Northwest Natural pany(US:NWN)2024-02-23 18:25Financial Data and Key Metrics Changes - For 2023, the company reported net income of $93.9 million, or $2.59 per share, an increase of $7.6 million compared to net income of $86.3 million, or $2.54 per share in 2022 [13][18] - Cash provided by operating activities reached a record $280 million, with capital expenditures of $327 million primarily for safety, reliability, and technology [39][68] - The company anticipates 2024 earnings guidance in the range of $2.20 to $2.40 per share, reflecting a decrease of approximately $0.30 per share from 2023 earnings [43][70] Business Line Data and Key Metrics Changes - The gas utility segment saw a net income increase of $14.4 million due to new rates in Oregon and Washington, despite higher depreciation and operating expenses [18][63] - The water services business was launched with two acquisitions, supporting nearly 20,000 connections, and Northwest Natural Water added 10,400 customers in 2023, achieving an average growth rate of 12.7% [14][32] - The renewables segment faced delays in full commissioning of two facilities designed to convert landfill waste gases to renewable natural gas, with investments of $25 million per facility contingent on achieving commercial operations [10][30] Market Data and Key Metrics Changes - Oregon residential customers experienced a 9% drop in their rates last November, and customers are currently paying 7% less for their total natural gas bill than they did 15 years ago [8] - The company added approximately 4,800 new gas utility customers in the last 12 months, achieving a growth rate of 0.6% [58] Company Strategy and Development Direction - The company aims for long-term earnings growth of 4% to 6%, reaffirming this target based on a 2022 earnings per share of $2.54 [33][70] - A focus on capital investments in safety, reliability, and technology is emphasized, with a projected capital expenditure range of $350 million to $400 million for the gas utility in 2024 [41][71] - The company is committed to decarbonization efforts and has signed agreements for renewable natural gas facilities, indicating a strategic shift towards sustainable energy solutions [74] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in 2024 due to regulatory lag and inflationary pressures but expressed confidence in the long-term growth potential of the business [4][22] - The company is optimistic about resolving technical issues with renewable projects and expects both facilities to be operational later in 2024 [29][30] - Management highlighted the importance of disciplined investments in the energy system to ensure reliability and affordability amid climate change [72][74] Other Important Information - The company was recognized as one of the world's most ethical companies for the second consecutive year and increased dividends for the 68th year [13] - The company maintains strong credit ratings, with S&P initiating an A-plus rating for the holding company in October 2023 [40] Q&A Session Summary Question: How is the rate case being received? - Management indicated that it is early in the process, with ongoing negotiations and no significant feedback from the other side yet [80] Question: What impact will the delays in the renewable facilities have on earnings? - Management expects some earnings from the facilities in late 2024 but does not view it as material, with full-year earnings anticipated starting in 2025 [81] Question: What is the primary driver for the decrease in guidance from 2023 to 2024? - The primary driver is the regulatory lag in the gas utility, which has significantly impacted earnings expectations [82]