NW Natural Holdings Reports Third Quarter and Year-To-Date 2018 Results

Portland, Oregon, UNITED STATES

Affirms earnings guidance for 2018 in the range of $2.10 to $2.30 per share

PORTLAND, Ore., Nov. 06, 2018 (GLOBE NEWSWIRE) -- Northwest Natural Holding Company, (NW Holdings) (NYSE: NWN), reported financial results and highlights of Northwest Natural Gas Company (NW Natural) as a result of NW Natural being reorganized into a holding company structure on Oct. 1, 2018. The highlights include:

  • Third quarter 2018 consolidated net loss of $0.41 per share, compared to $0.30 per share for 2017
  • Year-to-date 2018 consolidated net income of $1.00 per share, compared to $1.20 per share for 2017
  • Added more than 12,500 natural gas customers over the last 12 months equating to a 1.7% customer growth rate
  • Awarded the highest customer satisfaction score among large utilities in the West for the sixth year in a row and third highest score in the nation (2018 J.D. Power Gas Utility Residential Customer Satisfaction Study)
  • Received Oregon general rate case order with an expected annual pre-tax earnings benefit of about $14.2 million
  • Lowered residential customer rates by 2.1% in Oregon and 7.2% in Washington for the upcoming winter heating season from the combined effect of the Purchased Gas Adjustment (PGA) mechanism and Oregon general rate case
  • Signed purchase agreement for water utility and wastewater business and closed four water acquisitions
  • Increased dividends for the 63rd consecutive year with an annual indicated dividend rate of $1.90 per share

"We continued to execute on all aspects of our long-term strategy. This quarter, I'm proud to report our utility continues to have one of the highest growth rates in the nation and customers once again recognized our employees for exceptional service," said David H. Anderson, president and chief executive officer of NW Holdings and NW Natural.

"I'm also excited that we signed our largest water acquisition agreement to date, which when closed will add 9,400 customer connections to our growing water platform and bring wastewater treatment expertise to the portfolio," Anderson added.

As previously reported, results during 2018 have been affected by a timing difference between the revenue deferral associated with tax reform and the effect on tax expense from the lower federal tax rate. For the first nine months of 2018, the deferral and tax benefit largely offset; however, there have been timing variances each quarter. In the first quarter of 2018, the utility segment benefited from this timing and that benefit reversed in the second and third quarters. As of Nov. 1, 2018, Oregon rates have been reset and a revenue deferral for tax savings is no longer necessary. Therefore, we do not anticipate significant timing variances going forward.

NW Natural's third quarter 2018 consolidated net loss increased $3.3 million to a loss of $11.8 million (or $0.41 per share), compared to a loss of $8.5 million (or $0.30 per share) for the same period in 2017. The third quarter reflects the seasonal nature of the gas utility's earnings where the majority of revenues are generated during the winter heating season in the first and fourth quarters each year. The $3.3 million higher loss is primarily due to additional operations and maintenance costs and lower tax benefits, partially offset by contributions from utility margin.

NW Natural's year-to-date 2018 consolidated net income decreased $5.8 million to $28.7 million (or $1.00 per share), compared to net income of $34.5 million (or $1.20 per share) for the same period in 2017. Results reflected lower utility margin from colder than average weather in 2017 and higher operations and maintenance costs, partially offset by margin contributions from customer growth.


NW Natural's Oregon Rate Case
On Oct. 26, 2018, the Public Utility Commission of Oregon (OPUC) provided an order regarding NW Natural's general rate case and approved the following items effective beginning Nov. 1, 2018:

  • Annual revenue requirement increase of $23.4 million or 3.72% over existing rates;
  • Annual net earnings benefit to the Company of approximately $14.2 million, pre-tax with an estimated $4 million benefit expected in the fourth quarter of 2018 and an estimated annual cash flow benefit of $15 million;
  • Capital structure of 50% debt and 50% equity;
  • Return on equity of 9.4%;
  • Cost of capital of 7.317%;
  • Rate base of $1.186 billion or an increase of $300 million since the last rate case in 2012;
  • Pension expense recovery through rates with a revenue increase of $8.1 million; and
  • Asset management revenue sharing related to utility pipeline and storage assets increased to 90%/10% with 90% being credited to customers.

In addition, the Commission ordered the means by which federal income tax reform benefits will be returned to customers and the recovery of the balance of the pension balancing account should be determined by Feb. 1, 2019 in a proceeding. On Oct. 31, 2018, the pension balancing account was frozen as ordered.

Tax Reform
Federal tax reform was enacted in December 2017. Tax reform, among other things, lowered the federal corporate income tax rate to 21% from the previous maximum rate of 35%. Changes in deferred taxes within our regulated operations as a result of tax reform are recorded as adjustments to regulatory liability accounts.

As of Sept. 30, 2018, we estimated the regulatory liability for historical deferred taxes to be $216.6 million for NW Natural's utility segment. Approximately 90% of this liability relates to the Oregon jurisdiction. A proceeding has been ordered by the OPUC to determine how these tax savings will be used to the benefit of customers. We expect this proceeding to conclude by Feb. 1, 2019.

Beginning Jan. 1, 2018, we have deferred the estimated effect of tax reform on customer rates until rates could be reset. For the first six months of 2018, we deferred revenues of $9.2 million pre-tax (or $6.8 million after-tax based on a 26.5% statutory tax rate) into a liability to be used to the benefit of customers. We adjusted our estimate in the third quarter and consequently, recognized a pre-tax benefit of $2.2 million in utility margin (or $1.6 million after-tax). For the first nine months of 2018, we deferred revenues of $7.0 million pre-tax (or $5.1 million after-tax). We currently estimate the total regulatory revenue deferral for 2018 to be approximately $8 million pre-tax plus interest.

North Mist Expansion Project
NW Natural continues free-flow natural gas injections into the reservoir and has completed base gas injections. Due to the project's contractor experiencing delays constructing the compressor station, NW Natural is currently targeting an in-service date of March 31, 2019. The estimated cost of the expansion is $144 million or an increase of $12 million from the previous estimate of $132 million reflecting additional costs associated with the delay. The investment will be included in rate base under an established tariff when it is placed into service. We have an initial 30-year service contract with Portland General Electric and options to extend the contract totaling up to an additional 50 years upon mutual agreement.

The project is designed to provide long-term, no-notice underground gas storage service to support gas-fired electric generating facilities that are intended to facilitate the integration of wind power into the region's electric generation mix. Natural gas storage enables electric generation to adjust quickly when renewable energy, such as wind and solar, rises and falls. This service is designed to allow the local electric company to draw on our North Mist facility to meet its fueling needs and rapidly respond to natural variability in wind generation.

Water Acquisitions
In October 2018, NW Natural Water (NW Water), through a subsidiary, entered into our largest water acquisition to date that will add 9,400 water and wastewater connections serving about 20,000 people during peak season in Sunriver, Oregon. NW Water expects to close this transaction in the first half of 2019. In addition, to date in 2018, we've closed four water transactions and now serve approximately 22,000 people through 7,350 water connections in the Pacific Northwest.

Upon closing the Sunriver transaction, cumulatively, NW Water will serve nearly 42,000 people through 16,750 connections with total investments of approximately $67 million. These aggregate acquisitions are projected to be accretive to NW Holdings’ earnings per share in the first full year of operations. While their ongoing operations are not expected to have an immediately material impact on earnings, these acquisitions mark NW Holdings' continued commitment to building a water platform and are intended to provide investors with a risk profile that is similar to our core regulated gas utility.

Holding Company Reorganization
On Oct. 1, 2018, NW Natural completed the formation of a holding company structure to better position it to be able to respond to opportunities and risks in a manner that serves the interests of its shareholders and customers. We continuously look for growth opportunities and believe the holding company structure is a more agile and efficient platform from which to pursue, finance and oversee new opportunities, such as in the water sector. At the completion of the reorganization, NW Natural became a wholly-owned subsidiary of NW Holdings, with NW Holdings' common stock being listed and traded on the New York Stock Exchange. Upon reorganization, NW Natural common stock was converted into the same relative percentages of NW Holdings that each shareholder owned of NW Natural immediately prior to the reorganization.

Gill Ranch Sale Agreement
In June 2018, NW Natural entered into an agreement to sell its wholly-owned subsidiary Gill Ranch for an initial cash purchase price of $25 million, with an earn out provision and subject to a working capital adjustment. The agreement followed a comprehensive review process that concluded Gill Ranch was no longer core to our strategy. We expect the transaction to close within 12 months of the signing and in 2019. The closing is subject to approval by the California Public Utilities Commission and other customary closing conditions.

As a result of our strategic shift away from California gas storage and the significance of Gill Ranch's financial results in 2017, we have presented Gill Ranch in discontinued operations in our financial statements and discussion.

Additionally, NW Natural reevaluated its reportable segments during the second quarter given the strategic shift and determined separate reporting of a gas storage segment is not required. The non-utility Mist gas storage operations are now reported in other activities along with results from our natural gas appliance retail center operations, costs associated with the regulated water strategy and formation of a holding company, as well as other business development activities and investments. All prior periods have been reclassified to reflect these changes.


Segment Results
The following financial comparisons are between the third quarter of 2018 and the same period in 2017 with individual quarter-over-quarter drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted.

NW Natural's third quarter results are summarized by business segment in the table below:

 Three Months Ended September 30,
 2018 2017 Change
In thousands, except per share dataAmountPer Share AmountPer Share AmountPer Share
Net income (loss) from continuing operations:        
Utility segment$(11,983)$(0.42) $(10,349)$(0.36) $(1,634)$(0.06)
Other839 0.03  2,462 0.08  (1,623)(0.05)
Net income (loss) from continuing operations$(11,144)$(0.39) $(7,887)$(0.28) $(3,257)$(0.11)
Loss from discontinued operations, net of tax(650)(0.02) (608)(0.02) (42) 
Consolidated net income (loss)$(11,794)$(0.41) $(8,495)$(0.30) $(3,299)$(0.11)
Diluted Shares28,815   28,678   137  

NW Natural Utility
Gas utility net loss increased $1.6 million (or $0.06 per share). Utility margin increased $1.8 million largely due to a $1.6 million change in the revenue deferral associated with the decrease in the federal tax rate. In addition, customer growth of 1.7% over the last 12 months contributed $0.6 million to utility margin, although this was offset by lower margins from our gas reserve investments as they continue to amortize.

Operations and maintenance expense increased $1.8 million reflecting higher compensation and benefits expense. Depreciation expense increased $0.8 million from higher utility plant balances. In addition, tax benefits decreased an estimated $2.8 million as a result of a lower federal tax rate.

NW Natural Other
Other net income decreased $1.6 million (or $0.05 per share) reflecting higher costs from business development activities, partially offset by higher asset management revenues from our Mist gas storage facility.


NW Natural Segment Results
The following financial comparisons are between the first nine months of 2018 and the same period in 2017 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted.

The year-to-date results are summarized by business segment in the table below:

 Nine Months Ended September 30,
 2018 2017 Change
In thousands, except per share dataAmountPer Share AmountPer Share AmountPer Share
Net income from continuing operations:        
Utility segment$24,930 $0.86  $31,980 $1.11  $(7,050)$(0.25)
Other5,598 0.20  5,605 0.20  (7) 
Net income from continuing operations$30,528 $1.06  $37,585 $1.31  $(7,057)$(0.25)
Loss from discontinued operations, net of tax(1,783)(0.06) (3,041)(0.11) 1,258 0.05 
Consolidated net income$28,745 $1.00  $34,544 $1.20  $(5,799)$(0.20)
Diluted Shares28,846   28,734   112  

NW Natural Utility
Gas utility net income decreased $7.1 million (or $0.25 per share). Utility margin decreased $8.7 million largely due to deferring $5.1 million of revenues associated with the decline in the federal tax rate. While customer growth of 1.7% over the last 12 months contributed $2.3 million to utility margin, this was more than offset by lower margins from customers not covered by a weather normalization mechanism as weather was 11% warmer than average for the first nine months of 2018, compared to 24% colder than average for the same period in 2017.

Operations and maintenance expense increased $4.5 million reflecting higher compensation and benefits expense and professional service costs. Other expenses increased $1.3 million primarily from higher depreciation and property taxes as we continue to invest in our infrastructure for customer growth, safety, and facility upgrades. Tax expense decreased an estimated $5.2 million due to the lower federal income tax rate as a result of tax reform.

We estimate that tax reform has had minimal impact on utility net income as a result of the estimated $5.2 million tax expense benefit offsetting the $5.1 million revenue deferral.

Discontinued Operations
The net loss from discontinued operations at Gill Ranch decreased $1.3 million (or $0.05 per share) primarily due to lower depreciation expense after an impairment of the facility was taken in December 2017 and depreciation ceased in June 2018 when a sale agreement was signed and Gill Ranch was moved to discontinued operations.

During the first nine months of 2018, we generated $158.5 million in operating cash flow and invested $158.8 million in capital expenditures to support growth, safety, facility upgrades, and the North Mist expansion project. Cash provided by operations decreased $34.3 million due to changes in working capital and deferred gas costs as well as higher taxes paid. Cash outflow from investing activities increased $14.5 million primarily due to higher capital expenditures, and cash provided by financing activities increased $63.1 million primarily due to lower debt repayments, partially offset by a decrease in proceeds from the issuance of long-term debt.

NW Holdings affirmed 2018 guidance today in the range of $2.10 to $2.30 per share. This guidance assumes continued customer growth from our NW Natural utility segment, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant laws or regulations.

NW Natural continues to expect capital expenditures for 2018 to be in the range of $190 to $220 million to support core gas utility customer growth and safety and reliability, as well as the continued construction of the North Mist Expansion Project. We expect to finance our capital needs in 2018 using a combination of cash flow from operations and debt. Our total utility capital investment plan at NW Natural for the five-year period from 2018 to 2022 is approximately $750 to $850 million, with a majority supporting continued customer growth, distribution system maintenance and improvements, technology investments, and utility gas storage facility maintenance.

In October 2018, NW Holdings' Board of Directors declared a quarterly dividend of 47.50 cents per share on NW Holdings' common stock. The dividend will be payable on Nov. 15, 2018 to shareholders of record on Oct. 31, 2018, reflecting an annual indicated dividend rate of $1.90 per share.

As previously announced, NW Holdings will host a conference call and webcast today to discuss its third quarter and year-to-date 2018 financial and operating results.

Date and Time:Tuesday, November 6
8 a.m. PT (11 a.m. ET)
Phone Numbers:United States:  1-866-267-6789
Canada:  1-855-669-9657
International:  1-412-902-4110

The call will also be webcast in a listen-only format for the media and general public and can be accessed at nwnaturalholdings.com under the Investor Relations tab. A replay of the conference call will be available on our website and by dialing 1-877-344-7529 (U.S.), 1-855-669-9658 (Canada), and 1-412-317-0088 (international). The replay access code is 10124865.

Northwest Natural Holding Company, (NYSE: NWN) (NW Holdings), is headquartered in Portland, Oregon, and owns a 159-year-old regulated natural gas local distribution company, NW Natural Gas Company (NW Natural), NW Natural Water Company (NW Water), and other business interests and activities.

NW Natural currently provides natural gas service to approximately two million people in more than 140 communities through 740,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores.

NW Natural is currently constructing a 2.5 Bcf regulated gas storage expansion of its 16 Bcf facility in Oregon to support renewables. NW Natural Holdings’ subsidiaries own and operate 31 Bcf of underground gas storage capacity.

NW Water currently provides water distribution service to approximately 22,000 people through 7,350 connections. To date, NW Water has acquired four water distribution systems with one additional acquisition pending. Upon closing the transaction, cumulatively, NW Water will serve nearly 42,000 people through 16,750 connections in the Pacific Northwest with total investments of approximately $67 million.

Additional information is available at nwnaturalholdings.com.

Investor Contact:
Nikki Sparley
Phone: 503-721-2530
Email: n1s@nwnatural.com

Media Contact:
Melissa Moore
Phone: 503-220-2436
Email: msm@nwnatural.com

Forward-Looking Statements
This report, and other presentations made by NW Holdings and 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," "assumes," "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, risks, capital expenditures and allocations, stability, acquisitions and integration thereof, dispositions and outcome thereof, customer growth, weather, commodity and other costs, customer rates or rate recovery, customer preference, growth, adoption of renewable energy and our ability to provide effective supporting resources, infrastructure availability and development, our water utility strategy, financing plans, environmental remediation cost recoveries, levels and pricing of gas storage contracts, gas storage development or costs or timing related thereto, financial positions, revenues, liquidity, returns, and earnings and the timing thereof, earnings guidance, dividends, performance, timing or effects of future regulatory proceedings or future regulatory approvals, regulatory prudence reviews, effects of regulatory mechanisms, expectations, timing, and treatment with respect to the rate case, pension balancing account, interstate storage or treatment of federal tax reform, anticipated regulatory actions or filings, effects of rate case orders, effects of changes in laws or regulations, including federal tax reform, 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. 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 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 NW Natural'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 NW Natural'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 NW Natural and NW Holdings, 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 NW Natural or NW Holdings 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.

Presentation of Non-GAAP 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. Financial measures are expressed in cents per share as these amounts reflect factors that directly impact earnings, including income taxes. All references to EPS herein are on the basis of diluted shares.

We use such non-GAAP financial 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.

Consolidated Income Statement and Financial Highlights (Unaudited)
Third Quarter 2018
  Three Months Ended Nine Months Ended Twelve Months Ended 
In thousands, except per share amounts, customer, and degree day dataSeptember 30, September 30, September 30, 
2018 2017Change2018 2017Change2018 2017Change
Operating revenues$91,239  $86,213 6%$479,441  $516,413 (7)%$718,065  $748,118 (4)%
Operating expenses:         
 Cost of gas25,538  27,239 (6)175,697  223,855 (22)276,637  326,898 (15)
 Operations and maintenance37,569  34,267 10 115,120  106,710 8 160,767  142,076 13 
 Environmental remediation1,022  1,355 (25)7,528  10,920 (31)11,899  16,105 (26)
 General taxes7,589  7,540 1 24,792  23,423 6 32,008  30,268 6 
 Revenue taxes3,522   NM20,731   NM20,731   NM
 Depreciation and amortization21,485  20,352 6 63,507  60,529 5 84,031  80,253 5 
 Other operating expenses625   NM2,157   NM2,157   NM
 Total operating expenses97,350  90,753 7 409,532  425,437 (4)588,230  595,600 (1)
Income (loss) from operations(6,111) (4,540)35 69,909  90,976 (23)129,835  152,518 (15)
Other income (expense), net(312) 139 (324)(1,139) (624)83 (810) (2,546)(68)
Interest expense, net9,006  9,208 (2)27,051  28,311 (4)36,266  38,010 (5)
Income (loss) before income taxes(15,429) (13,609)13 41,719  62,041 (33)92,759  111,962 (17)
Income tax expense (benefit)(4,285) (5,722)(25)11,191  24,456 (54)27,743  44,755 (38)
Net income (loss) from continuing operations(11,144) (7,887)41 30,528  37,585 (19)65,016  67,207 (3)
Loss from discontinued operations, net of tax(650) (608)7 (1,783) (3,041)(41)(126,438) (4,388)2,781 
Net income (loss)$(11,794) $(8,495)39 $28,745  $34,544 (17)$(61,422) $62,819 (198)
Common shares outstanding:            
 Average diluted for period28,815  28,678  28,846  28,734  28,831  28,595  
 End of period28,844  28,713  28,844  28,713  28,844  28,713  
Per share information:            
Diluted earnings (loss) per share from continuing operations$(0.39) $(0.28) $1.06  $1.31  $2.26  $2.35  
Diluted loss per share from discontinued operations, net of tax(0.02) (0.02) (0.06) (0.11) (4.39) (0.15) 
Diluted earnings (loss) per share(0.41) (0.30) 1.00  1.20  (2.13) 2.20  
Dividends declared per share of common stock0.4725  0.4700  1.4175  1.4100  1.8900  1.8800  
Book value per share, end of period25.57  29.49  25.57  29.49  25.57  29.49  
Market closing price, end of period66.90  64.40  66.90  64.40  66.90  64.40  
Capital structure, end of period:            
 Common stock equity44.8% 52.1% 44.8% 52.1% 44.8% 52.1% 
 Long-term debt44.0  46.6  44.0  46.6  44  46.6  
 Short-term debt (including amounts due in one year)11.2  1.3  11.2  1.3  11.2  1.3  
 Total100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 
Utility segment operating statistics:            
Customers - end of period743,386  730,824 1.7%743,386  730,824 1.7%743,386  730,824 1.7%
Utility volumes - therms:            
 Residential and commercial sales57,368  54,557  439,024  495,949  683,444  724,062  
 Industrial sales and transportation104,730  109,064  347,420  369,954  477,390  499,150  
Total utility volumes sold and delivered162,098  163,621  786,444  865,903  1,160,834  1,223,212  
Utility operating revenues:            
 Residential and commercial sales$68,768  $69,294  $420,878  $466,867  $638,225  $682,568  
 Industrial sales and transportation12,780  13,488  43,572  47,182  60,315  64,520  
 Other revenues3,529  606  (2,925) 3,149  (2,202) 3,829  
 Less: Revenue taxes  2,262    13,251  5,818  19,110  
Total utility operating revenues85,077  81,126  461,525  503,947  690,520  731,807  
 Less: Cost of gas25,593  27,239  175,864  223,855  277,028  326,897  
 Environmental remediation expense1,022  1,355  7,528  10,920  11,899  16,105  
 Revenue taxes3,522    20,731    20,731    
Utility margin, net$54,940  $52,532  $257,402  $269,172  $380,862  $388,805  
Degree days:            
 Average (25-year average)10  10  1,637  1,637  2,705  2,705  
 Actual  14 NM1,449  2,037 (29)%2,526  2,976 (15)%
 NM = Not Meaningful calculation            

Consolidated Balance Sheets (Unaudited) September 30,
In thousands 2018 2017
Current assets:    
Cash and cash equivalents $29,965  $15,780 
Accounts receivable 25,125  21,930 
Accrued unbilled revenue 16,351  15,974 
Allowance for uncollectible accounts (394) (459)
Regulatory assets 41,241  49,504 
Derivative instruments 2,871  2,073 
Inventories 53,064  59,135 
Gas reserves 16,916  16,218 
Other current assets 20,376  17,285 
Discontinued operations current assets 12,644  2,106 
Total current assets 218,159  199,546 
Non-current assets:    
Property, plant, and equipment 3,370,388  3,148,545 
Less: Accumulated depreciation 996,994  954,782 
Total property, plant, and equipment, net 2,373,394  2,193,763 
Gas reserves 70,556  87,876 
Regulatory assets 333,917  345,352 
Derivative instruments 861  1,555 
Other investments 65,113  69,245 
Goodwill 6,563   
Other non-current assets 12,844  4,192 
Discontinued operations non-current assets   204,078 
Total non-current assets 2,863,248  2,906,061 
Total assets $3,081,407  $3,105,607 
Liabilities and equity:    
Current liabilities:    
Short-term debt $100,500  $ 
Current maturities of long-term debt 84,940  21,995 
Accounts payable 80,143  87,123 
Taxes accrued 13,074  11,933 
Interest accrued 9,453  9,854 
Regulatory liabilities 37,504  34,659 
Derivative instruments 8,828  8,968 
Other current liabilities 35,497  27,218 
Discontinued operations current liabilities 13,003  1,201 
Total current liabilities 382,942  202,951 
Long-term debt 724,654  757,429 
Deferred credits and other non-current liabilities:    
Deferred tax liabilities 274,315  572,293 
Regulatory liabilities 606,175  363,838 
Pension and other postretirement benefit liabilities 212,249  212,259 
Derivative instruments 3,016  3,926 
Other non-current liabilities 140,475  134,123 
Discontinued operations non-current liabilities   12,106 
Total deferred credits and other non-current liabilities 1,236,230  1,298,545 
Common stock 455,499  447,129 
Retained earnings 290,059  406,081 
Accumulated other comprehensive loss (7,977) (6,528)
Total equity 737,581  846,682 
Total liabilities and equity $3,081,407  $3,105,607 

Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30,
In thousands 2018 2017
Operating activities:    
Net income $28,745  $34,544 
Adjustments to reconcile net income to cash provided by operations:    
Depreciation and amortization 63,507  60,529 
Regulatory amortization of gas reserves 12,056  12,036 
Deferred income taxes 3,954  17,287 
Qualified defined benefit pension plan expense 4,450  3,923 
Contributions to qualified defined benefit pension plans (11,690) (15,400)
Deferred environmental expenditures, net (10,547) (10,468)
Amortization of environmental remediation 7,528  10,920 
Regulatory revenue deferral from Tax Cuts and Jobs Act 6,983   
Other 1,541  2,522 
Changes in assets and liabilities:    
Receivables, net 83,194  90,311 
Inventories (5,134) (5,372)
Income taxes (5,809) (216)
Accounts payable (22,929) (29,282)
Interest accrued 2,680  3,888 
Deferred gas costs 2,372  13,419 
Other, net (3,588) 28 
Discontinued operations 1,216  4,187 
Cash provided by operating activities 158,529  192,856 
Investing activities:    
Capital expenditures (158,795) (145,274)
Other (1,661) (1,131)
Discontinued operations (619) (167)
Cash used in investing activities (161,075) (146,572)
Financing activities:    
Repurchases related to stock-based compensation   (2,034)
Proceeds from stock options exercised 1,368  3,711 
Long-term debt issued 50,000  100,000 
Long-term debt retired (22,000) (40,000)
Change in short-term debt 46,300  (53,300)
Cash dividend payments on common stock (38,387) (40,390)
Stock purchases related to acquisitions (7,951)  
Other (291) (2,012)
Cash provided by (used in) financing activities 29,039  (34,025)
Increase in cash and cash equivalents 26,493  12,259 
Cash and cash equivalents, beginning of period 3,472  3,521 
Cash and cash equivalents, end of period $29,965  $15,780 
Supplemental disclosure of cash flow information:    
Interest paid, net of capitalization $22,821  $22,859 
Income taxes paid 22,047  11,581