PORTLAND, Ore., Nov. 05, 2019 (GLOBE NEWSWIRE) — Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), reported financial results and highlights including:
“We continue to be well positioned to meet our 2019 and long-term objectives,” said David H. Anderson, president and CEO of NW Natural Holdings. “I‘m pleased with our strong year-to-date financial results, continued growth in our gas utility, and the recognition once again from customers for our exceptional service.”
Anderson continued, “We are seeing good momentum in our water and wastewater utility business with plans for disciplined growth. In October, we announced our 64th consecutive year of dividend increases. As we come to the close of our 160th year, I‘m proud to continue executing on our strategy and meet our long-standing commitments to customers and shareholders.”
For the third quarter of 2019, net loss from continuing operations increased $7.4 million to $18.5 million (or $0.61 per share), compared to a net loss from continuing operations of $11.1 million (or $0.39 per share) for the same period in 2018. The third quarter reflects the seasonal nature of the gas utility‘s earnings and timing variances due to new rates from the Oregon general rate case being volumetrically recovered, whereas pension expenses are recognized evenly over the year, and income tax benefits associated with tax reform are recognized in alignment with pre-tax income. Net income is unaffected by these items on an annual basis.
Year-to-date net income from continuing operations decreased $3.6 million to $27.0 million (or $0.91 per share) for 2019, compared to $30.5 million (or $1.06 per share) for the same period in 2018. Excluding a regulatory pension disallowance, on a non-GAAP basis1 adjusted year-to-date net income from continuing operations for 2019 was $33.6 million (or $1.13 per share) or an increase of $3.0 million compared to net income from continuing operations for the same period in 2018. Results reflected higher margin from new natural gas rates in Oregon and customer growth, partially offset by higher operations and maintenance expense, higher depreciation and interest expense, and lower other income.
- Adjusted 2019 metrics are non-GAAP financial measures and exclude the regulatory pension disallowance of $10.5 million pre-tax or $6.6 million and $0.22 cents per share after-tax. See “Year-To-Date Results”, “2019 Earnings Guidance”, and “Reconciliation to GAAP” for additional information.
Washington General Rate Case
On Oct. 21, 2019, the Washington Utilities and Transportation Commission (WUTC) issued an order approving the all-party settlement in NW Natural‘s general rate case, increasing the utility‘s revenue requirement by $5.1 million (or $3.8 million after-tax). Approximately 10% of NW Natural’s revenues are derived from its Washington customers.
The order also approved a capital structure of 50% long-term debt, 1% short-term debt, and 49% common equity; a return on equity of 9.4%; cost of capital of 7.161%; and rate base of $173.7 million or an increase of $45.9 million since the last rate case.
The order also addresses how net benefits from the Tax Cuts and Jobs Act (TCJA) will be returned to customers. In the first year, customers will experience an initial rate reduction of $2.6 million and ongoing annual rate reductions are estimated to be $0.5 million thereafter. In addition, an environmental mechanism was approved that allows NW Natural to recover remediation costs.
New rates in Washington were effective beginning Nov. 1, 2019.
Water Utilities and Acquisitions
NW Natural Holdings‘ subsidiary, NW Natural Water Company, LLC (NW Natural Water), agreed in October to purchase Suncadia‘s water and wastewater utilities in Washington state and T&W water utility in Texas. The acquisitions are subject to customary closing conditions, including approvals by the respective Public Utility Commissions of Washington and Texas and are expected to close in 2020. Upon closing all outstanding transactions, NW Natural Water expects to serve about 62,000 people through nearly 25,000 connections and have invested nearly $110 million in the water sector.
Aggregate acquisitions are projected to be accretive to NW Natural Holdings’ earnings per share in the first full year of operations. While ongoing operations are not expected to have an immediately material impact on earnings, the acquisitions mark the Company‘s continued commitment to building a water platform that provides investors with a risk profile similar to NW Natural‘s regulated gas utility.
THIRD QUARTER RESULTS
The following financial comparisons are between results for the third quarter of 2019 and 2018 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted.
NW Natural Holdings‘ third quarter results are summarized by business segment in the table below:
Three Months Ended September 30, 2019 2018 ChangeIn thousands, except per share dataAmountPer Share AmountPer Share AmountPer ShareNet income from continuing operations: Natural Gas Distribution segment$(19,570)$(0.64) $(11,983)$(0.42) $(7,587)$(0.22)Other1,064 0.03 839 0.03 225 — Consolidated$(18,506)$(0.61) $(11,144)$(0.39) $(7,362)$(0.22) Diluted Shares 30,429 28,815 1,614
Natural Gas Distribution Segment
Natural Gas Distribution net loss was $19.6 million (or $0.64 per share) for 2019, compared to a net loss of $12.0 million (or $0.42 per share) for 2018. The net loss increased $7.6 million reflecting the seasonal nature of the gas utility‘s earnings and timing variances due to new rates from the Oregon general rate case being volumetrically recovered, whereas pension expenses are recognized evenly over the year, and income tax benefits associated with tax reform are recognized in alignment with pre-tax income. Net income is unaffected by these items on an annual basis.
Margin increased $0.7 million largely due to higher rates from the Oregon general rate case, revenue from storage services at our North Mist facility that commenced operations in May 2019, as well as customer growth of 1.6% over the last 12 months. This was offset by an adjustment to our tax reform deferral estimate in the third quarter of 2018 that was not repeated in 2019.
Operations and maintenance and other expense, net increased $3.6 million primarily due to higher pension expense in 2019. While pension costs are recovered on an annual basis through customer rates, there are timing differences on a quarterly basis as costs are recovered volumetrically in rates while corresponding expenses are incurred evenly throughout the year. In addition, other expense, net increased as the North Mist expansion project was completed resulting in lower allowance for funds used during construction (AFUDC).
Depreciation and interest expense combined increased $2.4 million related to higher property, plant, and equipment as we continue to invest in our natural gas utility system and facilities and have higher long-term debt balances to support these investments.
Income tax benefits declined $2.1 million as a result of returning deferred tax reform benefits to Oregon customers within volumetric base rates with corresponding deferred tax reform benefits recognized in income tax expense in alignment with pre-tax income.
The following financial comparisons are between the first nine months of 2019 and the same period in 2018 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted. Non-GAAP financial measures exclude the effects of the regulatory pension disallowance in 2019 as these adjusted metrics provide a clearer view of operations, reflect how Management views financial results, and provide comparability to prior year results. See “Reconciliation to GAAP” for a detailed reconciliation of adjusted amounts.
NW Natural Holdings‘ year-to-date results are summarized by business segment in the table below:
Nine Months Ended September 30, 2019 2018 ChangeIn thousands, except per share dataAmountPer Share AmountPer Share AmountPer ShareNet income from continuing operations: Natural Gas Distribution segment$22,848 $0.77 $24,930 $0.86 $(2,082)$(0.09)Regulatory pension disallowance, net6,588 0.22 — — 6,588 0.22 Adjusted Natural Gas Distribution segment129,436 0.99 24,930 0.86 4,506 0.13 Other4,115 0.14 5,598 0.20 (1,483)(0.06) Consolidated$26,963 $0.91 $30,528 $1.06 $(3,565)$(0.15)Adjusted Consolidated133,551 1.13 30,528 1.06 3,023 0.07 Diluted Shares 29,628 28,846 782
- The 2019 adjusted natural gas distribution segment and adjusted consolidated net income from continuing operations are non-GAAP financial measures and exclude the effects of a regulatory disallowance of NW Natural‘s pension balancing account of $6.6 million after-tax (or $10.5 million pre-tax). See “Reconciliation to GAAP” for additional information.
Natural Gas Distribution Segment
Natural Gas Distribution segment net income decreased $2.1 million (or $0.09 per share). Results were affected by a $6.6 million after-tax disallowance of costs in the pension balancing account as ordered in the Oregon general rate case in March 2019. Excluding the effects of this disallowance, net income increased $4.5 million reflecting higher rates under the Oregon general rate case and customer growth, partially offset by higher operations and maintenance expense and a decline in other income.
Margin increased $23.6 million largely due to higher rates in Oregon as well as customer growth of 1.6% over the last 12 months, which collectively contributed $5.3 million. The North Mist expansion began providing storage services in May 2019 and contributed $5.3 million. Colder weather early in 2019 along with higher fee revenue from interruptible customers as a result of system restrictions contributed $3.3 million net of losses from the gas cost incentive sharing mechanism. Finally, as a result of the Oregon general rate case and order related to pensions, margin increased $10.6 million with no significant effect on net income as offsetting adjustments were recognized through expenses and income taxes.
Operations and maintenance expense increased $8.9 million reflecting $2.8 million of expense related to the disallowance of costs in the pension balancing account. In addition, as a result of the Oregon rate case, $5.5 million of costs were recognized with no significant effect on net income due to offsetting adjustments in margin and income taxes.
Depreciation expense increased $2.7 million related to higher property, plant, and equipment as we continue to invest in our natural gas utility system and facilities.
Other income, net decreased $14.9 million primarily due to $4.9 million of expense related to the disallowance of costs in the pension balancing account and $10.0 million of higher pension expense as we began collecting Oregon pension expenses through rates beginning Nov. 1, 2018 as well as implementing the Oregon rate case order. These costs had no significant effect on net income due to offsetting adjustments in margin and income taxes. As a result of beginning collections of the pension balancing account, $3.2 million of regulatory interest income was recognized related to the equity interest component of financing costs on the pension balancing account. Other income declined $2.5 million as a result of the completion of the North Mist expansion and recording lower AFUDC.
Interest expense increased $3.0 million primarily from higher long-term debt balances and higher commercial paper balances in the first half of 2019.
Tax expense reflected a $3.7 million benefit related to implementing the March order in the Oregon general rate case; however, as this offset higher expense, there was no significant resulting effect on net income.
Other net income decreased $1.5 million (or $0.06 per share) reflecting lower asset management revenues from our Mist gas storage facility and non-operating expenses associated with developing the water business.
BALANCE SHEET AND CASH FLOWS
During the first nine months of 2019, the Company generated $155.3 million in operating cash flow and invested $160.8 million of capital expenditures in our natural gas distribution segment to support growth, safety, and technology and facility upgrades and $56.2 million for water acquisitions. Cash provided by financing activities was $67.9 million for the first nine months of 2019 or an increase of $38.8 million compared to the same period in 2018. The increase was primarily due to issuing $175 million of long-term debt and 1.4 million shares of NW Natural Holdings common stock in June 2019, partially offset by repayments of long- and short-term debt.
The Company continues to expect capital expenditures for 2019 to be in the range of $230 to $270 million to support gas utility customer growth and safety and reliability, as well as several projects.
2019 EARNINGS GUIDANCE
On March 1, 2019, NW Natural Holdings initiated 2019 earnings guidance from continuing operations in the range of $2.25 to $2.45 per share. As previously disclosed, this range did not incorporate a potential regulatory disallowance from an Oregon all-party settlement. On March 25, 2019, the OPUC issued an order requiring NW Natural to forego $10.5 million ($6.6 million after-tax or $0.22 per share) of costs associated with its pension balancing account. As a result of the disallowance, NW Natural Holdings‘ 2019 GAAP earnings guidance from continuing operations is expected to range from $2.02 to $2.22 per share. Excluding the pension disallowance on a non-GAAP basis, 2019 earnings guidance from continuing operations is expected to range from $2.25 to $2.45 per share.
This guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant laws or regulations. The expected sale of Gill Ranch and the related gain, and any operating results associated with it, are not included in this guidance range, as they are, and are expected to continue to be, reported as Discontinued Operations.
In October 2019, NW Natural Holdings‘ Board of Directors declared a quarterly dividend of 47.75 cents per share on NW Natural Holdings‘ common stock. The dividend is payable on November 15, 2019 to shareholders of record on October 31, 2019, reflecting an annual indicated dividend rate of $1.91 per share.
CONFERENCE CALL AND WEBCAST
As previously announced, NW Natural Holdings will host a conference call and webcast today to discuss its third quarter 2019 financial and operating results.
Date and Time:Tuesday, November 5
8 a.m. PT (11 a.m. ET)Phone Numbers:United States:
The call will also be webcast in a listen-only format for the media and general public and can be accessed at nwnaturalholdings. A replay of the conference call will be available on our website and by dialing (U.S.), (Canada), and (international). The replay access code is 10135561.
ABOUT NW NATURAL HOLDINGS
Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon, and through its subsidiaries has been doing business for 160 years in the Pacific Northwest. It owns NW Natural Gas Company (NW Natural), NW Natural Water Company, LLC (NW Natural Water), and other business interests and activities.
NW Natural is a local distribution company that currently provides natural gas service to approximately 2.5 million people in more than 140 communities through more than 750,000 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 Holdings’ subsidiaries own and operate 35 Bcf of underground gas storage capacity with NW Natural operating 20 Bcf in Oregon.
NW Natural Water currently provides water distribution and wastewater services to communities throughout the Pacific Northwest and Texas. When current outstanding transactions close, NW Natural Water expects to serve approximately 62,000 people through nearly 25,000 connections. Learn more about our water business at nwnaturalwater.
Additional information is available at nwnaturalholdings.
This report, and other presentations made by NW 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,” “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, assumptions, estimates, timing, goals, strategies, future events, investments, capital expenditures, targeted capital structure, risks, risk profile, stability, acquisitions and integration thereof, dispositions and timing, completion and outcomes thereof, customer and business growth, customer satisfaction ratings, weather, customer rates or rate recovery, environmental remediation cost recoveries, the water utility strategy and financial effects of the related pending water acquisitions, operating plans of third parties, financial results, including estimated income, liquidity, expenses, positions, revenues, returns, timing, and earnings and earnings guidance, dividends, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, regulatory prudence reviews, anticipated regulatory actions or filings, expectations, recovery of pension expense, accounting treatment of future events, effects of changes in laws or regulations, including tax reform, 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 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.
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 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 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.
Presentation of Non-GAAP Results
In addition to presenting the results of operations and earnings amounts in total, certain financial measures exclude the regulatory pension disallowance in 2019, which is a non-GAAP financial measure. The Company presents net income and EPS excluding this item along with the GAAP measures to illustrate the magnitude of this item on ongoing business and operational results. Although the excluded amount is properly included in the determination of this item under GAAP, the Company believes the amount and nature of such an item makes period-to-period comparisons of operations difficult or potentially confusing. Financial measures are expressed in cents per share as these amounts reflect factors that directly impact earnings, including income taxes. All references to EPS are on the basis of diluted shares. The Company uses such non-GAAP financial measures to analyze financial performance because the Company believes they provide useful information to investors and creditors in evaluating the Company‘s financial condition and results of operations.
NORTHWEST NATURAL HOLDINGSConsolidated Income Statement and Financial Highlights (Unaudited)Third Quarter 2019 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, 2019 2018Change2019 2018Change2019 2018ChangeOperating revenues$90,317 $91,239 (1)%$499,108 $479,441 4%$725,810 $718,065 1% Operating expenses: Cost of gas22,603 25,538 (11)163,167 175,697 (7)242,989 276,637 (12) Operations and maintenance40,886 37,569 9 131,854 115,120 15 173,432 160,767 8 Environmental remediation967 1,022 (5)7,258 7,528 (4)10,857 11,899 (9) General taxes7,993 7,589 5 24,899 24,792 — 32,279 32,008 1 Revenue taxes3,534 3,522 — 19,956 20,731 (4)29,307 20,731 41 Depreciation and amortization23,375 21,485 9 67,334 63,507 6 88,983 84,031 6 Other operating expenses593 625 (5)2,131 2,157 (1)3,201 2,157 48 Total operating expenses99,951 97,350 3 416,599 409,532 2 581,048 588,230 (1)Income (loss) from operations(9,634) (6,111)58 82,509 69,909 18 144,762 129,835 11 Other income (expense), net(2,267) (312)NM (18,782) (1,139)NM (21,244) (810)NM Interest expense, net10,948 9,006 22 31,807 27,051 18 41,815 36,266 15 Income (loss) before income taxes(22,849) (15,429)48 31,920 41,719 (23)81,703 92,759 (12)Income tax (benefit) expense(4,343) (4,285)1 4,957 11,191 (56)17,957 27,743 (35)Net income (loss) from continuing operations(18,506) (11,144)66 26,963 30,528 (12)63,746 65,016 (2)Loss from discontinued operations, net of tax(795) (650)22 (1,968) (1,783)10 (2,927) (126,438)(98)Net income (loss)$(19,301) $(11,794)64 $24,995 $28,745 (13)$60,819 $(61,422)(199) Common shares outstanding: Average diluted for period30,429 28,815 29,628 28,846 29,451 28,831 End of period30,422 28,844 30,422 28,844 30,422 28,844 Per share of common stock information: Diluted earnings (loss) from continuing operations$(0.61) $(0.39) $0.91 $1.06 $2.16 $2.26 Diluted loss from discontinued operations, net of tax(0.02) (0.02) (0.07) (0.06) (0.09) (4.39) Diluted earnings (loss)(0.63) (0.41) 0.84 1.00 2.07 (2.13) Dividends paid per share0.4750 0.4725 1.4250 1.4175 1.9000 1.8900 Book value, end of period27.77 25.57 27.77 25.57 27.77 25.57 Market closing price, end of period71.34 66.90 71.34 66.90 71.34 66.90 Capital structure, end of period: Common stock equity46.6% 44.8% 46.6% 44.8% 46.6% 44.8% Long-term debt44.5 44 44.5% 44.0% 44.5% 44.0% Short-term debt (including current maturities of long-term debt)8.9 11.2 8.9% 11.2% 8.9% 11.2% Total100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Natural Gas Distribution segment operating statistics: Meters – end of period755,458 743,386 1.6%755,458 743,386 1.6%755,458 743,386 1.6%Volumes in therms: Residential and commercial sales60,427 57,368 480,987 439,024 703,126 683,444 Industrial sales and transportation107,596 104,730 348,821 347,420 468,441 477,390 Total volumes sold and delivered168,023 162,098 829,808 786,444 1,171,567 1,160,834 Operating revenues: Residential and commercial sales$65,206 $68,768 $419,502 $420,878 $620,406 $638,225 Industrial sales and transportation12,280 12,780 40,511 43,572 55,652 60,315 Other distribution revenues430 3,417 12,678 (3,144) 15,716 (2,202) Other regulated services5,147 112 7,397 219 7,437 — Total operating revenues83,063 85,077 480,088 461,525 699,211 696,338 Less: Cost of gas22,659 25,593 163,335 175,864 243,214 277,028 Less: Environmental remediation expense967 1,022 7,258 7,528 10,857 11,899 Less: Revenue taxes3,534 3,522 19,956 20,731 29,307 26,549 Margin, net$55,903 $54,940 $289,539 $257,402 $415,833 $380,862 Degree days: Average (25-year average)9 10 1,646 1,637 2,723 2,705 Actual28 — NM 1,638 1,449 13%2,502 2,526 (1)%Percent colder (warmer) than average weatherNM NM —% (11)% (8)% (7)% NM = Not Meaningful calculation
NORTHWEST NATURAL HOLDINGS Consolidated Balance Sheets (Unaudited) September 30,In thousands 2019 2018Assets: Current assets: Cash and cash equivalents $10,522 $29,965 Accounts receivable 29,617 25,125 Accrued unbilled revenue 17,934 16,351 Allowance for uncollectible accounts (180) (394)Regulatory assets 47,996 41,241 Derivative instruments 5,987 2,871 Inventories 41,230 53,064 Gas reserves 16,392 16,916 Other current assets 18,617 20,376 Discontinued operations current assets 14,612 12,644 Total current assets 202,727 218,159 Non-current assets: Property, plant, and equipment 3,416,718 3,370,388 Less: Accumulated depreciation 1,027,330 996,994 Total property, plant, and equipment, net 2,389,388 2,373,394 Gas reserves 51,978 70,556 Regulatory assets 313,890 333,917 Derivative instruments 1,610 861 Other investments 63,018 65,113 Operating lease right of use asset 3,917 — Assets under sales-type leases 147,918 — Goodwill 49,333 6,563 Other non-current assets 27,839 12,844 Total non-current assets 3,048,891 2,863,248 Total assets $3,251,618 $3,081,407 Liabilities and equity: Current liabilities: Short-term debt $65,580 $100,500 Current maturities of long-term debt 94,671 84,940 Accounts payable 76,197 80,143 Taxes accrued 13,382 13,074 Interest accrued 10,406 9,453 Regulatory liabilities 37,573 37,504 Derivative instruments 4,156 8,828 Operating lease liabilities 3,171 — Other current liabilities 39,873 35,497 Discontinued operations current liabilities 13,399 13,003 Total current liabilities 358,408 382,942 Long-term debt 806,014 724,654 Deferred credits and other non-current liabilities: Deferred tax liabilities 284,625 274,315 Regulatory liabilities 615,813 606,175 Pension and other postretirement benefit liabilities 215,007 212,249 Derivative instruments 2,998 3,016 Operating lease liabilities 732 — Other non-current liabilities 123,352 140,475 Total deferred credits and other non-current liabilities 1,242,527 1,236,230 Equity: Common stock 556,623 455,499 Retained earnings 296,256 290,059 Accumulated other comprehensive loss (8,210) (7,977)Total equity 844,669 737,581 Total liabilities and equity $3,251,618 $3,081,407
NORTHWEST NATURAL HOLDINGS Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30,In thousands 2019 2018Operating activities: Net income $24,995 $28,745 Adjustments to reconcile net income to cash provided by operations: Depreciation and amortization 67,334 63,507 Regulatory amortization of gas reserves 14,474 12,056 Deferred income taxes 2,471 3,954 Qualified defined benefit pension plan expense 10,464 4,450 Contributions to qualified defined benefit pension plans (7,810) (11,690)Deferred environmental expenditures, net (10,992) (10,547)Amortization of environmental remediation 7,258 7,528 Regulatory revenue recovery deferral from TCJA 742 6,983 Regulatory disallowance of pension costs 10,500 — Other 9,058 1,541 Changes in assets and liabilities: Receivables, net 80,205 83,194 Inventories (3,293) (5,134)Income and other taxes 21,510 (5,809)Accounts payable (31,767) (22,929)Interest accrued 3,100 2,680 Deferred gas costs (47,085) 2,372 Decoupling mechanism 11,095 2,915 Other, net (6,713) (6,503)Discontinued operations (255) 1,216 Cash provided by operating activities 155,291 158,529 Investing activities: Capital expenditures (152,993) (158,795)Acquisitions, net of cash acquired (56,189) 136 Other (15,460) (1,797)Discontinued operations (648) (619)Cash used in investing activities (225,290) (161,075)Financing activities: Proceeds from stock options exercised 1,723 1,368 Proceeds from common stock issued 93,182 — Long-term debt issued 175,000 50,000 Long-term debt retired (10,000) (22,000)Change in short-term debt (152,040) 46,300 Stock purchases related to acquisitions — (7,951)Cash dividend payments on common stock (39,605) (38,387)Other (372) (291)Cash provided by (used in) financing activities 67,888 29,039 Increase in cash and cash equivalents (2,111) 26,493 Cash and cash equivalents, beginning of period 12,633 3,472 Cash and cash equivalents, end of period $10,522 $29,965 Supplemental disclosure of cash flow information: Interest paid, net of capitalization $27,736 $22,821 Income taxes paid (refunded), net (6,096) 22,047
NORTHWEST NATURAL HOLDINGSReconciliation to GAAP (Unaudited)Year-to-Date Results 2019 Nine Months Ended September 30, 2019 2018In thousands, except per share data AmountPer Share AmountPer ShareCONSOLIDATED GAAP net income from continuing operations $26,963 $0.91 $30,528 $1.06 Regulatory pension disallowance 10,500 0.35 — — Income tax effect of regulatory disallowance1 (3,912)(0.13) — — Adjusted net income from continuing operations $33,551 $1.13 $30,528 $1.06 Diluted shares 29,628 28,846 NATURAL GAS DISTRIBUTION SEGMENT GAAP net income $22,848 $0.77 $24,930 $0.86 Regulatory pension disallowance 10,500 0.35 — — Income tax effect of regulatory disallowance1 (3,912)(0.13) — — Adjusted net income $29,436 $0.99 $24,930 $0.86
- Regulatory disallowance related to the pension balancing account was recognized in the first quarter of 2019. Tax effect of adjustment was calculated using a combined federal and state statutory rate of 26.5% and reducing the disallowance by a $1.1 million deferred taxes specifically associated with the pension balancing account.