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Core Viewpoint - NorthWestern Corporation has updated its five-year capital plan to $3.21 billion, reflecting a 17% increase, and initiated 2026 earnings guidance, indicating growth prospects despite various challenges. Financial Performance - For the fourth quarter, NorthWestern reported adjusted EPS of $1.17, up from $1.13 in the same quarter of 2024, with improved margins attributed to new rates and regulatory execution, offset by mild weather and increased operating costs [3] - The company reported full-year 2025 GAAP diluted EPS of $2.94 and non-GAAP diluted EPS of $3.58, with a 1.5% increase in quarterly dividend to $0.67 per share [5][8] - CFO noted that 2025 non-GAAP results showed 5.3% growth over 2024, despite headwinds such as merger-related costs and warm weather [4] Capital Plan and Investments - The five-year capital plan has been increased to $3.21 billion, including a $300 million South Dakota natural gas project, with expectations for equity financing beyond 2026 on a 50/50 debt-to-equity basis [1][7] - Management indicated that the base capital plan remains self-funded, but incremental investments in South Dakota will likely require additional equity [8] Merger and Regulatory Developments - NorthWestern has filed for an all-stock "merger of equals" with Black Hills, with shareholder votes scheduled for April 2, 2026, and expects the deal to close in the second half of 2026 [6][10] - Joint merger approval requests have been filed in multiple states, with hearings expected in the second quarter of 2026 [11] Large-load and Data Center Initiatives - The company is actively pursuing large-load and data center opportunities in Montana and South Dakota, with progress on letters of intent and development agreements [12][19] - NorthWestern plans to file a Montana large-load tariff in conjunction with signed electric service agreements to ensure fair cost distribution among large-load customers [13] Colstrip Ownership and Cost Recovery - NorthWestern has increased its ownership in Colstrip through acquisitions, enhancing its strategic influence and ability to serve large-load customers [15] - The company has filed for cost recovery measures related to its acquisitions, expecting to offset significant incremental operating costs [16]

Financial Data and Key Metrics Changes - The company reported GAAP diluted EPS of $2.94 and non-GAAP diluted EPS of $3.58, reflecting a 5.3% growth from 2024 on a non-GAAP basis [7][9][15] - The quarterly dividend is being increased by 1.5% to $0.67 per share [7] - The company is initiating 2026 earnings guidance in the range of $3.68-$3.83 per share, representing a 5% growth at the midpoint from 2025 results [8][16] Business Line Data and Key Metrics Changes - The improved margin reflects new rates and regulatory execution, although it was offset by mild weather and higher operating costs [10][12] - Adjusted earnings for the fourth quarter were $1.17, compared to $1.13 in Q4 2024, despite unfavorable weather impacts [11][15] Market Data and Key Metrics Changes - The company has made significant progress in data center growth opportunities, signing a third letter of intent for a 500+ MW data center and advancing with Sabey to a development agreement [7][24] - The company is actively pursuing large load customers in both Montana and South Dakota, with ongoing discussions and agreements in place [26][27] Company Strategy and Development Direction - The company announced an all-stock merger agreement with Black Hills Corporation, expected to close in the second half of 2026, which aims to enhance scale and growth opportunities [4][20] - The updated five-year capital plan is set at $3.21 billion, a 17% increase over the prior plan, focusing on self-funded capital and maintaining high credit quality [8][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the legislative outcomes in Montana, which support transmission investments and wildfire risk management [5][6] - The company is optimistic about its ability to serve large load customers and the benefits of the merger, which is expected to create long-term value for both shareholders and customers [20][22] Other Important Information - The company has filed joint requests for merger approval in multiple states and is preparing for hearings in the second quarter of 2026 [23] - The company is addressing environmental concerns related to Colstrip and is prepared to invest in necessary upgrades if required [81][83] Q&A Session Summary Question: Update on large load tariff filing - The company plans to file a large load tariff once a signed ESA is in place, aiming for completion by the end of Q2 2026 [39][41] Question: Education plan for stakeholders regarding data centers - Management is focused on demonstrating the benefits of data centers and ensuring that they contribute fairly to system costs [42][45] Question: ESA strategy and financing implications - The company is working to ensure that ESAs protect customers while also addressing the unique needs of each data center [60][62] Question: Update on South Dakota plant and environmental upgrades - The South Dakota plant is expected to be completed by 2030, and the company is prepared to invest in environmental upgrades as necessary [78][81] Question: Concerns about merger regulatory delays - Management is confident in the timelines for both South Dakota and Montana, stating that the processes are progressing as expected [94][95]

Financial Data and Key Metrics Changes - The company reported GAAP diluted EPS of $2.94 and non-GAAP diluted EPS of $3.58 for the full year 2025, reflecting a 5.3% growth from 2024 on a non-GAAP basis [7][10][16] - The quarterly dividend was increased by 1.5% to $0.67 per share [7] - The company initiated 2026 earnings guidance in the range of $3.68-$3.83 per share, representing a 5% growth at the midpoint compared to 2025 results [17] Business Line Data and Key Metrics Changes - The improved margin for the fourth quarter was attributed to new rates and regulatory execution, although it was offset by mild weather and higher operating costs [11][12] - Adjusted earnings for the fourth quarter were $1.17, compared to $1.13 in Q4 2024, despite unfavorable weather impacting results [12][16] Market Data and Key Metrics Changes - The company is actively pursuing data center growth opportunities, having signed a third letter of intent for a 500+ MW data center and progressed with another from a letter of intent to a development agreement [4][7] - The company is focusing on large load customers in Montana and South Dakota, with significant interest from data centers in both states [27][28] Company Strategy and Development Direction - The company announced an all-stock merger agreement with Black Hills Corporation, expected to close in the second half of 2026, which aims to enhance scale, position, and growth opportunities [4][21] - The updated five-year capital plan is set at $3.21 billion, a 17% increase over the prior plan, reflecting the inclusion of new projects [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the legislative outcomes in Montana, which support transmission investment and mitigate wildfire-related risks [5][6] - The company is committed to maintaining high credit quality and is focused on self-funding its capital plan while managing equity issuance carefully [19][20] Other Important Information - The company has filed joint requests for merger approval in multiple states and is preparing for hearings expected in the second quarter of 2026 [24] - The company is also addressing environmental concerns related to its Colstrip operations and is prepared to invest in necessary upgrades if required [80][81] Q&A Session Summary Question: Update on large load tariff filing - The company plans to file a large load tariff in sync with a signed ESA, aiming for completion by the end of Q2 2026 [38][40] Question: Education plan for stakeholders regarding data centers - Management highlighted ongoing discussions to educate stakeholders on the benefits of data centers and the importance of a tariff that protects customers [41][44] Question: ESA strategy and financing implications - The company is focused on ensuring that ESAs are aligned with tariffs to protect customers, with plans to file by the first half of 2026 [58][60] Question: Update on South Dakota plant and turbine queue - The company is investing in turbines for the 131 MW plant, expected to be completed by 2030 [76][78] Question: Environmental upgrades at Colstrip - Management indicated readiness to invest in environmental controls if necessary, while maintaining a focus on keeping Colstrip operational [80][81] Question: Concerns about merger regulatory timelines - The company is working with regulators in South Dakota and Montana, expressing confidence in the timelines despite some delays [92][93]

Financial Data and Key Metrics Changes - The company reported GAAP diluted EPS of $2.94 and non-GAAP diluted EPS of $3.58 for the full year 2025, reflecting a 5.3% growth from 2024 on a non-GAAP basis [6][9][15] - The quarterly dividend was increased by 1.5% to $0.67 per share [6] - The company initiated 2026 earnings guidance in the range of $3.68-$3.83, representing a 5% growth at the midpoint compared to 2025 results [7][17] Business Line Data and Key Metrics Changes - The improved margin for the fourth quarter was attributed to new rates and regulatory execution, although it was offset by mild weather and higher operating costs [10][12] - Adjusted earnings for the fourth quarter were $1.17, compared to $1.13 in Q4 2024, despite unfavorable weather impacts [11][15] Market Data and Key Metrics Changes - The company is focusing on data center growth opportunities, having signed a third letter of intent for a 500+ MW data center and progressed with another from a letter of intent to a development agreement [6][24] - The company has seen a significant interest in large load customers in South Dakota, with established processes for accommodating them [27] Company Strategy and Development Direction - The company announced an all-stock merger agreement with Black Hills Corporation, which is expected to close in the second half of 2026, aiming to enhance scale and growth opportunities [4][21] - The company is committed to maintaining high credit quality while pursuing a self-funded capital plan, with an updated five-year capital plan of $3.21 billion, a 17% increase over the prior plan [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the legislative outcomes in Montana, which support transmission investments and clarify wildfire-related risks [5] - The company is optimistic about its ability to serve large load customers and enhance reliability and affordability for its customers [30][100] Other Important Information - The company has completed its acquisition of the Avista and Puget Colstrip interests, increasing its ownership in Colstrip from 30% to 55% [30] - The company is actively working on regulatory approvals for its merger and has filed necessary documents with multiple state commissions [24][92] Q&A Session Summary Question: Update on large load tariff filing - The company plans to file a large load tariff once a signed ESA is in place, aiming for completion by the end of Q2 2026 [38][40] Question: Education plan for stakeholders regarding data centers - Management noted ongoing discussions to educate stakeholders on the benefits of data centers and the importance of a tariff that protects customers [41][45] Question: Concerns about delays in merger approvals - Management indicated no concerns regarding the timelines in South Dakota and Montana, stating that the processes are progressing as expected [92][93] Question: Update on the South Dakota plant and turbine queue - The company is investing in turbines for the 131 MW plant, expected to be completed by 2030 [76][77] Question: Environmental upgrades at Colstrip - Management stated that they will invest in necessary upgrades to keep Colstrip operational, depending on regulatory requirements [78][81]

2025 Year-End Earnings Webinar February 12, 2026 8-K Date: February 12, 2026 Forward-Looking Statements Information in this communication, other than statements of historical facts, may constitute forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the proposed transaction between NorthWestern and Black Hil ...

Financial Performance - Net income for 2025 was $181.1 million, or $2.94 per diluted share, down from $224.1 million, or $3.65 per diluted share in 2024, primarily due to higher operating expenses [2]. - Adjusted non-GAAP net income for 2025 was $220.1 million, or $3.58 per diluted share, compared to $208.9 million, or $3.40 per diluted share in 2024 [3]. - Total revenues for 2025 were $1,610.6 million, an increase of 6.4% from $1,513.9 million in 2024 [34]. - Net income for 2025 was $181.1 million, down 19.2% from $224.1 million in 2024 [34]. - Consolidated gross margin increased by $23.5 million, or 5.1%, to $484.3 million in 2025 compared to $460.8 million in 2024 [37]. - Consolidated operating income for 2025 was $325.8 million, slightly up from $323.3 million in 2024, driven by new rates and increased revenues [45]. - Consolidated interest expense rose to $150.4 million in 2025 from $131.7 million in 2024, attributed to higher borrowings and interest rates [46]. - Consolidated other income decreased to $12.1 million in 2025 from $23.0 million in 2024, primarily due to lower capitalization of Allowance for Funds Used During Construction (AFUDC) [47]. - Consolidated income tax expense for 2025 was $6.5 million, compared to an income tax benefit of $9.4 million in 2024, with an effective tax rate of 3.5% [48]. - Basic earnings per share for 2025 were $2.94, down from $3.65 in 2024, while adjusted non-GAAP earnings per diluted share were $3.58 for 2025 compared to $3.40 for 2024 [56]. - For the full year 2025, NorthWestern Energy reported a GAAP net income of $181.1 million, with a diluted EPS of $2.94, compared to $224.1 million and $3.65 in 2024, representing a decrease of 19.2% in net income and 19.5% in EPS year-over-year [58]. - Non-GAAP adjusted net income for 2025 was $220.1 million, with a diluted EPS of $3.58, compared to $208.9 million and $3.40 in 2024, indicating an increase of 5.7% in net income and 5.3% in EPS year-over-year [58]. - Adjusted Non-GAAP pre-tax income for 2025 was $176.2 million, compared to $159.2 million in 2024, reflecting an increase of 10.5% [58]. Revenue and Expenses - Utility margin rose to $1,200.8 million in 2025, an increase of 11.2% from $1,080.1 million in 2024 [40]. - Electric revenues increased to $1,270.0 million in 2025, up from $1,200.7 million in 2024, reflecting a growth of 5.8% [34]. - Gas revenues also increased to $340.6 million in 2025, compared to $313.2 million in 2024, marking an increase of 8.7% [34]. - Operating expenses totaled $1,284.7 million in 2025, up from $1,190.6 million in 2024, representing an increase of 7.9% [34]. - Consolidated operating expenses (excluding fuel, purchased supply, and direct transmission expense) increased to $874.9 million in 2025, up 15.6% from $756.7 million in 2024 [44]. Capital Investments and Future Plans - A $3.2 billion capital investment plan for 2026-2030 was announced, a 17% increase over the prior plan, supporting rate base growth of 4% to 6% [5][13]. - The company plans to construct a 131 MW natural gas generating facility in South Dakota at an estimated cost of $300 million to meet regional capacity needs by 2030 [29]. - A nonbinding MOU was signed with North Plains Connector LLC for a 10% stake in the NPC Consortium project, which is expected to be operational by 2032 [30]. - The company expects to serve large-load customers with a combined energy service requirement of 175 megawatts beginning in late 2027, potentially growing to 1,100 megawatts by 2030 [24]. Mergers and Acquisitions - The merger agreement with Black Hills Corporation was announced, targeting a close in the second half of 2026, with regulatory applications filed in multiple states [4][9]. - The company completed the acquisition of Energy West, adding approximately 33,000 new natural gas customers [4]. - The acquisition of Colstrip Units 3 and 4 from Avista and Puget was completed on January 1, 2026, enhancing resource adequacy for customers [26][27][28]. - NorthWestern Energy is involved in a proposed transaction with Black Hills, with proxy statements filed with the SEC [72]. Regulatory and Compliance - The Montana electric and natural gas rate review was completed, allowing recovery of significant investments and incorporating the Yellowstone County Generating Station into rates [4][18]. - The Montana wildfire mitigation plan was approved by the MPSC in November 2025, with a decision anticipated in Q1 2026 [32]. - Information regarding executive officers and stock ownership is available in SEC filings for both NorthWestern and Black Hills [72]. - The Annual Report on Form 10-K for NorthWestern for the fiscal year ended December 31, 2025, was filed on February 12, 2026 [72]. - The Annual Report on Form 10-K for Black Hills for the fiscal year ended December 31, 2025, was filed on February 11, 2026 [72]. - Changes in ownership of securities will be reflected in Forms 3, 4, or 5 filed with the SEC [72]. Investor Relations - A quarterly dividend of $0.67 per share was declared, representing a 1.5% increase over the previous quarter [5][15]. - The company plans to host an investor earnings webinar on February 12, 2026, to discuss its financial results for the year ending December 31, 2025 [60]. - Investor relations and media contact information is provided for further inquiries [73]. Risks and Challenges - Supply chain constraints and high inflation levels are impacting capital expenditures and operating activities [71]. - Changes in trade credit availability and commodity prices may reduce revenues or increase operating costs [71]. - Unscheduled generation outages could lead to reduced revenues and increased operating costs [71]. - Adverse economic conditions in U.S. financial markets may negatively affect results of operations [71]. - The company reported a weather-related unfavorable adjustment of $14.4 million for the full year 2025, which impacted its financial results [58].

Core Insights - NorthWestern Energy reported a net income of $181.1 million for 2025, a decrease from $224.1 million in 2024, primarily due to higher operating expenses and regulatory disallowances [1][4] - The company announced a $3.2 billion capital investment plan for 2026-2030, representing a 17% increase over the previous plan [1][2] - A quarterly dividend of $0.67 per share was declared, marking a 1.5% increase, payable on March 31, 2026 [1][2] - The 2026 earnings guidance is set between $3.68 and $3.83 per diluted share, with a long-term EPS growth rate affirmed at 4% to 6% [1][2] Financial Performance - Adjusted diluted non-GAAP EPS for 2025 was $3.58, up from $3.40 in 2024, while diluted GAAP EPS was $2.94, down from $3.65 [1][4] - Total revenues for 2025 reached $1.61 billion, compared to $1.51 billion in 2024, driven by higher electric transmission revenue and retail volumes [4][5] - Operating expenses increased to $1.28 billion in 2025 from $1.19 billion in 2024, influenced by higher maintenance, administrative costs, and merger-related expenses [4][5] Strategic Developments - The company completed the acquisition of Energy West, adding approximately 33,000 natural gas customers [1] - A merger agreement with Black Hills Corporation was announced, expected to close in the second half of 2026, creating a stronger utility [1][2] - The Montana electric and natural gas rate review was completed, allowing recovery of significant investments made for reliable service [1][2] Regulatory and Legislative Updates - House Bill 490 was passed in Montana, providing clarity on wildfire-related risks and enhancing regulatory certainty for the company [1][2] - The Montana Public Service Commission approved a final order for natural gas and partial electric settlement agreements, impacting revenue recovery mechanisms [2][5] Future Outlook - The company anticipates funding its capital expenditures through operational cash flows, credit sources, and future rate increases [2] - A focus on resource adequacy and serving large-load customers is emphasized, with plans for new generation capacity in South Dakota [3][5] - The company is actively pursuing regulatory approvals for its merger and other strategic initiatives, with hearings scheduled for 2026 [1][2]

Merger and Acquisition - The company is in the process of a pending merger with Black Hills Corporation, which may face regulatory and shareholder approval delays[19] - The merger is expected to provide anticipated benefits and projected synergies, although realization timelines are uncertain[19] - The anticipated benefits of the merger include improved financial performance and increased market competitiveness, although there are risks related to regulatory approvals and potential delays[19] Operational Risks - The company faces risks related to supply chain constraints, tariffs, and inflation impacting capital expenditures and operating activities[24] - Changes in credit availability and commodity prices may adversely affect revenues and operating costs[24] - The company is subject to risks from natural disasters and cybersecurity threats that could impact operations[24] - The company is subject to various risks including changes in economic conditions, regulatory challenges, and potential natural disasters that could affect liquidity and operational results[24] Energy Production and Capacity - The company has a 55% ownership stake in the Colstrip coal-fired electric generation facility as of January 1, 2026[30] - The company operates several generating stations, including the 175 MW Yellowstone County Generating Station and the 150 MW Dave Gates Generating Station, contributing to its energy supply capacity[59][32] - The company emphasizes the importance of maintaining sufficient capacity to meet peak demand[29] - The Reserve Margin indicates the difference between available capacity and peak demand, ensuring adequate power supply[53] Regulatory Compliance and Oversight - The company operates under regulatory oversight from the Federal Energy Regulatory Commission (FERC) and the Montana Public Service Commission (MPSC)[33][45] - The company is committed to compliance with environmental regulations, including the Mercury Air Toxics Standard, which may impact operational costs[41] - The company is regulated by the Nebraska Public Service Commission and the South Dakota Public Utilities Commission[54][56] - The company adheres to Open Access Transmission Tariff (OATT) requirements to provide non-discriminatory access to its transmission system[50] Market Strategy and Expansion - The company is actively monitoring market conditions and customer usage patterns to adapt its strategies accordingly, which may include adjustments in pricing and service offerings[20] - The company is exploring opportunities for market expansion and new product development to enhance its service offerings and customer base[20] - NorthWestern Energy Group is constructing the North Plains Connector, a 3,000-megawatt, 415-mile high-voltage direct current transmission line[47] - NorthWestern Corporation provides electric and natural gas services in Montana and electric services to Yellowstone National Park[48] - The company operates a regulated utility subsidiary, NorthWestern Energy Public Service Corporation, which serves South Dakota and Nebraska[49] - The Power Cost and Credit Recovery Mechanism (PCCAM) is utilized in Montana to track power purchase costs and fuel expenses for recovery through utility rates[51] - NorthWestern Energy Group is involved in ensuring reliable power supplies and adequate transmission infrastructure through its participation in the Southwest Power Pool[55]