Southwest Gas Holdings (SWX) risk factors, FY2024 10-K

Operational Risks

1. 01Southwest Gas relies on having access to interstate pipelines’ transportation capacity. If these pipelines and related transportation capacity were not available, it could impact Southwest Gas’ ability to meet customers’ full requirements
2. 02Failure to attract and retain an appropriately qualified employee workforce, including executives and other management, could adversely affect our collective operations and ability to timely deploy on our plans
3. 03Loss of, or a reduction in business from, one or more significant customers at Centuri could adversely affect results
4. 04Fixed-price and unit-price contracts are subject to potential losses that could adversely affect our results of operations
5. 05ceiling or are not allowable under the provisions of the contract or any applicable regulations, Centuri may not be able to obtain reimbursement for all of the costs Centuri incurs, which could have an adverse impact on our financial condition, results of operations, and cash flows
6. 06Centuri derives a significant portion of its revenues from long-term MSAs that may be cancelled by customers on short notice, or which Centuri may be unable to renew on favorable terms or at all
7. 07The nature of our operations presents inherent risks of loss that could adversely affect our results of operations
8. 08Weather conditions in our operating areas can adversely affect operations, financial position, and cash flows
9. 09Regulatory and legislative developments related to climate change, or renewable portfolio standards or costs for renewables, may adversely affect our operations and financial results
10. 10Southwest Gas and Centuri may be impacted by the effects of weather and climate change, including physical and transition risks
11. 11A cybersecurity incident has the potential to disrupt normal business operations, expose sensitive information, and/or lead to physical damages, and may result in legal claims or damage to our reputation
12. 12Reliance on third-party suppliers and subcontractors
13. 13Challenges related to supply chain constraints have negatively affected, and may in the future negatively affect, Centuri’s work mix and volumes and could adversely impact our results of operations overall
14. 14Disruptions in labor relations with Centuri’s employees could adversely affect results of operations
15. 15Changing and uncertain work environment and conditions at Centuri could result in delays relating to billing and payment

Risks Related to Previously Announced Strategic Transactions

1. 16Our options for disposing of our remaining ownership interest in Centuri may be limited by market conditions and tax considerations. Any disposition transaction of Centuri common stock may not occur on the anticipated timeline and may not have the anticipated benefits
2. 17If we dispose of our remaining equity ownership in Centuri, our and Centuri’s operational and financial profiles will change and each will be a less diversified company than each exists today
3. 18If the disposition of our remaining equity ownership in Centuri is completed, there may be changes in our stockholder base, which may cause the price of our common stock to fluctuate
4. 19We or Centuri may fail to perform under various transaction agreements that were executed in connection with the Centuri IPO
5. 20We have overlapping directors with Centuri, which may lead to conflicting interests or the appearance of conflicting interests

Financial, Economic, and Market Risks

1. 21As a holding company, the Company depends on operating subsidiaries to meet financial obligations
2. 22Centuri’s clients’ budgetary constraints, regulatory support or decisions, and financial condition could adversely impact work awarded
3. 23Southwest Gas’ liquidity, and in certain circumstances, its earnings, may be reduced from historical amounts or expectations during periods in which natural gas prices are rising significantly or are more volatile
4. 24Southwest Gas’ earnings may be materially impacted due to volatility in the cash surrender value of our COLI policies during periods in which stock market changes are significant
5. 25The cost of providing pension and postretirement benefits is subject to changes in pension asset values, changing demographics, and actuarial assumptions which may have an adverse effect on our financial results
6. 26Uncertain economic conditions may affect Southwest Gas’ ability to finance capital expenditures and could reduce capital expenditures in the industries Centuri serves
7. 27Our business could be negatively affected as a result of actions of activist shareholders
8. 28Increases in market interest rates may have an adverse effect on the market price of our common stock

Regulatory, Legislative, and Legal Risks

1. 29The Company is currently subject to, and may in the future be subject to, litigation or threatened litigation, which may result in liability exposure that could have a material adverse effect on its business and results of operations
2. 30Governmental policies and regulatory actions can reduce Southwest Gas’ earnings or cash flows and impact demand for Centuri’s services
3. 31Southwest Gas may not be able to rely on rate decoupling to maintain a stable financial position, results of operations, and cash flows
4. 32Southwest Gas may be subject to increased costs related to the operation of natural gas pipelines under regulations concerning natural gas pipeline safety, which could have an adverse effect on our results of operations, financial condition, and/or cash flows

General Risks

1. 33The Company’s operating results may be adversely impacted by an economic downturn
2. 34A significant reduction in the Company’s, Centuri’s, and Southwest Gas’ credit ratings could materially and adversely affect our business, financial condition, and results of operations
3. 35We may be unable to successfully integrate business acquisitions into our business and realize the anticipated benefits of such acquisitions
4. 36Natural disasters, public health crises and epidemic or pandemic related illness, war, or terrorist activities and other extreme events could adversely affect the Company’s business, results of operations, financial condition, liquidity and/or cash flows
5. 37Our goodwill and other assets have been subject to impairment and may be subject to further impairment in the future