Southwest Gas Lifts Q3 Adjusted EPS to $0.20, Holds 2026 Guidance

Southwest Gas (NYSE: SWX) reported third-quarter 2026 adjusted earnings from continuing operations of $0.20 per share, more than triple the $0.06 posted a year earlier. For the first nine months of 2026, adjusted earnings reached $2.69 per share, up 18% from the same period in 2025. The company reaffirmed full-year guidance of $4.17 to $4.32 per share and kept its long-term adjusted earnings growth target of 12% to 14%.

The numbers are solid; the caveats sit in the regulatory files. Management itself expects results to land only at the midpoint of the range.

What drove the quarter?

President and CEO Justin Brown attributed the improvement primarily to regulatory outcomes and cost management. Chief Financial Officer and Treasurer Justin Forsberg said third-quarter operating margin increased by $3.8 million, driven mostly by updated California rates and customer growth.

Forsberg said management expects full-year adjusted earnings "to center around the midpoint" of the guidance range. That is a promise of steadiness, not of upside. The takeaway: rate relief, not demand, carried the quarter.

How much new revenue did the rate cases unlock?

Final orders in California and Nevada together authorized approximately $80 million in additional annual revenue, Brown said. He expects the relief to keep lifting results into 2027.

• California: just over $32 million in incremental revenue, a 10% return on equity and a 50% equity ratio, effective retroactively to Jan. 1, 2026.
• Nevada: an Oct. 14 order authorized nearly $48 million, kept a 9.5% authorized return on equity and set an actual equity ratio of 51.35%. New rates took effect in October.

Southwest Gas has asked Nevada regulators to reconsider the treatment of certain post-test-year plant investments it believes should have been included in rate base — a request the order did not grant.

Nevada regulators are expected to finalize alternative rate-making rules by the end of 2026, with a filing to implement alternative rates anticipated early in the second quarter of 2027. Forsberg said the full run-rate margin contribution from the Nevada decision will appear in 2027.

What is at stake in Arizona?

In Arizona, Southwest Gas cut its requested annual revenue increase to $91.3 million from $101 million after updating investment estimates. Commission staff recommended only $53 million to $58 million, depending on the treatment of the fair value increment, with a 9.75% return on equity.

Staff supported the company's proposed transition to formula rates, subject to modifications; the Residential Utility Consumer Office opposed it, Brown said. A hearing begins Dec. 7. New rates are anticipated to take effect April 1, 2027, contributing for part of that year and reaching a full annual run rate in 2028.

The gap between a $91.3 million request and a $58 million staff ceiling is the number to watch. In plain terms: Arizona has not decided anything yet.

What does Great Basin add?

Southwest Gas will file its Federal Energy Regulatory Commission certificate application for the Great Basin 2028 expansion by year-end, targeting service in the fourth quarter of 2028.

Shippers have signed binding precedent agreements and posted surety supporting 1 billion cubic feet per day of contracted demand. Brown said the estimated $2.3 billion project should generate $270 million to $300 million in incremental annual margin once in service.

Not all of that sits in guidance. Of the estimated cost, $600 million and its associated margin are excluded from the current long-term outlook; the company will fold in the full estimate when it updates its five-year plan in February. Spending is planned at roughly 15% in 2026, 25% in 2027 and 60% in 2028 — a back-loaded schedule that concentrates construction risk in the final year.

Brown said the company submitted a draft application for the federal FAST-41 permitting program. He described it as an opportunity for coordination and schedule transparency, "rather than a guarantee of a faster review." That admission deserves weight.

How will it all be financed?

The company ended the quarter with nearly $700 million in available liquidity after investing more than $800 million in capital at the utility and Great Basin year to date, Brown said. Consolidated net debt stood at approximately $3.7 billion when considering purchased gas adjustment balances payable to customers, according to Forsberg.

The company has not issued equity outside its dividend reinvestment plan in 2026 and does not expect any for the rest of the year. It plans to issue utility debt, with amounts set by liquidity and capital allocation needs. It will also renew its at-the-market equity program at its existing $340 million capacity — a housekeeping measure, Forsberg said, with relatively modest external equity issuance expected mainly during Great Basin's construction.

Southwest Gas serves residential, commercial and industrial customers in Arizona, Nevada and portions of California, including Las Vegas and Phoenix.

Guidance held, rates arrived, and a $2.3 billion bet now waits on Arizona, Nevada rulemaking and federal permits.