National Fuel Gas pany(NFG) - 2025 Q3 - Quarterly Results

Financial and Operational Highlights Third Quarter Fiscal 2025 Performance Summary National Fuel Gas Company reported strong Q3 FY2025 results, with a significant turnaround in GAAP earnings and a 66% increase in adjusted EPS, driven by record production and higher natural gas prices Q3 FY2025 vs Q3 FY2024 Earnings Per Share | Metric | Q3 FY2025 ($/share) | Q3 FY2024 ($/share) | Change ($/share) | | :--- | :--- | :--- | :--- | | GAAP EPS | $1.64 | $(0.59) | +$2.23 | | Adjusted EPS | $1.64 | $0.99 | +66% | - Exploration and Production segment's adjusted operating results surged 157% to $0.95 per share, fueled by a 16% increase in natural gas production to a record 112 Bcf, higher realized prices, and lower unit costs[6] - The company is revising its fiscal 2025 adjusted EPS guidance to a range of $6.80 to $6.95 per share[6] - Key pipeline development milestones were achieved, including the announcement of the Shippingport Lateral Project and FERC approval for the Tioga Pathway Project[6] Management Commentary Management attributed strong Q3 performance to record upstream production and capital efficiency, anticipating significant FY2026 earnings growth from production and regulated business expansion - Management noted record production and throughput in integrated upstream and gathering operations, coupled with improved capital efficiency[4] - The company anticipates significant earnings growth in fiscal 2026, supported by momentum in all business segments and a positive long-term outlook for natural gas[5] - Strong well results in the Eastern Development Area (EDA) underpin expectations for mid-single-digit production growth in the coming years[5] Capital Allocation The company increased its annual dividend by 4% for the 55th consecutive year and repurchased approximately 2 million shares, pausing buybacks to maintain balance sheet flexibility - The Board of Directors approved a 4% dividend increase, resulting in an annual rate of $2.14 per share, marking the 55th consecutive year of dividend increases[8] - Since March 2024, the company repurchased approximately 2 million shares at an average price of $59.70 per share[8] - Share repurchases were paused during the quarter to preserve balance sheet flexibility for potential growth opportunities[8] Financial Guidance Fiscal 2025 Guidance Update National Fuel revised its FY2025 adjusted EPS guidance to $6.80-$6.95, reflecting strong Q3 results, higher production, and lower unit costs, despite lower expected natural gas prices FY 2025 Updated Guidance | Metric | Updated Range ($/share) | | :--- | :--- | | Adjusted EPS | $6.80 - $6.95 | - The guidance revision is based on an assumed average NYMEX natural gas price of $3.25 per MMBtu for the remaining three months of fiscal 2025[10] FY 2025 Key Assumptions | Metric | Guidance | | :--- | :--- | | Consolidated Capital Expenditures | $890 - $955 million | | E&P Production (Bcf) | 420 to 425 | | Gathering Segment Revenues | $255 - $260 million | | Pipeline & Storage Segment Revenues | $420 - $430 million | | Utility Segment Customer Margin | $450 - $460 million | Fiscal 2026 Preliminary Guidance and Outlook Preliminary FY2026 guidance projects adjusted EPS of $8.00-$8.50, a 20% increase, driven by improved capital efficiency, 6% production growth, and regulated segment expansion FY 2026 Preliminary Adjusted EPS Guidance at Various NYMEX Prices | NYMEX Assumption ($/MMBtu) | Fiscal 2026 Adjusted EPS Range ($/share) | | :--- | :--- | | $3.00 | $6.35 - $6.85 | | $4.00 | $8.00 - $8.50 | | $5.00 | $9.75 - $10.25 | - Seneca's (E&P) capital expenditures are expected to decrease by 4% while production is projected to increase by 6% to a range of 440 to 455 Bcf[13] - Regulated segment earnings are expected to increase due to ongoing modernization investments and recent ratemaking efforts[13] - Combined Utility and Pipeline & Storage capital expenditures are expected to increase by $110 million from FY2025, driven by modernization and significant expansion projects[13] Segment Performance Analysis (Q3 FY2025) Upstream Business (Exploration and Production) The E&P segment saw Q3 adjusted operating results surge by $52.9 million to $86.7 million, fueled by record 112 Bcf natural gas production and higher realized prices E&P Segment Q3 Earnings (in thousands) | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | Variance (in thousands) | | :--- | :--- | :--- | :--- | | GAAP Earnings | $86,671 | $(112,028) | $198,699 | | Adjusted Operating Results | $86,704 | $33,843 | $52,861 | | Adjusted EBITDA | $202,488 | $128,535 | $73,953 | - Natural gas production reached a company record of 112 Bcf, a 16% increase from the prior year, driven by two highly prolific Utica pads in Tioga County[19] - The weighted average realized natural gas price increased by $0.43 to $2.71 per Mcf, after hedging and transportation costs[20] E&P Operating Costs per Mcf | Cost per Mcf | Q3 2025 ($/Mcf) | Q3 2024 ($/Mcf) | Variance ($/Mcf) | | :--- | :--- | :--- | :--- | | Total Cash Operating Costs | $0.91 | $0.96 | $(0.05) | | DD&A Expense | $0.62 | $0.71 | $(0.09) | | Total Operating Costs | $1.53 | $1.67 | $(0.14) | Midstream Businesses Midstream businesses showed mixed Q3 performance, with Gathering earnings up $5.0 million from higher throughput, while Pipeline and Storage earnings decreased by $1.8 million due to increased O&M expenses Pipeline and Storage Segment The Pipeline and Storage segment's Q3 GAAP earnings decreased by $1.8 million to $28.9 million, primarily due to higher Operations and Maintenance expenses Pipeline and Storage Segment Q3 Earnings (in thousands) | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | Variance (in thousands) | | :--- | :--- | :--- | :--- | | GAAP Earnings | $28,857 | $30,690 | $(1,833) | | Adjusted EBITDA | $67,019 | $68,221 | $(1,202) | - The earnings decrease was mainly due to higher O&M expense from inflationary increases in personnel and contractor costs[23] Gathering Segment The Gathering segment' reported strong Q3 GAAP earnings, increasing by $5.0 million to $30.0 million, driven by a 13% rise in operating revenues from higher throughput Gathering Segment Q3 Earnings (in thousands) | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | Variance (in thousands) | | :--- | :--- | :--- | :--- | | GAAP Earnings | $29,996 | $24,979 | $5,017 | | Adjusted EBITDA | $55,923 | $47,631 | $8,292 | - The earnings increase was primarily due to a 13% rise in operating revenues from increased throughput from new wells in Tioga County[25] Downstream Business (Utility) The Utility segment's Q3 GAAP earnings nearly doubled to $5.0 million, a 95% increase, primarily due to new rates from the New York rate case settlement and higher customer margin Utility Segment Q3 Earnings (in thousands) | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | Variance (in thousands) | | :--- | :--- | :--- | :--- | | GAAP Earnings | $4,997 | $2,559 | $2,438 | | Adjusted EBITDA | $25,743 | $21,047 | $4,696 | - The 95% earnings increase was primarily a result of new rates approved in the New York rate case settlement[28] - Customer margin (operating revenues less purchased gas) increased by $8.4 million, driven by higher customer usage from colder weather and the new rate settlement[29] Corporate and All Other The Corporate and All Other segment reported a net loss of $0.7 million for Q3, consistent with the prior-year period - The segment generated a net loss of $0.7 million, which was consistent with the prior-year period[31] Consolidated Financial Statements Summary of Operations (Income Statement) National Fuel reported Q3 net income of $149.8 million, a significant improvement from a $54.2 million net loss in the prior year, driven by increased operating revenues and no asset impairment Consolidated Summary of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Operating Revenues | $531,830 | $417,442 | | Operating Income (Loss) | $230,252 | $(51,440) | | Net Income (Loss) | $149,818 | $(54,158) | | Diluted EPS | $1.64 | $(0.59) | Consolidated Balance Sheets As of June 30, 2025, total assets increased to $8.45 billion, with shareholders' equity rising to $2.98 billion and long-term debt increasing to $2.38 billion Key Balance Sheet Items (in thousands) | Metric | June 30, 2025 (in thousands) | September 30, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $8,446,160 | $8,319,770 | | Total Comprehensive Shareholders' Equity | $2,975,488 | $2,848,343 | | Long-Term Debt, Net | $2,381,852 | $2,188,243 | | Total Capitalization and Liabilities | $8,446,160 | $8,319,770 | Consolidated Statements of Cash Flows For the nine months ended June 30, 2025, operating cash flow remained stable at $862.3 million, investing cash outflow decreased to $618.0 million, and financing cash outflow increased to $243.2 million Consolidated Cash Flows - Nine Months Ended June 30 (in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $862,276 | $868,015 | | Net Cash Used in Investing Activities | $(617,964) | $(685,571) | | Net Cash Used in Financing Activities | $(243,217) | $(156,477) | | Net Increase in Cash | $1,095 | $25,967 | Appendix: Reconciliations and Supplemental Data Reconciliation of GAAP Earnings to Adjusted Operating Results The reconciliation shows Q3 FY2025 GAAP earnings of $149.8 million adjusted to $149.2 million operating results, while Q3 FY2024 GAAP earnings of -$54.2 million were adjusted for a $200.7 million asset impairment Q3 GAAP to Adjusted Operating Results Reconciliation (in thousands) | Description | Q3 2025 (in thousands) | Q3 2024 (in thousands) | | :--- | :--- | :--- | | Reported GAAP Earnings | $149,818 | $(54,158) | | Impairment of assets (E&P) | — | $200,696 | | Tax impact of impairment | — | $(55,686) | | Other | $(615) | $873 | | Adjusted Operating Results | $149,203 | $91,725 | Q3 Adjusted EBITDA Reconciliation (in thousands) | Description | Q3 2025 (in thousands) | Q3 2024 (in thousands) | | :--- | :--- | :--- | | Reported GAAP Earnings | $149,818 | $(54,158) | | Add: D&A, Interest, Taxes, etc. | $196,842 | $112,509 | | Add: Impairment of Assets | — | $200,696 | | Adjusted EBITDA | $346,660 | $262,710 | Segment Operating Statistics Q3 FY2025 operational statistics show strong performance, with Appalachian gas production up 16% to 111.6 Bcf, and increased throughput in Gathering, Pipeline & Storage, and Utility segments Q3 Gas Production (Appalachia) | Metric | Q3 2025 (MMcf) | Q3 2024 (MMcf) | Change (MMcf) | | :--- | :--- | :--- | :--- | | Production | 111,588 | 96,504 | +15,084 | Q3 Throughput and Volume (MMcf) | Segment | Q3 2025 (MMcf) | Q3 2024 (MMcf) | Change (MMcf) | | :--- | :--- | :--- | :--- | | Pipeline & Storage Throughput | 179,182 | 168,628 | +10,554 | | Gathering Volume | 133,271 | 118,445 | +14,826 | | Utility Throughput | 25,755 | 22,312 | +3,443 | - Weather was significantly colder in Q3 2025 compared to Q3 2024, with degree days up 46.0% in Buffalo, NY and 56.6% in Erie, PA, contributing to higher utility demand[71]