Northwest Natural pany(NWN) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q2 2022, the company reported net income of $1.7 million or$0.05 per share, compared to a net loss of $700,000 or$0.02 per share for the same period in 2021, marking an increase of $0.07 per share [15] - For the first six months of 2022, net income was$58 million or $1.77 per share, compared to$58.8 million or $1.92 for the same period in 2021, reflecting a$0.15 decrease in earnings per share largely due to the issuance of 2.9 million shares of common stock [18] Business Line Data and Key Metrics Changes - The gas utility segment saw an increase in utility margin of $2.3 million due to customer growth and new rates, contributing$1.7 million [16] - The water and wastewater utility experienced nearly 11% organic growth in Texas and 4% organic growth in Idaho, leading to a consolidated 3% customer growth over the last 12 months [11] Market Data and Key Metrics Changes - In Oregon, unemployment was reported at 3.6% in June 2022, close to pre-pandemic levels of 3.4% in February 2020, indicating a robust labor market [8] - The median sales price of homes in the area increased by 9.4% for Q2 2022 compared to the previous year, with low inventory at 1.4 months of supply [9] Company Strategy and Development Direction - The company is focusing on sustainable growth through investments in hydrogen gas facilities and competitive renewable natural gas projects [24][31] - A significant acquisition of Far West Water and wastewater utilities in Yuma, Arizona, is expected to be accretive to earnings per share after its first full year of operations [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued customer growth and reaffirmed 2022 earnings per share guidance in the range of $2.45 to$2.65, assuming average weather conditions and no significant regulatory changes [22] - The company is actively managing inflationary impacts on materials and labor costs, with a proactive approach to procurement and inventory management [38][39] Other Important Information - The company filed a settlement in May 2022 for a revenue requirement increase of 62.7 million related to its Oregon general rate case, with rates expected to be effective November 1 [13][14] - The company has received stable outlook ratings from Moody's and S&P, reaffirming its strong balance sheet and liquidity [21] Q&A Session Summary Question: Dynamics and expectations for pension expense into next year - Management noted a benefit of about 0.05 per quarter from lower pension expenses, expecting this trend to continue through the year, with rates set based on year-end discount rates [35] Question: Trends with inflation and impact on O&M budget and capital plan - Management indicated no significant disruptions from supply chain issues, although there are slower delivery times and inflationary impacts on materials, which are a small component of overall costs [38][39] Question: Any large renegotiations of contracts to watch for in 2023 - Management confirmed that major contracts, particularly union contracts, are stable for the next couple of years, with no significant renegotiations expected [41]