Northwest Natural pany(US:NWN)2019-03-01 20:04Financial Data and Key Metrics Changes - For Q4 2018, the company reported consolidated net income of $35.8 million, or $1.24 per share, compared to a net loss of $90.2 million, or $3.13 per share for the same period in 2017 [22] - For the full year 2018, consolidated net income was $64.6 million, or $2.24 per share, compared to a net loss of $55.6 million, or $1.93 per share for 2017 [23] - The net income from continuing operations for 2018 was $67.3 million, or $2.33 per share, compared to $68.7 million, or $2.39 per share for 2017 [26] Business Line Data and Key Metrics Changes - Annual earnings from the Natural Gas Distribution segment declined by $0.14, while results from other segments improved by $0.08 due to asset optimization benefits [27] - In Q4 2018, earnings from the Natural Gas Distribution segment increased by $0.09, while results from other segments also increased by $0.09 [30] - The margin for the Natural Gas Distribution segment increased by $2.1 million from customer growth, new Oregon rates, and higher margins from industrial customers [31] Market Data and Key Metrics Changes - The statewide unemployment rate in Oregon was about 4%, with average wages growing by 3% and job growth around 2% [11] - The company connected more than 12,500 new customers in 2018, resulting in a growth rate of 1.7% [12] Company Strategy and Development Direction - The company continues to execute its long-term strategy by maximizing returns from its regulated natural gas utility and diversifying into the water sector [10] - The company is pursuing a decoupling mechanism for Washington customers to adjust for deviations from normal usage, including weather-related factors [18] - The company is focusing on renewable natural gas and plans to procure up to 4.5 million tons annually as part of its decarbonization strategy [43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the all-party settlement regarding regulatory matters, which is expected to provide tax savings and cash flow certainty moving forward [15][16] - The company anticipates capital expenditures for 2019 to range from $230 million to $270 million, with a five-year estimate of $850 million to $950 million [37][38] - The company initiated 2019 earnings guidance for continuing operations in the range of $2.25 to $2.45 per share, assuming continued customer growth and average weather conditions [39] Other Important Information - The company achieved its 63rd consecutive year of annual dividend increases, making it one of only three companies on the NYSE with this record [21] - The Oregon Commission acknowledged the company's 2018 integrated resource plan, marking a significant step in long-term planning [42] Q&A Session Summary Question: What is the expected regulatory lag to recover the higher CapEx and what do you expect broad-based growth to be for 2023? - Management indicated that there will be some lag on capital expenditures, but about $60 million related to customer growth has no lag [58][60] Question: Is there any change to the five-year outlook with respect to EPS growth? - Management confirmed that the five-year outlook remains unchanged despite the increase in core utility CapEx [66] Question: Can you talk about some of the expense pressures that are baked into 2019 guidance? - Management noted that fourth quarter 2018 expense levels are indicative of 2019, with some inflationary pressure expected [94] Question: What does your financing plan look like for 2019? - Management stated that financing needs will arise over the next couple of years, but specific timing is not yet determined [98][100] Question: Can you review the water acquisition strategy and potential state regulation changes? - Management confirmed that they are targeting acquisitions in Oregon, Washington, and Idaho, and are monitoring regulatory changes that could affect future acquisitions [104][106]