Northwest Natural Holding Company

Hello, everyone. Thank you for joining us and welcome to Northwest Natural Holding Company's Q1 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Nikki Sparley, Director of Investor Relations. Nikki, please go ahead.

Thank you. Good morning and welcome to our first quarter 2026 earnings call. In addition to the press release, a supplemental presentation is available on our investor relations website at irnorthwestnaturalholdings.com. And following this call, a recording will also be available on our website. 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. For a complete list of cautionary statements, refer to the language at the end of our press release. Additionally, our risk factors are provided in our 10Q and 10K filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these non-GAAP measures, including reconciliations to comparable GAAP measures, please see the slides that accompany today's call, which are available on the investor relations page of our website. Please note our guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or assumed outcomes, or significant changes in local, state, or federal laws, legislation, or regulations. We expect to file our 10-Q later today. With us today are Justin Pelferman, President and Chief Executive Officer, and Ray Kasuba, Senior Vice President and Chief Financial Officer. Justin will provide highlights from the first quarter of 2026, a regulatory update, and a look forward. Ray will walk through our financial results and guidance. After Justin and Ray's prepared remarks, we will host a question and answer session. With that, I will turn the call over to Justin.

Thanks, Nikki. Good morning and welcome, everyone. Overall, the first quarter results were strong and in line with our expectations, reflecting another quarter of solid execution and putting us on solid footing for the year. As a result, we also reaffirmed our 2026 and long term guidance. Our gas utility systems performed very well over the heating season. Our team delivered strong operational performance across all our utilities and we produced healthy customer growth. Importantly, the quarter underscored the strength of the Northwest Natural Holdings platform and the stability of having three distinct regulated utility businesses, making our results more predictable. We are well positioned to drive durable long term growth, while maintaining our core commitment to providing safe, reliable and affordable service to our customers. Our focus remains on disciplined execution, steady earnings growth and attractive overall shareholder returns. Related to that, we made meaningful progress on our regulatory initiatives this year. Let me highlight a few of our recent filings. In March, Northwest Natural filed a multi-party settlement with the Washington Utilities and Transportation Commission, resolving all the revenue requirement aspects of our multi-year general rate case. While it remains subject to Commission approval, the outcome is constructive for both customers and shareholders. The settlement provides for annual revenue requirement increases over three years, including $20.1 million in the first year beginning August 1, 2026, $7.7 million in the second year, and $8.7 million in the third year. The settlement includes a capital structure of 50% equity and 50% long-term debt and a return on equity of 9.5%. In Oregon, we remain constructively engaged with staff and parties on multi-year rate case rulemaking. As we've seen in other jurisdictions, we believe multi-year rate cases could provide greater clarity and predictability for both customers and utilities. While we await the outcome of the multi-year framework in Oregon, which could extend into 2027, we filed an alternative rate mechanism to help recover certain safety, IT, and large public works investments. The proposal contemplates a modest 1.5% rate increase beginning October 31, 2026. We've had productive conversations with staff and continue working closely with parties to reach agreement on the docket. Until the multi-year rulemaking process concludes, we have the ability to recover on our investments through additional mechanisms or general rate cases. In addition, we have made progress on regulatory initiatives in our other key businesses. On May 4th, Sea Energy filed a general rate case with the Texas Railroad Commission. The filing consolidates Sea Energy and the recently acquired Pines Gas entities, simplifying both our regulatory structure and operations in Texas. We are requesting a $12 million revenue requirement increase over current rates. This increase is based on a 10.75% return on equity, a cost of capital of 8.73%, and a capital structure of 60% equity and 40% long-term debt, which is consistent with other Texas gas utilities. This request includes an increase in average rate base of $176.9 million since the last rate case for a total rate base of $343.1 million. In addition to the existing beneficial mechanisms from Texas House Bill 4384 and weather normalization, we are requesting the factors necessary to file for the Gas Reliability Infrastructure Program, or GRIP. This mechanism would further align capital investment with timely cost recovery. Even after the increase, Sea Energy's rates are projected to be competitive with peers in the state. Turning to our water and wastewater business. As it scales, we are beginning to see a more consistent regulatory cadence. In 2025, we completed seven rate cases. We currently have four open rate cases in Oregon, Texas, and Arizona. Foothills, our largest water and wastewater utility, has made substantial investments over the past several years. That trend continues in 2026 as we invest in water storage and treatment to support growth in the region. In Q1, we received approval for our second certificate of convenience and necessity expansion, adding to our service territory in Arizona. We are excited to serve these growing communities and are committed to making the necessary investments to provide safe, reliable water and wastewater. We filed a rate case for Foothills last month that includes a request to use formula rates in the future. Formula rates are designed to support annual recovery of O&M and investments without going through a general rate case process. Blue Topaz, our Texas water utility, recently filed its first rate case in approximately 20 years. The filing consolidates several of our Texas entities, recovers capital investments made since our ownership of these assets, and incorporates fair market value rate-based adjustments. As our first quarter actions demonstrate, we are taking a more proactive and coordinated approach to our regulatory strategy across the enterprise. Multi-year rate cases in Washington and Oregon, as well as the mechanisms we plan to use at Sea Energy and Northwest Natural Water, are all designed to reduce regulatory lag and produce a more balanced and linear consolidated earnings profile. These mechanisms also maintain affordability and predictability for customers. Moving to a quick review of our key business segments. Starting with Sea Energy, our Texas gas utility delivered another strong quarter and performed well during the heating season. Results were driven by healthy 16% organic customer growth, and our backlog exceeded 250,000 future meters at quarter end, highlighting the long-term growth potential of this business. Looking ahead, we are continuing to see solid growth in the Texas housing market and expect 15% to 20% annual customer growth through 2030, with Sea Energy contributing approximately 10% to 15% of consolidated EPS in 2026. Moving to Northwest Natural Water. This business posted healthy overall customer growth of 4.1% in the quarter and organic customer growth of 2.2%. As a reminder, the seasonality of water compliments our gas business with the highest demand in the third quarter and lower demand in the first quarter. Even though results were consistent year over year, we continued to make progress on customer growth and regulatory execution. We also remain active in greenfield opportunities for water and wastewater in Texas. We now have signed agreements with developers that represent a backlog of over 10,000 connections. Approximately 25% of these are in communities that have started development. This platform is driven primarily by organic customer growth, and we expect it to achieve 2 to 3% growth through 2030. Water is expected to contribute approximately 10 to 15% of consolidated EPS in 2026. Finally, turning to Northwest Natural Gas, our largest segment, this business continues to play a critical role in ensuring affordable and reliable energy for customers in Oregon and Washington. I'm pleased to report that our system performed well this winter, reliably serving our customers during the heating season. we remain incredibly excited about our MX3 storage project that we announced last quarter. As a reminder, MX3 is a $300 million FERC regulated gas storage expansion that will add four to five BCF of capacity and is fully contracted with 25 year agreements. Since our last call, the project has continued to progress as we expected. Our timeline still contemplates receiving notice to proceed by the end of 2027 with an in-service date in 2029. E3, a highly regarded energy consulting firm, recently updated a study reinforcing earlier conclusions that natural gas remains essential to system reliability in the Pacific Northwest, particularly as the region continues to add significant electric load. The latest study now points to an approximately 14 gigawatt shortfall in generation capacity by 2035. That's why our storage capabilities are so important. They are uniquely positioned, expandable even beyond MX3, and offer a cost effective solution to our region's growing energy constraints. MX3 is not contemplated in our current 4% to 6% long-term EPS growth guidance. However, we do expect the project to have a sustained positive impact on earnings growth and plan to include the project in our guidance when we achieve notice to proceed, which would raise our long-term EPS outlook to 5% to 7%. Overall, we remain confident in our strategy, our execution, and the growth platform that we've built. The businesses are performing well, we are making progress on our regulatory initiatives and the outlook across our company is strong. We are progressing through 2026 with solid momentum and remain focused on disciplined utility growth and long term shareholder value with that i'll turn it over to Ray to walk through the financials Thank you, Justin and good morning everyone.