Thank you. Thank you all for attending. I would like to welcome you all to today's call, the Northwest Natural Holdings Company Q1 2025 Earnings Call. My name is Brika, and I will be your moderator for today. 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 you over to our host, Nikki Sparley, Head of Investor Relations to begin. Thank you. You may proceed.

Thank you. Good morning and welcome to our first quarter 2025 earnings call. A presentation for today's call is available on our Investor Relations website at irnwnaturalholdings.com. And following this call, a recording will be available on our website. Turning to Slide 2. 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. 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 outcomes or significant changes in laws, legislation or regulation. For context, our segment reporting includes our Northwest Natural Gas utility, which was previously referred to as the Northwest Natural Gas Distribution or NGD segment. Beginning with first quarter 2025 results, we are providing information on two additional segments: our Sea Energy Gas Utility segment and our Northwest Natural Water Utility segment. Finally, the other category includes our interstate storage services and asset management services, Northwest Natural Renewables and holding company expenses. We expect to file our 10-Q 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 3. With us today are Justin Palfreyman, President and Chief Executive Officer; and Ray Kaszuba, Senior Vice President and Chief Financial Officer. Justin will provide an update on each of our businesses, and Ray will walk through financial results, liquidity and financing and guidance. After Justin and Ray's prepared remarks, they will be available along with other members of our executive team to answer your questions. With that, I will turn it over to Justin on Slide 4.

Thanks, Nikki. Good morning, and welcome, everyone. It is an honor to be speaking to you this morning, and I am pleased to report that Northwest Natural Holdings had a solid first quarter. Before getting into the business highlights, I'd like to take a moment to thank David Anderson for his over 20 years of service at Northwest Natural. Our employees, customers and communities have benefited greatly from David's dedication. Under his leadership, our company has expanded into new areas and evolved significantly. David led initiatives that improved employee and customer safety, maintained low customer rates and extended our tradition of excellent customer service and community engagement. We wish David all the best in retirement. He has left the company well-positioned for future growth, and importantly, with an excellent team that is focused on delivering long-term value to our shareholders. Part of David's legacy is the company's long-standing commitment to leadership and business integrity. I am proud to say that Northwest Natural Holdings was named one of the 2025 World's Most Ethical Companies by Ethisphere for the fourth year running. Turning now to Q1 results. We have executed well across all of our businesses. Our financial results are on track for the year and in line with our full year guidance issued in February. We reported adjusted net income of $2.28 per share in the first quarter of 2025, compared to net income of $1.69 per share for the same period last year. Our combined utility customer growth rate was 9.6% for the 12 months ended March 31, 2025. The main driver was the acquisition of Sea Energy, which added about 73,000 gas meters in Texas. Northwest Natural Water is contributing strong incremental meter growth as well, posting a 5.9% increase. Our financial results reflect the strength of our business…

Thank you, Justin, and good morning, everyone. Turning to Slide 7. As you've seen in the earnings release and as we mentioned on our last call, we have begun providing financial data for our Sea Energy Gas Utility and Northwest Natural Water Utility segments. You can find additional information by segment in the 10-Q we expect to file later today. We reported adjusted net income of $91.8 million or $2.28 per share for the first quarter of 2025, compared to net income of $63.8 million or $1.69 per share for the same period in 2024. The increase reflected strong results across all our business segments. We saw new rates for our gas utility in Oregon, contributions from Sea Energy, higher income from Northwest Natural Water related to new rates and acquisitions and a full quarter of revenues from our Renewables business. These items were partially offset by higher depreciation and interest expense. For our Northwest Natural Gas segment, net income increased $21.5 million or $0.42 per share. Margin increased $38.7 million, mainly due to new rates in Oregon effective November 01, 2024. O&M increased $2.2 million, reflecting higher payroll and benefit expense. Depreciation and general taxes increased $4.8 million due to continued investment in our system. Other expense increased $1.4 million, mainly driven by higher pension costs. Sea Energy provided net income of $5.5 million or $0.14 per share for the first quarter of 2025. Margin and net income results met our expectations for the quarter. Historically, roughly 30% of margin for Sea Energy is earned in the first quarter. Our Water segment net income increased $2.4 million or $0.06 per share. The key drivers were new rates at our largest water and wastewater utility in Arizona and additional revenues from the Putman utilities after the acquisition in September 2024.…

Thank you, Ray. We'll now begin the question-and-answer session. [Operator Instructions] And we have the first question from Selman Akyol with Stifel. Please go ahead.

Hey, this is Tyler on for Selman. I wanted to ask about the pickup in 2025 on the water side. Obviously, 2025 looks pretty favorable. And I'm just wondering, as you make go into these rate cases, again for safety investments, just sort of what your outlook looks like in Arizona and your other geographies for water?

Well, good morning, Tyler. Thank you for the question. The water utilities, the increase in Q1, the results that you're seeing is largely driven by rate case activity from last year, the largest of which was the Foothills rate case with new rates in effect late last year. We continue to file rate cases across our water service territories. Most of these are small on an individual basis, but you'll see that over time, as we continue to file rate cases and recover the investments in rates that growth will continue and earnings contribution will continue from Northwest Natural Water. We anticipate about $0.25 to $0.30 earnings contribution in 2025.

And Tyler, just to put some additional numbers around it. That $0.25 to $0.30, that translates to about $10 million to $15 million in net income on top of the $5.5 million that you saw in Q1. And then, over the next couple of years, an EPS growth rate of 10% to 15%.

Got that. Appreciate the color on that. Also if I could ask on the Hughes acquisition, the backlog for that, is that sort of similar to that of Sea in that, it's primarily residential and commercial as opposed to any like industrial customers in that?

Yes, that's right. It's primarily residential and commercial customers. There's no transmission business within the Hughes Gas entity. So, it's very similar to Sea Energy. And in fact, there's a lot of geographic overlap surrounding Houston with these assets. So, it's a very logical acquisition for Sea Energy. It adds a little more scale and growth for us in the Texas jurisdiction.

All right. Thank you, guys, for the time.

Thanks, Tyler.

Thanks, Tyler.

[Operator Instructions] I can confirm we'll complete the question-and-answer session there. And I'd like to hand it back to Justin for some final closing comments.

Great. Well, thanks everybody for participating and listening in on the call this morning. 2025 is off to a great start. Wishing everybody a safe day today and we'll talk to you soon.

Thank you all for dialing in for the Northwest Natural Holdings Company's Q1 2025 earnings call. Today's call has concluded. Thank you for your participation and you may now disconnect.