Northwest Natural (NWN) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

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

TAKEAWAYS

• 2026 EPS Guidance -- $3.10 to $3.20, raised from the previous range of $2.95 to $3.15 reflecting strong year-to-date performance and constructive regulatory outcomes.
• Third Quarter EPS -- Loss of $0.71, compared to a loss of $0.73 in the prior year as higher margins and cost management were partially offset by higher depreciation and financing costs.
• Year-to-Date EPS -- $1.62, representing a 6.6% increase compared to adjusted EPS of $1.52 in the first nine months of 2025.
• SiEnergy Customer Growth -- 13% for the 12 months ended Sept. 30, 2026, driven by continued demand in Texas service territories.
• SiEnergy Backlog -- 265,000 lots as of quarter end, with 110,000 new lots added to the pipeline since the acquisition less than two years ago.
• Oregon Alternative Rate Mechanism -- $13 million revenue requirement increase, with new rates becoming effective on Oct. 31, 2026.
• Washington Multiyear Rate Plan -- $20.1 million revenue requirement increase in the first year effective Aug. 1, 2026, followed by increases of $7.5 million in the second year and $7.4 million in the third year.
• SiEnergy Rate Case Settlement -- $8.6 million revenue requirement increase, including a 9.8% authorized return on equity and an approximate 60% equity ratio.
• Annual Dividend Rate -- $2 per share, following a $0.03 increase that represents the company's largest dividend hike since 2012.
• 2026 Capital Expenditures Plan -- $500 million to $550 million, with $373.4 million already invested through the first nine months of the year.
• MX3 Gas Storage Project -- $300 million estimated cost for an expansion that will add 4 billion to 5 billion cubic feet of capacity, fully contracted with 25-year agreements.
• Equity Issuance -- $26 million raised year to date through the at-the-market program, toward a total 2026 expectation of $40 million to $50 million.
• Water Utility Customer Growth -- 2.1% for the 12 months ended Sept. 30, 2026, as the company continues to centralize and scale the platform.
• Long-Term EPS Growth Target -- 4% to 6% through 2030, with the potential to increase to 5% to 7% upon the in-service date of the MX3 project.
• Total Utility Connections -- 989,410 across gas and water services, representing an overall growth rate of 1.8% over the trailing 12 months.
• Northwest Natural Gas Year-to-Date Net Income -- $70.5 million, an increase from $68.9 million in the prior year driven by new rates and cost discipline.
• Northwest Natural Water Year-to-Date Net Income -- $7.6 million, a decrease from $9.3 million in the prior year due to higher depreciation and operations and maintenance expenses.
• SiEnergy Customer Connections -- 98,614 as of Sept. 30, 2026, compared to 86,945 at the same time in the prior year.
• Northwest Natural Water Connections -- 81,710 as of Sept. 30, 2026, compared to 79,037 in the previous year.
• Northwest Natural Margin -- $506.5 million for the first nine months of 2026, representing an increase from $486.9 million in the prior year.

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RISKS

• Palfreyman stated, "Elevated mortgage rates have begun to moderate housing activity from peak levels in Texas," noting that while the company remains bullish long term, it is seeing a shift from previous peak growth levels.
• Palfreyman indicated that the water utility segment is seeing a "modest slowdown" in housing activity in some markets due to higher mortgage rates.

SUMMARY

Northwest Natural Holding Company (NYSE:NWN) reported results for the third quarter and first nine months of 2026. Management increased full-year earnings guidance based on year-to-date performance and constructive regulatory developments in several jurisdictions. The company executed multiyear rate plans and settlement agreements in Washington, Oregon, and Texas while continuing to invest in utility infrastructure. Strategic initiatives focused on expanding the natural gas storage footprint and integrating water utility services into existing growth markets. Financial results for the period included the effects of customer additions across all utility segments and disciplined operations and maintenance spending.

• Palfreyman stated, "The ability to offer multiple utility services through a single company is a differentiated value proposition for developers, and we see opportunities to expand this model in the years ahead."
• Management reported that over 95% of the overall rate base is expected to have some form of forward-looking rate plan or mechanism by 2029 once the Oregon multiyear framework is implemented.
• The company expects to file its first Gas Reliability Infrastructure Program filing in 2027 following the conclusion of the SiEnergy rate case in Texas.
• Kaszuba stated, "Approximately 75% of our debt is at our regulated businesses, financing costs are generally recovered through rates."
• The MX3 storage expansion project remains on track for notice to proceed by the end of 2027 while an appeal process with the Land Use Board of Appeals continues.
• The company's gas storage reliability was enhanced by the addition of two new compressors at the Mist storage facility ahead of the winter heating season.

INDUSTRY GLOSSARY

• ARM: Alternative Rate Mechanism, a regulatory tool used to recover specific capital expenditures outside of a general rate case.
• BCF: Billion Cubic Feet, a standard unit of measurement for large volumes of natural gas.
• GRIP: Gas Reliability Infrastructure Program, a regulatory mechanism in Texas that allows for accelerated recovery of capital investments between rate cases.
• LDC: Local Distribution Company, a utility that delivers natural gas to end-use customers.
• LUBA: Land Use Board of Appeals, an Oregon state agency that hears appeals of land use decisions.
• MX3: A specific natural gas storage expansion project located in the Pacific Northwest.
• NTP: Notice to Proceed, a formal milestone in a construction project indicating that all conditions have been met to start work.
• OPUC: Public Utility Commission of Oregon, the state agency that regulates utility rates and services in Oregon.
• PGA: Purchased Gas Adjustment, a regulatory mechanism that allows utilities to pass through the actual cost of gas to customers without a markup.
• ROE: Return on Equity, a measure of the profitability of a utility's equity investment as authorized by regulators.
• RRC: Railroad Commission of Texas, the state agency that regulates the oil and gas industry and gas utilities in Texas.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us and welcome to the Northwest Natural Holding Company Third Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star-1 again. I will now hand the conference over to Nikki Sparley director of investor relations. Please go ahead.

Nikki Sparley: Thank you. Good morning, and welcome to our third 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 in 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 our press release and 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 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 Raymond J. Kaszuba, senior vice president and chief financial officer. Justin will provide highlights from the quarter, a regulatory update, and a look forward.

Raymond will walk through our financial results and guidance. After Justin and Raymond'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, welcome, everyone. I am pleased to report another quarter of strong financial results. Earnings per share for both the quarter and year to date exceeded our expectations. Driven by disciplined cost management, solid operational execution, and continued customer growth. Given the strength of our business through the first 9 months, our visibility into the remainder of 2026, and we are raising our annual earnings guidance. With the heating season still ahead, we are confident in our position today and the momentum we are building into 2027. Importantly, we achieved these results while prioritizing customer affordability.

At a time when inflation and energy costs are top of mind, our objective is to invest prudently in growth, reliability, and the safety of our systems. While carefully managing costs on behalf of our customers. That mindset is embedded across our organization. A central tenet of our long term strategy is collaborating with regulators to align customer needs with utility investment requirements Across our service territories, we continue to find that timely recovery of investments is important for both customers and utilities. We have long been proponents of multiyear rate making and its benefits. Customers benefit from more gradual and predictable rate adjustments, and utilities gain greater visibility and certainty to invest in critical infrastructure.

With this in mind, let me provide an update on our regulatory dockets. Starting in Texas, settled our SiEnergy rate case on September 1st under our ownership. The settlement provides an $8.6 million revenue requirement increase a 9.8% authorized ROE, and a nearly 60% equity ratio. We also received the factors necessary to file for the gas reliability infrastructure program or GRIP which provides accelerated recovery of CapEx between rate cases. We expect new rates to take effect in November subject to commission approval. Even after the rate changes, still expect SiEnergy's customer bills to remain competitive with other Texas gas utilities.

SiEnergy is laying the foundation for future investment recovery through both GRIP and the established benefits provided under HB 4.38 thousand. Together, these mechanisms help reduce regulatory lag, support ongoing infrastructure investment, and contribute to more gradual customer bill impacts over time. Turning to Northwest Natural Water. Foothills, our largest water utility, continues to make progress on its Arizona rate proceeding. Including its request for formula rates. We believe formula rate structures can provide a more efficient path for recovering investments while maintaining transparency and regulatory oversight. We have 4 additional water rate cases underway that we expect to conclude in early 2027. We also continue to advance our rate consolidation strategy across our water utilities.

We have made progress in Idaho and Washington, and are pursuing further consolidation in Oregon, Arizona, and Texas, with the goal of simplifying regulatory administration and reducing costs for stakeholders. Turning to Northwest Natural's regulatory updates. As we mentioned last quarter, new rates in Washington became effective August 1st following approval of our multiyear rate plan settlement. In October, we received the final order for our Alternative Rate Mechanism or ARM, in Oregon. We are pleased with the outcome. The order provides for a $13 million increase in revenue requirement compared to the original ask of $15.6 million New rates were effective on October 31st.

We also received approval for our annual Purchased Gas Adjustments or PGAs in both Oregon and Washington. Even after taking into account the arm in Oregon, the recent Washington rate case, and gas costs from the PGA, the average Northwest Natural residential customer continues to pay about the same today for their natural gas service as they did 20 years ago. Over that same period, comparable electricity rates have more than doubled in our region. Entering the heating season, our gas supply and system readiness position us well to meet customer demand. This includes the addition of 2 new compressors at our Mist storage facility helping to support reliability during peak winter conditions.

In Oregon, we continue to engage constructively with stakeholders as the state advances the framework for multiyear rate making. Phase 2 is now underway, with conversations occurring across several work streams. While these discussions progress, our priority remains the same. Finding solutions that support customer affordability while ensuring utilities can continue to make the investments necessary to maintain safe and reliable service. Under the Oregon Commission's current schedule, we expect to file our first multiyear rate case in 2028 with new rates effective in 2029. Before our first multiyear rates go into effect, we are closely examining additional options. Such as a general rate case to ensure timely recovery of our investments and costs.

By 2029, once multiyear rates are in place in Oregon, we expect over 95% of our overall rate base to have some form of forward looking rate plan or mechanism. These mechanisms support more timely recovery of investments help to smooth out customer rate impacts, and provide longer term visibility into our financial results. With that, let me spend a few minutes on our major growth initiatives. Starting with SiEnergy. Customer growth remains strong, up approximately 13% for the 12 months ended September 30, 2026. Elevated mortgage rates have begun to moderate housing activity from peak levels in Texas.

While SiEnergy is not immune to these trends, we are still bullish on the Texas housing market long term and are still seeing healthy double digit customer growth and a robust development pipeline. Underscoring our confidence in the future, our backlog continues to grow and sits at nearly 265 thousand lots as of quarter end. Since acquiring SiEnergy less than 2 years ago, have added approximately 110 thousand new lots to the backlog which is quite a testament to the strength of SiEnergy's reputation and development team.

SiEnergy continues to be 1 of the fastest growing gas LDCs in the country and the combination of continued customer growth, a constructive regulatory framework, recovery mechanisms in Texas support our confidence in SiEnergy's long term EPS growth. For our water utilities, we are making great progress on centralizing and consolidating the business. Our objective is to build a platform designed to scale efficiently over time. Customer growth at Northwest Natural Water was just over 2% for the 12 months ended September 30, Similar to SiEnergy, we are seeing a modest slowdown in housing activity in some of our markets due to higher mortgage rates.

Over the coming years, are still confident in our long term 2% to 3% customer growth target. Our teams are making significant progress on capital projects at our Foothills utilities, including tank projects that support anticipated and reliability of our water storage and distribution systems. Longer term, greenfield development remains an important incremental growth driver for our water utilities. I am excited to highlight that we recently began construction on the first community in Texas where we are serving gas, water, and wastewater through both sea energy and Northwest Natural Water.

The ability to offer multiple utility services through a single company is a differentiated value proposition for developers, and we see opportunities to expand this model in the years ahead. Finally, moving to MX3, As a reminder, MX3 is a $300 million FERC regulated gas storage expansion project that will add 4 to 5 BCF of capacity in our region. The project is fully contracted with 25 year agreements upon notice to proceed. 12.5% ROE, and a 50% equity layer. We continue to work through the permitting process and remain on track to receive notice to proceed by the end of 2027.

As discussed last quarter, we received unanimous approval of our conditional use permit from the Columbia County Board of Commissioners. As expected, an appeal was filed with the Land Use Board of Appeals, or LUBA, That process is underway, and our timeline for notice to proceed remains unchanged. MX3 represents an important opportunity to enhance energy reliability across the Pacific Northwest and, upon receiving notice to proceed, would support increased our long-term earnings growth target to 5% to 7%. In summary, the strategic work we have done over the past few years is starting to produce tangible results.

We serve growing service territories, are advancing key regulatory initiatives, and investing in critical infrastructure all while controlling costs and maintaining financial strength. Given our year to date results and expectations for the balance of the year, we are raising our 2026 earnings guidance, and remain confident in our long term growth. Additionally, we recently announced our largest dividend increase since 2012, which reflects that same confidence. The dividend remains an important component of our shareholder value proposition. And the increase highlights both the strength of our underlying business and our expectation that we will continue to drive sustainable earnings and dividend growth over time.

That confidence is grounded in our well established track record, For more than 167 years, Northwest Natural has successfully navigated a variety of economic environments, including periods of elevated inflation and higher interest rates. Throughout our history, we have consistently adapted to those conditions and delivered value to shareholders while staying committed to affordability and serving customers safely. With that, I will turn it over to Raymond for a more detailed financial update.

Raymond J. Kaszuba: Thank you, and good morning, everyone. As Justin mentioned, we are raising our EPS guidance range to $3.10 to $3.20 driven by our better than expected year to date performance constructive regulatory outcomes, the strong execution we are seeing across the company. A meaningful contributor has been our continued focus on cost management. We are seeing favorable O&M performance across several parts of the organization, reflecting both productivity improvements and disciplined spending decisions. We are also reaffirming our capital expenditure plan of $500 million to $550 million. Year to date CapEx is up 12% over last year, as we continue to invest in growth and reliability across our utility systems. Turning to a more detailed review of our financial results.

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. For the third quarter of 2026, we reported a loss of $0.71 per share compared to a loss of $0.73 per share for the same period of 2025. Results were modestly improved year over year due to higher margin across all businesses and O&M expense management that was partially offset by higher depreciation and financing costs. For the first 9 months, we reported earnings per share of a $1.62 in 2026 up 6.6% compared to adjusted EPS of $1.52 for the same period in 2025.

The year to date increase in earnings per share reflected a higher contribution from SiEnergy, as well as new rates across our gas utilities in Oregon and Washington. These items were partially offset by higher O&M expenses at Northwest Natural Water. At Northwest Natural Gas, year to date net income was up $1.6 million but EPS was down roughly $0.02. Results were driven by new rates and continued cost discipline. At SiEnergy, year to date net income was up $4.4 million or $0.10 per share reflecting customer growth and a full period of contribution from the Pines acquisition.

At Northwest Natural Water, year to date net income was down $1.7 million or $0.04 per share reflecting higher O&M from continued operational centralization, and higher depreciation from several key infrastructure projects. Finally, our other segment's year to date net loss improved by $8.5 million driven by lower O&M, partially offset by higher financing costs. Overall, we are pleased with our execution and believe the guidance increase appropriately reflects the strength of our year to date performance while maintaining a prudent outlook as we start the 2026 to 2027 heating season. Turning now to shareholder returns. Last month, we announced an increase in our indicated annual dividend of $0.03 bringing it to $2 per share.

This marks our largest dividend increase since 2012, and extends our track record to 71 consecutive years of dividend growth. I am very pleased with the significant progress we have made over the past 2 years to bring the payout ratio down to our long term target range of 55% to 65%. Our dividend increase reflects the strength and stability of our underlying business. We continue to have strong organic growth opportunities across our regulated businesses and remain committed to investing in essential utility infrastructure and driving sustainable earnings growth. Maintaining a solid balance sheet and returning capital to shareholders.

As we have said previously, we expect dividend growth to be higher than it has been historically, and supported by continued earnings growth. Beginning in 2027, we will announce updates to our dividend approach in connection with our annual guidance updates on our fourth quarter earnings call in February. Before turning to questions, I wanted to briefly discuss how we are thinking about financing in the current environment. Given the recent interest rate volatility and broader inflation, we remain focused on a financing strategy that preserves flexibility and supports long term value creation. On the debt side, we have intentionally maintained a diversified maturity profile and avoided concentrations of refinancing risks.

Approximately 75% of our debt is at our regulated businesses, financing costs are generally recovered through rates. Northwest Natural Gas, which represents the largest portion of our needs, benefits from a predictable capital program that generally requires only modest debt financing each year. That allows us to remain flexible and opportunistic as we access capital markets. Across the company, we have maintained very limited exposure to floating rate debt. Our target remains 10% or less. Which helps reduce earnings volatility and provides greater predictability for customers and shareholders. For 2026, we have completed debt financings for the year. On the equity side, we believe the ATM provides sufficient flexibility to support our anticipated equity needs.

Continue to expect to need $40 million to $50 million in total for the whole year and we have already issued $26 million While equity needs may vary from year to year depending on our CapEx profile, we believe our current plan can be supported by our ATM. Stepping back, I want to emphasize the flexibility of our financing plan. We have multiple levers to execute our capital program and navigate changing market conditions. Combined with our regulatory strategy and disciplined approach to capital allocation, we believe we are well positioned to continue delivering value for both customers and shareholders across a wide range of economic environments. With that, we will open up the call for questions.

Operator: You will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star-1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Konstantin Lednev with Wells Fargo. Please go ahead.

Analyst: Hi team. Good morning and congrats on a great quarter.

Justin Palfreyman: Thanks, Konstantin. Maybe just starting off on the Oregon multiyear plan process. The staff draft has you absorbing some pretty meaningful lag. Does the draft change your view around interim support filing? I guess, what is embedded in your current plan, and what are the options for a smoother kind of path into a multiyear framework in 2028? Yeah. I appreciate the question. We are evaluating options for bridging the period between 2026 and when we will file our first multiyear, rate case in 2028. We have all options available to us, including a general rate case. So we are actively evaluating that and the.

Some of the recent testimony kind of changed any of your views around the need for some of these interim filings? And just in terms of timing or maybe accelerating some of that No. I do not think so, Konstantin. Okay. And just with the, I guess, with the Oregon election behind us, some of the policy shifts in Oregon enable further gas generation just to back up renewables or coal retirement or the data center uncertainty kind of complicate some of these incremental gas demand needs just as we think in the context of MX3 and any further kind of missed expansion Yeah. No. it is a great question. The gas fired generation is difficult in Oregon.

We would expect that you would see more of that happening in surrounding states just because of some of the, restrictions in the state of Oregon. All of that, though, and the dynamics that you are referring to bode well for future gas storage expansion because there is a very significant need, especially on peak during the winter, for additional, energy resources, whether that is whether that is generation on the electric side or even on the gas grid itself. And so we still see strong long term demand beyond even MX3 for gas storage in our region. Okay. Got it. And then just maybe a quick regulatory follow-up on the SiEnergy kind of settlement.

Just in terms of what is embedded in the current plan and just going forward, assuming approval, what would you look for in terms of timing of the GRIP filings going forward on a more cyclical basis? Yeah. We have the factors in place now for Grip and assuming we get the final order here in the next few weeks, we would expect that our first grip filing would be in 2027.

Raymond J. Kaszuba: So and similar to other utilities who have leveraged this mechanism, we have up to 5 years of leveraging grip before a general rate case will be required again.

Analyst: Okay. Got it. that is finally clear. Appreciate your time today. Congrats again.

Justin Palfreyman: Thanks. Thank you.

Operator: Your next question comes from Richard Sunderland with Truist Securities. Please go ahead.

Analyst: Hey. Good morning. Thank you for your time today. And to be on. I wanted to follow-up on that last question around kind of the SiEnergy outlook. You spoke a little bit to the housing starts angle, and I guess maybe this is even more broadly touching water as well. Could you just parse a little bit more around what you are seeing on the ground on the housing front, how that compares to plan and kind of outlook assumptions And I guess, ultimately, do you expect earnings impact from this over the next year or 2 versus what you budgeted for? Just trying to contextualize all this. Thank you.

Justin Palfreyman: Yeah. I appreciate that. What we are seeing on the ground in Texas is still very strong growth. So if I think about what we thought at the beginning of the year, sort of 15% to 20% customer growth year over year. If you look at the last 12 months, we are tracking just below that, around 13%. that is still a significant amount of new meters being set in our markets in Texas for SiEnergy.

So we are seeing a moderation because of interest rates and other macro factors which would be, you know, I think very, very intuitive and logical But we are still seeing very strong growth, and I think that is evident in terms of how that translates into earnings. I think that is evident with the results you have seen here in Q3. And we continue to be bullish on our outlook in terms of housing growth in Texas, but I think that the peak from maybe 2 or 3 years ago as. Is probably behind us unless we see some meaningful change in the interest rate environment. Understood. that is helpful to run through. Thank you.

And then turning to MX3, I know you briefly touched on the luba appeal process. Has there been any movement on that since last quarter? Just any kind of state of the state, so to speak, on MX3 that we may not be appreciating? And, I guess, separate but related what do you have been focused on, MX3 on kind of the next 3 to 6 months basis as you progress towards NTP in 2027? Yeah. We just continue to work through that appeal process, which works on its. The court appointed timeline. We had a recent hearing on that. And so, we will expect to hear more over the coming months.

And none of this really changes our expectation on when we expect notice to proceed, which continues to be by the end of next year. That timeline contemplates this appeal process. And has always contemplated that. Very clear. Thank you for all of that.

Operator: Your next question comes from Dylan Lippner with Mizuho. Please go ahead.

Analyst: Hey. Good morning, everyone. Congrats Just kind of wanted to hit on the guidance range update here.

Justin Palfreyman: So, with this 10 to 2023 in the midpoint, I am 7.5% above 2025 adjusted EPS versus a 4% to 6% long term target. I wanted to raise this, you know, timing or onetime or it is a higher base. And how should we think about 27 gross maybe going off the $3.15 midpoint? Appreciate the question. I am going to hand that over to Raymond to answer.

Raymond J. Kaszuba: Yeah. Good morning, Dylan. Thanks for the question. So, as you noticed, well, in our release and on the call today that we also reaffirmed our long term growth rate without MX3 of 4% to 6% and with MX3 of 5% to 7%.

Justin Palfreyman: We typically provide guidance for the prompt year in February, so you will hear more about 2027 then from us. I think reaffirming that long-term growth rate from the higher guidance that we gave today gives you some direction in terms of how we are thinking about things long term.

Analyst: Gotcha. Will I have a capital cash flow-- read through of the long term plan in 2027.

Raymond J. Kaszuba: Sorry. Can you repeat the question? We will have a full capital update in 2027 as well. Yeah. We will provide that in February. Great. And I think you also saw there is no change to our long term capital plan through 2030 either.

Analyst: Yep. Gotcha. Alright. Cool. Yeah. No. Quick 1, but I appreciate the call, guys.

Justin Palfreyman: No. Thank you.

Operator: Your next question comes from Alexis Kania with US Bancorp BTIG. Please go ahead.

Alexis Kania: Hi there. Good morning. Just Justin, I think you talked a little bit about this opportunity in the prepared remarks, just about, I guess, lack of a better term, the kind of combined platform of water and gas services maybe even Texas. But just wondering where else you see those opportunities over time as you kind of hit that on the prepared remarks?

Justin Palfreyman: Yeah. Thanks for the question, Alexis. What we did after we acquired SiEnergy is we consolidated business development efforts around gas and water in Texas because we have very strong relationships with the developers and homebuilders there, that the SiEnergy team had and had a long standing relationship there in those communities. And, there was overlap with our water utilities particularly in the broader Houston market. So over the course of 2026, we have been very focused on trying to leverage that and really make sure new communities that are getting built understand that we can deliver both water wastewater, and natural gas service to those communities. And we are starting to see some signs of success there.

And that is why I highlighted that on my prepared remarks. it is super exciting to think about new communities going in where we are providing all 3 of those services. We will continue to focus on that in Texas. There may be opportunities for us to look at that in other states, but our gas and water overlap is not quite the same as it is in Texas. And the growth opportunity in some of our other markets is not quite the same as what it is in Texas, which is why you are hearing the focus there. Great. That makes sense.

Alexis Kania: And maybe a question for Raymond. Just thinking about the discussion you were mentioning about the dividend, and I guess we will get a little bit more clarity on this in the next year end earnings call. But just again, I am thinking about what are where are the areas where you feel like you could update some of that dividend policy? Is this just kind of a refresh of what you are looking at on ongoing cash flow? Is it a chain-- potential change or re-- Or thoughts on where the payout ratio needs to be in context of where the capital plan looks?

I am just kind of, you know, curious about what are the levers actually that you are looking for? As you are. As you kind of make that determination going into the year end call?

Raymond J. Kaszuba: Yeah, I do not think there are going to be any changes in fundamentals in terms of our payout ratio, etcetera. We just recently gave the payout ratio target of 55 to 65%, and combined with earnings, we think that gives good direction in terms of how we are thinking about our dividend profile going forward. We will provide more information in February, but some of the things that we are considering is timing of our annual increase for example, but we will provide more color in February.

Alexis Kania: Okay. Thanks very much.

Operator: There are no further questions there are no further questions at this time. I will now turn the call back to Justin Palfreyman, CEO, for closing remarks.

Justin Palfreyman: Well, thanks, everyone, for joining us this morning. Appreciate all the questions and your interest in Northwest Natural Holdings. We are pleased with our year to date 2026 performance and our raised guidance range of $3.10 to $3.20 per share. This reflects the confidence we have in the rest of the year and our ability to execute on our growth strategy. As always, please do not 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.

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