Southwest Gas : Earnings Presentation Q1 2024 Results

Earnings Conference Call First Quarter 2024 Results

May 8, 2024

Safe Harbor Statement

Forward-Looking Statements

Unless context otherwise requires, in this presentation, references to "we", "us" and "our" are to Southwest Gas Holdings, Inc. (NYSE: SWX) ("Southwest Gas" or the "Company" or "SWX") together with its current and former consolidated subsidiaries, which include, among others, Southwest Gas Corporation ("Southwest", "SWG", "Utility" or "Natural Gas Distribution" segment), MountainWest Pipelines Holding Company ("MountainWest", "MW" or "Pipelines and Storage" segment), Centuri Holdings, Inc., Centuri Group, Inc. ("Centuri" or "Utility Infrastructure Services" segment) and Great Basin Gas Transmission Company ("Great Basin" or "GBGTC"). The following are subsidiaries of Centuri: NPL Construction Co. ("NPL"), NPL Canada Ltd. ("NPL Canada"), New England Utility Constructors, Inc. ("Neuco"), Linetec Services, LLC ("Linetec"), Riggs Distler & Company, Inc. ("Riggs Distler"), Canyon Pipeline Construction, Inc. ("Canyon"), National Powerline LLC ("National Powerline") and WSN Construction Inc. ("WSN Construction").

This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, without limitation, statements regarding the Company and the Company's expectations or intentions regarding the future. These forward-looking statements can often be identified by the use of words such as "will", "predict", "continue", "forecast", "expect", "believe", "anticipate", "outlook", "could", "target", "project", "intend", "plan", "pursue", "seek", "estimate", "should", "may" and "assume", as well as variations of such words and similar expressions referring to the future, and include (without limitation) statements regarding our expectations for our utility infrastructure services and natural gas operations, estimated future capital expenditures, projected rate base growth, O&M per customer expectations, our 2024 financial guidance and expected value drivers, 2024 - 2026 financial guidance and expected value drivers, 2024 financing plan, and expectations with respect to future dividends, expectations with respect to a separation of our remaining interests in Centuri, and the future performance of the Company, Southwest Gas Corporation and Centuri. The Company can provide no assurances that a separation of our remaining interests in Centuri will occur on the expected timeline or at all. For purposes of any forward-looking consolidated financial information at Southwest Gas, full consolidation of Centuri has been modeled in this presentation. A number of important factors affecting the business and financial results could cause actual results to differ materially from those stated in the forward-looking statements. These factors include, but are not limited to, statements regarding the proposed transaction structure and timing of a separation of our remaining interests in Centuri, the timing and impact of executing (or not executing) on such transaction alternatives, the timing and amount of rate relief, changes in rate design, customer growth rates, the effects of regulation/deregulation, tax reform and related regulatory decisions, the impacts of construction activity at Centuri, the potential for, and the impact of, a credit rating downgrade, future earnings trends, inflation, increasing interest rates, sufficiency of labor markets and similar resources, seasonal patterns, current and future litigation, the costs and effect of stockholder activism, and the impacts of stock market volatility. In addition, the Company can provide no assurance that its discussions about future operating margin, operating income, COLI earnings, interest expense, and capital expenditures of the natural gas distribution segment will occur. The Company does not assume any obligation to update the forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise.

Forward-looking statements are based on assumptions which we believe are reasonable, based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions are subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including without limitation, those discussed under the heading "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosure about Market Risk" in the Company's most recent Annual Report on Form 10-K and in the Company's and Southwest Gas Corporation's current and periodic reports, including our Quarterly Reports on Form 10-Q, filed from time to time with the SEC, and other reports that we file with the SEC from time to time.

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. The statements in this presentation are made as of the date hereof, even if subsequently made available on our website or otherwise. We do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

May 8, 2024

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Non-GAAP Measures

This presentation contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. ("GAAP"). These non-GAAP measures include (i) Southwest Gas adjusted earnings (loss) per share, (ii) Southwest Gas adjusted net income (loss), (iii) Corporate and Administrative adjusted earnings (loss) per share, (iv) Corporate and Administrative adjusted net income (loss), (v) natural gas distribution segment adjusted earnings (loss) per share, (vi) natural gas distribution segment adjusted net income (loss), (vii) utility infrastructure services adjusted earnings (loss) per share, (viii) utility infrastructure services segment adjusted net income (loss), (ix) pipeline and storage segment adjusted earnings per share, and (x) pipeline and storage segment adjusted income (loss). Management uses these non-GAAP measures internally to evaluate performance and in making financial and operational decisions. Management believes that its presentation of these measures provides investors greater transparency with respect to its results of operations and that these measures are useful for a period-to-period comparison of results. Management also believes that providing these non-GAAP financial measures helps investors evaluate the Company's operating performance, profitability, and business trends in a way that is consistent with how management evaluates such performance.

The amortization of certain acquisition intangible assets applies to our utility infrastructure services segment adjusted net income (loss) and therefore applies to adjusted net income at the Southwest Gas Holdings consolidated level as well. We believe this adjustment is a common adjustment in the infrastructure services industry and that this adjustment allows investors to more clearly compare earnings performance with Centuri peer performance; as such, beginning with the first quarter of 2024, the Company has presented this adjustment now that Centuri has completed its IPO and has begun as a public company. For comparison, the Company has recast adjusted net income for the first quarter of 2023, to add amortization of certain intangible assets in order to align the presentation of adjusted net income between periods, including related tax effects.

We do not provide a reconciliation of forward-lookingNon-GAAP Measures to the corresponding forward-looking GAAP measure due to our inability to project special charges and certain expenses. Following the Centuri IPO, we are no longer reporting Utility Infrastructure Services EBITDA and Adjusted EBITDA. Centuri will report those metrics in its own earnings materials.

May 8, 2024

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SPEAKERS

Speakers

and Agenda

KAREN HALLER	ROB STEFANI
PRESIDENT AND CEO	CFO
SOUTHWEST GAS HOLDINGS	SOUTHWEST GAS HOLDINGS

PRESENTATION AGENDA

Strategic and Business Update

Financial Update

Guidance and Outlook

SWX: Becoming a Premier, Fully

Regulated Natural Gas Utility

Positioned for Continued Growth and Success

• Safely delivering reliable, sustainable, and affordable energy solutions
• Significant population growth and strong demand across service territories
• Clear strategic focus on optimizing utility performance
• Working collaboratively with regulators to drive constructive regulatory outcomes to complement strong organic rate base growth
• Partnering with stakeholders to establish frameworks across jurisdictions to support investment opportunities in emerging technology energy initiatives

Notes:

1. Net income and rate base CAGR: base year 2024

Committed to Delivering Value for SWX Stockholders

• Affirming 2024 Southwest net income guidance range of $228-$238 million
• Southwest targeting 10% to 12% adjusted net income growth from 2024-2026 and 6.5% to 7.5% rate base growth over the same period1
• Improving earned return on equity through constructive regulatory outcomes and cost management efforts
• Delivering competitive dividend to stockholders
• Maintaining strong investment grade balance sheet

May 8, 2024

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Executed Centuri IPO

Initial Public Offering ("IPO") Details

• On April 17, 2024 SWX priced an IPO of Centuri Holdings stock, selling approximately 19% of Centuri at a price of $21.00 per share
• SWX retained ~81% interest in Centuri Holdings stock. Centuri's market capitalization was valued at $2.21 billion as of 5/7/20241. We expect to consolidate Centuri until conditions for consolidation are no longer met

Initial Public Offering

16.85M Shares

12.4M Base Deal

1.86M Overallotment

2.6M Private Placement

71.67M remaining shares owned by SWX2

Completed IPO Within Targeted Timeframe

Generated Significant Cash and Value

• Generated ~$329 million in net cash proceeds to Centuri
• Proceeds used to reduce Centuri Holdings debt by $316 million

Notes

1. SWX 81% ownership estimated value $1.79 billion as of 5/7/2024
2. As of 4/18/2024

Centuri Holdings 1Q 2024 Investor Material

Centuri Investor Relations Website

https://investor.centuri.com/overview/default.aspx

Centuri Press Release

https://investor.centuri.com/news/default.aspx

Centuri 10-Q Filing

https://investor.centuri.com/financials/sec- filings/default.aspx

May 8, 2024

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Advancing SWX's 2024 Strategic Priorities

Centuri Separation

CEO onboarding	Complete	✓	1Q 2024
Public Filing of S-1	Complete	✓	2Q 2024
Centuri Deleveraging/Refinancing	Complete	✓	2Q 2024
IPO Execution	Complete	✓	2Q 2024
Complete Separation			Pending

2024 Financing Plan

SWX Equity issuance under ATM program (less than $100M)1

SWX $550M Term Loan Extension

SWGC $400M Revolving Credit Facility Extension

1Q - 4Q 2024

2Q/3Q 2024

2Q/3Q 2024

2024 Utility and Regulatory Strategy

NV Rate Case Approval	Complete	✓	2Q 2024
AZ Rate Case Filing	Complete	✓	1Q	2024
CA Rate Case Filing			3Q	2024
GBGTC Rate Case Filing	Complete	✓	1Q	2024
Utility Optimization Executing Planned Initiatives	Ongoing		1Q - 4Q	2024

Notes: Checkmark denotes items that have been completed
1 Depending on Centuri separation strategy and timing	May 8, 2024	| 7

Regulatory Update - Nevada

Rate Case Activity

Nevada Rate Case Outcome Summary

	Dollars in millions
				~98%
	Proposed Revenue Increase1	$73.9
				of request after
	Depreciation Expense	($6.8)		depreciation
				adjustment and
	Cost of Service Adjustment	($1.6)		before adjustments
				to cost of capital
	Stipulated Revenue Increase	~$65.6
	Cost of Capital Adjustment	($6.5)		~$297 million
				increase in rate base
	Authorized Revenue Increase	$59.1
		Cost of Capital
		Requested at Certification	Authorized
	Target Equity Ratio	50%		50%
	Return on Equity	10.00%		9.5%
	Cost of Debt	4.51% NNV	Company's Position
	4.50% SNV

Authorized $59 million

revenue increase in Nevada

rates became effective in

April 2024

O&M per customer

	SWG Nevada5		Peer Group6
	$191.95		$254.43

Notes: tables may not add due to rounding

1. As of November 30, 2023 Certification. Request at test year was $69.8M.
2. Settlement Parties included Staff, BCP and the Southern Nevada Gaming Group.
3. Decoupled rate schedules consistent with those currently authorized.

1. Due to the timing of the 2020 rate case and COVID pandemic, the 2020 wage increase was not included in rates at that time.
2. Weighted average of Southern and Northern Nevada, based on application as filed.
3. As of December 31, 2022, utilizing average of peer group natural gas utilities (ATO, NJR, NWN, OGS, SR, & NI).

May 8, 2024

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Delivering Strong Results and Advancing Strategy

GAAP Net income of ~$136 million, $1 million year-over-year increase in 1Q 2024 net income

Approximately 40,000 new meter sets added during the last 12 months

NV rate general rate case approved (~$59 million revenue increase), including an increase in allowed return on equity (9.5%) and an allowed equity capitalization of 50%

Operations and maintenance expenses were flat between comparative periods, reflecting cost discipline

Advanced regulatory strategy: filed AZ and GBGTC general rate cases and anticipate a CA rate case filing in 3Q 2024

Deferred purchased gas cost balances decreased by ~$770 million from March 31, 2023 to March 31, 2024. Cash balance at March 31, 2024 now greater than $400 million.

Completed initial public offering with proceeds used to partially de-lever Centuri

First quarter consolidated revenue of $528 million despite unfavorable weather and timing of bid projects and storm work

Over $40M of new awards from existing MSA customers supporting the work to advance critical reliability and integrity spending

In April, paid $92 million to acquire the remaining 10% outstanding noncontrolling interest in Linetec Services, LLC

In April 2024, paid down $316 million of debt from proceeds of the successful IPO

Successfully onboarded Bill Fehrman as President and CEO

May 8, 2024

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Financial Update