Northwest Natural Gas Q3 Earnings Call Highlights

Key Points

• Northwest Natural raised its 2026 earnings guidance to $3.10–$3.20 per share, citing year-to-date results, cost controls, customer growth and favorable regulatory outcomes. Earnings for the first nine months rose 6.6% year over year to $1.62 per share.
• SiEnergy’s Texas customer count grew about 13% over the past year—slower than the company initially expected amid higher mortgage rates—while a rate-case settlement provides for an $8.6 million revenue-requirement increase, subject to commission approval.
• The company increased its indicated annual dividend by $0.03 to $2 per share, its 71st consecutive year of dividend growth. It reaffirmed 2026 capital spending of $500 million to $550 million and long-term earnings growth targets of 4%–6% without the MX3 storage project and 5%–7% with it.

Northwest Natural Holding Company, the parent of Northwest Natural Gas NYSE: NWN, raised its 2026 earnings guidance after stronger-than-expected results through the first nine months of the year, citing cost controls, customer growth and favorable regulatory outcomes.

The utility company now expects full-year earnings of $3.10 to $3.20 per share. Chief Financial Officer Ray Kaszuba said the outlook reflects year-to-date performance while maintaining a prudent view ahead of the 2026-2027 heating season. The company did not state its previous guidance range on the call.

Northwest Natural reported a third-quarter loss of $0.71 per share, compared with a loss of $0.73 per share a year earlier. Kaszuba said higher margins across the company’s businesses and operating and maintenance cost management were partly offset by higher depreciation and financing costs. Gas utility results are seasonal, with most revenue and earnings typically generated during the first and fourth quarters.

For the first nine months of 2026, earnings were $1.62 per share, up 6.6% from adjusted earnings of $1.52 per share in the same period of 2025. The increase reflected a higher contribution from Texas utility SiEnergy and new gas utility rates in Oregon and Washington, partly offset by higher operating and maintenance expenses at Northwest Natural Water.

Texas Growth Moderates as Rate Settlement Advances

SiEnergy’s customer count rose approximately 13% over the 12 months ended September 30. Chief Executive Officer Justin Palfreyman said that was below the 15% to 20% growth the company had contemplated at the beginning of the year, as elevated mortgage rates moderated housing activity. He said growth remained strong and the company was optimistic about the Texas market over the long term.

SiEnergy’s development backlog stood at nearly 265,000 lots at quarter-end, including approximately 110,000 lots added since Northwest Natural acquired the business less than two years ago, Palfreyman said.

A September settlement in SiEnergy’s first rate case under Northwest Natural’s ownership provides for an $8.6 million increase in its revenue requirement, a 9.8% authorized return on equity and an equity ratio of nearly 60%. New rates are expected in November, subject to commission approval. Assuming a final order in the coming weeks, Palfreyman said SiEnergy expects its first filing under Texas’ Gas Reliability Infrastructure Program in 2027, allowing accelerated recovery of capital investments between rate cases.

At Northwest Natural Water, customer growth was just over 2% for the 12 months ended September 30. Palfreyman reaffirmed a long-term customer growth target of 2% to 3%, despite a modest housing slowdown in some markets. The company has also begun construction on a Texas community where it will provide gas, water and wastewater service through SiEnergy and Northwest Natural Water.

Oregon Rates and Storage Project in Focus

In Oregon, the company received a final order for its Alternative Rate Mechanism providing a $13 million increase in revenue requirement, compared with its original request for $15.6 million. New rates took effect October 31. Washington rates under a multiyear settlement became effective August 1.

Palfreyman said Northwest Natural is evaluating options, including a general rate case, to recover investments and costs before its first Oregon multiyear rate plan takes effect. Under the state commission’s current schedule, the company expects to file that case in 2028, with new rates effective in 2029.

The company also continues to pursue its $300 million MX3 gas storage expansion, which would add 4 billion to 5 billion cubic feet of capacity. Palfreyman said an appeal of the project’s conditional use permit is proceeding, but the company still expects notice to proceed by the end of 2027. He said the project is fully contracted under 25-year agreements upon notice to proceed.

Kaszuba reaffirmed the company’s long-term earnings growth target of 4% to 6% without MX3 and 5% to 7% with the project. He said the company expects to provide 2027 guidance and a capital update in February.

Dividend and Financing Plans

Northwest Natural reaffirmed its 2026 capital spending plan of $500 million to $550 million. Kaszuba said the company expects to issue $40 million to $50 million in equity for the year through its at-the-market program, including $26 million already issued. Its debt financing for 2026 is complete.

The company recently increased its indicated annual dividend by $0.03 to $2 per share, marking its largest increase since 2012 and its 71st consecutive year of dividend growth. Kaszuba said management had brought the payout ratio into its long-term target range of 55% to 65% and did not anticipate a fundamental change to that target. The company plans to provide more information about its dividend approach in February.

About Northwest Natural Gas (NYSE:NWN)

Northwest Natural Gas Company, operating as NW Natural and a subsidiary of Northwest Natural Holding Company, is an energy and utility company headquartered in Portland, Oregon. Its principal business is the distribution of natural gas to residential, commercial and industrial customers.

NW Natural serves communities primarily in Oregon and southwest Washington through a regulated natural gas distribution system. The company also provides related services, including natural gas storage and programs focused on renewable natural gas and other lower-carbon energy solutions.

The company traces its history to 1859 and has expanded beyond its traditional natural gas operations through investments in water and wastewater utilities.

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