NW Natural's Q3 Loss Widens, YTD Income Jumps on Revenue Growth

TL;DR

**NWN's Q3 loss is a blip; strong YTD revenue and strategic asset growth make it a buy for long-term utility investors.**

AI Summary

NORTHWEST NATURAL HOLDING COMPANY (NWN) reported a net loss of $29.89 million for the three months ended September 30, 2025, a slight increase from the $27.17 million net loss in the same period of 2024. Despite this, year-to-date net income for the nine months ended September 30, 2025, significantly improved to $55.53 million, up from $33.87 million in 2024. Operating revenues increased to $164.73 million for the quarter, compared to $136.93 million in 2024, and rose to $895.21 million year-to-date from $782.12 million. The company experienced a substantial increase in interest expense, net, reaching $30.44 million for the quarter, up from $19.06 million in 2024, and $90.32 million year-to-date, compared to $58.90 million. Total assets grew to $5.85 billion as of September 30, 2025, from $4.94 billion in 2024, driven by an increase in property, plant, and equipment, net, to $4.25 billion from $3.61 billion. Goodwill also saw a significant jump to $371.04 million from $181.39 million, indicating potential acquisitions. Cash provided by operating activities increased to $265.85 million for the nine months ended September 30, 2025, from $219.70 million in 2024.

Why It Matters

For investors, the widening Q3 net loss to $29.89 million, coupled with a significant increase in interest expense to $30.44 million, signals potential margin pressure in a rising interest rate environment. However, the strong year-to-date net income growth of 63.9% to $55.53 million and a 14.5% increase in operating revenues to $895.21 million demonstrate underlying business strength and effective cost management over a longer period. The substantial increase in goodwill to $371.04 million suggests strategic acquisitions are underway, which could impact future competitive positioning and market share in the utility sector. Employees and customers might see stability given the regulated nature of the business, but rising operational costs could eventually translate to rate adjustments.

Risk Assessment

Risk Level: medium — The company faces medium risk due to a significant increase in interest expense, net, rising from $19.06 million in Q3 2024 to $30.44 million in Q3 2025, and from $58.90 million to $90.32 million year-to-date. This indicates higher borrowing costs impacting profitability. Additionally, the substantial increase in goodwill from $181.39 million to $371.04 million could pose an impairment risk if acquired assets do not perform as expected.

Analyst Insight

Investors should closely monitor NWN's future interest expense trends and the performance of recently acquired assets, given the significant increase in goodwill. While the year-to-date revenue growth is positive, the widening Q3 net loss and rising debt costs warrant caution. Consider holding existing positions but delay new investments until there's clearer evidence of sustained profitability and successful integration of acquisitions.

Financial Highlights

revenue

$895.21M

total Assets

$5.85B

net Income

$55.53M

eps

$1.37

cash Position

$32.20M

revenue Growth

+14.45%

Revenue Breakdown

Key Numbers

• $29.89M — Net Loss (Q3 2025) (Increased from $27.17M in Q3 2024)
• $55.53M — Net Income (YTD 2025) (Increased from $33.87M in YTD 2024)
• $895.21M — Operating Revenues (YTD 2025) (Increased from $782.12M in YTD 2024)
• $30.44M — Interest Expense, Net (Q3 2025) (Increased from $19.06M in Q3 2024)
• $90.32M — Interest Expense, Net (YTD 2025) (Increased from $58.90M in YTD 2024)
• $5.85B — Total Assets (Sep 30, 2025) (Increased from $4.94B in Sep 30, 2024)
• $371.04M — Goodwill (Sep 30, 2025) (Increased from $181.39M in Sep 30, 2024)
• $265.85M — Cash from Operations (YTD 2025) (Increased from $219.70M in YTD 2024)
• $0.73 — Basic Loss Per Share (Q3 2025) (Increased from $0.71 in Q3 2024)
• $1.37 — Basic Earnings Per Share (YTD 2025) (Increased from $0.88 in YTD 2024)

Key Players & Entities

• NORTHWEST NATURAL HOLDING COMPANY (company) — Registrant and parent company
• NORTHWEST NATURAL GAS COMPANY (company) — Subsidiary and co-registrant
• $29.89 million (dollar_amount) — Net loss for Q3 2025
• $27.17 million (dollar_amount) — Net loss for Q3 2024
• $55.53 million (dollar_amount) — Net income for nine months ended September 30, 2025
• $33.87 million (dollar_amount) — Net income for nine months ended September 30, 2024
• $164.73 million (dollar_amount) — Operating revenues for Q3 2025
• $30.44 million (dollar_amount) — Interest expense, net for Q3 2025
• $90.32 million (dollar_amount) — Interest expense, net for nine months ended September 30, 2025
• $371.04 million (dollar_amount) — Goodwill as of September 30, 2025

FAQ

Risk Factors

• Regulatory Rate Setting Uncertainty [high — regulatory]: The company's profitability is subject to the decisions of state public utility commissions regarding rate increases. Delays or unfavorable decisions in rate cases can negatively impact earnings and cash flows. For example, the company is subject to ongoing regulatory proceedings that could affect future revenue.
• Increased Interest Expense [medium — financial]: Interest expense, net, significantly increased to $90.32 million year-to-date in 2025 from $58.90 million in 2024, a rise of over 53%. This increase is driven by higher debt levels and potentially higher interest rates, impacting net income.
• Commodity Price Volatility [medium — market]: While the cost of gas is largely passed through to customers, significant fluctuations in natural gas prices can impact working capital requirements and the timing of cash flows. The company manages this risk through hedging strategies.
• Infrastructure Modernization and Investment [medium — operational]: The company is investing heavily in its infrastructure, with Property, Plant, and Equipment, net, increasing to $4.25 billion. While necessary for reliability and safety, these capital expenditures require significant funding and are subject to regulatory approval.
• Goodwill Increase [medium — financial]: Goodwill increased substantially to $371.04 million from $181.39 million, indicating significant acquisitions. While this can drive growth, it also carries integration risks and potential for impairment if acquired businesses underperform.
• Economic Conditions and Inflation [medium — market]: The company's operations are sensitive to general economic conditions, including inflation and potential recessionary risks, which can affect customer demand and the company's ability to recover costs through rates.
• Climate Change and Decarbonization Policies [low — regulatory]: Evolving policies related to climate change and decarbonization, including the promotion of renewable natural gas and hydrogen, present both opportunities and risks. The company must adapt its business model and infrastructure to meet these evolving energy landscapes.

Industry Context

Northwest Natural Gas Co. operates in the regulated natural gas distribution sector, serving residential, commercial, and industrial customers. The industry is characterized by significant capital investment in infrastructure, reliance on regulatory rate-setting, and increasing focus on environmental sustainability and decarbonization initiatives. Competition is typically limited due to the nature of regulated monopolies.

Regulatory Implications

The company's operations are heavily influenced by state public utility commissions, which approve rates and capital investments. Changes in regulatory policy, particularly concerning environmental standards and the transition to lower-carbon energy sources, pose significant compliance and strategic challenges.

What Investors Should Do

1. Monitor regulatory filings and rate case outcomes.
2. Analyze the impact of increased interest expense.
3. Evaluate the strategic rationale and integration of acquisitions.
4. Assess the company's strategy for decarbonization and renewable energy.

Glossary

Goodwill

An intangible asset that arises when one company acquires another for a price greater than the fair market value of its net identifiable assets. It represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and recognized. (A significant increase in goodwill suggests substantial acquisitions, which can impact future earnings and carry integration risks.)

Regulatory Assets

Costs that have been incurred by a regulated utility but have not yet been recovered from customers through rates. These are typically recognized when it is probable that future recovery will occur. (The company has substantial regulatory assets ($140.50M current and $374.28M non-current), indicating significant costs that are expected to be recovered from customers over time.)

Accrued Unbilled Revenue

Revenue that has been earned but not yet billed to customers. This typically arises from the timing difference between the delivery of a service and the issuance of an invoice. (An increase in accrued unbilled revenue suggests higher service delivery or a lag in billing cycles, impacting short-term cash flow.)

Other Comprehensive Income (Loss)

A measure of changes in equity that result from transactions and other events and circumstances from nonowner sources. It includes items like unrealized gains or losses on certain investments and foreign currency translation adjustments. (The company reported a loss in other comprehensive income for Q3 2025, primarily due to unrealized losses on interest rate swaps.)

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life. For utilities, this is a significant non-cash expense related to their extensive infrastructure. (Depreciation expense increased significantly in Q3 2025 ($40.51M) and year-to-date ($122.55M), reflecting ongoing investments in property, plant, and equipment.)

Year-Over-Year Comparison

Northwest Natural Holding Company reported a mixed financial performance compared to the prior year. While operating revenues saw a healthy increase of 14.45% year-to-date to $895.21 million, driven by higher volumes and rates, the company experienced a wider net loss of $29.89 million in the third quarter of 2025, compared to $27.17 million in the same period of 2024. However, year-to-date net income improved significantly to $55.53 million from $33.87 million. A key concern is the substantial increase in interest expense, net, which rose over 53% year-to-date, impacting profitability. Total assets also grew considerably, driven by investments in property, plant, and equipment, and a notable increase in goodwill, suggesting recent acquisitions.

Filing Documents

• nwn-20250930.htm (10-Q) — 3343KB
• ex102northwestnaturalholdc.htm (EX-10.2) — 772KB
• ex103nwnopcosecondamendeda.htm (EX-10.3) — 779KB
• ex104nwnsienergy2025credit.htm (EX-10.4) — 786KB
• ex105northwestnaturalterml.htm (EX-10.5) — 36KB
• ex3112025q3.htm (EX-31.1) — 8KB
• ex3122025q3.htm (EX-31.2) — 8KB
• ex3132025q3.htm (EX-31.3) — 8KB
• ex3142025q3.htm (EX-31.4) — 8KB
• ex3212025q3.htm (EX-32.1) — 6KB
• ex3222025q3.htm (EX-32.2) — 6KB
• image_0.jpg (GRAPHIC) — 2KB
• image_01.jpg (GRAPHIC) — 2KB
• image_01a.jpg (GRAPHIC) — 2KB
• nwn-20250930_g1.jpg (GRAPHIC) — 56KB
• nwn-20250930_g2.jpg (GRAPHIC) — 38KB
• 0001733998-25-000176.txt ( ) — 19299KB
• nwn-20250930.xsd (EX-101.SCH) — 84KB
• nwn-20250930_cal.xml (EX-101.CAL) — 114KB
• nwn-20250930_def.xml (EX-101.DEF) — 642KB
• nwn-20250930_lab.xml (EX-101.LAB) — 930KB
• nwn-20250930_pre.xml (EX-101.PRE) — 771KB
• nwn-20250930_htm.xml (XML) — 3509KB

Forward-Looking Statements

Forward-Looking Statements 3 Item 1. Unaudited Financial Statements: Consolidated Statements of Comprehensive Income of Northwest Natural Holding Company for the three and nine months ended September 30, 2025 and 2024 5 Consolidated Balance Sheets of Northwest Natural Holding Company at September 30, 2025 and 2024 and December 31, 2024 6 Consolidated Statements of Shareholders' Equity of Northwest Natural Holding Company for the three and nine months ended September 30, 2025 and 2024 8 Consolidated Statements of Cash Flows of Northwest Natural Holding Company for the nine months ended September 30, 2025 and 2024 9 Consolidated Statements of Comprehensive Income of Northwest Natural Gas Company for the three and nine months ended September 30, 2025 and 2024 10 Consolidated Balance Sheets of Northwest Natural Gas Company at September 30, 2025 and 2024 and December 31, 2024 11 Consolidated Statements of Shareholder's Equity of Northwest Natural Gas Company for the three and nine months ended September 30, 2025 and 2024 13 Consolidated Statements of Cash Flows of Northwest Natural Gas Company for the nine months ended September 30, 2025 and 2024 14 Notes to Unaudited Consolidated Financial Statements 15 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 51 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 77 Item 4.

Controls and Procedures

Controls and Procedures 77

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 78 Item 1A.

Risk Factors

Risk Factors 78 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 78 Item 5. Other Information 78 Item 6. Exhibits 82

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to the safe harbors created by such Act. Forward-looking statements can be identified by words such as anticipates, assumes, may, intends, plans, projects, seeks, should, believes, estimates, expects, will, could, and similar references (including the negatives thereof) to future periods, although not all forward-looking statements contain these words. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, projections and predictions; objectives, goals, visions or strategies; assumptions, generalizations and estimates; ongoing continuation of past practices or patterns; future events or performance; trends; risks; uncertainties; timing and cyclicality; economic conditions, including impacts of inflation, interest rates, recessionary risk, the imposition and/or announcement of tariffs imposed on the import of certain goods into the U.S. from various countries and general economic uncertainty; earnings and dividends; capital expenditures and allocation; capital markets or access to capital; capital or organizational structure; matters related to climate change and our role in decarbonization or a lower-carbon future; renewable natural gas, environmental attributes related thereto, and hydrogen; our strategy to reduce greenhouse gas emissions and the efficacy of communicating that strategy to shareholders, investors, stakeholders and communities; potential impacts of the federal budget or debt ceiling matters, including the current U.S. federal government shutdown; the policies and priorities of the current presidential administration and U.S. Congress; growth; customer rates; labor relations and workforce succession; commodity costs; desirability and cost

CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS NORTHWEST NATURAL HOLDING COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, In thousands, except per share data 2025 2024 2025 2024 Operating revenues $ 164,728 $ 136,934 $ 895,206 $ 782,118 Operating expenses: Cost of gas 39,428 38,902 276,922 287,589 Operations and maintenance 76,785 63,940 239,533 202,504 Environmental remediation 1,247 1,151 9,796 9,226 General taxes 12,066 10,886 39,913 38,207 Revenue taxes 5,669 5,275 33,357 32,730 Depreciation 40,510 34,552 122,545 101,412 Other operating expenses 1,446 1,560 3,998 4,249 Total operating expenses 177,151 156,266 726,064 675,917 Income (loss) from operations ( 12,423 ) ( 19,332 ) 169,142 106,201 Other income (expense), net 929 930 ( 1,747 ) ( 198 ) Interest expense, net 30,435 19,060 90,321 58,902 Income (loss) before income taxes ( 41,929 ) ( 37,462 ) 77,074 47,101 Income tax (benefit) expense ( 12,039 ) ( 10,295 ) 21,548 13,232 Net income (loss) ( 29,890 ) ( 27,167 ) 55,526 33,869 Other comprehensive income (loss): Change in employee benefit plan liability, net of taxes of $ — and $ 58 for three months ended and $ — and $ 9 for the nine months ended September 30, 2025 and 2024, respectively — ( 58 ) — ( 192 ) Amortization of non-qualified employee benefit plan liability, net of taxes $( 1 ) and $ 54 for the three months ended and $ 49 and $ 155 for the nine months ended September 30, 2025 and 2024, respectively 200 153 549 432 Unrealized (loss) gain on interest rate swaps, net of taxes $ 14 and $ 279 for the three months ended and $ 62 and $ 133 for the nine months ended September 30, 2025 and 2024, respectively ( 40 ) ( 775 ) ( 171 ) ( 371 ) Comprehensive income (loss) $ ( 29,730 ) $ ( 27,847 ) $ 55,904 $ 33,738 Average common shares outstanding: Basic 41,184 38,394 40,640 38,356 Diluted 41,184 38,394 40,718 38,412 Earnings (loss) per share of comm

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements represent the respective, consolidated financial results of Northwest Natural Holding Company (NW Holdings) and Northwest Natural Gas Company (NW Natural) and all respective companies that each registrant directly or indirectly controls, either through majority ownership or otherwise. This is a combined report of NW Holdings and NW Natural, which includes separate consolidated financial statements for each registrant. NW Natural's regulated natural gas distribution activities are reported in the NWN Gas Utility reportable segment, which was previously referred to as the natural gas distribution (NGD) segment prior to 2025. The NWN Gas Utility segment serves residential, commercial, and industrial customers in Oregon and southwest Washington. SiEnergy Operating, LLC (SiEnergy Gas Utility or SiEnergy), which was acquired January 7, 2025, owns SiEnergy Gas, LLC, which is a regulated natural gas distribution utility, and ser

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