Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. Welcome to the NW Natural Holdings Company Q1 2023 Earnings Call. My name is Jaquita. I will be your moderator for today's call. [Operator Instructions]

to with conference NW like host, to now Sparley Nikki Natural would pass over the your I Holdings. Nikki, please go ahead.

Nikki Sparley

morning, Thanks, XXXX Good and our to Jaquita. first earnings call. welcome quarter

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

the our press release. a of statements, cautionary of For refer to end complete list the language at

We expect today. to later file our XX-Q

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

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

media News (XXX)XXX-XXXX. Roy contact may at David

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

to turn With over that, will David. I it

David Anderson

the everybody. Thanks, morning, Nikki, and good started Welcome. year strong. off We

our These gas companies. to from customer year. We from our reported results last Washington I'll of financial income economic net indicators with our $X.XX revenues utility, key gas compared through were at and an results, go in share continue and financial same are in along solid through will progress I'll few per by quarter Frank period on some Water with then higher company. renewables for a the and make Our decarbonization utility. first Natural This net we morning, our income per largely and of and objectives. initiatives and natural on water wrap then walk all growth up the Oregon solid, and gas update quarter's to share the Northwest driven $X.XX results

X.X% on Oregon's above we on saw in the is bit the our X.X% last XXXX, March now time end the of we utility territory, which area. March. saw in in service our economy the December little in me that a cover slightly par rate service year trending unemployment was Related year So to the with gas let at this X.X% and

activity our national trends. gas months last rate added new follow single-family nearly customers Overall, for area in continues the during of X,XXX expected, growth customer a XX As housing utility X%. growth our to

consolidated during water our customer Texas utility Our the last organic counties our a water wastewater X.X% provided Texas. have last over areas XX X.X% grew acquisition, and our Overall, remained territories X.X% to our highest utilities Unemployment the base organic X%, economic we water organic X.X% basis, in posting utilities growth. X.X% to in solid XX XX On wastewater located. Population water was and months. months. growth water X.X% Texas water including wastewater and X.X% are XXXX in business in service falls continue operate growth Idaho do our was utilities that grew months. in where rates over utility, growth customer The strong customer in market last range the growth rate there over footing. from year. Idaho gas our utilities and and last with X.X% Collectively,

Turning utility. our to gas

and on utility safe We reliable a initiatives. to on decarbonization running continue and work

report about Senate our to we've customers To XX Senate gas natural Bill which on and totaling behalf with invested was X% develop energy of date, Natural's under under facility I'm signed Bill to recently Oregon. commissioned. current annual agreements Natural's Northwest by volume of or We purchase sales landmark utilities. million options in RNG make the continue renewable Northwest procurement investment Oregon progress to and XX supports second legislation, happy $XX

XXXX wind To of and proud we've a time. short of put of front perspective, that's accounted in decades solar supply, about in us and be to made period investment. and the in progress after for opportunities electric of continue I our such of it XX% the nation's in

good off start we're to think I here. So a

quarter, to equipment. forefront nearly delivered the from As summer. greenhouse boilers are energy believe of last heat technology signed and another We with equipment In we in to March, emissions. start customers equipment Emission key expected commercial was are to gas is begin carbon the This installation blended in which is soap it new to site both reported customer existing one carbon contracts is captures to into great Portland our bringing this reduce reductions has we've market. carbon and dioxide converted at use installation pilot complete promise potassium excited the with be at to slated shortly. here carbonate, products. this several and The of to

Let me to that. and this Frank the I'll after results, over cover financial up turn to wrap it Frank?

Frank Burkhartsmeyer

on and rate an tax statutory everyone. results discussing quarter after-tax the conclude first highlights David, using you, good Thank will drivers and earnings begin basis of morning, describe guidance by the I of for the I'll the XX.X%. year. with

Natural asset is our clarification, segment combined of our outside referred activities in Natural business are Natural. to management For our the revenues from gas distribution Northwest The other. Renewables, natural Water, and Northwest Northwest Storage Interstate utility subsidiary, housed primary primary as and segment third-party

first with the a generated winter the earnings earnings revenues fourth majority As in during gas of the the seasonal reminder, and utilities months. quarters heating are and

compared increase income net share $X.XX XXXX, we an of per million quarter, for of or period in the share same of share. $X.XX the per reported net income to million $XX.X per or $X.XX For $XX.X

related utility in Oregon a our posted while results were in and earnings utility per earnings primarily increase from share declined Washington customer businesses growth. rates and gas Our new other at our Higher to $X.XX gas $X.XX.

of million margin these projects. IT in payroll amortization case, approved X increased O&M costs, Oregon to amortization labor drivers million. and information the increased the deferrals regulatory deferrals the related of result rate and costs, utility and utility or a higher of reflecting As Gas $XX.X XX%, contract regulatory technology large COVID $X.X

costs general million due $X.X amortization deferrals lower the property, plant rate and Utility higher income million, of pension and equipment and were $X.X increased while taxes anticipated interest costs depreciation $X.X Oregon the expense increased income million. interest increased the of investment. Other driven increased in to Most and by case.

Our in prior continue of was year, the other higher including loss as we our to invest costs, to provided a water strategy. primarily due $XXX,XXX, which businesses expense lower net interest than

For XXXX, the cash provided gas by operating million most was which into $XXX business, for expenditures. activities was We $XX invested of utility capital million.

in last to we've equity. issuing our both and financings, debt active Related the been year,

XXXX off a starting position cash financial counterparties. and strong are We solid with

per Our continued weather customer mechanisms in today in to prevailing regulations. income legislation policies, conditions regulatory no for objective significant Guidance growth, keep with earnings strong guidance changes to changes laws, reaffirmed the sheet share. and XXXX assumes balance outcomes average or significant remains net of our $X.XX or $X.XX company liquidity. The or ample in range

to long-term through a XXXX continue from XXXX. share We per growth earnings rate target annually compounded X% of X% to

the With over David. to that, call turn I'll back

David Anderson

Thanks, Frank.

on update Renewables an to now Moving our business.

focusing decarbonize As solutions using sources. waste through business, that to existing cost-effective you renewable know, variety streams on energy of we're providing and sectors help a

continue look or contracting, renewable across projects. spectrum. This include projects opportunities facilities, We greenfield developing from at the natural established could to existing gas acquiring owning or

by project. risk Renewables operations has the toward flow projects expected is profile. the early growth into working is commercial first cash first Under Natural Ohio. focus late that contracted million developed later corporate fit agreements, is and income $XX our in main overall to our facility A that of month, EDL Northwest May generate are good example portfolio a in June. of X with expected Commissioning invest this facilities that or being Our

under in operations begin anticipated The to roughly X late weeks agreements. June long-term with to second facility anticipated commercial in July. volumes contracted We the commissioning is or early expected sell

We out, on in continue investment to our and are this thesis in EDL opportunities see space. pleased to play we'll focus

platform to operations by expertise We're system for about shared this capital services, a allowing opportunity broadening support our can that efforts grown business by reasonable X acquisition more XX,XXX value from delivery coming to agreement leveraging Water. and in owners Water and execute owning these the than XX and Recently, XXXX, water systems. strong create of supporting an we preparing Since clean, works These also another cost. strategy long-term this and Under Arizona to to Texas. smaller provide and excited through invest footprint business acquisitions create and value set and connections acquisitions utilities Pacific years. believe we've business in Turning Northwest and Northwest water and through signed expanded opportunity acquisitions. water water maintenance be to in will another Natural week the we complement in will technology Washington. and a early expanding Natural provide wastewater to Northwest strategy. potentially that wastewater in personnel, Oregon in began at This our We've agreements, services next are a our and first launching water reliable X investments water is scaled add our to to broadening

finally, operator, Holdings This our XX were to joining this named XXXX's in integrity for industries. opportunities ethics, a our honorees practices. through year we'll proud all is continue Thanks one for of in long-standing Natural questions. World's of In we'll most -- it row. execute And and for and only X second your we're on the again your best-in-class Ethisphere XX one Holdings compliance morning, financially recognized energy strong, Ethical morning. all, to Companies governance being on commitment and the Northwest by open industry. and behalf reflects business Natural the that, With countries Northwest I'm In utilities and leadership honorees working of conclusion, spanning of XXX this and across is company up businesses.

Operator

of Instructions] [Operator line Maxim Tate Group. comes from with first the Sullivan The question

Tate Sullivan

On separate Washington in King the the gas your or parts King Company service water Is Oregon? natural and -- of acquisition. on that Water territory

David Anderson

Justin that, President of answer Palfreyman, water that to the give will I company, to Justin? our

Justin Palfreyman

sort areas with our territory. It's Puget not utility is It utility water business geographic service Sound so does existing overlap have it actually service in gas our of region, similar the located territory. in as

Tate Sullivan

get the state amount to connections? people roughly? water I to those -- general, in speak, and opposed the utility as connections vary bill do served the so mean, tariffs, And it does business by the on of Or Okay. you by

David Anderson

business, billed utility based on connections. water the yes, For it's

Tate Sullivan

home lower back it And the growth then Okay. due natural connections you're growth shifting trajectory is customer of mean be to to seeing on the I the new pivot natural growth still rated higher more data, possibly to trends And based for construction. gas? on to gas growth conversions could or the as seems and opposed Based to

David Anderson

the we pretty market are more with have back first customer numbers actually still from is conversion growth growth roughly new unique with has that's and overall. But that of exact kind out is don't rate the question. always, homes But XX% a comes a Thanks here we quarter, around overall, that we provided runs results. can has for fingertips, at I And in get probably the and usually have the and it you my new XX% but conversions, the breakdown. steady correct.

Tate Sullivan

mean, you you you growth? Is -- And trends? flight? talk think the prior Portland environment. Or I can X% seeing then outlook I going mean, area any can I Are I quarter, mean, talked population or it permit But good more around a you general? talk was is about forward just customer population good about, about there just the for

David Anderson

that. the the rates yesterday, mean and decent, you higher should country I obviously, a fairly we out, moved interest just Tate. -- expecting going but to that's activity bit, slow how that -- things Yes. don't little the just experiencing I we're down still rates we permitting mean Fed play is know and is when

that And so make population in growth work rate like time to the that our quarter. if really first all as you it to But through materially nothing way for me report we going and than say that, be rate front this. growth this wouldn't period the of we reported -- that different really kind on a what side is things the of would surprise at on X%

Tate Sullivan

well? And I organic said utilities with at you earlier X.X%? it think acquisitions water that with an customer then Or was as collectively rate the that growth lastly, was

David Anderson

Yes.

acquisitions, including growth of was X.X%. numbers all here. you total So Organically, is it if and include water, the gas water a the our And together, customer X.X%. for couple

Operator

Selman Next question Akyol the with Stifel. line comes of from

Selman Akyol

the opportunity taking So and we're acquire see just roll-up of at sort King the to maintenance big the be bunch front of out Do to go sort -- you? able Can in it the you of as just talk a of similar a you to Water going that look utilities of about Company. is side a equation?

Justin Palfreyman

and contracts that our to Yes. enter than a is allows I'll really, question. utility in haven't different strategy. Selman, starting Palfreyman view water necessarily bit as able a nice us and market strategy services We access is margin Justin this platform point historically. been for the drive a this to water into business that a It take services. for for And our we

think So targets owned municipally serving for for a acquisitions acquisition these X point expand homeowners organically utility se of our the same the for districts, business business. is as don't I for that starting competitive businesses. it's these necessarily associations, as per small We sector. nonregulated that roll-up more with is utilities utility because business the strategy first continuing view our it aren't utility services to nice exactly a

I that your answers So hope question.

Selman Akyol

Yes.

David Anderson

I thing, we've services as side still -- the the kind into from think seen and focused and gone seen we into business. Selman, the expanded now us, on the water wastewater nice as you've of for you've utility side

So it's just evolution. a very been nice

and is going even the because a those once typically, services about long earnings thing to you it's operation though other the unregulated time. maintain an The relationship, for steady like I you revenues, period of that business provide really it's get

so is as look I for for And forward. it's we think the And good horizon exciting. this us

Selman Akyol

Got it.

So any maybe just about presume to just but could kind a utility, there? you to talk getting? comment of Can make nonregulated the returns anticipate going premium nature you I what you of back water it.

David Anderson

say, Yes. relatively a But roughly little than business. profit profile margin The still low XX% bit regulated business, utility would water is return a I healthier, business. margin it's the

fairly little the is in renewal contracts and regulatory of It kind it the So bit But a it's for sticky rates doesn't thing. of in different terms that really lag you're very as service have to add tend have contracts to nature. good customers, value get and long really of customer we the business. renewed, as providing the businesses and to aspect these continuing that that these high like

Selman Akyol

Awesome.

me the ask hydrogen. you just decarbonization mention let Just guys on you, front, didn't

on So I'm just curious what's kind of there. going

David Anderson

kind we're facility. still very what of with of it. a have focused little we testing our doing, on might Kim especially are we're on update where bit Yes, give I on Sherwood

Kimberly Rush

Yes.

been -- of We're testing facility. may you our XX%. now we've hydrogen recall, continuing are Sherwood We different up to at blends

year. technologies. pleased the into We on appliances. piloting XX% the of We're with We've are our stepping been also but some -- equipment end the in both end different also by the the use testing, really

is carbon. in used a like produces is we're that getting have over a We electron pilot asphalt solid modern is produces really it. technology excited carbon our that conducting or hydrogen now that about and so technology precombustion finished This facility. basically we're tires solid The central markets at and then a secondary

NDA lined applicable the fit it's We've the of looking up creating We're like sort capturing also a you're that there. flavor some to good also concrete. really then carbon existing and flue basically participants where a hydrogen, liquid then is but at another buildings that secondary technology a turquoise under markets of gas for

kinds we capture be areas on of our there's in perspective, happening of innovation technologies our system. different seeing from a -- we're We're is a facilities in So flexibility that the R&D in carbon lot that can of put think utilization. and lot have or

and several consortiums learning participating around and lot a on. in also going international there. national a We're hydrogen lot So

come So that's but more report. to the

Selman Akyol

And what's the other facilities? Got online, on others for then the it. outlook RNG, coming

David Anderson

building on regulated get there. focus terms decarbonized our another utility, as to evaluating project Selman, going continue product that's push efforts we're for In and We we whether can can at our or to that owning facility as The is of do we're to through now. the much us, Tyson pipeline, contracting.

business, buying it's or So like look continue more outright. or And opportunities there. through our in see an to opportunity EDL I our greenfield facilities across whether you'll the just think country, then areas unregulated we

Operator

this at additional no are time. questions There voting

closing to So now remarks. I like David Anderson for over conference to the pass would

David Anderson

very everybody you thank Juquita, you, this. that on Well, for thank was facilitating call. And the much,

if questions, AGA have always, investors this you're there. the later -- As you And month, Forum have Nikki. see reach going love we'd if if to please to out at to you Financial be

that, appointment, Nikki call, So And if Thank up too. an in. we'll please you. that, need to conclude With the for set step call. you

Operator

participation. NW concludes XXXX QX Natural Holdings you Call. Thank the That for Earnings Company your

You lines. may now disconnect your

Northwest Natural Holding (NWN) 4 May 232023 Q1 Earnings call transcript