• Adjusted Operating Results: Up 14% over last year.
• Earnings Per Share (EPS) Growth: Rate regulated subsidiaries delivered approximately 30% growth.
• Production Increase: Up 6% sequentially.
• Capital Expenditures: Down 14% since fiscal 2023.
• Production Growth: Up 12% since fiscal 2023.
• Additional Margin from Rate Cases: Expected to provide in excess of $130 million compared to fiscal 2023.
• Allowed Rate of Return on Equity: 9.7% on a 48% equity layer.
• Operating Results: $1.66 per share, up 14% compared to last year.
• Fiscal 2025 Earnings Guidance: Adjusted operating results expected to be $6.50 to $7 per share, a 35% increase over fiscal 2024.
• Production Guidance: Revised upward to 410 to 425 Bcfe, a 6.5% annual increase over fiscal 2024.
• Share Buyback: $100 million invested to repurchase 1.8 million shares, or 2% of shares outstanding.
• Debt Maturities: $500 million maturing this summer and another $500 million early in 2026.

• Warning! GuruFocus has detected 8 Warning Signs with NFG.

Release Date: January 30, 2025

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

Positive Points

• National Fuel Gas Co (NYSE:NFG) reported a strong first quarter with adjusted operating results up 14% over the previous year.
• Rate regulated subsidiaries delivered approximately 30% growth in earnings per share, indicating strong performance in this segment.
• Capital expenditures have decreased by 14% since fiscal 2023, while production has increased by 12%, showcasing improved capital efficiency.
• The company has secured a multi-year New York rate settlement and a Pennsylvania DSIC, providing visibility for continued earnings growth.
• NFG's hedge book has mitigated the impact of price volatility, and the company expects significant free cash flow in non-regulated businesses, potentially upwards of $1 billion over the next three years.

Negative Points

• The company experienced non-cash impairments in the E&P segment due to the ceiling test, impacting GAAP earnings.
• Despite improvements, pricing continues to be volatile and is likely to be impacted by weather, power generation demand, and the timing of new LNG projects.
• There is some noise expected in financial statements due to the New York rate settlement, which may affect clarity in earnings reporting.
• Upcoming debt maturities of $500 million in summer 2025 and another $500 million in early 2026 require careful management.
• The Northern Access project is not expected to be restarted in the near term, limiting potential expansion opportunities in Appalachia.

Q & A Highlights

Q: Can you provide any incremental color on the types of conversations you're having around data centers and the timing of potential announcements? A: David Bauer, President and CEO, mentioned that discussions are still in the early stages, but the company is actively engaging with stakeholders across the value chain. While there is significant interest due to National Fuel's ability to offer a range of services, there are no announcements to make at this time.

Q: What is the thought process behind choosing to grow production versus holding it flat and taking CapEx savings? Was this enabled by the additional 50 million a day of egress? A: Justin Loweth, President of Seneca Resources and Midstream, explained that the production increase is driven by outstanding results in the first quarter, particularly in Tioga Utica. The company is committed to growing production only if there is access to takeaway markets, maintaining a balanced portfolio of firm transportation and sales.

Q: How do you view the potential for incremental return of capital through share repurchases versus dividends, and is debt reduction a focus for the next year or two? A: Timothy Silverstein, Principal Financial Officer and Treasurer, stated that the company is halfway through its current buyback program and will evaluate the best use of capital as it progresses. The focus remains on maintaining a strong balance sheet and potentially continuing the buyback program, alongside the long-standing dividend.

Q: What is your outlook for M&A in the industry, and is there a preference for scaling the regulated segment of the business? A: David Bauer reiterated that while the company is interested in expanding the regulated side, it remains open to smaller bolt-on acquisitions in the E&P segment.

Q: Can you provide more details on the suite of services offered to data centers? A: David Bauer explained that services range from providing incremental pipeline transportation capacity to long-term supply contracts. The company is also exploring partnerships with power developers to offer a comprehensive energy solution to data centers.

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