• Adjusted Earnings: $90.6 million or $2.33 per share for 2024, compared to $93.9 million or $2.59 per share in 2023.
• Revenue Requirement Increase: $93.3 million from the Oregon general rate case.
• Rate Base Increase: $334 million to $2.1 billion.
• Utility Margin Increase: $26.3 million, mainly due to new rates in Oregon.
• Gas Utility O&M Decrease: $2.1 million, excluding regulatory disallowance.
• Utility Depreciation and General Taxes Increase: $12.1 million due to additional capital investments.
• Other Income Decrease: $18.2 million, driven by higher pension costs and lower interest income.
• Interest Expense Increase: $2.8 million due to higher short-term debt financing.
• Cash Provided by Operating Activities: $200 million for 2024.
• Capital Expenditures: $394 million, with nearly 90% for the gas utility.
• Water and Wastewater Acquisitions: $30 million deployed.
• Cash Provided by Financing Activities: $227 million.
• 2025 Adjusted Earnings Guidance: $2.75 to $2.95 per share.
• Capital Expenditure Guidance for 2025: $450 million to $500 million.
• Consolidated CapEx Range through 2030: $2.5 billion to $2.7 billion.
• Customer Growth Projection for 2025: 2% to 2.5%, with SiEnergy contributing 20% or higher growth.
• Equity Issuances for 2025: Expected to be $65 million to $75 million.
• SiEnergy Meter Set Growth: Approximately 20% over last year.
• SiEnergy Rate Base Growth: 20% to 25% from 2025 to 2027.
• SiEnergy Net Income Growth: 32% to 37% compounded annually from 2025 to 2027.
• Water and Wastewater Rate Base Growth: 10% to 15% from 2025 to 2027.
• Water and Wastewater Net Income Growth: 10% to 15% from 2025 to 2027.

• Warning! GuruFocus has detected 13 Warning Signs with NWN.

Release Date: February 28, 2025

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

Positive Points

• Northwest Natural Holding Co (NYSE:NWN) achieved 2024 adjusted earnings at the upper end of the guidance range, demonstrating effective execution of plans to offset regulatory lag and inflation.
• The company successfully completed the largest Oregon gas utility rate case in its history, increasing revenue requirement by $93.3 million and rate base to $2.1 billion.
• NWN's acquisition of SiEnergy, a high-growth natural gas utility in Texas, is expected to be a significant driver of long-term growth.
• The company's renewable natural gas facilities with EDL are operational, providing steady cash flows and earnings expected for decades.
• NWN's water and wastewater customer base grew by 4.6% last year, indicating strong organic growth and successful acquisitions.

Negative Points

• The company's adjusted net income decreased by $3.3 million compared to the previous year, primarily due to regulatory lag and the issuance of common stock.
• Interest expense for the gas utility increased by $2.8 million due to higher short-term debt financing.
• Other income decreased by $18.2 million, driven by higher pension costs and lower interest income.
• The company anticipates modest regular common equity financing needs in 2025, with equity issuances expected to be in the range of $65 million to $75 million.
• NWN faces pipeline constraints in the Pacific Northwest, which could impact the ability to serve new data center loads.

Q & A Highlights

Q: Can you provide strategic thoughts on the developments in Washington and their potential impact on your business, particularly with the growth in electric load and data centers? A: Justin Palfreyman, President: We are evaluating opportunities to connect data centers in the Pacific Northwest and Texas to our systems. In the Pacific Northwest, we are assessing the impact of these loads on our system, considering existing pipeline constraints. Regarding Washington, we are closely monitoring federal developments, including tariffs, and have filed a deferral for gas costs to mitigate potential impacts.

Q: With the potential imposition of a 25% tariff on imported capital equipment, do you see a possibility for exemptions for energy-related capital? A: Justin Palfreyman, President: We are actively engaging with policymakers and industry associations to address this issue. While a 25% tariff could impact costs, we are monitoring the situation and advocating for potential exemptions.

Q: Does the compound annual growth rate (CAGR) for SiEnergy include adjustments for rate base and capital structure? A: Raymond Kaszuba, CFO: Yes, the CAGR assumes a reasonable approach to rate cases and capital structure adjustments. SiEnergy's current debt is around 40%, and we anticipate increasing it to a 60-40 equity-to-debt ratio over time.

Q: When do you plan to file a rate case for SiEnergy to address these adjustments? A: Justin Palfreyman, President: We are focused on integrating SiEnergy following the acquisition and will evaluate rate case timing as the year progresses, but we have no specific timeline to report at this moment.

Q: Can you break down the capital expenditures for gas, SiEnergy, and water for 2025? A: David Anderson, CEO: For 2025, Northwest Natural Gas Company will invest approximately $350 million, SiEnergy around $80 million, and water about $60 million, totaling $450 million to $500 million.

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