Northwest Natural Holding Co Reports Steady Earnings Growth and Expands Utility Services
Net Income: Increased to $93.9 million in 2023 from $86.3 million in 2022.
Earnings Per Share (EPS): Grew to $2.59 in 2023, up from $2.54 in the previous year.
Utility System Investments: $327.3 million invested to enhance reliability and resiliency.
Customer Growth: Added over 15,000 gas and water utility connections, achieving a 1.8% growth rate.
Renewable Energy: Signed agreements to construct a renewable natural gas (RNG) facility and secure a 20-year RNG supply.
Dividend: Increased for the 68th consecutive year to an annual indicated rate of $1.95 per share.
2024 Guidance: Earnings guidance initiated at $2.20 to $2.40 per share, with a reaffirmed long-term EPS growth rate target of 4-6%.
On February 23, 2024, Northwest Natural Holding Co (NYSE:NWN) released its 8-K filing, announcing its financial results for the fourth quarter and full year of 2023. The company, a prominent natural gas service supplier in the Pacific Northwest, operates through its subsidiary NW Natural and has a significant presence in Oregon and southwest Washington. With a focus on providing reliable and affordable energy, Northwest Natural Holding Co has consistently ranked high in customer satisfaction and is committed to safety and environmental stewardship.
Financial Performance and Strategic Investments
Northwest Natural Holding Co reported a net income of $93.9 million for 2023, an increase from the $86.3 million recorded in 2022. This growth in net income is attributed to new rates in Oregon and Washington for the natural gas utility, customer growth, and lower pension expenses. However, these positive factors were partially offset by higher operations and maintenance expenses and interest expense. The company's earnings per share also saw a slight increase, affected by the issuance of common shares in 2023.
Throughout the year, the company invested heavily in its utility systems, totaling $327.3 million, to support greater reliability and resiliency. This investment is crucial for the company's long-term strategy to maintain high service standards and adapt to the evolving energy landscape.
Customer Growth and Renewable Energy Initiatives
The company's customer base expanded with the addition of over 15,000 gas and water utility connections, resulting in a combined growth rate of 1.8% as of December 31, 2023. This growth was primarily driven by strong water acquisitions and combined organic growth. In line with its commitment to sustainability, Northwest Natural Holding Co has also made significant strides in renewable energy by signing agreements to construct an RNG facility and secure a long-term supply of RNG.
Moreover, the company's water utility business continued to expand through strategic acquisitions, adding approximately 6,200 customers in 2023. The launch of a water services business further diversifies the company's offerings and enhances its ability to provide essential services to its customers.
Challenges and Outlook
Despite the positive results, the company faces challenges, including regulatory lag in its natural gas distribution segment due to substantial investments and inflationary impacts on operating costs. To address these challenges, Northwest Natural Holding Co has filed a general rate case in Oregon, with new rates expected in November 2024.
For 2024, the company has initiated earnings guidance in the range of $2.20 to $2.40 per share and reaffirmed its long-term earnings per share growth rate target of 4% to 6% from 2022 through 2027. The company's capital expenditure for 2024 is projected to be between $350 million to $400 million, with additional investments planned for the subsequent five-year period.
In recognition of its consistent performance and commitment to shareholders, Northwest Natural Holding Co increased its dividend for the 68th consecutive year, reflecting confidence in its financial stability and growth prospects.
As Northwest Natural Holding Co continues to navigate the complexities of the energy sector, it remains focused on delivering value to its customers, employees, and shareholders while upholding its long-standing tradition of ethical business practices and community engagement.
Explore the complete 8-K earnings release (here) from Northwest Natural Holding Co for further details.
This article first appeared on GuruFocus.
