Q3 2020 Southwest Gas Holdings Inc Earnings Call
2023rd quarter earnings Conference call.
At this time all participants are in a listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session you'll need to press Star then one on your telephone. Please be advised that todays conference is being recorded if you require any further assistance. Please press star then zero 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., 2023rd 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 web site at Www S. W. G.
Yeah Holdings Dot 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 Jay Peterson, Senior Vice President Chief Financial Officer, and Mr., Justin L. Brown Senior Vice President General Counsel of Southwest Gas Corporation.
Other members of senior management.
To provide a brief overview of the Companys operation and earnings ended September Thirtyth 2020, and to reaffirm earnings per share guidance for 2020.
The company will discuss certain factors that may impact this coming years 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 Korea, 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 key.
Forward looking statements are made as of today and we assume no obligation to update any such date.
With that said I would like to turn the time over to John.
Thanks, Ken.
Turning to slide four.
Highlights for our third quarter include the following first.
Holding company level, we experienced earnings per share of 32 cents.
Also saw S&P upgrade its outlook for selfless gets holding 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 a regulated utility operations. Our third quarter highlights included continued robust customer growth that added 37001st time meter sets over the past year, a decrease in operation and maintenance expenses were seven point.
$9 million.
Increased income from company owned life insurance or $4.3 million and a resolution of our Nevada General rate case application that provided us refreshed rates effective October 20 Twond.
Meanwhile, at our century 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 supply.
Work services to our electric utility customers experienced significant facility damage due to numerous regional hurricane.
And as is the focus of our century business segment, 90% of our trailing 12 month revenues accrued from work performed for our regulated utility customers.
Moving to slide five we provide an outline for todays call first Greg Peterson will provide a report on our third quarter financial results with segment detail for our regulated 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.
2020, and beyond 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 a summary of total company operating results on slide six.
For the 12 months ended September Thirtyth 2020, net income was 220 million or 397 per diluted share compared to net income in the prior year period about 192 million.
[noise] excuse me were 359 per diluted share for the third quarter 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 32 cents and 2020.
The next several slides detailed results by segment, let me start with centuries third quarter results on slide seven.
As John mentioned earlier century, 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 returned back to their original assignments once the emergency needs of our customers primarily electric utilities were satisfied higher.
Higher volumes of gas and electric infrastructure work under blanketed 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.
Sam restoration were typically generates higher profit margins than core infrastructure services due to among other things improved operating efficiencies related to equipment utilization.
The DNA component of it.
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 centuries 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 line Tech business that we currently do not home.
As demonstrated this quarter in particular, our acquisition of line Tech 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 eight and our quarterly natural gas operations results.
This waterfall chart shows the components of the 4 million dollar improvement in natural gas operation that 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 37001st time meter sets over the past 12 months and $400000 of rate relief operating margin declined slightly between quarters, primarily due to a temporary moratorium on late fees.
And lower connection reconnection charges.
As well as a reduction in the mouse associated with regulatory account balances.
Oh, and M. expenses between quarters decreased $7.9 million as John mentioned, including the decline in legal claims related costs of $2.8 million and a reduction in travel and in person training costs 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 decline.
Bad debt expense increased only modestly by $150000 between the third quarters of 2020 in 2019.
The $4.1 million increase in depreciation amortization general taxes reflects the impact of the $678 million or 9% increase in average gas plant and service as we continue to reinforce and expand our natural gas distribution system.
The 3.1 million dollar improvement in other income reflects increases in the cash surrender value of company owned life insurance fully policies of 4.5 billion this quarter.
Versus 200000 of income in last years third quarter.
Partially offsetting the Colby 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 senior notes that we issued in June 2020 to facilitate southwest robust capital expenditure program.
Next we'll transition to review a 12, Matt month activities beginning on slide nine.
Give me this slide depicts the relative contributions by our two operating segments. During the 12 months ended September Thirtyth 2020 as.
As you can see natural gas operations provided 70% of our consolidated net income.
While century utility infrastructure services group provided 30%.
The current century contribution is slightly higher than our expected longer term mix due to century's record performance in the third quarter.
Let's move to slide 10, and look at the detailed the beach segments net income increase between 12 month periods, we'll start with century.
Slide 10 shows the components of the $19.9 million or 43% increase in century net income between 12 month period.
Overall revenues increased 178 million between periods, primarily due to a $132 million of incremental electric infrastructure revenues from line Tech, which we acquired for which we acquired in November 2018.
Of the nearly $1.9 billion of century 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 a $102 million associated with incremental line tech 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 line pick operation.
As well as from additional equipment placed in service to support higher volumes of work.
The other category primarily reflects the portion of centuries net income attributable to the non controlling interest in line Tech.
The $3.5 million decrease in interest expense was primarily due to lower interest rates on centuries credit facility.
In the appendix to the slides accompanying this presentation. We have added summary operating results of century in a format that includes the 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 and further evaluating century results.
Let me conclude my presentation with 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 period.
The 32.3 million dollar improvement in operating margin includes 14 million from continued customer growth and $5 million and can combined rate relief in Nevada and California.
The prior year period included a one time unfavorable 5 million dollar 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 on 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 $700000 between period.
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 period, 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 expenses 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 us 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.
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 project and sustainability efforts.
Well 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 an order within 30 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 in order within the next couple of weeks and would anticipate being on the December agenda.
Which is currently scheduled for December eight and nine.
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 aro is 9% to 5% and an equity ratio of 49.26.
Percent 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.
Yes.
The Cdfive 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.
The proposed settlement agreement provides for a revenue increase of $6.4 million, including an ROI, we have 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 and 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, but also from the base rate request.
The parties simply recover the costs annually segments of the project are completed this was.
Submitted as a 16.
We included about 30 million that as part of our future test period in the original filing which accounted for nearly $4 million of the original $12.8 million proposed deficiency 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 a return of 9.9%.
In addition, the parties agreed to continue the turban differentiated rate design and bulk transportation and LNG 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 dollar expansion project in Mesquite Weve completed construction of the approach, Maine, which will be the main sorts 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 dollar SB 151 Spring Creek proposal. Our contractor has completed construction of the initial the initial approach may two our first neighborhood, where 100% of customers have signed up for natural gas service subject to final testing on the approach me.
And 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 that 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 and Eric.
I want to build facility to allow renewable natural gas suppliers to interconnect with our distribution system. One is a dairy farm and the other the wastewater treatment facility. We have that's filed proposals for two additional dairy farms that are currently pending before the SEC.
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 is thrown a number of challenges that we and our customers. We continue to navigate those challenges effectively ensuring all the while and it's 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 income.
Increased utilization of personal protective equipment alone social this from form.
Temporary suspension of utility late fees and disconnections for non payment to our customers allow 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 PPD and social distancing practices.
Continuing on slide 19.
We are also continuing dialogues with our community leaders, increasing charitable contributions to organizations that provide coated related support.
Watching for any potential financial impact from the pandemic, although utility margin under decoupled rate structure is remains strong employees continued to be healthy and as Greg reported utility bad debt expense rose only $150000 this past quarter.
That said, we will 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 37001st time meter sets.
For the 12 month period, ending September 32020.
As homebuilding in our service territory remains strong and those homebuilders and home buyers 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 cobot shutdown, including the opening just this past week of the new one bill.
In dollars circa hotel casino.
Well in Las Vegas, and continued progress on the 4.3 billion dollar Center strip resorts World project expected to open in summer of next year.
In Arizona exciting projects include the 730000 square foot loose with Motors electric vehicle manufacturing facility and Cathy Graham a 7 billion dollar expansion that Intel's manufacturing plant in Chandler.
And to some 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 show some of the many reasons why customers in our part of the World continue to demand natural gas service reliable and affordable energy services provided with excellent customer satisfaction.
Just this past month, we were very excited for southwest gas two in separate residential and business best than the west customer satisfaction designations from a leading third party customer satisfaction rating agency.
Help us 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 this 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 totaled $2.1 billion funding of our capital expenditures as expected to come from a 50 50 mix of internal cash flows and financing that will be completed with a balanced mix.
Debt and equity issuances.
On slide 25, we provide some additional quantitative detail on our future capital needs and sources, ensuring that our company is continued growth as finance 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 and rate base.
Which will represent an 8.6% compounded annual growth rate over the five year period and 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.
End of the third quarter.
On slide 28, we reference our recently issued sustainability report for southwest gas Holdings.
Florida is available for review on our website at the web address noted at the bottom of this page 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 informative and interesting.
Turning to slide 29.
Both of our business segments itself was gas holdings have proven remarkably resilient during our current national Krona virus Pandemics we.
We believe that our business model continues to be strong and stable with a disciplined focus our natural gas operations continued 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 bring our service.
With renewable natural gas energy efficiency and initiatives to decrease our carbon dioxide emissions will 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 century utility infrastructure services group will continue to focus on operations execution cost management and resource optimization cross selling of services to combination utility customers, increasing profitability in dividends and providing a source of cash to the parent company.
On slide 13, 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 include.
Assumed $3 million to $5 million of company owned life insurance earnings for 20, Twond compared to the $17 million in coli earnings that we realized in 2019.
Moving to slide 31.
Looking towards 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.
Two 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 2020, two and equity issuances should approximate $125 million to $170 million for the year through our current ATM program.
For our century utility infrastructure services segment revenues are expected to increase by 6% to 8% operating income should approximate 5.5% to 6% of revenue interest expenses estimated.
To be $9 million to $10 million net income expectations reflect earnings attributable to southwest gas holding net of non controlling interest.
And Canadian exchange rates can influence results due to our Canadian operation.
Turning to slide 32.
We affirm our longer term expectations.
At the holding company level acute equity issuances through our ATM should total of $500 million to $675 million over the three year period, and 2022, and we will target dividend payout ratio of 55% to 65% at our natural gas operations our capital expenditure.
Should totaled $3.5 billion for the five year period ended 2024, and we expect a compounded annual growth rate in rate base of 8.6% over that same period.
And at our century 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 five and half to 6.5% of revenues over the three years ended 2022.
Finally on slide 33, we continue to believe the selfless guess holding fits to attractive and complementary business segments that are well positioned for continued growth for years to come our regulated utility operations continued to experience strong customer growth strong rate base growth.
Focus on safety and reliability and continued reinvestments in our gas distribution system. So.
Centuries 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 business.
Offers a compelling value proposition for investors.
I will return the call to Ken.
Thanks, John.
That concludes our prepared presentation.
For those of those who have access to our slides. We have also provided an appendix with slides that includes 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 ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone Telecom.
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Our first question comes from the line of.
Richard just directly with Bank of America. Your line is open. Please go ahead.
Hey, Thanks for taking my Polyjet and appreciate would be a very robust update there.
Just curious.
On the HCC elections here.
It seems like you had to Republicans and one Democrat in them and the lead right now still from both sides to be count just curious where things are setting as as you see them how does that impact the timing of the rate case outcome here I believe we have some open meetings coming up with the potential and al Jay were at.
Look what gives you confidence in a decision by year end.
Hey, rich, it's Justin yes.
Yes, I mean, I think as you described there still counting bulbs, but at the moment it looks like.
It will be at a toll bar.
Democrat leading both good and then also lead market Peterson.
Correct.
Followed by Jim O'connor, So obviously.
Super close in terms of those boats, but they're still counting so hopefully we'll get some finality to that in the next couple of days, but we don't anticipate that impacting kind of our anticipated schedule.
Again, we've we've talked before about our experiences Dan kind of that 30 to 60 day window that we're still in.
I know that the commission has there at December agenda sat for the eighth and ninth I also know that they have a couple of contingency open meeting date. One the ended 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 and.
Dissipate Sienna root here in the next couple of weeks. So, let'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 that's very helpful. There and then just separately.
On your updated drivers are 2020, it seems like you're able to bend the cost curve at the utility there I'm 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 your plans for the remainder of the year.
Richie This is Greg.
As we have indicated certainly the COVID-19 impacts changed how we do business not only at southwest gas and century, but for companies and individuals throughout the country in the world.
We have been 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 its an important part.
Beyond going business success of our company to have the 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 cost 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 what those cost savings here.
Still confident and the range that you provided but not necessarily planning to the top end or anything like that.
Yes, we are very confident in the ranges that we've provided and.
I think as Justin as mentioned John Wood.
Concur one of the outstanding items in our guidance range will be the timing and amount of Arizona rate really.
All right great. Thanks, a lot that's all I had.
Thank you and our next question comes from the line of for Alzheimer's Citi. Your line is open. Please go ahead.
Hi, good afternoon.
Given the contract structures at century that you're that you added in the appendix you seeing opportunities for margin expansion in light of COVID-19 changes to work procedures in costs or is that cost initiative more on the Tony Thanks.
Brian This is Greg, but the cost initiatives that we've talked about are really on the utility side century again. Their work is performed substantially by people outside their office structure and again they are utilizing appropriate protective measures.
Measures, including the appropriate use of pp and distancing where possible but.
But they continue to go out to perform the 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.
Okay. And then also can you quantify the impact is something the storms this quarter on centuries results.
Yes. This is this is Greg.
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No 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 we're working on emergency restoration work were pulled.
From the other profitable work that they were doing before the first the same or different customers.
And each of these contracts in 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 effort.
The benefit even appearing.
Not.
Willing to share the specific numbers I mean, there are we talking about.
Pennies per share in terms of upside or could it be more hit 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 map can give you some ideas.
But I don't think we're providing any specific information other than that.
I appreciate it thank you.
Thank you and Im showing no further questions at this time I would like to turn the conference back over to Mr., Ken Kenny for any further remarks.
Thank you Michelle this.
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.
[music].