NW Natural Reports Results for the Three and Six Months Ended June 30, 2015
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PORTLAND, OR -- (Marketwired) -- 08/04/15 --
- Consolidated net income was $2.2 million for the second quarter of 2015, or $0.08 per share, compared to $1.1 million, or $0.04 per share, in 2014.
- Customer growth rate was 1.5% at June 30, 2015, with over 10,000 customers added over the last twelve months.
- Combined Heat and Power (CHP) program filing was submitted to the Public Utility Commission of Oregon (OPUC) under Senate Bill (SB) 844.
- North Mist gas storage expansion project permitting and land acquisition work continued.
- Earnings guidance for 2015 remains unchanged and is expected to be in the range of $1.77 to $1.97 per share or $2.10 to $2.30 per share excluding the effects of the first quarter $15.0 million pre-tax environmental charge.
Northwest Natural Gas Company, dba NW Natural (NYSE: NWN), reported consolidated net income of $2.2 million for the second quarter of 2015, or $0.08 per share, compared to net income of $1.1 million, or $0.04 per share, for the second quarter of 2014. Consolidated net income was $30.7 million, or $1.12 per share, for the first six months of 2015, compared to net income of $39.0 million, or $1.43 per share, for the same period of 2014. Year-to-date results were impacted by a $15 million regulatory disallowance associated with a February 2015 OPUC Order in the Company's Site Remediation and Recovery Mechanism (SRRM) docket. Excluding the disallowance, net income for the first six months of 2015 increased $0.8 million to $39.8 million or $1.45 per share. The Company's earnings are typically lower during the second and third quarters due to the impact of decreased heating requirements affecting utility results.
"Second quarter results were solid with improved utility margin, continued customer growth, and higher revenues from our gas storage business," said Gregg Kantor, Chief Executive Officer. "In addition, we continued to execute on our long-term growth initiatives with the submission of our first Carbon Solutions Program filing under the SB 844 rules and filing of the permit for the North Mist storage expansion."
"Finally, the Company has made several key changes to its executive management team including promoting David Anderson to President of the Company and hiring Greg Hazelton as our Chief Financial Officer," said Kantor. "Both are strong leaders who will continue the utility's long legacy of service to its customers and shareholders."
Consolidated Results For the second quarter of 2015, consolidated net income increased $1.1 million compared to the same period last year. The increase was primarily due to the following: a $0.9 million increase in utility margin, a $0.3 million increase in gas storage operating revenues, and a $1.2 million decrease in interest expense, offset by a $0.6 million increase in operations and maintenance expense.
The second quarter results are highlighted on the following table:
Three Months Ended June 30, --------------------------------------------- 2015 2014 ----------------- ------------------ -------- In thousands, except per share Per data Amount Share Amount Per Share Change ------------------------------------------------ ------------------ -------- Net income: Utility segment $ 2,245 $ 0.08 $ 2,205 $ 0.08 40 Gas storage segment (86) -- (1,157) (0.04) 1,071 Other 38 -- 23 -- 15 ----------------- ------------------ -------- Consolidated net income $ 2,197 $ 0.08 $ 1,071 $ 0.04 $ 1,126 ================= ================== ======== Utility margin $70,715 $69,795 $ 920 Gas storage operating revenues 5,333 5,038 295
For the first six months of 2015, consolidated net income decreased $8.3 million compared to the same period last year primarily due to a $9.1 million after-tax charge resulting from the disallowance associated with the February 2015 OPUC Order in our SRRM docket. Excluding the charge, consolidated net income increased $0.8 million due to a $1.2 million increase in utility margin, a $4.5 million increase in other income, and a $2.3 million decrease in interest expense. These positive factors were offset by a $2.2 million decrease in gas storage revenues and a $4.3 million increase in operations and maintenance expense primarily at the utility.
The six month results are highlighted on the following table:
Six Months Ended June 30, -------------------------------------- 2015 2014 -------------- -------------- -------- Per Per In thousands, except per share data Amount Share Amount Share Change ---------------------------------------------------- -------------- -------- Net income: Utility segment $ 30,580 $1.12 $ 38,224 $1.41 $(7,644) Gas storage segment 28 -- 470 0.02 (442) Other 75 -- 261 -- (186) -------------- -------------- -------- Consolidated net income $ 30,683 $1.12 $ 38,955 $1.43 $(8,272) Adjustments: Regulatory environmental disallowance, net of taxes $5,925((1)) 9,075 0.33 -- -- 9,075 -------------- -------------- -------- Adjusted consolidated net income((1)) $ 39,758 $1.45 $ 38,955 $1.43 $ 803 ============== ============== ======== Utility margin $201,316 $200,089 $ 1,227 Gas storage operating revenues 10,636 12,873 (2,237) ((1)) Regulatory environmental disallowance of $15 million is recorded in utility operations and maintenance expense. Adjusted earnings per share (EPS) and net income are non-GAAP measures based on the after-tax disallowance. EPS is calculated using the combined federal and state statutory tax rate of 39.5% and 27.4 million dilutive shares for the first six months of 2015.
Utility Results For the three months ended June 30, 2015, utility net income was flat at $2.2 million compared to the same period in 2014. Results were driven by a $0.9 million increase in utility margin and a $0.7 million decrease in interest expense, offset by a $1.5 million increase in operations and maintenance expense.
For the six months ended June 30, 2015, utility net income decreased $7.6 million to $30.6 million compared to the same period last year. The primary factor impacting the 2015 results was the $9.1 million after-tax charge for the environmental disallowance, which is reflected in operations and maintenance expense. Excluding the charge, utility net income increased $1.4 million due to higher utility margin and other income and lower interest expense, offset by an increase in operations and maintenance expense.
Customer growth. NW Natural's customer growth rate for the trailing 12-month period ended June 30, 2015 was 1.5%. The Company added over 10,000 customers during the trailing 12-month period and now serves approximately 707,000 customers.
Utility Volumes and Margin. Utility volume and margin highlights include:
Three Months Six Months Ended June 30, Ended June 30, ----------------------- ----------------------- In thousands 2015 2014 2015 2014 --------------------------------------------------- ----------------------- Gas sales & transportation deliveries 207,886 208,253 537,863 614,470 Utility margin $ 70,715 $ 69,795 $ 201,316 $ 200,089 Change % Change ------------------------- ---------------------- In thousands QTD YTD QTD YTD ----------------------------------------------------- ---------------------- Gas sales & transportation deliveries (367) (76,607) (0.2)% (12.5)% Utility margin $ 920 $ 1,227 1.3 % 0.6 %
For the quarter, total gas sales and transportation deliveries decreased slightly compared to the same period last year. Utility margin for the quarter increased $0.9 million over last year due to customer growth, added loads under higher commercial rate schedules, rate-base returns on investments, and gains from gas cost incentive sharing.
For the six month period, total gas sales and transportation deliveries decreased 76.6 million therms, or 12.5%, compared to the same period last year due to warmer weather. Average temperatures in the period were 18% warmer than a year ago and 22% warmer than normal. Utility margin for the first six months increased $1.2 million over last year due to customer growth, added loads under higher commercial rate schedules, rate-base returns on investments, and gains from gas cost incentive sharing. These gains were offset by lower customer usage from warmer weather primarily during the first quarter heating season, which impacts utility margins from our Washington customers where we do not have a weather normalization mechanism in place, and from our Oregon customers who opted out of the weather normalization mechanism.
Combined Heat and Power (CHP) Program. In June 2015, NW Natural submitted its first filing related to a CHP program under the SB 844 rules. SB 844 incents gas utilities in Oregon to reduce carbon emissions. The submitted CHP program would pay owners of new commercial- and industrial-scale CHP systems for verified carbon emissions reductions. A final order on this program is expected to be issued within six months of the OPUC receiving the application of the program or at a later time as agreed to by the Company. Additionally, we expect to submit a residential heating conversion program in 2015 to replace fuel oil consumption with cleaner burning natural gas.
Environmental Site Remediation and Recovery Mechanism (SRRM). As a result of the OPUC Order in the SRRM docket, $15 million of the $95 million in total environmental remediation expenses deferred through 2012 were disallowed. The OPUC found the $95 million to be prudent but disallowed this amount from rate recovery based on its determination of how an earnings test should apply to years between 2003 and 2012, with adjustments for factors the OPUC deemed relevant. The Company recognized the $15 million pre-tax disallowance, or $9.1 million after-tax charge, during the first quarter of 2015.
The Company submitted the compliance filing required by the OPUC Order on March 31, 2015, demonstrating the proposed implementation of the Order and SRRM. The Company is engaged in discussions with the parties to resolve issues they have raised regarding the compliance filing and expects resolution of these matters in the second half of 2015. The compliance filing is subject to review and final approval by the OPUC and, as a consequence thereof, additional or different implementation procedures could be required, which may, among other things, result in additional impacts to earnings.
In addition, the Company requested clarification from the OPUC regarding the amount of insurance proceeds to be held in a secured account. In July 2015, the Company entered into an all-party settlement regarding this issue, which is pending OPUC review and approval. Under the proposed settlement, the Company would accrue interest on the portion of insurance proceeds to be used to offset future environmental expenses at an interest rate equal to the five-year treasury rate plus 100 basis points. Currently, these insurance proceeds total approximately $96 million on a pre-tax basis.
Gas Storage Results For the second quarter of 2015, the gas storage segment net loss decreased $1.1 million to $0.1 million compared to the same period last year. Improved results were mainly driven by a $0.3 million increase in operating revenues from slightly higher contract prices for the 2015-16 gas storage year and a $0.9 million decrease in operating expenses from lower repair and power costs at our Gill Ranch facility.
For the first six months of 2015, gas storage net income decreased $0.4 million to less than $0.1 million compared to the same period last year primarily due to a $2.2 million decrease in operating revenues from lower market pricing for the 2014-15 gas storage year, which ended on March 31, 2015. Over the past few years, market prices for natural gas storage, particularly in California, have been negatively affected by the abundant supply of natural gas, low volatility of natural gas prices, and surplus gas storage capacity. We contracted capacity for the 2014-15 gas storage year with shorter-term contracts at lower market prices than in previous years and re-contracted for the 2015-16 year at slightly higher prices. In addition, operating expenses decreased $1.0 million mainly due to lower repair and power costs at our Gill Ranch facility compared to the prior year.
Consolidated Operations and Maintenance (O&M) Expense Operations and maintenance highlights include:
Three Months Six Months Ended June 30, Ended June 30, Change --------------- --------------- -------------- In thousands 2015 2014 2015 2014 QTD YTD --------------------------------------------- --------------- -------------- Operations and maintenance $35,311 $34,731 $89,427 $70,117 $ 580 $19,310 Environmental disallowance -- -- 15,000 -- -- 15,000 --------------- --------------- -------------- Adjusted operations and maintenance (non-GAAP) $35,311 $34,731 $74,427 $70,117 $ 580 $ 4,310
For the second quarter of 2015, operations and maintenance expense increased $0.6 million compared to the same period last year due to a $2.2 million increase in compensation and benefit expense including pension and employee incentive costs, as well as higher wage rates under the new union labor contract, which became effective June 1, 2014. These items were offset by a $1.3 million decrease in repair and power costs at our Gill Ranch gas storage facility and a $0.3 million decrease in non-payroll costs primarily associated with contract work and professional services.
For the first six months of 2015, operations and maintenance expense increased $19.3 million compared to the same period last year mainly due to the effect of a $15 million pre-tax charge for the environmental disallowance; the Company also expensed an additional $1 million related to the Order. Other contributing factors were a $4.0 million increase in compensation and benefit expense including health care, pension, and employee incentive costs, as well as higher wage rates under the new union labor contract, and a $1.1 million increase in non-payroll costs primarily associated with ongoing growth initiatives and facilities costs. These increases were offset by a $1.8 million decrease in repair and power costs at our Gill Ranch gas storage facility.
Other Income and Expense, Net Other income and expense, net highlights include:
Three Months Six Months Ended June 30, Ended June 30, Change --------------- --------------- --------------- In thousands 2015 2014 2015 2014 QTD YTD -------------------------------------------- --------------- --------------- Other income and expense, net $ 1,135 $ 262 $ 6,184 $ 1,645 $ 873 $ 4,539
Other income for the second quarter of 2015 increased $0.9 million compared to the same period last year reflecting a decrease in regulatory interest expense due to the application of insurance proceeds under the SRRM.
Other income for the first six months of 2015 increased $4.5 million compared to the same period last year reflecting the recognition of net $5.3 million related to the equity component in interest income from our deferred environmental expenses. We realized the equity component of interest on these deferred regulatory asset balances as a result of the OPUC SRRM Order in February 2015. Offsetting the $5.3 million was a $0.8 million increase in interest expense primarily related to the receipt of insurance proceeds in the first quarter of 2014.
Cash Flows Cash provided by operations for the first six months of 2015 was $167 million, compared to $233 million for the same period in 2014. The decrease is primarily due to receiving $91 million of environmental insurance recoveries in 2014, which did not recur in 2015, and other working capital changes.
Earnings Guidance for 2015 The Company reaffirmed earnings guidance for 2015 in the range of $1.77 to $1.97 per share. As adjusted, our earnings guidance is $2.10 to $2.30 per share for 2015 excluding the effects of the $15.0 million pre-tax charge, which is equivalent to $0.33 per share after-tax(1), for the regulatory disallowance associated with the OPUC order on the recovery of past environmental cost deferrals. The Company's 2015 earnings guidance assumes continued customer growth from our utility segment, average weather conditions for the remainder of the year, slow recovery of the gas storage market, and no other significant changes in prevailing legislative and regulatory policies or outcomes.
(1)Impact on earnings per share assumes average shares outstanding of 27.4 million and an income tax rate of 39.5%.
Dividend Declaration The board of directors of NW Natural declared a quarterly dividend of 46.5 cents a share on the Company's common stock. The dividends will be payable on Aug. 14, 2015 to shareholders of record on July 31, 2015. Currently, the Company's indicated annual dividend rate is $1.86 per share.
Presentation of Results In addition to presenting the results of operations and earnings amounts in total, certain financial measures are expressed in cents per share or exclude the after-tax regulatory disallowance related to the OPUC's 2015 environmental order, which are non-GAAP financial measures. We present net income, EPS, and operations and maintenance expense excluding the regulatory disallowance along with the GAAP measures to illustrate the magnitude of this disallowance on ongoing business and operational results. Although the excluded amounts are properly included in the determination of these items under GAAP, we believe the amount and nature of such disallowance make period to period comparisons of operations difficult or potentially confusing. Financial measures are expressed in cents per share as these amounts reflect factors that directly impact earnings, including income taxes. All references in this section to EPS are on the basis of diluted shares. We use such non-GAAP measures to analyze our financial performance because we believe they provide useful information to our investors and creditors in evaluating our financial condition and results of operations.
Conference Call Arrangements As previously reported, NW Natural will conduct a conference call and webcast starting at 8 a.m. Pacific Time (11 a.m. Eastern Time) on August 4, 2015 to review the Company's financial and operating results for three and six months ended June 30, 2015.
To hear the conference call live, please dial 1-866-267-6789 within the United States and 1-855-669-9657 from Canada. To access the conference replay, please call 1-877-344-7529 and enter the conference identification pass code (10067641). To hear the replay from international locations, please dial 1-412-317-0088.
To hear the conference by webcast, log on to NW Natural's corporate website at nwnatural.com.
Forward-Looking Statements This report, and other presentations made by NW Natural 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," "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, goals, strategies, future events, investments, customer growth, weather, commodity and other costs, customer rates or rate recovery, environmental cost recoveries, allocation of environmental insurance settlement proceeds, levels and pricing of gas storage contracts, gas storage development or costs or timing related thereto, business development and energy efficiency programs including programs under SB 844, financial positions, capital expenditures, gas reserves and investments and regulatory recoveries related thereto, free cash flow levels, revenues and earnings and timing thereof, dividends, effects of regulatory disallowance, performance, outcomes, timing or effects of future regulatory proceedings or future regulatory approvals, regulatory prudence reviews, effects and implementation of regulatory mechanisms, including, but not limited to, SRRM, and other statements that are other than statements of historical facts.
Forward-looking statements are based on our current expectations and assumptions regarding our 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. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future 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 Company's 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 Company's 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 the Company, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we 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 for the Company 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.
About NW Natural NW Natural (NYSE: NWN) is headquartered in Portland, Ore., and provides natural gas service to about 707,000 residential, commercial, and industrial customers through 14,000 miles of mains and service lines in western Oregon and southwestern Washington. It is the largest independent natural gas utility in the Pacific Northwest with $2.9 billion in total assets. NW Natural and its subsidiaries currently own and operate underground gas storage facilities with designed storage capacity of approximately 31 Bcf in Oregon and California. Additional information is available at www.nwnatural.com.
NORTHWEST NATURAL GAS COMPANY Comparative Income Statements (Consolidated - Unaudited) Three Months Ended June 30, --------------------------------------- In thousands, except per share amounts 2015 2014 Change % Change ---------------------------------------------------------------------------- Income from operations $ 12,914 $ 13,266 $ (352) (3)% Net Income 2,197 1,071 1,126 105 Diluted average shares of common stock outstanding 27,388 27,182 206 1 Diluted earnings per share of common stock 0.08 0.04 0.04 100 Six Months Ended June 30, --------------------------------------- In thousands, except per share amounts 2015 2014 Change % Change ---------------------------------------------------------------------------- Income from operations $ 65,915 $ 88,294 $(22,379) (25)% Net income 30,683 38,955 (8,272) (21) Diluted average shares of common stock outstanding 27,378 27,158 220 1 Diluted earnings per share of common stock 1.12 1.43 (0.31) (22) Twelve Months Ended June 30, --------------------------------------- In thousands, except per share amounts 2015 2014 Change % Change ---------------------------------------------------------------------------- Income from operations $120,586 $143,751 $(23,165) (16)% Net income 50,420 59,728 (9,308) (16) Diluted average shares of common stock outstanding 27,319 27,096 223 1 Diluted earnings per share of common stock 1.85 2.20 (0.35) (16) NORTHWEST NATURAL GAS COMPANY Consolidated Balance Sheets (Unaudited) June 30, In thousands 2015 2014 -------------------------------------------------------------- ------------- Assets: Current assets: Cash and cash equivalents $ 4,466 $ 17,240 Accounts receivable 32,041 38,621 Accrued unbilled revenue 12,760 14,592 Allowance for uncollectible accounts (723) (1,404) Regulatory assets 63,016 38,265 Derivative instruments 1,023 11,191 Inventories 76,511 60,808 Gas reserves 18,214 20,373 Income taxes receivable -- -- Deferred tax assets 12,693 4,915 Other current taxes 15,348 14,518 ------------- ------------- Total current assets 235,349 219,119 ------------- ------------- Non-current assets: Property, plant, and equipment 3,042,671 2,965,226 Less: Accumulated depreciation 893,722 879,296 ------------- ------------ Total property, plant, and equipment, net 2,148,949 2,085,930 Gas reserves 121,355 130,280 Regulatory assets 342,806 267,248 Derivative instruments 1,369 1,202 Other investments 68,147 67,689 Restricted cash 4,500 3,000 Other non-current assets 9,404 12,646 ------------- ------------- Total non-current assets 2,696,530 2,567,995 ------------- ------------- Total assets $2,931,879 $2,787,114 ============= ============= Liabilities and equity: Current liabilities: Short-term debt $ 190,300 $ 74,200 Current maturities of long-term debt -- 100,000 Accounts payable 49,505 68,973 Taxes accrued 8,782 15,769 Interest accrued 5,922 7,053 Regulatory liabilities 26,712 26,742 Derivative instruments 15,017 1,490 Other current liabilities 31,332 34,507 ------------- ------------- Total current liabilities 327,570 328,734 ------------- ------------- Long-term debt 621,700 621,700 ------------- ------------- Deferred credits and other non-current liabilities: Deferred tax liabilities 524,099 489,892 Regulatory liabilities 328,646 309,327 Pension and other postretirement benefit liabilities 233,554 145,861 Derivative instruments 1,077 191 Other non-current liabilities 118,269 120,423 ------------- ------------- Total deferred credits and other non-current liabilities 1,205,645 1,065,694 ------------- ------------- Equity: Common stock 378,887 369,315 Retained earnings 407,490 407,698 Accumulated other comprehensive loss (9,413) (6,027) ------------- ------------- Total equity 776,964 770,986 ------------- ------------- Total liabilities and equity $2,931,879 $2,787,114 ============= ============= NORTHWEST NATURAL GAS COMPANY Six Months Ended Consolidated Statements of Cash Flows (Unaudited) June 30, In thousands 2015 2014 --------------------------------------------------------------- ------------ Operating activities: Net income $ 30,683 $ 38,955 Adjustments to reconcile net income to cash provided by operations: Depreciation and amortization 40,341 39,298 Regulatory amortization of gas reserves 10,023 8,680 Deferred tax liabilities, net 6,886 989 Non-cash expenses related to qualified defined benefit pension plans 3,032 2,540 Contributions to qualified defined benefit pension plans (5,810) (6,000) Deferred environmental (expenditures), net of recoveries (5,659) 92,104 Non-cash regulatory disallowance of prior environmental cost deferrals 15,000 -- Non-cash interest income on deferred environmental expenses (5,322) -- Other 418 1,010 Changes in assets and liabilities: Receivables 85,121 89,951 Inventories 1,321 (139) Taxes accrued (249) 8,447 Accounts payable (37,532) (24,472) Interest accrued (157) (50) Deferred gas costs 21,718 (18,812) Other, net 7,670 744 ------------ ------------ Cash provided by operating activities 167,484 233,245 ------------ ------------ Investing activities: Capital expenditures (58,072) (52,489) Utility gas reserves (1,945) (18,632) Restricted cash (1,500) 1,000 Other 201 (1,043) ------------ ------------ Cash used in investing activities (61,316) (71,164) ------------ ------------ Financing activities: Common stock issued, net 812 3,733 Long-term debt retired (40,000) (20,000) Change in short-term debt (44,400) (114,000) Cash dividend payments on common stock (25,398) (24,938) Other (2,250) 893 ------------ ------------ Cash used in financing activities (111,236) (154,312) ------------ ------------ (Decrease) increase in cash and cash equivalents (5,068) 7,769 Cash and cash equivalents, beginning of period 9,534 9,471 ------------ ------------ Cash and cash equivalents, end of period $ 4,466 $ 17,240 ============ ============ ------------------------------------------------- ------------ ------------ Supplemental disclosure of cash flow information: Interest paid $ 19,615 $ 23,270 Income taxes paid (net of refunds) 4,625 14,945 ------------------------------------------------- ------------ ------------ NORTHWEST NATURAL GAS COMPANY Financial Highlights (Unaudited) Second Quarter - 2015 Three Months Ended Six Months Ended June 30, June 30, In thousands, except per share amounts, customer, and degree day data 2015 2014 Change 2015 2014 Change ------------------------- ---------- ---------- ---------- Operating revenues $138,280 $133,169 4% $399,945 $426,555 (6)% Operating expenses: Cost of gas 62,176 58,280 7 187,881 213,481 (12) Operations and maintenance 35,311 34,731 2 89,427 70,117 28 General taxes 7,649 7,183 6 16,381 15,365 7 Depreciation and amortization 20,230 19,709 3 40,341 39,298 3 ---------- ---------- ---------- ---------- Total operating expenses 125,366 119,903 5 334,030 338,261 (1) ---------- ---------- ---------- ---------- Income from operations 12,914 13,266 (3) 65,915 88,294 (25) Other income and expense, net 1,135 262 333 6,184 1,645 276 Interest expense, net 10,438 11,677 (11) 20,919 23,219 (10) ---------- ---------- ---------- ---------- Income before income taxes 3,611 1,851 95 51,180 66,720 (23) Income tax expense 1,414 780 81 20,497 27,765 (26) ---------- ---------- ---------- ---------- Net income $ 2,197 $ 1,071 105 $ 30,683 $ 38,955 (21) ========== ========== ========== ========== Common shares outstanding: Average diluted for period 27,388 27,182 27,378 27,158 End of period 27,363 27,147 27,363 27,147 Per share information: Diluted earnings per share $ 0.08 $ 0.04 1.12 1.43 Dividends declared per share of common stock 0.465 0.460 0.930 0.920 Book value per share, end of period 28.39 28.40 28.39 28.40 Market closing price, end of period 42.18 47.15 42.18 47.15 Capital Structure, end of period: Common stock equity 48.9% 49.2% 48.9% 49.2% Long-term debt 39.1 39.7 39.1 39.7 Short-term debt (including amounts due in one year) 12.0 11.1 12.0 11.1 ---------- ---------- ---------- ---------- Total 100.0% 100.0% 100.0% 100.0% Utility operating statistics: Customers, end of period 707,539 697,422 1.5% 707,539 697,422 1.5% Utility volumes (therms): Residential and commercial sales 97,066 96,533 303,883 370,689 Industrial sales and transportati on 110,820 111,720 233,980 243,781 ---------- ---------- ---------- ---------- Total utility volumes sold and delivered 207,886 208,253 537,863 614,470 Utility operating revenues: Residential and commercial sales $117,919 $113,186 $358,831 $383,188 Industrial sales and transportati on 17,138 16,855 37,664 38,367 Other revenues 1,131 1,166 2,537 2,643 Less: Revenue taxes 3,297 3,132 9,835 10,628 ---------- ---------- ---------- ---------- Total utility operating revenues 132,891 128,075 389,197 413,570 Less: Cost of gas 62,176 58,280 187,881 213,481 ---------- ---------- ---------- ---------- Utility margin $ 70,715 $ 69,795 $201,316 $200,089 ========== ========== ========== ========== Degree days: Average (25- year average) 691 691 2,546 2,546 Actual 512 530 (3)% 1,993 2,420 (18)% Percent colder (warmer) than average weather (26)% (23)% (22)% (5)% Twelve Months Ended June 30, In thousands, except per share amounts, customer, and degree day data 2015 2014 Change -------------- ------------ ----------- Operating revenues $ 727,427 $ 775,498 (6)% Operating expenses: Cost of gas 339,890 385,278 (12) Operations and maintenance 156,292 139,756 12 General taxes 30,423 29,247 4 Depreciation and amortization 80,236 77,466 4 ------------ ----------- Total operating expenses 606,841 631,747 (4) ------------ ----------- Income from operations 120,586 143,751 (16) Other income and expense, net 6,472 4,344 49 Interest expense, net 42,263 46,195 (9) ------------ ----------- Income before income taxes 84,795 101,900 (17) Income tax expense 34,375 42,172 (18) ------------ ----------- Net income $ 50,420 $ 59,728 (16) ============ =========== Common shares outstanding: Average diluted for period 27,319 27,096 End of period 27,363 27,147 Per share information: Diluted earnings per share $ 1.85 $ 2.20 Dividends declared per share of common stock 1.86 1.84 Book value per share, end of period 28.39 28.40 Market closing price, end of period 42.18 47.15 Capital Structure, end of period: Common stock equity 48.9% 49.2% Long-term debt 39.1 39.7 Short-term debt (including amounts due in one year) 12.0 11.1 ------------ ----------- Total 100.0% 100.0% Utility operating statistics: Customers, end of period 707,539 697,422 1.5% Utility volumes (therms): Residential and commercial sales 554,097 670,618 Industrial sales and transportati on 462,286 477,996 ------------ ----------- Total utility volumes sold and delivered 1,016,383 1,148,614 Utility operating revenues: Residential and commercial sales $ 648,083 $ 689,917 Industrial sales and transportati on 73,289 72,499 Other revenues 3,877 3,926 Less: Revenue taxes 18,044 19,192 ------------ ----------- Total utility operating revenues 707,205 747,150 Less: Cost of gas 339,890 385,278 ------------ ----------- Utility margin $ 367,315 $ 361,872 ============ =========== Degree days: Average (25- year average) 4,240 4,240 Actual 3,365 4,304 (22)% Percent colder (warmer) than average weather (21)% 2%
Investor Contact: Nikki Sparley Phone: 503-721-2530 Email: [email protected] Media Contact: Melissa Moore Phone: 503-220-2436 Email: [email protected]
Source: Northwest Natural Gas Company
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