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Northwest Natural Holding Co (NWN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid operational results: operating revenues rose to $370.88M (+4% y/y) and GAAP EPS was $1.12, with adjusted EPS at $1.41 as the Oregon rate case flowed into results starting Nov 1 .
  • FY 2024 adjusted EPS finished at $2.33, at the upper end of the full‑year guidance range, despite pension headwinds and warmer-than-average weather; GAAP EPS was $2.03 .
  • 2025 guidance initiated: adjusted EPS $2.75–$2.95, GAAP EPS $2.66–$2.86; consolidated capex $450–$500M with ranges by segment, and long-term EPS CAGR target reaffirmed at 4–6% from 2025 adjusted EPS .
  • Strategic catalysts: SiEnergy acquisition closed Jan 2025 with 20%+ expected customer growth and GRIP recovery potential in Texas; Water rate base/net income targeted to grow 10–15% CAGR through 2027; Oregon 2025 GRC filed Dec 30 with new rates expected Nov 1, 2025 .

What Went Well and What Went Wrong

What Went Well

  • New Oregon rates effective Nov 1 drove Q4 margin up $25.4M; adjusted NGD segment net income rose y/y to $54.9M in Q4 (+$8.35M) .
  • FY adjusted EPS landed at the upper end of guidance; management: “2024 adjusted earnings came in at the upper end of the guidance range” .
  • Strategic execution: RNG facilities commenced operations, providing “steady cash flows and earnings” and SiEnergy adds a high-growth LDC with nearly 190,000 contracted connections backlog .

What Went Wrong

  • Regulatory disallowance: $13.7M pre-tax ($10.1M after-tax) line extension allowance disallowance recognized in Q4, depressing GAAP results; adjusted EPS excludes this non-cash item .
  • Warmer-than-average weather reduced utility margin (Q4 degree days 22% warmer than average; FY 17% warmer), and “Other income, net” fell on higher pension expense and lower interest income .
  • Pension and inflation pressure persisted: FY other income down $18.2M; depreciation and taxes up $12.1M from ongoing system investment .

Financial Results

Quarterly P&L Progression (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Operating Revenues ($M)$211.71 $136.93 $370.88
Income from Operations ($M)$15.71 $(19.33) $84.94
Diluted EPS (GAAP)$(0.07) $(0.71) $1.12
Adjusted EPSn/an/a$1.41

Year-over-Year – Q4

MetricQ4 2023Q4 2024y/y change
Operating Revenues ($M)$355.71 $370.88 +4%
Diluted EPS (GAAP)$1.21 $1.12 -$0.09
Adjusted EPS$1.21 $1.41 +$0.20

Segment Net Income – Q4

SegmentQ4 2023 GAAP ($M)Q4 2024 GAAP ($M)Q4 2024 Adjusted ($M)
Natural Gas Distribution (NGD)$46.52 $44.80 $54.87
Other$(1.88) $0.20 $1.89
Consolidated$44.64 $45.00 $56.76

KPIs and Operating Drivers

KPIQ2 2024Q3 2024Q4 2024
NGD Meters (end of period)801,943 800,421 805,529
Degree Days – Actual vs AvgQ2: 208 vs 297 (−30%) YTD: 1,424 vs 1,642 (−13%) Q4: 831 vs 1,060 (−22%)
NGD Margin, Net ($M)$110.31 $68.92 $203.90
Cost of Gas ($M)$72.97 $38.90 $124.79

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2025Not previously provided$2.66–$2.86 New
Adjusted EPSFY 2025Not previously provided$2.75–$2.95 New
Consolidated CapExFY 2025“close to 2024 or slightly lower” (qualitative) $450–$500M Formalized range
CapEx – NGDFY 2025n/a$330–$360M New
CapEx – SiEnergyFY 2025n/a$65–$75M New
CapEx – WaterFY 2025n/a$55–$65M New
Long-term EPS CAGR2025–20304–6% (reaffirmed) 4–6% (from 2025 adjusted EPS) Maintained
Consolidated CapEx2025–2030~$1.9B equivalent prior trajectory $2.5–$2.7B Raised (~+37%)
Rate Base Growth Target2025–20305–7% 6–8% Raised
Equity Issuance (ATM)FY 2025n/a$65–$75M projected New
FinancingSpring 2025n/aJunior subordinated notes ~$275–$300M to refinance term loan New
DividendOngoing$1.96 annual rate (Q4 2024 increase) Quarterly dividend $0.49 (Jan 2025) Maintained cadence

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Regulatory outcomes (Oregon GRC)Settlement filed; new rates expected Nov 1, 2024 Final order: +$93.3M revenue req, +$334M rate base; recognition of $13.7M disallowance; new rates effective Nov 1 2025 GRC filed Dec 30 (request: +$59.4M rev req; 10.4% ROE; 52% equity) with rates expected Nov 1, 2025 Constructive outcomes; continued cadence
Tariffs/macroInflation pressures; cost controls Macro discussion limited; focus on rate case resolution Monitoring potential 10–25% tariffs on imported energy materials; filed deferral for gas costs; limited customer impact expected Heightened focus; risk managed
RNG/energy transitionTwo landfill RNG facilities expected online later 2024 Both facilities reached substantial completion; 2025 earnings/cash flows expected RNG facilities “up and running,” steady revenues/cash flows; increasing allocations contracted Execution to monetization
Hydrogen/technology pilotsTurquoise hydrogen pilot and carbon capture pilots underway Noted R&D; no major update Technology investments raise O&M/IT costs; strategy focus continues Ongoing development
Growth platforms (Water)Puttman/ICH acquisition signed; recycled water entry Puttman/ICH closed; water net income +$4.4M y/y Water rate base/net income targeted +10–15% CAGR (2025–27); separate disclosure to begin Q1 2025 Scaling and transparency
Growth platforms (SiEnergy)n/aAcquisition announced Nov 2024 Closed Jan 7, 2025; 20%+ meter growth; GRIP recovery; rate base/net income CAGRs 20–25%/32–37% (2025–27) Major growth vector

Management Commentary

  • CEO: “2024 adjusted earnings came in at the upper end of the guidance range due to successfully executing our plans to offset regulatory lag from capital investments and inflation.”
  • CFO: “We initiated annual 2025 adjusted earnings guidance… $2.75 to $2.95 per share… and expect SiEnergy and Northwest Natural Water to each provide approximately $0.25 to $0.3 of EPS over the year.”
  • CEO on portfolio: “We have evolved from one utility to four strong businesses… and announced the acquisition of a high growth natural gas utility in Texas, SiEnergy… one of the most significant drivers of long term growth.”
  • President on tariffs/data centers: “We filed a deferral for our gas costs… we don’t anticipate at the 10% level a meaningful impact… we’re evaluating data center connections in the Pacific Northwest and Texas, noting pipeline constraints in some areas.”

Q&A Highlights

  • Macro/tariffs: Management engaged with policymakers; filed gas cost deferral; 10% tariff impact expected to be limited for customers; monitoring potential 25% scenarios .
  • SiEnergy regulatory/financial trajectory: Assumes reasonable rate case and capital structure normalization (toward ~60/40 equity/debt) embedded in CAGR outlook; timing of rate filing TBD during integration .
  • 2025 CapEx mix: NGD ~$350M, SiEnergy ~$80M, Water ~$60M within consolidated $450–$500M guidance range .
  • Growth demand: Exploring data center load connections; evaluating system impacts and constraints in the PNW; opportunity also in Texas .

Estimates Context

  • Wall Street consensus (S&P Global) was not available during this session due to an SPGI daily request limit and could not be retrieved; as a result, beats/misses versus consensus cannot be assessed for Q4 2024 [GetEstimates error].
  • Implication: Sell-side models may need to reflect 2025 guidance ranges, SiEnergy and Water EPS contributions ($0.25–$0.30 each), and raised long-term capex/rate base growth trajectory .

Key Takeaways for Investors

  • Rate relief flowed through in Q4 and will compound with the 2025 Oregon GRC; combined with RNG monetization, pension/interest headwinds should moderate versus 2024 .
  • Bold 2025 guidance and segment disclosures (SiEnergy/Water) improve transparency; EPS contributions from these platforms are meaningful early and targeted to accelerate (Water and SiEnergy 10–37% net income CAGR through 2027) .
  • SiEnergy is a multi‑year growth engine with 20%+ meter growth and GRIP mechanisms; a Texas rate case could further align earnings with growth investments .
  • Weather normalization mitigates volatility, but warmer-than-average winters still impact margin on opt‑out customers and Washington load; diversification (RNG, storage, water) is reducing sensitivity .
  • Financing plan is proactive: moderate ATM ($65–$75M) and junior subordinated notes ($275–$300M) to refinance acquisition bridge loan while targeting solid credit profile .
  • Dividend discipline continues (69th consecutive year); payout supported by rate base growth and new platforms .
  • Near-term trading: Stock narrative likely hinges on delivery against 2025 guidance, early SiEnergy run-rate proofs, and progress in Oregon rate case; medium-term thesis rests on 6–8% rate base growth, RNG cash flows, and Water tuck-ins .

Appendix: Additional Relevant Q4 Press Releases

  • Q4 2024 acquisition announcement: “NW Natural Holdings to Acquire Rapidly Growing Gas Utility” (SiEnergy) – announced Nov 18, 2024 .
  • Dividend increase (Q4): “Increases Dividend for 69th Consecutive Year” – Oct 10, 2024 .