Good morning and thank you all for attending the North West Natural Holdings Company Q4 2024 Earnings Call. My name is Bricka and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host Nikki Sparley, Head of Investor Relations at North West Natural Holdings. Thank you. You may proceed Nikki.

Thank you. Good morning and welcome to our fourth quarter 2024 earnings call. A presentation for today's call is available on our investor relations website at irnorthwestnaturalholdings.com and following this call a recording will also be available on our website. Turning to slide two. As a reminder some things that will be said this morning contain forward-looking statements. They're 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. Please note our guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies mechanisms or outcomes or significant changes in laws legislation or regulations. As a reminder our segment reporting includes our natural gas distribution or NGD segment and other which includes our interstate storage services and asset management services, Northwest Natural Water, Northwest Natural Renewables and holding company expenses. We expect to file our 10k later today. 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 David Roy at 503-610-7157. Moving to slide three, with us today are David Anderson, Chief Executive Officer, Justin Pelferman, President, and Ray Kasuba, Senior Vice President and Chief Financial Officer. David and Ray have prepared remarks and then will be available along with other members of our executive team to answer your questions. With that, I will turn it over to David on slide four.

Thanks, Nikki, and good morning and welcome. This past January, we celebrated the 166th anniversary of the founding of our company in 1859. Over this impressive span of years, the company has been unwavering in its dedication to delivering safe, reliable, and affordable utility services to better the lives of the communities we serve. It is this reputation that drew me to Northwest Natural in 2004 when I joined the company. At that time, we were known in our industry for operating the premier gas utility in the Pacific Northwest with a legacy of ingenuity, safety, superior customer service. I immediately found that reputation to be well-earned. In 2016, I was honored to be given the responsibility as CEO to uphold that reputation while also growing the company and continuing to create long-term shareholder value. As I address you this final time, I am pleased to report that we have been successful on that path. In my time as CEO, we have evolved from one utility to four strong businesses serving nearly one million customers across seven states that are growing meaningfully and sustainably and dedicated to our hallmarks of service and safety. This past year was one of achievements and setting the stage for future growth. 2024 adjusted earnings came in at the upper end of the guidance range due to successfully executing our plans to offset regulatory lag from capital investments and inflation. To mitigate those pressures longer term, we completed the largest Oregon gas utility rate case in our history and also concluded a number of water and wastewater utility rate cases last year. but we did not lose sight of affordability. Today, our Northwest Natural customers are paying less for their natural gas service than they did 20 years ago. At the same time, our water and wastewater customer base grew at a clip of 4.6 percent last year, including organic growth and acquisitions. In addition, our two renewable natural gas facilities with EDL went into operations. These facilities and our related offtake contracts are already providing steady cash flows and earnings that we expect for decades to come. But we did not stop there. We also announced the acquisition of a high-growth natural gas utility in Texas, Sea Energy. This transaction, which closed last month, represents one of the most significant drivers of long-term growth for our company. All of these accomplishments in 2024 put us back on track and further support our 4% to 6% long-term earnings per share guidance. And that's why today we are able to initiate 2025 adjusted earnings guidance in the range of $2.75 per share to $2.95 per share. Turning to more detail on our Pacific Northwest gas utility on slide five, as I mentioned, we successfully completed an Oregon general rate case in October of last year with new rates effective on November 1st. Under the order, Northwest Natural's revenue requirement increased $93.3 million, and rate-based increased $334 million to $2.1 billion. It is important to remember that we prioritize safe, reliable service and make investments that support that critical mission. In January last year, we were reminded once again of the importance of peak planning and the natural gas system during cold weather events. We delivered 9 million therms on our new peak day last year. Our gas system provided 55% more energy than the largest electric utilities in Portland, Oregon, combined over the cold snap. In fact, the region narrowly avoided rolling blackouts during the January 2024 storm because widespread outages in the Willamette Valley dramatically reduced electric regional load. That is according to the Clark Public Utility District Supply peak load and resource adequacy snapshot. shot. This just clearly illustrates the true power of natural gas. Voters in our service territory have repeatedly agreed with us. The most recent data shows that voters want a diversified set of energy solutions, citing reliability and affordability concerns. With increasing concern about power outages, 81% of voters say we need both electricity and natural gas to reliably meet our energy needs. We appreciate voters' understanding of the essential role the natural gas system plays. It is why we believe Washington voters in November 2024 repealed laws that favor electrical usage over the direct use of natural gas and why we believe that two integrated systems, gas and electric, are better than one. In order to continue that critical mission of safe, reliable gas service, we filed an Oregon general rate case at the end of December last year. The gas utility request included a modest revenue requirement increase of $59.4 million or 5.8 percent over current rates. The increase is based on a 52 percent equity and 48 percent long-term debt capital structure and a return on equity of 10.4 percent and a cost of capital of approximately 7.7 percent. This request includes an increase in average rate base of $204 million since the last rate case and an updated depreciation study resulting in a 10 million dollar increase to revenue requirement. As you may recall, Oregon rate cases are adjudicated over a 10-month period, so we expect new rates starting November 1st of this year. We carefully considered this rate case filing and the effect on customers' bills. Our team has done all they can to reduce costs and operate as efficiently as possible while maintaining a safe and reliable system. Moving to slide six and an update on our gas utility in Texas, Sea Energy. We are thrilled to close the Sea Energy acquisition on January the 7th and add a rapidly growing natural gas utility in Texas to our portfolio. The transaction meets all of our investment criteria. It is a regulated utility in a rapidly expanding region with constructive regulation and a long runway of growth opportunities plus an excellent management team. C-Energy has produced strong customer growth of 22% from 2021 to 2024 compounded annually. We believe C-Energy's double-digit growth will continue, and the acquisition continues our platform of further scaling our business. In summary, we have a strong year of execution and are well-positioned to continue delivering on our financial and strategic objectives. I am proud of the achievements across all four of our growing businesses. With that, let me turn it over to Ray to cover the financials.

Thank you, David, and good morning, everyone. Turning to full year results on slide 7. On an adjusted basis, the company achieved net income of $90.6 million, or $2.33 per share, compared to net income of $93.9 million, or $2.59 per share for the same period in 2023. rate. The $3.3 million decrease in adjusted net income was largely the result of regulatory lag for the first 10 months of 2024 until new Oregon gas utility rates were effective on November 1st. Earnings per share was also affected by the issuance of common stock during the year as we financed long-term growth capital. Turning to the natural gas distribution segment's annual results. Utility margin increased $26.3 million, mainly due to new rates in Oregon. Gas utility O&M decreased $2.1 million, excluding the effects of a regulatory disallowance as a result of lower contractor costs and bad debt expense. Utility depreciation and general taxes increased $12.1 million due to additional capital investments. Other income decreased $18.2 million, driven by higher pension costs and lower interest income. Interest expense for our gas utility increased $2.8 million due primarily to higher short-term debt financing. Our other businesses' net income increased $3.6 million, excluding expenses related to the sea energy transaction, primarily due to $4.4 million of higher net income from the water and wastewater utility business. For 2024, cash provided by operating activities was $200 million. We invested $394 million in our systems related to safety, reliability, and technology. Nearly 90% of those capital expenditures were for the gas utility. These were planned and included in our rate case requests. We deployed $30 million for water and wastewater acquisitions. Cash provided by financing activities was $227 million. Moving to our financial outlook on slide 8. The company initiated annual 2025 adjusted earnings guidance today in the range of $2.75 to $2.95 per share. Our 2025 guidance reflects strong contribution from our other businesses. We expect sea energy and Northwest Natural Water to each provide approximately $0.25 to $0.30 of EPS over the year in 2025. We also expect a long-term earnings per share growth rate of 4% to 6% compounded annually from 2025 adjusted EPS. Turning to our capital expenditure guidance. For 2025, consolidated capital expenditures are expected to be in the range of $450 to $500 million, anchored by significant projects at our gas utilities in the Pacific Northwest related to modernizing end-of-life meters, system reinforcement, and gas storage upgrades. Our range also includes sea energy and investments to support growing communities in Texas as well as water and wastewater capex. As a result of the increased capital investments, which is largely related to adding sea energy to our portfolio, we have increased our consolidated capex range to 2.5 to 2.7 billion dollars through 2030, a nearly 40 percent increase from our previous trajectory. Our CapEx projection only includes line-of-sight projects that have been specifically identified and estimated. It doesn't include any future acquisitions. As we announced in November, our utility's combined annual rate-based growth target has increased from 5% to 7% to 6% to 8%. Related to customer growth, last year on a consolidated basis, our utilities grew 1.1%. From 2025, we are projecting 2% to 2.5% customer growth. This acceleration is largely based on 20% or higher customer growth from Sea Energy. Our customer growth projections for Sea Energy are backstopped by an impressive backlog of nearly 190,000 connections under contract. Our water customer growth projections are rooted in the strong economic growth in the regions they serve. While we expect to continue to execute on tuck-in acquisitions, we haven't included incremental water acquisitions in our projections. We will remain disciplined in our approach to deploying capital and are focused on maintaining our strong credit ratings and a solid balance sheet. We see modest, regular, common equity financing needs in 2025 with equity issuances expected to be in the range of $65 million to $75 million. That's lower than the $90 million issued through the ATM program in 2024. Despite increasing our capital expenditures by an average of $115 million per year through 2030, we don't see a proportional increase in equity issuances due to the strong underlying operating cash flow that supports a healthy balance sheet. We financed the C energy acquisition last month with a committed term loan. Our plan is to add junior supported notes to our financing portfolio to refinance the term loan in line with the goal of maintaining a healthy investment grade credit rating. This would also allow us to expand our financing channels while meeting our financial objectives. We continue to review our options, but our plan is to issue permanent financing this spring. Moving to slide nine. For Sea Energy, we anticipate total meter set growth of approximately 20 percent over last year. That translates into rate-based growth of 20 to 25 percent from 2025 to 2027 and an expected net income growth of 32 to 37 percent compounded annually over the same time period with further growth beyond. We'll support this growth and our priority to provide safe reliable service with a with a constructive regulatory strategy. We're evaluating options for regulatory recovery and using supportive mechanisms such as the gas reliability infrastructure program or GRIP in the Texas jurisdiction. A few comments on Northwest Natural Water. We've seen a tremendous amount of investment needed in our water utilities to ensure clean and safe water and wastewater services to our customers. Based on near-term needs, we expect water and wastewater rate base to grow 10 to 15 percent from 2025 to 2027 and net income to grow at that same level. We are excited about the long-term earnings power of both sea energy, and water. To provide additional information, we also expect to begin separately disclosing Northwest Natural Water and Sea Energy financial results with our first quarter 2025 earnings. With that, I'll turn it over to David.

Thanks, Ray. Moving to slide 10, let me outline our initiatives for 2025. We are focused on reaching constructive completion of the Oregon General Ray case to allow the gas utility to continue earning a strong return on its invested capital. Second, capturing the growth from sea energy is a priority. We see double digit growth next year and for years to come from this business. Third, the water and wastewater utilities have a robust growth trajectory with both organic and acquisition opportunities. We will continue to evaluate acquisitions to ensure they fit our portfolio and assess rate case violence as necessary to recover crucial safety investments. As always, we will keep affordability at the center of our strategy. Finally, I'm excited that Northwest Natural Renewables First projects are up and running, generating steady revenues and cash flows. We are contracted to receive increasing allocations of RNG from these facilities over the next several years. In summary, I am pleased with all the accomplishments our employees and this leadership team achieved in 2024. We've made substantial progress on all our strategic initiatives, and I look forward to what the team will do this year and for years to come. Last year was especially significant for me personally, as I announced my intent to retire in April of 2025. In my time as CEO, we have evolved from one strong utility to four thriving businesses, creating value for all stakeholders today, and I believe well into the future. We are at a pivotal time of growth and transformation. Northwest Natural Holdings and this leadership team are well prepared. Our company is in strong financial position and poised for continued growth. It is important to ensure a smooth leadership transition and the board and I are excited that Justin will be succeeding me. It has been an honor and an enormous privilege to lead Northwest Natural Holdings and the talented and deeply committed people who work here. Thank you for joining us this morning and thank you for your support over the years. With that, we'll open it up to questions.

Thank you. David, we will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. And if for any reason you would like to remove that question, please press star then two to remove that. And again, it's star followed by one to register for a question. And as a quick reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. We will pause briefly whilst questions are registered. We have the first question from Chris Ealingas with SIBA William Shank. Please go ahead when you're ready.

Chris Ealingas- Good morning, everybody. How are you? Chris Ealingas- And, you know, you can't throw a rock without hitting a story about data centers.

So can you give us some strategic thoughts about, you know what's happening in washington and how you feel that with the amount of electric global are talking about how do you see that as an opportunity for say mist or just the business in general justin would you like to take that one sure good morning chris thank you for the question so regarding data centers um the uh we are looking at a number of potential opportunities both in the Pacific Northwest and in Texas, evaluating connecting these to our systems. For the Pacific Northwest, we've received inquiries from several data centers in various stages of development, all of which would need to firm up their on-site electricity demands. We can connect these loads to our system, but we're evaluating the size of the loads and doing analysis on the system impacts. We do have some pipeline constraints, as you're probably aware, in our region, and so we're evaluating how we might be able to serve that. But it does seem like an interesting opportunity. And your question around Washington, I'm not sure if you're referring to the federal level, but we are monitoring that closely. Obviously, everyone in the industry is. The tariff situation is day-to-day, but we are well prepared there. We actually filed a deferral for our gas costs in the event that those tariffs do go into effect. We don't anticipate at the 10 percent level a meaningful impact in terms of cost to our customers, but we're monitoring the situation.

Yeah, I'm sorry to confuse the state and the D.C. You know, a lot of capital equipment is imported, especially from a 25% tariff might be pretty substantial. Do you think there, maybe really early for this, but maybe since so much of the executive orders so far are energy related, do you think there's a chance to get exemptions for, say, energy capital that, you know, could be inserted into the tariffs?

Yeah, it's an interesting thought, Chris. Our team is actively engaged with policymakers on the Hill, as is AGA and EEI, as you know. So we're looking at that closely. Obviously, we've dealt with inflation before in recent years in the industry, and certainly a 25% tariff on materials like that could have an impact, but we're engaged, and it's hard to comment on the direction that that's going to head at this time.

I haven't backed into or imputed the Sea Energy net income growth on slide nine, but, you know, the last time I did some poking around in their last rate case, you know, I presume that this CAGR that you've given us is beyond the core growth at Sea. catching up on, you know, they're pretty behind on rate-based, you know, getting to some kind of rational cap structure. So, those CAGRs, do they include, you know, not resetting?

Yeah, good morning. This is Ray. Yes, you're correct. It assumes a reasonable approach from a rate case standpoint and also from a capital structure standpoint. They are in the high 40s or so percent uh debt today and we think that over time that that can that can increase increase to more like a 60-40 equity to debt ratio over over time so those are the assumptions uh resetting those is what is in the um the CAGR that you see in the deck okay um do you have any sense of when you may make a filing for C to get that sort of yeah Chris we uh we just closed on the acquisition last month and are focused on integrating the the company uh we will be

evaluating rate case timing as as the year unfolds but we don't have anything to report at this time okay um all right that's it for me thanks so much david appreciate it have a great retirement thanks chris i really do appreciate that thanks chris thank you as a quick reminder that staff I wanted to register for questions.

We now have Salman Akil with Stiefel on the line.

Thank you. Good morning, Salman. Congratulations, David. Just a quick one for me. On your capex, can you just unpack that exactly by gas, sea, and water on how much you're going to be investing in each one?

Sure. So for Northwest Natural Gas Company, it's in the ballpark of $350 million. For Sea Energy, it's an $80 million range. And for water, it is in the $60 million range for a total of the range that we mentioned on the call, $450 to $500 million for 2025.

Got it.

All right.

Great. Thanks so much.

Thanks, Tommy. Thanks, Tommy.

Thank you. We currently have no further questions. So I would like to hand it back to David Anderson for some final comments.

Well, thank you very much. And thank you for everybody for joining us today. As always, if you have follow-up questions, Mickey will be available online or by telephone. And we look forward to talking and seeing you soon. Take care, everybody.

Thank you all for dialing in for the Northwest Natural Holdings Company Q4 2024 Earnings School. I can confirm today's school has now concluded. Please enjoy the rest of your day.