Northwest Natural Holding Company

Good morning and welcome to the NW Natural Holding Company's first quarter conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Nikki Sparley, Director of Investor Relations. Please go ahead.

Thank you, Brandon. Good morning and welcome to our first quarter 2020 earnings call. As a reminder, some things that will be said this morning contain forward-looking statements. They are based on management's assumptions which may or may not occur. In addition, some of our comments today reference non-GAAP adjusted measures. For a complete reconciliation of these measures and other cautionary statements, Refer to the language and reconciliation at the end of our press release. We expect to file our 10Q later today. As mentioned, this teleconference is being recorded and will be available on our website following the call. Please note these calls are designed for the financial community. If you are an investor and have additional questions after the call, please contact me directly at 503-721-2530. News media may contact Melissa Moore at 503-220-2436. Our speakers today are doing this call remotely, so please bear with us if we have any technical difficulties or sound quality issues or pauses as we go on and off mute. Speaking this morning are David Anderson, President and Chief Executive Officer, and Frank Burkhartschneyer, Senior Vice President and Chief Financial Officer. David and Frank have prepared remarks and then will be available along with other members of our executive team to answer your questions. With that I'll turn it over to David.

Well thank you Nikki and good morning everybody and welcome to our first quarter call. I hope you are safe and well as we all go through unprecedented times here. Like you We've adapted to a new normal in the last few weeks as we've limited social interactions and taken every precaution to fight the spread of the coronavirus while continuing to provide essential services to our customers. Personally, I'm very proud of how our company and our employees have responded to this event. I especially want to recognize our field personnel for all they are doing to keep our system safe and, of course, operating reliably. In Oregon, where about 90% of our gas customers reside, A series of progressively restrictive executive orders culminated with the stay-at-home directive beginning on March 23rd in Washington, Idaho, and Texas where we have gas and or water operations also implemented various forms of restrictions. Our natural gas and water utilities obviously are critical infrastructure. We've continued all essential functions necessary to provide reliable service while following the guidelines set out in the governor's executive orders. Biosha, and of course the CDC. We continue to respond to customer issues, emergencies, and providing other essential services. In addition, we are performing maintenance and construction on our systems. While we can't predict the full economic effects of the pandemic, I see several mitigating factors for our business. Timing-wise, this executive order coincided with the conclusion of the winter heating season. April and May continue to require some heating resources in the Northwest, but the majority of the sales occur from November through March. In addition to being a pure play utility business, we benefited from an attractive customer mix. About 87% of our natural gas margin comes from residential and commercial customers, of which a majority are decoupled. and about 8% of our margin comes from industrial customers while the remaining 5% primarily come from a fixed fee regulated natural gas storage arrangement. Our water utilities are comprised primarily of residential customers and in many cases are entirely residentially based. At our largest water utility, Sun River, about 72% of the revenues come from residential customers with 10% from commercial and 18% from irrigation customers. And finally, we operate with customer affordability in mind and work very hard to run an efficient organization. These operating principles, coupled with the decline in natural gas prices, have led to natural gas bills being about 40% lower today than they were 15 years ago. And despite starting from an efficient place, we're taking steps to further reduce our expenses by tightening spending where possible. Finally, we are committed to helping the most vulnerable members of our communities. We do this through a variety of programs, including our corporate philanthropy fund, our gas assistance program, and several state and federal programs that assist with customer bills. We've also filed a request with the regulators to provide our Oregon natural gas customers with their annual June bill credit related to our revenue sharing mechanism. This year, that credit equates to a one-time 30% reduction in an average monthly residential bill, and that's a record amount, by the way. At this point, bad debt levels are essentially in line with previous years. We'll continue to watch collections closely and, of course, work with any customers having financial difficulties. With that said, the closure of small businesses and loss of jobs weighs heavily on our regions. As our governors reopen our states, we're hopeful small business can bounce back quickly. In March, we took several steps to improve our already strong liquidity position by increasing cash on hand. As a result, we have over We had over $470 million of cash at quarter end and continue to maintain large cash balances. We will continue to closely monitor the markets to ensure our liquidity position remains strong. In summary, while we aren't immune from the effects of a recession, we believe our financial strength and low-risk business model will serve us well. We are obviously living in truly unprecedented times with economic conditions that continue to evolve, the full effects of which continue to be unknown. But it is important to understand where we stood in February. At that time, we had a fundamentally sound sustainable growing economy with record low unemployment both nationally and in our service territories. All of our territories were experiencing solid growth. As an example, Oregon was adding nearly 2,000 jobs per month through the end of 2019. Early in the first quarter, home prices continued to climb while building permits had stabilized. In-migration continued to be steady and outpaced the national average. Through the end of the first quarter, new construction plus conversions translated into connecting over 12,400 new customers during the last 12 months, which equated to a growth rate of about 1.6%. As our states reopen, we will closely monitor the rate of recovery and ensure we are doing all we can to help. With that, Frank, I will turn it over to you to provide some additional details on our first quarter results. Frank?