.24 $1.19 
The accompanying notes are an integral part of these statements.
7

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
June 30, 2022December 31, 2021
ASSETS
Regulated operations plant:
Gas plant$9,137,313 $8,901,575 
Less: accumulated depreciation(2,613,096)(2,538,508)
Construction work in progress193,269 183,485 
Net regulated operations plant6,717,486 6,546,552 
Other property and investments, net146,599 153,093 
Current assets:
Cash and cash equivalents102,143 38,691 
Accounts receivable, net of allowance141,820 169,666 
Accrued utility revenue40,000 84,900 
Income taxes receivable, net6,665 7,826 
Deferred purchased gas costs354,571 291,145 
Receivable from parent— 1,031 
Prepaid and other current assets207,545 242,243 
Total current assets852,744 835,502 
Noncurrent assets:
Goodwill10,095 10,095 
Deferred charges and other assets388,054 405,021 
Total noncurrent assets398,149 415,116 
Total assets$8,114,978 $7,950,263 
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock$49,112 $49,112 
         Additional paid-in capital1,622,006 1,618,911 
Accumulated other comprehensive loss, net(44,247)(46,913)
Retained earnings952,725 906,827 
Total equity2,579,596 2,527,937 
Long-term debt, less current maturities2,904,099 2,440,603 
Total capitalization5,483,695 4,968,540 
Current liabilities:
Current maturities of long-term debt— 275,000 
Short-term debt225,000 250,000 
Accounts payable143,569 234,070 
Customer deposits50,925 56,127 
Accrued general taxes51,722 53,064 
Accrued interest26,942 22,926 
Payable to parent330 — 
Other current liabilities162,151 146,422 
Total current liabilities660,639 1,037,609 
Deferred income taxes and other credits:
Deferred income taxes and investment tax credits, net676,294 638,828 
Accumulated removal costs437,000 424,000 
Other deferred credits and other long-term liabilities857,350 881,286 
Total deferred income taxes and other credits1,970,644 1,944,114 
Total capitalization and liabilities$8,114,978 $7,950,263 
The accompanying notes are an integral part of these statements.
8

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
 202220212022202120222021
Regulated operations revenues$377,942 $292,796 $1,054,481 $814,728 $1,761,543 $1,400,052 
Operating expenses:
Net cost of gas sold146,654 76,496 443,775 232,517 642,165 347,060 
Operations and maintenance127,811 103,137 247,447 209,272 476,725 413,246 
Depreciation and amortization55,930 57,631 128,044 126,329 255,113 243,701 
Taxes other than income taxes20,098 19,338 41,750 40,025 82,068 71,765 
Total operating expenses350,493 256,602 861,016 608,143 1,456,071 1,075,772 
Operating income27,449 36,194 193,465 206,585 305,472 324,280 
Other income and (expenses):
Net interest deductions(28,633)(24,175)(55,243)(46,341)(106,462)(98,440)
Other income (deductions)(3,433)(1,165)(2,118)(615)(6,062)5,493 
Total other income and (expenses)(32,066)(25,340)(57,361)(46,956)(112,524)(92,947)
Income (loss) before income taxes(4,617)10,854 136,104 159,629 192,948 231,333 
Income tax expense (benefit)(2,351)(559)26,575 29,501 26,412 37,628 
Net income (loss)$(2,266)$11,413 $109,529 $130,128 $166,536 $193,705 
The accompanying notes are an integral part of these statements.

9

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Thousands of dollars)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
 202220212022202120222021
Net income (loss)$(2,266)$11,413 $109,529 $130,128 $166,536 $193,705 
Other comprehensive income (loss), net of tax
Defined benefit pension plans:
Net actuarial gain (loss)— — — — 44,974 (43,730)
Amortization of prior service cost33 182 66 364 431 802 
Amortization of net actuarial loss6,615 8,472 13,231 16,946 30,179 31,322 
Regulatory adjustment(5,524)(7,277)(11,047)(14,554)(63,520)3,856 
Net defined benefit pension plans1,124 1,377 2,250 2,756 12,064 (7,750)
Forward-starting interest rate swaps (“FSIRS”):
Amounts reclassified into net income — 414 416 827 1,241 2,023 
Net forward-starting interest rate swaps— 414 416 827 1,241 2,023 
Total other comprehensive income (loss), net of tax1,124 1,791 2,666 3,583 13,305 (5,727)
Comprehensive income (loss)$(1,142)$13,204 $112,195 $133,711 $179,841 $187,978 
The accompanying notes are an integral part of these statements.

10

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
Six Months Ended
June 30,
Twelve Months Ended
June 30,
 2022202120222021
CASH FLOW FROM OPERATING ACTIVITIES:
Net income$109,529 $130,128 $166,536 $193,705 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization128,044 126,329 255,113 243,701 
Deferred income taxes36,624 38,178 51,683 64,989 
Changes in current assets and liabilities:
Accounts receivable, net of allowance27,846 28,018 (22,978)(25,096)
Accrued utility revenue44,900 43,900 (1,500)(2,700)
Deferred purchased gas costs(63,426)(287,687)(119,467)(305,043)
Accounts payable(72,201)(56,518)42,081 6,812 
Accrued taxes(181)2,401 5,171 (16,872)
Other current assets and liabilities46,730 4,549 (28,090)(18,418)
Gain on sale of property(1,503)— (1,503)— 
Changes in undistributed stock compensation4,459 4,159 6,692 5,959 
Equity AFUDC(157)— (157)(2,543)
Changes in deferred charges and other assets 2,529 (17,540)(8,674)(48,142)
Changes in other liabilities and deferred credits(22,230)(45,309)(49,307)(55,272)
Net cash provided by (used in) operating activities240,963 (29,392)295,600 41,080 
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures and property additions(293,197)(276,109)(619,071)(613,824)
Changes in customer advances17,051 7,507 25,517 17,442 
Other(896)(934)677 
Net cash used in investing activities(277,042)(268,596)(594,488)(595,705)
CASH FLOW FROM FINANCING ACTIVITIES:
Contributions from parent— 115,641 86,942 194,063 
Dividends paid(60,200)(53,500)(118,100)(106,900)
Issuance of long-term debt, net593,862 — 891,180 — 
Retirement of long-term debt(275,000)— (275,000)(125,000)
Change in credit facility and commercial paper(130,000)— (150,000)150,000 
Change in short-term debt(25,000)234,000 (66,000)291,000 
Withholding remittance - share-based compensation(1,996)(1,242)(2,017)(1,242)
Other(2,135)(263)(3,692)(362)
Net cash provided by financing activities99,531 294,636 363,313 401,559 
Change in cash and cash equivalents63,452 (3,352)64,425 (153,066)
Cash and cash equivalents at beginning of period38,691 41,070 37,718 190,784 
Cash and cash equivalents at end of period$102,143 $37,718 $102,143 $37,718 
SUPPLEMENTAL INFORMATION:
Interest paid, net of amounts capitalized$51,312 $44,834 $96,718 $94,984 
Income taxes paid (received), net$$— $(13,524)$3,359 
The accompanying notes are an integral part of these statements.

11

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Common stock shares
Beginning and ending balances47,482 47,482 47,482 47,482 
Common stock amount
Beginning and ending balances$49,112 $49,112 $49,112 $49,112 
Additional paid-in capital
Beginning balances1,620,616 1,458,344 1,618,911 1,410,345 
Share-based compensation1,390 1,418 3,095 3,433 
Contributions from Southwest Gas Holdings, Inc.— 69,657 — 115,641 
Ending balances1,622,006 1,529,419 1,622,006 1,529,419 
Accumulated other comprehensive loss
Beginning balances(45,371)(59,343)(46,913)(61,135)
Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax
1,124 1,377 2,250 2,756 
FSIRS amounts reclassified to net income, net of tax— 414 416 827 
Ending balances(44,247)(57,552)(44,247)(57,552)
Retained earnings
Beginning balances987,177 926,011 906,827 835,146 
Net income (loss)(2,266)11,413 109,529 130,128 
Share-based compensation (186)(167)(631)(517)
Dividends declared to Southwest Gas Holdings, Inc.(32,000)(28,500)(63,000)(56,000)
Ending balances952,725 908,757 952,725 908,757 
Total Southwest Gas Corporation equity ending balances$2,579,596 $2,429,736 $2,579,596 $2,429,736 
The accompanying notes are an integral part of these statements.
12

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Note 1 – Background, Organization, and Summary of 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 (“Southwest” or the “natural gas distribution” segment), all of the shares of common stock of Centuri Group, Inc. (“Centuri,” or the “utility infrastructure services” segment), and all of the shares of common stock of MountainWest Pipelines Holding Company (“MountainWest,” or the “pipeline and storage” segment).
The Company completed the acquisition of Dominion Energy Questar Pipeline, LLC and related entities (“Questar Pipelines”) in December 2021. Following the completion of the acquisition, the Company formed MountainWest which owns all of the membership interests in Questar Pipelines. In April 2022, the Company completed a general rebranding of the Questar Pipelines entities under the MountainWest name. The acquired operations further diversify the Company’s business in the midstream sector, with an expansion of interstate natural gas pipelines and underground storage services, primarily composed of regulated operations under the jurisdiction of the Federal Energy Regulatory Commission (the “FERC”), thereby expanding natural gas transportation services into Utah, Wyoming, and Colorado. See Note 8 - Business Acquisitions 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 distribution segment are higher during winter periods due to the seasonality incorporated in its regulatory rate structures.
Centuri is a strategic utility infrastructure services company dedicated to partnering with North America’s gas and electric providers to build and maintain the energy network that powers millions of homes across the United States (“U.S.”) and Canada. Centuri derives revenue primarily from installation, replacement, repair, and maintenance of energy networks. Centuri operates in the U.S., primarily as NPL, Neuco, Linetec, and 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 the summer and fall 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.
Centuri completed the acquisition of Drum Parent LLC (“Drum”), including Drum’s most significant operating subsidiary, Riggs Distler, in August 2021, thereby expanding Centuri’s electric infrastructure services footprint in the northeast and mid-Atlantic regions of the U.S. See Note 8 - Business Acquisitions for more information.
In March 2022, the Company announced that its Board of Directors (the “Board”) had determined to separate Centuri from the Company and authorized management to complete the separation within nine to twelve months. Initially it was contemplated that the Centuri separation would take the form of a spin-off. Then, in April 2022, as a result of interest in the Company well in excess of an earlier tender offer to other shareholders by an activist stockholder (affiliates of Carl C. Icahn), the Board authorized the review of a full range of strategic alternatives to maximize stockholder value. As part of this process, a strategic transactions committee of the Board (the “Strategic Transactions Committee”), consisting entirely of independent directors, has been evaluating a sale of the Company, as well as a range of alternatives, including, but not limited to, a separate sale of its business units and/or pursuing the spin-off of Centuri (collectively, the “Strategic Review”). On August 3, 2022, the Company announced that the Board had unanimously determined that the best path forward to maximize value for all stockholders is to (i) focus on the strategic plan and conclude the strategic review process for Southwest Gas Holdings, Inc. and Southwest Gas Corporation; (ii) continue to review strategic alternatives for MountainWest; and (iii) continue to review strategic alternatives for Centuri, including a sale or spin-off of Centuri.
On May 6, 2022, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with Carl C. Icahn and the persons and entities referenced therein (collectively, the “Icahn Group”). In accordance with the Cooperation Agreement, among other things, John P. Hester, President and Chief Executive Officer of the Company and Southwest, retired from his positions with the Company and Southwest and resigned from the Board. Thereafter, Karen S. Haller, the Company’s former Executive Vice President/Chief Legal and Administrative Officer, was appointed President and Chief Executive Officer of the Company and Chief Executive Officer of Southwest, and was appointed as a member of the Board effective immediately following the completion of the Company’s 2022 annual meeting of stockholders (the “2022 Annual Meeting”). Justin L. Brown, formerly Southwest’s Senior Vice President/General Counsel, was appointed as President of Southwest.
In addition, pursuant to the Cooperation Agreement, the Company agreed to appoint three new directors, Andrew W. Evans, H. Russell Frisby, Jr., and Henry P. Linginfelter (collectively, the “Icahn Designees”), to the Board, which became effective immediately following the 2022 Annual Meeting. Also pursuant to the Cooperation Agreement, on May 27, 2022, the Icahn group informed the Company that it would cause Mr. Frisby to resign from the Board and requested that Andrew J. Teno be
13

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

appointed to the Board to fill the vacancy created by Mr. Frisby’s resignation. As a result, on May 27, Mr. Frisby resigned from the Board, effective immediately, and the Board appointed Mr. Teno to fill the vacancy created by Mr. Frisby’s resignation, effective immediately. The Icahn Group’s ability to designate directors to the Board is subject to certain ownership thresholds. Consistent with the May 6, 2022 Cooperation Agreement with the Icahn Group, the Company expects José A. Cárdenas to step down from the Board in the near future, and a new director will be appointed.
The Cooperation Agreement required the Board expand the Strategic Transactions Committee from three directors to six directors, comprised of the existing members of the Strategic Transactions Committee in addition to the three Icahn Designees. Also, as the Icahn Group has the ability to designate at least three members of the Board, such individuals are to be included on the Strategic Transactions Committee. If the Icahn Group may only designate two members of the Board, then both would serve on the Strategic Transactions Committee.
On May 9, 2022, the Company also entered into Amendment No. 1 to the Rights Agreement dated October 10, 2021 (the “Original Rights Agreement” and as amended, the “Amended Rights Agreement”), to increase the triggering percentage from 10% to 24.9% pursuant to the terms of the Cooperation Agreement and permit the subsequent consummation of the Offer (as defined below). See details in the Company’s and Southwest’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”) regarding the Original Rights Agreement, as well as Note 4 – Common Stock in this current report on Form 10-Q.
In addition, pursuant to the Cooperation Agreement, the Icahn Group is permitted to acquire up to 24.9% of the shares of the Company, which would include shares as part of an updated tender offer of $82.50 per share, with the updated tender offer expiring on May 20, 2022. An earlier civil suit (initiated in November 2021) by Icahn entities against the Company and certain directors and officers of the Company was subject to a stipulation of dismissal as part of the Cooperation Agreement. The Cooperation Agreement also provides for the reimbursement by the Company of certain out-of-pocket third-party expenses, including certain legal fees, incurred by the Icahn Group.
Basis of Presentation. The condensed consolidated financial statements of Southwest Gas Holdings, Inc. and subsidiaries and Southwest included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The year-end 2021 condensed balance sheet data was derived from audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. No substantive change has occurred with regard to the Company’s business segments on the whole during the recently completed quarter.
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 as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. 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 depiction of results for the interim periods, have been made.
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2021 Annual Report to Stockholders, which is incorporated by reference into the 2021 Form 10-K.
Other Property and Investments. Other property and investments on Southwest’s and the Company’s Condensed Consolidated Balance Sheets includes:
(Thousands of dollars)June 30, 2022December 31, 2021
Net cash surrender value of COLI policies$142,819 $149,947 
Other property3,780 3,146 
Total Southwest Gas Corporation146,599 153,093 
Non-regulated property, equipment, and intangibles1,678,683 1,616,392 
Non-regulated accumulated provision for depreciation and amortization(569,630)(512,343)
Other property and investments57,049 59,337 
Total Southwest Gas Holdings, Inc.$1,312,701 $1,316,479 
Included in the table above are the net cash surrender values of company-owned life insurance (“COLI”) 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
14

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

non-regulated in regard to assets and related balances in the table above is in reference to the non-rate regulated operations of Centuri, and to a more limited extent, certain assets of MountainWest.
Cash and Cash Equivalents.  Cash and cash equivalents include money market fund investments totaling approximately $77 million and $97 million, for Southwest and the Company, respectively, at June 30, 2022, and $20 million for the Company as of December 31, 2021. The balance for Southwest as of December 31, 2021 was insignificant. These investments fall within Level 2 of the fair value hierarchy, due to the asset valuation methods used by money market funds.
Non-cash investing activities for the Company and Southwest include capital expenditures that were not yet paid, thereby remaining in accounts payable, which declined by approximately $11.6 million and $18.3 million, respectively, during the six months ended June 30, 2022, and increased $6.5 million and $6.6 million, respectively, during the twelve months ended June 30, 2022.
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 may not be collected, and if so, would be 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 the 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 $70.2 million at June 30, 2022 and $62.9 million at December 31, 2021 (carried at weighted average cost). For the Company, there were materials and operating supplies of $74.5 million and $67.4 million at June 30, 2022 and December 31, 2021, respectively, which included amounts for MountainWest. Also included in the balance for both Southwest and the Company was $10.2 million and $52 million as of June 30, 2022 and December 31, 2021, respectively, in accrued purchased gas cost.
Goodwill. Goodwill is assessed as of October 1st each year for impairment, or more frequently, if circumstances indicate an impairment to the carrying value of goodwill may have occurred. Management of the Company and Southwest considered its reporting units and segments, determining that they remained consistent between periods presented below, and that no change was necessary with regard to the level at which goodwill is assessed for impairment. The acquisition of MountainWest resulted in a new reportable segment which is assessed for impairment beginning in 2022. Since December 31, 2021, management qualitatively assessed whether events during the first six months of 2022 may have resulted in conditions whereby the carrying value of goodwill was higher than its fair value, which if the case, could be an indication of a permanent impairment. Through this assessment, no such condition was believed to have existed and therefore, no impairment was deemed to have occurred. However, there can be no assurances that future assessments of goodwill will not result in an impairment, and various factors, including the results of the continuing Strategic Review related to Centuri and MountainWest, or changes in economic conditions, governmental monetary policies, interest rates, or others, on their own or in combination with the undertakings of the Strategic Review, could result in the fair value of the related reporting units being lower than their carrying value. See also Note 8 - Business Acquisitions. Goodwill in the Natural Gas Distribution operations of Southwest, and across all operations of the Company, is included in their respective Condensed Consolidated Balance Sheets as follows:
(Thousands of dollars)Natural Gas
Distribution
Utility Infrastructure
Services
Pipeline and StorageTotal Company
December 31, 2021$10,095 $785,058 $986,179 $1,781,332 
Measurement-period adjustments from Riggs Distler acquisition (a)— (906)(906)
Measurement-period adjustments from MountainWest acquisition (a)— — (28,178)(28,178)
Foreign currency translation adjustment— (1,776)— (1,776)
June 30, 2022$10,095 $782,376 $958,001 $1,750,472 
(a) See Note 8 - Business Acquisitions for details regarding measurement-period adjustments.
15

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

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 $41.5 million and $36 million of dividends declared as of June 30, 2022 and December 31, 2021, respectively.
Other Income (Deductions). The following table provides the composition of significant items included in Other income (deductions) in Southwest’s and the Company’s Condensed Consolidated Statements of Income:
Three Months Ended June 30,Six Months Ended
June 30,
Twelve Months Ended
June 30,
(Thousands of dollars)
202220212022202120222021
Southwest Gas Corporation:
Change in COLI policies$(5,200)$3,100 $(7,200)$5,800 $(4,200)$18,500 
Interest income3,198 1,231 5,999 1,947 9,165 4,160 
Equity AFUDC81 (981)157 — 157 2,543 
Other components of net periodic benefit cost(187)(3,505)(375)(7,010)(7,386)(17,021)
Miscellaneous income and (expense)(1,325)(1,010)(699)(1,352)(3,798)(2,689)
Southwest Gas Corporation - total other income (deductions)(3,433)(1,165)(2,118)(615)(6,062)5,493 
Centuri, MountainWest, and Southwest Gas Holdings, Inc.:
Foreign transaction gain (loss)214 (9)217 (12)207 (12)
Equity AFUDC236 — 418 — 418 — 
Equity in earnings of unconsolidated investments728 109 1,243 101 1,368 156 
Miscellaneous income and (expense)(580)(246)(1,351)(337)(158)(444)
Southwest Gas Holdings, Inc. - total other income (deductions)$(2,835)$(1,311)$(1,591)$(863)$(4,227)$5,193 
Included in the table above is the change in cash surrender values of COLI policies (including net death benefits recognized). Current tax regulations provide for tax-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. Refer also to the discussion of Other Property and Investments above and to Note 2 – Components of Net Periodic Benefit Cost.
Redeemable Noncontrolling Interests. In connection with the acquisition of Linetec in November 2018, the previous owner retained a 20% equity interest in that entity, the reduction of which is subject to certain rights based on the passage of time or upon the occurrence of certain triggering events. Effective January 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 interest held by the previous owner, and in incremental amounts each year thereafter. In March 2022, the parties agreed to a partial redemption based on these provisions, and as a result, Centuri paid $39.6 million to the previous owner of Linetec for a 5% equity interest in Linetec, thereby reducing the balance continuing to be redeemable to 15% under the terms of the original agreement. In order to fund the redemption, Southwest Gas Holdings, Inc. contributed capital to Centuri.
Certain members of Riggs Distler management have a 1.42% interest in Drum, which is redeemable, subject to certain rights based on the 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 and operating characteristics. Based on the fair value model employed, the estimated redemption value of the Linetec redeemable noncontrolling interest decreased by approximately $36 million during the six months ended June 30, 2022. Adjustment to the redemption value also impacts retained earnings, as reflected in the Company’s Condensed Consolidated Statement of Equity, but does not impact net income. The following depicts changes to the balances of the redeemable noncontrolling interests:
16

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

(Thousands of dollars):LinetecDrumTotal
Balance, December 31, 2021
$184,148 $12,569 $196,717 
Net income (loss) attributable to redeemable noncontrolling interests1,576 (10)1,566 
 Redemption value adjustments(35,978)— (35,978)
 Redemption of equity interest from noncontrolling party(39,649)— (39,649)
Balance, June 30, 2022
$110,097 $12,559 $122,656 
Earnings Per Share. Basic earnings per share (“EPS”) in each period of this report were calculated by dividing net income attributable to Southwest Gas Holdings, Inc. by the weighted-average number of 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 following table:
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
(In thousands)202220212022202120222021
Weighted average basic shares67,045 58,607 63,909 58,106 62,022 57,348 
Effect of dilutive securities:
Restricted stock units (1)145 103 132 91 135 92 
Weighted average diluted shares67,190 58,710 64,041 58,197 62,157 57,440 
(1) The number of securities included 136,000 and 95,000 performance shares during the three months ending June 30, 2022 and 2021, 125,000 and 85,000 performance shares during the six months ending June 30, 2022 and 2021 and 124,000 and 83,000 performance shares during the twelve months ending June 30, 2022 and 2021, respectively, the total of which was derived by assuming that target performance will be achieved during the relevant performance period.
Contingencies. Southwest maintains liability insurance for various risks associated with the operation of its natural gas pipelines and facilities. In connection with these liability insurance policies, Southwest is responsible for an initial deductible or self-insured retention amount per incident, after which the insurance carriers would be responsible for amounts up to the policy limits. For the policy year August 2021 to July 2022, these liability insurance policies require Southwest to be responsible for the first $1 million (self-insured retention) of each incident plus the first $4 million in aggregate claims above its self-insured retention in the policy year. In August 2021, a natural gas pipe operated by Southwest was involved in an explosion that injured four individuals and damaged property. The explosion was caused by a leak in the pipe, and is under investigation. Individuals that were injured have each brought legal claims against Southwest and other parties. If Southwest is deemed fully or partially responsible, Southwest estimates its net exposure could be equal to the self-insured retention of $5 million (the maximum noted above). In 2021, pursuant to Accounting Standards Codification 450, Contingencies, Southwest recorded a $5 million liability related to this incident reflecting the maximum noted above; an estimate of actual loss greater than this exposure (to be covered by insurance) cannot be estimated as of the date these financial statements are issued.
Other contingencies are also recognized where appropriate, if claims are brought, or expected to be brought, against the Company or Southwest, where management expects it may settle (or be required to settle) claims in cash, or in some cases, by means of insurance indemnification. The balance of such reserves was updated for additional accruals, including in regard to a contract dispute. For that item, $6.2 million was recorded during the second quarter of 2022, based on management’s estimate of Southwest’s exposure.
As described above, the November 2021 civil suit filed by the Icahn Group, against the Company and certain officers and directors, was subject to a stipulation of dismissal with prejudice in May 2022, pursuant to the terms of the Cooperation Agreement.
On November 18, 2021, the City Pension Fund for Firefighters and Police Officers in the City of Miami Beach (“City Pension Fund”) commenced a putative class action lawsuit in the Court of Chancery for the State of Delaware on behalf of a putative class of persons who purchased the Company’s stock. The complaint was later amended on November 30, 2021. The amended complaint named the Company and the individual members of the Board as defendants. The complaint sought to assert breach of fiduciary duty claims, alleging that the Board’s recommendation that stockholders reject Icahn’s Offer to purchase shares of the Company’s common stock omitted material information about the Company’s financial analysis; and sought to have the Board approve Icahn’s slate of nominees as “continuing directors” under certain of the Company’s debt instruments. In March 2022, the City Pension Fund filed a motion for summary judgment on its claim; however, in April 2022, the City Pension Fund
17

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

filed a notice of withdrawal of its motion for summary judgment. The Company believes that the claims lack merit and intends to vigorously defend against them.
Recent Accounting Standards Updates.
Accounting pronouncements effective or adopted in 2022:
In March 2020, the Financial Accounting Standards Board (the “FASB”) issued 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 limited time to 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 to Topic 848) to replace a reference rate affected by such reform. The update applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another rate expected to be discontinued due to reference rate reform. The guidance was eligible to be applied upon issuance on March 12, 2020, and can generally be applied through December 31, 2022, and while a proposal by the FASB has occurred to extend the optional guidance to the full tenor of LIBOR expiration dates occurring after 2022, to date, no such update has been made effective. Management will monitor the impacts this update might have on the Company’s and Southwest’s consolidated financial statements and disclosures, and will reflect such appropriately, in the event that the optional guidance is elected. Management will also monitor further FASB action, if any, in regard to the full tenor of LIBOR expiration dates. See also LIBOR discussion in Note 5 – Debt.
In August 2020, the FASB issued ASU 2020-06 “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The update, amongst other amendments, improves the guidance related to the disclosures and earnings-per-share for convertible instruments and contracts in an entity’s own equity. The Company and Southwest adopted the update in the first quarter of 2022, the impact of which was not material to the consolidated financial statements of the Company or Southwest.

18

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Note 2 – Components of Net Periodic Benefit Cost
Southwest has a noncontributory qualified retirement plan with defined benefits covering substantially all employees and a separate unfunded supplemental retirement plan (“SERP”) which is limited to officers. Southwest also provides postretirement benefits other than pensions (“PBOP”) to its qualified retirees for health care, dental, and life insurance. The defined benefit qualified retirement plan, SERP, and PBOP are not available to Southwest employees hired on or after January 1, 2022. Employees hired in 2022 or later periods are eligible for enhanced defined contributions as part of the Southwest 401(k) plan, rather than participating in the defined benefit retirement plan.
The service cost component of net periodic benefit costs included in the table below is a component of an overhead loading process associated with the cost of labor. The overhead process ultimately results in allocation of service cost to the same accounts to which productive labor is charged. As a result, service costs become components of various accounts, primarily operations and maintenance expense, net regulated operations plant, and deferred charges and other assets for both the Company and Southwest. The other components of net periodic benefit cost are reflected in Other income (deductions) on the Condensed Consolidated Statements of Income of each entity.
 Qualified Retirement Plan
 June 30,
 Three MonthsSix MonthsTwelve Months
 202220212022202120222021
(Thousands of dollars)      
Service cost$11,028 $10,290 $22,056 $20,580 $42,635 $37,730 
Interest cost11,251 10,108 22,502 20,216 42,718 42,994 
Expected return on plan assets(19,978)(18,088)(39,956)(36,176)(76,132)(68,824)
Amortization of net actuarial loss8,117 10,489 16,234 20,978 37,211 38,990 
Net periodic benefit cost$10,418 $12,799 $20,836 $25,598 $46,432 $50,890 
 SERP
 June 30,
 Three MonthsSix MonthsTwelve Months
 202220212022202120222021
(Thousands of dollars)      
Service cost$106 $132 $212 $263 $475 $457 
Interest cost360 358 720 716 1,435 1,517 
Amortization of net actuarial loss587 660 1,175 1,320 2,497 2,223 
Net periodic benefit cost$1,053 $1,150 $2,107 $2,299 $4,407 $4,197 
 PBOP
 June 30,
 Three MonthsSix MonthsTwelve Months
 202220212022202120222021
(Thousands of dollars)      
Service cost$485 $423 $970 $846 $1,815 $1,636 
Interest cost613 548 1,226 1,096 2,323 2,388 
Expected return on plan assets(807)(810)(1,614)(1,620)(3,233)(3,324)
Amortization of prior service costs44 240 88 480 567 1,057 
Net periodic benefit cost$335 $401 $670 $802 $1,472 $1,757 

19

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Note 3 – Revenue
The following information about the Company’s revenues is presented by segment. Southwest encompasses the natural gas distribution segment, Centuri encompasses the utility infrastructure services segment, and MountainWest encompasses the pipeline and storage segment. Certain disclosures, where materially consistent with those provided most recently in the 2021 Form 10-K, are not repeated below.
Natural Gas Distribution Segment:
Southwest’s operating revenues included on the Condensed Consolidated Statements of Income of both the Company and Southwest include revenue from contracts with customers, which is shown below, disaggregated by customer type, in addition to other categories of revenue:
 Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended June 30,
(Thousands of dollars)202220212022202120222021
Residential$228,573 $193,322 $743,159 $596,465 $1,182,306 $995,132 
Small commercial78,730 56,093 202,714 137,491 335,437 235,114 
Large commercial20,989 13,158 41,150 25,831 72,690 47,818 
Industrial/other10,773 6,974 20,745 20,744 42,314 33,785 
Transportation24,466 21,797 51,098 46,333 97,005 90,307 
Revenue from contracts with customers363,531 291,344 1,058,866 826,864 1,729,752 1,402,156 
Alternative revenue program revenues (deferrals)11,022 (1,531)(12,477)(17,904)18,608 (6,110)
Other revenues (1)3,389 2,983 8,092 5,768 13,183 4,006 
Total Regulated operations revenues$377,942 $292,796 $1,054,481 $814,728 $1,761,543 $1,400,052 
(1) Amounts include late fees and other miscellaneous revenues, and may also include the impact of certain regulatory mechanisms, such as cost-of-service components in customer rates expected to be returned to customers in future periods. 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 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
June 30,
Six Months Ended
June 30,
Twelve Months Ended June 30,
(Thousands of dollars)202220212022202120222021
Service Types:
Gas infrastructure services$418,869 $346,877 $679,551 $568,714 $1,413,177 $1,282,008 
Electric power infrastructure services179,749 97,644 361,717 191,605 695,314 435,825 
Other107,472 84,104 188,699 132,281 387,537 294,749 
Total Utility infrastructure services revenues
$706,090 $528,625 $1,229,967 $892,600 $2,496,028 $2,012,582 
20

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

 Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended June 30,
(Thousands of dollars)202220212022202120222021
Contract Types:
Master services agreement$617,489 $398,650 $1,062,834 *$692,330 $2,023,482 *$1,543,292 
Bid contract88,601 129,975 167,133 *200,270 472,546 *469,290 
Total Utility infrastructure services revenues
$706,090 $528,625 $1,229,967 $892,600 $2,496,028 $2,012,582 
Unit price contracts$421,927 $361,926 $724,450 $596,375 $1,497,157 $1,344,626 
Fixed price contracts128,793 50,455 215,330 85,049 398,023 179,194 
Time and materials contracts155,370 116,244 290,187 211,176 600,848 488,762 
Total Utility infrastructure services revenues
$706,090 $528,625 $1,229,967 $892,600 $2,496,028 $2,012,582 
* The Company identified an error 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 item was not material to the previously issued financial statements and will revise the first quarter 2022 amounts in future filings.
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 June 30, 2022 and December 31, 2021 on the Company’s Condensed Consolidated Balance Sheets:
(Thousands of dollars)June 30, 2022December 31, 2021
Contracts receivable, net$332,433 $296,005 
Revenue earned on contracts in progress in excess of billings254,259 214,774 
Amounts billed in excess of revenue earned on contracts13,738 11,860 
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, 2021 to June 30, 2022 is due to increases in cash received, net of revenue recognized, from contracts that commenced during the period, offset by revenue recognized of approximately $11.9 million that was included in this balance as of January 1, 2022, after which time it became earned and the balance was reduced.
For contracts that have an original duration of one year or less, Centuri uses the practical expedient applicable to such contracts and does not consider/compute an interest component based on the time value of money. Furthermore, because of the 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 June 30, 2022, Centuri had 47 fixed price contracts with an original duration of more than one year. The aggregate amount of the transaction price allocated to the unsatisfied performance obligations of these contracts as of June 30, 2022 was $465.7 million. Centuri expects to recognize the remaining performance obligations over approximately the next 2.9 years; however, the timing of that recognition is largely within the control of the customer, including when the necessary equipment and materials required to complete the work are provided by the customer.
Utility infrastructure services contracts receivable consists of the following:
(Thousands of dollars)June 30, 2022December 31, 2021
Billed on completed contracts and contracts in progress$331,173 $292,770 
Other receivables1,408 3,492 
Contracts receivable, gross332,581 296,262 
Allowance for doubtful accounts(148)(257)
Contracts receivable, net$332,433 $296,005 
21

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Pipeline and Storage Segment:
MountainWest derives revenue on the basis of services rendered, commodities delivered, or contracts settled and includes amounts yet to be billed to customers. MountainWest generates revenue and earnings from annual reservation payments under firm peaking storage and firm transportation contracts. Straight-fixed-variable rate designs are used to allow for recovery of substantially all fixed costs in demand or reservation charges, thereby reducing the earnings impact of volume changes on gas transportation and storage operations.
MountainWest receives upfront payment for certain storage services it provides to customers, which are considered to be contract liabilities. These payments are amortized to revenue over the term of the contract.
The primary types of sales and service activities reported as revenue from contracts with customers are FERC-regulated gas transportation and storage services, and to a lesser extent, natural gas liquid (“NGL”) revenues consisting primarily of NGL processing services, and other revenue (consisting of natural gas sales, as well as services related to gathering and processing activities and miscellaneous service revenue).
Transportation and storage contracts are primarily stand-ready service contracts that include fixed reservation and variable usage fees. Fixed fees are recognized ratably over the life of the contract as the stand-ready performance obligations are satisfied, while variable usage fees are recognized when MountainWest has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the performance obligation completed to date. Substantially all of MountainWest’s revenues are derived from performance obligations satisfied over time, rather than recognized at a single point in time. Payment for most sales and services varies by contract type, but is typically due within a month of billing.
MountainWest typically receives or retains NGLs and natural gas from customers when providing natural gas processing, transportation, or storage services. MountainWest records the fair value of NGLs received as service revenue recognized over time and recognizes revenue from the subsequent sale of the NGLs to customers upon delivery. MountainWest typically retains some natural gas under certain transportation service arrangements, intended to facilitate performance of the service and allow for natural losses that occur. As the intent of the retention amount is to enable fulfillment of the contract rather than to provide compensation for services, the fuel allowance is not included in revenue.
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.
Three Months Ended
June 30,
Six Months Ended
June 30,
(Thousands of dollars)2022
Regulated gas transportation and storage revenues$57,786 119,763 
NGL revenues1,876 3,369 
Other revenues2,380 5,859 
Revenue from contracts with customers62,042 128,991 
Other revenues46 90
Total Regulated operations revenues$62,088 129,081 
MountainWest has certain multi-year contracts with fixed-price performance obligations that were unsatisfied (or partially unsatisfied) at the end of the reporting period, whereby revenue will be earned over time as MountainWest stands ready to provide service. These amounts are not material to the Company’s financial statements overall. MountainWest also has certain contract liabilities related to consideration received from customers with an obligation to transfer goods or services subsequent to the balance sheet date, amounts for which are generally consistent between December 31, 2021 and June 30, 2022 and are not material.

22

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Note 4 – Common Stock
Shares of the Company’s common stock are publicly traded on the New York Stock Exchange, under the ticker symbol “SWX.” Share-based compensation related to Southwest and Centuri is based on stock awards to be issued in shares of Southwest Gas Holdings, Inc.
On April 8, 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 offer and sale of up to $500 million of common stock from time to time in an at-the-market offering program. The shares are issued pursuant to the Company’s automatic shelf registration statement on Form S-3 (File No. 333-251074), or “the Universal Shelf.” There was no activity under the Equity Shelf Program during the quarter ended June 30, 2022. The following table provides the life-to-date activity under that program through June 30, 2022:
Gross proceeds$158,180,343 
Less: agent commissions(1,581,803)
Net proceeds$156,598,540 
Number of shares sold2,302,407 
Weighted average price per share$68.70 
As of June 30, 2022, the Company had approximately $341.8 million in common stock available for sale under the program.
In March 2022, the Company issued, through a separate prospectus supplement under the Universal Shelf, an aggregate of 6.325 million shares of common stock, in an underwritten public offering price of $74.00 per share, resulting in proceeds to the Company of $452.3 million, net of an underwriters’ discount of $15.8 million. The Company used the net proceeds to repay a portion of the outstanding borrowings under the 364-day term loan credit agreement that was used to initially fund the MountainWest acquisition.
During the six months ended June 30, 2022, the Company issued approximately 191,000 shares of common stock through the Restricted Stock/Unit Plan and Omnibus Incentive Plan.
Additionally, during the six months ended June 30, 2022, the Company issued 66,000 shares of common stock through the Dividend Reinvestment and Stock Purchase Plan, raising approximately $5.1 million.
In connection with the entry into the Cooperation Agreement (see Note 1 – Background, Organization, and Summary of Significant Accounting Policies), the Company entered into the Amended Rights Agreement to increase the beneficial ownership percentage included in the definition of “Acquiring Person” from 10% to 24.9% and to delete the concept of a “Passive Institutional Investor” to permit the Icahn Group to consummate the Offer.
23

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

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.
 June 30, 2022December 31, 2021
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
(Thousands of dollars)
Southwest Gas Corporation:
Debentures:
Notes, 6.1%, due 2041
$125,000 $126,410 $125,000 $166,380 
Notes, 4.05%, due 2032
600,000 549,396 — — 
Notes, 3.875%, due 2022
— — 250,000 250,603 
Notes, 4.875%, due 2043
250,000 230,653 250,000 307,538 
Notes, 3.8%, due 2046
300,000 235,140 300,000 329,055 
Notes, 3.7%, due 2028
300,000 283,260 300,000 325,191 
Notes, 4.15%, due 2049
300,000 250,461 300,000 342,030 
Notes, 2.2%, due 2030
450,000 365,054 450,000 440,838 
Notes, 3.18%, due 2051
300,000 211,326 300,000 292,116 
8% Series, due 2026
75,000 84,078 75,000 92,623 
Medium-term notes, 7.78% series, due 2022
— — 25,000 25,122 
Medium-term notes, 7.92% series, due 2027
25,000 27,821 25,000 31,555 
Medium-term notes, 6.76% series, due 2027
7,500 7,839 7,500 8,949 
Unamortized discount and debt issuance costs(26,627)(19,959)
2,705,873 2,387,541 
Revolving credit facility and commercial paper— — 130,000 130,000 
Industrial development revenue bonds:
Tax-exempt Series A, due 202850,000 50,000 50,000 50,000 
2003 Series A, due 203850,000 50,000 50,000 50,000 
2008 Series A, due 203850,000 50,000 50,000 50,000 
2009 Series A, due 203950,000 50,000 50,000 50,000 
Unamortized discount and debt issuance costs(1,774)(1,938)
198,226 198,062 
Less: current maturities— (275,000)
Southwest Gas Corporation total long-term debt, less current maturities$2,904,099 $2,440,603 
Southwest Gas Holdings, Inc.:
Centuri secured term loan facility$1,011,413 $970,329 $1,117,138 $1,117,841 
Centuri secured revolving credit facility145,885 145,759 103,329 103,749 
MountainWest unsecured senior notes, 3.53%, due in 2028
101,922 90,430 102,078 102,078 
MountainWest unsecured senior notes, 4.875%, due in 2041
199,599 157,894 199,926 199,926 
MountainWest unsecured senior notes, 3.91%, due in 2038
147,786 113,703 147,735 147,735 
Other debt obligations141,653 129,810 51,665 50,003 
Unamortized discount and debt issuance costs(22,627)(24,466)
Less: current maturities(41,276)(22,324)
Southwest Gas Holdings, Inc. total long-term debt, less current maturities$4,588,454 $4,115,684 
24

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Southwest has a $400 million credit facility that is scheduled to expire in April 2025. Southwest designates $150 million of associated capacity as long-term debt and the remaining $250 million for working capital purposes. Interest rates for the credit facility are calculated at either the Secured Overnight Financing Rate (“SOFR”) or an “alternate base rate,” plus in each case an applicable margin that is determined based on Southwest’s senior unsecured debt rating. At June 30, 2022, the applicable margin is 1.125% for loans bearing interest with reference to SOFR and 0.125% for loans bearing interest with reference to the alternative base rate. At June 30, 2022, no borrowings were outstanding on the long-term portion of the facility (including under the commercial paper program, discussed below), nor on the short-term portion of the facility.
Southwest has a $50 million commercial paper program. Issuances under the commercial paper program are supported by Southwest’s revolving credit facility and, therefore, do not represent additional borrowing capacity under the credit facility. Borrowings under the commercial paper program, if any, are designated as long-term debt. Interest rates for the program are calculated at the then current commercial paper rate. At June 30, 2022, as noted above, no borrowings were outstanding under the commercial paper program.
In March 2022, Southwest issued $600 million aggregate principal amount of 4.05% Senior Notes at a discount of 0.65%. The notes will mature in March 2032. Southwest used the net proceeds to redeem the $250 million 3.875% notes due in April 2022 and to repay outstanding amounts under its credit facility, with the remaining net proceeds used for general corporate purposes.
Centuri has a $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 and term loan facility are based on either a “base rate” or LIBOR, plus an applicable margin in either case. 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 June 30, 2022 totaled $2.5 billion. At June 30, 2022, $1.157 billion in borrowings were outstanding under Centuri’s combined secured revolving credit and term loan facility.
MountainWest has two private placement unsecured senior notes and a public unsecured senior note, with a combined carrying value of $449.3 million and aggregate principal amount of $430 million. The carrying value is higher than the principal balance as amounts outstanding were recorded at their fair values as of the December 31, 2021 acquisition date of the MountainWest entities.
Short-Term Debt
Southwest Gas Holdings, Inc. has a $200 million credit facility that is scheduled to expire in December 2026 and is primarily used for short-term financing needs. Interest rates for the credit facility are calculated at either SOFR or the “alternate base rate” plus in each case an applicable margin. There was $90 million outstanding under this credit facility as of June 30, 2022.
As indicated above, under Southwest’s $400 million credit facility, no short-term borrowings were outstanding at June 30, 2022.
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. There was $225 million outstanding under the March 2021 Term Loan as of June 30, 2022.
In November 2021, Southwest Gas Holdings, Inc. entered into a 364-day term loan credit agreement (the “Credit Agreement”). The Credit Agreement provided for a $1.6 billion delayed-draw term loan (the “Term Loan Facility”) to primarily fund the acquisition of the equity interests in MountainWest (refer to Note 8 - Business Acquisitions). The Term Loan Facility was funded on December 31, 2021, and matures on December 30, 2022. There was $1.15 billion outstanding under the Term Loan Facility as of June 30, 2022.
The borrowings under the Term Loan Facility created a negative working capital condition for the Company, which as of June 30, 2022 is approximately $707 million. As of August 9, 2022, the Company does not have sufficient liquidity or capital resources to repay the Term Loan Facility without issuing new debt or equity. As disclosed in Note 1 – Background, Organization, and Summary of Significant Accounting Policies, the Company is exploring strategic alternatives, including a potential sale of MountainWest. Management intends to either issue long-term debt to refinance the Term Loan Facility or extend the Term Loan Facility up to 364 days. If MountainWest is sold as part of the Strategic Review process, the proceeds will be used to repay the amounts borrowed to fund the acquisition.
25

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Management believes that its refinancing plan is probable based on the Company’s ability to generate consistent cash flows, its current credit ratings, its relationships with its lenders and its prior history of successfully raising debt and equity necessary to fund its acquisitions and operations. As such, management has concluded that the Company can satisfy its obligations for at least the next twelve months from the issuance date of these financial statements.
The Company’s ability to access capital markets or to otherwise obtain sufficient financing may be affected by future conditions. If the Company is unable to execute its plan to refinance debt obligations, the Company’s credit facility could be terminated, and amounts due under its revolver and other borrowing arrangements could be declared immediately due and payable.
LIBOR
Certain rates established at LIBOR are scheduled to be discontinued as a benchmark or reference rate after 2021, while other LIBOR-based rates are scheduled to be discontinued after June 2023. As of June 30, 2022, the Company had $2.16 billion in aggregate outstanding borrowings under Centuri’s combined facility and Southwest Gas Holdings, Inc.’s Term Loan Facility. Southwest had no outstanding borrowings or variable rate debt agreements with reference to LIBOR as of June 30, 2022. In order to mitigate the impact on the financial condition and results of operations of the Company, management will monitor developments and work with lenders to determine the appropriate replacement/alternative reference rate for variable rate debt. At this time the Company can provide no assurances as to the impact a LIBOR discontinuance will have on its financial condition or results of operations. Any alternative rate may be less predictable or less attractive than LIBOR.
26

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

Note 6 – Other Comprehensive Income and Accumulated Other Comprehensive Income
The following information presents the Company’s Other comprehensive income (loss), both before and after-tax impacts, within the Condensed Consolidated Statements of Comprehensive Income, which also impact Accumulated other comprehensive income (“AOCI”) in the Condensed Consolidated Balance Sheets and the Condensed Consolidated Statements of Equity.
Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss)
Three Months Ended
June 30, 2022
Three Months Ended
June 30, 2021
(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 $240 $(58)$182 
Amortization of net actuarial (gain)/loss8,704 (2,089)6,615 11,148 (2,676)8,472 
Regulatory adjustment(7,268)1,744 (5,524)(9,575)2,298 (7,277)
Pension plans other comprehensive income (loss)1,480 (356)1,124 1,813 (436)1,377 
FSIRS (designated hedging activities):
Amounts reclassified into net income— — — 544 (130)414 
FSIRS other comprehensive income (loss)— — — 544 (130)414 
Total other comprehensive income (loss) - Southwest Gas Corporation1,480 (356)1,124 2,357 (566)1,791 
Foreign currency translation adjustments:
Translation adjustments(2,680)— (2,680)909 — 909 
Foreign currency other comprehensive income (loss)(2,680)— (2,680)909 — 909 
Total other comprehensive income (loss) - Southwest Gas Holdings, Inc.$(1,200)$(356)$(1,556)$3,266 $(566)$2,700 
Six Months Ended
June 30, 2022
Six Months Ended
June 30, 2021
(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$88 $(22)$66 $480 $(116)$364 
Amortization of net actuarial (gain)/loss17,409 (4,178)13,231 22,297 (5,351)16,946 
Regulatory adjustment(14,536)3,489 (11,047)(19,150)4,596 (14,554)
Pension plans other comprehensive income (loss)2,961 (711)2,250 3,627 (871)2,756 
FSIRS (designated hedging activities):
Amounts reclassified into net income545 (129)416 1,088 (261)827 
FSIRS other comprehensive income (loss)545 (129)416 1,088 (261)827 
Total other comprehensive income (loss) - Southwest Gas Corporation3,506 (840)2,666 4,715 (1,132)3,583 
Foreign currency translation adjustments:
Translation adjustments(1,433)— (1,433)1,732 — 1,732 
Foreign currency other comprehensive income (loss)(1,433)— (1,433)1,732 — 1,732 
Total other comprehensive income (loss) - Southwest Gas Holdings, Inc.$2,073 $(840)$1,233 $6,447 $(1,132)$5,315 
27

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

 Twelve Months Ended
June 30, 2022
Twelve Months Ended
June 30, 2021
(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)$59,176 $(14,202)$44,974 $(57,539)$13,809 $(43,730)
Amortization of prior service cost567 (136)431 1,057 (255)802 
Amortization of net actuarial (gain)/loss39,709 (9,530)30,179 41,212 (9,890)31,322 
Regulatory adjustment(83,580)20,060 (63,520)5,075 (1,219)3,856 
Pension plans other comprehensive income (loss)15,872 (3,808)12,064 (10,195)2,445 (7,750)
FSIRS (designated hedging activities):
Amounts reclassified into net income 1,631 (390)1,241 2,662 (639)2,023 
FSIRS other comprehensive income (loss)1,631 (390)1,241 2,662 (639)2,023 
Total other comprehensive income (loss) - Southwest Gas Corporation17,503 (4,198)13,305 (7,533)1,806 (5,727)
Foreign currency translation adjustments:
Translation adjustments(3,145)— (3,145)5,656 — 5,656 
Foreign currency other comprehensive income (loss)(3,145)— (3,145)5,656 — 5,656 
Total other comprehensive income (loss) - Southwest Gas Holdings, Inc.$14,358 $(4,198)$10,160 $(1,877)$1,806 $(71)
(1)Tax amounts are calculated using a 24% rate. The Company has elected to indefinitely reinvest, in Canada, the earnings of 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).
The following table represents a rollforward of AOCI, presented on the Company’s Condensed Consolidated Balance Sheets and its Condensed Consolidated Statements of Equity:
 Defined Benefit PlansFSIRSForeign Currency Items 
(Thousands of dollars)
Before-TaxTax
(Expense)
Benefit (4)
After-TaxBefore-TaxTax
(Expense)
Benefit (4)
After-TaxBefore-TaxTax
(Expense)
Benefit
After-TaxAOCI
Beginning Balance AOCI December 31, 2021
$(61,182)$14,685 $(46,497)$(545)$129 $(416)$152 $— $152 $(46,761)
Translation adjustments— — — — — — (1,433)— (1,433)(1,433)
Other comprehensive income (loss) before reclassifications— — — — — — (1,433)— (1,433)(1,433)
FSIRS amount reclassified from AOCI (1)— — — 545 (129)416 — — — 416 
Amortization of prior service cost (2)88 (22)66 — — — — — — 66 
Amortization of net actuarial loss (2)17,409 (4,178)13,231 — — — — — — 13,231 
Regulatory adjustment (3)(14,536)3,489 (11,047)— — — — — — (11,047)
Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc.2,961 (711)2,250 545 (129)416 (1,433)— (1,433)1,233 
Ending Balance AOCI June 30, 2022
$(58,221)$13,974 $(44,247)$— $— $— $(1,281)$— $(1,281)$(45,528)
(1)The FSIRS reclassification amount is included in Net interest deductions 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 Deferred charges and other assets on the Company’s Condensed Consolidated Balance Sheets).
(4)Tax amounts are calculated using a 24% rate.

28

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

The following table represents a rollforward of AOCI, presented on Southwest’s Condensed Consolidated Balance Sheets:
 Defined Benefit PlansFSIRS 
(Thousands of dollars)Before-TaxTax
(Expense)
Benefit (8)
After-TaxBefore-TaxTax
(Expense)
Benefit (8)
After-TaxAOCI
Beginning Balance AOCI December 31, 2021
$(61,182)$14,685 $(46,497)$(545)$129 $(416)$(46,913)
FSIRS amount reclassified from AOCI (5)— — — 545 (129)416 416 
Amortization of prior service cost (6)88 (22)66 — — — 66 
Amortization of net actuarial loss (6)17,409 (4,178)13,231 — — — 13,231 
Regulatory adjustment (7)(14,536)3,489 (11,047)— — — (11,047)
Net current period other comprehensive income attributable to Southwest Gas Corporation2,961 (711)2,250 545 (129)416 2,666 
Ending Balance AOCI June 30, 2022
$(58,221)$13,974 $(44,247)$— $— $— $(44,247)
(5)    The FSIRS reclassification amount is included in Net interest deductions on Southwest’s Condensed Consolidated Statements of Income.
(6)These AOCI components are included in the computation of net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost for additional details).
(7)The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in Deferred charges and other assets on Southwest’s Condensed Consolidated Balance Sheets).
(8)Tax amounts are calculated using a 24% rate.
The following table represents amounts (before income tax impacts) included in AOCI (in the tables above), that have not yet been recognized in net periodic benefit cost:
(Thousands of dollars)
June 30, 2022December 31, 2021
Net actuarial loss$(381,601)$(399,010)
Prior service cost(1,440)(1,528)
Less: amount recognized in regulatory assets324,820 339,356 
Recognized in AOCI$(58,221)$(61,182)
Note 7 – Segment Information
As a result of the MountainWest acquisition on December 31, 2021, management updated its segment reporting from the historical presentation of two reportable segments to three reportable segments, with MountainWest presented as the pipeline and storage segment. Southwest comprises the natural gas distribution segment and Centuri comprises the utility infrastructure services segment.
Centuri accounts for the 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)
June 30, 2022December 31, 2021
Centuri accounts receivable for services provided to Southwest$16,915 $15,166 

29

SOUTHWEST GAS HOLDINGS, INC.  Form 10-Q
SOUTHWEST GAS CORPORATION  June 30, 2022

In order to reconcile (below) to net income 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 StorageOtherTotal
Three Months Ended June 30, 2022