• Net Loss (Q3 2024): $27.2 million or $0.71 per share.
• Net Loss (Q3 2023): $23.7 million or $0.65 per share.
• Net Income (First 9 months 2024): $33.9 million or $0.88 per share.
• Net Income (First 9 months 2023): $49.2 million or $1.37 per share.
• Revenue Requirement Increase: $93.3 million from Oregon gas utility rate case.
• Rate Base Increase: $334 million to $2.1 billion.
• Cash Provided by Operating Activities (2024): $220 million.
• Capital Investments (2024): $326 million.
• Equity Issuance (2024): $90.4 million through ATM program.
• 2024 GAAP EPS Guidance: $1.94 to $2.14.
• 2024 Adjusted EPS Guidance: $2.20 to $2.40.
• Long-term EPS Growth Rate Target: 4% to 6%.

• Warning! GuruFocus has detected 10 Warning Signs with NWN.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Northwest Natural Holding Co (NYSE:NWN) reported a strong third quarter performance, with successful execution of their capital investment plan and regulatory dockets.
• The company completed the Oregon gas utility rate case and three water and wastewater utility rate cases, receiving constructive orders in nearly all cases.
• The customer base for both gas and water utilities grew by 1.9% over the last 12 months, indicating positive growth trends.
• The company closed the Puttman Infrastructure and ICH acquisition, expanding their customer base in Idaho, Oregon, and California, and entering the recycled water business.
• Northwest Natural Renewables' two landfill RNG facilities reached substantial completion, setting the company up for a full year of revenues and cash flows in 2025.

Negative Points

• Northwest Natural Holding Co (NYSE:NWN) reported a net loss of $27.2 million for the third quarter of 2024, compared to a net loss of $23.7 million in the same period in 2023.
• The company faced regulatory lag on investments and inflationary pressures, impacting earnings negatively.
• The Oregon commission required NWN to forgo recovery of $13.7 million of rate base related to line extension allowances, resulting in a $10.1 million after-tax noncash disallowance.
• Utility depreciation and general taxes increased by $3.6 million, adding to the financial pressures.
• The company's guidance assumes no significant changes in regulatory policies or laws, indicating potential vulnerability to regulatory shifts.

Q & A Highlights

Q: Can you elaborate on the final order regarding the disallowance and any deductions from the revenue increase that are non-margin enhancing? A: David Anderson, CEO: The majority of the rate case was settled early, resulting in a $93 million revenue requirement. The only unsettled items were government affairs expenses and line extension allowances. The increase in depreciation and amortization is a cash flow impact, not an earnings impact.

Q: What is your impression of the commission's decision on the government affairs recovery? A: David Anderson, CEO: We believe all should have been recovered, but we accept the partial recovery. We track time carefully across our subsidiaries.

Q: How do you interpret the commission's stance on the disallowance of historically recoverable rate base items? A: David Anderson, CEO: We were disappointed with the commission's decision. Going forward, we will ensure costs align with the new allowance to avoid similar issues.

Q: Can you clarify the commission's position on multiyear rate discussions? A: David Anderson, CEO: The order was unclear. We will discuss with the commission to understand their stance and work towards multiyear rate cases.

Q: What contributed to the strong performance in the 'other' segment this quarter? A: Raymond Kaszuba, CFO: The strength was mainly due to our storage operations and favorable results in the water segment.

Q: Should we expect elevated CapEx next year, similar to this investment year? A: Raymond Kaszuba, CFO: We will provide detailed guidance in February, but expect CapEx to be close to 2024 levels or slightly lower.

Q: What is the outlook for continued acquisitions in the water segment? A: David Anderson, CEO: We see many opportunities, primarily smaller tuck-in acquisitions around our expanding service territories.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.