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NW Natural Holdings Reports Fourth Quarter and Full Year 2022 Results

Initiated 2023 earnings guidance and reaffirmed long-term EPS growth rate target

Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), reported financial results and highlights including:

  • Reported net income of $86.3 million (or $2.54 per share) for 2022, an increase of $7.6 million or 10%, compared to net income of $78.7 million (or $2.56 per share) for 2021
  • Added 8,600 natural gas meters over the last 12 months equating to a 1.1% growth rate
  • Invested $338.6 million in our gas and water utility systems to support growth and greater reliability and resiliency
  • Scored second in the West for customer satisfaction among large utilities in the 2022 J.D. Power Gas Utility Residential Customer Satisfaction Study, making this the 19th consecutive year customers have ranked NW Natural among the top two utilities
  • New rates went into effect on Nov. 1, 2022 related to Oregon and Washington NW Natural general rate cases
  • Closed our largest water and wastewater acquisition to date in Yuma, Arizona increasing NW Natural Water's customer base by approximately 70% and bringing total connections to approximately 62,500 at Dec. 31, 2022
  • Demonstrating continued success, in 2023 NW Natural Water signed agreements to add over 2,800 water and wastewater connections in key states in its service territory
  • Expect renewable natural gas (RNG) facilities, in which NW Natural Renewables is investing, to begin producing commercial volumes in the second quarter of 2023
  • Honored as one of the 2022 World's Most Ethical Companies® by Ethisphere1
  • Increased our dividend for the 67th consecutive year to an annual indicated dividend rate of $1.94 per share
  • Initiated 2023 earnings guidance in the range of $2.55 to $2.75 per share and reaffirmed long-term earnings per share growth rate target of 4% to 6%

"In 2022, NW Natural Holdings demonstrated our continued commitment toward decarbonization, diversification and growth and delivered strong financial performance," said David H. Anderson, president and CEO of NW Natural Holdings. "It was a transformative year on many fronts. We grew our gas and water utilities, began operation of the first RNG facility under the landmark Oregon Senate Bill 98 - producing RNG on behalf of our gas utility customers, closed our largest water and wastewater acquisition to date, and began construction of the first RNG facilities we’re investing in through our competitive RNG business. We’re proud to operate three growing businesses that provide essential services."

For 2022, NW Natural Holdings reported net income of $86.3 million (or $2.54 per share), an increase of $7.6 million or 10%, compared to $78.7 million (or $2.56 per share) for 2021. Results reflected higher revenues in Oregon and Washington for our natural gas utility, customer growth, and lower pension expense, partially offset by higher operations and maintenance expenses, depreciation, and general tax expenses. Net income from our other activities decreased primarily due to higher interest expense. Earnings per share were also affected by issuing common shares in 2022.

1 “World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC.

KEY INITIATIVES AND EVENTS

New Rates Effective from NW Natural's Oregon General Rate Case

New rates in Oregon were effective beginning Nov. 1, 2022. The OPUC approved the multi-party settlements in NW Natural's general rate case increasing the revenue requirement $59.4 million including final adjustments for capital projects placed into service and the depreciation study. The order included a capital structure of 50% common equity and 50% long-term debt, return on equity of 9.4%, cost of capital of 6.836%, and rate base of $1.76 billion, or an increase of $320 million since the last rate case.

Second Year of Washington Multi-year Rate Case Goes into Effect

Washington rates increased $3.0 million on Nov. 1, 2022 as the second year of the Washington general rate case went into effect. In 2021, the Washington Utilities and Transportation Commission issued an order concluding NW Natural's general rate case filed in December 2020. The order provides for an annual revenue requirement increase over two years, consisting of a $5.0 million increase in the first year beginning Nov. 1, 2021 and up to an incremental $3.0 million increase in the second year beginning Nov. 1, 2022.

NW Natural Renewables Poised to See RNG Facilities Begin Operations

NW Natural Renewables Holdings, LLC (NW Natural Renewables), a competitive RNG business, is investing a combined $50 million in two RNG facilities owned by EDL. Substantial completion and commissioning of the facilities is anticipated in the second quarter of 2023.

NW Natural Water Continues Steady Pace of Acquisitions

In October 2022, NW Natural Water closed its acquisition of the Far West water and wastewater utilities (referred to as Foothills Utilities post acquisition) in Yuma, Arizona adding 25,000 connections and expanding Water's service territory into a fifth state. In addition to Far West, NW Natural Water recently signed other agreements to acquire water and wastewater utilities serving more than 2,800 connections with key additions to its newly acquired Arizona territory and growing Texas assets. Complimenting this acquisition activity, NW Natural Water signed an agreement to support a realty management company as it builds out the water and wastewater infrastructure for a new multi-family development on the west side of Houston.

ANNUAL RESULTS

The following financial comparisons are between the annual results for 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' annual results by business segment are summarized in the table below:

 

2022

 

2021

 

Change

In thousands, except per share data

Amount

 

Per Share

 

Amount

 

Per Share

 

Amount

 

Per Share

Net income:

 

 

 

 

 

 

 

 

Natural Gas Distribution segment

$

79,690

$

2.34

 

$

68,988

$

2.24

 

$

10,702

 

$

0.10

 

Other

 

6,613

 

 

0.20

 

 

 

9,678

 

 

0.32

 

 

 

(3,065

)

 

(0.12

)

Consolidated

$

86,303

 

$

2.54

 

 

$

78,666

 

$

2.56

 

 

$

7,637

 

$

(0.02

)

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

33,984

 

 

 

 

30,752

 

 

 

 

3,232

 

Natural Gas Distribution Segment

Natural Gas Distribution (NGD) segment net income increased $10.7 million (or $0.10 per share) reflecting new rates in Oregon that went into effect on Nov. 1, 2022, new rates in Washington that went into effect on Nov. 1, 2021 and Nov. 1, 2022, and customer growth, partially offset by higher operating expenses. Earnings per share was affected by issuing 4.4 million of common shares during 2022.

Margin increased $19.2 million reflecting new rates, which contributed $11.0 million; the amortization of deferrals approved in the rate case, including COVID and cybersecurity, contributed $2.1 million; and customer growth of 1.1% over the last 12 months provided $4.5 million. In addition, margin increased $1.5 million due to higher usage from colder comparative weather for customers not covered by the weather normalization mechanism, net of the loss from the Oregon gas cost incentive sharing mechanism. Weather was 1% colder than average for 2022, compared to 12% warmer than average for 2021.

Operations and maintenance expense increased $12.3 million as a result of higher contractor labor for safety and reliability projects, expenses related to information technology maintenance and support, amortization expense related to cloud-computing arrangements and deferrals, and professional service fees.

Depreciation expense and general taxes increased $3.2 million as we continue to invest in our natural gas utility system and facilities.

Other income, net increased $9.3 million driven by lower pension costs primarily related to higher returns and lower interest costs.

Interest expense increased $2.5 million due to a combination of higher interest rates on commercial paper, mitigated by a lower outstanding balance, and incremental long-term debt issued to fund capital expenditures, partially offset by higher Allowance for Funds Used During Construction (AFUDC).

Other

Net income from our other businesses decreased $3.1 million (or $0.12 per share) reflecting lower asset management revenues primarily related to a 2021 cold weather event, and higher interest expense primarily due to incremental debt issued.

FOURTH QUARTER RESULTS

The following financial comparisons are between the fourth quarter of 2022 and 2021 with individual year-over-year drivers presented on an after-tax basis using a statutory tax rate of 26.5%, unless otherwise noted.

NW Natural Holdings' fourth quarter results by business segment are summarized in the table below:

 

Three Months Ended December 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

$

47,159

$

1.34

$

39,741

$

1.29

$

7,418

 

$

0.05

 

Other

 

777

 

 

0.02

 

 

787

 

 

0.03

 

 

(10

)

 

(0.01

)

Consolidated

$

47,936

 

$

1.36

 

$

40,528

 

$

1.32

 

$

7,408

 

$

0.04

 

 

 

 

 

 

 

 

Diluted Shares

 

 

35,294

 

 

 

30,883

 

 

 

4,411

 

Natural Gas Distribution Segment

Natural gas distribution segment net income increased $7.4 million (or $0.05 per share) reflecting new rates in Oregon that went into effect on Nov. 1, 2022 and new rates in Washington that went into effect on Nov. 1, 2021 and Nov. 1, 2022, partially offset by higher operating expenses. Earnings per share was affected by issuing common shares during 2022.

Margin increased $12.6 million primarily due to new rates, which contributed $8.9 million; the amortization of deferrals approved in the rate case contributed $2.1 million; and customer growth of 1.1% over the last 12 months contributed $1.6 million.

Operations and maintenance expense increased $4.1 million as a result of higher information technology costs, contractor labor for safety and reliability projects, and professional service fees.

Depreciation and general taxes collectively increased by $1.8 million due to additional capital investments in the distribution system. In addition, we placed two significant information technology projects into service in September 2022.

Other income, net reflected a benefit of $2.8 million primarily from lower pension expense.

Interest expense increased $2.3 million due to a higher interest rate on commercial paper and higher long-term debt balance.

BALANCE SHEET AND CASH FLOWS

For 2022, the Company generated $147.7 million in operating cash flow and invested $338.6 million in natural gas utility capital expenditures to support growth, safety, and technology and facility upgrades; and water & wastewater utility capital expenditures to support growth and safety. In addition, the Company invested $94.3 million in water and wastewater acquisitions. Net cash provided by financing activities was $301.6 million for 2022 primarily due to issuing long-term debt and equity.

2023 GUIDANCE AND LONG-TERM TARGETS

NW Natural Holdings is initiating 2023 earnings guidance in the range of $2.55 to $2.75 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' long-term earnings per share growth rate target is 4% to 6% compounded annually from 2022 through 2027.

We expect NW Natural capital expenditures for 2023 to be in the range of $310 million to $350 million and for the five-year period from 2023 to 2027 to range from $1.3 billion to $1.5 billion. We expect NW Natural Water to invest approximately $25 million in 2023 related to maintenance capital expenditures for water and wastewater utilities owned as of Dec. 31, 2022, and for the five-year period to invest approximately $90 million to $110 million.

The timing and amount of the capital expenditures and projects for 2023 or additional investments in our infrastructure during or after 2023 could change based on customer growth, significant changes in prevailing regulatory policies or outcomes, or significant local, state or federal laws, legislation or regulations, or cost estimates. Required funds for the investments are expected to be internally generated or financed with long-term debt or equity, as appropriate.

67 YEARS OF INCREASING DIVIDENDS

On Nov. 15, 2022, NW Natural Holdings paid its 67th consecutive annual dividend increase. In January 2023, the board of directors of NW Natural Holdings declared a quarterly dividend of 48.50 cents per share on the Company’s common stock. The dividend was paid on Feb. 15, 2023 to shareholders of record on Jan. 31, 2023. The Company’s current indicated annual dividend rate is $1.94 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 fourth quarter and annual 2022 financial and operating results.

Date and Time:

Friday, February 24

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 193311

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 343562.

ABOUT NW NATURAL HOLDINGS

Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and, with its predecessors, has been doing business for nearly 165 years. 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. Learn more in our latest ESG Report at nwnatural.com/about-us/the-company/sustainability.

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 nearly 795,000 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 21.6 Bcf of underground gas storage capacity in Oregon.

NW Natural Water provides water distribution and wastewater services to an estimated 155,000 people through approximately 62,500 connections for communities throughout the Pacific Northwest, Texas and Arizona. Learn more at nwnaturalwater.com.

NW Natural Renewables is a unregulated business committed to leading in the energy transition by providing cost-effective solutions to support decarbonization in the utility, commercial, industrial and transportation sectors. Learn more at nwnaturalrenewables.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," “continues,” “could,” "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, approval, 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, continued expansion of service territories, 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, including the construction of RNG facilities, and timing, magnitude and completion thereof, unregulated renewable natural gas strategy and initiatives, renewable hydrogen projects or investments and timing, magnitude, approvals 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, partnerships, and investment strategy and financial effects of water and wastewater acquisitions, expected growth and safety benefits of facility upgrade investments, 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, future dividends, commodity costs and sourcing asset management activities, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, including OPUC approval of the Oregon general rate case settlements, 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 any resulting economic disruption therefrom, geopolitical uncertainty 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, geopolitical factors, 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, which, among others, outline legal, regulatory and legislative risks, COVID-19 risks, macroeconomic and geopolitical risks, growth and strategic risks, operational risks, and environmental risks.

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.

NON-GAAP FINANCIAL MEASURES

In addition to presenting the results of operations and earnings amounts in total, certain financial measures are expressed in cents per share, which are non-GAAP financial measures. All references to EPS are on the basis of diluted shares. Such non-GAAP financial measures are used to analyze our financial performance because we believe they provide useful information to our investors and creditors in evaluating our financial condition and results of operations. Our non-GAAP financial measures should not be considered a substitute for, or superior to, measures calculated in accordance with U.S. GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than how such measures are calculated in this report, limiting the usefulness of those measures for comparative purposes. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in the tables above.

NORTHWEST NATURAL HOLDINGS

Consolidated Income Statement and Financial Highlights (Unaudited)

Fourth Quarter and Annual Period

 

Three Months Ended

 

 

 

Twelve Months Ended

 

December 31,

 

 

 

December 31,

In thousands, except per share amounts, customer, and degree day data

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Operating revenues

$

375,253

 

 

$

294,090

 

28%

$

1,037,353

 

 

$

860,400

 

21%

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of gas

 

168,222

 

 

 

113,645

 

48

 

429,635

 

 

 

292,314

 

47

Operations and maintenance

 

63,262

 

 

 

54,660

 

16

 

224,667

 

 

 

204,227

 

10

Environmental remediation

 

4,439

 

 

 

3,846

 

15

 

12,389

 

 

 

9,938

 

25

General taxes

 

10,366

 

 

 

9,289

 

12

 

41,031

 

 

 

38,633

 

6

Revenue taxes

 

15,789

 

 

 

12,514

 

26

 

41,826

 

 

 

34,740

 

20

Depreciation

 

31,142

 

 

 

28,855

 

8

 

116,707

 

 

 

113,534

 

3

Other operating expenses

 

806

 

 

 

1,103

 

(27)

 

3,621

 

 

 

3,897

 

(7)

Total operating expenses

 

294,026

 

 

 

223,912

 

31

 

869,876

 

 

 

697,283

 

25

Income from operations

 

81,227

 

 

 

70,178

 

16

 

167,477

 

 

 

163,117

 

3

Other income (expense), net

 

295

 

 

 

(4,204

)

(107)

 

1,203

 

 

 

(12,559

)

(110)

Interest expense, net

 

17,091

 

 

 

11,157

 

53

 

53,247

 

 

 

44,486

 

20

Income before income taxes

 

64,431

 

 

 

54,817

 

18

 

115,433

 

 

 

106,072

 

9

Income tax expense

 

16,495

 

 

 

14,289

 

15

 

29,130

 

 

 

27,406

 

6

Net income

$

47,936

 

 

$

40,528

 

18

$

86,303

 

 

$

78,666

 

10

 

 

 

 

 

 

 

 

 

Common shares outstanding:

 

 

 

 

 

 

 

 

Average diluted for period

 

35,294

 

 

 

30,883

 

 

 

33,984

 

 

 

30,752

 

 

End of period

 

35,525

 

 

 

31,129

 

 

 

35,525

 

 

 

31,129

 

 

 

 

 

 

 

 

 

 

 

Per share information:

 

 

 

 

 

 

 

 

Diluted earnings per share

$

1.36

 

 

$

1.31

 

 

$

2.54

 

 

$

2.56

 

 

Dividends paid per share

 

0.4850

 

 

 

0.4825

 

 

 

1.9325

 

 

 

1.9225

 

 

Book value per share, end of period

 

33.09

 

 

 

30.04

 

 

 

33.09

 

 

 

30.04

 

 

Market closing price, end of period

 

47.59

 

 

 

48.78

 

 

 

47.59

 

 

 

48.78

 

 

 

 

 

 

 

 

 

 

 

Capital structure, end of period:

 

 

 

 

 

 

 

 

Common stock equity

 

42.4

%

 

 

39.5

%

 

 

42.4

%

 

 

39.5

%

 

Long-term debt

 

45.0

 

 

 

44.0

 

 

 

45.0

 

 

 

44.0

 

 

Short-term debt (including current maturities of long-term debt)

 

12.6

 

 

 

16.5

 

 

 

12.6

 

 

 

16.5

 

 

Total

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

Natural Gas Distribution segment operating statistics:

 

 

 

 

 

 

 

 

Meters - end of period

 

794,497

 

 

 

785,897

 

1.1%

 

794,497

 

 

 

785,897

 

1.1%

Volumes - therms:

 

 

 

 

 

 

 

 

Residential and commercial sales

 

271,289

 

 

 

247,166

 

 

 

766,592

 

 

 

703,054

 

 

Industrial sales and transportation

 

125,548

 

 

 

131,546

 

 

 

485,745

 

 

 

481,721

 

 

Total volumes sold and delivered

 

396,837

 

 

 

378,712

 

 

 

1,252,337

 

 

 

1,184,775

 

 

Operating revenues:

 

 

 

 

 

 

 

 

Residential and commercial sales

$

328,512

 

 

$

259,871

 

 

$

881,370

 

 

$

730,794

 

 

Industrial sales and transportation

 

26,430

 

 

 

19,827

 

 

 

86,810

 

 

 

65,299

 

 

Other distribution revenues

 

577

 

 

 

429

 

 

 

1,944

 

 

 

1,707

 

 

Other regulated services

 

4,906

 

 

 

4,766

 

 

 

19,628

 

 

 

19,087

 

 

Total operating revenues

 

360,425

 

 

 

284,893

 

 

 

989,752

 

 

 

816,887

 

 

Less: Cost of gas

 

168,183

 

 

 

113,701

 

 

 

429,861

 

 

 

292,538

 

 

Environmental remediation expense

 

4,444

 

 

 

3,846

 

 

 

12,389

 

 

 

9,938

 

 

Revenue taxes

 

15,720

 

 

 

12,457

 

 

 

41,627

 

 

 

34,600

 

 

Margin, net

$

172,078

 

 

$

154,889

 

 

$

505,875

 

 

$

479,811

 

 

Degree days:

 

 

 

 

 

 

 

 

Average (25-year average)

 

1,046

 

 

 

1,052

 

 

 

2,686

 

 

 

2,692

 

 

Actual

 

1,121

 

 

 

931

 

20%

 

2,712

 

 

 

2,378

 

14%

Percent colder (warmer) than average weather

 

7

%

 

 

(12

)%

 

 

1

%

 

 

(12

)%

 

NORTHWEST NATURAL HOLDINGS

 

 

 

Consolidated Balance Sheets (Unaudited)

As of December 31,

In thousands

2022

 

2021

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

29,270

 

 

$

18,559

 

Accounts receivable

 

168,906

 

 

 

101,495

 

Accrued unbilled revenue

 

89,048

 

 

 

82,169

 

Allowance for uncollectible accounts

 

(3,296

)

 

 

(2,018

)

Regulatory assets

 

117,491

 

 

 

72,391

 

Derivative instruments

 

194,412

 

 

 

48,130

 

Inventories

 

87,096

 

 

 

57,262

 

Other current assets

 

61,286

 

 

 

59,288

 

Total current assets

 

744,213

 

 

 

437,276

 

Non-current assets:

 

 

 

Property, plant, and equipment

 

4,261,566

 

 

 

3,997,243

 

Less: Accumulated depreciation

 

1,147,166

 

 

 

1,125,873

 

Total property, plant, and equipment, net

 

3,114,400

 

 

 

2,871,370

 

Regulatory assets

 

340,432

 

 

 

314,579

 

Derivative instruments

 

5,045

 

 

 

10,730

 

Other investments

 

95,704

 

 

 

89,278

 

Operating lease right of use asset, net

 

73,429

 

 

 

75,049

 

Assets under sales-type leases

 

134,302

 

 

 

138,995

 

Goodwill

 

149,283

 

 

 

70,570

 

Other non-current assets

 

91,518

 

 

 

56,757

 

Total non-current assets

 

4,004,113

 

 

 

3,627,328

 

Total assets

$

4,748,326

 

 

$

4,064,604

 

Liabilities and equity:

 

 

 

Current liabilities:

 

 

 

Short-term debt

$

258,200

 

 

$

389,500

 

Current maturities of long-term debt

 

90,697

 

 

 

345

 

Accounts payable

 

180,667

 

 

 

133,486

 

Taxes accrued

 

15,625

 

 

 

15,520

 

Interest accrued

 

10,169

 

 

 

7,503

 

Regulatory liabilities

 

248,582

 

 

 

112,281

 

Derivative instruments

 

28,728

 

 

 

10,402

 

Operating lease liabilities

 

1,514

 

 

 

1,296

 

Other current liabilities

 

64,552

 

 

 

54,432

 

Total current liabilities

 

898,734

 

 

 

724,765

 

Long-term debt

 

1,246,167

 

 

 

1,044,587

 

Deferred credits and other non-current liabilities:

 

 

 

Deferred tax liabilities

 

366,022

 

 

 

340,231

 

Regulatory liabilities

 

689,578

 

 

 

658,332

 

Pension and other postretirement benefit liabilities

 

149,143

 

 

 

166,684

 

Derivative instruments

 

20,838

 

 

 

412

 

Operating lease liabilities

 

78,965

 

 

 

79,468

 

Other non-current liabilities

 

123,438

 

 

 

114,979

 

Total deferred credits and other non-current liabilities

 

1,427,984

 

 

 

1,360,106

 

Equity:

 

 

 

Common stock

 

805,253

 

 

 

590,771

 

Retained earnings

 

376,473

 

 

 

355,779

 

Accumulated other comprehensive loss

 

(6,285

)

 

 

(11,404

)

Total equity

 

1,175,441

 

 

 

935,146

 

Total liabilities and equity

$

4,748,326

 

 

$

4,064,604

 

NORTHWEST NATURAL HOLDINGS

 

 

 

Consolidated Statements of Cash Flows (Unaudited)

Year Ended December 31,

In thousands

2022

 

2021

Operating activities:

 

 

 

Net income

$

86,303

 

 

$

78,666

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

Depreciation

 

116,707

 

 

 

113,534

 

Regulatory amortization of gas reserves

 

5,589

 

 

 

13,897

 

Deferred income taxes

 

17,410

 

 

 

14,617

 

Qualified defined benefit pension plan expense

 

5,351

 

 

 

16,556

 

Contributions to qualified defined benefit pension plans

 

 

 

 

(9,590

)

Deferred environmental expenditures, net

 

(18,160

)

 

 

(18,187

)

Environmental remediation expense

 

12,389

 

 

 

9,938

 

Asset optimization revenue sharing bill credits

 

(41,102

)

 

 

(9,053

)

Other

 

21,558

 

 

 

20,622

 

Changes in assets and liabilities:

 

 

 

Receivables, net

 

(76,454

)

 

 

(44,128

)

Inventories

 

(29,269

)

 

 

(14,571

)

Income and other taxes

 

6,908

 

 

 

3,292

 

Accounts payable

 

24,508

 

 

 

12,118

 

Deferred gas costs

 

12,334

 

 

 

(40,541

)

Asset optimization revenue sharing

 

28,937

 

 

 

44,458

 

Decoupling mechanism

 

10,922

 

 

 

(5,206

)

Cloud-based software

 

(23,908

)

 

 

(7,407

)

Other, net

 

(12,351

)

 

 

(18,662

)

Cash provided by operating activities

 

147,672

 

 

 

160,353

 

Investing activities:

 

 

 

Capital expenditures

 

(338,602

)

 

 

(293,892

)

Acquisitions, net of cash acquired

 

(94,279

)

 

 

(1,289

)

Leasehold improvement expenditures

 

(761

)

 

 

(1,364

)

Proceeds from the sale of assets

 

870

 

 

 

3,926

 

Purchase of equity method investment

 

(1,000

)

 

 

(14,450

)

Proceeds from sale of equity method investment

 

 

 

 

7,000

 

Other

 

(1,688

)

 

 

(54

)

Cash used in investing activities

 

(435,460

)

 

 

(300,123

)

Financing activities:

 

 

 

Proceeds from common stock issued, net

 

208,561

 

 

 

17,501

 

Long-term debt issued

 

290,000

 

 

 

185,000

 

Long-term debt retired

 

 

 

 

(95,000

)

Proceeds from term loan due within one year

 

 

 

 

100,000

 

Repayment of term loan

 

 

 

 

(100,000

)

Repayments of commercial paper, maturities greater than three months

 

 

 

 

(195,025

)

Changes in other short-term debt, net

 

(131,300

)

 

 

280,000

 

Cash dividend payments on common stock

 

(62,771

)

 

 

(55,919

)

Other

 

(2,858

)

 

 

(5,121

)

Cash provided by financing activities

 

301,632

 

 

 

131,436

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

13,844

 

 

 

(8,334

)

Cash, cash equivalents and restricted cash, beginning of period

 

27,120

 

 

 

35,454

 

Cash, cash equivalents and restricted cash, end of period

$

40,964

 

 

$

27,120

 

Supplemental disclosure of cash flow information:

 

 

 

Interest paid, net of capitalization

$

50,823

 

 

$

43,719

 

Income taxes paid, net of refunds

 

2,779

 

 

 

10,555

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

Cash and cash equivalents

$

29,270

 

 

$

18,559

 

Restricted cash included in other current assets

 

11,694

 

 

 

8,561

 

Cash, cash equivalents and restricted cash

$

40,964

 

 

$

27,120

 

 

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