Northwest Natural Holding Company Q4 FY2025 earnings call

• 2025 saw record adjusted earnings per share, record capital deployment, and strongest organic customer growth in nearly two decades, driven by strategic decisions like diversifying into water utility, expanding jurisdictions, and adding Texas gas utilities.
• Announced MX3 storage expansion project in Pacific Northwest, adding 4 - 5 BCF of storage capacity, expected to be in service by end 2029.
• In Oregon, settled rate case in 2025 with new rates effective Oct 31; in Washington, reached settlement in principle for rate case. Working on multi - year rate cases in both states.
• Sea Energy completed acquisitions in Jan and Jun 2025, had 18% organic customer growth, and near 250,000 future meters in customer backlog.
• Water utility platform achieved scale, outperformed expectations in 2025, completed seven rate cases, and has runway for growth with organic customer additions and acquisition pipeline.

For the Northwest Natural Gas Utility segment, adjusted earnings per share improved 45 cents in 2025, primarily reflecting new rates in Oregon but partially offset by higher operations and maintenance and depreciation expenses. Sea Energy contributed 33 cents per share in 2025, with strong margins and net income in its first year of ownership exceeding expectations. The water segment's earnings per share increased 21 cents, contributing 35 cents per share, driven by new rates at the largest water and wastewater utility in Arizona and additional revenues from an acquisition. The other segment had an adjusted net loss increase of 39 cents per share due to higher interest expense at the holding company. Revenue contributions: Northwest Natural Gas Utility, Sea Energy, and water business each have their respective percentages.

• 2026 earnings per share guidance: $2.95 to $3.15.
• Reaffirmed long - term EPS growth rate of 4% - 6% compounded annually from 2025 adjusted EPS through 2030; including MX3, expected to increase to 5% - 7%.
• 2026 anticipated consolidated capital expenditures: approx. $500 - $550 million; five - year CapEx plan: $2.6 - $2.9 billion through 2030.
• Expect Sea Energy to contribute 10 - 15% of consolidated earnings per share in 2026, water business 10 - 15%.
• Focus on returning capital to shareholders, target long - term dividend payout ratio 55 - 65%.

Forward - looking statements based on management assumptions may not occur; risks related to changes in regulatory policies, mechanisms, or outcomes; significant changes in laws, legislation; delay in MX3 project notice to proceed; execution risks in Sea Energy rate case; risks associated with water business acquisitions and growth.

Q: 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 missed moves the needle that much?

A: Without MX3, very comfortable with 4% - 6% long - term EPS growth guidance; with project, once notice to proceed, expect to increase to 5% - 7%.

Q: What is what do you or when do you expect the notice to proceed and what what is the the any hang ups that that might delay that?

A: Expect notice to proceed by end of next year; milestones achieved include Oregon permit, Energy Facility Siting Council permit, FERC approval, customer agreements executed, finalizing EPC contracts and local permits.

Q: How much ahead do you see Sea Energy relative to what your expectations were and Are you at a level at this point where maybe the 26 cases is not as critical?

A: Pleased with Sea Energy's growth, despite Texas housing market slowdown, had incredible growth and record backlog additions; contemplating rate case this year, evaluating elements including GRIP mechanism.

Q: For 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, so would you be able to get AFDC over the course of construction? And the second question related to that is, funding plan.

A: Believe would be able to fund equity through normal issuances under ATM; would receive AFDC during construction period.

Q: 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 having any conversations, anyone approaching you on sort of behind the meter opportunities.

A: There are other reservoirs for gas storage beyond MX3, keep an eye on customer demand; MX3 capacity spoken for; approached by customers for behind - the - meter opportunities, evaluate on case - by - case basis, nothing to announce yet.