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NW Natural Holdings Reports Third Quarter 2023 Results

Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), reported financial results and highlights including:

  • Reported a net loss of $23.7 million ($0.65 per share) for the third quarter of 2023, compared to a net loss of $19.6 million ($0.56 per share) for the same period in 2022
  • Reported net income of $49.2 million ($1.37 per share) for the first nine months of 2023, compared to earnings of $38.4 million ($1.14 per share) for the same period in 2022
  • Added over 33,000 gas and water utility connections in the last 12 months for a growth rate of 4.0% as of September 30, 2023 mainly driven by strong water acquisitions
  • Invested over $240 million in our utility systems in the first nine months of 2023 for continued safety and reliability
  • Received approval in Oregon and Washington for new rates related to NW Natural's Purchased Gas Adjustment (PGA) mechanism, which includes estimated gas costs for the upcoming winter heating season. Residential rates in Oregon and Washington declined 9% and 14%, respectively
  • Closed several acquisitions, notably a water utility in a high-growth suburb of Phoenix, Arizona and our second water services business headquartered in Oregon
  • Increased our dividend for the 68th consecutive year to an annual indicated dividend rate of $1.95 per share
  • Reaffirmed 2023 earnings guidance in the range of $2.55 to $2.75 per share

"We continue to execute on our strategy and growth opportunities," said David H. Anderson, CEO of NW Natural Holdings. "Customers are paying 8% less for their natural gas bill now than they did 15 years ago. We're excited to continue passing back gas cost savings to our customers and at the same time continue to invest in our system to meet customers' needs for today and tomorrow. Related to our water and wastewater utilities, we continue to close transactions and grow that business. I'm proud of our achievements and our long-term growth prospects."

For the third quarter of 2023, the Company reported a net loss of $23.7 million (or $0.65 per share), compared to a $19.6 million (or $0.56 per share) net loss for the same period in 2022. The third quarter reflects the seasonal nature of the gas utility's earnings where the majority of revenues are generated during the winter heating season in the first and fourth quarters each year. Results reflected lower asset management revenues and higher interest expense.

Net income increased $10.9 million to $49.2 million (or $1.37 per share) for the first nine months of 2023, compared to $38.4 million (or $1.14 per share) for the same period in 2022. Results reflected new rates in Oregon and Washington for our natural gas utility, customer growth and lower pension expense, partially offset by higher operations and maintenance expenses and interest expense.

KEY EVENTS AND INITIATIVES

Water and Wastewater Utilities

In October 2023, NW Natural Water closed its acquisition of Rose Valley Water Company in Peoria, Arizona, a major suburb northwest of Phoenix. The acquisition adds 2,400 customers and provides NW Natural Water an opportunity to enter a high-growth region. In September 2023, we received regulatory approval from the Arizona Corporate Commission to acquire Truxton and Cerbat Water located in Kingman, Arizona. NW Natural Water expects to close the Truxton and Cerbat acquisition in the coming weeks adding nearly 1,400 water utility connections. Today NW Natural Water serves over 164,000 people through approximately 66,000 connections across five states.

NW Natural Water Launches a Water Operations & Maintenance Services Business

The operations and maintenance services business portion of the Hiland Water transaction closed in October 2023. Hiland supports approximately 6,400 connections across Oregon. NW Natural Water now provides services to over 16,000 connections. NW Natural Water launched its services business in April 2023. This business provides operations and maintenance services to water and wastewater system owners and works to create value by leveraging shared personnel, technology and expertise to support delivery of clean, reliable water at a reasonable cost.

THIRD QUARTER RESULTS

We primarily operate through our natural gas distribution segment, which is operated through a regulated utility and principally engaged in the delivery of natural gas to customers in Oregon and southwest Washington. The segment also includes the portion of the Mist underground storage facility used to serve gas utility customers, the North Mist gas storage expansion, and RNG development and procurement for the utility.

Other business activities are reported through other results and primarily include Interstate Storage Services and third-party asset management services for the Mist facility in Oregon; NW Natural Water, which holds our water and wastewater utility operations and continues to pursue acquisitions in the water and wastewater sector; and NW Natural Renewables, which is a competitive renewable fuels business.

The following financial comparisons are for the third quarter of 2023 and 2022 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted.

NW Natural Holdings' third quarter results are summarized by business segment in the table below:

 

Three Months Ended September 30,

 

2023

 

 

2022

 

 

Change

In thousands, except per share data

Amount

Per Share

 

Amount

Per Share

 

Amount

Per Share

Net income (loss):

 

 

 

 

 

 

 

 

Natural Gas Distribution segment

$

(24,160

)

$

(0.66

)

 

$

(23,016

)

$

(0.66

)

 

$

(1,144

)

$

 

Other

 

473

 

 

0.01

 

 

 

3,429

 

 

0.10

 

 

 

(2,956

)

 

(0.09

)

Consolidated

$

(23,687

)

$

(0.65

)

 

$

(19,587

)

$

(0.56

)

 

$

(4,100

)

$

(0.09

)

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

36,214

 

 

 

 

34,939

 

 

 

 

1,275

 

Natural Gas Distribution Segment

Natural Gas Distribution segment net income decreased $1.1 million primarily reflecting higher operating expenses and interest expense, partially offset by new rates in Oregon and Washington that went into effect on Nov. 1, 2022 and higher interest income.

Margin increased $5.3 million primarily due to new rates, which contributed $4.0 million; a $0.8 million higher gain from the Oregon gas cost incentive sharing mechanism due to lower than estimated gas costs; and customer growth of $0.6 million.

Operations and maintenance expense increased $5.5 million as a result of higher payroll costs; information technology costs; contractor labor; and the amortization of deferrals approved in the rate case, which is offset by revenues.

Depreciation and general taxes collectively increased by $0.8 million.

Other income, net reflected a benefit of $3.2 million primarily from interest income from invested cash, higher equity Allowance for Funds Used During Construction (AFUDC), and lower pension expense.

Interest expense increased $3.3 million due to higher long-term debt balances and rates.

Other

Other net income decreased $3.0 million (or $0.09 per share) reflecting lower net income from NW Natural Holdings' other businesses primarily as a result of higher interest expense and lower asset management revenues from NW Natural.

YEAR-TO-DATE RESULTS

The following financial comparisons are for the first nine months of 2023 and 2022 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted.

NW Natural Holdings' year-to-date results are summarized by business segment in the table below:

 

Nine Months Ended September 30,

 

2023

 

2022

 

Change

In thousands, except per share data

Amount

Per Share

 

Amount

Per Share

 

Amount

Per Share

Net income:

 

 

 

 

 

 

 

 

Natural Gas Distribution segment

$

47,520

$

1.32

 

$

32,531

$

0.97

 

$

14,989

 

$

0.35

 

Other

 

1,708

 

0.05

 

 

5,836

 

0.17

 

 

(4,128

)

 

(0.12

)

Consolidated

$

49,228

$

1.37

 

$

38,367

$

1.14

 

$

10,861

 

$

0.23

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

35,980

 

 

 

33,539

 

 

 

2,441

 

Natural Gas Distribution Segment

Natural Gas Distribution segment net income increased $15.0 million (or $0.35 per share) reflecting new rates in Oregon and Washington that went into effect on Nov. 1, 2022, partially offset by higher operating expenses.

Margin increased $46.1 million primarily due to new rates, which contributed $36.2 million; a $4.8 million higher gain from the Oregon gas cost incentive sharing mechanism due to lower than estimated gas costs; and customer growth over the last 12 months contributed $3.1 million.

Operations and maintenance expense increased $22.6 million as a result of higher payroll costs, information technology costs, contractor labor, higher bad debt expense, and the amortization of deferrals approved in the rate case, which is offset by revenues.

Depreciation and general taxes collectively increased by $7.3 million due to additional capital investments in the distribution system including several significant information technology projects that were placed into service in September 2022.

Other income, net reflected a benefit of $8.9 million primarily from lower pension expense, interest income from invested cash, and higher equity AFUDC.

Interest expense increased $9.4 million due to higher long-term debt balances and rates.

Other

Other net income decreased $4.1 million (or $0.12 per share) reflecting lower net income from NW Natural Holdings' other businesses as a result of higher interest expense.

BALANCE SHEET AND CASH FLOWS

During the first nine months of 2023, the Company generated $301.5 million in operating cash flows, compared to $166.0 million for the same period in 2022. The Company used $250.5 million in investing activities during the first nine months of 2023 primarily for natural gas utility capital expenditures, compared to $257.0 million used in investing activities during the same period in 2022. Net cash provided by financing activities was $79.5 million for the first nine months of 2023, compared to $184.2 million during the same period in 2022. As of September 30, 2023, NW Natural Holdings held cash of $156.6 million.

2023 GUIDANCE AND LONG-TERM TARGETS

NW Natural Holdings is reaffirming 2023 earnings guidance in the range of $2.55 to $2.75 per share. This guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant local, state or federal laws, legislation or regulations. NW Natural Holdings' long-term earnings per share growth rate target is 4% to 6% compounded annually from 2022 through 2027.

DIVIDEND DECLARED

The board of directors of NW Natural Holdings declared a quarterly dividend of 48.75 cents per share on the Company’s common stock. The dividend is payable on November 15, 2023 to shareholders of record on October 31, 2023. The Company's current indicated annual dividend rate is $1.95 per share. Future dividends are subject to board of director discretion and approval.

CONFERENCE CALL AND WEBCAST

As previously announced, NW Natural Holdings will host a conference call and webcast today to discuss its third quarter 2023 financial and operating results.

Date and Time:

Friday, November 3, 2023

8 a.m. PT (11 a.m. ET)

Phone Numbers:

United States 1-833-470-1428

Canada 1-833-950-0062

International 1-929-526-1599

Passcode 463956

The call will also be webcast in a listen-only format for the media and general public and can be accessed at ir.nwnaturalholdings.com. A replay of the conference call will be available on our website and by dialing 1-866-813-9403 (U.S.), 1-226-828-7578 (Canada), and +44-204-525-0658 (international). The replay access code is 243492.

ABOUT NW NATURAL HOLDINGS

Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and has been doing business for over 160 years in the Pacific Northwest. It owns NW Natural Gas Company (NW Natural), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests.

We have a longstanding commitment to safety, environmental stewardship and the energy transition, and taking care of our employees and communities. NW Natural Holdings was recognized by Ethisphere® in 2022 and 2023 as one of the World’s Most Ethical Companies®. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores. Learn more in our latest ESG Report at nwnatural.com/about-us/the-company/sustainability.

NW Natural is a local distribution company that currently provides natural gas service to approximately 2.5 million people in more than 140 communities through more than 795,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural owns and operates 21.6 Bcf of underground gas storage capacity in Oregon.

NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest, Texas and Arizona. Today NW Natural Water serves over 164,000 people through approximately 66,000 meters and provides operation and maintenance services to an additional 16,000 connections. Learn more about our water business at nwnaturalwater.com.

NW Natural Renewables is a competitive business committed to leading in the energy transition by providing renewable fuels to support decarbonization in the utility, commercial, industrial and transportation sectors. Learn more at nwnaturalrenewables.com.

Additional information is available at nwnaturalholdings.com.

“World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC

Forward-Looking Statements

This press release, and other presentations made by NW Holdings from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," “continues,” “could,” "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, assumptions, estimates, expectations, timing, goals, strategies, commitments, future events, investments, timing and amount of capital expenditures, targeted capital structure, risks, risk profile, stability, acquisitions and timing, approval, completion and integration thereof, the likelihood and success associated with any transaction, utility system and infrastructure investments, system modernization, reliability and resiliency, global, national and local economies, customer and business growth, continued expansion of service territories, customer satisfaction ratings, weather, performance and service during weather events, customer rates or rate recovery and the timing and magnitude of potential rate changes and the potential outcome of rate cases, environmental remediation cost recoveries, environmental initiatives, decarbonization and the role of natural gas and the gas delivery system, including decarbonization goals and timelines, energy efficiency measures, use of renewable sources, renewable natural gas purchases, projects, investments and other renewable initiatives, including the construction of RNG facilities, and timing, magnitude and completion thereof, unregulated renewable natural gas strategy and initiatives, renewable hydrogen projects or investments and timing, magnitude, approvals and completion thereof, procurement of renewable natural gas or hydrogen for customers, technology and policy innovations, strategic goals and visions, water and wastewater acquisitions, partnerships, and investment strategy and financial effects of water and wastewater acquisitions, expected growth and safety benefits of facility upgrade investments, diversity, equity and inclusion initiatives, operating plans of third parties, financial results, including estimated income, availability and sources of liquidity, expenses, positions, revenues, returns, cost of capital, timing, and earnings, earnings guidance and estimated future growth rates, future dividends, commodity costs and sourcing, asset management activities, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, regulatory prudence reviews, anticipated regulatory actions or filings, accounting treatment of future events, effects of legislation or changes in laws or regulations, effects, extent, severity and duration of epidemics and pandemics, and any resulting economic disruption therefrom, geopolitical uncertainty and other statements that are other than statements of historical facts.

Forward-looking statements are based on current expectations and assumptions regarding its business, the economy, geopolitical factors, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. You are therefore cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future operational, economic or financial performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed by reference to the factors described in Part I, Item 1A "Risk Factors", and Part II, Item 7 and Item 7A "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosure about Market Risk" in the most recent Annual Report on Form 10-K and in Part I, Items 2 and 3 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk", and Part II, Item 1A, "Risk Factors", in the quarterly reports filed thereafter, which, among others, outline legal, regulatory and legislative risks, epidemics and pandemics risks, macroeconomic and geopolitical risks, growth and strategic risks, operational risks, and environmental risks.

All forward-looking statements made in this report and all subsequent forward-looking statements, whether written or oral and whether made by or on behalf of NW Holdings or NW Natural, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and NW Holdings and NW Natural undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. New factors emerge from time to time and it is not possible to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements.

NON-GAAP FINANCIAL MEASURES

In addition to presenting the results of operations and earnings amounts in total, certain financial measures are expressed in cents per share, which are non-GAAP financial measures. All references to EPS are on the basis of diluted shares. Such non-GAAP financial measures are used to analyze our financial performance because we believe they provide useful information to our investors and creditors in evaluating our financial condition and results of operations. Our non-GAAP financial measures should not be considered a substitute for, or superior to, measures calculated in accordance with U.S. GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than how such measures are calculated in this report, limiting the usefulness of those measures for comparative purposes. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the tables above.

NORTHWEST NATURAL HOLDINGS

Consolidated Income Statement and Financial Highlights (Unaudited)

Third Quarter 2023

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

Twelve Months Ended

September 30,

 

In thousands, except per share amounts, customer, and degree day data

 

 

 

 

 

 

 

2023

 

 

 

2022

 

Change

 

2023

 

 

 

2022

 

Change

 

2023

 

 

 

2022

 

Change

Operating revenues

$

141,479

 

 

$

116,839

 

21

%

$

841,761

 

 

$

662,100

 

27

%

$

1,217,014

 

 

$

956,190

 

27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of gas

 

49,180

 

 

 

36,105

 

36

 

 

357,362

 

 

 

261,413

 

37

 

 

525,584

 

 

 

375,058

 

40

 

 

Operations and maintenance

 

61,524

 

 

 

50,745

 

21

 

 

200,160

 

 

 

161,405

 

24

 

 

263,422

 

 

 

216,065

 

22

 

 

Environmental remediation

 

1,032

 

 

 

980

 

5

 

 

8,547

 

 

 

7,950

 

8

 

 

12,986

 

 

 

11,796

 

10

 

 

General taxes

 

10,577

 

 

 

9,572

 

10

 

 

35,685

 

 

 

30,665

 

16

 

 

46,051

 

 

 

39,954

 

15

 

 

Revenue taxes

 

5,523

 

 

 

4,437

 

24

 

 

33,750

 

 

 

26,037

 

30

 

 

49,539

 

 

 

38,551

 

29

 

 

Depreciation

 

30,061

 

 

 

29,026

 

4

 

 

92,819

 

 

 

85,565

 

8

 

 

123,961

 

 

 

114,420

 

8

 

 

Other operating expenses

 

1,159

 

 

 

901

 

29

 

 

3,664

 

 

 

2,815

 

30

 

 

4,470

 

 

 

3,918

 

14

 

 

Total operating expenses

 

159,056

 

 

 

131,766

 

21

 

 

731,987

 

 

 

575,850

 

27

 

 

1,026,013

 

 

 

799,762

 

28

 

Income (loss) from operations

 

(17,577

)

 

 

(14,927

)

18

 

 

109,774

 

 

 

86,250

 

27

 

 

191,001

 

 

 

156,428

 

22

 

Other income (expense), net

 

5,004

 

 

 

1,636

 

206

 

 

13,228

 

 

 

908

 

1357

 

 

13,523

 

 

 

(3,296

)

(510

)

Interest expense, net

 

19,406

 

 

 

13,054

 

49

 

 

56,676

 

 

 

36,156

 

57

 

 

73,767

 

 

 

47,313

 

56

 

Income (loss) before income taxes

 

(31,979

)

 

 

(26,345

)

21

 

 

66,326

 

 

 

51,002

 

30

 

 

130,757

 

 

 

105,819

 

24

 

Income tax expense (benefit)

 

(8,292

)

 

 

(6,758

)

23

 

 

17,098

 

 

 

12,635

 

35

 

 

33,593

 

 

 

26,924

 

25

 

Net income (loss)

$

(23,687

)

 

$

(19,587

)

21

 

$

49,228

 

 

$

38,367

 

28

 

$

97,164

 

 

$

78,895

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Average diluted for period

 

36,214

 

 

 

34,939

 

 

 

35,980

 

 

 

33,539

 

 

 

35,814

 

 

 

32,911

 

 

 

End of period

 

36,576

 

 

 

35,098

 

 

 

36,576

 

 

 

35,098

 

 

 

36,576

 

 

 

35,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share of common stock information:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings

$

(0.65

)

 

$

(0.56

)

 

$

1.37

 

 

$

1.14

 

 

$

2.71

 

 

$

2.40

 

 

Dividends paid per share

 

0.4850

 

 

 

0.4825

 

 

 

1.4550

 

 

 

1.4475

 

 

 

1.9400

 

 

 

1.9300

 

 

Book value, end of period

 

33.34

 

 

 

31.94

 

 

 

33.34

 

 

 

31.94

 

 

 

33.34

 

 

 

31.94

 

 

Market closing price, end of period

 

38.16

 

 

 

44.91

 

 

 

38.16

 

 

 

44.91

 

 

 

38.16

 

 

 

44.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital structure, end of period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock equity

 

42.0

%

 

 

43.1

%

 

 

42.0

%

 

 

43.1

%

 

 

42.0

%

 

 

43.1

%

 

 

Long-term debt

 

49.0

%

 

 

49.5

%

 

 

49.0

%

 

 

49.5

%

 

 

49.0

%

 

 

49.5

%

 

 

Short-term debt (including current maturities of long-term debt)

 

9.0

%

 

 

7.4

%

 

 

9.0

%

 

 

7.4

%

 

 

9.0

%

 

 

7.4

%

 

 

Total

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural Gas Distribution segment operating statistics:

 

 

 

 

 

 

 

 

 

 

 

 

Meters - end of period

 

795,754

 

 

 

790,511

 

0.7

%

 

795,754

 

 

 

790,511

 

0.7

%

 

795,754

 

 

 

790,511

 

0.7

%

Volumes in therms:

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential and commercial sales

 

55,555

 

 

 

53,929

 

 

 

509,197

 

 

 

495,303

 

 

 

780,486

 

 

 

742,469

 

 

 

Industrial sales and transportation

 

103,139

 

 

 

104,632

 

 

 

348,912

 

 

 

360,197

 

 

 

474,460

 

 

 

491,743

 

 

Total volumes sold and delivered

 

158,694

 

 

 

158,561

 

 

 

858,109

 

 

 

855,500

 

 

 

1,254,946

 

 

 

1,234,212

 

 

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential and commercial sales

$

98,327

 

 

$

78,459

 

 

$

705,016

 

 

$

552,858

 

 

$

1,033,528

 

 

$

812,729

 

 

 

Industrial sales and transportation

 

20,828

 

 

 

19,581

 

 

 

73,210

 

 

 

60,380

 

 

 

99,640

 

 

 

80,207

 

 

 

Other distribution revenues

 

737

 

 

 

351

 

 

 

3,715

 

 

 

1,367

 

 

 

4,292

 

 

 

1,796

 

 

 

Other regulated services

 

4,732

 

 

 

4,904

 

 

 

14,167

 

 

 

14,722

 

 

 

19,073

 

 

 

19,488

 

 

Total operating revenues

 

124,624

 

 

 

103,295

 

 

 

796,108

 

 

 

629,327

 

 

 

1,156,533

 

 

 

914,220

 

 

 

Less: Cost of gas

 

49,235

 

 

 

36,258

 

 

 

357,530

 

 

 

261,678

 

 

 

525,713

 

 

 

375,379

 

 

 

Less: Environmental remediation expense

 

1,032

 

 

 

975

 

 

 

8,547

 

 

 

7,945

 

 

 

12,991

 

 

 

11,791

 

 

 

Less: Revenue taxes

 

5,425

 

 

 

4,375

 

 

 

33,559

 

 

 

25,907

 

 

 

49,279

 

 

 

38,364

 

 

Margin, net

$

68,932

 

 

$

61,687

 

 

$

396,472

 

 

$

333,797

 

 

$

568,550

 

 

$

488,686

 

 

Degree days:

 

 

 

 

 

 

 

 

 

 

 

 

 

Average (25-year average)

 

10

 

 

 

9

 

 

 

1,629

 

 

 

1,640

 

 

 

2,675

 

 

 

2,692

 

 

 

Actual

 

 

 

 

 

%

 

1,658

 

 

 

1,591

 

4

%

 

2,779

 

 

 

2,522

 

10

%

Percent colder (warmer) than average weather

 

(100

)%

 

 

(100

)%

 

 

2

%

 

 

(3

)%

 

 

4

%

 

 

(6

)%

 

 

NORTHWEST NATURAL HOLDINGS

 

 

 

 

Consolidated Balance Sheets (Unaudited)

 

September 30,

In thousands

 

 

2023

 

 

 

2022

 

Assets:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

156,616

 

 

$

108,556

 

Accounts receivable

 

 

51,999

 

 

 

50,850

 

Accrued unbilled revenue

 

 

24,626

 

 

 

16,857

 

Allowance for uncollectible accounts

 

 

(2,312

)

 

 

(2,171

)

Regulatory assets

 

 

108,525

 

 

 

104,830

 

Derivative instruments

 

 

23,454

 

 

 

62,710

 

Inventories

 

 

94,585

 

 

 

98,725

 

Other current assets

 

 

49,947

 

 

 

41,414

 

Total current assets

 

 

507,440

 

 

 

481,771

 

Non-current assets:

 

 

 

 

Property, plant, and equipment

 

 

4,468,602

 

 

 

4,207,328

 

Less: Accumulated depreciation

 

 

1,189,968

 

 

 

1,166,150

 

Total property, plant, and equipment, net

 

 

3,278,634

 

 

 

3,041,178

 

Regulatory assets

 

 

312,665

 

 

 

301,660

 

Derivative instruments

 

 

6,188

 

 

 

8,008

 

Other investments

 

 

104,562

 

 

 

96,569

 

Operating lease right of use asset, net

 

 

71,477

 

 

 

73,145

 

Assets under sales-type leases

 

 

130,952

 

 

 

135,480

 

Goodwill

 

 

152,399

 

 

 

74,732

 

Other non-current assets

 

 

100,801

 

 

 

88,169

 

Total non-current assets

 

 

4,157,678

 

 

 

3,818,941

 

Total assets

 

$

4,665,118

 

 

$

4,300,712

 

Liabilities and equity:

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

 

$

71,000

 

 

$

141,000

 

Current maturities of long-term debt

 

 

190,728

 

 

 

50,614

 

Accounts payable

 

 

99,326

 

 

 

118,274

 

Taxes accrued

 

 

17,120

 

 

 

18,080

 

Interest accrued

 

 

13,940

 

 

 

11,086

 

Regulatory liabilities

 

 

88,376

 

 

 

111,551

 

Derivative instruments

 

 

46,603

 

 

 

19,594

 

Operating lease liabilities

 

 

1,815

 

 

 

1,361

 

Other current liabilities

 

 

61,149

 

 

 

39,796

 

Total current liabilities

 

 

590,057

 

 

 

511,356

 

Long-term debt

 

 

1,424,572

 

 

 

1,287,006

 

Deferred credits and other non-current liabilities:

 

 

 

 

Deferred tax liabilities

 

 

375,917

 

 

 

349,633

 

Regulatory liabilities

 

 

683,262

 

 

 

663,547

 

Pension and other postretirement benefit liabilities

 

 

145,991

 

 

 

160,196

 

Derivative instruments

 

 

21,085

 

 

 

18,824

 

Operating lease liabilities

 

 

77,475

 

 

 

78,469

 

Other non-current liabilities

 

 

127,219

 

 

 

110,825

 

Total deferred credits and other non-current liabilities

 

 

1,430,949

 

 

 

1,381,494

 

Equity:

 

 

 

 

Common stock

 

 

851,288

 

 

 

786,094

 

Retained earnings

 

 

373,231

 

 

 

345,570

 

Accumulated other comprehensive loss

 

 

(4,979

)

 

 

(10,808

)

Total equity

 

 

1,219,540

 

 

 

1,120,856

 

Total liabilities and equity

 

$

4,665,118

 

 

$

4,300,712

 

 

NORTHWEST NATURAL HOLDINGS

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited)

 

Nine Months Ended September 30,

In thousands

 

 

2023

 

 

 

2022

 

Operating activities:

 

 

 

 

Net income

 

$

49,228

 

 

$

38,367

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

 

Depreciation

 

 

92,819

 

 

 

85,565

 

Regulatory amortization of gas reserves

 

 

2,532

 

 

 

4,527

 

Deferred income taxes

 

 

6,678

 

 

 

7,759

 

Qualified defined benefit pension plan (benefit) expense

 

 

(1,823

)

 

 

4,013

 

Deferred environmental expenditures, net

 

 

(14,887

)

 

 

(14,437

)

Environmental remediation expense

 

 

8,547

 

 

 

7,950

 

Asset optimization revenue sharing bill credits

 

 

(10,471

)

 

 

(41,102

)

Other

 

 

18,079

 

 

 

16,640

 

Changes in assets and liabilities:

 

 

 

 

Receivables, net

 

 

182,297

 

 

 

114,755

 

Inventories

 

 

(6,484

)

 

 

(41,463

)

Income and other taxes

 

 

8,770

 

 

 

19,447

 

Accounts payable

 

 

(39,695

)

 

 

(30,010

)

Deferred gas costs

 

 

(8,678

)

 

 

(1,785

)

Asset optimization revenue sharing

 

 

18,667

 

 

 

17,629

 

Decoupling mechanism

 

 

(12,328

)

 

 

7,124

 

Cloud-based software

 

 

(12,316

)

 

 

(17,332

)

Other, net

 

 

20,568

 

 

 

(11,686

)

Cash provided by operating activities

 

 

301,503

 

 

 

165,961

 

Investing activities:

 

 

 

 

Capital expenditures

 

 

(242,747

)

 

 

(251,842

)

Acquisitions, net of cash acquired

 

 

(3,248

)

 

 

(2,352

)

Other

 

 

(4,525

)

 

 

(2,810

)

Cash used in investing activities

 

 

(250,520

)

 

 

(257,004

)

Financing activities:

 

 

 

 

Proceeds from common stock issued, net

 

 

40,955

 

 

 

190,929

 

Long-term debt issued

 

 

330,000

 

 

 

290,000

 

Long-term debt retired

 

 

(50,000

)

 

 

 

Changes in other short-term debt, net

 

 

(187,200

)

 

 

(248,500

)

Cash dividend payments on common stock

 

 

(50,114

)

 

 

(46,434

)

Other

 

 

(4,108

)

 

 

(1,802

)

Cash provided by financing activities

 

 

79,533

 

 

 

184,193

 

Increase in cash, cash equivalents and restricted cash

 

 

130,516

 

 

 

93,150

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

40,964

 

 

 

27,120

 

Cash, cash equivalents and restricted cash, end of period

 

$

171,480

 

 

$

120,270

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Interest paid, net of capitalization

 

$

51,970

 

 

$

31,774

 

Income taxes paid, net of refunds

 

 

18,963

 

 

 

2,106

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

Cash and cash equivalents

 

$

156,616

 

 

$

108,556

 

Restricted cash included in other current and non-current assets

 

 

14,864

 

 

 

11,714

 

Cash, cash equivalents and restricted cash

 

$

171,480

 

 

$

120,270

 

 

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