Good day and welcome to the Northwest Natural Holding Company First Quarter 2019 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would like to now turn the conference over to Nikki Sparley, Director of Investor Relations. Please go ahead.

Thank you, Alicia. Good morning and welcome to our first quarter 2019 earnings call. As a reminder, some of the things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not occur. In addition, some of our comments today reference non-GAAP adjusted measures. For a complete reconciliation of these measures and other cautionary statements, refer to the language and reconciliation at the end of our press release. We expect to file our 10-Q later today. As mentioned, this teleconference is being recorded and will be available on our website following the call. 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 Melissa Moore at 503-220-2436. Speaking this morning are David Anderson, President and Chief Executive Officer; and Frank Burkhartsmeyer, Senior Vice President and Chief Financial Officer. David and Frank have prepared remarks and then we'll be available along with other members of our executive team to answer your questions. With that, I will turn it over to David.

Thanks, Nikki, and good morning and welcome to the first quarter earnings call. I'll start today with highlights from the quarter and then turn it over to Frank to cover our financial performance. And then, I'll wrap up the call with an update on some of our key projects and initiatives. Obviously, the year is off to a great start. Our financial results were solid and we continue to make progress on all key objectives. For the first quarter, net income increased $1.4 million to $43.4 million, or $1.50 per share. This included a one-time regulatory disallowance of $6.6 million after-tax, or $0.23 a share as a result of the Oregon commission order on pension recovery that we received in March. We will discuss this more in a moment. On an adjusted basis, excluding the charge, net income increased $8 million to $50 million, or $1.73 per share. Full quarter of new rates in Oregon and customer growth were the main drivers for the quarter-on-quarter increase. Our system performed very well this past winter. Weather was colder than average, particularly during February which was the third coldest since 1989. The entire Pacific Northwest region also experienced capacity restrictions as Enbridge conducted maintenance work on its system following its pipeline incident in Canada this past October. Our extensive resource planning and the value of our storage assets were proven once again. Our team successfully managed gas supplies, called on interruptible resources and relied on our storage facilities to serve customers. The economics in our region remain solid and the labor market remains strong in Oregon. The Portland Metro area continues to enjoy extremely low unemployment. After a several years of exceptional growth, the housing market remained steady. In fact, over the last 12 months we've connected more than 12,500 new customers, resulting in a growth rate of 1.7%, which is one of the strongest in the country. Now a quick update on our regulatory activities. As you may remember, the Oregon commission issued an order in October last year that resolved the majority of items in our Oregon general rate case. This past March, the commission approved an order resolving the remaining two items in the rate case; the recovery of our pension balancing account and the timing and method of returning federal tax savings to customers. In March, we began recovering the pension balancing account which totals approximately $57 million and expect it to be recovered at a rate of about $7 million per year over the next 10 years. On April 1, we began returning deferred tax reform benefits of approximately $6 million per year to customers. Resolving these outstanding regulatory items secured tax savings for customers and ensured recovery of the pension balancing account, providing cash flow certainty for the company moving forward. With that, I'll turn it over to Frank, to give you a little bit more details on the financials. Frank?

Thank you, David, and good morning, everyone. I'll begin today with a summary of our reported financials and then discuss the drivers of our operating results. For the quarter we reported net income from continuing operations of $43.4 million, or $1.50 per share, compared to $42 million, or $1.46 per share for the same period in 2018. As David mentioned, our first quarter 2019 numbers include an after-tax $6.6 million or $0.23 per share regulatory disallowance for costs in the pension balancing account. Excluding that disallowance, on an adjusted basis, net income from continuing operations was $1.73 per share or an increase of $0.27 over 2018. While there were some offsetting items, the higher results were primarily driven by the first full quarter of new rates in Oregon and customer growth. Before I discuss the results in detail, I'd like to describe the accounting implications of the second Oregon order. First, with regard to the regulatory disallowance, you will see $10.5 million of additional expense in the first quarter offset by a $3.9 million tax benefit, resulting in an after-tax impact of $6.6 million. Second, per the order, we applied $12.5 million of tax reform benefits to the pension balancing account in the first quarter. This resulted in $12.5 million of higher expenses largely offset by $7.1 million of higher revenues and tax benefits of $4.3 million. As a reminder, due to the effects of tax reform, the distribution of earnings across the quarters has permanently shifted our seasonal earnings profile. The impact of the lower tax rate is positive in the first and fourth quarters, when earnings are higher and lower in the second and third quarters. Finally, our effective tax rate was 16.7% this quarter, compared to our statutory tax rate of 26.5%. The lower effective tax rate…

Thanks, Frank. As we speak today, we're commissioning one of the largest projects in Northwest Natural's history, the North Mist Expansion Project. We hope to place it into service by the end of May. As you may recall, this project includes a new reservoir, now estimated to be three Bcf or three billion cubic feet in size, a compressor station and a dedicated 13-mile pipeline, which will supply no-notice service to Portland General Electric's Port Westward power plants that are used to balance renewable power on the grid. The expected cost of the expansion remains $149 million. As a reminder, when the expansion is placed into service, the investment will be immediately rate based under an established tariff schedule already approved by the Oregon PUC. This facility is contracted for an initial 30-year period to PGE with renewal options of up to 50 years beyond that. This will not only be an important asset for us but for the region as the supply's much needed flexible storage in a region with limited storage assets. Finally today, we have good news regarding our water strategy. In April, the Sunriver water utility transaction reached a key milestone when the Oregon Public Utility Commission approved our acquisition. As a result we expect to close this transaction soon. You may remember that this transaction includes a water utility and a wastewater company that combined serve about 9,400 connections in Central Oregon at one of the state's longest-standing resort communities. In addition, last week we closed two water utility transactions in Washington, adding about 600 connections that serve 1,400 people to our water platform. These transactions closed in less than four months, largely due to receiving full regulatory approval from the Washington commission within 50 days of filing. Through this and other water acquisitions we are adding an earnings stream that has a low risk and strong cash flow profile much like our regulated natural gas utility. Overall, I've been very pleased with the receptivity of sellers, the commissions and other stakeholders in the water sector. Once we close all outstanding transactions we'll have committed nearly $70 million of investment in the water sector and serve approximately 45,000 people through about 18,000 connections. These aggregate acquisitions are projected to be accretive to our earnings per share in the first full year of operations. In closing, we are off to a good start and excited to continue executing on the opportunities in front of us. Thanks again for taking the time to join us this morning. And Alicia with that, I think we're ready to open up for Q&A.

Thank you. We will now begin the question-and-answer session. [Operator Instructions]

Alicia we must have answered all their questions.

There are no questions in the question queue. This concludes the question-and-answer session. I would like to turn the conference back over to David Anderson for any closing remarks.

Well, we appreciate. Thank you again everybody for joining us this morning. Frank and Nikki will look forward to seeing many of you at the American Gas Association conference in a few weeks. Unfortunately we have some overlapping commitments with the AGA conference this year due to our Board meetings and our annual shareholder meetings, so Frank and Nikki's time at AGA will be limited to Tuesday and Wednesday, and I will not be able to attend this year. So -- but we look forward to seeing you and catching up in the coming months. If you have additional Q&A, please reach out to Nikki and we'll be happy to answer questions. With that Alicia, I think we're done today and everybody have a great day. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.