Inve US ▾
NWNWN

Northwest Natural Holding Company (NWN) Q2 FY26 earnings call: guidance

Earnings call· Jun 2026 (Q2 FY26)· Utilities· Aug 5, 2026

Source: earnings call transcript

Executive summary

Northwest Natural Holding Company Q2 FY26 — Strong Performance and Regulatory Progress Drive Top-Half EPS Outlook

Northwest Natural Holding Company delivered a solid second quarter, exceeding internal expectations and prompting an upgrade to the top half of its full-year EPS guidance. Strong customer growth in SiEnergy and favorable regulatory outcomes across its gas utility segments underpinned performance. The company continues to advance strategic projects like the MX3 gas storage expansion, which is poised to enhance future earnings growth, while managing costs and maintaining robust liquidity.

Highlights

5

  • Q2 and YTD EPS surpassed expectations, leading to an updated FY26 EPS outlook in the top half of the $2.95 to $3.15 range.

  • SiEnergy achieved over 15% organic customer growth and maintains a backlog of over 260,000 future meters.

  • Northwest Natural Gas secured favorable regulatory outcomes, including over 80% of requested revenue increase in Washington and a $13 million ARM settlement in Oregon.

  • The MX3 gas storage expansion project is progressing as planned, with conditional use permit secured and expected to increase long-term EPS growth target to 5-7% upon Notice to Proceed.

  • The company maintains strong liquidity with $628 million available and successfully completed a $75 million investment-grade Water bond issuance.

Concerns

2

  • Northwest Natural Water's financial results for H1 2026 were modestly below plan, though peak volume months are ahead.

  • An appeal has been filed against the MX3 conditional use permit, though the project timeline remains unchanged.

Guidance & targets

CategoryTargetConfidence
Adjusted EPS
Top half of $2.95 to $3.15 per share
high materiality
High
Long-term earnings growth target
4% to 6%
high materiality
High
Long-term earnings growth target (post-MX3)
5% to 7%
high materiality
High
MX3 Notice to Proceed
by the end of 2027
high materiality
High
MX3 In-service date
2029
high materiality
High
Capital expenditure plan
approximately $500 million to $550 million
high materiality
High
Net long-term debt issuance
approximately $150 million
medium materiality
High
Equity issued through ATM program
roughly $40 million to $50 million
medium materiality
High
SiEnergy customer growth
approximately 15% to 20% annually
medium materiality
High
SiEnergy and Water EPS contribution
approximately 25% of our EPS
medium materiality
High
Dividend payout ratio target
55% to 65%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Northwest Natural Gas
Higher margin from rates in Oregon was offset by increased operations and maintenance expense and continued investment in the system, resulting in higher depreciation expense and financing costs. Expected stronger performance in H2 due to new Washington rates and Oregon ARM.
EPS: $0.09 (Q2 FY26)EPS: $0.12 (Q2 FY25)Infrastructure investment H1 2026: >$165 million
————
SiEnergy
Results were primarily driven by customer growth and the benefit of deferring depreciation, interest, and general taxes. Benefited from a full quarter of earnings contribution from Pines, acquired on June 2, 2025.
EPS: $0.05 (Q2 FY26)EPS: $0.03 (Q2 FY25)Organic customer growth: >15%
————
Northwest Natural Water
Higher operating revenues from organic growth and acquisition were offset by higher O&M as the company supports platform integration and centralization. Financial results for H1 2026 were modestly below plan, but peak volume months are ahead.
EPS: $0.05 (Q2 FY26)EPS: $0.07 (Q2 FY25)Customer growth (12 months ended Jun 30, 2026): 3.4%
————

Orderbook & backlog

SiEnergy future meters backlog 260,000 Q2 FY26

Expected to fuel growth for many years to come, with anticipated customer growth of 15% to 20% annually through 2030.

MX3 gas storage capacity 4 to 5 Bcf Q2 FY26

Fully contracted with 25-year agreements, 12.5% return on equity, 50% equity capital structure. Notice to Proceed expected by end of 2027, in-service in 2029.

Deals & partnerships

Pines Acquisition of a utility business

Acquired on June 2, 2025.

Capital programs

2026 Capital Expenditure Plan underway $500 million to $550 million
Spent to date: $165 million (H1 2026 for Northwest Natural Gas)
Funding: Operating cash flow, $150 million net long-term debt issuance, $40 million to $50 million equity through ATM program
Start: FY26

Benefit:Supports investment opportunities across all 3 utility platforms, customer growth, system reliability, modern, resilient natural gas network

The plan remains in the range of approximately $500 million to $550 million and continues to support investment opportunities across all 3 utility platforms.

MX3 Gas Storage Expansion Project underway $300 million
Funding: 50% equity capital structure (implied debt for remaining)

Benefit:4 to 5 Bcf of capacity

FERC-regulated project, fully contracted with 25-year agreements, 12.5% return on equity. Recently received conditional use permit in Columbia County. Notice to Proceed expected by end of 2027.

Risks & headwinds

Appeal filed against MX3 conditional use permit

An appeal has been filed with the Land Use Board of Appeals.

Mitigation:Company's timeline already contemplated potential for additional process and therefore remains unchanged. Notice to Proceed still expected by end of 2027.

Northwest Natural Water financial results modestly below plan H1 2026

modestly below plan

Mitigation:Peak volume months of the year still lie ahead. Company is making solid regulatory and strategic progress to support growth over the long term, including platform integration and centralization.

What to watch in Q3 FY26

SiEnergy Rate Case Outcome

Later this year
Current Filed May 4, progressing constructively
Target New rates take effect, GRIP mechanism implemented

Why it matters

Will impact SiEnergy's revenue and profitability, a key growth driver for the company.

We continue to constructively work through the rate case, including the factors needed to implement the GRIP mechanism and expect new rates to take effect later this year.

Find out whether NWN delivers this. Inve re-checks your case every morning.

2 min read 6 chapters

Detailed narrative

Strong Q2 Performance and Upgraded Outlook

The company reported a solid second quarter, with EPS of $0.01, flat year-over-year but above expectations. Year-to-date EPS reached $2.33, up from $2.28 in 2025. This strong performance and improved visibility led management to expect full-year 2026 EPS to be in the top half of their $2.95 to $3.15 guidance range, reflecting disciplined execution and effective cost management.

Regulatory Successes in Gas Utilities

Northwest Natural Gas achieved significant regulatory progress. In Washington, the company received over 80% of its requested revenue increase, a 9.5% ROE, and a 50% equity capital structure, with new rates effective August 1. In Oregon, a multiparty settlement for an alternative rate mechanism was filed, providing for a $13 million revenue requirement, with new rates expected by October 31, 2026. The company is also actively engaged in Oregon's multiyear rate plan rulemaking, with Phase 1 completed and Phase 2 underway, aiming for a new GRC filing in 2028.

SiEnergy's Robust Growth in Texas

The Texas-based SiEnergy segment continued its strong performance, driven by over 15% organic customer growth. The company boasts a backlog of over 260,000 future meters and anticipates annual customer growth of 15% to 20% through 2030. SiEnergy is also progressing its rate case with the Texas Railroad Commission, expecting new rates to take effect later this year, including the implementation of the GRIP mechanism.

Northwest Natural Water's Strategic Development

The Water business continues to grow, with 3.4% customer growth over the last 12 months ended June 30, 2026. While H1 2026 financial results were modestly below plan, the company is focused on platform integration and centralization to scale the business. Four active rate case proceedings are underway across Oregon, Texas, and Arizona, and the company successfully completed a $75 million investment-grade Water bond issuance, further reflecting the platform's maturity.

MX3 Storage Expansion Project Progress

The $300 million MX3 FERC-regulated gas storage expansion project is advancing, having secured its conditional use permit in Columbia County with unanimous approval. Despite an expected appeal to the Land Use Board of Appeals, the project timeline remains unchanged, with Notice to Proceed anticipated by the end of 2027 and an in-service date in 2029. This project is expected to add 4-5 Bcf of capacity and increase the long-term EPS growth target to 5-7% upon its commencement.

Capital Investment and Financing Strategy

Northwest Natural invested over $165 million in infrastructure in H1 2026 to support customer growth and system reliability. The company's 2026 capital expenditure plan remains between $500 million and $550 million, funded by operating cash flow, approximately $150 million in net long-term debt, and roughly $40 million to $50 million from its ATM program. The company maintains strong liquidity of $628 million as of quarter end.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.