Northwest Natural pany(NWN) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income of $1.92 per share for the first six months of 2021, compared to$ 1.41 per share for the same period in 2020, reflecting a significant increase driven by new rates and customer growth [6][12] - For Q2 2021, the company reported a net loss of $700,000 or$ 0.02 per share, an improvement from a net loss of $5.1 million or$ 0.17 per share in Q2 2020 [10] - Cash provided by operating activities was $193 million for the first half of 2021, an increase of$ 31 million compared to the previous year [14] Business Line Data and Key Metrics Changes - The Gas Distribution segment saw utility margin increase by $22.1 million, primarily due to higher customer rates and growth [13] - Customer growth in the Gas Distribution segment was 1.6%, with over 12,000 new meters connected in the past year [8] - The water and wastewater utilities experienced a 4% customer growth rate, driven by strong residential housing construction [8] Market Data and Key Metrics Changes - Unemployment rates in the Portland Metro area decreased to 5.3%, lower than the national rate of 5.9% [6] - Home sales in the Portland Metro region increased by 39% in the first five months of 2021 compared to the same period in 2020, with median sales prices rising over 20% [7] Company Strategy and Development Direction - The company is committed to environmental stewardship and aims for a 30% carbon savings goal by 2035, which includes the use of natural gas by customers [16][17] - The company is actively pursuing renewable natural gas (RNG) procurement and has signed agreements that could supply enough RNG to heat 36,000 homes [18][19] - The water utility business is seeing increased development activity and a robust acquisition pipeline, with plans to close several pending sales [20] Management's Comments on Operating Environment and Future Outlook - Management noted a steady recovery in several sectors affected by COVID-19, particularly in food service and lodging [6][7] - The company reaffirmed its 2021 earnings guidance, expecting net income in the range of$ 2.40 to $2.60 per share, assuming continued customer growth and stable regulatory conditions [14] Other Important Information - The company filed a multiparty settlement for its general rate case in Washington, which will increase revenue requirements by$ 5 million starting November 1, 2021 [9] - The company is investing in a new wastewater facility in Sunriver, Oregon, equipped with advanced technologies to meet environmental guidelines [21] Q&A Session Summary Question: Can you expand on the higher O&M this quarter? - The increase in O&M was expected, with about one-third attributed to payroll and benefits, another third to a new lease for headquarters, and the remaining third to cloud-based IT solutions and other minor expenses [24][25][26] Question: What is the vetting process for RNG procurement? - The company aims to procure cost-effective RNG and has a rigorous methodology for evaluating costs, including avoided costs and transportation [27][28][29] Question: Any updates on hydrogen experimentation? - The company is working with EWEB on land acquisition for hydrogen projects and is exploring various technologies, with interest from industrial customers in blending hydrogen [31][32][33][34]