Northwest Natural Holding (NWN) 8 Nov 222022 Q3 Earnings call transcript

Hello, and welcome to today's NW Natural Holding Company Q3 2022 Earnings Conference Call. [Operator Instructions]

I would now like to hand over to our host, Nikki Sparley, with NW Natural Holding. The floor is yours. Please go ahead.

Elliot. you, Thank welcome and third XXXX quarter Good to call. earnings morning, our

which will some are this assumptions, not reminder, a be based or occur. things management's They As statements. that said may forward-looking morning on may contain

a to language refer press at cautionary our the of complete list end For our release. statements, of the

file later today. to expect We our XX-Q

note, be the website following our As teleconference mentioned, on for is this designed call. being these Please available financial are recorded community. and will calls the

questions additional have the and investor an are at you contact please directly after me If call, XXX-XXX-XXXX.

Roy News contact XXX-XXX-XXXX. may media David at

Speaking members Chief and Vice remarks this Frank our answer to of and morning President are Officer; Senior prepared other David have then Anderson, executive team will David President Burkhartsmeyer, questions. Officer. Frank Executive your and be and available Financial Chief with and along

I that, With David. to turn over will it

welcome. Thanks, everybody, Nikki, morning, and good and

results to the a previously in guidance with see the strong continue moment. go We more expect will financial be to here the in line financial results Frank through we year that and provided. detailed of

recent at water This gas some an and Northwest of update summary up rate economic hydrogen I'll Oregon through and general on competitive projects morning, renewables provide Natural's case and with our indicators utility order. I'll news walk from wrap the business.

few its from unemployment in averages, XXXX. economic we The stable. conditions. In to for strength moderates in XXXX. remains is see in In a our while to Oregon was continue we housing gas September comments to continue market economy. to on the in labor Overall, Oregon employment X.X% monitor Turning carefully similar Washington, utility service and territory highs example, the but trending numbers, market national Oregon,

health as rise. single-family activity interest expected, rates cooling and As is

inventory was only tight elevated levels The Single-family permitting median X.X of homes home supply. of the sales remains Portland for XXXX. in price very for at about area Metro moderated this in X.X% the year. a quarter of sale of off third down The has months the

growth our line roughly expectations. is in Overall, with

expect seen So to the far, come online we've decline but the quarter. mixed-use in multifamily several developments projects, in fourth

chain last projects runway. supply a rate issues which the we Despite new during XX addition, In of put a about customer' to added months, on nearly these customers growth equates X.X%. longer have X,XXX factors, conversion

water large with our utilities, solid pockets We across strong to The in Texas. several water water X.X% waste Our X% in with providing and outperformance. market posting an in and growth water operate rates remains that X% though utilities utility, our in range extraordinary XX% areas of territories a water utilities footing. organic nearly continued wastewater service have water Unemployment economic our -- falls very Idaho, Ibaho from our Texas growth. with in a is extraordinarily growth. market housing experienced

the water and basis, over X% consolidated On utilities our XX a grew months. wastewater last over

and In a addition including increased to base collective West base our a recent customer gas this basis, On of customers. consolidated customer growth, by Arizona in our our to organic XX,XXX recent XX% water X.X%, Far acquisitions. grew acquisition utility water

now Rate October, overall our Under increased of Northwest billion. million on Natural's order, $XX.X This November general for ROE cost base and issued the summary In a approving Public an X.X% million rate a of $XXX requirement based order Oregon stands Moving X. settlements. Oregon Commission multiparty and capital beginning increased case $X.X of gas at an capital to revenue an was XX-XX X.X%. structure, of several utility. the the Utility

recovery energy RNG clause approved other items investments. efficiency as new part including our for adjustment recovery of case, of were program, Lexington new and RNG our deferral, automatic the full of the a to enhancements rate number of facility COVID low-income A our

updates which annual Washington for purchase our both and into new approval the states, quarter, projected Oregon cost also coming both for year. effect for went those gas the we in received October, the During from In adjustment November X. in we rates increases filed for gas in rates also those

recent paying to gas are less XX note increases, their customers area total ago. they natural important for it's these today our than years that service Despite did in

With over me Frank? little it into turn bit the go to to that, deeper let Frank a financials.

by drivers after-tax guidance I rate you, of Thank using morning, of XX.X%. everyone. for the basis conclude describe with statutory results the and the earnings quarter highlights good year. David, and on begin will an discussing year-to-date and I'll tax the the

and winter As a first and reminder, with months. earnings the fourth Natural's Northwest earnings in during revenues are heating the the of quarters majority seasonal

quarter, $XX.X million the or share. of That's improvement for $XX.X net For per $X.XX we a of results $X.XX or compared same loss the of third share XXXX. million an in per loss period reported share per in a $X.XX to net

other of quarter higher businesses the provided On offset for income increased of $XXX,XXX pension asset basis, margin $XXX,XXX a lower third quarter-over-quarter related higher to XXXX higher gas management earnings revenues, expense. Net our utility by to our expenses. and from related interest increased

management period results declined of higher nine-month benefited while the income improvement $X.X we million or prior utility period the event. the related for the increase $X.XX $XXX,XXX at of of cold the in million, reported an reflects first as our the or in months $X.X nine million, $X.XX of net per XXXX. from February weather $XX.X million revenues For XXXX The income asset share from to $XX.X net income businesses the net XXXX, compared same to other for gas period

colder XXXX Higher utility primarily XXXX. Washington to in new earnings growth, gas customer the at related were compared and to in rates weather

a $X.X utility As million. increased factors, margin of result these

depreciation equipment and our $X.X to increased higher increased driven due by costs. contract general pension taxes system. $X.X services increased and in reflecting $X.X to income million we lower and Utility professional and levels million, property, Other million, of IT higher plant O&M continue upgrades. invest Utility as

expenditures. of business, gas was was the capital operating $XXX XXXX, cash For for provided most activities which by utility invested million. We into $XXX million

Northwest debt rating long-term secured Our credit for Natural's of That ratings S&P senior stable AA- Moody's. AX remain for outlook. unchanged with and includes a

Our keep our with to ample remains liquidity. sheet objective strong balance

today earnings net assumes or policies, the $X.XX significant customer and The guidance or mechanisms conditions Moving no regulatory of changes reaffirmed outcomes regulations. in legislation changes on continued Guidance in to weather to for financial share. prevailing in growth, $X.XX per significant average or guidance. XXXX income company laws, range

continue long-term rate X%. per to earnings target We to a X% share of growth

With over that, I'll David. back turn to the call

Frank. Thanks,

key on a to long-term our Turning updates objectives. few

a which the reimagining and our day and innovation change in role to Our of believe driving the we committed We environmental value stewardship requires long-standing fuel the our why for rapid we're and every we the is climate operations behind in future. system choices core make force of is deliver. collective that action, planning

outlining best filed In The variety of scenarios decarbonization meet cost, reliability to long-range the plans our lowest to plan reduce and emissions. safety, Washington resource Oregon with September, incorporates the we commissions, and at plan achieve complex modeling options pathways integrated and to a resource arrive to needs.

We expect these to conclude year. proceedings next

just planning taking not are forward. future, the steps we tangible we're for But

equipment team goal blend coming and engineering by testing our a of test has the system year, and hydrogen to the completed blends pending with operations weeks, center, Our at X% of results. Sherwood XX% XX% in the increase end plans and to training

technology turn we year. into pilot We're is project This spring the also at and hydrogen live We'll Portland in on Electron, turquoise go to partnership project and work project clean facility. exciting of hydrogen continuing our methane to this Modern to in with carbon. be next solid an the operations expect groundbreaking testing

carbon furnaces by COX boilers For is equipment. equipment CarbinX pounds into is potassium XX,XXX dioxide a reduce nearly and captures couple from emissions greenhouse carbon we're The The blended which of to potential a each working existing unit energy the commercial and both on sell customers, our products use to pilot has carbonate, emissions. converted using to gas reduce annually.

in Canada direct of a this equipment. of been at and alone excited has on It cutting looking technologies not to to edge to innovation. commercialization, and other approaching installed already we and continue We're expect are the in rates Minneapolis. variety be are facilities capture adoption this grow in Several

business launched an our renewable to now gas on Moving natural we last update that year. competitive

energy we're on are a cost-effective focused producing and XXXX. to spring gas two completed track business, to the RNG in existing sectors help that in first facilities renewable providing of on we're Construction our decarbonize of through know, and solutions be sources. that you using waste investing streams As variety on

growing fast for As strategy. conservative we have business us and earnings represents growing market discussed water and add flows to and earnings, strive a natural to are transact. gas RNG time, the our right for a utility projects growth in while gas At in seeking to stable the most provide segment. to same past, fit we significant that opportunity The effectively sized opportunities renewable cash us add

excited this to enter edge our potential believe allows approach business. opportunities. and and thesis tailor RNG us interest space and have the recent our nimble which be transaction be a The adding due validated additional and business to has in about continue for we the project. our activity to growth size, projects of forward each to new to competitive look We pursuing this I

in Turning excited Arizona. utility utilities that to our in Water approximately a XX,XXX water to acquisition closed currently largest customers. our Yuma, announce utilities are I'm serves West region, to-date, wastewater and These wastewater businesses. and we fast-growing which Far

incremental there presence We grow also are believe in Arizona. to our opportunities

the another and this Washington for potential investment a signed agreement and this We also. an Idaho about just in also fact, week, past closed In acquisition excited we for remain utility. business tuck-in signed

August, quarter, our to Board And New increases. on Natural report then three progress year some the one announce I'm consecutive of morning, initiatives. making finally, the we Holdings important released with And our Stock Exchange York this this record. is companies XXXX ESG a the outstanding in dividend XXth dividend of of this for fourth the outlining happy approved sustainability our late increase only annual most Northwest on

we and and forward are quarter behalf we We've where on big pleased of customers coming a our for of year. you. up executing in So to got all conclusion, the are with look

And Thanks open I for Elliot, us morning. for this think out up there, any if questions those. ready to joining it we're there's

question from instructions] comes from [Operator Williams. Our Chris you. Ellinghaus Siebert Thank first

Your line is open.

you? everybody. Hey, are How

Good.

talked on little but you Can you hydrogen you sort color can more give what -- of broader on us are hydrogen? a new give us project, for little this aspirations about a your color

Yes.

thing going efficiency. you been first that our products there's go different I pipeline. decarbonizes, vocal, very obviously, that think is believe we've we you're can work as energy And on the if to through

The second a here, has time wastewater been natural for believe But biogenic on period hydrogen is Europe resources the thing and we gases also landfill. putting like do doing renewable like of from system.

a And for hydrogen, allows they're what flowing replicate forms put very doing hydrogen and of what well green that's pipeline into that really this we and the that product Europe. already and level of even in clean area of the frankly, to testing can different further. mix decarbonize purpose system positioned is there's the what's us And through

the the outcome. focus companies, on a Reduction main opportunities from do there's now the I There's other especially going Congress which good forward, funding passed. So, hydrogen is Inflation Chris, Act to after tremendous was for to utility. be push investment is long-term, believe

talked RNG. a in see speeding the that's Do up or has place enhancing some about your as these ability do taking effect? or think transact, been you you development maybe You temporary or slowing consolidation of that transactions to

to I have overall, renewable are we're change, on we same people systems. natural gas we see that transactions more Well, this get to show think is address but important. going seeing, the that If thesis the the really climate

competitive can small be our and doing that I lot are bigger in path it's nimble a a trying it on us to It's that we're we've of a people to good guys. and really bit would allow can a because doing. we're a we we compete water, But it piece, footholds, compete to size, Chris, not against just -- right very to like the and believe in a just these what are think more I the little reaffirmation market. of than that maybe already much here. going guys does that We call And established gain try big it we're transact focus. it's

not? or if I fully question know don't answers So that your

of companies that think leave companies will available into be the that gas of have public stuff retrospect? mean oil some smaller behemoth was that RNG That some you question. would maybe Does the and some than of these more my you looking next sort for space? in and Do means think of the the larger transactions, to going they're coming to you maybe

to what be. be on going what we -- to returns bigger makes them spending That want what is it sector. If we're similar and sure exactly lot will are the water And seeing very a they what these the projects, happen, companies are to I'm of believe in this smaller not sense. we're the time is

or about your having pretty you you seeing thought you lastly, transactions the What's seeing active today? in water water. a are And process in Are some additional business talked Right. environment? what

get I Water that, our to don't Justin? Why answer of President

the become two on that. market-related week, Washington in that's seeing we our We're Yes. We that a we and of will Thank acquisitions. larger past mentioned then pretty but And execute flow building the It's seeing acquisitions in one a in call pipeline predict. of Chris, of difficult to pretty the very that space. larger in out -- activity, positions new pretty what and existing Idaho. time-to-time, you. new and transactions on indicative as just in steady one occur will markets earlier there we're steady tuck-in from available, signed just water There's

on you from case? tracker you rate One last Can thing. little us the see a the RNG Okay. color how give working

it's Chris, to we from net and is in you. this renewable will is way them it straightforward. And pretty hear to able Yes, put rate assets Frank. work are base. the RNG tracker, Hey, the Good invest where into

We will invest.

bring and -- the we each for online, it when we then update X it will close, into rates we will with will PGA. rates We incorporate the November build,

every little a in there's can in we pick it's up lag, between So year. cases, bit rates but of it -- rate

begin year they're So opportunities, little within producing, a when there's to we would bit we'll ready upon bit online. they little so. the as came can, But to extent optimize we a of a have lag that depending if

in worked the for be if you and reflect Chris, investment bare replacement of remember, update will the we how similar, make base to steel we cast the which every when gas adjusted November And it bill iron increase is program. and that associated our as portion year. That's would Very the the cost. rates our then rate X,

percentage? revenue the by limited It's Right.

Yes. under of million of $XX-plus Yes. have revenue incremental that still SBXX We requirement per X% cost. still up which our year,

of we gas in So invest still a the at renewable to have bit to continue natural gas room quite utility.

details. for the Okay. much so Appreciate Great. Thanks it.

Chris. Thanks,

Our from next Instructions] [Operator question from Akyol Selman Stifel. comes

open. Your line is

Thank you.

there. Hi

Let and me just there on a RNG follow-ups. few just start off

your that early they you are talk outlook two So the coming XXXX. online in just that projects Maybe how you referenced could quickly about in for have comments online? and could additional you come

Selman, Renewables out He's looking and business Kotyk even Mike team of our across contractual President actively country. that landfill We're opportunities, dairies a that projects this Yeah. is from of so -- actively the at is Michigan. based arrangements. got and to everything is the things like potential

about to that's to trying of -- the in and, information at product. that little things like lot line can development now. and it's of I of projects for looking that we're So the right all you up give a terms also course, customers There's,

still it's stages. So early

we're then various more the next attacking But country. marketplace I We of on around bit actively provide hear this at business. just year think started what projects do his team how the looking the see a and is little terms But in probably you'll what early us we is market.

just you to participation Got bit side on you looking help little the maybe understand better? could over side? going be explain that that or to Could capture on just then, where more a little it. on the actually bit a that, capture, is in carbon your just transportation me exactly And

do that Kim, take you want one? Yeah. Sure. to

Carbon long-term and gas the X conventional clean as with start said, view, is then, hydrogen. David displacing I don't Why Yeah. renewable RNG morning. Good Yeah. project? and Our with

carbon to the think, some see and those And and are to of Reduction technologies. I Inflation the utilization funding really again, you going believe do flowing that also We sequestration in be capture, important. Act

partnered to of X is commercial with boilers. bigger have some Carbon two we equipment existing is natural basically, the projects, furnaces onto one And designed our fit customers. where we're So the gas and

both. exhaust the secondary to and energy from captures create can And reduces dioxide appliances. into it in and then market potassium be use then carbonate a it's It the converted those then that carbon used

just We in it about Canada. really is piloted, David as mentioned, in being This Minneapolis know example this one technology. that it. and But we're is of excited

unit. reduce emissions pounds As XX,XXX we it per to by annually potential the has mentioned,

And it's very flexible.

of You and -- on accounts, proves some can out, of as the them their you allows can system. put customer variety it meet individually along chemicals a it to with this

low-carbon really be project the is, cost so one project. lowest if and modern about With lot of electron followed other we're fuels. potential a Turquoise a that because the The in hydrogen pyrolysis Turquoise to has excited a about excitement Methane you news, it of hydrogen there's

$X they're a project has Monolith billion getting technology. on spending that DOE this

a equipment be have on us It we that our to allow project, our wherever flexibility this variety located of For out would distributed it. really proves to it in produce are hydrogen whenever need kind of areas system. the anticipating we or

these so consortium sort interested point. We're really the part of And learnings we're And which both of David exploring prove in again, hydrogen want sharing are technologies, to also other looking the America, before. as our of technology. hydrogen is in these out an the on the We consortium, but part kinds HyDeploy, we're price on at mentioned work that of international and utilities pilots pilot. a kinds blending, of of North some

it's for but different exploring gas lot carbon are also the capture I the avenues. of hydrogen of networks, we So And think a of versatility reflection a opportunities.

outside utility? opportunities the see outside to utility, you deploy all Do the it inside be or and utility would the

focus about Kim the utility. us the for talking is think what right inside now, is I

like utility, can have is think view XXXX, I by utility is the to of investment goals in and opportunities would inside utility. we just we think we it will is learned process. the our the of net-zero it right the our decarbonize utility. that -- this outside I think that one more provide focus be gas there it, But now, business, even about about and I also get The learn a of one main RNG our part we

for Thank up than helpful. come of two for to wondering could look if way in the And we the lower year? quarter a first just shapes Very at the maybe about it. you. were O&M quarters Got just there last one you taking this anything seemed I the there relative talk was was then me. expecting. fourth to

initiatives year. some had have We underway this

on year. say, say, great bit course. been and unnecessary trajectory. been, -- of a We're to we've little you're I'd or the the think doing keep far for at trying a expected the non, monitoring backfills it's up we've a question, the So about is expenditures bit that from And That, which too seeing during lid we of not slowly and where mandatory cost be. dampening year, of a I too utility X% really to

I costs, kind we've we think in would it extra year. bit the and reflecting be in with I'd so been maybe to were track our IT it's view a but of line to for will general, of our it's far, but action inflation then would -- some by we maintenance say, rest off of keep you we it expect where been. where really is we're level kind on management where and what contract little it's and from cloud driven be. the thought work for It's little expecting -- kind of a it But year just be, the it dampened in to

All very right. Thanks much.

Selman Thanks,

David President final our Anderson, I'll to now over remarks. for Q&A. CEO, hand and concludes This

of Thank joining hope out Obviously, media, and questions, you Nikki -- thanks, us. get and get in it's to you We hold have I you. David Elliot, Thanks, her a We'll Nikki hope all hold you there vote. remarks. of know get Roy the a or as talk if for day, said busy soon. prepared everybody, and any

for participation. We'd Today's call you thank to like your concluded. has now

You disconnect may your now lines.