Northwest Natural Holding Co Q1 FY2025 earnings call

Thanked David Anderson for over 20 years of service. Northwest Natural Gas utility benefited from new rates effective November 01, 2024, with an Oregon rate case ongoing. Sea Energy closed the acquisition on January 7 and added 73,000 gas meters, with plans to acquire Hughes Gas Resources. Northwest Natural Water's customer base grew 5.9% over 12 months, with plans to refresh rates in multiple utilities and invest $60 million in infrastructure. Northwest Natural Renewables projects with EDL began operations last year, with steady cash flows. Highlighted the importance of the gas system in the Pacific Northwest for reliability and affordability.

Northwest Natural Holdings had a solid first quarter. The Northwest Natural Gas segment saw net income increase $21.5 million or $0.42 per share. Margin rose $38.7 million mainly due to new rates in Oregon effective November 01, 2024. Sea Energy provided net income of $5.5 million or $0.14 per share for the first quarter of 2025. The Northwest Natural Water segment's net income increased $2.4 million or $0.06 per share, driven by new rates and acquisitions. The other category, which includes interstate storage services, asset management services, Northwest Natural Renewables, and holding company expenses, provided an adjusted net loss of $2.6 million, an increase of $1.4 million or $0.06 per share compared to the same period last year, primarily due to higher interest expense at the holding company, partially offset by higher revenues from the Renewables business as it completed its first full quarter of operations.

The company reaffirmed 2025 adjusted earnings guidance in the range of $2.75 per share to $2.95 per share. First quarter results were in line with expectations. Gas utility earnings are seasonal with most revenues and earnings generated in winter months. Sea Energy and Water each are expected to contribute approximately $0.25 to $0.30 of earnings per share in 2025. Consolidated capital expenditures are expected to be in the range of $450 million to $500 million.

Forward-looking statements are based on management's assumptions which may not occur. Risks related to changes in regulatory policies, mechanisms, outcomes, laws, legislation, or regulation.

Q: Tyler asked about the pickup in 2025 on the water side and rate cases in Arizona and other geographies.

A: Justin Palfreyman said water utility results were largely driven by 2024 rate case activity, with continued rate case filings across water service territories and anticipation of $0.25 to $0.30 earnings contribution in 2025. Ray Kaszuba added that $0.25 to $0.30 translates to about $10 million to $15 million in net income on top of Q1's $5.5 million and an EPS growth rate of 10% to 15% over the next couple of years.

Q: Tyler asked about the Hughes acquisition's customer base.

A: Justin Palfreyman said Hughes Gas Resources is primarily residential and commercial customers, with no transmission business, similar to Sea Energy and having geographic overlap surrounding Houston.