Northwest Natural Holding Company Q2 FY2025 earnings call

Management Statement and Operational Highlights

• CEO Remarks: Solid second quarter and first half 2025, with adjusted net income of $2.28 per share in the first 6 months of 2025 vs $1.60 last year, and combined utility customer growth 10.6%.
• Gas Utility Initiatives: Filed Oregon rate case in Dec 2024, settlement reached with revenue and rate base changes, expect commission order fall with rates effective Oct 31.
• SiEnergy Growth: Strong customer growth and backlog, integration of Pines smooth, with business development team exceeding annual meter goal midyear.
• Water Utilities: Net income increase from new rates and acquisitions, working on multiple rate cases in various states.
• Renewables: Renewable natural gas projects running smoothly, with solid earnings and cash flows.

Segment Performance

• Northwest Natural Gas Utility: Filed an Oregon general rate case in Dec 2024 to recover infrastructure investments. A settlement was reached with a revenue requirement increase of $21.3 million, rate base increase of $144 million to $2.2 billion, an ROE of 9.5%, and rates expected to be effective Oct 31 with a ~2.5% increase.
• SiEnergy Gas Utility: Experienced strong customer growth, with a backlog of over 217,000 future meters including Pines Holdings (7,000 connections and 12,000 meter backlog), serving ~83,000 customers, and making up ~10% of the business.
• Northwest Natural Water Utility: Saw 5.8% customer growth, net income increased $1.8 million or $0.04 per share, and is working on rate cases in multiple states.
• Other category: Adjusted net loss increased $4.2 million or $0.11 per share due to higher holding company interest expense.

Guidance

• Reaffirmed 2025 adjusted earnings guidance in the range of $2.75 per share to $2.95 per share.
• Expect long-term earnings per share growth rate of 4% to 6%.
• Projected consolidated organic customer growth for 2025 is 2% to 2.5%.
• Consolidated capital expenditures expected to be in the range of $450 million to $500 million.

Risks

• Forward-looking statements based on assumptions that may not occur.
• Cautionary statements in press release and risk factors in 10-Q/10-K filings. Guidance assumes continued customer growth, average weather, and no significant regulatory changes.

Question and Answer

• Q: Talk about SiEnergy growth since acquiring Pines.

A: Justin Palfreyman said SiEnergy is performing as expected, with strong backlog growth and the business development team exceeding the annual meter goal midyear.

• Q: Scale of upcoming water rate cases.

A: Justin Palfreyman stated individual water rate cases are relatively small, some less than $1 million of revenue requirement, with 3-5 cases executed annually