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NW Natural Holdings Reports Second Quarter 2022 Results

6:00 am ET August 4, 2022 (BusinessWire) Print

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

Reported net income of $1.7 million ($0.05 per share) for the second quarter of 2022, compared to a net loss of $0.7 million ($0.02 per share) for the same period in 2021 Earned net income of $58.0 million ($1.77 per share) for the first six months of 2022, compared to earnings of $58.8 million ($1.92 per share) for the same period in 2021 Earnings per share in 2022 was affected by a 2.9 million common share issuance on April 1, 2022 Added nearly 10,200 natural gas meters in the last 12 months for a growth rate of 1.3% as of June 30, 2022 Filed multi-party settlements in the Oregon general rate case Began approval process with the Public Utility Commission of Oregon (OPUC) for a one megawatt hydrogen project Reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 per share and our long-term earnings per share growth rate target of 4% to 6%

"The Company continues to perform well and serve customers safely and reliably this quarter," said David H. Anderson, president and CEO of NW Natural Holdings. "Paving the way to incorporate low-carbon energy resources into its system, NW Natural initiated the approval process with the Oregon Commission in July to develop its clean hydrogen production facility -- a first-of-its-kind in Oregon. We're making progress on behalf of our customers and stakeholders as we execute on the decarbonization and growth opportunities in front of us."

For the second quarter of 2022, net income increased $2.4 million to net income of $1.7 million (or $0.05 per share), compared to a net loss of $0.7 million (or $0.02 per share) for the same period in 2021. Results reflected higher margin from customer growth and new rates in Washington for our natural gas utility and lower pension expense, partially offset by higher operations and maintenance expenses.

Year-to-date net income decreased $0.8 million to $58.0 million (or $1.77 per share), compared to $58.8 million (or $1.92 per share) for the same period in 2021. Results reflected customer growth and new rates in Washington for our natural gas utility and lower pension expense, offset by higher operations and maintenance expenses. Net income from our other activities decreased primarily due to lower asset management revenues related to a severe winter storm in February 2021. Earnings per share was affected by a 2.9 million common share issuance on April 1, 2022.

KEY EVENTS AND INITIATIVES

Settlements Reached in Oregon General Rate Case for NW Natural

On Dec. 17, 2021, NW Natural filed a request for a general rate increase with the Public Utility Commission of Oregon (OPUC). The original filing included a requested $73.5 million annual revenue requirement increase and an increase in average rate base of $294 million to support long-planned investments related to safety, reliability, and information technology upgrades.

On May 31, 2022, NW Natural, the OPUC staff, the Oregon Citizens' Utility Board (CUB), the Alliance of Western Energy Consumers (AWEC), and the Small Business Utility Advocates (SBUA) filed a settlement with the OPUC regarding the majority of revenue requirement items in the case. Under the settlement, NW Natural's revenue requirement would increase $62.7 million. The settlement 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 $1.77 billion, or an increase of $337 million since the last rate case. The settlement is subject to review and approval by the OPUC.

On June 29, 2022, NW Natural, the OPUC staff, the Oregon CUB, AWEC, and the Coalition of Communities of Color, Climate Solutions, Verde, Columbia Riverkeeper, Oregon Environmental Council, Community Energy Project, and Sierra Club (Coalition) filed a second settlement with the OPUC addressing the following items: providing information on the decoupling calculation for new customers, foregoing deposits for new residential customers, updating the Oregon low-income energy efficiency program, and recovery of the COVID-19 deferral over the next two years beginning Nov. 1, 2022. The June settlement did not change the revenue requirement reached in the first settlement. Both settlements are subject to review and approval by the OPUC.

The remaining items in the rate case are as follows: the capital allowance provided for each new customer to connect to the system, the cost recovery and rate spread of the Lexington RNG facility, and the automatic adjustment clause for RNG investments, which allows the cost of the RNG facility to be included in rates outside a rate case.

New rates in Oregon are expected to take effect Nov. 1, 2022.

Gas Utility Submits Clean Hydrogen Project Application

In July, NW Natural filed to open a docket with the OPUC seeking approval for a one megawatt (MW) power-to-gas facility. The facility is designed to produce clean hydrogen by leveraging Eugene Water & Electric Board's (EWEB's) power generated from hydro, wind, and nuclear energy. The project is intended to be installed on EWEB's Eugene campus and generate up to 4,300 MMBtu of clean hydrogen annually to blend into NW Natural's system at up to 5% for the initial phase and up to 10% over time at this facility.

The primary objective for the project is to use NW Natural's tight system, one of the most modern in the U.S., to begin the planning for hydrogen integration to support the Company's decarbonization goals. The project can also provide hands-on experience in the generation, distribution and storage of low-carbon energy sources across increasingly interdependent gas and electric grids.

The project is being filed for OPUC approval under Senate Bill 844. This Bill is unique to Oregon and designed to support gas utility projects that reduce greenhouse gas emissions that would not otherwise be undertaken in the normal course of business.

This project filing follows two years of 5% hydrogen blend tests successfully completed at NW Natural's Sherwood, Oregon operating facility.

Water and Wastewater Utilities

In May 2022, NW Natural Water signed two purchase agreements for water utilities, representing approximately 1,400 connections in Washington near its existing Cascadia Water utilities. The acquisitions received approval by the Washington Utilities and Transportation Commission in July 2022 and are expected to close in August 2022. In addition, NW Natural Water closed the purchase of a water and wastewater utility, representing approximately 150 connections in Texas.

In December 2021, NW Natural Water agreed to purchase the water and wastewater utilities of Far West Water & Sewer, Inc. located in Yuma, Arizona. In March 2022, we filed our acquisition application with the Arizona Corporation Commission and in June 2022 Arizona staff recommended approval of the Far West acquisition. The docket is currently awaiting Commission review, which is expected in August or early September.

When all pending acquisitions close, NW Natural Water will serve over 150,000 people through approximately 61,000 connections in five states.

SECOND QUARTER RESULTS

The following financial comparisons are for the second quarter of 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' second quarter results are summarized by business segment in the table below:

                    Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30,                                                                                                                                                          Three Months Ended June 30,
                                      --------------------------- --------------------------- --------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                               2022                        2022                        2022                                                      2022                                                   2021                                                                  2021                                                                 Change                                               Change
                                      --------------------------- --------------------------- --------------------------- ------------------------------------------------------------------------------------     -------------------- ----------------------------------------------------------------------------------------------------------------       -------------------- --------------------------------------------------------------------------------
In thousands, except per share data              Amount                      Amount                      Amount                        Amount                   Per Share                    Per Share                    Amount                             Amount                            Per Share                          Per Share                           Amount                     Amount                   Per Share                  Per Share
------------------------------------- --------------------------- --------------------------- --------------------------- ------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------------------   -------------------- ----------------------------------------------   -------------------- ------------------------------  -------------------- ------------------------------
Net income (loss):                                                                                                                                                                 
                                                                $                           $                           $                    $        157                    $                    $ --                    $                    $ (1,381 )                                       $                    $  (0.05 )                                       $                    $      1,538                    $                    $       0.05
     Natural Gas Distribution segment
                                                                        1,558               0.05        657         0.03              901           0.02
     Other
                                      --------------------------- --------------------------- --------------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ----------
                                                                $                           $                           $                    $      1,715                    $                    $           0.05                    $                    $   (724 )                                       $                    $  (0.02 )                                       $                    $      2,439                    $                    $       0.07
     Consolidated
                                      =========================== =========================== =========================== ==================== ========== ==================== ==================== ============== ==================== ==================== ====== ==================== ==================== ==================== ====== ==================== ==================== ==================== ========== ==================== ==================== ==========
                                                                                                                                                                

Natural Gas Distribution Segment

Natural gas distribution segment net income increased $1.5 million (or $0.05 per share) primarily reflecting higher margin and lower pension expense, partially offset by higher operations and maintenance expense.

Margin increased $2.3 million reflecting customer growth and new rates in Washington, which collectively contributed $1.7 million. In addition, higher usage from colder weather contributed $0.6 million, net of the loss from the Oregon gas cost incentive sharing mechanism.

Operations and maintenance expense increased $3.0 million as a result of higher expenses mainly from contractor labor for safety and reliability projects, professional service fees, and information technology costs.

Other income, net reflected a benefit of $2.1 million primarily from lower pension expense.

Other

Other net income increased $0.9 million (or $0.02 per share) reflecting $0.6 million higher net income from NW Natural's other activities driven by increased asset management revenues. In addition, NW Natural Holding's other businesses reported higher net income of $0.3 million primarily from lower business development costs.

YEAR-TO-DATE RESULTS

The following financial comparisons are for the first six months of 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' year-to-date results are summarized by business segment in the table below:

                    Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30,                                                                                                                                                Six Months Ended June 30,
                                      ------------------------- ------------------------- ------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                              2022                      2022                      2022                                                   2022                                                 2021                                                 2021                                                Change                                                       Change
                                      ------------------------- ------------------------- ------------------------- --------------------------------------------------------------------------------     -------------------- --------------------------------------------------------------------------------     -------------------- ---------------------------------------------------------------------------------------------
In thousands, except per share data             Amount                    Amount                    Amount                       Amount                   Per Share                  Per Share                  Amount                     Amount                   Per Share                  Per Share                  Amount                             Amount                            Per Share                 Per Share
------------------------------------- ------------------------- ------------------------- ------------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ----------------------------------------------   -------------------- ---------------------------
Net income:                                                                                                                                             
                                                              $                         $                         $                    $     55,547                    $                    $       1.70                    $                    $     52,544                    $                    $       1.71                    $                    $  3,003                      $                    $  (0.01 )
     Natural Gas Distribution segment
                                                                  2,407           0.07          6,249           0.21     (3,842 )                         (0.14 )
     Other
                                      ------------------------- ------------------------- ------------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -
                                                              $                         $                         $                    $     57,954                    $                    $       1.77                    $                    $     58,793                    $                    $       1.92                    $                    $   (839 )                                       $                    $  (0.15 )
     Consolidated
                                      ========================= ========================= ========================= ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ====== ==================== ==================== ==================== ====== =
                                                                                                                                     

Natural Gas Distribution Segment

Natural Gas Distribution segment net income increased $3.0 million (and earnings per share decreased $0.01 per share) primarily reflecting new rates in Washington as a result of a general rate case, which was effective beginning Nov. 1, 2021. Earnings per share was affected by a 2.9 million common share issuance on April 1, 2022.

Margin increased $6.1 million reflecting new rates in Washington and customer growth, which collectively contributed $4.4 million. In addition, margin increased $2.2 million due to higher usage from colder comparative weather, net of the loss from the Oregon gas cost incentive sharing mechanism. Weather was 2% warmer than average weather for the first six months of 2022, compared to 12% warmer than average weather for the same period in 2021.

Operations and maintenance expense increased $6.5 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 professional service fees.

Depreciation and general taxes increased $0.8 million as we continue to invest in our natural gas utility system.

Other income, net increased $3.9 million driven by lower pension costs primarily related to higher returns and lower interest costs.

Other

Other net income decreased $3.8 million (or $0.14 per share) reflecting $3.6 million lower net income from NW Natural's other activities driven by asset management revenues from a February 2021 cold weather event.

February 2021 Winter Weather Event

In February 2021, NW Natural experienced a severe winter storm in its service territory. To meet expected demand, we purchased additional natural gas supplies at higher than anticipated prices. However, our third-party marketer provided incremental asset management revenues, which more than offset the cost of the incremental gas purchases. The effect of these transactions resulted in a net benefit to shareholders of $2.8 million from the combined effect of $4.6 million of asset management revenues reflected in NW Natural's other segment offset by lower utility margin from a $1.8 million of loss on the Oregon gas cost incentive sharing mechanism.

BALANCE SHEET AND CASH FLOWS

During the first six months of 2022, the Company generated $196.6 million in operating cash flows, compared to $194.3 million for the same period in 2021. The Company used $169.7 million in investing activities during the first six months of 2022 primarily for natural gas utility capital expenditures, compared to $127.9 million used in investing activities during the same period in 2021. Net cash used in financing activities was $24.0 million for the first six months of 2022, compared to $73.5 million used in financing activities during the same period in 2021. As of June 30, 2022, NW Natural Holdings held cash of $17.2 million.

2022 GUIDANCE AND LONG-TERM TARGETS

NW Natural Holdings reaffirmed 2022 earnings guidance in the range of $2.45 to $2.65 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 reaffirmed its long-term earnings per share growth rate target of 4% to 6% compounded annually from 2022 through 2027.

DIVIDEND DECLARED

The board of directors of NW Natural Holdings declared a quarterly dividend of 48.25 cents per share on the Company's common stock. The dividend is payable on Aug. 15, 2022 to shareholders of record on July 29, 2022. The Company's current indicated annual dividend rate is $1.93 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 second quarter 2022 financial and operating results.

Date and Time: Thursday, Aug. 4, 2022 Thursday, Aug. 4, 2022
               8 a.m. PT (11 a.m. ET) 8 a.m. PT (11 a.m. ET)

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 931705.

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 160 years in the Pacific Northwest. 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.

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 more than 790,000 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 Bcf of underground gas storage capacity in Oregon.

NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest and Texas. With all pending acquisitions closed, NW Natural Water will serve nearly 150,000 people through approximately 61,000 connections in five states. Learn more about our water business at nwnaturalwater.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," "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, 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, 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 and investment strategy and financial effects of water and wastewater acquisitions, 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, 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 resulting economic disruption, the impact of mitigating factors and other efforts to mitigate risks posed by its spread, ability of our workforce, customers or suppliers to operate or conduct business, COVID-19 financial impact, expenses, cost savings measures and cost recovery including through regulatory deferrals and the timing and magnitude thereof, impact on capital projects, governmental actions and timing thereof, 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 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.

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.

NORTHWEST NATURAL HOLDINGS
Consolidated Income Statement and Financial Highlights (Unaudited)
Second Quarter 2022
                                                    Three Months Ended                                                            Three Months Ended                                                                                      Six Months Ended                                                              Six Months Ended                                                                            Twelve Months Ended                                                         Twelve Months Ended                                                          
                                                                            June 30,                                                                      June 30,                                                                                                                                     June 30,                                                                      June 30,                                                                                                                           June 30,                                                                    June 30,
In thousands, except per share amounts, customer, and degree day data                                                                                                                                               
---------------------------------------------------------------------
                                 2022                                                           2022                                   2021                                   2021                                  Change                          Change                          2022                                   2022                                   2021                                   2021                                  Change                     Change                     2022                                   2022                                   2021                                 2021                               Change                     Change
--------------------------------------------------------------------- ------------------------------------------------------   -------------------- ------------------------------------------------------   -------------------- ----------------------------------------  -------------------- ------------------------------------------------------   -------------------- ------------------------------------------------------   -------------------- ------------------------------  -------------------- ------------------------------------------------------   -------------------- -------------------------------------------------   -------------------- ------------------------------
Operating revenues                                                                       $                    $        194,960                      $                    $        148,917                     31                   31 %                                       $                    $        545,261                      $                    $        464,863                     17         17 %                                       $                    $        940,798                      $                    $   818,420                     15         15 %
                                                                                                                                                                                                                                                                                                                                         
Operating expenses:                                                                                                                                                                                                                                                                                                                                                                               
                                                                                  79,720               41,193                     94                   94              225,308              153,403                     47         47              364,219         266,410                     37         37  
  Cost of gas
                                                                                  53,175               50,047                      6                    6              110,660              102,238                      8          8              212,649         189,463                     12         12  
  Operations and maintenance
                                                                                   2,267                1,509                     50                   50                6,970                5,286                     32         32               11,622           9,350                     24         24  
  Environmental remediation
                                                                                   8,989                8,914                      1                    1               21,093               20,283                      4          4               39,443          37,093                      6          6  
  General taxes
                                                                                   8,240                5,671                     45                   45               21,600               18,335                     18         18               38,005          32,429                     17         17  
  Revenue taxes
                                                                                  28,110               28,144         --       --               56,539               56,241                      1          1              113,832         109,413                      4          4  
  Depreciation
                                                                                     920                  815                     13                   13                1,914                1,747                     10         10                4,064           3,969                      2          2  
  Other operating expenses
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                                 181,421              136,293                     33                   33              444,084              357,533                     24         24              783,834         648,127                     21         21  
  Total operating expenses
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Income from operations                                                            13,539               12,624                      7                    7              101,177              107,330                     (6         (6 )                               156,964         170,293                     (8         (8 )
Other income (expense), net                                                          226               (2,597 )                                    (109                 (109 )                                  (728 )                                (6,139 )                                     (88        (88 )                                (7,148 )                          (13,468 )                                     (47        (47 )
Interest expense, net                                                             11,580               11,028                      5                    5               23,102               22,154                      4          4               45,434          42,032                      8          8  
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Income (loss) before income taxes                                                  2,185               (1,001 )                                    (318                 (318 )                                77,347               79,037                     (2         (2 )                               104,382         114,793                     (9         (9 )
Income tax expense (benefit)                                                         470                 (277 )                                    (270                 (270 )                                19,393               20,244                     (4         (4 )                                26,555          28,871                     (8         (8 )
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Net income (loss) from continuing operations                                       1,715                 (724 )                                    (337                 (337 )                                57,954               58,793                     (1         (1 )                                77,827          85,922                     (9         (9 )
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Income from discontinued operations, net of tax                           --       --                                --       --                      --           7,006                   (100       (100 )
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Net income (loss)                                                                        $                    $          1,715                      $                    $           (724 )                                    (337                 (337 )                                       $                    $         57,954                      $                    $         58,793                     (1         (1 )                                       $                    $         77,827                      $                    $    92,928                    (16        (16 )
                                                                      ==================== ==================== ============== ==================== ==================== ==================== ============== ====================                                                                ==================== ==================== ============== ==================== ==================== ==================== ============== ====================                                                      ==================== ==================== ============== ==================== ==================== ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                         
Common shares outstanding:                                                                                                                                                                                                                                                                                                                                  
                                                                                  34,352               30,664                                        32,805               30,671                              31,799          30,636      
  Average diluted for period
                                                                                  34,754               30,672                                        34,754               30,672                              34,754          30,672      
  End of period
                                                                                                                                                                                                                                                                                                                                         
Per share of common stock information:                                                                                                                                                                                                                                                                                                                      
Diluted earnings from continuing operations                                              $                    $           0.05                      $                    $          (0.02 )                                                                $                    $           1.77                      $                    $           1.92                                     $                    $           2.45                      $                    $      2.80      
Diluted earnings from discontinued operations, net of tax                 --       --                                --       --                      --            0.23      
Diluted earnings                                                                    0.05                (0.02 )                                                           1.77                 1.92                                2.45            3.03      
Dividends paid per share                                                          0.4825               0.4800                                        0.9650               0.9600                              1.9275          1.9175      
Book value, end of period                                                          32.77                30.09                                         32.77                30.09                               32.77           30.09      
Market closing price, end of period                                                53.10                52.52                                         53.10                52.52                               53.10           52.52      
                                                                                                                                                                                                                                                                                                                                         
Capital structure, end of period:                                                                                                                                                                                                                                                                                                                           
                                                                                    47.3 %                                  43.2 %                                                           47.3 %                                  43.2 %                                                 47.3 %                             43.2 %                       
  Common stock equity
                                                                                    43.4 %                                  42.8 %                                                           43.4 %                                  42.8 %                                                 43.4 %                             42.8 %                       
  Long-term debt
                                                                                     9.3 %                                  14.0 %                                                            9.3 %                                  14.0 %                                                  9.3 %                             14.0 %                       
  Short-term debt (including current maturities of long-term debt)
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                                   100.0 %                                 100.0 %                                                          100.0 %                                 100.0 %                                                100.0 %                            100.0 %                       
  Total
                                                                                                                                                                                                                                                                                                                                         
Natural Gas Distribution segment operating statistics:                                                                                                                                                                                                                                                                                                      
Meters - end of period                                                           790,438              780,279                    1.3                  1.3 %                               790,438              780,279                    1.3        1.3 %                               790,438         780,279                    1.3        1.3 %
Volumes in therms:                                                                                                                                                                                                                                                                                                                                          
                                                                                 147,447              102,469                                       441,374              400,291                             744,137         690,875      
  Residential and commercial sales
                                                                                 121,106              111,245                                       255,565              244,543                             492,743         468,726      
  Industrial sales and transportation
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Total volumes sold and delivered                                                 268,553              213,714                                       696,939              644,834                           1,236,880       1,159,601      
Operating revenues:                                                                                                                                                                                                                                                                                                                                         
                                                                                         $                    $        159,792                      $                    $        120,360                                               $                    $        474,399                      $                    $        398,944                                     $                    $        806,249                      $                    $   695,487      
  Residential and commercial sales
                                                                                  19,526               14,093                                        40,799               31,472                              74,626          60,289      
  Industrial sales and transportation
                                                                                     409                  396                                         1,016                  986                               1,737           1,944      
  Other distribution revenues
                                                                                   4,907                4,765                                         9,818                9,550                              19,355          18,825      
  Other regulated services
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Total operating revenues                                                         184,634              139,614                                       526,032              440,952                             901,967         776,545      
                                                                                  79,776               41,249                                       225,420              153,515                             364,443         266,635      
  Less: Cost of gas
                                                                                   2,272                1,509                                         6,970                5,286                              11,622           9,350      
  Less: Environmental remediation expense
                                                                                   8,208                5,650                                        21,532               18,305                              37,827          32,399      
  Less: Revenue taxes
                                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                                -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------                                                      -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Margin, net                                                                              $                    $         94,378                      $                    $         91,206                                               $                    $        272,110                      $                    $        263,846                                     $                    $        488,075                      $                    $   468,161      
                                                                      ==================== ==================== ============== ==================== ==================== ==================== ============== ====================                                                                ==================== ==================== ============== ==================== ==================== ==================== ============== ====================                                                      ==================== ==================== ============== ==================== ==================== ==================== ========= ====================
Degree days:                                                                                                                                                                                                                                                                                                                                                
                                                                                     305                  305                                         1,631                1,631                               2,692           2,687      
  Average (25-year average)
                                                                                     374                  182                    105                  105 %                                 1,591                1,443                     10         10 %                                 2,526           2,423                      4          4 %
  Actual
NORTHWEST NATURAL HOLDINGS                                                                              
Consolidated Balance Sheets (Unaudited)                            June 30,                                                                    June 30,
In thousands                                                         2022                                   2022                                   2021                                 2021
------------------------------------------------------------ -------------------- ------------------------------------------------------   -------------------- -------------------------------------------------
Assets:                                                                                                 
Current assets:                                                                                         
                                                                                $                    $         17,209                      $                    $    20,084  
  Cash and cash equivalents
                                                                         68,583          60,713  
  Accounts receivable
                                                                         18,060          13,592  
  Accrued unbilled revenue
                                                                         (1,356 )                           (3,283 )
  Allowance for uncollectible accounts
                                                                         92,803          60,672  
  Regulatory assets
                                                                         60,652          46,168  
  Derivative instruments
                                                                         65,983          39,024  
  Inventories
                                                                 --           6,000  
  Income taxes receivable
                                                                         36,060          30,871  
  Other current assets
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                        357,994         273,841  
    Total current assets
Non-current assets:                                                                                     
                                                                      4,129,236       3,849,792  
  Property, plant, and equipment
                                                                      1,150,555       1,093,863  
  Less: Accumulated depreciation
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                      2,978,681       2,755,929  
    Total property, plant, and equipment, net
                                                                        301,855         330,710  
  Regulatory assets
                                                                          9,121           7,912  
  Derivative instruments
                                                                         96,027          77,577  
  Other investments
                                                                         73,754          76,294  
  Operating lease right of use asset, net
                                                                        136,673         141,408  
  Assets under sales-type leases
                                                                         70,714          69,313  
  Goodwill
                                                                         75,699          50,516  
  Other non-current assets
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                      3,742,524       3,509,659  
    Total non-current assets
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                                $                    $      4,100,518                      $                    $ 3,783,500  
    Total assets
                                                             ==================== ==================== ============== ==================== ==================== ==================== ========= ====================
Liabilities and equity:                                                                                 
Current liabilities:                                                                                    
                                                                                $                    $        222,700                      $                    $   240,000  
  Short-term debt
                                                                            351          60,274  
  Current maturities of long-term debt
                                                                        135,364          97,854  
  Accounts payable
                                                                         11,324          15,143  
  Taxes accrued
                                                                          7,425           7,425  
  Interest accrued
                                                                         97,277         103,210  
  Regulatory liabilities
                                                                         15,918           3,393  
  Derivative instruments
                                                                          1,315           1,228  
  Operating lease liabilities
                                                                         47,624          43,946  
  Other current liabilities
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                        539,298         572,473  
    Total current liabilities
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Long-term debt                                                        1,045,530         915,501  
Deferred credits and other non-current liabilities:                                                     
                                                                        355,470         325,600  
  Deferred tax liabilities
                                                                        658,925         645,046  
  Regulatory liabilities
                                                                        162,511         203,854  
  Pension and other postretirement benefit liabilities
                                                                          9,475             453  
  Derivative instruments
                                                                         78,826          80,088  
  Operating lease liabilities
                                                                        111,704         117,659  
  Other non-current liabilities
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                      1,376,911       1,372,700  
    Total deferred credits and other non-current liabilities
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
Equity:                                                                                                 
                                                                        767,826         569,785  
  Common stock
                                                                        381,963         365,501  
  Retained earnings
                                                                        (11,010 )                          (12,460 )
  Accumulated other comprehensive loss
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
                                                                      1,138,779         922,826  
    Total equity
                                                             -------------------- -------------------- -------------- -------------------- -------------------- -------------------- --------- --------------------
NORTHWEST NATURAL HOLDINGS                                                                                            
Consolidated Statements of Cash Flows (Unaudited)                      Six Months Ended June 30,                                                       Six Months Ended June 30,
In thousands                                                                     2022                                     2022                                   2021                                   2021
--------------------------------------------------------------------- ------------------------- ------------------------------------------------------   -------------------- ------------------------------------------------------
Operating activities:                                                                                                 
                                                                                              $                    $         57,954                      $                    $         58,793  
  Net income
                                                                                                                      
  Adjustments to reconcile net income to cash provided by operations:
                                                                                       56,539               56,241  
    Depreciation
                                                                                        2,984                7,597  
    Regulatory amortization of gas reserves
                                                                                       10,659                1,048  
    Deferred income taxes
                                                                                        2,882                7,874  
    Qualified defined benefit pension plan expense
                                                                               --               (9,590 )
    Contributions to qualified defined benefit pension plans
                                                                                       (9,608 )                                (9,625 )
    Deferred environmental expenditures, net
                                                                                        6,970                5,286  
    Environmental remediation expense
                                                                                      (41,102 )                                (9,053 )
    Asset optimization revenue sharing bill credits
                                                                                        9,961               10,663  
    Other
                                                                                                                      
    Changes in assets and liabilities:
                                                                                       96,453               73,133  
      Receivables, net
                                                                                       (8,721 )                                 3,666  
      Inventories
                                                                                       17,241               21,467  
      Income and other taxes
                                                                                      (13,728 )                               (17,239 )
      Accounts payable
                                                                                        2,607              (26,962 )
      Deferred gas costs
                                                                                        3,929               36,872  
      Asset optimization revenue sharing
                                                                                        9,669               (6,860 )
      Decoupling mechanism
                                                                                       (8,125 )                                (9,030 )
      Other, net
                                                                      ------------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
                                                                                      196,564              194,281  
    Cash provided by operating activities
Investing activities:                                                                                                 
                                                                                     (167,696 )                              (130,108 )
  Capital expenditures
                                                                               --                  (55 )
  Acquisitions, net of cash acquired
                                                                                          345                2,234  
  Proceeds from the sale of assets
                                                                                       (2,336 )                                    46  
  Other
                                                                      ------------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
                                                                                     (169,687 )                              (127,883 )
    Cash used in investing activities
Financing activities:                                                                                                 
                                                                                      174,053       --  
  Proceeds from common stock issued, net
                                                                                          692               55,000  
  Long-term debt issued
                                                                               --              (35,000 )
  Long-term debt retired
                                                                               --              100,000  
  Proceeds from term loan due within one year
                                                                               --             (195,025 )
  Repayment of commercial paper, maturities greater than three months
                                                                                     (166,800 )                                30,500  
  Changes in other short-term debt, net
                                                                                      (30,311 )                               (27,842 )
  Cash dividend payments on common stock
                                                                                       (1,596 )                                (1,175 )
  Other
                                                                      ------------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
                                                                                      (23,962 )                               (73,542 )
    Cash used in financing activities
                                                                      ------------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Increase (decrease) in cash, cash equivalents and restricted cash                       2,915               (7,144 )
Cash, cash equivalents and restricted cash, beginning of period                        27,120               35,454  
                                                                      ------------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Cash, cash equivalents and restricted cash, end of period                                     $                    $         30,035                      $                    $         28,310  
                                                                      ========================= ==================== ============== ==================== ==================== ==================== ============== ====================
                                                                                                   
Supplemental disclosure of cash flow information:                                                                     
                                                                                              $                    $         22,867                      $                    $         21,971  
  Interest paid, net of capitalization
                                                                                        1,086                7,405  
  Income taxes paid, net of refunds
                                                                                                   
Reconciliation of cash, cash equivalents and restricted cash:                                                         
                                                                                              $                    $         17,209                      $                    $         20,084  
  Cash and cash equivalents
                                                                                       12,826                8,226  
  Restricted cash included in other current assets
                                                                      ------------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005277/en/

SOURCE: NW Natural

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
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