Northwest Natural pany(NWN) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For 2021, the company reported net income of $2.56 per share, an 11% increase from $2.30 per share in 2020 [7] - In Q4 2021, net income was $40.5 million or $1.32 per share, down from $45.8 million or $1.50 per share in Q4 2020 [18] - Full year 2021 cash provided by operating activities was $160 million, an increase of $15 million compared to the previous year [22] Business Line Data and Key Metrics Changes - The gas utility saw a utility market increase of $4.5 million due to new rates and customer growth [19] - The water utility connections increased by nearly 30% in 2021, driven by organic growth and acquisitions [10] - The company closed four acquisitions in 2021, significantly expanding its water utility business [10] Market Data and Key Metrics Changes - Unemployment rates in the Portland Metro area declined to 3.9% in December 2021 from 7.3% a year ago, indicating a strong local economy [8] - Home sales in the area increased by 10% in 2021 compared to 2020, with average sales prices up 16% [8] Company Strategy and Development Direction - The company aims to maximize returns from its regulated gas utility while investing in water utilities and renewable natural gas (RNG) [25] - A focus on diversifying energy systems is emphasized, with plans to transform into a provider of carbon-neutral energy by 2050 [25][30] - The company has launched a competitive RNG strategy and formed a new subsidiary, Northwest Natural Renewables, to lead in renewable energy transition [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth in natural gas and water utilities, targeting a long-term earnings per share growth rate of 4% to 6% from 2022 to 2027 [23] - The company is optimistic about the demand for renewable fuels and believes it is well-positioned to fulfill this need [30] Other Important Information - The company increased its annual dividend to $1.93 per share, marking the 66th consecutive year of dividend increases [15] - The company filed an Oregon general rate case with a revenue requirement increase of $73.5 million [12] Q&A Session All Questions and Answers Question: CapEx update and drivers - The increase in CapEx is driven by safety and reliability projects, IT upgrades, and renewable natural gas projects, with customer growth expected to be around 1.5% to 1.6% [40] Question: Long-term EPS guidance - The company sees potential upside in gas utility and renewable natural gas investments, with ongoing opportunities in the water portfolio [41][42] Question: RNG strategy scale and capital deployment - The company is in early stages of RNG strategy and is optimistic about investment opportunities, with plans to scale operations [47] Question: Growth rate of RNG sales - Under SB-98, the company targets a 5% sales volume of RNG by 2025, increasing to 10% [61]