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NN

Northwest Natural Holding Co (NWN)·Q2 2025 Earnings Summary

Executive Summary

  • Mixed quarter: EPS beat but revenue miss. Adjusted EPS was $0.01 vs S&P Global consensus of -$0.13, a beat of $0.14; revenue was $236.2M vs $252.7M consensus, a miss of ~$16.5M (6.5%). EBITDA exceeded consensus, aided by rate increases and segment contributions, while “Other” interest expense weighed on results *.
  • Guidance: Reaffirmed 2025 adjusted EPS $2.75–$2.95; GAAP EPS narrowed to $2.60–$2.80 reflecting transaction and business development costs; capex remained $450–$500M; long-term EPS CAGR 4–6% reiterated .
  • Regulatory: Oregon rate case settlement (pending approval) sets 9.5% ROE, 50/50 cap structure, ~7.12% cost of capital, ~2.5% rate increase; new rates expected Oct 31, 2025; rate base ~ $2.2B (+$144M) .
  • Growth: Texas utilities momentum—SiEnergy plus Pines added; contracted backlog >217k future meters; combined SiEnergy+Pines ~83k customers at 6/30; consolidated meters up 10.6% YoY to 969k .
  • Liquidity/financing: ~$550M liquidity at 6/30; modest equity issuance of $65–$75M expected in 2025; plan to refinance ~$148M SiEnergy debt in 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • Oregon rate relief driving margin: Gas utility margin +$16.9M YoY in Q2 from new Oregon rates effective Nov 1, 2024 .
    • Texas growth execution: SiEnergy Q2 net income of $1.0M; backlog expanded, with Pines (7k connections; ~12k contracted backlog) integrated smoothly; total SiEnergy+Pines ~83k customers at 6/30 .
    • Water improvement: NWN Water Q2 net income +$1.8M YoY on higher revenues from Arizona rate increases and 2024 acquisitions .
    • Quote: “We reaffirmed annual 2025 adjusted earnings guidance… and continue to expect our long term earnings per share growth rate to be 4% to 6%.” — CFO Ray Kaszuba .

  • What Went Wrong

    • Revenue shortfall vs Street: Q2 operating revenues of $236.2M missed S&P consensus ~$252.7M (seasonality and utility cadence) *.
    • Higher O&M and interest: O&M +$14.1M YoY; interest expense +$11.2M YoY; “Other” adjusted net loss widened primarily from higher holding company interest, including junior subordinated notes issued March 2025 .
    • Limited Q&A depth: Few new datapoints beyond backlog/rate case cadence; water rate cases are numerous and small (<$1M in many instances), extending execution timelines .

Financial Results

Consolidated performance

MetricQ2 2024Q1 2025Q2 2025
Operating Revenues ($M)$211.7 $494.3 $236.2
GAAP Diluted EPS ($)-0.07 2.18 -0.06
Adjusted EPS ($)-0.07 2.28 0.01
Income from Operations ($M)$15.7 $154.4 $27.2
Operating Margin (%)7.4% (15.706/211.714) 31.2% (154.354/494.284) 11.5% (27.211/236.194)

Estimates vs actuals (S&P Global)

MetricQ2 2025 ConsensusQ2 2025 ActualDelta
EPS ($)-0.128*0.01 +0.14*
Revenue ($M)252.7*236.2 -16.5*
EBITDA ($M)63.4*77.6*+14.2*
  • Values with asterisk (*) retrieved from S&P Global.

Segment results (Net income)

Segment ($M)Q2 2024Q2 2025YoY Δ
NWN Gas Utility-2.987 1.529 +4.516
SiEnergy Gas Utility—1.014 +1.014
NWN Water Utility1.071 2.833 +1.762
Other-0.871 -7.876 -7.005
Consolidated-2.787 -2.500 +0.287

KPIs and operating stats

KPIQ2 2024Q2 2025
Total meters (end of period)876,280 969,156
NWN Gas meters801,943 807,243
SiEnergy meters—83,278
NWN Water meters74,337 78,635
Combined 12-mo meter growth—10.6% (added >92k meters)
Texas contracted backlog~11k (Hughes at signing) >217k (SiEnergy+Pines contracted)

Drivers and mix

  • Gas utility margin +$16.9M YoY in Q2 from Oregon rate case; O&M +$6.3M; depreciation and general taxes +$4.8M .
  • “Other” adjusted net loss worsened due to ~$9.1M higher interest expense tied to financing actions (junior subordinated notes in March 2025) .

Non-GAAP adjustments and impacts

  • Q2 adjusted EPS excludes $3.8M transaction/business development costs (after-tax effect ~$0.07–$0.09 per share for the quarter; company shows $0.09/share pre-tax add-back and $(0.02) tax effect) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2025$2.65–$2.85 (Q1) $2.60–$2.80 (Q2) Lowered (reflects transaction/BD costs)
Adjusted EPS (non-GAAP)FY 2025$2.75–$2.95 (Q1) $2.75–$2.95 (Q2) Maintained
CapexFY 2025$450–$500M (Q1) $450–$500M (Q2) Maintained
LT EPS Growth CAGR2025–20304–6% (Q1) 4–6% (Q2) Maintained
Dividend per quarterQ2/Q3 2025$0.49 (declared May) $0.49 (payable Aug 15) Maintained
Oregon Rate CaseEffective—New rates expected Oct 31, 2025; 9.5% ROE; 50/50 cap structure; ~7.12% cost of capital; ~2.5% bill impact; rate base ~$2.2B Settlement details filed (pending approval)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 call)Previous Mentions (Q1’25 call)Current Period (Q2’25 call)Trend
Oregon rate caseCompleted large 2024 case; filed new OR case Dec 2024; affordability focus Expect new rates Nov 1, 2025; constructive outcome targeted Settlement on revenue requirement (+$21.3M), 9.5% ROE, 50/50, cost of capital ~7.12%; rates expected Oct 31 Positive visibility
Texas (SiEnergy/Pines)Close SiEnergy; 20%+ growth outlook SiEnergy closed; signed Hughes; strong organic growth Backlog >217k meters; Pines closed (7k connections; ~12k backlog); integration smooth Strengthening
Water utilitiesRate base/net income growth; multiple cases ahead Arizona rates benefit; more cases likely Multiple water cases (ID/WA/OR); cases generally small (<$1M) Steady execution
Renewables (RNG)First projects online; steady CF expected Full quarter revenues; growing contribution Projects running smoothly; fixed-price offtake; no meaningful RIN/LCFS exposure Stable, de-risked
Liquidity/financingPlan junior subs; equity $65–$75M in 2025 Completed junior subs; manageable maturities ~$550M liquidity; equity $65–$75M; refinance ~$148M SiEnergy debt in 2025 Balanced
Macro/tariffsMonitoring tariffs; data center opportunities —Monitoring housing in TX (some slowing pockets), overall strong Mixed macro

Management Commentary

  • Strategic execution: “We continue to execute well on initiatives across all of our businesses… We reaffirmed our annual 2025 adjusted earnings guidance today and continue to expect our long term earnings per share growth rate to be 4% to 6%.” — CEO Justin Palfreyman .
  • Customer growth: “Our combined utility customer growth rate was 10.6% for the twelve months ended 06/30/2025… driven by our gas utilities in Texas… Northwest Natural Water also… 5.8% increase.” — CEO .
  • Oregon settlement and affordability: “Settlement… revenue requirement increase of $21.3 million… 50/50 capital structure, ROE of 9.5%, cost of capital ~7.12%… expected… relatively modest 2.5% rate increase… residential customers… paying about the same as… twenty years ago.” — CEO .
  • Liquidity and guidance: “We reaffirmed annual 2025 adjusted earnings guidance… We had liquidity of approximately $550 million… modest regular common equity financing needs in 2025… $65–$75 million… expect to refinance existing SiEnergy debt… ~$148 million.” — CFO .
  • Renewables: “Both of our renewable natural gas projects continue to run smoothly… no meaningful exposure to the RIN or LCFS markets.” — CEO .

Q&A Highlights

  • Texas growth cadence: Management acknowledged some housing slowdown in parts of Texas but highlighted strong overall growth; business development exceeded backlog addition goals by midyear; Pines enhances growth .
  • Water rate cases: Numerous, smaller filings across subsidiaries; many individual cases are “relatively small” (often < $1M of revenue requirement), hence ongoing cadence .

Estimates Context

  • Q2 2025: Adjusted EPS beat consensus (0.01 vs -0.128), EBITDA beat (77.6M vs 63.4M), but revenue missed (236.2M vs 252.7M).* Actual EPS and revenue per company filings; EBITDA actual per S&P Global. *

  • FY 2025: Consensus EPS 2.92 sits within reaffirmed adjusted EPS guidance (2.75–2.95) and above GAAP EPS range (2.60–2.80), implying Street expects non-GAAP adjustments similar to company framing.* *

  • Target price: S&P Global consensus $52.75.*

  • Implications: Expect estimate revisions to skew toward slightly lower revenue for near-term quarters while holding FY adjusted EPS near the midpoint, supported by rate relief, Texas growth, and RNG/Water contributions.*

  • Values marked with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter’s narrative is EPS quality over revenue quantity: margin uplift from Oregon rates and segment mix offset a top-line shortfall; higher holding company interest is the main drag to monitor .
  • Regulatory progress in Oregon (9.5% ROE, 50/50 cap structure) underpins visibility into H2 rate implementation (Oct 31), improving the earnings cadence into winter season .
  • Texas remains the structural growth engine: >217k contracted meters and successful Pines integration provide a longer runway; watch for regulatory optimization in Texas to support cap structure and earnings conversion .
  • Liquidity and funding are adequate: ~$550M liquidity, modest equity $65–$75M, and expected SiEnergy debt refinancing in 2025 mitigate balance sheet risk in a higher-rate environment .
  • Guidance is intact where it matters (adjusted EPS, capex, LT CAGR), suggesting no change to medium-term thesis; GAAP EPS narrowed due to non-recurring costs tied to acquisitions/business development .
  • Seasonal pattern persists: sequential down from Q1’s winter peak is expected; focus shifts to Q4/Q1 strength, Oregon rate implementation, and Texas meter sets into 2026 .
  • Potential stock catalysts: formal OPUC approval/order, Texas backlog conversion metrics and any near-term Texas regulatory filings, and “Other” interest expense trajectory as refinancing progresses .