Northwest Natural Holding (NWN) 2 Aug 242024 Q2 Earnings call transcript

Good morning. Thank you for attending today's Northwest Natural Holding Company Q2 2024 Earnings Call. My name is Jayla and I will be your moderator for today. [Operator Instructions] I would now like to pass the conference over to our host, Nikki Sparley, Director of Investor Relations. Nikki, you may proceed.

to quarter welcome earnings and morning, our XXXX second call. Good

which will reminder, are this assumptions, not some 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

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

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

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

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

Thanks, Nikki, and good and welcome. morning,

the full Brody and update economic in our through in are financial and walk rate I'll the results few our This line track a February. in year an through issued up a Oregon here moment. provide our for initiatives. with growth will details case. and morning, guidance and of with update Our I'll on the results go gas an decarbonization you utility long-term indicators wrap year on on

XXXX. X.X% U.S. national June annualized at Oregon's a drop service Turning to remains to average to a Oregon employment few June. low with comments to growth X.X% Related increased to unemployment in rate territory, the compared on on gas utility Employment the in for our X.X%, economy. and growth par in

Oregon ahead. metro the conditions signaling housing for customer permits area, in and XX.X% increased in were Portland Single-family X.X% up favorable growth year-over-year

XX the counties our XXXX. the in base XXXX June, for utility water gas as service posted our months of period customer our utilities X last the low in over ended Collectively, as same For grew water double-digit compared were single-family growth serve, to X%. XX permits June months. X.X% In X building rates territories the and unemployment water

on update cases. an rate to gas our water and Moving

Our in investments necessary utilities reliability record levels. at have continued and to technology make safety,

effect wastewater and increasing utilities, growth. systems to customer with these find other Like filed investments why standards we Oregon utmost utility contending and quality our consideration operating and the for water file meet bills. number all very we're many with and the careful our to cases of We customer rate we pressures continue water support in reasons only decided current and need a on inflationary These also and wastewater expenses. gas our after to For to attention on utilities. are substantial companies,

this time. know is a We difficult

constructively can maintaining while all operate Our been have stakeholders worked cases team happy safe majority as and to to done with I'm report has efficiently cost filed we've and All these in they in dockets. and substantial made as have progress. systems. settlements of reliable the reduce possible, party the

and million $XX Concerning case. of of resolving ROE the system approximately structure in consisted filed capital a of of rate capital X.X% July, million the and to settlement a cost included $X.X and of Natural investments in also $XX.X increased general an all-party XX-XX of expenses the included revenue that requirement case, utility a settlement The and for related a depreciation. million X.X%. Northwest That gas Oregon majority increase

rate base a rate base since the last total of would for $XXX rate case $X.XX billion. addition, increase In million

we November fall filed preliminary order We full week, for and from X.X% Oregon compounded X. will about rates basis, in rates that's more We've increase an offset been which settled XXXX. in a natural updates purchase case a we expect This coming than our X, in On utilities rate effective X.XX% wastewater did the expected with gas annual with on into an gas XXXX. With commission That the services in this rates from go rate. adjustment, pay effect in, new in me rate November the about an prices water decrease they it which utility expected have Gas bills, largest an to to the the rates annual will includes case. All Arizona projected for gas customer resulting of cost. customers case growth that, X% cases. their winter dropping, help turn for rate also let Brody. several over expect

I'll Thank year. earnings discussing second XXXX. for by guidance results overall conclude for Highlights and you, with everyone. David, and the begin and good drivers quarter morning, the for year-to-date

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

I XXXX. of results, for a to themes through couple wanted Before walk I emphasize financial second quarter detailed

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

rate solid we we year. for unchanged combination and a our reflects gas last to resolve While XXXX maintain growth ratings, long-term sheet a credit are filed we experiencing late simultaneously. To of the related inflationary lag regulatory earnings case that utility investments strong our outlook, balance continue capital pressures a Oregon to an lag, and guidance earnings

we all-party go recently will expect and filed settlement rates mentioned, As new November David effect into an X.

pension debt million, higher due costs. by in million second utility million, $X.X for net same income the income as $X.XX results. per Lower Utility Gas result and a $X.X $X.X the reported our drove discussed earlier. Utility saving we and of of reflecting customer the regulatory net growth to $X.X $X.X amortization margin earnings long-term general $X.X increased compared Interest to on declined million measures. of investments increased mainly and consolidated XXXX depreciation primarily pressures gas cost Utility quarter financing. per inflationary to results million. deferrals. million, for million $X.XX taxes O&M of loss increased moving Now expense the incremental share decreased of lag $X.X or period We from XXXX. at quarter or driven second share a Other

income of other $XXX,XXX, to of compared period businesses due to gain XXXX. primarily provided million the Our was a on same $X.X decrease a settlement last which year net in

results as XXXX, and the same our partially quarter, reported amortization as few income For months customer of million share of million net similar the income weather we drove XXXX. or net in of X or Utility gas $XX.X noted customers we on the offset the of gas result to effect and of results. the gas for lag the of $XX of first earnings on more that on namely on margin themes $X.XX growth Lower by gains $X.XX pressures. and per deferrals, for weather investments utility lower details compared regulatory utility A the costs. consolidated with at $X.X inflation out million normalization increased warmer opt a period

incremental lower offsetting and interest Gas higher but Interest contractor this mainly costs. increased higher to equipment decreased AFUDC. from and million, general $X.X costs Other lower was income Utility million, and Utility decreased million information O&M depreciation cost-saving million income $X payroll employee and technology investments. expense measures, long-term reflecting benefit and taxes partially due equity $X.X related pension to increased from also $X.X costs, higher property, financing. debt plant

primarily a Our of other gain businesses XXXX. reported settlement due in million, to a on $X.X decrease

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

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

changes strong share. ample no customer guidance sheet Our our average liquidity. outcomes today net growth, assumes with continued the laws, in annual or legislation changes objective of regulations. remains per $X.XX weather reaffirmed range keep to XXXX conditions The $X.XX Guidance or mechanisms and or income regulatory in policies, company balance prevailing to significant in for earnings significant

release, have earnings of provided also our we expectations quarterly consolidated our distribution regarding the earnings. In

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

Thanks, Brody.

Utility. Gas our to Turning

evaluating related decarbonization our closed natural May pilots. to to begin gas, work utility on currently on expect contracting to our very hydrogen Work offtake and continue with We We're the soon. renewable in good continues responses. initiatives RFP proposals

are remember, also directly also examining reduce sites than And too. Modern hosted customers. utility Turquoise unveiling same capture may solid first form on at could boilers carbon for in technology time, resulted We're we largest ground coupled future delegation become hydrogen May, edge. North deliver also our natural piloting congressional American We a XXX which to hybrid just stakeholders partnered you source our we're to technology gas the believe more system. In important heat that key and Hydrogen the cutting the attended to pump the this policymakers it clean backup the our would ceremony excited of week, and systems in see are carbon in As energy blended last gas emissions fact, from see we sequesters At to that other be with with Hydrogen, heating. firsthand. at permanently they solutions to

Natural Turning to Water. Northwest

customers ICH, execute on built will continue X,XXX we to as ultimately will in June, is add out. agreed Idaho, and to We Puttman Infrastructure acquire grow Oregon to which growth California, XX,XXX which and our strategy. it In

sustainable Waters' shares to a to will provides years lead in leader and recognized business. experience the customers. executive recycled the wastewater water Northwest of our systems. Most infrastructure recycled market our Tom importantly, is acquisition happy over water, be and water investing, developing this core values Tom entry an innovative water Importantly, very Tom into operating with team XX and commitment business. the I'm Natural joining

acquisition soon. We expect to this close

Moving update Natural renewables. on Northwest now an to

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

is raw investment project convert Construction to gases gas. with is and an to landfills. continues production natural forecasted that be completed the from EDL the both in in XXXX, landfill was gas first renewable facilities to designed at facilities levels the X waste Our on

are gas. be production progress. able and all Our finished this needed ramping to I'm pleased landfill very partners of plants to process additional with have up equipment installing the the

expects online now to both to operations ready EDL later and begin be fall. commercial this facilities

Our will million or reaching per upon our only specified approximately investment completion levels. production at facility made $XX election at of be substantial

contracted with flows and open we'll price thereafter it revenues to that begin to investment-grade long joining morning. counterparties. Thanks we us agreements from cash have the primarily that, expected questions. With term, for fixed up Importantly, this offtake promptly are

Our Williams from Shank. with Siebert Ellinghaus Chris the first [Operator company comes Instructions] question

recent where announcement, water the recycled market? that just of talk about The can aspect you see you

Yes.

one, have kind you let mind. So take of don't me if that Justin

that important and obviously actually areas in irrigation for areas, That's typically it overall and able such purposes. really provide Chris, a the really community. plants recycled is of has California, to lot -- the water-scarce water are company water as what required treated technology, And to Idaho, currently it think does of effluent wastewater the about areas it's water our installed treatment service. reduces reuse Oregon, as Central serve a Arizona, customers the that that

support a us for we opportunities new So as technology it going forward. that really and growth see and create application will interesting help

Do could you say, have any water? other industries recycled utilize your that like, geothermal

some any industrial have we There Geothermal, there, format. and in are something that that's commercial a Puttman I similar future. that we into Infrastructure in but specific could serves look the applications customers that don't know

I any of accelerate for water And Well, your you the your environment are thoughts tenor have Okay. growth see sort the of do there? current you. on What to opportunities M&A?

Yes.

little if a out capital you a M&A say down probably of today. of the in that's the cost slowed and bid-ask market just So current the I will, spread, bit, market, function and would the it

opportunistic a our we're are pipeline So seeing tuck-in robust them a we're acquisition have of little around always we existing But at something substantial, slowdown. of a opportunities on and take opportunities. an that service do to bit more but territories, Many we'll acquisitions of still looking basis.

for is maybe see materially for in reporting and of your water guys the Brody, talked terms so the there as business, opportunity guys is far water about water for vis-a-vis you that have Okay. reporting utilities you future. how but this is and valuation expediting higher. in segment an And you But

the that when place. of So material be there benefit takes to stock could a reporting

So have guys you about thought aspect? that

the Chris. for Thanks Yes. question,

our investors. I all for always think disclosures valuable we're of considering our what's and

is And for feel what both that a so receive. requirement to on like with investors look SEC, but also from compliance we'll then we at best our the

a setting for also number yes, we're is And as water ongoing, grows, that. the business. say, looking would an year. us, and a cases I at growth and business cases side, on you in So us investment future know, rate those of this actually settlements the number of rate always we've water up We've on as reached got this for

are and in and that pleased the we do future. at very disclosures to always there, plan what looking So we

will We Chris, you, impacts. hear valuation We drive Yes. understand and decision. make a the us absolutely that to

last One Okay. question.

a is some that this final interpretation point, you you a When XXXX guidance at of about that thought Given order lag in a earnings is get Oregon, difficult guidance maybe that earlier the some year, side? just maybe power your of the what or it's have on year. case given

it that. do is first think the will got I get we approved. We to needs about We mean is -- be still a the right? thing through news case, settlement, but good to we've

will Chris. So but I this, don't get too want consider that, we far to ahead of

Our Selman next question comes Stifel. from with the company Akyol

Selman. Rakers on for Tyler This is

of sort going it just it's wastewater that? to of Water On wondering more love looking opportunities. if or to stuff. California acquisition, be more growing into CapEx whether the the then growth sort geographic it's like footprint, at more what just get I'm the And you whether it's alluded into thoughts. Puttman your I'd looks entering these And

question, Good Tyler. Yes.

So there are that. few of different aspects a

terms base. there's But we growth. that long-term certainly assets opportunity the customer are serve to support existing CapEx, In an acquiring capital of existing investment a

number a communities, different of individual that Puttman owns. utilities there's So Infrastructure

those of partly -- are those And built some many communities of only out.

plant So growing homes ground the areas that's down in market. for pipe ready in in treatment example, Idaho, Diego of to and Boise, the future and serve the San that outside picture the infrastructure are rapidly underground

but invested, future And also opportunities. that there's in opportunities and also future they so the that capital been territories potential there beyond has service we existing see serve, there's And expand opportunities but already growth long-term to that.

on hydrogen, that blue business? whether opening looking forward may the green hydrogen, Turquoise or just still with then at you Modern, in of or Or whatever -- And of you forms are you as path about it the with remarks that the be the of just the sort it Great. I know seeing other side mentioned are Hydrogen yes, be? or

we directly Yes, at to various places. is What were really just would distribution look that can these this in David. is units on We them. system about of the this trying out, what's opportunity all unique point go

hydrogen And so you the large hub have don't to make to have a hydrogen.

and example is So business think the are to one above on R&D how we just hydrogen. decarbonize. to it all I coming you of for And more gas this dollars of shows technology the help

weather, warmer And normal terms on you I'm -- the sensitivity of full sort year It. how expects earnings? then the have guys warmer Got guidance regarding mentioned to that affects weather. more weather, future in just wondering of

weather. for we weather we warmer-than-normal the heating quarters, quarters are the the largest did first Thanks quarters referenced Yes. experience warmer for the fourth quarter. the and us, weather, impacted question. When Generally, by in first

offset lag the we've So do, the we're what those year-to-date the a help year, year, the I the and think that's remainder some remainder assuming the always normal for again, of -- rest and we given hard of forecasting weather then we're pressures of the for with regulatory earnings And for and are on just would worked to year. inflation assuming normal O&M weather, savings. really we

of And Tyler, our then load reminder load have by well and opt it, most normalization, option normalization. but weather doesn't just load out weather over of XX% to in normalized Washington is covered and some on a have customers is our our weather an Oregon

it's the minor side some have So a weather impact, can overall. more impact of of

no the time, this queue. At questions registered are there other in

closing remarks. David like I'd over Anderson to the conference pass So back to for

us. Well, joining everybody, thank you, for

up. have follow of happy you Thank please we'll you. can any to hold great we help questions, any have Everybody, to up in weekend. a If way you be and a Nikki, get

conference That concludes your for call. and participation, enjoy the you rest your of today's Thank day.