Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

NW Natural Holdings Reports Fourth Quarter and Full Year 2023 Results


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

"For over 165 years, NW Natural Holdings has provided essential energy to the communities it serves. We've demonstrated our unwavering commitment to safety, service and our constant focus on the future, while delivering strong financial performance," said David H. Anderson, CEO of NW Natural Holdings. "Looking forward, 2024 is an important year for us as we're making substantial investments in our gas and water utility systems to provide continued safe and reliable service for our customers. Growth is not always linear and in certain years the focus will be on initiatives that set the stage for future growth. This increased level of investment and inflationary impacts on operating costs magnifies the effect of normal recovery lag in our gas utility business model in 2024, and that's why we've filed a general rate case in Oregon. We expect new rates in November 2024. We remain focused on executing our long-term growth plan and providing value to customers, employees and shareholders. I remain confident in our long-term earnings per share growth target of 4% to 6% from 2022 through 2027, off a base year earnings per share of $2.54 in 2022."

For 2023, NW Natural Holdings reported net income of $93.9 million (or $2.59 per share), compared to $86.3 million (or $2.54 per share) for 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. Net income from our other activities decreased primarily due to higher interest expense. Earnings per share were also affected by issuing common shares in 2023.

1 "World's Most Ethical Companies" and "Ethisphere" names and marks are registered trademarks of Ethisphere LLC

KEY INITIATIVES AND EVENTS

NW Natural Files an Oregon General Rate Case

On Dec. 29, 2023, NW Natural filed a request for a general rate increase with the Oregon Public Utility Commission (OPUC). The filing includes a requested $154.9 million annual revenue requirement increase and an increase in average rate base of $381 million compared to the last rate case driven by long-planned investments related to safety, reliability, and information technology upgrades. NW Natural's filing will be reviewed by the OPUC and other stakeholders. The process is anticipated to take up to 10 months with new rates expected to take effect Nov. 1, 2024.

NW Natural Signs Agreement for RNG Facility in Washington State

NW Natural and WM have signed an agreement that gives NW Natural exclusive rights to construct and operate an RNG facility at WM's landfill in East Wenatchee, Wash., for a term of 20 years. We anticipate the new facility could begin generating RNG in late 2025, providing NW Natural a 20-year supply of RNG from the facility once constructed.

NW Natural Water Continues Expansion of Water and Wastewater Utility Business

In 2023, NW Natural Water closed four acquisitions in three states including expanding its presence in Arizona with an acquisition in Peoria, Arizona, a major suburb northwest of Phoenix. In total, the acquisitions added approximately 6,200 customers in 2023. In June 2023 and January 2024, NW Natural Water increased its ownership investment in Avion Water Company. Currently NW Natural Water owns 45.6% of Avion, which serves approximately 15,000 customer connections in and around Bend, Oregon. In total, NW Natural Water serves over 180,000 people through approximately 73,000 connections across five states.

NW Natural Water Launches a Water Operations & Maintenance Services Business

Today NW Natural Water provides services to nearly 20,000 connections. NW Natural Water launched its services business in April 2023 and completed a second acquisition in October 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.

ANNUAL 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 between the annual results for 2023 and 2022. NW Natural Holdings' annual results by business segment are summarized in the table below:

 

2023

 

2022

 

Change

In thousands, except per share data

Amount

Per Share

 

Amount

Per Share

 

Amount

Per Share

Net income:

 

 

 

 

 

 

 

 

Natural Gas Distribution segment

$

94,042

 

$

2.59

 

$

79,690

$

2.34

 

$

14,352

 

$

0.25

 

Other

 

(174

)

 

?

 

 

6,613

 

0.20

 

 

(6,787

)

 

(0.20

)

Consolidated

$

93,868

 

$

2.59

 

$

86,303

$

2.54

 

$

7,565

 

$

0.05

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

36,265

 

 

 

33,984

 

 

 

2,281

 

Natural Gas Distribution Segment

Natural Gas Distribution (NGD) segment net income increased $14.4 million (or $0.25 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 $69.1 million primarily due to new rates, which contributed $56.7 million; a $9.4 million higher gain from the Oregon gas cost incentive sharing mechanism due to lower than estimated gas costs; and customer growth of 0.6% over the last 12 months provided $4.6 million. Offsetting these increases, margin decreased $2.4 million due to lower usage from warmer comparative weather for customers not covered by the weather normalization mechanism. Weather was 8% warmer than average for 2023, compared to 1% colder than average for 2022.

Operations and maintenance expense increased $40.0 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 $11.4 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 $15.8 million primarily from lower pension expense, interest income from invested cash, and higher equity Allowance for Funds Used During Construction (AFUDC) interest income.

Interest expense increased $14.3 million due to higher long-term debt balances.

Income tax expense increased $4.9 million primarily due to higher pre-tax income.

Other

Net income from Other decreased $6.8 million (or $0.20 per share) reflecting $9.1 million of higher interest expense related to higher outstanding debt balances at NW Natural Holdings and NW Natural Water, offset by lower taxes of $1.4 million.

FOURTH QUARTER RESULTS

The following financial comparisons are between the fourth quarter of 2023 and 2022. NW Natural Holdings' fourth quarter results by business segment are summarized in the table below:

 

Three Months Ended December 31,

 

2023

 

2022

 

Change

In thousands, except per share data

Amount

Per Share

 

Amount

Per Share

 

Amount

Per Share

Net income:

 

 

 

 

 

 

 

 

Natural gas distribution segment

$

46,522

 

$

1.26

 

 

$

47,159

$

1.34

 

$

(637

)

$

(0.08

)

Other

 

(1,882

)

 

(0.05

)

 

 

777

 

0.02

 

 

(2,659

)

 

(0.07

)

Consolidated

$

44,640

 

$

1.21

 

 

$

47,936

$

1.36

 

$

(3,296

)

$

(0.15

)

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

37,045

 

 

 

 

35,294

 

 

 

1,751

 

Natural Gas Distribution Segment

Natural gas distribution segment net income decreased $0.6 million (or $0.08 per share) 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 $6.5 million primarily due to new rates, which contributed $7.4 million; a $2.8 million higher gain from the Oregon gas cost incentive sharing mechanism due to lower than estimated gas costs; and customer growth of 0.6% over the last 12 months contributed $0.4 million. Offsetting these increases, margin declined $4.9 million due to lower usage from warmer comparative weather for customers not covered by the weather normalization mechanism. Weather was 22% warmer than average for 2023, compared to 7% colder than average for 2022.

Operations and maintenance expense increased $9.2 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 $1.5 million.

Other income, net reflected a benefit of $4.8 million primarily from higher equity AFUDC interest income, lower pension expense, and interest income from invested cash.

Interest expense increased $1.6 million due to higher long-term debt balances.

Income taxes decreased $0.4 million due to lower pre-tax income.

Other

Net income from Other decreased $2.7 million (or $0.07 per share) as a result of $1.2 million of higher interest expense for NW Natural Water and NW Natural Holdings primarily from higher interest rates and $1.0 million of additional operating expenses associated with water purchases and treatment for our water utilities.

BALANCE SHEET AND CASH FLOWS

For 2023, the Company generated $279.9 million in operating cash flow and invested $327.3 million in natural gas utility capital expenditures to support growth, safety, and technology and facility upgrades; and water & wastewater utility capital expenditures to support growth and safety. In addition, the Company invested $7.5 million in water and wastewater acquisitions. Net cash provided by financing activities was $64.2 million for 2023 primarily due to issuing long-term debt and equity. As of December 31, 2023, NW Natural Holdings held cash of $32.9 million.

2024 GUIDANCE AND LONG-TERM TARGETS

NW Natural Holdings' reaffirmed its long-term earnings per share growth rate target of 4% to 6% compounded annually from 2022 through 2027. 2022 earnings were $2.54 per share. Holdings' 2024 earnings per share guidance is not in line with that goal primarily due to regulatory lag from our natural gas distribution segment mainly as a result of two factors. First the natural gas distribution segment is making substantial investments to provide continued safe and reliable service for our customers. This increased level of investment and the elevated investment in technology, which is shorter lived and results in higher depreciation expense, is exacerbating the regulatory lag in 2024. Second due to inflationary pressures, the natural gas distribution segment's operating expenses are increasing in 2024 because of several multi-year operations and maintenance contracts renewing, higher personnel costs, the amortization of cloud computing technology investments, and increased pension expense. These factors are part of our request in the Oregon general rate case NW Natural filed at the end of 2023. Based on Oregon statute, new rates are expected to be effective on Nov. 1, 2024.

We expect NW Natural capital expenditures for 2024 to be in the range of $350 million to $400 million and for the five-year period from 2024 to 2028 to range from $1.4 billion to $1.6 billion. We expect NW Natural Water to invest approximately $40 million in 2024 related to maintenance capital expenditures for water and wastewater utilities owned as of Dec. 31, 2023, and for the five-year period to invest approximately $120 million to $140 million.

The timing and amount of the capital expenditures and projects for 2024 or additional investments in our infrastructure during or after 2024 could change based on customer growth, significant changes in prevailing regulatory policies or outcomes, or significant local, state or federal laws, legislation or regulations, or cost estimates. Required funds for the investments are expected to be internally generated or financed with long-term debt or equity, as appropriate.

Primarily because of regulatory lag, NW Natural Holdings is initiating 2024 earnings guidance in the range of $2.20 to $2.40 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.

68 YEARS OF INCREASING DIVIDENDS

On Nov. 15, 2023, NW Natural Holdings paid its 68th consecutive annual dividend increase. In January 2024, 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 was paid on Feb. 15, 2024 to shareholders of record on Jan. 31, 2024. 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 fourth quarter and annual 2023 financial and operating results.

Date and Time:

Friday, February 23

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

 

 

Phone Numbers:

United States 1-833-470-1428

Canada 1-833-950-0062

International 1-404-975-4839

Passcode 245162

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 in the U.S. and Canada, and +44-204-525-0658 (international). The replay access code is 746841.

ABOUT NW NATURAL HOLDINGS

Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and has been doing business for 165 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 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 180,000 people through approximately 73,000 meters and provides operation and maintenance services to an additional 20,000 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, technology 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, including our Oregon general rate case, 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, wastewater and water services acquisitions, partnerships, and investment strategy and financial effects of water, wastewater and water services 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, public health risks, financial, macroeconomic and geopolitical risks, growth and strategic risks, operational risks, business continuity and technology risks, environmental risks and risks related to our water and renewables businesses.

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)

Fourth Quarter and Annual Period

 

Three Months Ended

 

Twelve Months Ended

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

 

December 31,

 

 

 

December 31,

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

Operating revenues

$

355,714

 

$

375,253

 

(5

)%

$

1,197,475

 

$

1,037,353

 

15

%

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Cost of gas

 

142,475

 

 

168,222

 

(15

)

 

499,837

 

 

429,635

 

16

 

Operations and maintenance

 

73,606

 

 

63,262

 

16

 

 

273,766

 

 

224,667

 

22

 

Environmental remediation

 

4,352

 

 

4,439

 

(2

)

 

12,899

 

 

12,389

 

4

 

General taxes

 

10,563

 

 

10,366

 

2

 

 

46,248

 

 

41,031

 

13

 

Revenue taxes

 

14,921

 

 

15,789

 

(5

)

 

48,671

 

 

41,826

 

16

 

Depreciation

 

32,762

 

 

31,142

 

5

 

 

125,581

 

 

116,707

 

8

 

Other operating expenses

 

1,868

 

 

806

 

132

 

 

5,532

 

 

3,621

 

53

 

Total operating expenses

 

280,547

 

 

294,026

 

(5

)

 

1,012,534

 

 

869,876

 

16

 

Income from operations

 

75,167

 

 

81,227

 

(7

)

 

184,941

 

 

167,477

 

10

 

Other income (expense), net

 

4,627

 

 

295

 

1,468

 

 

17,855

 

 

1,203

 

1,384

 

Interest expense, net

 

19,890

 

 

17,091

 

16

 

 

76,566

 

 

53,247

 

44

 

Income before income taxes

 

59,904

 

 

64,431

 

(7

)

 

126,230

 

 

115,433

 

9

 

Income tax expense

 

15,264

 

 

16,495

 

(7

)

 

32,362

 

 

29,130

 

11

 

Net income

$

44,640

 

$

47,936

 

(7

)

$

93,868

 

$

86,303

 

9

 

 

 

 

 

 

 

 

Common shares outstanding:

 

 

 

 

 

 

Average diluted for period

 

37,045

 

 

35,294

 

 

 

36,265

 

 

33,984

 

 

End of period

 

37,631

 

 

35,525

 

 

 

37,631

 

 

35,525

 

 

 

 

 

 

 

 

 

Per share information:

 

 

 

 

 

 

Diluted earnings per share

$

1.21

 

$

1.36

 

 

$

2.59

 

$

2.54

 

 

Dividends paid per share

 

0.4875

 

 

0.4850

 

 

 

1.9425

 

 

1.9325

 

 

Book value per share, end of period

 

34.12

 

 

33.09

 

 

 

34.12

 

 

33.09

 

 

Market closing price, end of period

 

38.94

 

 

47.59

 

 

 

38.94

 

 

47.59

 

 

 

 

 

 

 

 

 

Capital structure, end of period:

 

 

 

 

 

 

Common stock equity

 

43.5

%

 

42.4

%

 

 

43.5

%

 

42.4

%

 

Long-term debt

 

48.3

 

 

45.0

 

 

 

48.3

 

 

45.0

 

 

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

 

8.2

 

 

12.6

 

 

 

8.2

 

 

12.6

 

 

Total

 

100.0

%

 

100.0

%

 

 

100.0

%

 

100.0

%

 

 

 

 

 

 

 

 

Natural Gas Distribution segment operating statistics:

 

 

 

 

 

 

Meters - end of period

 

799,250

 

 

794,497

 

0.6

%

 

799,250

 

 

794,497

 

0.6

%

Volumes - therms:

 

 

 

 

 

 

Residential and commercial sales

 

226,558

 

 

271,289

 

 

 

735,755

 

 

766,592

 

 

Industrial sales and transportation

 

122,007

 

 

125,548

 

 

 

470,919

 

 

485,745

 

 

Total volumes sold and delivered

 

348,565

 

 

396,837

 

 

 

1,206,674

 

 

1,252,337

 

 

Operating revenues:

 

 

 

 

 

 

Residential and commercial sales

$

310,056

 

$

328,512

 

 

$

1,015,072

 

$

881,370

 

 

Industrial sales and transportation

 

24,676

 

 

26,430

 

 

 

97,886

 

 

86,810

 

 

Other distribution revenues

 

825

 

 

577

 

 

 

4,540

 

 

1,944

 

 

Other regulated services

 

4,735

 

 

4,906

 

 

 

18,902

 

 

19,628

 

 

Total operating revenues

 

340,292

 

 

360,425

 

 

 

1,136,400

 

 

989,752

 

 

Less: Cost of gas

 

142,531

 

 

168,183

 

 

 

500,061

 

 

429,861

 

 

Environmental remediation expense

 

4,352

 

 

4,444

 

 

 

12,899

 

 

12,389

 

 

Revenue taxes

 

14,873

 

 

15,720

 

 

 

48,432

 

 

41,627

 

 

Margin, net

$

178,536

 

$

172,078

 

 

$

575,008

 

$

505,875

 

 

Degree days:

 

 

 

 

 

 

Average (25-year average)

 

1,057

 

 

1,046

 

 

 

2,686

 

 

2,686

 

 

Actual

 

822

 

 

1,121

 

(27

)%

 

2,480

 

 

2,712

 

(9

)%

Percent (warmer) colder than average weather

 

(22

)%

 

7

%

 

 

(8

)%

 

1

%

 

NORTHWEST NATURAL HOLDINGS

 

 

 

Consolidated Balance Sheets (Unaudited)

As of December 31,

In thousands

2023

 

2022

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

32,920

 

 

$

29,270

 

Accounts receivable

 

121,341

 

 

 

168,906

 

Accrued unbilled revenue

 

83,138

 

 

 

89,048

 

Allowance for uncollectible accounts

 

(3,455

)

 

 

(3,296

)

Regulatory assets

 

178,270

 

 

 

117,491

 

Derivative instruments

 

11,380

 

 

 

194,412

 

Inventories

 

112,571

 

 

 

87,096

 

Other current assets

 

65,275

 

 

 

61,286

 

Total current assets

 

601,440

 

 

 

744,213

 

Non-current assets:

 

 

 

Property, plant, and equipment

 

4,556,609

 

 

 

4,261,566

 

Less: Accumulated depreciation

 

1,198,555

 

 

 

1,147,166

 

Total property, plant, and equipment, net

 

3,358,054

 

 

 

3,114,400

 

Regulatory assets

 

333,443

 

 

 

340,432

 

Derivative instruments

 

431

 

 

 

5,045

 

Other investments

 

102,951

 

 

 

95,704

 

Operating lease right of use asset, net

 

71,308

 

 

 

73,429

 

Assets under sales-type leases

 

129,882

 

 

 

134,302

 

Goodwill

 

163,344

 

 

 

149,283

 

Other non-current assets

 

106,239

 

 

 

91,518

 

Total non-current assets

 

4,265,652

 

 

 

4,004,113

 

Total assets

$

4,867,092

 

 

$

4,748,326

 

Liabilities and equity:

 

 

 

Current liabilities:

 

 

 

Short-term debt

$

89,780

 

 

$

258,200

 

Current maturities of long-term debt

 

150,865

 

 

 

90,697

 

Accounts payable

 

145,361

 

 

 

180,667

 

Taxes accrued

 

15,454

 

 

 

15,625

 

Interest accrued

 

15,836

 

 

 

10,169

 

Regulatory liabilities

 

84,962

 

 

 

248,582

 

Derivative instruments

 

98,661

 

 

 

28,728

 

Operating lease liabilities

 

2,333

 

 

 

1,514

 

Other current liabilities

 

93,626

 

 

 

64,552

 

Total current liabilities

 

696,878

 

 

 

898,734

 

Long-term debt

 

1,425,435

 

 

 

1,246,167

 

Deferred credits and other non-current liabilities:

 

 

 

Deferred tax liabilities

 

382,673

 

 

 

366,022

 

Regulatory liabilities

 

695,896

 

 

 

689,578

 

Pension and other postretirement benefit liabilities

 

158,116

 

 

 

149,143

 

Derivative instruments

 

28,055

 

 

 

20,838

 

Operating lease liabilities

 

77,167

 

 

 

78,965

 

Other non-current liabilities

 

119,034

 

 

 

123,438

 

Total deferred credits and other non-current liabilities

 

1,460,941

 

 

 

1,427,984

 

Equity:

 

 

 

Common stock

 

890,976

 

 

 

805,253

 

Retained earnings

 

399,911

 

 

 

376,473

 

Accumulated other comprehensive loss

 

(7,049

)

 

 

(6,285

)

Total equity

 

1,283,838

 

 

 

1,175,441

 

Total liabilities and equity

$

4,867,092

 

 

$

4,748,326

 

NORTHWEST NATURAL HOLDINGS

 

 

 

Consolidated Statements of Cash Flows (Unaudited)

Year Ended December 31,

In thousands

2023

 

2022

Operating activities:

 

 

 

Net income

$

93,868

 

 

$

86,303

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

Depreciation

 

125,581

 

 

 

116,707

 

Regulatory amortization of gas reserves

 

3,217

 

 

 

5,589

 

Deferred income taxes

 

8,966

 

 

 

17,410

 

Qualified defined benefit pension plan (benefit) expense

 

(2,430

)

 

 

5,351

 

Deferred environmental expenditures, net

 

(26,052

)

 

 

(18,160

)

Environmental remediation expense

 

12,899

 

 

 

12,389

 

Asset optimization revenue sharing bill credits

 

(10,471

)

 

 

(41,102

)

Other

 

22,972

 

 

 

21,558

 

Changes in assets and liabilities:

 

 

 

Receivables, net

 

50,977

 

 

 

(76,454

)

Inventories

 

(24,105

)

 

 

(29,269

)

Income and other taxes

 

(1,246

)

 

 

6,908

 

Accounts payable

 

(39,958

)

 

 

24,508

 

Deferred gas costs

 

52,371

 

 

 

12,334

 

Asset optimization revenue sharing

 

22,637

 

 

 

28,937

 

Decoupling mechanism

 

(11,415

)

 

 

10,922

 

Cloud-based software

 

(16,307

)

 

 

(23,908

)

Other, net

 

18,445

 

 

 

(12,351

)

Cash provided by operating activities

 

279,949

 

 

 

147,672

 

Investing activities:

 

 

 

Capital expenditures

 

(327,347

)

 

 

(338,602

)

Acquisitions, net of cash acquired

 

(7,533

)

 

 

(94,279

)

Purchase of equity method investment

 

(1,000

)

 

 

(1,000

)

Other

 

383

 

 

 

(1,579

)

Cash used in investing activities

 

(335,497

)

 

 

(435,460

)

Financing activities:

 

 

 

Proceeds from common stock issued, net

 

66,495

 

 

 

208,561

 

Long-term debt issued

 

330,000

 

 

 

290,000

 

Long-term debt retired

 

(90,000

)

 

 

?

 

Changes in other short-term debt, net

 

(168,540

)

 

 

(131,300

)

Cash dividend payments on common stock

 

(67,340

)

 

 

(62,771

)

Payment of financing fees

 

(2,200

)

 

 

(912

)

Other

 

(4,207

)

 

 

(1,946

)

Cash provided by financing activities

 

64,208

 

 

 

301,632

 

Increase in cash, cash equivalents and restricted cash

 

8,660

 

 

 

13,844

 

Cash, cash equivalents and restricted cash, beginning of period

 

40,964

 

 

 

27,120

 

Cash, cash equivalents and restricted cash, end of period

$

49,624

 

 

$

40,964

 

Supplemental disclosure of cash flow information:

 

 

 

Interest paid, net of capitalization

$

80,197

 

 

$

50,823

 

Income taxes paid, net of refunds

 

24,263

 

 

 

2,779

 

Non-cash activities:

 

 

 

Shares issued in connection with business combinations

$

12,884

 

 

$

?

 

Debt assumed in connection with business combinations

 

3,131

 

 

 

?

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

Cash and cash equivalents

$

32,920

 

 

$

29,270

 

Restricted cash included in other current assets

 

16,704

 

 

 

11,694

 

Cash, cash equivalents and restricted cash

$

49,624

 

 

$

40,964

 

 


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