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Dec 31, 2023
NW Natural Q4 2023 Earnings Report
NW Natural Holdings reported a decrease in net income for the fourth quarter of 2023, primarily due to higher operating and interest expenses, which was partially offset by new rates.
Key Takeaways
NW Natural Holdings reported a net income of $44.6 million for the fourth quarter of 2023, a decrease compared to $47.9 million in the same period of 2022. The decrease was mainly due to higher operating expenses and interest expense, partially offset by new rates in Oregon and Washington and higher interest income.
Net income decreased to $44.6 million (or $1.21 per share) compared to $47.9 million (or $1.36 per share) for the same quarter last year.
Natural gas distribution segment net income decreased by $0.6 million primarily due to higher operating expenses and interest expense, partially offset by new rates and higher interest income.
Margin increased by $6.5 million due to new rates and a higher gain from the Oregon gas cost incentive sharing mechanism, offset by lower usage from warmer weather.
NW Natural reaffirmed long-term earnings per share growth rate target of 4% to 6% compounded annually from 2022 through 2027 and initiated 2024 earnings guidance in the range of $2.20 to $2.40 per share.
NW Natural
NW Natural
Forward Guidance
NW Natural Holdings initiated 2024 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% compounded annually from 2022 through 2027.
Positive Outlook
- Continued customer growth is expected.
- Capital expenditures are planned to support growth, safety, and technology upgrades.
- Long-term earnings per share growth rate target of 4% to 6% is reaffirmed.
- New rates are expected to be effective on Nov 1, 2024.
- NW Natural Water is expected to invest approximately $40 million in 2024 related to maintenance capital expenditures
Challenges Ahead
- Regulatory lag from the natural gas distribution segment is impacting earnings.
- Increased level of investment and elevated investment in technology is exacerbating the regulatory lag in 2024.
- Inflationary pressures are increasing operating expenses.
- Higher depreciation expense is expected due to shorter lived technology investments.
- Guidance assumes average weather conditions, and significant changes in laws or regulations.