Northwest Natural Lifts EPS Outlook as Connection Growth Slows
Northwest Natural Holding narrowed its earnings guidance to the upper half of a $2.95-to-$3.15 range even as customer-connection growth decelerated to 1.9% from 11.1% a year earlier.
Northwest Natural Holding (NWN) posted a second-quarter profit of $0.01 a share, reversing a $0.06 loss per share in the same period last year, and expects full-year earnings to land in the upper half of its previously reaffirmed $2.95-to-$3.15 guidance range.
The shift in tone extends a run of increasingly upbeat headline framing from the natural-gas utility holding company, which called its fourth-quarter and full-year 2024 results "Record Results," then its first quarter "Strong," and has now titled its second-quarter release around the guidance upgrade itself. Beneath that framing, though, the growth engine that powered 2024 is cooling. Twelve-month connection growth, which ran at 11.1%, or roughly 98,000 connections, at year-end 2024 on the strength of the SiEnergy acquisition, slowed to 2.8% at the first quarter and further to 1.9%, or about 18,000 connections, by the end of the second quarter.
First-half earnings of $2.33 a share compared with $2.11 in the same period of 2024, with adjusted first-half EPS rising to $2.33 from $2.28. Operating revenue for the quarter grew 3.1% to $243.6 million from $236.2 million, while first-half revenue was nearly flat at $734.0 million versus $730.5 million a year earlier. Income from operations expanded more than revenue did, rising to $33.2 million in the quarter from $27.2 million and to $196.0 million for the first half from $181.6 million, as total operating expenses grew only marginally.
The two reporting segments moved in different directions. Net income at the core NW Natural gas-distribution segment fell $1.0 million, or $0.03 a share, year over year in the quarter, as higher operations-and-maintenance expense and depreciation offset margin gains from the Oregon rate case, a reversal from the first quarter, when the segment's net income had risen $9.6 million year over year. SiEnergy, the Texas gas utility Northwest Natural acquired last year, added $1.0 million, or $0.02 a share, in the quarter on customer growth and deferral benefits tied to Texas HB 4384, along with a first full quarter of contribution from the Pines system; that gain was smaller than the $4.6 million SiEnergy added over the first half as a whole.
Rising financing and depreciation costs weighed on the bottom line even as operating income improved. Interest expense, net, climbed 9.4% to $33.4 million in the quarter from $30.5 million, and to $66.7 million for the first half from $59.9 million, while depreciation rose to $44.2 million from $41.5 million in the quarter and to $88.3 million from $82.0 million for the half. Diluted shares outstanding also grew, to 42,178,000 from 40,482,000, diluting per-share results even as consolidated net income increased.
Regulatory outcomes moved forward on two fronts. Washington's utility commission approved the general rate case that Northwest Natural had filed in settlement form during the first quarter, with slightly revised second- and third-year revenue increases of $7.5 million and $7.4 million against the originally filed $7.7 million and $8.7 million; the new rates take effect Aug. 1, 2025. In Oregon, the company disclosed a multi-party settlement filed June 29, 2025, proposing a $13.0 million revenue requirement increase, down from the original $15.6 million request, with an expected effective date of Oct. 31, 2025.
Capital spending kept pace with the company's growth plan, with $235 million invested in the first half of 2025, implying about $121 million in the second quarter versus $114 million in the first, tracking toward full-year guidance of $500 million to $550 million, up from $467 million actually spent in 2024. That spending underpins the higher depreciation and interest costs pressuring per-share results even as the company signals confidence in its ability to reach the top of its earnings range for the year.