Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries NW Natural Holdings Reports First Quarter 2022 Results By: NW Natural via Business Wire May 04, 2022 at 06:00 AM EDT Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), reported financial results and highlights including: Earned net income of $1.80 per share for the first quarter of 2022, compared to net income of $1.94 per share for the same period in 2021. The first quarter of 2021 results included a $2.8 million after-tax (or $0.09 per share) benefit primarily related to asset management revenues from a February 2021 cold weather event. Added more than 10,800 natural gas meters in the last 12 months for a growth rate of 1.4% as of March 31, 2022 Commenced operations at the first renewable natural gas (RNG) facility under the landmark Oregon legislation Senate Bill 98, which is producing RNG on behalf of our gas utility customers Continued executing our water and wastewater investment strategy, announcing acquisitions near our existing service territory in Texas Construction began on the first RNG facilities that we're investing in through our competitive renewables business Honored as one of the 2022 World's Most Ethical Companies® by Ethisphere Reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 per share and our long-term earnings per share growth rate target of 4% to 6% "This quarter we reached an important milestone in our decarbonization efforts with the commencement of operations at our first RNG facility under Oregon Senate Bill 98," said David H. Anderson, president and CEO of NW Natural Holdings. "NW Natural is the first local gas distribution utility in the continental United States to invest in and own an RNG facility on behalf of all its sales customers. We're continuing to work on behalf of our customers, executing on the decarbonization and growth opportunities in front of us. In addition, I'm proud of NW Natural Holdings being named one of the 2022 World's Most Ethical Companies® by Ethisphere. This reflects our long-standing commitment to leadership in business integrity through best-in-class ethics, compliance and governance practices." Year-to-date net income decreased $3.3 million to $56.2 million (or $1.80 per share), compared to $59.5 million (or $1.94 per share) for the same period in 2021. Results reflected customer growth and new rates in Washington for our natural gas utility, offset by higher operations and maintenance expenses and depreciation and general taxes as we continue investing in our gas utility system. In addition, net income from our other activities decreased primarily due to lower asset management revenues related to a severe winter storm in February 2021. KEY EVENTS AND INITIATIVES Ongoing Oregon General Rate Case for NW Natural On Dec. 17, 2021, NW Natural filed a request for a general rate increase with the Oregon Public Utility Commission (OPUC). The filing included a requested $73.5 million annual revenue requirement increase and an increase in average rate base of $294 million to support long-planned investments related to safety, reliability, and information technology upgrades. NW Natural's filing will be reviewed by the OPUC and other stakeholders. The process is anticipated to take up to 10 months with new rates expected to take effect Nov. 1, 2022. Utility Renewable Natural Gas (RNG) Operations commenced at our first investment in a RNG facility under Oregon Senate Bill 98 with BioCarbN and Tyson Foods in January 2022. Construction of the second RNG facility began in late 2021 with completion and commissioning expected in early 2023. NW Natural has options to invest up to a total estimated $38 million in four separate RNG development projects using biogas derived from Tyson Foods’ processing plants. NW Natural continues to pursue RNG supply for customers under the landmark Oregon Senate Bill 98, which supports renewable energy procurement and investment by natural gas utilities. To date, NW Natural has signed agreements with options to purchase or develop RNG on behalf of utility customers totaling about 3% of NW Natural’s current annual sales volume in Oregon. NW Natural Renewables Competitive RNG Strategy NW Natural Renewables is an unregulated subsidiary of NW Natural Holdings committed to leading in the energy transition by providing cost-effective solutions to decarbonize the utility, commercial, industrial and transportation sectors. In January 2022, NW Natural Renewables named Michael Kotyk, an industry leader, as president of the new business line and since then has made additional key hires, equipping the business to be ready and resourced to pursue further RNG opportunities. NW Natural Renewables' first project is with EDL, a leading global producer of sustainable distributed energy. NW Natural Renewables has contracted to provide a combined $50 million investment in two production facilities in Ohio that are designed to convert landfill waste gases to RNG and connect that production to existing regional pipeline networks. Construction began in January 2022 with substantial completion and commissioning of the first facility anticipated in early 2023 and the second facility in spring 2023. In addition, the agreements with EDL provide for a 20-year supply of RNG that NW Natural Renewables intends to market and sell primarily under long-term contracts. Water Utilities During the first quarter of 2022, NW Natural Water signed two purchase agreements for water utilities in Texas, representing approximately 900 connections. The acquisitions are subject to customary closing conditions, including approval by the Public Utility Commission of Texas, and are expected to close in 2022. In December 2021, NWN Water agreed to purchase the water and wastewater utilities of Far West Water & Sewer, Inc. located in Yuma, Arizona. In March 2022, we filed our acquisition application with the Arizona Corporation Commission. With all pending acquisitions closed, NW Natural Water will serve over 145,000 people through approximately 60,000 connections in five states. For our acquired water utilities, we have been executing general rate cases. In February 2022, the OPUC adopted a comprehensive stipulation in Sunriver Water's rate case with new rates effective May 2022. In January 2022, we filed a general rate case for Suncadia Water and last week the Washington Commission approved new rates effective May 1, 2022. FIRST QUARTER RESULTS The following financial comparisons are for the first quarter of 2022 and 2021 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted. NW Natural Holdings' first quarter results are summarized by business segment in the table below: Three Months Ended March 31, 2022 2021 Change In thousands, except per share data Amount Per Share Amount Per Share Amount Per Share Net income: Natural Gas Distribution segment $ 55,390 $ 1.77 $ 53,925 $ 1.76 $ 1,465 $ 0.01 Other 849 0.03 5,592 0.18 (4,743 ) (0.15 ) Consolidated $ 56,239 $ 1.80 $ 59,517 $ 1.94 $ (3,278 ) $ (0.14 ) Diluted Shares 31,212 30,633 579 Natural Gas Distribution Segment Natural Gas Distribution segment net income increased $1.5 million (or $0.01 per share) primarily reflecting new rates in Washington as a result of a general rate case, which was effective beginning Nov. 1, 2021. Margin increased $3.7 million reflecting new rates in Washington and customer growth, which collectively contributed $2.7 million. In addition, there was a $1.7 million improvement from the gas cost incentive sharing mechanism as the prior year included the effect of purchasing higher priced gas for a February 2021 cold weather event. This was offset by decline in margin of $0.7 million due to 8% warmer than average weather for the first quarter of 2022, compared to 5% warmer than average weather for the same period in 2021. Operations and maintenance expense increased $3.5 million as a result of higher contractor labor for safety and reliability projects, compensation costs due to higher headcount and wage increases, expenses related to information technology maintenance and support, and amortization expense related to cloud-computing arrangements. Depreciation and general taxes increased $0.9 million as we continue to invest in our natural gas utility system. Other income, net increased $1.9 million driven by lower pension costs primarily related to higher returns and lower interest costs. Other Other net income decreased $4.7 million (or $0.15 per share) reflecting $4.2 million of lower net income from NW Natural's other activities driven by asset management revenues from a February 2021 cold weather event. In addition, NW Natural Holding's other businesses reported a higher net loss of $0.6 million primarily related to increased water and wastewater utility business development costs. BALANCE SHEET AND CASH FLOWS During the first three months of 2022, the Company generated $141.0 million in operating cash flows or an increase of $4.0 million compared to the same period in 2021. The Company used $69.8 million in investing activities during the first three months of 2022 primarily for natural gas utility capital expenditures, compared to $63.9 million used in investing activities during the same period in 2021. Net cash used in financing activities was $62.8 million for the first three months of 2022, compared to $83.1 million used in financing activities during the same period in 2021. As of March 31, 2022, NW Natural Holdings held cash of $24.3 million. 2022 GUIDANCE AND LONG-TERM TARGETS NW Natural Holdings reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 per share. This guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant local, state or federal laws, legislation or regulations. NW Natural Holdings reaffirmed its long-term earnings per share growth rate target of 4% to 6% compounded annually from 2022 through 2027. DIVIDEND DECLARED The board of directors of NW Natural Holdings declared a quarterly dividend of 48.25 cents per share on the Company’s common stock. The dividend is payable on May 13, 2022 to shareholders of record on April 29, 2022. The Company's current indicated annual dividend rate is $1.93 per share. Future dividends are subject to board of director discretion and approval. CONFERENCE CALL AND WEBCAST As previously announced, NW Natural Holdings will host a conference call and webcast today to discuss its first quarter 2022 financial and operating results. Date and Time: Wednesday, May 4, 2022 8 a.m. PT (11 a.m. ET) Phone Numbers: United States 1-844-200-6205 Canada 1-833-950-0062 International 1-929-526-1599 Passcode 884524 The call will also be webcast in a listen-only format for the media and general public and can be accessed at ir.nwnaturalholdings.com. A replay of the conference call will be available on our website and by dialing 1-866-813-9403 (U.S.), 1-226-828-7578 (Canada), and +44-204-525-0658 (international). The replay access code is 448759. ABOUT NW NATURAL HOLDINGS Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and has been doing business for over 160 years in the Pacific Northwest. It owns NW Natural Gas Company (NW Natural), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests. We have a longstanding commitment to safety, environmental stewardship and the energy transition, and taking care of our employees and communities. NW Natural is a local distribution company that currently provides natural gas service to approximately 2.5 million people in more than 140 communities through more than 785,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores. NW Natural owns and operates 21 Bcf of underground gas storage capacity in Oregon. NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest and Texas. With all pending acquisitions closed, NW Natural Water will serve over 145,000 people through approximately 60,000 connections in five states. Learn more about our water business at nwnaturalwater.com. Additional information is available at nwnaturalholdings.com. Forward-Looking Statements This press release, and other presentations made by NW Holdings from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, assumptions, estimates, expectations, timing, goals, strategies, commitments, future events, investments, timing and amount of capital expenditures, targeted capital structure, risks, risk profile, stability, acquisitions and timing, completion and integration thereof, the likelihood and success associated with any transaction, utility system and infrastructure investments, system modernization, reliability and resiliency, global, national and local economies, customer and business growth, customer satisfaction ratings, weather, performance and service during weather events, customer rates or rate recovery and the timing and magnitude of potential rate changes and the potential outcome of rate cases, environmental remediation cost recoveries, environmental initiatives, decarbonization and the role of natural gas and the gas delivery system, including decarbonization goals and timelines, energy efficiency measures, use of renewable sources, renewable natural gas purchases, projects, investments and other renewable initiatives and timing, magnitude and completion thereof, unregulated renewable natural gas strategy and initiatives, renewable hydrogen projects or investments and timing, magnitude and completion thereof, procurement of renewable natural gas or hydrogen for customers, technology and policy innovations, strategic goals and visions, the water and wastewater acquisition and investment strategy and financial effects of water and wastewater acquisitions, diversity, equity and inclusion initiatives, operating plans of third parties, financial results, including estimated income, availability and sources of liquidity, expenses, positions, revenues, returns, cost of capital, timing, and earnings, earnings guidance and estimated future growth rates, dividends, commodity costs and sourcing asset management activities, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, regulatory prudence reviews, anticipated regulatory actions or filings, accounting treatment of future events, effects of legislation or changes in laws or regulations, effects, extent, severity and duration of COVID-19 and resulting economic disruption, the impact of mitigating factors and other efforts to mitigate risks posed by its spread, ability of our workforce, customers or suppliers to operate or conduct business, COVID-19 financial impact, expenses, cost savings measures and cost recovery including through regulatory deferrals and the timing and magnitude thereof, impact on capital projects, governmental actions and timing thereof, and other statements that are other than statements of historical facts. Forward-looking statements are based on current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. You are therefore cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future operational, economic or financial performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed by reference to the factors described in Part I, Item 1A "Risk Factors", and Part II, Item 7 and Item 7A "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosure about Market Risk" in the most recent Annual Report on Form 10-K and in Part I, Items 2 and 3 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk", and Part II, Item 1A, "Risk Factors", in the quarterly reports filed thereafter. All forward-looking statements made in this report and all subsequent forward-looking statements, whether written or oral and whether made by or on behalf of NW Holdings or NW Natural, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and NW Holdings and NW Natural undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. New factors emerge from time to time and it is not possible to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. NORTHWEST NATURAL HOLDINGS Consolidated Income Statement and Financial Highlights (Unaudited) First Quarter 2022 Three Months Ended Twelve Months Ended In thousands, except per share amounts, customer, and degree day data March 31, March 31, 2022 2021 Change 2022 2021 Change Operating revenues $ 350,301 $ 315,946 11 % $ 894,755 $ 804,474 11 % Operating expenses: Cost of gas 145,588 112,210 30 325,692 266,427 22 Operations and maintenance 57,485 52,191 10 209,521 183,399 14 Environmental remediation 4,703 3,777 25 10,864 9,463 15 General taxes 12,104 11,369 6 39,368 36,552 8 Revenue taxes 13,360 12,664 5 35,436 31,212 14 Depreciation 28,429 28,097 1 113,866 107,105 6 Other operating expenses 994 932 7 3,959 3,705 7 Total operating expenses 262,663 221,240 19 738,706 637,863 16 Income from operations 87,638 94,706 (7 ) 156,049 166,611 (6 ) Other income (expense), net (954 ) (3,542 ) (73 ) (9,971 ) (13,911 ) (28 ) Interest expense, net 11,522 11,126 4 44,882 43,710 3 Income before income taxes 75,162 80,038 (6 ) 101,196 108,990 (7 ) Income tax expense 18,923 20,521 (8 ) 25,808 27,476 (6 ) Net income from continuing operations 56,239 59,517 (6 ) 75,388 81,514 (8 ) Income from discontinued operations, net of tax — — — 7,286 (100 ) Net income $ 56,239 $ 59,517 (6 ) $ 75,388 $ 88,800 (15 ) Common shares outstanding: Average diluted for period 31,212 30,633 30,868 30,598 End of period 31,380 30,655 31,380 30,655 Per share of common stock information: Diluted earnings from continuing operations $ 1.80 $ 1.94 $ 2.44 $ 2.66 Diluted earnings from discontinued operations, net of tax — — — 0.24 Diluted earnings 1.80 1.94 2.44 2.90 Dividends paid per share 0.4825 0.4800 1.9250 1.9150 Book value, end of period 31.48 30.54 31.48 30.54 Market closing price, end of period 51.72 53.95 51.72 53.95 Capital structure, end of period: Common stock equity 41.8 % 44.0 % 41.8 % 44.0 % Long-term debt 44.1 % 40.4 % 44.1 % 40.4 % Short-term debt (including current maturities of long-term debt) 14.1 % 15.6 % 14.1 % 15.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % Natural Gas Distribution segment operating statistics: Meters - end of period 788,772 777,966 1.4 % 788,772 777,966 1.4 % Volumes in therms: Residential and commercial sales 293,927 297,822 699,159 688,221 Industrial sales and transportation 134,459 133,298 482,882 464,879 Total volumes sold and delivered 428,386 431,120 1,182,041 1,153,100 Operating revenues: Residential and commercial sales $ 314,607 $ 278,584 $ 766,817 $ 684,526 Industrial sales and transportation 21,273 17,379 69,193 58,863 Other distribution revenues 607 590 1,724 1,553 Other regulated services 4,911 4,785 19,213 18,981 Total operating revenues 341,398 301,338 856,947 763,923 Less: Cost of gas 145,644 112,266 325,916 266,651 Less: Environmental remediation expense 4,698 3,777 10,859 9,463 Less: Revenue taxes 13,324 12,655 35,269 31,203 Margin, net $ 177,732 $ 172,640 $ 484,903 $ 456,606 Degree days: Average (25-year average) 1,326 1,326 2,692 2,690 Actual 1,217 1,261 (3 )% 2,334 2,430 (4 )% Percent colder (warmer) than average weather (8 ) % (5 ) % (13 ) % (10 ) % NORTHWEST NATURAL HOLDINGS Consolidated Balance Sheets (Unaudited) March 31, In thousands 2022 2021 Assets: Current assets: Cash and cash equivalents $ 24,325 $ 17,907 Accounts receivable 103,131 105,226 Accrued unbilled revenue 41,772 41,907 Allowance for uncollectible accounts (2,488 ) (3,503 ) Regulatory assets 64,481 47,789 Derivative instruments 84,438 19,914 Inventories 33,377 26,237 Income taxes receivable — 6,000 Other current assets 42,329 41,315 Total current assets 391,365 302,792 Non-current assets: Property, plant, and equipment 4,041,894 3,788,283 Less: Accumulated depreciation 1,137,138 1,091,903 Total property, plant, and equipment, net 2,904,756 2,696,380 Regulatory assets 297,546 338,692 Derivative instruments 6,955 3,087 Other investments 96,266 79,034 Operating lease right of use asset, net 74,416 76,957 Assets under sales-type leases 137,837 142,586 Goodwill 70,570 69,330 Other non-current assets 74,923 49,767 Total non-current assets 3,663,269 3,455,833 Total assets $ 4,054,634 $ 3,758,625 Liabilities and equity: Current liabilities: Short-term debt $ 332,500 $ 236,225 Current maturities of long-term debt 339 95,265 Accounts payable 130,557 88,591 Taxes accrued 14,258 23,550 Interest accrued 10,886 9,491 Regulatory liabilities 111,791 81,314 Derivative instruments 3,855 1,038 Operating lease liabilities 1,303 1,213 Other current liabilities 52,778 48,978 Total current liabilities 658,267 585,665 Long-term debt 1,044,667 860,654 Deferred credits and other non-current liabilities: Deferred tax liabilities 353,746 328,112 Regulatory liabilities 652,977 636,384 Pension and other postretirement benefit liabilities 164,530 210,811 Derivative instruments 592 1,272 Operating lease liabilities 79,162 80,414 Other non-current liabilities 112,749 118,989 Total deferred credits and other non-current liabilities 1,363,756 1,375,982 Equity: Common stock 602,382 568,066 Retained earnings 396,769 380,939 Accumulated other comprehensive loss (11,207 ) (12,681 ) Total equity 987,944 936,324 Total liabilities and equity $ 4,054,634 $ 3,758,625 NORTHWEST NATURAL HOLDINGS Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, In thousands 2022 2021 Operating activities: Net income $ 56,239 $ 59,517 Adjustments to reconcile net income to cash provided by operations: Depreciation 28,429 28,097 Regulatory amortization of gas reserves 1,481 3,634 Deferred income taxes 8,780 3,145 Qualified defined benefit pension plan expense 1,441 3,937 Contributions to qualified defined benefit pension plans — (4,540 ) Deferred environmental expenditures, net (4,345 ) (4,270 ) Environmental remediation expense 4,703 3,777 Asset optimization revenue sharing bill credits (41,102 ) (9,053 ) Other 6,325 6,134 Changes in assets and liabilities: Receivables, net 38,664 1,044 Inventories 23,885 16,454 Income and other taxes 14,436 22,975 Accounts payable (16,487 ) (2,329 ) Deferred gas costs 11,728 (28,912 ) Asset optimization revenue sharing (646 ) 34,633 Decoupling mechanism 4,434 656 Other, net 3,072 2,166 Cash provided by operating activities 141,037 137,065 Investing activities: Capital expenditures (68,514 ) (65,702 ) Acquisitions, net of cash acquired — (42 ) Proceeds from the sale of assets 195 1,960 Other (1,431 ) (91 ) Cash used in investing activities (69,750 ) (63,875 ) Financing activities: Proceeds from common stock issued, net 9,938 — Repayment of commercial paper, maturities greater than three months — (100,000 ) Changes in other short-term debt, net (57,000 ) 31,700 Cash dividend payments on common stock (14,452 ) (13,858 ) Other (1,250 ) (974 ) Cash used in financing activities (62,764 ) (83,132 ) Increase (decrease) in cash, cash equivalents and restricted cash 8,523 (9,942 ) Cash, cash equivalents and restricted cash, beginning of period 27,120 35,454 Cash, cash equivalents and restricted cash, end of period $ 35,643 $ 25,512 Supplemental disclosure of cash flow information: Interest paid, net of capitalization $ 7,977 $ 8,976 Income taxes paid, net of refunds 773 800 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 24,325 $ 17,907 Restricted cash included in other current assets 11,318 7,605 Cash, cash equivalents and restricted cash $ 35,643 $ 25,512 View source version on businesswire.com: https://www.businesswire.com/news/home/20220504005273/en/Contacts Investor Contact: Nikki Sparley Phone: 503-721-2530 Email: nikki.sparley@nwnatural.com Media Contact: David Roy Phone: 503-610-7157 Email: david.roy@nwnatural.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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NW Natural Holdings Reports First Quarter 2022 Results By: NW Natural via Business Wire May 04, 2022 at 06:00 AM EDT Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), reported financial results and highlights including: Earned net income of $1.80 per share for the first quarter of 2022, compared to net income of $1.94 per share for the same period in 2021. The first quarter of 2021 results included a $2.8 million after-tax (or $0.09 per share) benefit primarily related to asset management revenues from a February 2021 cold weather event. Added more than 10,800 natural gas meters in the last 12 months for a growth rate of 1.4% as of March 31, 2022 Commenced operations at the first renewable natural gas (RNG) facility under the landmark Oregon legislation Senate Bill 98, which is producing RNG on behalf of our gas utility customers Continued executing our water and wastewater investment strategy, announcing acquisitions near our existing service territory in Texas Construction began on the first RNG facilities that we're investing in through our competitive renewables business Honored as one of the 2022 World's Most Ethical Companies® by Ethisphere Reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 per share and our long-term earnings per share growth rate target of 4% to 6% "This quarter we reached an important milestone in our decarbonization efforts with the commencement of operations at our first RNG facility under Oregon Senate Bill 98," said David H. Anderson, president and CEO of NW Natural Holdings. "NW Natural is the first local gas distribution utility in the continental United States to invest in and own an RNG facility on behalf of all its sales customers. We're continuing to work on behalf of our customers, executing on the decarbonization and growth opportunities in front of us. In addition, I'm proud of NW Natural Holdings being named one of the 2022 World's Most Ethical Companies® by Ethisphere. This reflects our long-standing commitment to leadership in business integrity through best-in-class ethics, compliance and governance practices." Year-to-date net income decreased $3.3 million to $56.2 million (or $1.80 per share), compared to $59.5 million (or $1.94 per share) for the same period in 2021. Results reflected customer growth and new rates in Washington for our natural gas utility, offset by higher operations and maintenance expenses and depreciation and general taxes as we continue investing in our gas utility system. In addition, net income from our other activities decreased primarily due to lower asset management revenues related to a severe winter storm in February 2021. KEY EVENTS AND INITIATIVES Ongoing Oregon General Rate Case for NW Natural On Dec. 17, 2021, NW Natural filed a request for a general rate increase with the Oregon Public Utility Commission (OPUC). The filing included a requested $73.5 million annual revenue requirement increase and an increase in average rate base of $294 million to support long-planned investments related to safety, reliability, and information technology upgrades. NW Natural's filing will be reviewed by the OPUC and other stakeholders. The process is anticipated to take up to 10 months with new rates expected to take effect Nov. 1, 2022. Utility Renewable Natural Gas (RNG) Operations commenced at our first investment in a RNG facility under Oregon Senate Bill 98 with BioCarbN and Tyson Foods in January 2022. Construction of the second RNG facility began in late 2021 with completion and commissioning expected in early 2023. NW Natural has options to invest up to a total estimated $38 million in four separate RNG development projects using biogas derived from Tyson Foods’ processing plants. NW Natural continues to pursue RNG supply for customers under the landmark Oregon Senate Bill 98, which supports renewable energy procurement and investment by natural gas utilities. To date, NW Natural has signed agreements with options to purchase or develop RNG on behalf of utility customers totaling about 3% of NW Natural’s current annual sales volume in Oregon. NW Natural Renewables Competitive RNG Strategy NW Natural Renewables is an unregulated subsidiary of NW Natural Holdings committed to leading in the energy transition by providing cost-effective solutions to decarbonize the utility, commercial, industrial and transportation sectors. In January 2022, NW Natural Renewables named Michael Kotyk, an industry leader, as president of the new business line and since then has made additional key hires, equipping the business to be ready and resourced to pursue further RNG opportunities. NW Natural Renewables' first project is with EDL, a leading global producer of sustainable distributed energy. NW Natural Renewables has contracted to provide a combined $50 million investment in two production facilities in Ohio that are designed to convert landfill waste gases to RNG and connect that production to existing regional pipeline networks. Construction began in January 2022 with substantial completion and commissioning of the first facility anticipated in early 2023 and the second facility in spring 2023. In addition, the agreements with EDL provide for a 20-year supply of RNG that NW Natural Renewables intends to market and sell primarily under long-term contracts. Water Utilities During the first quarter of 2022, NW Natural Water signed two purchase agreements for water utilities in Texas, representing approximately 900 connections. The acquisitions are subject to customary closing conditions, including approval by the Public Utility Commission of Texas, and are expected to close in 2022. In December 2021, NWN Water agreed to purchase the water and wastewater utilities of Far West Water & Sewer, Inc. located in Yuma, Arizona. In March 2022, we filed our acquisition application with the Arizona Corporation Commission. With all pending acquisitions closed, NW Natural Water will serve over 145,000 people through approximately 60,000 connections in five states. For our acquired water utilities, we have been executing general rate cases. In February 2022, the OPUC adopted a comprehensive stipulation in Sunriver Water's rate case with new rates effective May 2022. In January 2022, we filed a general rate case for Suncadia Water and last week the Washington Commission approved new rates effective May 1, 2022. FIRST QUARTER RESULTS The following financial comparisons are for the first quarter of 2022 and 2021 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted. NW Natural Holdings' first quarter results are summarized by business segment in the table below: Three Months Ended March 31, 2022 2021 Change In thousands, except per share data Amount Per Share Amount Per Share Amount Per Share Net income: Natural Gas Distribution segment $ 55,390 $ 1.77 $ 53,925 $ 1.76 $ 1,465 $ 0.01 Other 849 0.03 5,592 0.18 (4,743 ) (0.15 ) Consolidated $ 56,239 $ 1.80 $ 59,517 $ 1.94 $ (3,278 ) $ (0.14 ) Diluted Shares 31,212 30,633 579 Natural Gas Distribution Segment Natural Gas Distribution segment net income increased $1.5 million (or $0.01 per share) primarily reflecting new rates in Washington as a result of a general rate case, which was effective beginning Nov. 1, 2021. Margin increased $3.7 million reflecting new rates in Washington and customer growth, which collectively contributed $2.7 million. In addition, there was a $1.7 million improvement from the gas cost incentive sharing mechanism as the prior year included the effect of purchasing higher priced gas for a February 2021 cold weather event. This was offset by decline in margin of $0.7 million due to 8% warmer than average weather for the first quarter of 2022, compared to 5% warmer than average weather for the same period in 2021. Operations and maintenance expense increased $3.5 million as a result of higher contractor labor for safety and reliability projects, compensation costs due to higher headcount and wage increases, expenses related to information technology maintenance and support, and amortization expense related to cloud-computing arrangements. Depreciation and general taxes increased $0.9 million as we continue to invest in our natural gas utility system. Other income, net increased $1.9 million driven by lower pension costs primarily related to higher returns and lower interest costs. Other Other net income decreased $4.7 million (or $0.15 per share) reflecting $4.2 million of lower net income from NW Natural's other activities driven by asset management revenues from a February 2021 cold weather event. In addition, NW Natural Holding's other businesses reported a higher net loss of $0.6 million primarily related to increased water and wastewater utility business development costs. BALANCE SHEET AND CASH FLOWS During the first three months of 2022, the Company generated $141.0 million in operating cash flows or an increase of $4.0 million compared to the same period in 2021. The Company used $69.8 million in investing activities during the first three months of 2022 primarily for natural gas utility capital expenditures, compared to $63.9 million used in investing activities during the same period in 2021. Net cash used in financing activities was $62.8 million for the first three months of 2022, compared to $83.1 million used in financing activities during the same period in 2021. As of March 31, 2022, NW Natural Holdings held cash of $24.3 million. 2022 GUIDANCE AND LONG-TERM TARGETS NW Natural Holdings reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 per share. This guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant local, state or federal laws, legislation or regulations. NW Natural Holdings reaffirmed its long-term earnings per share growth rate target of 4% to 6% compounded annually from 2022 through 2027. DIVIDEND DECLARED The board of directors of NW Natural Holdings declared a quarterly dividend of 48.25 cents per share on the Company’s common stock. The dividend is payable on May 13, 2022 to shareholders of record on April 29, 2022. The Company's current indicated annual dividend rate is $1.93 per share. Future dividends are subject to board of director discretion and approval. CONFERENCE CALL AND WEBCAST As previously announced, NW Natural Holdings will host a conference call and webcast today to discuss its first quarter 2022 financial and operating results. Date and Time: Wednesday, May 4, 2022 8 a.m. PT (11 a.m. ET) Phone Numbers: United States 1-844-200-6205 Canada 1-833-950-0062 International 1-929-526-1599 Passcode 884524 The call will also be webcast in a listen-only format for the media and general public and can be accessed at ir.nwnaturalholdings.com. A replay of the conference call will be available on our website and by dialing 1-866-813-9403 (U.S.), 1-226-828-7578 (Canada), and +44-204-525-0658 (international). The replay access code is 448759. ABOUT NW NATURAL HOLDINGS Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and has been doing business for over 160 years in the Pacific Northwest. It owns NW Natural Gas Company (NW Natural), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests. We have a longstanding commitment to safety, environmental stewardship and the energy transition, and taking care of our employees and communities. NW Natural is a local distribution company that currently provides natural gas service to approximately 2.5 million people in more than 140 communities through more than 785,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores. NW Natural owns and operates 21 Bcf of underground gas storage capacity in Oregon. NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest and Texas. With all pending acquisitions closed, NW Natural Water will serve over 145,000 people through approximately 60,000 connections in five states. Learn more about our water business at nwnaturalwater.com. Additional information is available at nwnaturalholdings.com. Forward-Looking Statements This press release, and other presentations made by NW Holdings from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, assumptions, estimates, expectations, timing, goals, strategies, commitments, future events, investments, timing and amount of capital expenditures, targeted capital structure, risks, risk profile, stability, acquisitions and timing, completion and integration thereof, the likelihood and success associated with any transaction, utility system and infrastructure investments, system modernization, reliability and resiliency, global, national and local economies, customer and business growth, customer satisfaction ratings, weather, performance and service during weather events, customer rates or rate recovery and the timing and magnitude of potential rate changes and the potential outcome of rate cases, environmental remediation cost recoveries, environmental initiatives, decarbonization and the role of natural gas and the gas delivery system, including decarbonization goals and timelines, energy efficiency measures, use of renewable sources, renewable natural gas purchases, projects, investments and other renewable initiatives and timing, magnitude and completion thereof, unregulated renewable natural gas strategy and initiatives, renewable hydrogen projects or investments and timing, magnitude and completion thereof, procurement of renewable natural gas or hydrogen for customers, technology and policy innovations, strategic goals and visions, the water and wastewater acquisition and investment strategy and financial effects of water and wastewater acquisitions, diversity, equity and inclusion initiatives, operating plans of third parties, financial results, including estimated income, availability and sources of liquidity, expenses, positions, revenues, returns, cost of capital, timing, and earnings, earnings guidance and estimated future growth rates, dividends, commodity costs and sourcing asset management activities, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, regulatory prudence reviews, anticipated regulatory actions or filings, accounting treatment of future events, effects of legislation or changes in laws or regulations, effects, extent, severity and duration of COVID-19 and resulting economic disruption, the impact of mitigating factors and other efforts to mitigate risks posed by its spread, ability of our workforce, customers or suppliers to operate or conduct business, COVID-19 financial impact, expenses, cost savings measures and cost recovery including through regulatory deferrals and the timing and magnitude thereof, impact on capital projects, governmental actions and timing thereof, and other statements that are other than statements of historical facts. Forward-looking statements are based on current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. You are therefore cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future operational, economic or financial performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed by reference to the factors described in Part I, Item 1A "Risk Factors", and Part II, Item 7 and Item 7A "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosure about Market Risk" in the most recent Annual Report on Form 10-K and in Part I, Items 2 and 3 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk", and Part II, Item 1A, "Risk Factors", in the quarterly reports filed thereafter. All forward-looking statements made in this report and all subsequent forward-looking statements, whether written or oral and whether made by or on behalf of NW Holdings or NW Natural, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and NW Holdings and NW Natural undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. New factors emerge from time to time and it is not possible to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. NORTHWEST NATURAL HOLDINGS Consolidated Income Statement and Financial Highlights (Unaudited) First Quarter 2022 Three Months Ended Twelve Months Ended In thousands, except per share amounts, customer, and degree day data March 31, March 31, 2022 2021 Change 2022 2021 Change Operating revenues $ 350,301 $ 315,946 11 % $ 894,755 $ 804,474 11 % Operating expenses: Cost of gas 145,588 112,210 30 325,692 266,427 22 Operations and maintenance 57,485 52,191 10 209,521 183,399 14 Environmental remediation 4,703 3,777 25 10,864 9,463 15 General taxes 12,104 11,369 6 39,368 36,552 8 Revenue taxes 13,360 12,664 5 35,436 31,212 14 Depreciation 28,429 28,097 1 113,866 107,105 6 Other operating expenses 994 932 7 3,959 3,705 7 Total operating expenses 262,663 221,240 19 738,706 637,863 16 Income from operations 87,638 94,706 (7 ) 156,049 166,611 (6 ) Other income (expense), net (954 ) (3,542 ) (73 ) (9,971 ) (13,911 ) (28 ) Interest expense, net 11,522 11,126 4 44,882 43,710 3 Income before income taxes 75,162 80,038 (6 ) 101,196 108,990 (7 ) Income tax expense 18,923 20,521 (8 ) 25,808 27,476 (6 ) Net income from continuing operations 56,239 59,517 (6 ) 75,388 81,514 (8 ) Income from discontinued operations, net of tax — — — 7,286 (100 ) Net income $ 56,239 $ 59,517 (6 ) $ 75,388 $ 88,800 (15 ) Common shares outstanding: Average diluted for period 31,212 30,633 30,868 30,598 End of period 31,380 30,655 31,380 30,655 Per share of common stock information: Diluted earnings from continuing operations $ 1.80 $ 1.94 $ 2.44 $ 2.66 Diluted earnings from discontinued operations, net of tax — — — 0.24 Diluted earnings 1.80 1.94 2.44 2.90 Dividends paid per share 0.4825 0.4800 1.9250 1.9150 Book value, end of period 31.48 30.54 31.48 30.54 Market closing price, end of period 51.72 53.95 51.72 53.95 Capital structure, end of period: Common stock equity 41.8 % 44.0 % 41.8 % 44.0 % Long-term debt 44.1 % 40.4 % 44.1 % 40.4 % Short-term debt (including current maturities of long-term debt) 14.1 % 15.6 % 14.1 % 15.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % Natural Gas Distribution segment operating statistics: Meters - end of period 788,772 777,966 1.4 % 788,772 777,966 1.4 % Volumes in therms: Residential and commercial sales 293,927 297,822 699,159 688,221 Industrial sales and transportation 134,459 133,298 482,882 464,879 Total volumes sold and delivered 428,386 431,120 1,182,041 1,153,100 Operating revenues: Residential and commercial sales $ 314,607 $ 278,584 $ 766,817 $ 684,526 Industrial sales and transportation 21,273 17,379 69,193 58,863 Other distribution revenues 607 590 1,724 1,553 Other regulated services 4,911 4,785 19,213 18,981 Total operating revenues 341,398 301,338 856,947 763,923 Less: Cost of gas 145,644 112,266 325,916 266,651 Less: Environmental remediation expense 4,698 3,777 10,859 9,463 Less: Revenue taxes 13,324 12,655 35,269 31,203 Margin, net $ 177,732 $ 172,640 $ 484,903 $ 456,606 Degree days: Average (25-year average) 1,326 1,326 2,692 2,690 Actual 1,217 1,261 (3 )% 2,334 2,430 (4 )% Percent colder (warmer) than average weather (8 ) % (5 ) % (13 ) % (10 ) % NORTHWEST NATURAL HOLDINGS Consolidated Balance Sheets (Unaudited) March 31, In thousands 2022 2021 Assets: Current assets: Cash and cash equivalents $ 24,325 $ 17,907 Accounts receivable 103,131 105,226 Accrued unbilled revenue 41,772 41,907 Allowance for uncollectible accounts (2,488 ) (3,503 ) Regulatory assets 64,481 47,789 Derivative instruments 84,438 19,914 Inventories 33,377 26,237 Income taxes receivable — 6,000 Other current assets 42,329 41,315 Total current assets 391,365 302,792 Non-current assets: Property, plant, and equipment 4,041,894 3,788,283 Less: Accumulated depreciation 1,137,138 1,091,903 Total property, plant, and equipment, net 2,904,756 2,696,380 Regulatory assets 297,546 338,692 Derivative instruments 6,955 3,087 Other investments 96,266 79,034 Operating lease right of use asset, net 74,416 76,957 Assets under sales-type leases 137,837 142,586 Goodwill 70,570 69,330 Other non-current assets 74,923 49,767 Total non-current assets 3,663,269 3,455,833 Total assets $ 4,054,634 $ 3,758,625 Liabilities and equity: Current liabilities: Short-term debt $ 332,500 $ 236,225 Current maturities of long-term debt 339 95,265 Accounts payable 130,557 88,591 Taxes accrued 14,258 23,550 Interest accrued 10,886 9,491 Regulatory liabilities 111,791 81,314 Derivative instruments 3,855 1,038 Operating lease liabilities 1,303 1,213 Other current liabilities 52,778 48,978 Total current liabilities 658,267 585,665 Long-term debt 1,044,667 860,654 Deferred credits and other non-current liabilities: Deferred tax liabilities 353,746 328,112 Regulatory liabilities 652,977 636,384 Pension and other postretirement benefit liabilities 164,530 210,811 Derivative instruments 592 1,272 Operating lease liabilities 79,162 80,414 Other non-current liabilities 112,749 118,989 Total deferred credits and other non-current liabilities 1,363,756 1,375,982 Equity: Common stock 602,382 568,066 Retained earnings 396,769 380,939 Accumulated other comprehensive loss (11,207 ) (12,681 ) Total equity 987,944 936,324 Total liabilities and equity $ 4,054,634 $ 3,758,625 NORTHWEST NATURAL HOLDINGS Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, In thousands 2022 2021 Operating activities: Net income $ 56,239 $ 59,517 Adjustments to reconcile net income to cash provided by operations: Depreciation 28,429 28,097 Regulatory amortization of gas reserves 1,481 3,634 Deferred income taxes 8,780 3,145 Qualified defined benefit pension plan expense 1,441 3,937 Contributions to qualified defined benefit pension plans — (4,540 ) Deferred environmental expenditures, net (4,345 ) (4,270 ) Environmental remediation expense 4,703 3,777 Asset optimization revenue sharing bill credits (41,102 ) (9,053 ) Other 6,325 6,134 Changes in assets and liabilities: Receivables, net 38,664 1,044 Inventories 23,885 16,454 Income and other taxes 14,436 22,975 Accounts payable (16,487 ) (2,329 ) Deferred gas costs 11,728 (28,912 ) Asset optimization revenue sharing (646 ) 34,633 Decoupling mechanism 4,434 656 Other, net 3,072 2,166 Cash provided by operating activities 141,037 137,065 Investing activities: Capital expenditures (68,514 ) (65,702 ) Acquisitions, net of cash acquired — (42 ) Proceeds from the sale of assets 195 1,960 Other (1,431 ) (91 ) Cash used in investing activities (69,750 ) (63,875 ) Financing activities: Proceeds from common stock issued, net 9,938 — Repayment of commercial paper, maturities greater than three months — (100,000 ) Changes in other short-term debt, net (57,000 ) 31,700 Cash dividend payments on common stock (14,452 ) (13,858 ) Other (1,250 ) (974 ) Cash used in financing activities (62,764 ) (83,132 ) Increase (decrease) in cash, cash equivalents and restricted cash 8,523 (9,942 ) Cash, cash equivalents and restricted cash, beginning of period 27,120 35,454 Cash, cash equivalents and restricted cash, end of period $ 35,643 $ 25,512 Supplemental disclosure of cash flow information: Interest paid, net of capitalization $ 7,977 $ 8,976 Income taxes paid, net of refunds 773 800 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 24,325 $ 17,907 Restricted cash included in other current assets 11,318 7,605 Cash, cash equivalents and restricted cash $ 35,643 $ 25,512 View source version on businesswire.com: https://www.businesswire.com/news/home/20220504005273/en/Contacts Investor Contact: Nikki Sparley Phone: 503-721-2530 Email: nikki.sparley@nwnatural.com Media Contact: David Roy Phone: 503-610-7157 Email: david.roy@nwnatural.com
Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), reported financial results and highlights including: Earned net income of $1.80 per share for the first quarter of 2022, compared to net income of $1.94 per share for the same period in 2021. The first quarter of 2021 results included a $2.8 million after-tax (or $0.09 per share) benefit primarily related to asset management revenues from a February 2021 cold weather event. Added more than 10,800 natural gas meters in the last 12 months for a growth rate of 1.4% as of March 31, 2022 Commenced operations at the first renewable natural gas (RNG) facility under the landmark Oregon legislation Senate Bill 98, which is producing RNG on behalf of our gas utility customers Continued executing our water and wastewater investment strategy, announcing acquisitions near our existing service territory in Texas Construction began on the first RNG facilities that we're investing in through our competitive renewables business Honored as one of the 2022 World's Most Ethical Companies® by Ethisphere Reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 per share and our long-term earnings per share growth rate target of 4% to 6% "This quarter we reached an important milestone in our decarbonization efforts with the commencement of operations at our first RNG facility under Oregon Senate Bill 98," said David H. Anderson, president and CEO of NW Natural Holdings. "NW Natural is the first local gas distribution utility in the continental United States to invest in and own an RNG facility on behalf of all its sales customers. We're continuing to work on behalf of our customers, executing on the decarbonization and growth opportunities in front of us. In addition, I'm proud of NW Natural Holdings being named one of the 2022 World's Most Ethical Companies® by Ethisphere. This reflects our long-standing commitment to leadership in business integrity through best-in-class ethics, compliance and governance practices." Year-to-date net income decreased $3.3 million to $56.2 million (or $1.80 per share), compared to $59.5 million (or $1.94 per share) for the same period in 2021. Results reflected customer growth and new rates in Washington for our natural gas utility, offset by higher operations and maintenance expenses and depreciation and general taxes as we continue investing in our gas utility system. In addition, net income from our other activities decreased primarily due to lower asset management revenues related to a severe winter storm in February 2021. KEY EVENTS AND INITIATIVES Ongoing Oregon General Rate Case for NW Natural On Dec. 17, 2021, NW Natural filed a request for a general rate increase with the Oregon Public Utility Commission (OPUC). The filing included a requested $73.5 million annual revenue requirement increase and an increase in average rate base of $294 million to support long-planned investments related to safety, reliability, and information technology upgrades. NW Natural's filing will be reviewed by the OPUC and other stakeholders. The process is anticipated to take up to 10 months with new rates expected to take effect Nov. 1, 2022. Utility Renewable Natural Gas (RNG) Operations commenced at our first investment in a RNG facility under Oregon Senate Bill 98 with BioCarbN and Tyson Foods in January 2022. Construction of the second RNG facility began in late 2021 with completion and commissioning expected in early 2023. NW Natural has options to invest up to a total estimated $38 million in four separate RNG development projects using biogas derived from Tyson Foods’ processing plants. NW Natural continues to pursue RNG supply for customers under the landmark Oregon Senate Bill 98, which supports renewable energy procurement and investment by natural gas utilities. To date, NW Natural has signed agreements with options to purchase or develop RNG on behalf of utility customers totaling about 3% of NW Natural’s current annual sales volume in Oregon. NW Natural Renewables Competitive RNG Strategy NW Natural Renewables is an unregulated subsidiary of NW Natural Holdings committed to leading in the energy transition by providing cost-effective solutions to decarbonize the utility, commercial, industrial and transportation sectors. In January 2022, NW Natural Renewables named Michael Kotyk, an industry leader, as president of the new business line and since then has made additional key hires, equipping the business to be ready and resourced to pursue further RNG opportunities. NW Natural Renewables' first project is with EDL, a leading global producer of sustainable distributed energy. NW Natural Renewables has contracted to provide a combined $50 million investment in two production facilities in Ohio that are designed to convert landfill waste gases to RNG and connect that production to existing regional pipeline networks. Construction began in January 2022 with substantial completion and commissioning of the first facility anticipated in early 2023 and the second facility in spring 2023. In addition, the agreements with EDL provide for a 20-year supply of RNG that NW Natural Renewables intends to market and sell primarily under long-term contracts. Water Utilities During the first quarter of 2022, NW Natural Water signed two purchase agreements for water utilities in Texas, representing approximately 900 connections. The acquisitions are subject to customary closing conditions, including approval by the Public Utility Commission of Texas, and are expected to close in 2022. In December 2021, NWN Water agreed to purchase the water and wastewater utilities of Far West Water & Sewer, Inc. located in Yuma, Arizona. In March 2022, we filed our acquisition application with the Arizona Corporation Commission. With all pending acquisitions closed, NW Natural Water will serve over 145,000 people through approximately 60,000 connections in five states. For our acquired water utilities, we have been executing general rate cases. In February 2022, the OPUC adopted a comprehensive stipulation in Sunriver Water's rate case with new rates effective May 2022. In January 2022, we filed a general rate case for Suncadia Water and last week the Washington Commission approved new rates effective May 1, 2022. FIRST QUARTER RESULTS The following financial comparisons are for the first quarter of 2022 and 2021 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted. NW Natural Holdings' first quarter results are summarized by business segment in the table below: Three Months Ended March 31, 2022 2021 Change In thousands, except per share data Amount Per Share Amount Per Share Amount Per Share Net income: Natural Gas Distribution segment $ 55,390 $ 1.77 $ 53,925 $ 1.76 $ 1,465 $ 0.01 Other 849 0.03 5,592 0.18 (4,743 ) (0.15 ) Consolidated $ 56,239 $ 1.80 $ 59,517 $ 1.94 $ (3,278 ) $ (0.14 ) Diluted Shares 31,212 30,633 579 Natural Gas Distribution Segment Natural Gas Distribution segment net income increased $1.5 million (or $0.01 per share) primarily reflecting new rates in Washington as a result of a general rate case, which was effective beginning Nov. 1, 2021. Margin increased $3.7 million reflecting new rates in Washington and customer growth, which collectively contributed $2.7 million. In addition, there was a $1.7 million improvement from the gas cost incentive sharing mechanism as the prior year included the effect of purchasing higher priced gas for a February 2021 cold weather event. This was offset by decline in margin of $0.7 million due to 8% warmer than average weather for the first quarter of 2022, compared to 5% warmer than average weather for the same period in 2021. Operations and maintenance expense increased $3.5 million as a result of higher contractor labor for safety and reliability projects, compensation costs due to higher headcount and wage increases, expenses related to information technology maintenance and support, and amortization expense related to cloud-computing arrangements. Depreciation and general taxes increased $0.9 million as we continue to invest in our natural gas utility system. Other income, net increased $1.9 million driven by lower pension costs primarily related to higher returns and lower interest costs. Other Other net income decreased $4.7 million (or $0.15 per share) reflecting $4.2 million of lower net income from NW Natural's other activities driven by asset management revenues from a February 2021 cold weather event. In addition, NW Natural Holding's other businesses reported a higher net loss of $0.6 million primarily related to increased water and wastewater utility business development costs. BALANCE SHEET AND CASH FLOWS During the first three months of 2022, the Company generated $141.0 million in operating cash flows or an increase of $4.0 million compared to the same period in 2021. The Company used $69.8 million in investing activities during the first three months of 2022 primarily for natural gas utility capital expenditures, compared to $63.9 million used in investing activities during the same period in 2021. Net cash used in financing activities was $62.8 million for the first three months of 2022, compared to $83.1 million used in financing activities during the same period in 2021. As of March 31, 2022, NW Natural Holdings held cash of $24.3 million. 2022 GUIDANCE AND LONG-TERM TARGETS NW Natural Holdings reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 per share. This guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant local, state or federal laws, legislation or regulations. NW Natural Holdings reaffirmed its long-term earnings per share growth rate target of 4% to 6% compounded annually from 2022 through 2027. DIVIDEND DECLARED The board of directors of NW Natural Holdings declared a quarterly dividend of 48.25 cents per share on the Company’s common stock. The dividend is payable on May 13, 2022 to shareholders of record on April 29, 2022. The Company's current indicated annual dividend rate is $1.93 per share. Future dividends are subject to board of director discretion and approval. CONFERENCE CALL AND WEBCAST As previously announced, NW Natural Holdings will host a conference call and webcast today to discuss its first quarter 2022 financial and operating results. Date and Time: Wednesday, May 4, 2022 8 a.m. PT (11 a.m. ET) Phone Numbers: United States 1-844-200-6205 Canada 1-833-950-0062 International 1-929-526-1599 Passcode 884524 The call will also be webcast in a listen-only format for the media and general public and can be accessed at ir.nwnaturalholdings.com. A replay of the conference call will be available on our website and by dialing 1-866-813-9403 (U.S.), 1-226-828-7578 (Canada), and +44-204-525-0658 (international). The replay access code is 448759. ABOUT NW NATURAL HOLDINGS Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and has been doing business for over 160 years in the Pacific Northwest. It owns NW Natural Gas Company (NW Natural), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests. We have a longstanding commitment to safety, environmental stewardship and the energy transition, and taking care of our employees and communities. NW Natural is a local distribution company that currently provides natural gas service to approximately 2.5 million people in more than 140 communities through more than 785,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores. NW Natural owns and operates 21 Bcf of underground gas storage capacity in Oregon. NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest and Texas. With all pending acquisitions closed, NW Natural Water will serve over 145,000 people through approximately 60,000 connections in five states. Learn more about our water business at nwnaturalwater.com. Additional information is available at nwnaturalholdings.com. Forward-Looking Statements This press release, and other presentations made by NW Holdings from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, assumptions, estimates, expectations, timing, goals, strategies, commitments, future events, investments, timing and amount of capital expenditures, targeted capital structure, risks, risk profile, stability, acquisitions and timing, completion and integration thereof, the likelihood and success associated with any transaction, utility system and infrastructure investments, system modernization, reliability and resiliency, global, national and local economies, customer and business growth, customer satisfaction ratings, weather, performance and service during weather events, customer rates or rate recovery and the timing and magnitude of potential rate changes and the potential outcome of rate cases, environmental remediation cost recoveries, environmental initiatives, decarbonization and the role of natural gas and the gas delivery system, including decarbonization goals and timelines, energy efficiency measures, use of renewable sources, renewable natural gas purchases, projects, investments and other renewable initiatives and timing, magnitude and completion thereof, unregulated renewable natural gas strategy and initiatives, renewable hydrogen projects or investments and timing, magnitude and completion thereof, procurement of renewable natural gas or hydrogen for customers, technology and policy innovations, strategic goals and visions, the water and wastewater acquisition and investment strategy and financial effects of water and wastewater acquisitions, diversity, equity and inclusion initiatives, operating plans of third parties, financial results, including estimated income, availability and sources of liquidity, expenses, positions, revenues, returns, cost of capital, timing, and earnings, earnings guidance and estimated future growth rates, dividends, commodity costs and sourcing asset management activities, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, regulatory prudence reviews, anticipated regulatory actions or filings, accounting treatment of future events, effects of legislation or changes in laws or regulations, effects, extent, severity and duration of COVID-19 and resulting economic disruption, the impact of mitigating factors and other efforts to mitigate risks posed by its spread, ability of our workforce, customers or suppliers to operate or conduct business, COVID-19 financial impact, expenses, cost savings measures and cost recovery including through regulatory deferrals and the timing and magnitude thereof, impact on capital projects, governmental actions and timing thereof, and other statements that are other than statements of historical facts. Forward-looking statements are based on current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. You are therefore cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future operational, economic or financial performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed by reference to the factors described in Part I, Item 1A "Risk Factors", and Part II, Item 7 and Item 7A "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosure about Market Risk" in the most recent Annual Report on Form 10-K and in Part I, Items 2 and 3 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk", and Part II, Item 1A, "Risk Factors", in the quarterly reports filed thereafter. All forward-looking statements made in this report and all subsequent forward-looking statements, whether written or oral and whether made by or on behalf of NW Holdings or NW Natural, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and NW Holdings and NW Natural undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. New factors emerge from time to time and it is not possible to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. NORTHWEST NATURAL HOLDINGS Consolidated Income Statement and Financial Highlights (Unaudited) First Quarter 2022 Three Months Ended Twelve Months Ended In thousands, except per share amounts, customer, and degree day data March 31, March 31, 2022 2021 Change 2022 2021 Change Operating revenues $ 350,301 $ 315,946 11 % $ 894,755 $ 804,474 11 % Operating expenses: Cost of gas 145,588 112,210 30 325,692 266,427 22 Operations and maintenance 57,485 52,191 10 209,521 183,399 14 Environmental remediation 4,703 3,777 25 10,864 9,463 15 General taxes 12,104 11,369 6 39,368 36,552 8 Revenue taxes 13,360 12,664 5 35,436 31,212 14 Depreciation 28,429 28,097 1 113,866 107,105 6 Other operating expenses 994 932 7 3,959 3,705 7 Total operating expenses 262,663 221,240 19 738,706 637,863 16 Income from operations 87,638 94,706 (7 ) 156,049 166,611 (6 ) Other income (expense), net (954 ) (3,542 ) (73 ) (9,971 ) (13,911 ) (28 ) Interest expense, net 11,522 11,126 4 44,882 43,710 3 Income before income taxes 75,162 80,038 (6 ) 101,196 108,990 (7 ) Income tax expense 18,923 20,521 (8 ) 25,808 27,476 (6 ) Net income from continuing operations 56,239 59,517 (6 ) 75,388 81,514 (8 ) Income from discontinued operations, net of tax — — — 7,286 (100 ) Net income $ 56,239 $ 59,517 (6 ) $ 75,388 $ 88,800 (15 ) Common shares outstanding: Average diluted for period 31,212 30,633 30,868 30,598 End of period 31,380 30,655 31,380 30,655 Per share of common stock information: Diluted earnings from continuing operations $ 1.80 $ 1.94 $ 2.44 $ 2.66 Diluted earnings from discontinued operations, net of tax — — — 0.24 Diluted earnings 1.80 1.94 2.44 2.90 Dividends paid per share 0.4825 0.4800 1.9250 1.9150 Book value, end of period 31.48 30.54 31.48 30.54 Market closing price, end of period 51.72 53.95 51.72 53.95 Capital structure, end of period: Common stock equity 41.8 % 44.0 % 41.8 % 44.0 % Long-term debt 44.1 % 40.4 % 44.1 % 40.4 % Short-term debt (including current maturities of long-term debt) 14.1 % 15.6 % 14.1 % 15.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % Natural Gas Distribution segment operating statistics: Meters - end of period 788,772 777,966 1.4 % 788,772 777,966 1.4 % Volumes in therms: Residential and commercial sales 293,927 297,822 699,159 688,221 Industrial sales and transportation 134,459 133,298 482,882 464,879 Total volumes sold and delivered 428,386 431,120 1,182,041 1,153,100 Operating revenues: Residential and commercial sales $ 314,607 $ 278,584 $ 766,817 $ 684,526 Industrial sales and transportation 21,273 17,379 69,193 58,863 Other distribution revenues 607 590 1,724 1,553 Other regulated services 4,911 4,785 19,213 18,981 Total operating revenues 341,398 301,338 856,947 763,923 Less: Cost of gas 145,644 112,266 325,916 266,651 Less: Environmental remediation expense 4,698 3,777 10,859 9,463 Less: Revenue taxes 13,324 12,655 35,269 31,203 Margin, net $ 177,732 $ 172,640 $ 484,903 $ 456,606 Degree days: Average (25-year average) 1,326 1,326 2,692 2,690 Actual 1,217 1,261 (3 )% 2,334 2,430 (4 )% Percent colder (warmer) than average weather (8 ) % (5 ) % (13 ) % (10 ) % NORTHWEST NATURAL HOLDINGS Consolidated Balance Sheets (Unaudited) March 31, In thousands 2022 2021 Assets: Current assets: Cash and cash equivalents $ 24,325 $ 17,907 Accounts receivable 103,131 105,226 Accrued unbilled revenue 41,772 41,907 Allowance for uncollectible accounts (2,488 ) (3,503 ) Regulatory assets 64,481 47,789 Derivative instruments 84,438 19,914 Inventories 33,377 26,237 Income taxes receivable — 6,000 Other current assets 42,329 41,315 Total current assets 391,365 302,792 Non-current assets: Property, plant, and equipment 4,041,894 3,788,283 Less: Accumulated depreciation 1,137,138 1,091,903 Total property, plant, and equipment, net 2,904,756 2,696,380 Regulatory assets 297,546 338,692 Derivative instruments 6,955 3,087 Other investments 96,266 79,034 Operating lease right of use asset, net 74,416 76,957 Assets under sales-type leases 137,837 142,586 Goodwill 70,570 69,330 Other non-current assets 74,923 49,767 Total non-current assets 3,663,269 3,455,833 Total assets $ 4,054,634 $ 3,758,625 Liabilities and equity: Current liabilities: Short-term debt $ 332,500 $ 236,225 Current maturities of long-term debt 339 95,265 Accounts payable 130,557 88,591 Taxes accrued 14,258 23,550 Interest accrued 10,886 9,491 Regulatory liabilities 111,791 81,314 Derivative instruments 3,855 1,038 Operating lease liabilities 1,303 1,213 Other current liabilities 52,778 48,978 Total current liabilities 658,267 585,665 Long-term debt 1,044,667 860,654 Deferred credits and other non-current liabilities: Deferred tax liabilities 353,746 328,112 Regulatory liabilities 652,977 636,384 Pension and other postretirement benefit liabilities 164,530 210,811 Derivative instruments 592 1,272 Operating lease liabilities 79,162 80,414 Other non-current liabilities 112,749 118,989 Total deferred credits and other non-current liabilities 1,363,756 1,375,982 Equity: Common stock 602,382 568,066 Retained earnings 396,769 380,939 Accumulated other comprehensive loss (11,207 ) (12,681 ) Total equity 987,944 936,324 Total liabilities and equity $ 4,054,634 $ 3,758,625 NORTHWEST NATURAL HOLDINGS Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, In thousands 2022 2021 Operating activities: Net income $ 56,239 $ 59,517 Adjustments to reconcile net income to cash provided by operations: Depreciation 28,429 28,097 Regulatory amortization of gas reserves 1,481 3,634 Deferred income taxes 8,780 3,145 Qualified defined benefit pension plan expense 1,441 3,937 Contributions to qualified defined benefit pension plans — (4,540 ) Deferred environmental expenditures, net (4,345 ) (4,270 ) Environmental remediation expense 4,703 3,777 Asset optimization revenue sharing bill credits (41,102 ) (9,053 ) Other 6,325 6,134 Changes in assets and liabilities: Receivables, net 38,664 1,044 Inventories 23,885 16,454 Income and other taxes 14,436 22,975 Accounts payable (16,487 ) (2,329 ) Deferred gas costs 11,728 (28,912 ) Asset optimization revenue sharing (646 ) 34,633 Decoupling mechanism 4,434 656 Other, net 3,072 2,166 Cash provided by operating activities 141,037 137,065 Investing activities: Capital expenditures (68,514 ) (65,702 ) Acquisitions, net of cash acquired — (42 ) Proceeds from the sale of assets 195 1,960 Other (1,431 ) (91 ) Cash used in investing activities (69,750 ) (63,875 ) Financing activities: Proceeds from common stock issued, net 9,938 — Repayment of commercial paper, maturities greater than three months — (100,000 ) Changes in other short-term debt, net (57,000 ) 31,700 Cash dividend payments on common stock (14,452 ) (13,858 ) Other (1,250 ) (974 ) Cash used in financing activities (62,764 ) (83,132 ) Increase (decrease) in cash, cash equivalents and restricted cash 8,523 (9,942 ) Cash, cash equivalents and restricted cash, beginning of period 27,120 35,454 Cash, cash equivalents and restricted cash, end of period $ 35,643 $ 25,512 Supplemental disclosure of cash flow information: Interest paid, net of capitalization $ 7,977 $ 8,976 Income taxes paid, net of refunds 773 800 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 24,325 $ 17,907 Restricted cash included in other current assets 11,318 7,605 Cash, cash equivalents and restricted cash $ 35,643 $ 25,512 View source version on businesswire.com: https://www.businesswire.com/news/home/20220504005273/en/
Investor Contact: Nikki Sparley Phone: 503-721-2530 Email: nikki.sparley@nwnatural.com Media Contact: David Roy Phone: 503-610-7157 Email: david.roy@nwnatural.com
