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DATE

Wednesday, Aug. 5, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Director of Investor Relations - Nikki Sparley
• President and Chief Executive Officer - Justin Palfreyman
• Senior Vice President and Chief Financial Officer - Raymond Kaszuba

TAKEAWAYS

• Earnings Per Share -- $0.01 for the second quarter, remaining flat year over year and exceeding internal expectations.
• Year-to-Date EPS -- $2.33, an increase from adjusted earnings of $2.28 in 2025, driven by higher margins from Oregon rates and contributions from SiEnergy.
• Full-Year Guidance -- narrowed to the top half of the $2.95 to $3.15 per share range, reflecting clarity on regulatory initiatives and cost management.
• Texas Customer Growth -- over 15% for SiEnergy during the second quarter, supported by demand in one of the fastest-growing regions in the country.
• SiEnergy Backlog -- 260,000 future meters, which management stated will fuel growth for multiple years.
• Texas Growth Projections -- 15% to 20% annual customer growth target through 2030, supported by disciplined infrastructure investment.
• Oregon Alternative Rate Mechanism -- $13 million revenue requirement settlement filed with regulators, compared to an original request of $15.6 million.
• Oregon Rate Effective Date -- Oct. 31, 2026, for new rates associated with the alternative rate mechanism settlement.
• Washington Rate Case Outcome -- 80% of the requested revenue requirement received in a recent commission order, with new rates effective Aug. 1, 2026.
• Washington Capital Structure -- 50% equity and 50% long-term debt, as established by the commission's order.
• Washington ROE -- 9.5%, as approved in the recently concluded multiyear rate case.
• Gas Infrastructure Investment -- $165 million invested through the first half of 2026 to support system reliability and customer growth.
• Water Customer Growth -- 3.4% for the 12-month period ended June 30, 2026, reflecting organic expansion and acquisitions.
• Water Rate Cases -- four active proceedings across Oregon, Texas, and Arizona to align recovery with infrastructure investments.
• MX3 Project Cost -- $300 million for the FERC-regulated gas storage expansion project.
• MX3 Capacity -- 4 to 5 billion cubic feet of capacity, which is already fully contracted under long-term agreements.
• MX3 Contract Terms -- 25-year duration for agreements supporting the new storage capacity.
• MX3 Financial Framework -- 12.5% return on equity and a 50% equity capital structure.
• Current Growth Target -- 4% to 6% long-term earnings growth target reaffirmed through 2030.
• Projected Growth Acceleration -- 5% to 7% long-term earnings growth target expected following the notice to proceed for the MX3 project.
• 2026 Capital Expenditures -- $500 million to $550 million planned to support investment across three utility platforms.
• Debt Issuance -- $150 million of net long-term debt issuance expected to fund the 2026 investment plan.
• ATM Equity Program -- $40 million to $50 million of equity issuance planned through the at-the-market program in 2026.
• Available Liquidity -- $628 million as of June 30, 2026, maintaining financial flexibility for the company.
• Water Bond Issuance -- $75 million inaugural issuance completed in June 2026 after receiving an investment-grade A- rating.

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RISKS

• Palfreyman stated, "As expected, an appeal has been filed with the Land Use Board of Appeals," regarding the conditional use permit for the MX3 storage expansion project in Columbia County.

SUMMARY

Management reported that Northwest Natural Holding Company (NWN +1.29%) narrowed its 2026 earnings per share guidance to the upper half of the existing range following regulatory progress in Oregon and Washington. The company stated that customer expansion in the Texas natural gas segment exceeded 15% and reaffirmed that the long-term growth trajectory is projected to accelerate upon the commencement of the MX3 storage project. Financial leadership indicated that 2026 capital requirements will be satisfied through operating cash flow, new debt, and the existing at-the-market equity program.

• Washington utility rates were implemented on Aug. 1, 2026, following a commission order that preserved the line extension allowance for new customers.
• Management noted that the water utility performance was modestly below plan for the first half of the year but expects the third quarter to be the peak volume period.
• The company stated that its first multiyear general rate case in Oregon is scheduled to be filed in 2028 with rates becoming effective in 2029.
• CFO Kaszuba indicated that utility operation and maintenance expenses are expected to be below the original plan for 2026 due to cost management efforts.
• CEO Palfreyman stated, "MX3 remains an attractive opportunity to enhance regional energy reliability," noting that the project is expected to receive a notice to proceed by the end of 2027.
• The company confirmed its dividend payout ratio target remains between 55% to 65% of earnings.
• Management noted that consolidation efforts in the water segment are intended to create a scaled and efficient platform for long-term growth.

INDUSTRY GLOSSARY

• ARM (Alternative Rate Mechanism): A regulatory tool used to adjust utility rates between general rate cases.
• ATM (At-the-Market): A type of equity offering where a company sells shares directly into the secondary trading market.
• Bcf: One billion cubic feet, a volume measurement for natural gas.
• FERC (Federal Energy Regulatory Commission): The U.S. federal agency that regulates interstate transmission of electricity, natural gas, and oil.
• GRIP (Gas Reliability Infrastructure Program): A Texas regulatory mechanism for the interim recovery of infrastructure investment costs.
• MX3: A specific natural gas storage expansion project located in Oregon.
• ROE (Return on Equity): A measure of financial performance calculated by dividing net income by shareholders' equity.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the Northwest Natural Holding Company Q2 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Nikki Sparley, Director of Investor Relations.

Nikki Sparley: Thank you. Good morning, and welcome to our second quarter 2026 earnings call. In addition to the press release, a supplemental presentation is available on our Investor Relations website at ir.nwnaturalholdings.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 also refer to certain non-GAAP financial measures.

For additional disclosures around 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 assumed outcomes or significant changes in local, state or federal laws, legislation or regulations. We expect to file our 10-Q 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 the second quarter 2026, a regulatory update and a look forward.

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.

Justin Palfreyman: Thanks, Nikki. Good morning, everyone. The second quarter represented another solid quarter of performance for Northwest Natural Holdings, adding to our growing track record of consistent earnings results. Earnings per share for both the quarter and year-to-date surpassed our expectations, reflecting disciplined execution across the company. Our teams are demonstrating operational excellence and delivering healthy financial results while continuing to advance key regulatory initiatives and growth projects that lay the groundwork for continued success for years to come. I'm pleased to announce that we now expect 2026 EPS to be in the top half of our guidance range of $2.95 to $3.15 per share.

This is driven by our strong year-to-date performance and improved visibility into the second half of the year as we have clarity regarding our key regulatory initiatives and continue to manage costs effectively. With that, let's review our business segments and key regulatory and project updates. Starting in Texas. SiEnergy had another outstanding quarter, highlighted by organic customer growth of over 15%. We currently have over 260,000 future meters in our backlog, which we expect to fuel growth for many years to come. On the regulatory front, SiEnergy continues to make progress on its ongoing rate case. As a reminder, we filed with the Texas Railroad Commission on May 4.

This case reflects the necessary investments we have made to continue serving one of the fastest-growing regions in the country. We continue to constructively work through the rate case, including the factors needed to implement the GRIP mechanism and expect new rates to take effect later this year. Looking ahead, we remain very optimistic about the growth opportunities in Texas. We continue to expect customer growth of approximately 15% to 20% annually through 2030. Through disciplined infrastructure investment and strong stakeholder partnerships, we are well positioned to support growth and create long-term value for customers and shareholders. Turning to Northwest Natural Gas. In Oregon, we continue to make steady progress on several important regulatory initiatives.

First, we filed a multiparty settlement in our alternative rate mechanism docket with the Public Utility Commission of Oregon. The settlement provides for a $13 million revenue requirement compared to the original ask of $15.6 million. A commission order is expected later this year with new rates expected to be effective on October 31, 2026. We are also actively engaged in Oregon's ongoing multiyear rate plan rule-making process. Phase 1 of that docket has been completed and focuses on the high-level development of key concepts, including 5-year rate plans, a revenue indexing mechanism during the rate plan and a capital funding mechanism.

We have consistently advocated for multiyear ratemaking because we believe it provides the most effective balance between customer affordability and the critical investments needed to maintain a safe system and support growth. We are encouraged by the critical investments needed to maintain a safe system and support growth. We are encouraged by the progress being made in this docket. We continue to see pathways to implement the Phase 1 framework in a manner that balances the interest of customers, regulators, and our investors. Phase 2 is now underway and is expected to more fully outline the details of the constructs laid out in Phase 1. The overall process is expected to conclude before the end of 2027.

The current schedule has Northwest Natural filing its first multiyear general rate case under the new rules in 2028, with rates becoming effective in 2029. In the interim years, we have several options to ensure timely recovery of our investments, including traditional rate cases. Turning to Washington. We received the commission's order in our multiyear rate case and are pleased with the outcome. We received over 80% of our requested revenue requirement increase, a capital structure of 50% equity and 50% long-term debt, and a return on equity of 9.5%. The order also preserves the line extension allowance for prospective customers, recognizing the important role of natural gas in the energy system and in supporting customer affordability.

New rates were effective on August 1. Overall, I'm very pleased with the progress we've made on the regulatory front at Northwest Natural. We continue to support growth and provide safe, reliable service to our communities. Through the first half of 2026, Northwest Natural invested more than $165 million in infrastructure to support customer growth, enhance system reliability, and maintain a modern, resilient natural gas network. Moving to an update on Northwest Natural Water. The business continues to grow and mature. Overall customer growth was 3.4% for the 12 months ended June 30, 2026. While the financial results for the first half of 2026 were modestly below plan, the peak volume months of the year still lie ahead.

Across the Water business, we continue to make solid regulatory and strategic progress to support growth over the long term. We currently have 4 active rate case proceedings across Oregon, Texas, and Arizona, all of which are progressing as expected. In Arizona, we continue advancing formula rates for Foothills, aiming to align recovery with ongoing infrastructure investment. We also continue to progress our consolidation efforts in multiple jurisdictions, consistent with our long-term strategy of creating a scaled, efficient water utility platform that benefits both customers and shareholders. We remain confident in the long-term growth prospects of Northwest Natural Water and the value we're creating.

Finally, let me provide a brief update on the MX3 storage expansion project as we continue to make solid progress there as well. As a reminder, MX3 is a $300 million FERC-regulated gas storage expansion project that will add 4 to 5 Bcf of capacity and is fully contracted with 25-year agreements, 12.5% return on equity and 50% equity capital structure. We recently received our conditional use permit in Columbia County. Importantly, the County Board of Commissioners unanimously approved the permit, reflecting the strength of the project, its economic benefits to the region, and broad support from the community. As expected, an appeal has been filed with the Land Use Board of Appeals.

Our time line already contemplated the potential for additional process and therefore, remains unchanged. We continue to expect Notice to Proceed by the end of 2027, with the project advancing as planned. MX3 remains an attractive opportunity to enhance regional energy reliability and, upon receiving Notice to Proceed, supports increasing our long-term earnings growth target to 5% to 7%. In conclusion, I am happy to report that all of our businesses are in a strong financial position and poised for future growth. With that, I'll turn the call over to Ray to review our financials.

Raymond Kaszuba: Thank you, Justin, and good morning, everyone. The second quarter reflected strong operational and financial execution across the company. Earnings per share was $0.01, flat to the prior year period, but above our expectations. As a reminder, our gas utility earnings are seasonal, with the majority of revenues and earnings generated in the first and fourth quarters during the winter heating months. Our water utility revenues and earnings are weighted towards the third quarter, when customer demand is highest during the summer months. Northwest Natural Gas reported EPS of $0.09 compared to $0.12 in the prior year period.

Higher margin from rates in Oregon was offset by increased operations and maintenance expense and continued investment in the system, resulting in higher depreciation expense and financing costs. Looking ahead, we expect stronger performance in the back half of the year as compared to last year, driven in part by the implementation of new rates in Washington and the benefit of the alternative rate mechanism in Oregon beginning October 31. SiEnergy reported earnings of $0.05 per share compared to $0.03 in the second quarter of 2025. Results were primarily driven by customer growth of over 15% and the benefit of deferring depreciation, interest, and general taxes.

SiEnergy also benefited from a full quarter of earnings contribution from Pines, which was acquired on June 2, 2025. Northwest Natural Water's EPS was $0.05 for the second quarter of 2026 compared to $0.07 in the prior period. Higher operating revenues from organic growth and acquisition were offset by higher O&M as we support platform integration and centralization. Importantly, these initiatives are consistent with our long-term strategy to scale our Water business and position the platform for numerous opportunities that we expect to translate into sustained long-term growth. Turning to year-to-date results. EPS was $2.33 for 2026 compared to adjusted EPS of $2.28 in 2025.

The year-to-date increase in EPS reflected higher margin from new rates for our gas utility in Oregon and higher contributions from SiEnergy. These items are partially offset by higher O&M costs, depreciation, and interest expense. Overall, we are very pleased with the strong start to the year and believe EPS for the full year will be in the top half of our guidance range of $2.95 to $3.15 per share. At Northwest Natural, new Washington rates have been implemented and parties have filed a settlement for the ARM. We also expect Northwest Natural's O&M to be below original plan, reflecting disciplined execution and a continued focus on cost management.

At SiEnergy, we expect the favorable results from the first half of 2026 will continue, and we are making constructive progress with the general rate case. As it relates to SiEnergy and Water, we still expect these 2 businesses to contribute approximately 25% of our EPS this year. Today, we are also reaffirming our long-term earnings growth target, which remains 4% to 6% through 2030. Following Notice to Proceed on MX3, we expect our long-term earnings growth framework to increase to 5% to 7%, reflecting the substantial earnings and cash flow opportunity associated with that project. We continue to expect Notice to Proceed by the end of 2027, with an in-service date in 2029. Turning to capital allocation.

Our 2026 capital expenditure plan remains in the range of approximately $500 million to $550 million and continues to support investment opportunities across all 3 utility platforms. We expect these investments to be funded through a combination of strong operating cash flow, approximately $150 million of net long-term debt issuance, and roughly $40 million to $50 million of equity issued through our ATM program. In June, we successfully completed our inaugural $75 million Water bond issuance after receiving an investment-grade A- rating for our Water debt, further reflecting the platform's maturity and strong financial foundation.

Over the 5-year planning horizon, capital expenditures for the full company will be funded largely through operating cash flows, along with a balanced mix of long-term debt and equity. We have approximately $628 million of available liquidity as of quarter end. We continue to maintain strong liquidity and financial flexibility. We currently expect our equity needs through 2030 to be met through disciplined use of our ATM program. Finally, on shareholder returns, as our dividend payout ratio comes in line with our 55% to 65% target, we continue to expect to increase our dividend over time, consistent with earnings growth and cash flow generation. To conclude, we're very encouraged by the momentum we see across the company.

The first half of the year was strong. Our regulatory strategy continues to advance, and we're confident in our ability to deliver on our objectives in the back half of 2026 and beyond. With that, we'll open the call to questions.

Operator: [Operator Instructions] Your first question comes from the line of Constantine Lednev with Wells Fargo.

Justin Palfreyman: So, Constantine, we can't hear you on the line here. I understand there have been some technical difficulties. We will make sure that Nikki and the team connect with you after the call and get your questions answered. I see we have no other questions in the queue. So I want to thank you all for joining us this morning. We appreciate your interest in Northwest Natural Holdings. We're pleased with our first half of 2026 performance and are targeting the top half of our 2026 EPS guidance range for the year. This reflects the confidence we have in the rest of the year and our ability to execute on our growth strategy.

As always, please don't hesitate to reach out to Nikki with any further questions. Thank you.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.