Northwest Natural Gas ((NWN)) has held its Q4 earnings call. Read on for the main highlights of the call.
During the recent earnings call of Northwest Natural Gas, the company conveyed a mixed sentiment. While there were notable achievements such as the acquisition of C Energy and robust growth in the water and renewables sectors, challenges like regulatory delays affecting earnings and increased capital expenditures were also highlighted. The impact of equity issuance on earnings per share (EPS) was another concern addressed during the call.
Strong Growth in Water and Renewable Segments
The earnings call revealed significant progress in Northwest Natural Gas’s water and renewable segments. The water and wastewater customer base expanded by 4.6% in 2024, driven by both organic growth and strategic acquisitions. Additionally, two renewable natural gas facilities with EDL became operational, promising steady cash flows and earnings for the foreseeable future.
Successful Acquisition and Expansion Strategy
A major highlight was the acquisition of C Energy, a rapidly growing natural gas utility in Texas. This acquisition has been a strategic success, with C Energy achieving a remarkable 22% customer growth rate from 2021 to 2024. The company anticipates continued double-digit growth, reinforcing its expansion strategy.
Oregon Rate Case Success
Northwest Natural Gas successfully completed the largest Oregon gas utility rate case in history. This resulted in an increase in revenue requirement by $93.3 million and a rate base increase to $2.1 billion, marking a significant financial milestone for the company.
Positive Financial Guidance
The company provided optimistic financial guidance for 2025, projecting adjusted earnings between $2.75 and $2.95 per share. They also expect a long-term EPS growth rate of 4% to 6% compounded annually, indicating a strong financial outlook.
Regulatory Lag Impact on Earnings
Despite the positive developments, the company faced challenges due to regulatory lag, which led to a decrease in net income by $3.3 million compared to the previous year. This issue was a significant point of concern during the call.
Increased Capital Expenditures
The company announced an increase in capital expenditure guidance for 2025, ranging from $450 million to $500 million. This rise is primarily attributed to the integration of C Energy and represents a nearly 40% increase in planned expenditures through 2030.
Equity Issuance Impact on Earnings Per Share
Earnings per share were affected by the issuance of common stock during the year, which was part of the company’s strategy to finance long-term growth capital. This was another key topic discussed during the earnings call.
Forward-Looking Guidance
Looking ahead, Northwest Natural Gas projects 2025 adjusted earnings between $2.75 and $2.95 per share, with significant contributions expected from C Energy and Northwest Natural Water. The company plans substantial capital investments, forecasting expenditures between $450 million and $500 million for 2025. They also anticipate a consolidated customer growth of 2% to 2.5%, driven largely by C Energy’s robust growth.
In conclusion, Northwest Natural Gas’s earnings call presented a balanced view of achievements and challenges. While the company celebrated significant growth and strategic successes, it also acknowledged hurdles such as regulatory delays and the impact of equity issuance on EPS. The forward-looking guidance remains positive, with expectations of continued growth and strategic investments.