NorthWestern (NWE) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section outlines the nature of forward-looking statements, identifies key risks, and clarifies the company's update policy Special Note Regarding Forward-Looking Statements This section outlines the nature of forward-looking statements, identifies key risks, and clarifies the company's update policy - The report contains forward-looking statements, identified by specific terminology, subject to various risks and uncertainties[11][12] - Key factors that could cause material differences include adverse regulatory outcomes, extraordinary events, cybersecurity threats, supply chain issues, and economic conditions[15] - The company undertakes no obligation to update forward-looking statements, directing investors to subsequent SEC filings for disclosures[17] PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis Financial Statements This section presents unaudited condensed consolidated financial statements, including income, balance sheets, and cash flows, with notes on key events Condensed Consolidated Statements of Income Q2 2025 revenues increased to $342.7 million, but net income decreased to $21.2 million, while H1 net income slightly rose to $98.2 million Income Statement Highlights (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $342,713 | $319,929 | $809,343 | $795,271 | | Operating Income | $60,786 | $61,612 | $185,513 | $163,692 | | Net Income | $21,228 | $31,654 | $98,168 | $96,740 | | Diluted EPS | $0.35 | $0.52 | $1.60 | $1.58 | Condensed Consolidated Balance Sheets Total assets increased to $8.14 billion as of June 30, 2025, driven by property, plant, and equipment, with liabilities rising to $5.26 billion Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $403,080 | $418,186 | | Property, Plant, and Equipment, net | $6,531,509 | $6,398,275 | | Total Assets | $8,135,967 | $7,997,524 | | Total Current Liabilities | $537,432 | $802,200 | | Long-term Debt | $3,029,611 | $2,695,343 | | Total Liabilities | $5,256,291 | $5,139,824 | | Total Shareholders' Equity | $2,879,676 | $2,857,700 | Condensed Consolidated Statements of Cash Flows Net cash from operations was $211.6 million for H1 2025, with $226.8 million used in investing and $12.7 million provided by financing activities Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $211,601 | $223,943 | | Cash Used in Investing Activities | $(226,756) | $(248,278) | | Cash Provided by Financing Activities | $12,686 | $30,186 | | (Decrease) Increase in Cash | $(2,469) | $5,851 | Notes to Condensed Consolidated Financial Statements Notes detail key accounting policies, including the $36.5 million Energy West acquisition, ongoing rate reviews, $500 million in new bond issuances, and EPA rule challenges - On July 1, 2025, the company acquired Hope Utilities' Energy West natural gas distribution system for approximately $36.5 million in cash[38][39] - The company is undergoing a Montana rate review, with interim rates implemented and settlement agreements filed, seeking a total revenue increase of $14.6 million for electric and $18.1 million for natural gas[40][47] - In March and May 2025, the company issued $400.0 million and $100.0 million in First Mortgage Bonds for refinancing and general utility purposes[60][62] - The company is challenging EPA rules on GHG and MATS emissions, with a presidential proclamation providing temporary exemptions and proposed rule changes[82][84] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, noting a Q2 2025 net income decrease to $21.2 million but H1 increase to $98.2 million, covering segment performance, liquidity, and key developments Overall Consolidated Results Q2 2025 consolidated net income decreased to $21.2 million due to lower volumes and higher costs, while H1 net income increased to $98.2 million Net Income Reconciliation - Q2 2025 vs. Q2 2024 (in millions) | Description | Impact on Net Income | | :--- | :--- | | Q2 2024 Net Income | $31.7 | | Rates | $14.5 | | Operating, maintenance, and administrative | $(7.5) | | Depreciation | $(4.1) | | Interest expense | $(3.3) | | Natural gas retail volumes | $(3.0) | | Montana property tax tracker collections | $(3.2) | | Electric retail volumes | $(2.2) | | Q2 2025 Net Income | $21.2 | Utility Margin Change - H1 2025 vs. H1 2024 (in millions) | Description | Change in Utility Margin | | :--- | :--- | | Interim rates (subject to refund) | $30.1 | | Transmission revenue | $9.9 | | Base rates | $5.8 | | Electric retail volumes | $4.1 | | Montana property tax tracker collections | $(6.8) | | Total Increase in Utility Margin | $51.8 | Electric Segment Electric segment utility margin increased by $20.6 million in Q2 2025 to $219.9 million, driven by interim rates and transmission revenue, despite lower retail volumes Electric Segment Utility Margin (in millions) | Period | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Q2 | $219.9 | $199.2 | $20.6 | 10.3% | | H1 | $462.6 | $427.1 | $35.5 | 8.3% | - Primary drivers for the Q2 utility margin increase were interim rates of $14.7 million and a $5.7 million increase in transmission revenue[171] - Lower Q2 retail volumes resulted from unfavorable spring weather and reduced commercial/industrial demand, partially offset by customer growth[172] Natural Gas Segment Natural Gas segment utility margin increased by $3.4 million in Q2 2025 to $47.6 million, driven by interim rates and transportation revenue, despite lower retail volumes Natural Gas Segment Utility Margin (in millions) | Period | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Q2 | $47.6 | $44.2 | $3.4 | 7.6% | | H1 | $133.3 | $117.0 | $16.3 | 13.9% | - The Q2 utility margin increase was driven by interim rates of $3.2 million and Montana natural gas transportation revenue of $1.6 million[193] - Lower Q2 retail volumes resulted from warmer weather across all jurisdictions, partially offset by customer growth[195] Liquidity and Capital Resources As of June 30, 2025, the company maintained $317.9 million in liquidity, funding operations through cash flow, borrowing capacity, and future debt/equity issuances - Total net liquidity was approximately $317.9 million as of June 30, 2025, including $2.9 million cash and $315.0 million revolving credit facility availability[207] Consolidated Cash Flows - Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $211.6 | $223.9 | | Cash Used in Investing Activities | $(226.8) | $(248.3) | | Cash Provided by Financing Activities | $12.7 | $30.2 | - The company maintains investment-grade credit ratings from Fitch (BBB), Moody's (Baa2), and S&P (BBB) for its primary operating subsidiaries[222] - Total contractual cash obligations and commitments as of June 30, 2025, are estimated at $9.28 billion[225] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks, including interest rates and commodity prices, with no material changes since the 2024 Annual Report - The company's primary market risks relate to interest rates, energy commodity prices, and counterparty credit[235] - There have been no material changes in the company's market risks since its 2024 Annual Report[235] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Disclosure controls and procedures were concluded to be effective by principal officers as of the end of the reporting period[237] - No material changes occurred in internal control over financial reporting during the most recent fiscal quarter[238] PART II. OTHER INFORMATION This part provides additional information including legal proceedings, risk factors, other disclosures, and exhibits Legal Proceedings Information regarding legal proceedings is detailed in Note 11 - Commitments and Contingencies, to the Financial Statements - Information regarding legal proceedings is provided in Note 11 - Commitments and Contingencies, to the Financial Statements[241] Risk Factors No material changes to the company's risk factors have occurred since the 2024 Annual Report on Form 10-K - There have been no material changes to the company's risk factors since the disclosure in the 2024 Annual Report on Form 10-K[242] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading plan during Q2 2025 - During the second quarter of 2025, no director or officer adopted or terminated a Rule 10b5-1 trading agreement[243] Exhibits This section lists exhibits filed with the Form 10-Q, including supplemental indentures, officer certifications, and Inline XBRL data files - Exhibits filed include officer certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and various Inline XBRL documents[244][245][246] Signatures The report was formally signed by Crystal Lail, Vice President and Chief Financial Officer, on July 31, 2025 - The report was signed on July 31, 2025, by Crystal Lail, Vice President and Chief Financial Officer[250]