Northwest Natural pany(NWN) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net loss of $27.2 million or$0.71 per share for Q3 2024, compared to a net loss of $23.7 million or$0.65 per share for Q3 2023, indicating a decline in earnings [19] - For the first nine months of 2024, net income was $33.9 million or$0.88 per share, down from $49.2 million or$1.37 per share in the same period of 2023 [22] - Utility margin remained stable year-over-year with a slight increase of 900,000 [23] Business Line Data and Key Metrics Changes - Gas utility O&M increased by 1.3 million due to higher payroll and benefits costs, while O&M decreased by $2.5 million year-to-date due to cost-saving measures [20][23] - Other businesses net income increased by$2.8 million, driven by higher gas storage revenues and improved performance in water and wastewater utilities [21] Market Data and Key Metrics Changes - The customer base for gas and water utilities grew by 1.9% over the last 12 months, reaching over 875,000 customers [9] - Single-family housing permits in the Portland metro area increased by 13.1% on a rolling 12-month basis, indicating potential future customer growth [8] Company Strategy and Development Direction - The company is focused on executing its capital investment plan and regulatory dockets to support growth opportunities [6] - The completion of the Oregon gas utility rate case and the approval of rate increases for water and wastewater utilities are seen as critical for future earnings [10][32] - The company is expanding into the recycled water business and has closed acquisitions to enhance growth in its water segment [29] Management's Comments on Operating Environment and Future Outlook - Management noted that Oregon's unemployment rate remains low at 4%, which is favorable for customer growth [7] - The company reaffirmed its 2024 GAAP earnings per share guidance in the range of $1.94 to$2.14, with a long-term earnings per share growth target of 4% to 6% [27][28] Other Important Information - The company completed its financing needs for 2024, issuing $90.4 million through the ATM program [26] - A$10.1 million after-tax noncash disallowance will be recognized in Q4 results due to a regulatory decision [13] Q&A Session All Questions and Answers Question: Can you elaborate on the final order and any non-margin enhancing deductions? - Management confirmed that the majority of the rate case was settled early, with only a few items remaining unresolved, including some government affairs expenses and a line extension allowance [36] Question: What is the impression of the commission's stance on the disallowance? - Management expressed disappointment in the commission's decision regarding the disallowance and emphasized the need for careful cost management going forward [41] Question: What is the outlook for continued acquisitions in the water segment? - Management indicated a robust pipeline of smaller tuck-in acquisitions around existing service territories, with ongoing expansion creating more opportunities [51]