Northwest Natural Holding Company (NWN) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, including significant net income growth and customer growth rates. The reaffirmed earnings guidance and strategic acquisitions, such as Hughes Gas Resources, support operational synergies and expansion. Despite concerns about higher operational costs and interest rates, the company's liquidity position and optimistic guidance for 2025 mitigate these risks. The Q&A session confirmed strong growth for SiEnergy and effective management of water rate cases. Given the company's small-cap status, these factors suggest a positive stock price movement in the near term.
Key Financial Performance
Adjusted Net Income (First 6 Months of 2025) $2.28 per share compared to $1.60 per share for the same period last year, representing a significant increase. This growth was driven by strong performance across all business segments, including new rates at the Oregon gas utility, contributions from SiEnergy, higher net income from water utilities, and earnings from renewables.
Combined Utility Customer Growth Rate 10.6% for the 12 months ended June 30, 2025, driven by gas utilities in Texas and incremental meter growth from Northwest Natural Water, which posted a 5.8% increase.
Revenue Requirement Increase (Oregon General Rate Case) $21.3 million, with a 50-50 capital structure, an ROE increase to 9.5% from 9.4%, and a cost of capital of approximately 7.12%. Rate base increased by $144 million to a total of $2.2 billion. This resulted in a relatively modest 2.5% rate increase for customers.
SiEnergy Customer Backlog 217,000 future meters, including 7,000 connections from the acquisition of Hughes Gas Resources (rebranded as Pines Holdings) and a contracted backlog of 12,000 meters. SiEnergy and Pines served approximately 83,000 customers as of June 30, 2025.
Water and Wastewater Utility Customer Growth 5.8% over the last 12 months, supported by 3 acquisitions and ongoing investments in infrastructure and wastewater treatment facilities.
Adjusted Net Income (Second Quarter of 2025) $315,000 or $0.01 per share compared to a loss of $2.8 million or $0.07 per share for the same period in 2024. The improvement was due to higher margins from new rates at the Oregon gas utility, partially offset by higher O&M, depreciation, and interest expenses.
Northwest Natural Gas Segment Net Income Increased by $4.5 million or $0.12 per share, driven by a $16.9 million margin increase from new rates in Oregon, offset by $6.3 million higher O&M expenses and $4.8 million higher depreciation and taxes.
SiEnergy Net Income (Second Quarter of 2025) $1 million or $0.03 per share, with margin and net income trending well and in line with expectations.
Water Segment Net Income Increased by $1.8 million or $0.04 per share, driven by new rates at the largest water and wastewater utility in Arizona and additional revenues from the ICH utilities acquired in September 2024.
Adjusted Net Loss from Other Businesses Increased by $4.2 million or $0.11 per share compared to the same period last year, primarily due to higher interest expenses at the holding company.
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Operating Highlights
Renewable Natural Gas Projects: Both projects are running smoothly, meeting production expectations, and providing solid earnings and cash flows. No meaningful exposure to RIN or LCFS markets.
SiEnergy Gas Utility Expansion: Strong customer growth with a backlog of 217,000 future meters. Integration of Hughes Gas Resources (rebranded as Pines Holdings) added 7,000 connections and a backlog of 12,000 meters.
Northwest Natural Water Expansion: Customer base grew 5.8% over the last 12 months, supported by 3 acquisitions. Active rate cases in Idaho, Washington, and Oregon to recover investments.
Oregon General Rate Case: Filed in December 2024, resulting in a $21.3 million revenue requirement increase, a 2.5% rate increase, and a rate base increase to $2.2 billion.
Capital Expenditures: 2025 CapEx expected to range between $450 million to $500 million, focusing on modernizing infrastructure and system upgrades.
Earnings Guidance and Growth Outlook: Reaffirmed 2025 adjusted earnings guidance of $2.75 to $2.95 per share. Long-term EPS growth rate projected at 4% to 6% annually.
SiEnergy Business Growth: SiEnergy, currently 10% of the business, is expected to grow significantly and become a larger portion of the business mix.
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Risk or Challenges
Regulatory Risks: The company assumes no significant changes in prevailing regulatory policies, mechanisms, or outcomes. However, any unexpected changes in local, state, or federal laws, legislation, or regulations could adversely impact operations and financial performance.
Rate Case and Affordability Concerns: The Oregon general rate case includes a revenue requirement increase of $21.3 million and a 2.5% rate increase. While the company has considered affordability concerns, there is a risk of customer dissatisfaction or pushback due to higher rates.
Operational Costs: Higher operations and maintenance (O&M) expenses, including payroll and benefits, as well as increased depreciation and interest expenses, could pressure margins and profitability.
Debt Refinancing: The company plans to refinance $148 million of SiEnergy debt in 2025. Any unfavorable refinancing terms or interest rate increases could negatively impact financials.
Capital Expenditures: The company expects significant capital expenditures of $450 million to $500 million in 2025. Delays, cost overruns, or challenges in executing these projects could impact financial performance and growth.
Customer Growth and Backlog Execution: SiEnergy's customer backlog includes over 217,000 future meters. Any delays or issues in converting this backlog into active customers could hinder growth projections.
Renewable Gas Market Exposure: While the renewable gas business has no meaningful exposure to RIN or LCFS markets, any changes in market dynamics or regulatory frameworks could pose risks to this segment.
Interest Rate Risks: Higher interest expenses at the holding company and potential increases in interest rates could impact overall profitability and financial stability.
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Guidance & Outlook
Annual 2025 Adjusted Earnings Guidance: Reaffirmed in the range of $2.75 per share to $2.95 per share. Quarterly earnings cadence for 2025 is expected to be similar to past years.
Earnings Per Share Growth Rate: Projected to grow at a compounded annual rate of 4% to 6% from 2025 adjusted EPS.
SiEnergy and Northwest Natural Water Earnings Contribution: Each expected to provide approximately $0.25 to $0.30 of adjusted earnings per share in 2025.
Consolidated Organic Customer Growth: Projected at 2% to 2.5% across utilities for 2025.
Capital Expenditures for 2025: Expected to range between $450 million to $500 million, focused on modernizing end-of-life meters, system reinforcement, and gas storage upgrades.
SiEnergy Customer Backlog: Increased to over 217,000 future meters, including 12,000 meters from the acquisition of Hughes Gas Resources.
Northwest Natural Water Growth: Customer base grew 5.8% over the last 12 months, supported by 3 acquisitions and ongoing rate cases in Idaho, Washington, and Oregon.
Renewable Natural Gas Projects: Production levels are meeting expectations, with fixed price offtake contracts providing solid earnings and cash flows.
Capital Structure and Liquidity: Liquidity of approximately $550 million as of June 30, 2025, with equity issuances expected to range from $65 million to $75 million in 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you talk about the growth you're seeing with SiEnergy now compared to when it was first acquired?
A:Justin Palfreyman stated that SiEnergy is performing as expected, with strong growth in Texas despite some signs of housing slowdown in certain communities. There has been significant growth in new meter sets and an extremely strong backlog. The business development team exceeded their annual goal for adding meters to the backlog by midyear, and the acquisition of Pines enhances this growth.
Q:What is the scale of the upcoming water rate cases?
A:Justin Palfreyman explained that the water rate cases are relatively small due to the combination of multiple subsidiaries. Individual cases typically involve less than $1 million of revenue requirement, though some exceed that. The company executes 3 to 5 rate cases annually, as seen last year.
Q:Review of Unclear Management Responses
A:No questions were avoided or lacked clarity in the responses provided by management.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CEO Director
CFO Timothy
Director Investor
Division Conference
ET Northwest
Gas Utility
Holding Palfreyman
Holdings Texas
Holdings business
Houston backlog
Incorporated Research
Interstate Storage
Kaszuba
LCFS market
Media Slide
Nashville fall
Natural Gas
Natural party
News Media
Nicolaus Incorporated
Nikki Northwest
Northwest Nashville
OToole Stifel
Pines
President Chief
backlog meter
business result
customer rate
infrastructure
measure
rate increase
service Northwest
settlement
target
today Investor
NWN Transcript
Northwest Natural Holding Company (NWN) Q3 2025 Earnings Call Transcript
Positive11-5
The earnings call shows strong financial performance with increased customer growth and a dividend hike. Risks like interest expenses and operational costs are offset by strategic investments and successful rate cases. The Q&A section confirmed management's proactive approach to growth and cost management. Despite some uncertainties, the company's strategic positioning in growing markets like Texas and consistent dividend increases suggest a positive stock price movement. Given the market cap, a positive sentiment is expected.
Northwest Natural Holding Company (NWN) Q2 2025 Earnings Call Transcript
Positive8-5
The earnings call highlights strong financial performance, including significant net income growth and customer growth rates. The reaffirmed earnings guidance and strategic acquisitions, such as Hughes Gas Resources, support operational synergies and expansion. Despite concerns about higher operational costs and interest rates, the company's liquidity position and optimistic guidance for 2025 mitigate these risks. The Q&A session confirmed strong growth for SiEnergy and effective management of water rate cases. Given the company's small-cap status, these factors suggest a positive stock price movement in the near term.
Northwest Natural Holding Company (NWN) Q1 2025 Earnings Call Transcript
Positive5-6
The earnings call indicates strong financial performance with increased net income and margins, driven by new rates and customer growth. The company shows promising growth projections, especially with SiEnergy's expected contribution and a solid liquidity position. However, the absence of a shareholder return plan and some regulatory uncertainties slightly temper the outlook. The Q&A section did not reveal significant negative concerns, and the company's strategic initiatives and guidance suggest a positive sentiment, likely resulting in a 2% to 8% stock price increase over the next two weeks.
Northwest Natural Holding Company (NYSE:NWN) Q4 2024 Earnings Call Transcript
Unknown3-1
The earnings call summary indicates a negative sentiment due to the EPS miss of $1.16 against expectations of $1.42, highlighting financial performance risks. The lack of a share repurchase program and unclear management responses during the Q&A further contribute to this negative sentiment. Although there is potential customer growth, the risks related to regulatory changes and weather conditions add to the uncertainty. Given the market cap of approximately $1.36 billion, the stock is likely to react negatively, falling between -2% to -8%.
NWN Slides
NWN Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
