Acquisition expands NWN’s presence in Texas
Northwest Natural Holding Company (NYSE: NWN) (NW Natural
Holdings) today announced it entered into an agreement to acquire
SiEnergy Operating, LLC (SiEnergy or the Company) from SiEnergy
Capital Partners, LLC (an affiliate of Ridgewood Infrastructure)
for $273 million in cash and the assumption of $152 million of
debt. Upon closing the transaction, which is expected to occur in
the first quarter of 2025, SiEnergy will become a wholly owned
subsidiary of NW Natural Holdings.
SiEnergy is one of the fastest growing natural gas distribution
utilities in the nation. The Company serves approximately 70,000
residential and commercial customers in the greater metropolitan
areas of Houston, Dallas, and Austin (known as the Texas Triangle).
SiEnergy has grown organically by providing infrastructure to
residential and commercial developments in high-growth areas and
has a current contracted customer backlog of over 180,000.
SiEnergy’s regulated business model generates stable earnings and
is well positioned for future investment opportunities as
communities and new developments in the Texas Triangle continue to
expand.
As of Dec. 31, 2024, SiEnergy is expected to have approximately
$247 million in rate base and to have achieved rate base and
customer growth of 26% and 22% compounded annually, respectively,
over the last five years ending in 2024. NW Natural Holdings
expects capital expenditures for the Company to be in the range of
$450 million to $650 million over the next five years. We estimate
rate base growth of 6% to 8% from 2023 to 2028 for our regulated
utilities, an increase over our previous 5% to 7% projection.
“The acquisition of SiEnergy builds on our core strength of
operating utilities and delivering essential services to
customers,” said David H. Anderson, CEO of NW Natural Holdings.
“Texas is one of the fastest growing states in the nation with a
constructive regulatory and policy environment. SiEnergy has a
substantial number of contracts to add new customers in the coming
years. We believe we will be well positioned to capture additional
growth as Texas' population expands and new housing developments
provide opportunities for new customers.”
“We have a proven track record of acquiring utilities,
supporting growth and delivering safe and reliable service to
customers. This acquisition directly aligns with our strategic and
financial goals,” said Justin B. Palfreyman, president of NW
Natural Holdings. “Through this transaction, we expect to
meaningfully increase our presence in Texas, creating more
opportunities for organic growth, and setting the stage for future
growth. We are excited for SiEnergy to join the team and will aim
to build on their incredible track record and drive shareholder
value.”
The transaction is expected to further support management's
long-term EPS growth outlook of 4% to 6%. In addition, NW Natural
Holdings reaffirmed its 2024 EPS guidance in the range of $1.94 to
$2.14 on a GAAP basis or $2.20 to $2.40 on a non-GAAP Adjusted
Basis1.
NW Natural Holdings expects to finance the cash portion of the
acquisition with junior subordinated notes in the first half of
2025. We do not anticipate issuing common equity to directly fund
this transaction. NW Natural Holdings has obtained a committed
interim term loan from J.P. Morgan Securities LLC to fund the
purchase price of $273 million.
The transaction is expected to close in the first quarter of
2025 subject to customary closing conditions including expiration
of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. No regulatory approval is
needed from the Railroad Commission of Texas to close this
transaction.
J.P. Morgan Securities LLC is serving as exclusive financial
advisor to NW Natural Holdings with Stoel Rives, LLP serving as
legal advisor.
Conference Call and Webcast
NW Natural Holdings will host a conference call and webcast to
discuss the acquisition. A presentation is available for the call
and can be accessed on our Investor Relations website.
Date and Time:
Tuesday, Nov. 19, 2024
8 a.m. PT (11 a.m. ET)
Phone Numbers:
United States 1-833-470-1428
International 1-404-975-4839
Passcode 002854
The call will also be webcast in a listen-only format for the
media and general public and can be accessed on our Investor
Relations website. A replay of the conference call will be
available on our website and by dialing 1-866-813-9403 (U.S.) and
1-929-458-6194 (international). The replay access code is
832303.
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 165 years. It owns Northwest 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 Holdings was recognized by
Ethisphere® for three years running as one of the World’s Most
Ethical Companies®. NW Natural consistently leads the industry with
high J.D. Power & Associates customer satisfaction scores.
Learn more in our latest Community and Sustainability Report.
NW Natural is a local distribution company that currently
provides natural gas service to approximately 2 million people in
more than 140 communities through more than 800,000 meters in
Oregon and Southwest Washington with one of the most modern
pipeline systems in the nation. NW Natural owns and operates 21.6
Bcf of underground gas storage capacity in Oregon.
NW Natural Water provides water distribution and wastewater
services to communities throughout the Pacific Northwest, Texas,
Arizona, and California. Today NW Natural Water serves over 188,000
people through approximately 76,000 meters and provides operation
and maintenance services to an additional 22,000 connections. Learn
more about our water business.
NW Natural Renewables is committed to leading in the energy
transition by providing renewable fuels to support decarbonization
in the utility, commercial, industrial and transportation sectors.
Learn more about our renewable business.
Additional information is available at
nwnaturalholdings.com.
“World’s Most Ethical Companies” and “Ethisphere” names and
marks are registered trademarks of Ethisphere LLC
2024 Guidance and Long-Term Targets
NW Natural Holdings reaffirmed its 2024 GAAP EPS guidance of
$1.94 to $2.14, or $2.20 to $2.40 on a non-GAAP Adjusted Basis1.
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.
2024 EPS Guidance Reconciliation
Table
GAAP EPS Guidance
$1.94 to $2.14
Regulatory Disallowance2
0.26
Adjusted EPS Guidance1
$2.20 to $2.40
NW Natural Holdings reaffirmed its long-term EPS growth rate
target of 4% to 6% compounded annually from 2022 through 2027. 2022
EPS was $2.54.
1 See "Non-GAAP Financial Measures" for a
definition and further information on Adjusted Basis EPS.
2 Non-GAAP guidance excludes the $13.7
million non-cash, pre-tax regulatory charge (approximately $10.1
million or $0.26 per share after-tax) related to the Oregon general
rate case recorded in the fourth quarter of 2024. Impact on EPS
assumes average diluted shares of 39.0 million and an income tax
rate of 26.5%.
Non-GAAP Financial Measures
Management uses "adjusted net income" and "adjusted basis
earnings per share," both of which are non-GAAP financial measures,
when evaluating NW Natural Holdings' overall performance.
Management believes that these non-GAAP measures provide meaningful
information to investors about NW Natural Holdings' performance
because they eliminate the impacts of significant discrete items
that can affect the comparison of period-over-period results. In
addition to presenting the results of operations and earnings
amounts in total, certain financial measures are expressed in cents
per share, which are non-GAAP financial measures. All references to
EPS are on the basis of diluted shares.
Such non-GAAP financial measures are used 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. Our non-GAAP
financial measures should not be considered a substitute for, or
superior to, measures calculated in accordance with U.S. GAAP.
Moreover, these non-GAAP financial measures have limitations in
that they do not reflect all the items associated with the
operations of the business as determined in accordance with GAAP.
Other companies may calculate similarly titled non-GAAP financial
measures differently than how such measures are calculated in this
report, limiting the usefulness of those measures for comparative
purposes. A reconciliation of each non-GAAP financial measure to
the most directly comparable GAAP financial measure is provided in
the table above.
Forward-Looking Statements
This press release, and other presentations made by NW Natural
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," “continues,” “could,” "intends,"
"plans," "seeks," "believes," "estimates," "expects," "will" 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, forecasts, outlook, timing, goals, visions,
strategies, commitments, future events, financial positions,
acquisition strategy and pending acquisitions, and timing,
approval, completion and integration thereof, investments,
valuations, timing and amount of capital expenditures, rate base
growth, strategic fit, performance, risks, risk profile, stability,
the likelihood and success associated with any transaction,
customer and business growth, growth opportunities, weather,
customer rates or rate recovery, investment strategy and financial
effects of acquisitions, shareholder return and value, financial
results, including estimated income, availability and sources of
liquidity, capital markets, financing transactions, debt or equity
issuances, expenses, positions, revenues, returns, cost of capital,
timing, and earnings, earnings guidance and estimated future growth
rates, regulatory strategy, performance, timing, outcome, or
effects of regulatory proceedings or mechanisms or approvals,
accounting treatment of future events, economic and political
conditions, effects of legislation or changes in laws or
regulations, inflation, geopolitical uncertainty, 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, geopolitical
factors, 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,
which, among others, outline legal, regulatory and legislative
risks, public health risks, financial, macroeconomic and
geopolitical risks, growth and strategic risks, operational risks,
business continuity and technology risks, environmental risks and
risks related to our water and renewables businesses.
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 Natural 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 Natural 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241118390111/en/
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
Northwest Natural (NYSE:NWN)
Historical Stock Chart
From Oct 2024 to Nov 2024
Northwest Natural (NYSE:NWN)
Historical Stock Chart
From Nov 2023 to Nov 2024
