NWN - Earnings call transcript Q3 2020 | Northwest Natural Holding Company

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Operator

Good morning and welcome to the NW Natural Third Quarter 2020 Earnings Conference Call. All participants are in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. to conference like Sparley. to now would turn over the Nikki I go Please ahead.

Nikki Sparley

Good to and XXXX you, morning Thank Emily. welcome earnings our call. quarter third

be forward-looking As this may on or reminder, some occur. the which that a not of management's assumptions, morning They statements. will contain may are based things said

our today, non-GAAP adjusted addition, In comments some measures. of reference

press reconciliation other refer to please a reconciliation at end For the statements, complete of cautionary these release. of our language measures and and the

later today. XX-Q We expect our to file

As is following be call. community. are teleconference mentioned, on Please available the for calls will this and recorded being these our financial the website designed note

If you directly the me at after are XXX-XXX-XXXX. questions an and additional you contact have call may investor

media XXX-XXX-XXXX. News, Moore Melissa may contact at

Officer; Financial Senior President of to then other will to Speaking David. questions. this morning our David are Officer. will it with With team over that, David prepared Executive Frank and be Vice and Anderson, remarks Chief members Frank executive Chief President, have and along and turn your available, Burkhartsmeyer, answer I and

David Anderson

and I these call and hope safe you you, that Like Nikki, good welcome. all finds continue times. well. to morning unusual we navigate this Thanks, and

COVID with Oregon September. In dealt to addition in wildfires.

here as was all of our ensure our employees with unusual system impacted, of times. personally during of those their steps thank the to and closely work their I course for want and all event, resilient gas with proactive minimally coordinated the we took Our customers first any of but efforts to safety fire responders hard commanders. for

time unemployment, and the record growing we economic pandemic is - fundamentally sound with stood before sustainable February territories. in remember we record few to a It where Moving a low service nationally updates. had to started. our both At that economy in important

impacts some Northwest we've COVID recent the As the improvement the of but economic calls affected like seen country, rest previous in earnings discussed in months.

from year In the a the Portland essentially the XXXX sustained Job April. about X.X% second this upward year-over-year XX.X% were back Oregon's growth of closed down climb up rate. and X% an high bounce in in in from quarter XX%. national rate That's is was of growth For territory metro September price year-to-date Oregon in unemployment matching example, sales home positive with region, through stronger September. to

issued we New what single-family are than That's in was better spring. permits to generally this expected year this closed where much were XXXX.

ended year. As that's result, months we connected over meters last a XXX meters XX,XXX added have September during and last time we this the more than XXth XX at

for September system customer rate pandemic. lower the X.X% ended the Our disconnecting a XX and customer overall months is our growth reflects of level during from

why normal That's will positive the we pandemic the began, have see customers. practices, finalized decrease difficult working trends, a this couple times been and suspended we disconnections stakeholders that bit. March. normal of normal collection are commissions resume normal for our all The we've to operations. their As voluntarily likely of more we staff, way utilities determine processes timelines return months in and to states some little practices. we operating to resume Despite these rate states best in know the in growth of our disconnection with last to all the allow commission, Since

commissions Idaho Oregon, have Additionally, applications. the Texas, and deferral approved

equity previously order million the case disclosed of rate On XX/XX on in October includes our structure, cap our based and capital of cost requirement $XX.X Oregon X.X% all-party the X%. in return an general order in a is of settlement. a a regulatory increase issued just The front, revenues was our under approving

last compared an increase of case. base of $XXX reflects addition, to the order the $X.XX In an rate or million rate average billion

mute, Somebody to on please. needs the phone

the to Oregon, of costs gas and took a offset November filing. in on purchase from resulted rates were today Natural largely reduced XX In bills ago. residential than bill. gas case Overall by and their low, remain the they me $X effect effect our monthly Northwest less for XX% to combined customers years customers adjustment bills gas rate XX% annual Xst New PGA are increase did a continue or paying excuse about

our are In Customer J.D a ranked June credits service Study. among West report utilities record These we Satisfaction addition, in proud Oregon storage to of in I'm that customers passed gas And especially company in year. during our a $XX in to to and the the second Natural increase, this of Northwest this making the recognized employees that increases. customer-centric Power XXXX the the back culture fourth million Residential bill XXth and to dividend to report results I'm annual Board consecutive customers. testament quarter, of morning, large continuing legacy pleased finally, our challenging approved this year gratifying dividend see in customers a

is New details York amount now three With the of long get more record. Frank? with dividend per to to of on me bit little it $X.XX companies the turn annual that Exchange Stock over Our proud Frank the financials, only let be a share. to this We're one

Frank Burkhartsmeyer

XXXX. by David, of results and impacts conclude you, and highlights morning COVID-XX the good everyone. Thank the and and of quarter the year-to-date discussing I will begin with guidance third financial for

financing These outlines and Oregon debt recently include that David costs recovered. proceeding. review be and lost the term certain bad associated against As lower entertainment travel determined deferral. additional that Direct COVID-XX a may the types be to noted, be and sheet the as Prudency expense liquidity deferral netted the a costs accounts and are expense. will recovery PPE, revenues. of meals with such revenues and reduction, Commission of future at approved

the suspension revenue. are customers are normal a recognized estimated resilient, September an financial pandemic. to allowed cost we Through charged million the of have we experiencing recover Utilities $X.X processes. asset fee has and incurred business date. model since incurred costs impacts Oregon that to XXth, been regulatory revenue we is not late collection million for incremental our also In to related quarter, some of third While $X the to lower

$X approximately of recognized will However, this September, revenue period fees recover when this the rates. we the revenue to million of future began million. of rates third be million through In we the these the million September $X to end with XXth, deferred as under $X.X in recover At of the quarter. $X.X totaled total foregone impact through orders financial summary in expect

excess for earnings on addition which an tax order In our of of income our initiated third to taxes our effects issuance rate temporary $X tax in after-tax pandemic, million year-to-date deferrals X.X XXXX per Oregon provided return describe shares results. XX.X%. that of in impacted rate utility. in fund to in and basis an the using of customers to cost-savings earnings of mitigate detailed these resulted gas comparisons to The year-to-date. by we drivers deferred of June were as the XX.X%. financial note investment raised Switching savings further now quarter effective I'll million measures statutory we the the equity approximately Also share the financial to

Northwest seasonal As quarters the during with majority generated earnings a a heating in revenues of first the season. are reminder, Natural's winter and fourth

at customers XXXX. $X.X decoupled. utility per savings the higher share the offset related decline In slightly expense gas and more or decrease rates loss increased distribution of incurred the loss $XX.X benefit the in continuing to This or taxes depreciation use net by than non-payroll system. expenses COVID-XX as COVID-XX. I cost Washington in in - large by Washington general share offset expense, from operations offset our $X.XX the the to for Texas are regulatory we charges per earlier. of industrial and was and Utility posted commercial the customer period investment related O&M slightly compared usage large was compensation from lower reconnection to discussed as tax For segment, company. to $XXX,XXX $X.XX reported a of the The related of deferral water same utility declined the net and a fees offset $X.XX increased utility general in and per deferral asset for lower which of by $XX.X acquired expenses, million higher million contribution recognition and $XXX,XXX by quarter, gas customer the and and the business in a in as decline an share we from measures partially gas revenues assets late of growth and increased and million partially higher in margin our a from we Depreciation that quarter expenses ongoing not holding

increased Finally, decreased for expense cash balances we interest million quarter to incurred March. in as interest deferred $X.X the

regulatory disallowance $XX period first to Last order. X $XX.X million or months $X.XX from income reported an share per For per year. net to per of share Oregon we million the included compared for net continuing year's results or a $X.XX last income same $X.XX of share operations of related the of XXXX, Commission

to per margin reduced of on COVID. million. expansion customer and million. which $XXX,XXX. the from contributed to margin XXXX. for and also Washington, XXXX prior curtailment disallowance collectively entitlement expense. growth, growth to North quarter late and compared reconnection is fees in related as utility customer decline $X.XX pipeline the fees in March $X.X The collection In tax segment, project result revenues remaining non-GAAP the $X.X decline the per by XXXX earnings million largely the is the continuing $XX.X weather suspended related was order of gas adjusted offset declined from and to first an in that effects and Utility and $X.XX margin due constraints warmer year, processes. pension a rates in Excluding additional share of lower basis, distribution Higher declined Mist in year-over-year from we revenue $X.X This an due Oregon was share to margin utility expenses lower normal operations million per reform The XXXX by share

of described This impact recognized in other the expenses contractor as income, earlier. describe. were headquarters compensation and operation service new last XXXX. first million order adjustments for I'll in This the which moving pension Utility and X of quarter I This well previously first taxes, O&M the a in is with partially increase through has measures Oregon declined our exception of as $X.X discussed. the cost resulted O&M during first as million was and to as no the disallowance, on additional by costs by $XX center. of expense costs, underlying decrease higher as as offset expenses this offsetting $X.X order, offset quarter income associated professional was savings months related year With million and net

have historically invested last we into the we Mist facility storage and placed service. North gas gas years system at Over in several our levels the high

As general $X.X and a result, million. taxes increased expense depreciation

$XXX,XXX flow, million included Finally, from to higher Net generated benefit expenditures, offset March asset utilities our at $XXX effect for in of gas $XX increased income A months X lower the wastewater tax first related company, our business net order, with no utility, by and the million million management water in We million our capital utility lower partially $XXX from of $XXX operating significant XXXX segment acquisitions. income. primarily and implementation earnings on revenues. a cash other expense for invested resulting with the notes expenses cash water flow. into XXXX, the of $X.X the million from company few businesses on holding and

We to this be $XXX year range million capital million. continue to expect of the expenditures in to $XXX

remains Our with balance liquidity. strong sheet ample

late are effects regarding COVID-XX. and and of third regarding our the expectations line In quarter recovery with ongoing clarity in results our financial fee Now of have summary, Oregon cost we revenues. the in

losses. season, heating their usage monitor industrial some our are continue to XX% closely been that customers we bills. and current Going negatively the commercial of have into we and with commercial levels know categories Nonetheless, impacted of customer customers commercial and

cost guided lower laws, mechanisms and in the to continue of range, reaffirm also measures outcomes mitigate from prevailing potential the share due We significant to COVID-XX. and continuing per savings regulation. the to The significant regulatory the growth, implications assumes average or underway legislation, or these the range or $X.XX weather Today, for $X.XX continued policies, customer guidance no per end conditions, will also in operations circumstances. of pursue changes we to guidance share towards

call to this Finally, are to the any back concluding sale Gill of over in reported gain his associated excludes operations. related results. remarks. the These With for discontinued and operating turn David that, guidance items Ranch I'll

David Anderson

Frank. Thanks,

system in vision carbon-neutral long-term any the the year. of we country. the use with terms objectives, gas mitigating At things our in to systems by many pursuing a we're also or more persevered Today challenges customer tight aggressively for key many safety, than While utility time, of we important iron no that and We utility accomplished deliver the bare XXXX. has have tightest year and future service, renewable effects. cast Oregon same includes in the and one a other pandemic helped each that advancing energy steel,

meet gas goal. In is or a yet established over as accounts a peak we achieved XX% we system, much use on annually. to customers' from gas a road. existing operations this emissions electric for removing this That's goal in to better, savings the know to provided emissions the our I'm fact, by for just equivalent cars greenhouse of a In meet the as has why of own energy Oregon's we and XX,XXX very usage. on years lot track and can but of nearly carbon XX% savings businesses of from Two do to we homes X% of report, voluntary day twice in system That's XXXX, sales the energy, pleased delivery and which goal. we're natural heating efficient our our of exceed needed the gas XXXX customers'

from So X have savings far - come main areas. from

energy to the reduce Northwest priority country is the supports we in to of were and First, move. cheapest first for efficiency Back utilities XXXX, way decoupling the a obtain gas emissions Natural. which a efficiency energy in the and mechanism, fastest one long-standing

Second, from them their to Northwest vital that customers strong all from the facility a of some a standalone offer carbon our or use. role the offset voluntary was plays emissions also carbon And producers. and calculate use savings. emissions contributor to responsible screening intensity country natural XXXX, the we also to gas a to producer first we in harvested Natural In allows gas We emission offset program to gas was program for implementing most information gas have gas from operations, finally, the that tools first of believe purchases savings purchases. utility to we the carbon and EPA our producers, prioritize are relative data the use

We we more the now with groundbreaking understand savings and RNG Oregon. ambitious several Bill see hydrogen possible. are Now about have now years into today support we and carbon our and goal, Senate more have in XX policy

We also storage it the natural Northwest. in Pacific and valuable future. of seasonal the renewable one our storage for very with advantage only be Conventional can molecules facilities is the storage gas of in in have the used area,

facility taken. at million-megawatt battery a $X In and policy on here in industry has these about of of gas is States already in fact, peers its XX how to at about And and Canada alone much had underground to United times of Natural That's however, lithium X the many in the Europe future not world. RNG advantages the billion recent discussions out electricity we with equivalent biggest there of our the steps ways. Mist to all cubic we solutions is as and system, role certainly focus --what thinking renewable storage. we're to than We're our having storage a larger hydrogen bigger I'm support prices and excited get about about hours battery today's leverage What feet, well. in new and need, the the now Northwest scale. continued coming these the is trillion help

region The several of We we're hydrogen collaborative facility. In pursuing, contracts, for signed RFP and development we electric of a gas. a Bonneville our explore have the to the result and MOU issued renewable Bonneville environmental in as the an natural renewable the in utility October, viable we July foundation. includes a

and objective our utility growing long-term Another businesses. wastewater is water

to see pandemic, platform. investments Although pace and to is our the due our good in we acquisition slow growth continue existing

for I to this contacts expand footprint. about industry working excited investment making business. our continue the hard in remain are the and potential We

that but work easy we no Now and each we are move there strides make year and shortcuts, we goals, vision. is our closer set achieving this to

thanks we'll for this again, that, it questions. for joining Emily So us morning. With up open

Operator

[Operator Instructions].

Our first Ciciarelli go Bank at of question from Please comes Richard America. ahead.

David Anderson

Richard. morning, Good

Unidentified Analyst

taking Hey, is Thanks our for question. This Richard. guys. Harry for on actually

talked water you off, earnings utilities XQ So to the from starting quarter. contributing about in your higher

pertains the water earnings your utility Can segment the obviously more some to that $X.XX do segment? growing details see think provide over Your other we potentially utilities, gas, the water as year-over-year. composition you And around than it increased could other term, you business? longer of faster the

Frank Burkhartsmeyer

Thanks, Yeah. sorry. Rich. here. Harry, Frank It's

don't Texas we we utility earlier. stand-alone assets yet announced driver water there, the some of as break the the have Washington and out of course optimization company a primary and Of costs and additional in segment the you quarter-over-quarter was holding the that but acquisition

driver. the was that So

we're, any announced that haven't from think more that I acquisitions we point.

what is what's pretty of seeing good So you're on. representation there going year-to-date

year-to-date representative, high we good period, a softening a business, quarter been the depending year-over-year optimization number There because well little in is quarter bit as see usage and the there. business is go we'll has of of think. for the activities of in of some down a development little water so kind up it's there bit I the level can volatility Third on on always and cost a of

David Anderson

one. the that thing one our are do opportunity of seeing underlying number laid a lot good that assets, we've growth is of once only these we two them are finding, that number in acquired things the that investment we solid I'll is, kind is deck. thesis water additional the IR add to out our of we Harry, and and is a on proving have

to proving is be growth base rate the So beneficial.

very it good our your to to to So opportunity going growth underlying forward, match would overall. continues about be gas earnings point have we're a that in nice seeing utility investment

had playing thesis hoped is we the out as front. So along that

Unidentified Analyst

heating you season guys, critical to in COVID guess into a gas quarter be how things in your your to month here for guidance. utility are of XQ obviously into the so the face winter to back Nice it. turning I about or a Got trending peak hear.

helpful? heading season will into on heating be update any trends winter so, And

David Anderson

country effects. all obviously the Yeah, like experiencing I the we're mean COVID

And of first businesses normal that are of on we, will so occur quarter. of having are and how the news how and to there a the through term various the the good most commission trouble over which in customers sheets time, some back you walk get that's we period

though right So all season is to we heating important. good our but continue PGA for be, so impact which place, we're most in watch is are in the closely, there done there. course, The done, weather is normalized an we which results, that territory, winter some and a still is the that for driver even weather from weather usage news us, of things is of of into those of our is getting will cases

So we've it again, impacts seen seems some COVID. to from be,

think what will out see plan businesses frankly first also more and along obviously comes with we I have some level, think Harry, we individuals. we've like of that carefully, we're strong, fairly did But we've in have housing watch being helped the of it happens kind going just but what seen but we've national it's the on with interesting. greatly as that one I stimulus to very at program the Congress to critical we that it's, whether continue, really seeing seen customers having trouble, and market it's still a

answers can I we're don't as about know we that be. possibly So I as prepared question, but directly think your well

Unidentified Analyst

this first morning? renewable talked RFP are you I makes about issued That hydrogen discussions project could release more and the I just that the it. RNG any trending press relate one there mean, sense. Got and this in does in to you update if on the sneak how

David Anderson

that, Palfreyman Kim? I'll the of an him Heiting, Kim RFP. one Senior a our Kim on phone. have update little Justin have bit and me RNG, then give on hydrogen, VPs the tackle tackle the is of Let

Kimberly Heiting

Yeah, good Yes. morning.

have and is Foundation, and of hoping to Eugene our evolution a our some an exciting technical recently an center into and and excess of the portfolio COX to Board created. This the out part system. hydrogen team renewables pure flow And project to with David a on to a is to seeking hydrogen can we use industrials training far. project. We're Bonneville X% at selected. still renewable so testing demonstration then Water of we methanoate hydrogen. project waste sort important have from around our In their local together work, starting Environmental use So, would our partners, it the The doing we're some up mentioned. We're an as U.S a XX-megawatt that, it is up we've system to but Electric put project. our the plan We're be really with site announced We for parallel there isolated team into we viewing blending portion that be plan this really Eugene that from blending pleased project.

going that Going at into be the blend facility. testing this some to year, equipment on we're X% end-user

we're we're and this very about going Europe So evolving watching some Canada, own blending between very what's testing the project of where of closely. hydrogen and Eugene our excited on and in all is

I'll it to to maybe Justin on over So status RFP. of touch the turn the

Justin Palfreyman

received too was RFP our RFP on announce, little due we The and of - response a to September, continue the Harry. Thanks, - as going where head conduct it's in diligence a robust back and that's to we natural proposed invest expect to we received that exactly directly early we for natural to some our will to gas. renewable some SBXX we in renewable do execute gas investment but result we evaluate through contracts projects. And that responses parallel opportunities that continue in with it agreements, negotiate to in

are two it and within in or company. the savings is. They end renewable two think our expect they related that, was will separate some then RFP, portfolio only a over your time, we'll not both to separate make of And they and whether that the are with I question They related meaningful goal, workstreams a hydrogen some natural have gas projects direct agreements carbon our renewable project impact gas. but So investments separate purchase are into on or around we projects. RNG, up we

Unidentified Analyst

I guys. have. Thank all you, That's

David Anderson

in looks it Well, questions Richard. is there more Thanks, queue, Emily. no like the

I other know everybody thank for really us you getting So watching we'll go joining is I really ahead for and here. conferences. today. want and down and ready election it results shut to busy

She have understand be follow-up indicated. as help reach quarter the year-to-date. do will to go into Nikki additional she questions, you out you to please happy details to the If and

close the down. again that with Everybody, call today. and Emily, we thank you for your be please So safe, time will

Operator

has today's attending for now conference presentation. concluded. This Thank you

You may disconnect. now

Northwest Natural Holding (NWN) 7 Nov 202020 Q3 Earnings call transcript