Good morning, and thank you all for attending the Northwest Natural Holding Company Q4 2024 earnings call. My name is Brica, 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 Northwest Natural Holding Company. 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 IR Northwest Natural Holdings dot com. 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 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 10-Q and 10-K 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 10-K 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 Palfreyman, President, and Raymond Kaszuba, 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 160th 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 Holding Company in 2004. 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, and superior customer service. I immediately found that reputation to be well deserved. In 2016, I was honored to be given the responsibility of 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, in setting the stage for future growth. 2024 adjusted earnings came in at the upper end of the guidance range due to successfully offsetting 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. We did not lose sight of affordability. Today, our Northwest Natural customers are paying less for their natural gas service than they did twenty years ago. At the same time, our water and wastewater…

Thank you, David. Good morning, everyone. Turning to full year results on Slide seven. 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. The $3.3 million decrease in adjusted net income is largely the result of regulatory lag for the first ten 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 C Energy transaction, primarily due to $4.4 million of higher net income from the Water and Waste utility business. For 2024, cash provided by operating activities was $200 million. We invested $394 million in 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 eight. The company initiated annual 2025 adjusted earnings guidance today in the…

Thanks, Ray. Moving to slide ten. Let me outline our initiatives for 2025. We are focused on reaching constructive completion of the Oregon general rate case to allow the gas utility to continue earning a strong return on its invested capital. Second, capturing the growth from C Energy is a priority. We see double-digit growth next year and for years to come from this business. Third, 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 filings 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 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. And Northwest Natural Holding Company 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 Holding Company 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. 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 here briefly whilst questions are registered. We have the first question from Chris Ellinghaus with Siebert Williams Shank. Please go ahead when you're ready.

Hey. Good morning, everybody. How are you?

Excellent.

David, there's lots been going on in Washington 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 will influence the business? And two, with the amount of electric load growth that people are talking about, how do you see that as an opportunity for, say, missed or just a business in general?

Justin, would you like to take that on?

Sure. Good morning, Chris. Thank you for the question. So regarding data centers, 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 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. 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 ten percent level a meaningful impact in terms of cost to our customers, but we're monitoring the situation.

That's yeah. I'm sorry to confuse the state and the DC. You know, a lot of capital equipment is imported, especially from Europe and a twenty-five percent tariff might be pretty substantial. Do you think there may be really early for this, but maybe since so much of the executive orders so far 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 in the industry and certainly a twenty-five percent 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 gonna head at this time.

Okay. I haven't backed into or imputed the C 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 C to include things like catching up on you know, they're pretty behind on rate base at this point as well as you know, getting to some kind of rational cap structure. So those CAGRs, do they include you know, not just the core growth there, but, you know, sort of resetting everything in Texas there?

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 forties or so percent debt today, and we think that over time that can increase to more like a sixty-forty equity to debt ratio over time. So those are the assumptions. Resetting those is what is in the CAGR that you see in the deck.

Okay. Do you have any sense of when you may make a filing for C to get that sort of process rolling?

Chris, we just closed on the acquisition last month and are focused on integrating the company. We will be evaluating rate case timing as the year unfolds, but we don't have anything to announce at this time.

Okay. Alright. That's it for me. Thanks so much, David. I appreciate it. Have a great retirement.

Thanks, Chris. Really do appreciate that.

Thank you. A quick reminder, star followed by one to register for questions. We now have Selman Akyol with Stifel on the line.

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

Sure. So for Northwest Natural gas company, it's in the ballpark of $350 million. For C Energy, it's in the $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. Alright. Great. Thanks so much.

Thanks, Selman.

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, Nikki will be available online or by telephone. We look forward to talking and seeing you soon. Take care, everybody.

Thank you all for dialing in for the Northwest Natural Holding Company Q4 2024 Earnings Call. At Hancock Foundation, today's call has now concluded. Please enjoy the rest of your day.