NW Natural Holdings Reports Fourth Quarter and Full Year 2024 Results

Rhea-AI Summary

NW Natural Holdings (NYSE: NWN) reported its Q4 and full-year 2024 results, with net income of $2.03 per share and adjusted earnings of $2.33 per share, down from $2.59 per share in 2023. The decline was primarily attributed to regulatory lag before new Oregon gas utility rates took effect on Nov. 1, 2024.

Key highlights include:

• Acquisition of SiEnergy, a Texas-based gas utility, completed in January 2025
• $394.4 million invested in utility systems
• Added nearly 10,000 gas and water utility connections (1.1% growth)
• Initiated 2025 GAAP EPS guidance of $2.66-$2.86 and adjusted EPS guidance of $2.75-$2.95
• Reaffirmed long-term EPS growth target of 4-6%
• Increased dividend for 69th consecutive year to $1.96 per share annually

Positive

• Completed strategic acquisition of high-growth SiEnergy gas utility
• Added 10,000 new utility connections (1.1% growth)
• Invested $394.4 million in utility system improvements
• Increased dividend for 69th consecutive year
• Initiated positive 2025 EPS guidance showing growth

Negative

• Net income declined from $2.59 to $2.03 per share year-over-year
• Higher pension expenses impacting earnings
• $10.1 million regulatory disallowance on line extension costs
• 17% warmer weather negatively impacting gas demand
• Increased interest expenses due to higher short-term debt

Insights

Financial Analyst

NW Natural Holdings' financial results reveal a transitional year with adjusted earnings of $2.33 per share for 2024, down from $2.59 in 2023. The decline primarily stems from regulatory lag until new Oregon gas rates took effect in November 2024, alongside higher pension expense and increased depreciation costs.

The company's 2025 guidance of $2.75-$2.95 adjusted EPS signals confidence in a return to growth, reinforced by their reaffirmed 4-6% long-term EPS growth target. This expected recovery is supported by the full-year impact of the new Oregon rates and contributions from the strategic SiEnergy acquisition in Texas.

The $394.4 million capital investment in utility systems and planned $450-$500 million expenditure for 2025 demonstrate significant infrastructure commitment. Their longer-term $2.5-$2.7 billion capital plan for 2025-2030 will require careful balance sheet management.

The company's diversification strategy is gaining traction with the water utility segment showing improved performance. The Puttman/ICH water acquisition strengthens their position in this complementary business. Meanwhile, the renewable natural gas facilities beginning operations add another growth avenue.

The 69 consecutive years of dividend increases (now at $1.96 annually) represents one of the longest dividend growth streaks in the market, highlighting management's commitment to shareholder returns even while navigating operational challenges.

Utility Sector Specialist

The $10.1 million regulatory disallowance related to line extension allowances represents a significant non-recurring factor in NW Natural's 2024 results. These disallowances typically indicate a regulatory commission finding costs imprudent or not properly recoverable through rates, a challenge for utilities operating in regulated environments.

Weather sensitivity remains evident in NW Natural's operations with conditions 17% warmer than average in 2024 compared to 8% warmer in 2023, impacting margin by $4.3 million. This highlights the importance of their weather normalization mechanisms, though they don't cover all customers.

The SiEnergy acquisition marks a strategic geographic expansion into Texas, providing exposure to a high-growth market with generally favorable regulatory conditions compared to NW Natural's traditional Pacific Northwest territory. This diversification reduces regulatory concentration risk.

The 1.1% customer growth rate across gas and water utilities demonstrates modest but steady expansion of their customer base, important for a utility seeking consistent growth. The water utility segment's increasing earnings contribution indicates this diversification strategy is beginning to deliver material financial results.

The company's $227.1 million in financing activities reflects the capital-intensive nature of utility operations. With substantial ongoing capex needs, managing their financing mix between debt, equity, and internally generated funds will be important for maintaining financial flexibility and credit metrics.

Initiated 2025 earnings guidance and reaffirmed long-term EPS growth rate target of 4-6%

PORTLAND, Ore.--(BUSINESS WIRE)-- Northwest Natural Holding Company (NYSE: NWN) (NW Natural Holdings) reported financial results and highlights including:

• Reported net income of $2.03 per share and achieved adjusted earnings¹ of $2.33 per share for 2024, compared to net income of $2.59 per share for 2023, a decline primarily due to regulatory lag for the first 10 months of 2024 until new Oregon gas utility rates were effective on Nov. 1, 2024
• Acquisition of SiEnergy, a high-growth gas utility located in Texas, signed and announced in November 2024 and subsequently closed in January 2025
• Invested $394.4 million in our utility systems to support greater reliability and resiliency
• Added nearly 10,000 gas and water utility connections in the last 12 months for a combined growth rate of 1.1% as of Dec. 31, 2024, mainly driven by organic customer growth from all utilities
• Closed Puttman/ICH water acquisition in September 2024, adding customers and a strong pipeline of growth opportunities
• Began operations, earnings and cash flows from two renewable natural gas (RNG) facilities for NW Natural Renewables
• Honored as one of the 2024 World's Most Ethical Companies® by Ethisphere for the third year in a row²
• Increased our dividend for the 69^th consecutive year to an annual indicated dividend rate of $1.96 per share
• Initiated 2025 GAAP earnings per share (EPS) guidance of $2.66 to $2.86 and adjusted EPS guidance of $2.75 to $2.95
• Reaffirmed long-term EPS growth rate target of 4% to 6% from our expected 2025 adjusted EPS³

“For over 165 years, NW Natural Holdings has provided essential energy to the communities it serves. In 2024, we made great strides across all our businesses to continue growing and providing customers critical services well into the future,” said David H. Anderson, CEO of NW Natural Holdings. “I'm proud to provide 2025 guidance in line with our long-term financial targets and very excited to have SiEnergy join our Company. Our financial strength allows us to continue making substantial investments in our growing portfolio of gas and water utility systems to provide continued safe and reliable service for our customers. We remain focused on executing our long-term growth plan and providing value to customers, employees and shareholders.”

For 2024, NW Natural Holdings reported net income of $78.9 million (or $2.03 per share) and adjusted¹ net income of $90.6 million (or $2.33 per share), compared to $93.9 million (or $2.59 per share) for 2023. Results reflected higher pension expense, lower interest income, and an increase in depreciation expense, partially offset by new rates in Oregon for our natural gas utility beginning Nov. 1, 2024.

1 See "Non-GAAP Financial Measures" and "Reconciliation to GAAP" for additional information. The 2024 adjusted consolidated net income and adjusted EPS are non-GAAP and exclude the effects of a non-cash line extension regulatory disallowance of $10.1 million after-tax and SiEnergy transaction costs of $1.7 million after-tax.

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

3 Adjusted EPS growth forecasted for period 2025 – 2030 compounded annually; EPS growth rate uses adjusted 2025 EPS as base year. NW Natural Holdings does not provide a reconciliation of adjusted EPS growth rate target to the most directly comparable GAAP measures due to the inherent difficulty in forecasting and quantifying certain significant items. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results for the relevant period.

2025 GUIDANCE AND LONG-TERM TARGETS

NW Natural Holdings initiated 2025 GAAP EPS guidance of $2.66 to $2.86 and adjusted EPS guidance of $2.75 to $2.95 on a non-GAAP¹ basis excluding the $5.3 million pre-tax transaction costs associated with the SiEnergy acquisition (approximately $3.9 million or $0.09 per share after-tax²) recorded in the first quarter of 2025. This guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or assumed outcomes, or significant local, state or federal laws, legislation or regulations.

NW Natural Holdings reaffirmed its long-term EPS growth rate target of 4% to 6% compounded annually from the expected 2025 adjusted EPS³.

We expect NW Natural Holdings capital expenditures for 2025 to be in the range of $450 - $500 million including:

• NW Natural Gas Company capital expenditures of $330 - $360 million,
• SiEnergy capital expenditures of $65 - $75 million, and
• NW Natural Water capital expenditures of $55 - $65 million.

NW Natural Holdings capital expenditures are expected to range from $2.5 billion to $2.7 billion from 2025 to 2030. The timing and amount of the capital expenditures and projects for 2025 or additional investments in our infrastructure during or after 2025 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.

1 See "Non-GAAP Financial Measures" and "Reconciliation to GAAP" for a definition and further information on adjusted EPS.

2 Effect on EPS assumes average diluted shares of 41.1 million and an income tax rate of 26.5%.

3 Adjusted EPS growth forecasted for period 2025 – 2030 compounded annually; EPS growth rate uses adjusted 2025 EPS as base year. NW Natural Holdings does not provide a reconciliation of adjusted EPS growth rate target to the most directly comparable GAAP measures due to the inherent difficulty in forecasting and quantifying certain significant items. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results for the relevant period.

DIVIDEND DECLARED

In January 2025, the board of directors of NW Natural Holdings declared a quarterly dividend of $0.49 per share on the Company’s common stock. The dividend was paid on Feb. 14, 2025 to shareholders of record on Jan. 31, 2025. The Company’s current indicated annual dividend rate is $1.96 per share. Future dividends are subject to board of director discretion and approval.

ANNUAL RESULTS

We primarily operate through our natural gas distribution segment, which is operated through a regulated utility and principally engaged in the delivery of natural gas to customers in Oregon and southwest Washington. The segment also includes the portion of the Mist underground storage facility used to serve gas utility customers, the North Mist gas storage expansion, and RNG development and procurement for the utility.

Other business activities are reported through “Other” results and primarily include Interstate Storage Services and third-party asset management services for the Mist facility in Oregon; NW Natural Water, which is a water and wastewater utility business; and NW Natural Renewables, which is a renewable fuels business.

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

	2024							2023							Change
In thousands, except per share data	Amount			Per Share				Amount			Per Share				Amount			Per Share
Net income:
Natural gas distribution segment	$	77,126		$	1.98			$	94,042		$	2.59			$	(16,916	)	$	(0.61	)
Regulatory disallowance, net		10,070			0.26				—			—				10,070			0.26
Adjusted natural gas distribution segment1	$	87,196		$	2.24			$	94,042		$	2.59			$	(6,846	)	$	(0.35	)
Other	$	1,745		$	0.05			$	(174	)	$	—			$	1,919		$	0.05
SiEnergy transaction expenses, net		1,685			0.04				—			—				1,685			0.04
Adjusted other1	$	3,430		$	0.09			$	(174	)	$	—			$	3,604		$	0.09
Consolidated	$	78,871		$	2.03			$	93,868		$	2.59			$	(14,997	)	$	(0.56	)
Adjustments		11,755			0.30				—			—				11,755			0.30
Adjusted consolidated1	$	90,626		$	2.33			$	93,868		$	2.59			$	(3,242	)	$	(0.26	)
Diluted Shares					38,869							36,265							2,604
1 See "Non-GAAP Financial Measures" and "Reconciliation to GAAP" for additional information. Adjusted 2024 natural gas distribution segment, other, and consolidated net income are non-GAAP financial measures and exclude the effects of a non-cash regulatory disallowance of NW Natural's line extension costs $10.1 million after-tax and SiEnergy transaction costs $1.7 million after-tax. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures calculated in accordance with U.S. GAAP. 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.

Natural Gas Distribution Segment

Natural gas distribution segment net income decreased $16.9 million (or $0.61 per share). Results include a $10.1 million non-cash detriment due to a regulatory disallowance of NW Natural's line extension allowance. Excluding the effects of the disallowance, net income decreased $6.8 million (or $0.35 per share), reflecting higher pension costs and lower interest income, partially offset by new rates in Oregon effective beginning Nov. 1, 2024.

Margin increased $26.3 million primarily due to new rates in Oregon effective Nov. 1, 2024, which contributed $25.8 million, the amortization of deferrals and customer growth, which contributed $5.9 million. Partially offsetting these items was a $4.3 million reduction in margin due to warmer comparative weather and the effect of customers not covered by the weather normalization mechanism. Weather was 17% warmer than average for 2024, compared to 8% warmer than average for 2023. In addition, there was a $1.8 million decline in gains on the Oregon gas cost incentive sharing mechanism due to lower commodity price volatility and higher than estimated gas costs during the cold weather event in January 2024.

Operations and maintenance expense decreased $2.1 million, excluding the effects of the regulatory disallowance, as a result of lower contractor costs and bad debt expense, partially offset by higher information technology costs.

Depreciation and general taxes increased by $12.1 million primarily due to additional capital investments in the distribution system.

Other income, net decreased $18.2 million primarily from higher pension expense, lower interest income due to a lower level of invested cash, lower regulatory interest income, and lower equity Allowance for Funds Used During Construction (AFUDC).

Interest expense increased $2.8 million primarily due to higher short-term debt balances, partially offset by the debt portion of AFUDC.

Income tax expense decreased $1.5 million primarily due to the decrease in pre-tax results.

Other

Net income from Other increased $1.9 million (or $0.05 per share). Results included $1.7 million of transaction expenses related to the SiEnergy acquisition. Excluding the effects of the transaction, net income increased $3.6 million (or $0.09 per share) primarily reflecting a $4.4 million increase in water and wastewater utility net income, partially offset by higher interest and other expenses at Holdings.

FOURTH QUARTER RESULTS

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

	Three Months Ended December 31,
	2024							2023							Change
In thousands, except per share data	Amount			Per Share				Amount			Per Share				Amount			Per Share
Net income:
Natural gas distribution segment	$	44,802		$	1.11			$	46,522		$	1.26			$	(1,720	)	$	(0.15	)
Regulatory disallowance, net		10,070			0.25				—			—				10,070			0.25
Adjusted natural gas distribution segment1	$	54,872		$	1.36			$	46,522		$	1.26			$	8,350		$	0.10
Other	$	200		$	0.01			$	(1,882	)	$	(0.05	)		$	2,082		$	0.06
SiEnergy transaction expenses, net		1,685			0.04				—			—				1,685			0.04
Adjusted other1	$	1,885		$	0.05			$	(1,882	)	$	(0.05	)		$	3,767		$	0.10
Consolidated	$	45,002		$	1.12			$	44,640		$	1.21			$	362		$	(0.09	)
Adjustments		11,755			0.29				—			—				11,755			0.29
Adjusted consolidated1	$	56,757		$	1.41			$	44,640		$	1.21			$	12,117		$	0.20
Diluted Shares					40,220							37,045							3,175
1 See "Non-GAAP Financial Measures" and "Reconciliation to GAAP" for additional information. Adjusted 2024 natural gas distribution segment, other, and consolidated net income are non-GAAP financial measures and exclude the effects of a non-cash regulatory disallowance of NW Natural's line extension costs $10.1 million after-tax and SiEnergy transaction costs $1.7 million after-tax. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures calculated in accordance with U.S. GAAP. 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.

Natural Gas Distribution Segment

Natural gas distribution segment net income decreased $1.7 million (or $0.15 per share). Results include a $10.1 million non-cash detriment due to a regulatory disallowance of NW Natural's line extension allowance. Excluding the effects of the disallowance, net income increased $8.4 million (or $0.10 per share) primarily reflecting new rates in Oregon that went into effect on Nov. 1, 2024, partially offset by higher pension costs, and lower interest income.

Margin increased $25.4 million primarily due to new rates in Oregon effective Nov. 1, 2024, which contributed $25.8 million.

Operations and maintenance expense increased $0.4 million excluding the effects of the non-cash regulatory disallowance of line extension costs.

Depreciation and general taxes collectively increased by $3.9 million primarily due to continued investment in our system.

Other income, net reflected a $5.6 million decrease primarily from higher pension expense, lower regulatory interest income, and lower equity AFUDC.

Interest expense increased $1.4 million primarily due to higher short-term debt balances.

Income tax expense increased $2.0 million primarily due to several items including higher Oregon corporate activity taxes and a lower level of regulatory tax benefits.

Other

Net income from Other increased $2.1 million (or $0.06 per share). Results included a $1.7 million detriment due to transaction expenses related to the SiEnergy acquisition. Excluding the effects of the transaction, net income increased $3.8 million (or $0.10 per share), reflecting higher gas storage net income of $1.0 million and a $3.2 million higher net income contribution from water and wastewater utilities related to new rates at several larger utilities and the acquisition of Puttman/ICH.

BALANCE SHEET AND CASH FLOWS

For 2024, the Company generated $200.3 million in operating cash flow and invested $394.4 million in utility capital expenditures to support growth and safety. In addition, the Company invested $29.8 million in water and wastewater acquisitions. Net cash provided by financing activities was $227.1 million for 2024 due to issuing long-term and short-term debt and equity. As of Dec. 31, 2024, NW Natural Holdings held cash of $38.5 million.

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 2024 financial and operating results.

Date and Time:	Friday, February 28
	8 a.m. PT (11 a.m. ET)
Phone Number:	1-833-470-1428
	Passcode 633579

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 and the replay access code of 907583.

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 165 years. It owns Northwest Natural Gas Company (NW Natural), SiEnergy Operating (SiEnergy), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests.

NW Natural Holdings provides critical energy and delivers essential water and wastewater services to nearly one million customers across seven states. We have a longstanding commitment to safety, environmental stewardship, and the energy transition, and taking care of our employees and communities. NW Natural Holdings was recognized by Ethisphere® for three years running as one of the World’s Most Ethical Companies®. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores. Learn more in our latest Community and Sustainability Report at ir.nwnaturalholdings.com/sustainability.

NW Natural is a local distribution company that currently provides natural gas service to approximately 2 million people in more than 140 communities through approximately 806,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural owns and operates 21.6 Bcf of underground gas storage capacity in Oregon.

SiEnergy is one of the fastest growing natural gas distribution utilities in the nation, serving approximately 70,000 customers in the greater metropolitan areas of Houston, Dallas, and Austin, Texas.

NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest, Texas, Arizona, and California. Today NW Natural Water serves an estimated 190,000 people through approximately 76,000 meters and provides operation and maintenance services to an additional 25,000 connections. Learn more about our water business at nwnaturalwater.com.

NW Natural Renewables is committed to leading in the energy transition by providing renewable fuels. Learn more at nwnaturalrenewables.com.

Additional information is available at nwnaturalholdings.com.

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

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," "will" 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, forecasts, outlooks, timing, goals, strategies, commitments, future events, financial positions, financial performance, investments, valuations, 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, strategic fit, utility system, technology and infrastructure investments, system modernization, reliability and resiliency, global, national and local economies, economic and GDP growth, customer and business growth, continued expansion of service territories, rate base growth, customer backlog, growth opportunities, 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, 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, water, wastewater and water services acquisitions, personnel additions, partnerships, and investment strategy and financial effects of water, wastewater and water services acquisitions, expected growth and safety benefits of facility upgrade investments, operating plans of third parties, financial targets, financial results, including estimated income, availability and sources of liquidity, capital markets, financing transactions, expenses, positions, revenues, returns, cost of capital, timing, and earnings, earnings guidance and estimated future growth rates, credit ratings, debt and equity issuances and timing, future dividends, commodity costs and sourcing, asset management activities, regulatory environment, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, rate case execution, regulatory prudence reviews, anticipated regulatory actions or filings, accounting treatment of future events, economic and political conditions, effects of legislation or changes in laws or regulations, impact of the new U.S. presidential administration and Congress, effects, extent, severity and duration of epidemics and pandemics, and any resulting economic disruption therefrom, inflation, 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, public health risks, financial, macroeconomic and geopolitical risks, growth and strategic risks, operational risks, business continuity and technology risks, environmental risks and risks related to our water and renewables businesses.

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

Management uses "adjusted net income" and "adjusted earnings per share," both of which are non-GAAP financial measures, when evaluating NW Natural Holdings' overall performance. Management believes that these non-GAAP measures provide meaningful information to investors about NW Natural Holdings' performance because they eliminate the impacts of significant discrete items that can affect the comparison of period-over-period results. 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 below.

NORTHWEST NATURAL HOLDINGS
Consolidated Income Statement and Financial Highlights (Unaudited)
Fourth Quarter and Annual Period
		Three Months Ended									Twelve Months Ended
In thousands, except per share amounts, customer, and degree day data		December 31,									December 31,
			2024				2023		Change			2024				2023		Change
Operating revenues		$	370,876			$	355,714		4%		$	1,152,994			$	1,197,475		(4)%
Operating expenses:
	Cost of gas		124,793				142,475		(12)			412,382				499,837		(17)
	Operations and maintenance		92,154				73,606		25			294,658				273,766		8
	Environmental remediation		4,828				4,352		11			14,054				12,899		9
	General taxes		10,465				10,563		(1)			48,672				46,248		5
	Revenue taxes		15,613				14,921		5			48,343				48,671		(1)
	Depreciation		36,486				32,762		11			137,898				125,581		10
	Other operating expenses		1,596				1,868		(15)			5,845				5,532		6
	Total operating expenses		285,935				280,547		2			961,852				1,012,534		(5)
Income from operations			84,941				75,167		13			191,142				184,941		3
Other income (expense), net			(910	)			4,627		(120)			(1,108	)			17,855		(106)
Interest expense, net			21,190				19,890		7			80,092				76,566		5
Income before income taxes			62,841				59,904		5			109,942				126,230		(13)
Income tax expense			17,839				15,264		17			31,071				32,362		(4)
Net income		$	45,002			$	44,640		1		$	78,871			$	93,868		(16)
Common shares outstanding:
Average diluted for period			40,220				37,045					38,869				36,265
End of period			40,222				37,631					40,222				37,631
Per share information:
Diluted earnings per share		$	1.12			$	1.21				$	2.03			$	2.59
Dividends paid per share			0.4900				0.4875					1.9525				1.9425
Book value per share, end of period			34.44				34.12					34.44				34.12
Market closing price, end of period			39.56				38.94					39.56				38.94
Capital structure, end of period:
Common stock equity			42.4	%			43.5	%				42.4	%			43.5	%
Long-term debt			51.4				48.3					51.4				48.3
Short-term debt (including current maturities of long-term debt)			6.2				8.2					6.2				8.2
	Total		100.0	%			100.0	%				100.0	%			100.0	%
Natural Gas Distribution segment operating statistics:
Meters - end of period			805,529				799,250		0.8%			805,529				799,250		0.8%
Volumes - therms:
	Residential and commercial sales		233,892				226,558					708,873				735,755
	Industrial sales and transportation		121,126				122,007					461,966				470,919
Total volumes sold and delivered			355,018				348,565					1,170,839				1,206,674
Operating revenues:
	Residential and commercial sales	$	321,350			$	310,056				$	968,676			$	1,015,072
	Industrial sales and transportation		21,831				24,676					83,060				97,886
	Other distribution revenues		900				825					4,435				4,540
	Other regulated services		4,877				4,735					19,517				18,902
Total operating revenues			348,958				340,292					1,075,688				1,136,400
	Less: Cost of gas		124,778				142,531					412,320				500,061
	Environmental remediation expense		4,827				4,352					14,053				12,899
	Revenue taxes		15,456				14,873					48,037				48,432
Margin, net		$	203,897			$	178,536				$	601,278			$	575,008
Degree days:
	Average (25-year average)		1,060				1,057					2,702				2,686
	Actual		831				822		1%			2,255				2,480		(9)%
Percent warmer than average weather			(22	)%			(22	)%				(17	)%			(8	)%

NORTHWEST NATURAL HOLDINGS
Consolidated Balance Sheets (Unaudited)	As of December 31,
In thousands		2024				2023
Assets:
Current assets:
Cash and cash equivalents	$	38,490			$	32,920
Accounts receivable		124,480				121,341
Accrued unbilled revenue		94,400				83,138
Allowance for uncollectible accounts		(3,474	)			(3,455	)
Regulatory assets		130,116				178,270
Derivative instruments		6,628				11,380
Inventories		106,954				112,571
Other current assets		60,180				65,275
Total current assets		557,774				601,440
Non-current assets:
Property, plant, and equipment		4,918,919				4,556,609
Less: Accumulated depreciation		1,246,592				1,198,555
Total property, plant, and equipment, net		3,672,327				3,358,054
Regulatory assets		382,499				333,443
Derivative instruments		535				431
Other investments		82,236				102,951
Operating lease right of use asset, net		68,626				71,308
Assets under sales-type leases		125,653				129,882
Goodwill		183,804				163,344
Other non-current assets		160,862				106,239
Total non-current assets		4,676,542				4,265,652
Total assets	$	5,234,316			$	4,867,092
Liabilities and equity:
Current liabilities:
Short-term debt	$	170,110			$	89,780
Current maturities of long-term debt		30,787				150,865
Accounts payable		133,270				145,361
Taxes accrued		16,176				15,454
Interest accrued		18,220				15,836
Regulatory liabilities		116,180				84,962
Derivative instruments		75,272				98,661
Operating lease liabilities		1,840				2,333
Other current liabilities		87,162				93,626
Total current liabilities		649,017				696,878
Long-term debt		1,679,355				1,425,435
Deferred credits and other non-current liabilities:
Deferred tax liabilities		397,149				382,673
Regulatory liabilities		730,117				695,896
Pension and other postretirement benefit liabilities		130,397				158,116
Derivative instruments		13,307				28,055
Operating lease liabilities		75,914				77,167
Other non-current liabilities		173,689				119,034
Total deferred credits and other non-current liabilities		1,520,573				1,460,941
Equity:
Common stock		989,346				890,976
Retained earnings		402,925				399,911
Accumulated other comprehensive loss		(6,900	)			(7,049	)
Total equity		1,385,371				1,283,838
Total liabilities and equity	$	5,234,316			$	4,867,092

NORTHWEST NATURAL HOLDINGS
Consolidated Statements of Cash Flows (Unaudited)	Year Ended December 31,
In thousands		2024				2023
Operating activities:
Net income	$	78,871			$	93,868
Adjustments to reconcile net income to cash provided by operations:
Depreciation		137,898				125,581
Amortization		20,162				17,641
Deferred income taxes		11,366				8,966
Qualified defined benefit pension plan expense (benefit)		4,062				(2,430	)
Contributions to qualified defined benefit pension plans		(20,460	)			—
Deferred environmental expenditures, net		(23,307	)			(26,052	)
Environmental remediation expense		14,054				12,899
Asset optimization revenue sharing bill credits		(28,874	)			(10,471	)
Regulatory disallowance of line extension allowances		13,700				—
Other		10,799				8,548
Changes in assets and liabilities:
Receivables, net		(15,302	)			50,977
Inventories		(2,735	)			(24,105	)
Income and other taxes		809				(1,246	)
Accounts payable		(14,144	)			(39,958	)
Deferred gas costs		38,129				52,371
Asset optimization revenue sharing		14,539				22,637
Decoupling mechanism		5,173				(11,415	)
Cloud-based software		(22,393	)			(16,307	)
Regulatory accounts		12,292				4,617
RNC facility prepayment		(51,427	)			—
Other, net		17,070				13,828
Cash provided by operating activities		200,282				279,949
Investing activities:
Capital expenditures		(394,400	)			(327,347	)
Acquisitions, net of cash acquired		(29,816	)			(7,533	)
Purchase of equity method investment		(1,000	)			(1,000	)
Other		(3,770	)			383
Cash used in investing activities		(428,986	)			(335,497	)
Financing activities:
Proceeds from common stock issued, net		90,374				66,495
Long-term debt issued		285,000				330,000
Long-term debt retired		(150,000	)			(90,000	)
Changes in other short-term debt, net		80,330				(168,540	)
Cash dividend payments on common stock		(72,852	)			(67,340	)
Payment of financing fees		(3,290	)			(2,200	)
Shares withheld for tax purposes		(1,319	)			(1,313	)
Other		(1,181	)			(2,894	)
Cash provided by financing activities		227,062				64,208
(Decrease) increase in cash, cash equivalents and restricted cash		(1,642	)			8,660
Cash, cash equivalents and restricted cash, beginning of period		49,624				40,964
Cash, cash equivalents and restricted cash, end of period	$	47,982			$	49,624
Supplemental disclosure of cash flow information:
Interest paid, net of capitalization	$	71,233			$	80,197
Income taxes paid, net of refunds		19,394				24,263
Non-cash activities:
Shares issued in connection with business combinations	$	1,429			$	12,884
Debt assumed in connection with business combinations		—				3,131
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	38,490			$	32,920
Restricted cash included in other current assets		9,492				16,704
Cash, cash equivalents and restricted cash	$	47,982			$	49,624

NORTHWEST NATURAL HOLDINGS
Reconciliation to GAAP (Unaudited)
2025 EPS Guidance Reconciliation Table
GAAP EPS guidance	$2.66 to $2.86
SiEnergy transaction costs1	0.09
Adjusted EPS guidance2	$2.75 to $2.95

1		Effect on EPS assumes average diluted shares of 41.1 million and an income tax rate of 26.5%.
2		See "Non-GAAP Financial Measures" for a definition and further information on Adjusted EPS.

NORTHWEST NATURAL HOLDINGS
Reconciliation to GAAP (Unaudited)
		Twelve Months Ended December 31,
		2024							2023
In thousands, except per share data		Amount			Per Share				Amount			Per Share
CONSOLIDATED
GAAP net income		$	78,871		$	2.03			$	93,868		$	2.59
Regulatory line extension disallowance			13,700			0.35
SiEnergy transaction costs			2,292			0.06
Income tax effect1			(4,237	)		(0.11	)
Adjusted net income		$	90,626		$	2.33			$	93,868		$	2.59
Diluted shares						38,869							36,265
NATURAL GAS DISTRIBUTION SEGMENT
GAAP net income		$	77,126		$	1.98			$	94,042		$	2.59
Regulatory line extension disallowance			13,700			0.35
Income tax effect1			(3,630	)		(0.09	)
Adjusted net income		$	87,196		$	2.24			$	94,042		$	2.59
OTHER
GAAP net income (loss)		$	1,745		$	0.05			$	(174	)	$	—
SiEnergy transaction costs			2,292			0.06
Income tax effect1			(607	)		(0.02	)
Adjusted net income (loss)		$	3,430		$	0.09			$	(174	)	$	—

1		Regulatory disallowance related to line extension allowance and SiEnergy transaction expenses were recognized in the fourth quarter of 2024. Tax effect of adjustment was calculated using a combined federal and statutory rate of 26.5%.

NORTHWEST NATURAL HOLDINGS
Reconciliation to GAAP (Unaudited)
		Three Months Ended December 31,
		2024							2023
In thousands, except per share data		Amount			Per Share				Amount			Per Share
CONSOLIDATED
GAAP net income		$	45,002		$	1.12			$	44,640		$	1.21
Regulatory line extension disallowance			13,700			0.34
SiEnergy transaction costs			2,292			0.06
Income tax effect1			(4,237	)		(0.11	)
Adjusted net income		$	56,757		$	1.41			$	44,640		$	1.21
Diluted shares						40,220							37,045
NATURAL GAS DISTRIBUTION SEGMENT
GAAP net income		$	44,802		$	1.11			$	46,522		$	1.26
Regulatory line extension disallowance			13,700			0.34
Income tax effect1			(3,630	)		(0.09	)
Adjusted net income		$	54,872		$	1.36			$	46,522		$	1.26
OTHER
GAAP net income (loss)		$	200		$	0.01			$	(1,882	)	$	(0.05	)
SiEnergy transaction costs			2,292			0.06
Income tax effect1			(607	)		(0.02	)
Adjusted net income (loss)		$	1,885		$	0.05			$	(1,882	)	$	(0.05	)

1

Regulatory disallowance related to line extension allowance and SiEnergy transaction expenses were recognized in the fourth quarter of 2024. Tax effect of adjustment was calculated using a combined federal and statutory rate of 26.5%.

 

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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

Source: NW Natural

FAQ

What caused NWN's earnings decline in 2024 compared to 2023?

Earnings declined primarily due to regulatory lag in the first 10 months of 2024, higher pension expense, lower interest income, and increased depreciation expense, partially offset by new Oregon rates effective November 1, 2024.

What is NWN's capital expenditure forecast for 2025?

NWN forecasts total capital expenditures of $450-500 million for 2025, including $330-360 million for gas operations, $65-75 million for SiEnergy, and $55-65 million for water operations.

How many utility connections did NWN add in 2024?

NWN added nearly 10,000 gas and water utility connections in 2024, achieving a combined growth rate of 1.1% as of December 31, 2024.

What is NWN's dividend policy and recent increase?

NWN increased its dividend for the 69th consecutive year to an annual rate of $1.96 per share, with quarterly payments of $0.49 per share.

What is NWN's earnings guidance for 2025?

NWN initiated 2025 guidance with GAAP EPS of $2.66-2.86 and adjusted EPS of $2.75-2.95, maintaining a long-term EPS growth target of 4-6%.