Northwest Natural Holding (NWN) 6 May 242024 Q1 Earnings call transcript

Hello, and welcome to the NW Natural Holdings Company Q1 2024 Earnings Call. My name is Natasha and I will be your moderator for today.

[Operator Instructions]

I now have the pleasure of handing you over to your host, Nikki. Nikki, please go ahead.

Natasha. you, Thank welcome and first 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 the at to release. the statements, press language our complete list of For cautionary refer of end

XX-Q file We expect our to today. later

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

and have contact investor questions after XXX-XXX-XXXX, If Newpedia please an you contact additional the call, at me [ are XXX-XXX-XXXX. at directly David ] may Roy

then this CFO, be other with of Anderson, Vice over Speaking Officer. I available, Chief our Wilson, and members to answer it turn executive Treasurer that, and to and Chief With Accounting Brody David. have David your will are President, will Brody questions. David along Executive morning and team Officer; remarks prepared

a Nikki, the renewables and our with and experienced. on net period to quarter and To morning, for morning, share last of update and everyone. will for economic full first in that This reported of line in $X.XX same are year issued Thanks, I'll wrap and the walk begin then with per income in in good compared guidance on our income year. results results, the an decarbonization $X.XX takeaways company. through with, a go water We event the February. our financial share track winter few year Brody activities and indicators we peak net that per we financial quarter's some from up through I'll

regulatory a to in end the February, XXXX reflect call of the lag and It's capital XXXX. mortgage the on results investments filed discussed combination the year-end rate general at we pressures. inflationary in case related reason As our in of

low gas X.X% to in XXXX pension, to results utility depreciation our higher as period interest Related in located outside Arizona. expense Phoenix, at softening, same rates despite were organ's territories utility signs X.X%. seeing service Rose quarter Valley our of XXXX. some service rate the Unemployment our of compared at remains First just low water as territory include and unemployment

permits growth counties. X building of posted X for Single-family double-digit the

months. the water XXXX ended utility serve our the and growth and period in X.X% over Our our serve XXXX Humerizona same as Population months utility the where service winter. high grew to to forefront are our was XXXX. water utilities customers the Texas, blue X.X% water last as largest Essential XX gas growth in customers. March for And Collectively, this X.X% XX was compared customer energy in base our Topas in utility past where again based at

in about week Frigid and and the Pacific January. snow temperatures severe wind for Northwest a region hit

customers. That's the again Our December hit customers set January on than We about terms gas send-out. long-term million record reliability the sales nation double daily region system of Natural's XXX,XXX average $X energy natural were heavily Saturday, new system. benefits delivering a in Northwest and gas and of record to more and day our the once natural critical life-saving delivers energy reminded the system our region. to on relied our provides previous our winter XX, peak 'XX

power entire experience and Mist, event. of occasion natural well, supporting the gas electric throughout providing region's gas Saturday, a employees direct outages. heaters that and pleased stoves on-system systems system when to support that our the use experiencing and ensured and that our the and delivered fireplaces, was like essential appliances water our performed generators widespread storage to system same energy gas rose volume record I'm gas new facility report electric our for

decades of renewables, wind, energy solar more During the from its Natural combined. the Despite week system Northwest United that States and hour, electric than only of electric use investment power sourced, the XX% X% in delivered hydro. energy providers highest for local

gas only events. the Climate during be the acknowledge will these provides society, we successful policies system if understand as a critical role essential modern and

Our have best resulted energy of innovative new driving each in our strategy and point emissions what continue we research systems commissioning decades climate in through why even years investments and respected a our today. right gas believe X affordable down further. over surveyed system the territory in solution. already they voters the a place in we many the service starting agree independent as leverage be transportation for ways X the systems, us. disciplined last integrated That's businesses our homes safe the It's a doing We've in to Voters do to with firm. electric, is

Time and data a the shows time citing that diversified concerns. set want energy solutions, affordability reliability of again, voters and

X voters to be out in essential system for X been XX% and of years. gas affordable, meet financials. power gas outages, concern example, an the the We increasing role understanding reliable needs. to X This Brody cover For the today decarbonized we electricity as system. consistently gas it energy of to me energy say that, natural natural increasing a reliably of of and past let over need the appreciate view With the turn continue plays system voters With voters to has both about the essential. natural

and first I'll the for for good drivers discussing year. by and morning, with begin results earnings David, quarter Thank guidance overall for you, highlights conclude XXXX, everyone. the

includes interstate storage and gas segment earnings expenses. segment in reminder, which includes revenues NGD services, Northwest our are Natural Also, our services and and a company and winter with quarters Renewables or Northwest first generated of seasonal Water, Natural other, the As the majority Natural's fourth distribution management and asset our the holding Northwest natural months. during earnings reporting heating

first Before few I of for walk I results, XXXX. through a financial wanted outline detailed the to themes quarter

you stage for that us for an year future setting XXXX remember, is may As is growth. investment the

and a of XXXX related lag sheet, a While an capital our balance we are inflationary to maintain strong that pressures unchanged earnings earnings simultaneously. investments for our to solid outlook, long-term we combination reflects continue experiencing and growth ratings, guidance credit

lag technology record to expense is and levels. investment depreciation of in increased at The Our cybersecurity shorter XXXX or gas these the level due reliability in making safety, live utility regulatory and associated exacerbated the with associated is -- nature higher assets. necessary with and investments of investments technology

and Second, of our gas amortization inflationary primarily on operating pension utility expenses, computing the several pressures due of costs, technology higher is personnel O&M contending expenses. renewal with contracts, the to investments higher cloud multiyear

to to lag, gas we reduce utility reliable Oregon and a maintaining instituted the can has team aggressive efficiently a possible To resolve case cost-saving filed rate last regulatory year. as safe all Our while do measures as and operate late we costs system.

into expect November We new rates effect will X. go

or in costs, by first moving XXXX decreased $X.XX weather per on in lag saving utility earnings period due our share $X.XX the share Now same Utility measures. and first year-over-year gas to the cost offset of inflationary to quarter Utility costs. on of primarily of O&M partially $X.X at margin which and $XX.X per income and of We earlier. to increased net investments is to discussed the reported we amortization benefit lower and pressures effects million deferrals, regulatory due for gains million compared reflecting results, for net warmer income XXXX. customer lower the the quarter decline Gas million primarily growth gas of or results. the $XX.X Lower drove

taxes million. $X.X and general income million driven depreciation interest to primarily declined Utility $X.X higher expense financing. incremental by $X.X and increased long-term pension primarily Other million, increased costs due debt

lower of management $X.X asset an increase provided loss $X.X million of businesses million year, a net the was to which other Our due last same to period primarily compared revenues.

overall in to capital the our of cost we've remained increasing, With disciplined deploying approach capital.

into provided request. majority of in and business with $XX are and reliability the was activities cash regulated These in and million. operating XXXX, We water investments for by the our planned case rate invested included projects For our $XXX businesses. gas the million safety

Our balance keep XXXX sheet $X.XX of to strong in ample our the with per company liquidity. share. annual range today net $X.XX The reaffirmed objective guidance to income for earnings remains

significant significant distribution consolidated or regarding growth, in outcomes provided earnings. or conditions In also policies, laws, Guidance have assumes we no continued prevailing mechanisms customer earnings and legislation in regulations. release, our the average quarterly changes our of weather or changes regulatory expectations

continue target growth from rate David. turn compounded With share earnings that, XXXX a over of per annually through I'll X% long-term to X% XXXX. We the to to call back

Brody. Thanks,

utility. our gas Turning to

to grow work on issued we to decarbonization continue initiatives. solicit to RFP renewable closes We and that natural gas, proposals Related request bids for in mid-May. offtake a

pilots For have hydrogen, motion. we in several

actively has carbon markets in solid This production can of modern through hydrogen like and our with sequestered pyrolysis a First, been commissioned capturing secondary farming the used tires. be pipeline and is our from for is a process. project

fully the over equipment the this test to coming continue technology. understand to months We'll

used for and issue. project help to our that system XX% training at industrial customers hydrogen our solutions. prepare We've include results, Next operations to our at applications cost-effective future different years and Sherwood with now, a level without now, are steps opportunities for been for levels testing blending decarbonization demonstrating important is Right all explore data few at is a broader which will us blends an this be assessing who can positive for eager hydrogen blending. blend center

to excited we're backup of House policymakers Bill of pleased think Northwest pump solutions. you this have a will We'll emissions. I'm that a the this, [ $XX system. and gas cost quarter, and great XX like We on ground brown XX also solutions networks the support Pacific with heating. the pilot as proving coupled gas supporting to to establishing this was ground reducing our available source to heat updated XXXX, examine for progress. view too. last to reported we cover with way In We forefront. utilities the great promise million pk support incremental heat As hybrid Oregon kinds natural thermal in be state supporting energy in Eugene, source see keep these at pumps of needs systems utilities energy as level we believe of are project innovative passed February the ]while Washington

Turning to water.

growth execute strategy. to on continue We our

robust pipeline, seek the XXXX, focused multiple rates value. right as to at create In companies. we opportunities a continue While disciplined to manage also are refresh staying acquisition working we're we we to hard and water

investments far, utility as growth. to these we to related and and to later to file expect So customer and X largest increasing mainly systems in current including rate are capital cases find rate our meet investments additional are need this continue support quality These to we year. Arizona, X cases process, cases standards, substantial in

Moving renewables. on to

business, to variety existing streams renewable we're using and As you providing energy that through decarbonize solutions cost-effective of focused sources. sectors waste know, on help a

land is Our facilities to investment first that convert with aces gas. designed to an is natural X in EDL project renewable

year both gas expected is the last and Construction on facilities raw the production levels. was completed at

is However, technical the conditioning a equipment. there with issue

resolve this that and right And and be will if equipment Our be completed. both expects begin partners' new issue are goes this technical then commercial will EDL to teams according believe everything facilities now. online summer. operations Testing later installing plan, to ready to

this Northwest Ethisphere named our reflects compliance Finally, all, spanning I'm XXX morning, honorees business proud year Northwest long-standing the third X Holdings best-in-class practices. Natural XX in world's to through and one of Most of This and utilities being and Natural XXXX for Ethical commitment energy were X leadership the recognized Companies only integrity countries honorees In ethics, and running. XX industries. by governance of is Holdings industry.

working In of conclusion, our to execute the will continue and strong businesses. financially is on all behalf your across your opportunities company on

we'll questions. ready, So And you're for joining up when it this thanks for open us morning. Natasha,

[Operator Instructions]

We our please go your first Akyol ahead. a will and is line Selman, of from take question Selman Stifel.

a the on seeing just Looking and But together. questions income probably expense quick X guys this Brody, loss and a other can looking going we since for million. forward Just bit be to Can through you just at what that? that go go [indiscernible] we're of to impacted $X.X at back getting you and for to I'm me little

Sure.

If or hitting you're looking of like XX couple looking there's you're at that months, quarter-over-quarter things if line a the item.

of of through in the then operating [ And some in might us that O&M had So fall Go sale include have QX hit water number can had income earnings of we out release don't settlement in on here, ] been the XX for some rolling of the into last flow the those in that on a that year-over-year would -- we year. our there. costs other months see the that gains you period costs XX us Ranch closing

wastewater -- some So some we some And handling there flowing costs pension water the through of well. then costs the around number that of as as have well.

we that for going the pension earnings driving as kind for number to is the year. year, of -- one for think if costs I biggest pension So the us do XXXX this quarter, going movement highlighted you up of and impacting QX QX to be is overall factors that

you. Got

into some about that And QX? so QX thinking relief similar get before you in and rate then QX

that's think fair. Yes. I

All conversations went I for maybe guess, to you Great. statement, I want outlook. could Fair on little bit -- you, right. a Okay. how the talk And just David, and with downgrade then, the S&P and the about just

If you could bit just little about talk that. a

to with S&P agencies it and you, both Brody, good. Yes. but we will our I'll probably tell use, relationships over Moody's turn that are I

background holding on We have them, little over I Brody, to they're made regular contact with basis. and that to very twice and the level? give year, the you discussions But a fulsome the on why least of at Nicki company at with a turn in move S&P don't Brody bit it a

Thanks for the Yes. question.

got by the we overall rated the A+ got rating matched which at businesses. company, to holding the company and both and time, outlook last gave utility a year, first you'll So S&P the holding our gas at time negative for an recall

So that. watching they've been

Our right overall XX%. around consolidated debt that, FFO threshold sort was to of level at number their

last at I a the end of slightly consolidated think it year. below fell on basis

So closely. they that looking at were

to the held holding stable Ultimately, gas utility study gas but the the company moving downgrade put and in they decided outlook consolidated utility forward. fact, on

basis, on the the a company view at and They rating the it down to gas our saw rating consolidated strong, but really on that did in debt financial there So gas holding at of have Felt have that's the A+ the utility. and maintaining conversations them. the metric and we really And like we negative our the with with this outlook. gas continue really utility with their company the holding was stable at of that utility to some a good reflected S&P pressure maintained A outlook on level. kept drop we

fair to also. to it's a not say think I holding company unusual it's below notch have one

further questions. no have We

call the would like I to So David. turn back to

couple you, Natasha, indicate at California us. for thank Gas lot just in you American everybody, the would and weeks, Association's see down Financial joining of thank Forum. a as in you, Well, Selman a And hopefully of here

Otherwise, there reach great have the you you Nikki. forward questions, to you we If up any Have catching out day, a future. in look or to with seeing everybody.

This you concludes today's joining. Thank call. for

lines. your disconnect now may You