Northwest Natural Holding (NWN) 12 Nov 242024 Q3 Earnings call transcript

Good morning, and thank you all for attending the NW Natural Holding Company Third Quarter 2024 Earnings Call. My name is Rica and I will be your moderator for today. [Operator Instructions] I would now like to pass the conference over to your host, Nikki Sparley, Head of Investor Relations at NW Natural Holdings. Thank you.

You may proceed, Nikki.

you. Thank welcome Quarter and earnings our to morning, XXXX third 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

the our these calls note, Following a this Please recording call, designed will financial for website. be available on community. are

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

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

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

over turn With will that, I to David. it

with good and In third strong happy and wastewater case perform on our plan, The cases. great having company conclusion capital focused water and executing everyone. the quarter. including dockets rate and well, morning, of on continues investment success. also very utility Nikki, to a the XXXX, growth to completion utility been our gas we've I'm Thanks, opportunities regulatory the Oregon of report rate

and an then on the cover the our an opportunities. call on growth close cases. update I'll with provide on the our Ray will Today, I'll rate and economy update financials, an update

rate at comments economy. low X.X% to service Related unemployment September. of few Oregon's our national the a on utility to lower remains in than average Turning territory, X%, the gas

are a future of on in Portland area Permits rolling were customer a XX-month potential permits XX.X% basis. indicator Single-family the up growth. housing good metro

months utilities were our September in as XXXX to XXXX. our low of And same single-family the double-digit permits the compared For September, posted water building the XX X.X%. in for as growth X rates period service ended X water territories counties, serve, unemployment

water last topped at the XXXX. and XX base grew utility $XXX,XXX gas September our and months XX, Collectively, customer X.X% over

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

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

need utilities, For and to our wastewater water current meet and support systems increasing standards we to and customer growth. find substantial investments these continue quality

and all our a These the we for we've stakeholders in of why effect wastewater for Oregon to utilities. gas cases decided after these happy on of bills, nearly cases, utility constructive file collaboratively putting and report us to with consideration our water rate in orders are customer I'm received solid in forward. number worked results all reasons track on going cases careful in

we've cases. that the orders settlements October, the of Concerning includes the approving before. in utility rate order That note particular November effective water settlements commission rate all-party case order our gas for Oregon wastewater X new approving is in the the Arizona XXXX. and A all-party an X, utilities our X rates issued with in largest discussed

of approximately requirement Natural's of also Under equity a system million, the $X.X of increased consisted in X.X%. order $XX.X a investments structure million The a the million Northwest capital of and cost return and and increased order, depreciation. that to for capital X.X% on $XX.X revenue XX-XX included related expenses

after-tax be fourth result previously commissions results. in Rate rate of $X.X $XX.X recognized will decision related base $XX.X in disappointed to will require disallowance, line increased base to This in a our $XXX to Natural in of million forgo noncash the rate to million extension We're recovery which total. in to billion Northwest allowances past cases. million the approved quarter

a Oregon customers, modest combined decline updates costs in residential Oregon gas rate X.X%. for filed Oregon, purchase quarter, the a in the gas decline the for average increasing in the rates with news, Washington, is good the year. in costs projected annual for adjustments which we case coming and gas During resulted The customer for X.X% our bill Washington both the result

than to went New Ray. are over their Overall, XX paying me turn into gas X. effect today that, less service it service let ago. our customers did for on natural territory pleased that residential rates they I'm across years November With

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

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

interstate Also, storage gas revenues combined our from distribution segment primary asset segment, activities management Natural Northwest, our Water reporting the includes Natural are outside and as referred our natural of segment Northwest other. third-party and to Renewables,

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

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

combination earnings rate guidance filed inflationary a To investments reflected of utility for and initial the simultaneously. related capital our regulatory are case. XXXX pressures experiencing we lag an gas that to resolve we Oregon lag, Our

our David As us mentioned, for case guidance. to the well achieve long-term position earnings and order that new recent rates

stronger for third share or results, year, net were to we to than the same XXXX, $X.XX third to the compared a $XX.X in share moving which last per of $X.XX of XXXX. for Relative reported period or Now quarter per million quarter we loss projected. million $XX.X

and and increased drove inflation at payroll margin X additional Gas reflecting staffing Utility this under year. from $X.X consistent began in costs the prior employees key results year. for on union and with benefits O&M million, on utility higher contract earnings Lower June gas driven our pay that by increases pressures. new regulatory the areas utility consolidated lag remained investments

reduction income by general costs. million. $X.X from lower depreciation declined mainly a Utility taxes and higher income and net cash Other pension expenses increased and $X.X of invested interest million, driven

to net due the and to water and utilities increased income $X.X net XXXX. other compared gas higher million wastewater businesses period higher storage same in Our income revenues

or gas million net quarter, months consolidated investments noted per utility reported income $XX.X compared $X.XX our at X lag of first regulatory results and for the for million period with For as the $X.XX per on pressures. of same themes we XXXX. share in Lower drove we net earnings to the inflationary of income or $XX.X share XXXX, similar

O&M an Utility more contractor of $XXX,XXX. measures, on savings cost increase related gas margin Gas this details million, remained expenses and to year few partially and last payroll lower information technology stable results. was decreased costs. benefit Utility with offsetting reflecting A $X.X employee Utility higher utility from

depreciation funds mainly and also income general allowance due interest property, costs, increased $X.X expense million but investment. taxes higher to equipment during declined and higher million, income pension equity construction. lower Other and for used and $XX.X plant net from

We've approach to a and strong had our businesses other stable focused credit maintaining balance sheet. results on ratings disciplined Our our remained year-over-year. are capital and in deploying solid

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

rate support the XXXX program in financing included that completed through ATM case to issuing a XXXX needs our business, request. ATM year I'm and and issued we've equity planned $XX.X happy in We lower and needs issuances the through level we're for with financing year. for next at debt million we report the the equity, were equity compared done XXXX. see These to modest to in to XXXX. our Related

the issuances, we gas holding the issue expect For at and long-term at million $XX company debt months. coming $XX XX company million in the to

$X.XX earnings rate issuance cover Oregon of guidance adjusted company the the to $X.XX The basis, per range $XX XXXX. guidance $X.XX general the of the share maturity earnings in on to case. at million XXXX will share a regulatory the $X.XX a per from company in disallowance gas in and Part GAAP of reaffirmed non-GAAP range excluding the

laws, and significant weather conditions Guidance customer outcomes assumes or legislation or mechanisms policies, changes changes average in growth, significant continued prevailing regulatory regulations. in or

We growth X% a turn David. target rate continue long-term With per earnings I'll to share that, to to over it of X%.

Thanks, Ray.

our quick opportunities. growth update Now a on

closed adding Natural customers we've Water, and Idaho, the First, in Infrastructure and acquisition, California. at Puttman Northwest Oregon ICH

as the Tom business provides of Importantly, growth. Northwest Puttman our Natural into water brings of entering this acquisition team to pipeline Water. recycled a President and

on of second XXXX and flows. to to Moving September in expect the Northwest EDL, project with reached in agreement completion well both are the update online our year and we landfill up a us quarter. sets revenues Natural Under by an closed the and for facilities substantial first third with facilities the cash Renewables That on EDL, RNG of end X close and project and on full year. the our

renewable ] The year our and and credits. I or these want offtake continue facilities volumes and are agreements contracted emphasize execution objectives. of positioned We've to investments our a to financial not [ on strong contracted from had LCFS RIN strategy under that have are RNG with are fixed based counterparties. the strategic delivering price off investment-grade well we primarily long-term

gas invested of rate utility we've the X a I am of our strong case. capital. growing was critical. on This on of The constructive across its accomplishments to businesses. reached track all general return Oregon completion earn the is To summarize, proud

acquisition the Second, utilities and robust have a and opportunities. organic wastewater water both trajectory growth with

Importantly, for finally, recover water, up earnings. Renewables foundation running, and generating the a I'm for Northwest with And excited project and regulators strong revenues crucial flows. safety that first investments worked is and we've to Natural cash provide

initiatives amount a to have up this on We've they've With worked questions. I'll done for They the it accomplished to for joining short of hard here. time. the a us Operator? Thanks morning. lot want thank team execute that, in all I XXXX. for open for

from Chris Williams question phone Siebert have [Operator line first We Instructions] the on the Ellinghaus Shank. with

give trying exclude case margin component. Can I revenue find disallowance, final there adding DNA DNA us to not sort number, helpful. of can to the trying obviously, But non-margin was the only any enhancing? sort and are could the the that there. the for us through order the that elaborate the from interpret digging any deductions you color major you actually David, thanks of case, other increase that on But the part. was you in give from are

we extension prepared then that The $XX what allowance that that approved I settlements, X the The revenue settle items that of affairs I settled Chris. is also remarks. the in and being commission line good at case we that mentioned. looking majority expenses my and ended up that's was the requirement were the which some No, early news million didn't commission mentioned only government that on, rate both

But not that earnings of a as depreciation place was where increase you came in know, which, impact, responsive, and that expense, is other Is the included that than Is an impact. that, amortization you're in going? flow everything in kind an necessarily Chris? cash with settlements, which line

happy that government up Yes. I a were. more given what on parties actually brought the them take see certainly kind positions I could part. that. And was tack you affairs the of with hardline

of So what quarters impression part of that? the recovery was X sort your of

get can we company holding end, or insurance the We have the time carefully very you of or subsidiaries. take what Well, Chris, that all you in it's feel that had we other it here. the track recovered. should obviously, But whether

goes, about coming as disallowance And got tell from where item, some ways. how what historically was in recoverable base far does going And you do But Right. where they that as us it the anything were sort I -- rate at adjust a is today? forward? that commission the of given

were tell to. it's will I good looking in question, order you you've especially the as And that portion a and Yes, referred of Chris. we disappointed that back, very

processes we're we putting place a we're the know extension a $X,XXX per be household tend come going have now Going allowance terms you When costs look very, spend household. forward, about. just at are The to in build a that to sure around that careful and going of situation, when in what to make at $X,XXX. is very just line single-family you to so we look new in

need sure up. popping issue that make absolutely $X,XXX that we so tight very are have to don't to we we that So this just number

commission, account but stance, reemphasize, number forward. But one, I'm did. as taking back we'll with I in things we they also the do will that into And that the very Chris, take looking going disappointed

said? the commission's a, And related way there. their are? there multiyear thoughts you of what nebulous interpret case, order they was very position what any of thoughts on The in Also to the sort Okay. was got sort your what of Have to there really or discussion. unclear rate is clarifying rate any

and in likes question, a rate have beneficial forward, to to good X. it's the very like the only in proven going company laid that state on filing discuss had We Washington successful not Chris. as we've we Another of regard, out would to but that been commission case the multiyear

like honest still very trying the we'll exactly Chris, with to to on are would We and talk commission they be you, interpret the to forward. order, what going

get work to that study to rate going with appears have to we'll to them further they it ultimately being forward. to It to of multiyear those processes as what try read when work you want order, kind just continue kind is the through of we we and hope approved cases

Okay.

very unclear it So agree really want? that would what they you was

Correct. like more clarity. I would

good the other was really The And on quarter components Can color there what RNG any strong you all? give was contribution in segment. really at there? were us any

Yes.

Let to over it me turn Ray.

right in other related is was than as that well. you're water of Yes, favorability storage pointing Yes. the operations majority stronger well as last some out to a year in our as

I As with Selman we Akyol a ask want reminder, to now it a is have fair questions. And Stifel. any

maybe characterize You'd how investment year, relationship you year? expect going elevated that again really roll over? sort this in that to being next next about to year year? an about CapEx we this and of I'm forward as trying so would and should just think think Or Should

Yes.

when of tackle lag terms it guidance from recall we depreciation CapEx. let a also was experiencing, start So which unique turn capital IT-related, lot this lives were year, year, the and of you only but over of little we it released kind not in I'll to impacts earlier as the infusion, of This of Ray level me have regulatory inflation. a that it the the to shorter

we're CapEx I'll going of maybe of very bit more having in, it turn over segments. basis, strong But to Ray that frankly, about a still And kind little on all opportunities to our a forward. talk a

Yes.

to our the guidance provide practice you is call. our As year historic in know, February for

So there. can expect details you more

our our long-term you piece rate. today, though, to think key we that is of a I that, in growth heard remarks prepared EPS reaffirmed X%

provide something I you standpoint, for bit pretty earnings can next we'll details maybe lower CapEx call. to close or XXXX expect think but little a on a more from our XXXX, However,

Got on of you. can acquisitions you sort And the discuss just then continued maybe outlook the waterfront? for

into X it Maybe seeing I'll quite Justin on still has X with a seeing activities Yes. private been With opportunities. me, give now to now in the states, equation. on few We're on there. the just you're little color to focused of excuse We're turn side the California. entry a states. of more our all now private what bit Almost the over

service know, Yes, happy of our a it's to have opportunities. pipeline we tuck-in service expanding. have Selman, around of territories answer existing continue territories. acquisitions smaller that question. been robust I And a you mean those to lot fairly as

with So up it opportunities us. more expansion, to that opens

the run side. So rate we'll of continue to I steady, smaller see acquisitions on a think, fairly water

final to to remarks. back I you. Thank like it would now hand David for any

Well, us today. for thanks joining everybody,

great in As always, details the reach dive if want Nikki. questions, With have you please or to additional to out day. that, have a

Third I all you Natural call for Quarter Holdings concluded. that confirm Thank Company XXXX now Earnings Call. now joining the today's NW has

You your and enjoy please disconnect rest may the the from day. call, of now