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NW Natural Holdings Reports Second Quarter 2023 Results

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

  • Reported net income of $1.2 million ($0.03 per share) for the second quarter of 2023, compared to earnings of $1.7 million ($0.05 per share) for the same period in 2022
  • Reported net income of $72.9 million ($2.03 per share) for the first six months of 2023, compared to earnings of $58.0 million ($1.77 per share) for the same period in 2022
  • Added nearly 6,400 natural gas meters in the last 12 months for a growth rate of 0.8% as of June 30, 2023
  • NW Natural Water closed its first water services transaction and signed a second
  • Began operations at the Carbon Limestone RNG facility - the first of two facilities NW Natural Renewables is investing in with EDL
  • Reaffirmed 2023 earnings guidance in the range of $2.55 to $2.75 per share

"The Company continues to perform well, and we're executing on our growth and decarbonization opportunities," said David H. Anderson, CEO of NW Natural Holdings. "Our mission is to continue providing utility services and renewable energy to customers safely, reliably, and affordably in a sustainable way to better the lives of the communities we serve."

For the second quarter of 2023, net income was $1.2 million (or $0.03 per share), compared to net income of $1.7 million (or $0.05 per share) for the same period in 2022. Results reflected higher operating costs, partially offset by new rates in Oregon and Washington for our natural gas utility.

Net income increased $15.0 million to $72.9 million (or $2.03 per share) for the first six months of 2023, compared to $58.0 million (or $1.77 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.

KEY EVENTS AND INITIATIVES

NW Natural Water Launches a Water Operations & Maintenance Service Business

NW Natural Water launched its services business in April by acquiring King Water Company in Washington and signing agreements with Hiland Water Corporation in May to acquire its services company and utility connections in Oregon. The two businesses support a combined 15,000 connections. 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. The Hiland Water transaction is expected to close by the end of 2023. Upon closing outstanding transactions, NW Natural Water would serve approximately 170,000 people through more than 68,000 meters and provide operation and maintenance services to an additional 15,000 connections.

NW Natural Renewables' First Project Begins Operations

In August 2023, EDL announced that the Carbon Limestone RNG facility began operations. This is the first of two facilities NW Natural Renewables is investing in with EDL, a leading global producer of sustainable distributed energy. NW Natural Renewables has contracted to provide approximately $50 million toward the development of the two production facilities that are designed to convert landfill waste gases to RNG and connect that production to the existing regional pipeline networks. The second facility is expected to come online this fall.

NW Natural Renewables and EDL executed agreements designed to obtain a 20-year supply of RNG produced by the facilities for NW Natural Renewables. NW Natural Renewables has separately contracted to sell an equivalent amount of fixed-volume RNG supply to investment grade counterparties under long-term contracts. The revenues associated with these agreements are expected to start when the facilities begin commercial operations.

SECOND 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 second 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' second quarter results are summarized by business segment in the table below:

 

Three Months Ended June 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

$

(271

)

$

(0.01

)

 

$

157

$

 

 

$

(428

)

$

(0.01

)

Other

 

1,515

 

 

0.04

 

 

 

1,558

 

0.05

 

 

 

(43

)

 

(0.01

)

Consolidated

$

1,244

 

$

0.03

 

 

$

1,715

$

0.05

 

 

$

(471

)

$

(0.02

)

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

36,062

 

 

 

 

34,352

 

 

 

 

1,710

 

Natural Gas Distribution Segment

Natural Gas Distribution segment net income decreased $0.4 million (or $0.01 per share) primarily reflecting higher operations expenses, partially offset by new rates in Oregon and Washington that went into effect on Nov. 1, 2022.

Margin increased $11.4 million primarily due to new rates, which contributed $7.6 million; a $2.4 million higher gain from the Oregon gas cost incentive sharing mechanism due to lower than estimated gas costs; and the amortization of deferrals approved in the rate case contributed $1.2 million.

Operations and maintenance expense increased $8.4 million or 24% 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 $3.2 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 $3.0 million primarily from lower pension expense, interest income from invested cash, and higher equity Allowance for Funds Used During Construction (AFUDC).

Interest expense increased $3.3 million due to higher debt balances.

YEAR-TO-DATE RESULTS

The following financial comparisons are for the first six 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:

 

Six Months Ended June 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

$

71,680

$

2.00

 

$

55,547

$

1.70

 

 

$

16,133

 

$

0.30

 

Other

 

1,235

 

0.03

 

 

2,407

 

0.07

 

 

 

(1,172

)

 

(0.04

)

Consolidated

$

72,915

$

2.03

 

$

57,954

$

1.77

 

 

$

14,961

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

35,845

 

 

 

32,805

 

 

 

 

3,040

 

Natural Gas Distribution Segment

Natural Gas Distribution segment net income increased $16.1 million (or $0.30 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 $40.7 million primarily due to new rates, which contributed $27.1 million; the amortization of deferrals approved in the rate case contributed $5.1 million; a $4.1 million higher gain from the Oregon gas cost incentive sharing mechanism due to lower than estimated gas costs; and customer growth of 0.8% over the last 12 months contributed $2.5 million.

Operations and maintenance expense increased $17.1 million or 23% as a result of higher payroll costs; the amortization of deferrals approved in the rate case, which is offset by revenues; information technology costs; contractor labor; and higher bad debt expense.

Depreciation and general taxes collectively increased by $6.5 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 $5.7 million primarily from lower pension expense, interest income from invested cash, and higher equity AFUDC.

Interest expense increased $6.1 million due to higher debt balances.

Other

Other net income decreased $1.2 million (or $0.04 per share) reflecting lower net income from NW Natural Holding's other businesses as a result of higher interest expense, partially offset by higher net income from asset management revenues from NW Natural.

BALANCE SHEET AND CASH FLOWS

During the first six months of 2023, the Company generated $297.9 million in operating cash flows, compared to $196.6 million for the same period in 2022. The Company used $151.5 million in investing activities during the first six months of 2023 primarily for natural gas utility capital expenditures, compared to $169.7 million used in investing activities during the same period in 2022. Net cash used in financing activities was $32.2 million for the first six months of 2023, compared to $24.0 million used in financing activities during the same period in 2022. As of June 30, 2023, NW Natural Holdings held cash of $137.8 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 48.50 cents per share on the Company’s common stock. The dividend is payable on August 15, 2023 to shareholders of record on July 31, 2023. The Company's current indicated annual dividend rate is $1.94 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 second quarter 2023 financial and operating results.

Date and Time:

Thursday, August 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 812526

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 494549.

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 more than 158,000 people through nearly 64,000 meters and provides operation and maintenance services to an additional 10,000 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)

Second Quarter 2023

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

Twelve Months Ended

 

 

 

June 30,

June 30,

June 30,

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

2023

 

2022

 

Change

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

Operating revenues

 

$

237,859

 

 

$

194,960

 

 

22

%

 

$

700,282

 

 

$

545,261

 

 

28

%

 

$

1,192,374

 

 

$

940,798

 

 

27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of gas

 

 

102,433

 

 

 

79,720

 

 

28

 

 

 

308,182

 

 

 

225,308

 

 

37

 

 

 

512,509

 

 

 

364,219

 

 

41

 

Operations and maintenance

 

 

66,819

 

 

 

53,175

 

 

26

 

 

 

138,636

 

 

 

110,660

 

 

25

 

 

 

252,643

 

 

 

212,649

 

 

19

 

Environmental remediation

 

 

2,140

 

 

 

2,267

 

 

(6

)

 

 

7,515

 

 

 

6,970

 

 

8

 

 

 

12,934

 

 

 

11,622

 

 

11

 

General taxes

 

 

10,889

 

 

 

8,989

 

 

21

 

 

 

25,108

 

 

 

21,093

 

 

19

 

 

 

45,046

 

 

 

39,443

 

 

14

 

Revenue taxes

 

 

9,185

 

 

 

8,240

 

 

11

 

 

 

28,227

 

 

 

21,600

 

 

31

 

 

 

48,453

 

 

 

38,005

 

 

27

 

Depreciation

 

 

31,293

 

 

 

28,110

 

 

11

 

 

 

62,758

 

 

 

56,539

 

 

11

 

 

 

122,926

 

 

 

113,832

 

 

8

 

Other operating expenses

 

 

1,257

 

 

 

920

 

 

37

 

 

 

2,505

 

 

 

1,914

 

 

31

 

 

 

4,212

 

 

 

4,064

 

 

4

 

Total operating expenses

 

 

224,016

 

 

 

181,421

 

 

23

 

 

��

572,931

 

 

 

444,084

 

 

29

 

 

 

998,723

 

 

 

783,834

 

 

27

 

Income from operations

 

 

13,843

 

 

 

13,539

 

 

2

 

 

 

127,351

 

 

 

101,177

 

 

26

 

 

 

193,651

 

 

 

156,964

 

 

23

 

Other income (expense), net

 

 

6,618

 

 

 

226

 

 

2,828

 

 

 

8,224

 

 

 

(728

)

 

(1230

)

 

 

10,155

 

 

 

(7,148

)

 

(242

)

Interest expense, net

 

 

18,974

 

 

 

11,580

 

 

64

 

 

 

37,270

 

 

 

23,102

 

 

61

 

 

 

67,415

 

 

 

45,434

 

 

48

 

Income before income taxes

 

 

1,487

 

 

 

2,185

 

 

(32

)

 

 

98,305

 

 

 

77,347

 

 

27

 

 

 

136,391

 

 

 

104,382

 

 

31

 

Income tax expense

 

 

243

 

 

 

470

 

 

(48

)

 

 

25,390

 

 

 

19,393

 

 

31

 

 

 

35,127

 

 

 

26,555

 

 

32

 

Net income

 

$

1,244

 

 

$

1,715

 

 

(27

)

 

$

72,915

 

 

$

57,954

 

 

26

 

 

$

101,264

 

 

$

77,827

 

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average diluted for period

 

 

36,062

 

 

 

34,352

 

 

 

 

 

35,845

 

 

 

32,805

 

 

 

 

 

35,557

 

 

 

31,799

 

 

 

End of period

 

 

36,065

 

 

 

34,754

 

 

 

 

 

36,065

 

 

 

34,754

 

 

 

 

 

36,065

 

 

 

34,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share of common stock information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings

 

$

0.03

 

 

$

0.05

 

 

 

 

$

2.03

 

 

$

1.77

 

 

 

 

$

2.85

 

 

$

2.45

 

 

 

Dividends paid per share

 

 

0.4850

 

 

 

0.4825

 

 

 

 

 

0.9700

 

 

 

0.9650

 

 

 

 

 

1.9375

 

 

 

1.9275

 

 

 

Book value, end of period

 

 

34.39

 

 

 

32.77

 

 

 

 

 

34.39

 

 

 

32.77

 

 

 

 

 

34.39

 

 

 

32.77

 

 

 

Market closing price, end of period

 

 

43.05

 

 

 

53.10

 

 

 

 

 

43.05

 

 

 

53.10

 

 

 

 

 

43.05

 

 

 

53.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital structure, end of period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock equity

 

 

44.0

%

 

 

47.3

%

 

 

 

 

44.0

%

 

 

47.3

%

 

 

 

 

44.0

%

 

 

47.3

%

 

 

Long-term debt

 

 

46.0

%

 

 

43.4

%

 

 

 

 

46.0

%

 

 

43.4

%

 

 

 

 

46.0

%

 

 

43.4

%

 

 

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

 

 

10.0

%

 

 

9.3

%

 

 

 

 

10.0

%

 

 

9.3

%

 

 

 

 

10.0

%

 

 

9.3

%

 

 

Total

 

 

100.0

%

 

 

100.0

%

 

 

 

 

100.0

%

 

 

100.0

%

 

 

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural Gas Distribution segment operating statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meters - end of period

 

 

796,792

 

 

 

790,438

 

 

0.8

%

 

 

796,792

 

 

 

790,438

 

 

0.8

%

 

 

796,792

 

 

 

790,438

 

 

0.8

%

Volumes in therms:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential and commercial sales

 

 

122,977

 

 

 

147,447

 

 

 

 

 

453,642

 

 

 

441,374

 

 

 

 

 

778,860

 

 

 

744,137

 

 

 

Industrial sales and transportation

 

 

113,389

 

 

 

121,106

 

 

 

 

 

245,773

 

 

 

255,565

 

 

 

 

 

475,953

 

 

 

492,743

 

 

 

Total volumes sold and delivered

 

 

236,366

 

 

 

268,553

 

 

 

 

 

699,415

 

 

 

696,939

 

 

 

 

 

1,254,813

 

 

 

1,236,880

 

 

 

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential and commercial sales

 

$

194,382

 

 

$

159,792

 

 

 

 

$

606,689

 

 

$

474,399

 

 

 

 

$

1,013,660

 

 

$

806,249

 

 

 

Industrial sales and transportation

 

 

23,238

 

 

 

19,526

 

 

 

 

 

52,382

 

 

 

40,799

 

 

 

 

 

98,393

 

 

 

74,626

 

 

 

Other distribution revenues

 

 

1,368

 

 

 

409

 

 

 

 

 

2,978

 

 

 

1,016

 

 

 

 

 

3,906

 

 

 

1,737

 

 

 

Other regulated services

 

 

4,726

 

 

 

4,907

 

 

 

 

 

9,435

 

 

 

9,818

 

 

 

 

 

19,245

 

 

 

19,355

 

 

 

Total operating revenues

 

 

223,714

 

 

 

184,634

 

 

 

 

 

671,484

 

 

 

526,032

 

 

 

 

 

1,135,204

 

 

 

901,967

 

 

 

Less: Cost of gas

 

 

102,490

 

 

 

79,776

 

 

 

 

 

308,295

 

 

 

225,420

 

 

 

 

 

512,736

 

 

 

364,443

 

 

 

Less: Environmental remediation expense

 

 

2,140

 

 

 

2,272

 

 

 

 

 

7,515

 

 

 

6,970

 

 

 

 

 

12,934

 

 

 

11,622

 

 

 

Less: Revenue taxes

 

 

9,159

 

 

 

8,208

 

 

 

 

 

28,134

 

 

 

21,532

 

 

 

 

 

48,229

 

 

 

37,827

 

 

 

Margin, net

 

$

109,925

 

 

$

94,378

 

 

 

 

$

327,540

 

 

$

272,110

 

 

 

 

$

561,305

 

 

$

488,075

 

 

 

Degree days:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average (25-year average)

 

 

296

 

 

 

305

 

 

 

 

 

1,619

 

 

 

1,631

 

 

 

 

 

2,674

 

 

 

2,692

 

 

 

Actual

 

 

273

 

 

 

374

 

 

(27

)%

 

 

1,658

 

 

 

1,591

 

 

4

%

 

 

2,779

 

 

 

2,526

 

 

10

%

Percent colder (warmer) than average weather

 

 

(8

)%

 

 

23

%

 

 

 

 

2

%

 

 

(2

)%

 

 

 

 

4

%

 

 

(6

)%

 

 

NORTHWEST NATURAL HOLDINGS

 

 

 

 

Consolidated Balance Sheets (Unaudited)

 

June 30,

In thousands

 

2023

 

2022

Assets:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

137,759

 

 

$

17,209

 

Accounts receivable

 

 

73,930

 

 

 

68,583

 

Accrued unbilled revenue

 

 

21,924

 

 

 

18,060

 

Allowance for uncollectible accounts

 

 

(3,297

)

 

 

(1,356

)

Regulatory assets

 

 

111,819

 

 

 

92,803

 

Derivative instruments

 

 

12,423

 

 

 

60,652

 

Inventories

 

 

67,502

 

 

 

65,983

 

Other current assets

 

 

35,797

 

 

 

36,060

 

Total current assets

 

 

457,857

 

 

 

357,994

 

Non-current assets:

 

 

 

 

Property, plant, and equipment

 

 

4,391,993

 

 

 

4,129,236

 

Less: Accumulated depreciation

 

 

1,181,230

 

 

 

1,150,555

 

Total property, plant, and equipment, net

 

 

3,210,763

 

 

 

2,978,681

 

Regulatory assets

 

 

307,999

 

 

 

301,855

 

Derivative instruments

 

 

2,118

 

 

 

9,121

 

Other investments

 

 

104,330

 

 

 

96,027

 

Operating lease right of use asset, net

 

 

72,096

 

 

 

73,754

 

Assets under sales-type leases

 

 

132,045

 

 

 

136,673

 

Goodwill

 

 

152,670

 

 

 

70,714

 

Other non-current assets

 

 

96,827

 

 

 

75,699

 

Total non-current assets

 

 

4,078,848

 

 

 

3,742,524

 

Total assets

 

$

4,536,705

 

 

$

4,100,518

 

Liabilities and equity:

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

 

$

41,000

 

 

$

222,700

 

Current maturities of long-term debt

 

 

240,714

 

 

 

351

 

Accounts payable

 

 

101,369

 

 

 

135,364

 

Taxes accrued

 

 

12,217

 

 

 

11,324

 

Interest accrued

 

 

11,443

 

 

 

7,425

 

Regulatory liabilities

 

 

61,546

 

 

 

97,277

 

Derivative instruments

 

 

42,135

 

 

 

15,918

 

Operating lease liabilities

 

 

1,732

 

 

 

1,315

 

Other current liabilities

 

 

58,777

 

 

 

47,624

 

Total current liabilities

 

 

570,933

 

 

 

539,298

 

Long-term debt

 

 

1,294,578

 

 

 

1,045,530

 

Deferred credits and other non-current liabilities:

 

 

 

 

Deferred tax liabilities

 

 

380,058

 

 

 

355,470

 

Regulatory liabilities

 

 

672,215

 

 

 

658,925

 

Pension and other postretirement benefit liabilities

 

 

147,063

 

 

 

162,511

 

Derivative instruments

 

 

25,212

 

 

 

9,475

 

Operating lease liabilities

 

 

77,951

 

 

 

78,826

 

Other non-current liabilities

 

 

128,417

 

 

 

111,704

 

Total deferred credits and other non-current liabilities

 

 

1,430,916

 

 

 

1,376,911

 

Equity:

 

 

 

 

Common stock

 

 

831,135

 

 

 

767,826

 

Retained earnings

 

 

414,398

 

 

 

381,963

 

Accumulated other comprehensive loss

 

 

(5,255

)

 

 

(11,010

)

Total equity

 

 

1,240,278

 

 

 

1,138,779

 

Total liabilities and equity

 

$

4,536,705

 

 

$

4,100,518

 

NORTHWEST NATURAL HOLDINGS

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited)

 

Six Months Ended June 30,

In thousands

 

2023

 

2022

Operating activities:

 

 

 

 

Net income

 

$

72,915

 

 

$

57,954

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

 

Depreciation

 

 

62,758

 

 

 

56,539

 

Regulatory amortization of gas reserves

 

 

1,678

 

 

 

2,984

 

Deferred income taxes

 

 

8,610

 

 

 

10,659

 

Qualified defined benefit pension plan (benefit) expense

 

 

(1,129

)

 

 

2,882

 

Deferred environmental expenditures, net

 

 

(9,732

)

 

 

(9,608

)

Environmental remediation expense

 

 

7,515

 

 

 

6,970

 

Asset optimization revenue sharing bill credits

 

 

(10,471

)

 

 

(41,102

)

Other

 

 

14,068

 

 

 

9,961

 

Changes in assets and liabilities:

 

 

 

 

Receivables, net

 

 

163,965

 

 

 

96,453

 

Inventories

 

 

20,084

 

 

 

(8,721

)

Income and other taxes

 

 

14,834

 

 

 

17,241

 

Accounts payable

 

 

(48,935

)

 

 

(13,728

)

Deferred gas costs

 

 

(16,370

)

 

 

2,607

 

Asset optimization revenue sharing

 

 

12,056

 

 

 

3,929

 

Decoupling mechanism

 

 

(9,554

)

 

 

9,669

 

Cloud-based software

 

 

(7,229

)

 

 

(414

)

Other, net

 

 

22,791

 

 

 

(7,711

)

Cash provided by operating activities

 

 

297,854

 

 

 

196,564

 

Investing activities:

 

 

 

 

Capital expenditures

 

 

(144,863

)

 

 

(167,696

)

Acquisitions, net of cash acquired

 

 

(3,249

)

 

 

 

Purchase of equity method investment

 

 

(1,000

)

 

 

 

Other

 

 

(2,428

)

 

 

(1,991

)

Cash used in investing activities

 

 

(151,540

)

 

 

(169,687

)

Financing activities:

 

 

 

 

Proceeds from common stock issued, net

 

 

22,072

 

 

 

174,053

 

Long-term debt issued

 

 

200,000

 

 

 

692

 

Changes in other short-term debt, net

 

 

(217,200

)

 

 

(166,800

)

Cash dividend payments on common stock

 

 

(33,293

)

 

 

(30,311

)

Other

 

 

(3,774

)

 

 

(1,596

)

Cash used in financing activities

 

 

(32,195

)

 

 

(23,962

)

Increase in cash, cash equivalents and restricted cash

 

 

114,119

 

 

 

2,915

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

40,964

 

 

 

27,120

 

Cash, cash equivalents and restricted cash, end of period

 

$

155,083

 

 

$

30,035

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Interest paid, net of capitalization

 

$

36,376

 

 

$

22,867

 

Income taxes paid, net of refunds

 

 

12,163

 

 

 

1,086

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

Cash and cash equivalents

 

$

137,759

 

 

$

17,209

 

Restricted cash included in other current and non-current assets

 

 

17,324

 

 

 

12,826

 

Cash, cash equivalents and restricted cash

 

$

155,083

 

 

$

30,035

 

 

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