Hello, and welcome to the Northwest Natural Holding Company Q4 2025 Earnings Call. My name is Harry, and I'll be your operator. [Operator Instructions] I will now hand over to Nikki Sparley, Director of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to our fourth quarter and full year 2025 earnings call. In addition to the press release, a supplemental presentation is available on our Investor Relations website at ir.northwestnaturalholdings.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 10-Q and 10-K filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these 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-K later today. With us today are Justin Palfreyman, President and Chief Executive Officer; and Ray Kaszuba, Senior Vice President and Chief Financial Officer. Justin will provide highlights from 2025 and a look forward, and 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. We are excited to share our results for the year and our expectations for the future. Northwest Natural Holdings began a new chapter in 2025. We delivered record adjusted earnings per share at the top of our guidance range, deployed a record amount of capital to support our customers and reported our strongest organic customer growth in nearly 2 decades. Those results aren't an accident. They were driven by deliberate strategic decisions we have made as a company, reflect our management team's focus on execution and foreshadow the strength of our platform going forward. Over the last few years, we have taken steps to diversify into the water utility business, expand into multiple jurisdictions and add Texas Gas utilities to further enhance our long-term growth prospects. What began as a single utility in the Pacific Northwest has evolved into 3 thriving businesses serving customers across 6 states. Our 2025 performance is a result of these strategic decisions. We've set the stage for growth while fulfilling our mission of delivering safe, reliable and affordable service to our growing customer base. And we're still in the early chapters of our success story. As you know, we are in an age of tremendous energy demand. Natural gas plays a critical role in meeting that need, and we're uniquely positioned to address it. That's why we are excited to announce our new MX3 storage expansion project in the Pacific Northwest, a project that will enhance regional reliability and capacity and one that has the potential to drive our long-term earnings growth target to 5% to 7% once we receive notice to proceed. As our story progresses, we remain focused on disciplined execution and delivering consistent growing earnings and returns for our shareholders. The momentum we've built positions…

Thank you, Justin, and good morning, everyone. I will start by echoing Justin's sentiment about our strong performance in 2025. This was a year defined by disciplined execution as we delivered record adjusted earnings per share and are creating a strong platform position for long-term growth. For the full year 2025, we reported record adjusted earnings per share of $2.93 compared to $2.33 per share for 2024. Earnings growth was fueled by new rates in Oregon, healthy rate base growth across the business and continued strong organic customer growth. For our Northwest Natural Gas Utility segment, adjusted earnings per share improved $0.45, primarily reflecting new rates in Oregon, partially offset by higher operations and maintenance and depreciation expenses. SiEnergy contributed $0.33 per share for 2025. In our first year of ownership, margin and net income was strong, driving results above our expectations of $0.25 to $0.30 per share. Our Water segment earnings per share increased $0.21 and contributed $0.35 per share to 2025 results, which was also above our expectation of $0.25 to $0.30 per share. The key drivers were new rates at our largest water and wastewater utility in Arizona and additional revenues from an acquisition late in 2024. Finally, the adjusted net loss of our other segment increased $0.39 per share compared to the same period last year, primarily due to higher interest expense at the holding company. For 2025, we generated approximately $270 million in cash provided by operating activities, about 35% above 2024. We invested a record $467 million in our systems related to safety, reliability and technology. Roughly 75% of those capital expenditures were for Northwest Natural Gas with about 15% for SiEnergy and 10% deployed for Water. We invested nearly $340 million for acquisitions. Cash provided by financing activities was $533 million, including $47…

[Operator Instructions] Our first question will be from the line of Chris Ellinghaus with Siebert Williams Shank.

Congratulations on a great year. Given what you've said about potentially raising the guidance or the growth range, where did you guys see yourselves within the existing range that Mist moves the needle that much?

So thanks for the question, Chris. This is Justin. Without MX3, we are very comfortable with our 4% to 6% long-term EPS growth guidance. With the project, once that achieves notice to proceed, we expect that we will increase that to the 5% to 7% that we just described. And we're very comfortable with our current range with everything else that we've got in our plan.

Okay. What is -- what do you -- when do you expect the notice to proceed? And what is the -- any hang-ups that might delay that?

Yes. So we expect notice to proceed by the end of next year. And we have a lot of milestones that we've achieved with this project already, including our Oregon permit, the Energy Facility Siting Council permit. We've got that completed. We have FERC approval in place. We've got our customer agreements executed, and we are finalizing our EPC contracts. So that's one item that we still need to finalize, and then we are also finalizing some local permits before we achieve notice to proceed.

Okay. So Si seems to be maybe ahead of the curve, certainly what I was kind of expecting on a pro forma basis. How much ahead do you see it relative to what your expectations were? And are you at a level at this point where maybe the '26 case is not as critical?

So we've been really pleased with the growth that we've seen at SiEnergy despite a slowdown in the housing market in Texas, we had incredible growth this year. We also had record additions to our backlog, which bodes well for the long-term future growth at SiEnergy. I would say we're really pleased with what we're seeing. It's probably exceeded our expectations. However, we have not gone in for a rate case yet, and there's still some remaining items that we want to see on an execution standpoint. So we are contemplating a rate case this year and studying that heavily right now. But I can say that overall, the growth has been strong. It's been a few years since they've been in for a rate case, and there are certain elements of the rate case that we are evaluating that could be more beneficial down the road as well, including using the GRIP mechanism in Texas.

If I recall correctly, Texas passed legislation that's constructive, would that bypass GRIP? Or would you stick with that sort of older mechanism?

We're evaluating that now, Chris. But I would expect that when we do go in for a rate case that we would look at the GRIP mechanism. The HB 4384, which I think you're referring to, has been helpful from an earnings perspective, and that is reflected a little bit in our results even in 2025. But I would expect that because of the way the mechanism works for GRIP, that's likely what we would be looking at in a future rate case.

Okay. So given the mechanism that you filed for in Oregon, -- your guidance suggests -- I guess, it's kind of silly to look at growth versus 2025, but your guidance suggests considerably lower growth, right? So are you anticipating receipt of that mechanism within the guidance?

Yes. We are expecting receipt of that, the rate mechanism here in Oregon as part of that guidance. It is a relatively modest increase to rates, about 1.5%, and that is effectively just to recover on some capital investments that we are making in this interim period while we're working through the multiyear rate planning and -- so it's actually, we think, beneficial to have this modest incremental increase in the interim so that we avoid a scenario in the future where you have a larger rate shock for customers.

Sure. One last question. What's the next step for water? You've always had a robust M&A pipeline. Is it expanding regionally? Or is it just continuing to do tuck-ins in your existing service areas? What are your thoughts on what water is up to?

Yes. We're always looking opportunistically at acquisition opportunities that really add long-term shareholder value and would drive more incremental growth. That being said, we are really happy with the platform that we have built. We are in 6 states now with our water business, and we have some great service territories that have a lot of organic growth embedded in them. So we're very focused on executing, both investing in the business, ensuring timely recovery on those investments and then also looking at expansion. So we're expanding our CCNs or our regulated service areas in a number of our jurisdictions across the water business. And we are focused on greenfield growth as well. So in Texas, in particular, where we've seen incredible growth with our SiEnergy business. Our Water platform is a lot smaller in Texas. So we're trying to find ways to combine our business development efforts down there to achieve greater greenfield growth in the future. And then we always look at tuck-in acquisitions. It's probably a little less of a focus for us right now, given some of the other opportunities that we see to drive shareholder value in the near term and some of the growth that we're excited about in our existing service territories.

Okay. One more short question. So mortgage rates have come down a decent amount over the last 12 months. Have you seen some alleviation of the headwinds against house or new customers, housing development expansion in Texas over the course of 12 months?

I would say that we saw a slowdown roughly around the middle of 2025 in new housing starts and completions. It does seem that the more recent moderation in interest rates and perhaps other factors has had a little bit of an uptick back the other way, which we think is positive. But it's pretty early to tell here in 2026 where that's going. Certainly, a reduction in mortgage rates is helpful. The Texas economy more generally continues to benefit from a lot of growth in terms of industrial and commercial activity in the state, companies relocating there, announcing new manufacturing facilities, and that drives residential growth as well. So we are very optimistic long term about the growth in the Texas market. And I think any reduction in interest rates is just going to be a tailwind around that.

The next question will be from the line of Alex Kania with BTIG.

I have a follow-up question on MX3 or actually 2 questions on MX3. First is just for the perspective of thinking about the earnings profile associated with that project, it sounds like it's a FERC-regulated project. Would you be able to get AFDC over the course of construction? And the second question related to that is just funding plan. kind of whenever the notice proceed happens, you add the roughly $300 million of CapEx. Would you still be able to fund any incremental equity needs through the ATM in that instance? Or would you need to think of alternatives there?

Yes. So first on the funding plan. In terms of the profile, because we are still working to [indiscernible] and cross some keys with our EPC contractors, we're not providing the actual cash flow profile at this point. But you are correct that we, we would be able to fund any equity through normal issuances under our ATM. And then to your first question, yes, we would also receive AFUDC during the construction period.

Great. And just so I heard the previous question right. So the idea of the target would be -- notice to proceed would be -- you're targeting by the end of next year, end of '27, right?

Correct.

[Operator Instructions] The next question will be from the line of Selman Akyol with Stifel.

Just a real quick one for me. So very pleased to see the storage expansion. But I'm just kind of curious, maybe you can talk about other opportunities that you may be seeing like that and one in particular, just thinking about are you having any conversations, anyone approaching you on sort of behind-the-meter opportunities?

Yes. Thanks, Selman. The opportunities that bit missed, they are long term in nature and fairly exciting in that we do have other reservoirs that can be developed for additional gas storage beyond MX3. They all have their own characteristics and cost profile and whatnot with them. But it is something that we keep an eye on. We do believe there is strong customer demand for this. So MX3, all of the capacity is spoken for with our existing customers there. And just what you're seeing in the broader energy constraints in the Pacific Northwest region with one major interstate pipe serving the region, gas storage is uniquely valuable here. So I do think there will be opportunities over the long term. It's very premature to comment on any specifics there. In terms of behind-the-meter opportunities, it is something we've been approached by numerous customers looking for access to really consistent, reliable energy in order to cite data centers and other types of facilities here. We do evaluate that on a case-by-case basis. If there is a storage potential use case there, but there's nothing that we have today to announce on that front.

That will conclude our Q&A. I'd like to hand the call back to Justin Palfreyman for closing remarks.

Thank you. So thanks, everybody, for joining us this morning. We really appreciate the questions and your interest in Northwest Natural Holdings. We're really proud of what we achieved in 2025 and even more excited about the momentum we're carrying into 2026. As you've heard today, we're entering this next chapter with a focus on our strategy, execution and continuing to grow our utility business. Please don't hesitate to reach out to Nikki with any further questions, and thank you for participating today.

This concludes the Northwest Natural Holding Company Q4 2025 Earnings Call. Thank you all for joining. You may now disconnect your lines.