Southwest Gas Holdings, Inc. (SWX) Q3 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Southwest Gas Holdings 2020 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would like to hand the conference over to one of your speakers today, Ken Kenny, Vice President of Finance and Treasurer. Sir, please go ahead.

Thank you, Michelle. Welcome to Southwest Gas Holdings Inc. 2020 third quarter earnings conference call. As Michelle stated, my name is Ken Kenny, and I am the Vice President, Finance and Treasurer. Our conference call is being broadcast live over the Internet. For those of you who would like to access the webcast, please visit our website at www.swgasholdings.com and click on the conference call link. We have slides on the Internet, which can be accessed to follow our presentation. Today, we have Mr. John P. Hester, President and Chief Executive Officer; Mr. Gregory J. Peterson, Senior Vice President, Chief Financial Officer; and Mr. Justin L. Brown, Senior Vice President, General Counsel of Southwest Gas Corporation, and other members of senior management to provide a brief overview of the company's operations and earnings ended September 30, 2020 and to reaffirm earnings per share guidance for 2020 as the company will discuss certain factors that may impact this coming year's earnings. Further, our lawyers have asked me to remind you that some of the information that will be discussed contains forward-looking statements. These statements are based on management's assumptions, which may or may not come true, and you should refer to the language on Slide 3 and the press release and also our SEC filings for a description of the factors that may cause actual results to differ from our forward-looking statements. All forward-looking statements are made as of today, and we assume no obligation to update any such statements. With that said, I would like to turn the time over to John.

Thanks, Ken. Turning to Slide 4, highlights for our third quarter include the following. First, at the holding company level, we experienced earnings per share of $0.32. We also saw S&P upgrade its outlook for Southwest Gas Holdings and Southwest Gas Corporation from negative to stable. And finally, we recently released our 2020 sustainability report, which details many of the initiatives we are undertaking to support our commitment to the environment, our communities, our employees and corporate governance. At our regulated utility operations, our third quarter highlights included continued robust customer growth that added 37,000 first-time meter sets over the past year, a decrease in operation and maintenance expense of $7.9 million, increased income from company-owned life insurance of $4.3 million, and a resolution of our Nevada general rate case application that provided us refreshed rates effective October 2020. Meanwhile, at our Centuri infrastructure services segment, we realized record third quarter revenues of $580 million and net income of $34.9 million. A portion of our record third quarter financial results related to emergency storm support services to our electric utility customers that experienced significant facility damage due to numerous regional hurricane. And as is the focus of our Centuri business segment, 90% of our trailing 12-month revenues accrued from work performed for our regulated utility customers. Moving to Slide 5, we provide an outline for today's call. First, Greg Peterson will provide a report on our third quarter financial results with segment detail for our regulated and utility infrastructure services businesses. Justin Brown will provide a comprehensive report on our various regulatory activities. And I will close with a report on our management of COVID-19, our growing customer base, capital rate base growth and liquidity, our recently issued sustainability report and our expectations for the remainder of 2020 and beyond. With that, I will now turn the call over to Greg.

Thank you, John. As a reminder, our earnings press release and quarterly report on Form 10-Q were made available yesterday afternoon. And I invite you to read those documents for additional details of our third quarter results and outlook for 2020. For today's call, let me start with the summary of total company operating results on Slide 6. For the 12 months ended September 30, 2020, net income was $220 million or $3.97 per diluted share compared to net income in the prior year period of $192 million or $3.59 per diluted share. For the third quarter of 2020, consolidated net income was $18.3 million versus $5.4 million for the prior year quarter. Third quarter EPS rose from a dime in 2019 to $0.32 in 2020. The next several slides detail results by segment. Let me start with Centuri's third quarter results on Slide 7. As John mentioned earlier, Centuri, our utility infrastructure services segment, posted record third quarter net income of $34.9 million, a $9 million or 35% increase over the prior year quarter. Revenues were also at record levels for the third quarter and included nearly $49 million associated with emergency restoration services for customers following hurricane damage in the Gulf Coast and Eastern regions of the U.S. At the peak of this effort, we had over 600 employees working 16-hour days to restore power to thousands of homes and businesses, while remaining vigilant in protecting the health and safety of themselves and the community. These employees were diverted from other work to perform these emergency services and return back to their original assignments once the emergency needs of our customers, primarily electric utilities, were satisfied. Higher volumes of gas and electric infrastructure work under blanket and bid contracts were also realized during the third quarter of 2020. The $51.4 million increase in infrastructure expenses was primarily due to the significant growth in overall revenues. Storm restoration work typically generates higher profit margins than core infrastructure services due to, among other things, improved operating efficiencies related to equipment utilization. The G&A component of infrastructure expenses grew over $6 million due to higher administrative payroll, profit-based incentive compensation and other items associated with business growth. The $1.2 million increase in depreciation and amortization is attributable to additional equipment placed in service to support the higher volume of business. The $1.8 million decline in interest expense reflects lower rates on borrowings under Centuri's credit facility. The net income allocable to non-controlling interest grew by $1.7 million over the prior year quarter and reflects the portion of Linetec business that we currently do not own. As demonstrated in this quarter, in particular, our acquisition of Linetec electric infrastructure business two years ago has provided financial benefits to our shareholders, while providing top level service to electric utilities and their customers. Now let's go to Slide 8 and our quarterly natural gas operations results. This waterfall chart shows the components of the $4 million improvement in natural gas operation results between quarters. As a reminder, due to the seasonality of this business, utility losses during the third quarter are expected. Despite $2.6 million of incremental margin from customer growth, reflecting 37,000 first-time meter sets over the past 12 months and $400,000 of rate relief, operating margin declined slightly between quarters, primarily due to a temporary moratorium on late fees and lower connection/re-connection charges, as well as a reduction in amounts associated with regulatory account balances. O&M expenses between quarters decreased $7.9 million, as John mentioned, including the decline in legal claims-related cost of $2.8 million and a reduction in travel and in-person training cost of about $1.5 million. Management cost containment initiatives, including deferral of various planned projects and delayed hiring of incremental and replacement personnel are also reflected in the quarterly O&M decline. Bad debt expense increased only modestly by $150,000 between the third quarters of 2020 and 2019. The $4.1 million increase in depreciation, amortization and general taxes reflects the impact of a $678 million or 9% increase in average gas plant in service as we continue to reinforce and expand our natural gas distribution system. The $3.1 million improvement in other income reflects increases in the cash surrender value of company-owned life insurance or COLI policies of $4.5 million this quarter versus $200,000 [of income] in last year's third quarter. Partially offsetting the COLI benefit was a $1.2 million increase in non-service pension-related costs. Lastly, the $2.5 million uptick in interest expense reflects higher debt outstanding, including $450 million of senior notes that we issued in June 2020 to facilitate Southwest's robust capital expenditure program. Next, we'll transition to review a 12-month activity, beginning on Slide 9. This slide depicts the relative contributions by our two operating segments during the 12 months ended September 30, 2020. As you can see, natural gas operations provided 70% of our consolidated net income, while Centuri utility infrastructure services group provided 30%. The current Centuri contribution is slightly higher than our expected longer term mix due to Centuri's record performance in the third quarter. Let's move to Slide 10 and look at the details of each segment's net income increase between 12-month periods. We'll start with Centuri. Slide 10 shows the components of the $19.9 million or 43% increase in Centuri net income between 12-month periods. Overall, revenues increased $178 million between periods, primarily due to $132 million of incremental electric infrastructure revenues from Linetec, which we acquired in November 2018. Of the nearly $1.9 billion of Centuri revenues during the last 12 months, approximately $56 million was from emergency restoration services. Infrastructure services expenses were $137 million higher than the prior year period, primarily due to $102 million associated with incremental Linetec operations, including costs associated with increased storm restoration work. Incremental costs were also incurred related to additional gas infrastructure work. Depreciation and amortization increased $13.9 million, including $10.4 million from Linetec operations, as well as from additional equipment placed in service to support higher volumes of work. The other category primarily reflects the portion of Centuri's net income attributable to the non-controlling interest in Linetec. The $3.5 million decrease in interest expense was primarily due to lower interest rate from Centuri's credit facility. In the appendix to the slides accompanying this presentation, we have added summary operating results of Centuri in a format that includes a gross profit line and separately identifies amortization of intangible assets. A separate presentation of EBITDA, a non-GAAP measure, is also included. We believe these additional materials may be useful to investors and analysts in further evaluating Centuri results. Let me conclude my presentation with a review of 12 months natural gas operations results on Slide 11. This slide depicts the components of the $9.7 million increase in natural gas operations income between 12-month periods. The $32.3 million improvement in operating margin includes $14 million from continued customer growth and $5 million in combined rate relief in Nevada and California. The prior year period included a one-time unfavorable $5 million tax reform adjustment associated with the Arizona decoupling mechanism. The remaining net increase in operating margin resulted primarily from higher regulatory asset recoveries. The 6.2 million or 1% decrease in O&M reflects an approximate $3 million reduction in travel and in-person training costs. Management cost containment initiatives, including deferral of various planned projects and delayed hiring are also reflected in the 12-month reduction. Bad debt expense increased about $700,000 between the periods. The $26.2 million increase in depreciation, amortization and general taxes reflects the impact of a $670 million or 9% increase in average gas plant in service. Impacts associated with regulatory program balances account for approximately $8 million of the increase in amortization between periods. The $2.4 million decrease in other income includes a $2 million reduction in interest income and a $1.4 million reduction in the equity component of AFUDC or allowance for funds used during construction. Non-service pension costs increased approximately $2.2 million between periods, while COLI cash surrender value income was $7.2 million in the current 12-month period versus $2 million in the prior year. The $8.1 million increase in interest expense is due to debt issuances of $300 million in May, 2019 and $450 million in June 2020 as we continue to finance capital expenditures to expand and fortify our distribution system. The $7.9 million reduction in income taxes reflects lower state income taxes due to apportionment changes, and an additional $1.2 million in amortization of excess accumulated deferred income taxes following U.S. tax reform, which reduces tax expense. With that, I'll now turn the call over to Justin Brown for a regulatory update.

Thanks, Greg. We made some good progress on several of our regulatory initiatives during this quarter. First, FERC approval of our Paiute rate case settlement became final in August. We also filed our proposed California rate case settlement the first week of August. We completed our Nevada rate case hearings in August and received a final order in September that resulted in new rates in October. And we’ve reached several key milestones on some of our expansion projects and sustainability efforts. I will update each of these in a little more detail starting on Slide 12, which provides an overview of our $90 million rate case in Arizona. We completed the legal briefing stage in mid-September. As we've previously mentioned, we've always anticipated seeing a recommended opinion and order within 30 days to 60 days following legal briefing with new rates before the end of the year. We are still within that timeframe, and we anticipate receiving a recommended opinion and order within the next couple of weeks and would anticipate being on the December agenda, which is currently scheduled for December 8 and 9. Moving to Slide 13 and our Nevada rate case. As I mentioned previously, we completed hearings in August and received a decision the end of September. New rates became effective in October. The decision authorized the revenue increase of $23 million with an ROE of 9.25% and an equity ratio of 49.26% relative to an approved rate base of $1.48 billion. The rate case also approved the unamortized amounts of the previously disallowed software projects from our 2018 case, as well as costs associated with our expansion project in Mesquite and full cost recovery of the test year amounts of the customer, the CDMI project. We also received approval to continue with our fully decoupled rate design. Turning to our California rate case on Slide 14. We filed our proposed settlement agreement with the commission the first week of August. The proposed settlement agreement provides for a revenue increase of $6.4 million, including an ROE of 10% and an equity ratio of 52% relative to an authorized rate base of $435.5 million. We also agreed to continue our annual attrition filings, which will allow us to adjust revenues by 2.75% annually over the next five year rate cycle. Two other very important components of the rate case include approval of our proposed risk informed decision making programs, which allow us to invest up to $119 million over the next five years in safety measures to ensure continued safe and reliable service for our customers. And we will also be allowed to recover these costs annually through a surcharge. In addition, we agreed to remove a large replacement project in North Lake Tahoe from the base rate request, and instead, the parties agreed to simply recover the cost annually as segments of the project are completed. This was recently estimated as a $60 million project and we included about $30 million of it as part of our future test period in the original filing, which accounted for nearly $4 million of the original $12.8 million proposed efficiency in the case. We expect a final decision before the end of this year. Turning to Slide 15. As previously mentioned, we reached a black box settlement on our Paiute rate case that will slightly reduce the existing cost of service based upon a stated pre-tax rate of return of 9.9%. In addition, the parties agreed to continue the term differentiated rate design and both transportation and LNG storage customers agreed to five year contract extension as part of the settlement. The proposed settlement became effective the first week of August. Turning to Slide 16 and a quick update on several expansion-related projects. In Southern Nevada, we continue to make progress on our $28 million expansion project in Mesquite. We've completed construction of the approach main, which will be the main source of permanent supply of natural gas for the area, and we're in the final stage of testing before we place that pipeline into service later this month. In Northern Nevada, since receiving approval to proceed with our $62 million SB151 Spring Creek proposal, our contractor has completed construction of the initial approach main to our first neighborhood where 100% of customers have signed up for natural gas service. Subject to final testing on the approach main, we are on track to serve our first customers possibly by the end of this month. Turning to Slide 17. Another important focus that John mentioned earlier at Southwest Gas has been working with stakeholders on various sustainability initiatives, including partnering with key stakeholders on compressed natural gas and renewable natural gas opportunities. During the quarter, we received approval on two different proposals in Arizona to build facilities to allow renewable natural gas suppliers to interconnect with our distribution system. One is a dairy farm and the other is a wastewater treatment facility. We have since filed proposals for two additional dairy farms that are currently pending before the ACC. In Nevada, we've also made a filing requesting approval to purchase renewable natural gas on behalf of the Regional Transportation Commission of Southern Nevada that will be used to supplement their existing load of CNG used in their fleets. And with that, I'll turn it back to John.

Thanks, Justin. Turning to Slide 18. While the COVID-19 pandemic has thrown a number of challenges at us and our customers, we continue to navigate those challenges effectively, ensuring all the while that safe, reliable, and affordable natural gas service is provided to our customers without interruption or inconvenience. Numerous protective protocols have been affected to ensure the maximum health and safety of our employees and our customers, including a continuing work from home program for most office employees, increased utilization of personal protective equipment along with social distancing, temporary suspension of utility late fees and disconnections for non-payment to our customers along with outreach programs to provide financial support and coordination of available governmentally sponsored financial support programs, working with our numerous contractors to share best practices and ensure their aggressive use of PPE and social distancing practices. Continuing on Slide 19, we are also continuing dialogues with our community leaders, increasing charitable contributions to organizations that provide COVID-related support, watching for any potential financial impact from the pandemic. Although utility margin under decoupled rate structures remained strong, employees continue to be healthy. And as Greg reported, utility bad debt expense rose only $150,000 this past quarter. That said, we'll continue to partner with our utility regulators to ensure timely recovery of our cost of providing service to our customers. On Slide 20, we detail our growing diversified customer base across three states. As previously mentioned, we experienced 37,000 first-time meter sets for the 12-month period ending September 30, 2020 as homebuilding in our service territory remains strong and those homebuilders and homebuyers continue to demand natural gas service. Existing home inventory has been low and prices have been increasing, as both Arizona and Nevada continue to experience in-migration from other states around the country. Turning to Slide 21. Beyond our residential customer growth, we also continue to see continued commercial and industrial growth in our service territory. In Las Vegas, the hotel casino business continues to ramp up from prior COVID shutdown, including the opening just this past week of the new $1 billion Circa Hotel Casino near Downtown Las Vegas and continued progress on the $4.3 billion Center Strip Resorts World project expected to open in summer of next year. In Arizona, exciting projects include the 730,000 square foot Lucid Motors' electric vehicle manufacturing facility in Casa Grande, a $7 billion expansion at Intel's manufacturing plant in Chandler and Tucson being identified as the headquarters for the post-merger entity of Raytheon Missile Systems and United Technologies. Moving to Slide 22. We provide some quantitative information detailing the robust customer growth I previously referenced with new home permits this year set to exceed last year's numbers. On Slide 23, we showed some of the many reasons why customers in our part of the world continue to demand natural gas services, reliable and affordable energy services provided with excellent customer satisfaction. Just this past month, we are very excited for Southwest Gas to win separate, residential and business Best in the West Customer Satisfaction designation from a leading third-party customer satisfaction rating agency. Southwest Gas received leading marks from our customers on safety, reliability, price, communications, corporate citizenship, and several other categories, all indicating that the core values that we prioritize as a management team are resonating with our customers. Turning to Slide 24. Continuing customer growth and our aggressive commitment to pursuing the safest and most reliable gas distribution system possible causes us to continue to have a significant capital expenditure plan. This year, we anticipate investing $700 million across our service territory to meet these goals. Over the three year period ended 2022, we expect those investments in our systems to total $2.1 billion. Funding of our capital expenditures is expected to come from a 50-50 mix of internal cash flows and financing that will be completed with a balanced mix of debt and equity issuances. On Slide 25, we provide some additional quantitative detail on our future capital needs and sources, ensuring that our company's continued growth is financed responsibly and in the collective best interest of our shareholders and debt holders. Moving to Slide 26. Our continued reinvestment in serving our growing customer base ultimately translate into increased rate base. By the end of 2024, we anticipate that our regulated utility operations will have $6.2 billion in rate base, which will represent an 8.6% compounded annual growth rate over the five-year period ended 2024. On Slide 27, we provide information on our liquidity profile for our natural gas operations. We continue to experience stable cash flows and have a $400 million revolving credit facility available with only $58 million being used as of the end of the third quarter. On Slide 28, we referenced our recently issued sustainability report for Southwest Gas Holdings. The report is available for review on our website at the web address noted at the bottom of this page. The report details our strong commitment to the highest standards of responsible and ethical business practices, embracing diversity, equity and inclusion and promoting environmental sustainability. These priorities are important to our management team, as well as our employees, our customers, our local communities and our investors. I encourage you to check out the report. I think you'll find it informative and interesting. Turning to Slide 29. Both of our business segments of Southwest Gas Holdings have proven remarkably resilient during the current national coronavirus pandemic. We believe that our business model continues to be strong and stable with a disciplined focus. Our natural gas operations continue to experience customer and rate base growth, while providing a highly desired and affordable service to our customers. We continue to pursue further opportunities to green our service with renewable natural gas, energy efficiency, an initiative to decrease our carbon dioxide emissions. We'll also continue to strive for excellent working relationships with our regulators. We believe our collective efforts will continue to reward our investors with growing earnings and dividends. At our Centuri utility infrastructure services group, we'll continue to focus on operations execution, cost management and resource optimization, cross-selling of services to combination utility customers, increasing profitability and dividends and providing a source of cash to the parent company. On Slide 30, we affirm the earnings per share guidance we issued at the beginning of this year. At the end of this year, we continue to expect to generate earnings per share of $3.75 to $4. Our year-end estimate includes an assumed $3 million to $5 million of company-owned life insurance earnings for 2020, compared to the $17 million in COLI earnings that we realized in 2019. Moving to Slide 31, looking toward more detailed expectations as we approach year end. For our natural gas operations, operating margin is expected to increase by 3% to 4%. Operating income should increase by 5% to 7%. Pension costs are expected to increase by $13.6 million, partially due to low discount rates. As I mentioned on the last slide, we assume normalized COLI returns of $3 million to $5 million. Capital expenditures should total $700 million this year and $2.1 billion over the three year period ended 2022. And equity issuances should approximate $125 million to $170 million for the year through our current ATM program. For our Centuri utility infrastructure services segment, revenues are expected to increase by 6% to 8%. Operating income should approximate 5.5% to 6% of revenues. Interest expense is estimated to be $9 million to $10 million. Net income expectations reflect earnings attributable to Southwest Gas Holdings net of non-controlling interest. And Canadian exchange rates can influence results due to our Canadian operations. Turning to Slide 32. We affirm our longer-term expectations. At the holding company level, equity issuances through our ATM should total $500 million to $675 million over the three year period ended 2022, and we will target a dividend payout ratio of 55% to 65%. At our natural gas operations, our capital expenditures should total $3.5 billion for the five year period ended 2024, and we expect a compounded annual growth rate and rate base of 8.6% over that same period. And at our Centuri utility infrastructure services business, revenues are expected to grow 5% to 8% annually over the three year period ended 2022 and operating income is expected to be 5.5% to 6.5% of revenues over the three years ended 2022. Finally, on Slide 33, we continue to believe that Southwest Gas Holdings has two attractive and complementary business segments that are well positioned for continued growth for years to come. Our regulated utility operations continue to experience strong customer growth, strong rate base growth, our focus on safety and reliability and continued reinvestment in our gas distribution system. Centuri's utility infrastructure services group continues to grow and diversify their utility service offerings by focusing on a low risk platform catering to the needs of our long-term utility customers, while providing increasing dividends and free cash flow. We believe the combination of these two businesses offers a compelling value proposition for investors. With that, I will return the call to Ken.

Thanks, John. That concludes our prepared presentation. For those who have accessed our slides, we have also provided an appendix with slides that include other pertinent information about Southwest Gas Holdings and its two business segments. These slides can be reviewed at your convenience. Our operator, Michelle, will now explain the process for asking questions.

Thank you. [Operator Instructions] Our first question comes from the line of Richard Ciccarelli with Bank of America. Your line is open. Please go ahead.

Hi, thanks for taking my call, and appreciate the very robust update there. Just curious on the ACC elections here, it seems like you have two republicans and one democrat in the lead right now, still some votes left to be count. Just curious where things are sitting as you see them? And how does that impact the timing of the rate case outcome here? I believe we have some open meetings coming up with the potential ALJ rec. What gives you confidence in the decision by year end?

Hey, Richie, it's Justin. Yeah, I mean, I think as you described, they're still counting votes, but at the moment it looks like it will be Anna Tovar, who is the democrat leading vote gainer, and then also Lea Marquez Peterson, who is their current commissioner followed by Jim O'Connor. So, obviously, they are super close in terms of those votes, but they're still counting. So hopefully we'll get some finale of that in the next couple of days. But we don't anticipate that impacting kind of our anticipated schedule. Again, we've talked before about our experience has been kind of that 30 day to 60 day window that we're still in. I know that the commission has their December agenda set for the 8th and the 9th. I also know that they have a couple of contingency open meeting dates; one, the end of November, one the middle part of December. So, I feel confident that there’s four opportunities for us to get on an open meeting agenda. And we also anticipate seeing a route here in the next couple of weeks. So that's just based on our historical experience, as well as kind of what they've got planned out for the remainder of the year in terms of open meeting opportunities.

Got it. Thank you. That's very helpful there. And then just separately, on your updated drivers for 2020, it seems like you're able to bend the cost curve at the utility there. Just curious, how we should be thinking about where you sit within that range? And what are the key drivers that we should be thinking about here for the remainder of the year?

Richie, this is Greg. As we have indicated, certainly the COVID-19 [Technical Difficulty] as you mentioned, as we indicated, been able to ramp down the number of people that come into our offices. Over 80% of our office staff works from home and there have been some cost savings associated with that. We've been able to manage the impacts as we reach out to customers and provide the services we need. We found ways to safely and efficiently change service for customers without personal contact, and that has saved us the money as well. So, we are well situated to continue some of these savings into the future. As we have mentioned though, we think it's an important part of the ongoing business success of our company to have interactions, to reach out and participate in person in various conferences and meetings with our customers and suppliers. That has been limited at the time and that has been cost savings to us. However, we expect some of those to come back in the future. So, the long answer to your short question is, we expect to receive the benefits and things that we've learned on an ongoing basis in saving money and keeping our costs down. But we do expect cost to ramp back up in some fashion later in the fourth quarter of this year and as we move into 2021.

All right. So, just with those cost savings, you're still confident in the range that you provided, but not necessarily pointing to the top end or anything like that?

Yeah. We are very confident in the range that we have provided. And I think as Justin has mentioned and John would concur, one of the outstanding items in our guidance range will be the timing and amount of Arizona rate relief.

All right. Greg, thanks a lot. That's all I had.

Thank you. And our next question comes from the line of Ryan Levine with Citi. Your line is open. Please go ahead.

Hi, good afternoon. Given the contract structures at Centuri that you're – that you added in the appendix, are you seeing opportunities for margin expansion in light of COVID-19, changes to work procedures and costs or is that cost initiative more in the utility thing?

Ryan, this is Greg. The cost initiatives that we've talked about are really on the utility side. Centuri, again, they're work is performed substantially by people outside their office structure. And again, they are utilizing appropriate protective measures, including the appropriate use of PPE and distancing where possible. But they continue to go out and perform their construction services and the necessary emergency services that were highlighted in the third quarter. So they like the utility have found some efficiencies, but in general, those cost saving measures that we've talked about are focused on the utility side.

And then also, can you quantify the impact of some of the storms this quarter on Centuri's results?

Yeah. This is Greg. Those results we've talked about, the incremental revenues that came from storm work. But of course, as I mentioned, the people that worked on that, the 600 plus employees at the peak that were working on emergency restoration work were pulled from the other profitable work that they were doing for the same or different customers. And each of these contracts and each of the incidents were very considerably. So, while I think it's safe to say that safety and these restoration services were more profitable for us. We haven't put out any quantification other than we expect to have revenues increase this year to the levels that we talked about and the three year revenues to increase 5% to 8% annually.

Okay. I mean, is there a way to frame just the scope of the benefit even if you're not going to share the specific numbers? I mean, are we talking about pennies per share in terms of upside or is it going to be more or may have been more substantial?

Yeah. I don't think we've got any more definitive information that we want to share on the call, other than certainly, if you look at the third quarter results and you look at the incremental revenues, I think you can draw some conclusions about the incremental profitability of the overall increase in revenues, and you can see the relationship of revenue increase from storm work to the overall revenue increase. So, I think that math can give you some ideas, but I don't think we're providing any specific information other than that.

Okay. I appreciate it. Thank you.

Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Mr. Ken Kenny for any further remarks.

Thank you, Michelle. This concludes our conference call, and we appreciate your participation and interest in Southwest Gas Holdings, Inc. Have a great day. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.