Overview of Second Quarter 2025 Results Financial Highlights NorthWestern Energy reported a decrease in second-quarter net income and earnings per share compared to the prior year, primarily due to unfavorable weather impacting usage, higher operating costs, and delays in Montana rate implementation. The company has initiated its 2025 earnings guidance and affirmed its long-term growth targets and capital plan Q2 2025 vs Q2 2024 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $21.2 million | $31.7 million | | GAAP Diluted EPS | $0.35 | $0.52 | | Non-GAAP Net Income | $24.1 million | $32.2 million | | Non-GAAP Diluted EPS | $0.40 | $0.53 | - The decrease in earnings was primarily driven by lower retail gas and electric usage due to weather, non-recoverable Montana electric supply costs, and increased depreciation, operating, and interest expenses. These were partially offset by higher retail rates and transmission revenues2 - The company announced 2025 earnings guidance of $3.53 to $3.65 per diluted share and affirmed its $531 million capital plan for 20256 CEO Commentary CEO Brian Bird highlighted strong operational performance, the successful acquisition of Energy West's Montana assets, and progress on a third large-load data center project. He noted that Q2 earnings, while lower than last year, met expectations, with the decline attributed to delays in implementing updated interim rates in Montana. A final decision on the rate review is anticipated in Q4 2025 - Successfully completed the acquisition of Energy West's natural gas system in Montana on July 1, adding over 33,000 customers and 43 employees4 - Announced a third large-load letter of intent with Quantica Infrastructure for a proposed 500-megawatt data center project in Montana4 - Q2 earnings were impacted by a delay in implementing updated interim electric rates in Montana, which were adjusted in late May. A final outcome in the rate review is expected in early Q4 20255 Financial Outlook 2025 Guidance and Long-Term Targets The company has initiated its 2025 non-GAAP EPS guidance at $3.53 - $3.65 and affirmed its long-term growth targets. The guidance is based on several assumptions, including normal weather and a favorable outcome in the Montana rate review. The capital investment plan for 2025-2029 remains on track, supporting a 4% to 6% rate base growth Financial Guidance and Targets | Metric | Target/Range | | :--- | :--- | | 2025 Non-GAAP Diluted EPS Guidance | $3.53 - $3.65 | | Long-Term (5-Year) EPS Growth Rate | 4% to 6% (from 2024 base of $3.40) | | 2025-2029 Capital Investment Plan | $2.7 billion | | Long-Term Rate Base Growth Rate | 4% to 6% (from 2024 base of ~$5.4B) | - Key assumptions for 2025 guidance include final approval of the Montana rate review settlement, normal weather, an effective tax rate of 12%-15%, and ~61.5 million diluted average shares outstanding10 - The capital program will be funded by cash from operations and debt. Equity financing may be required for incremental investments in generation, transmission, or other strategic opportunities8 Dividend Declared The Board of Directors declared a quarterly dividend of $0.66 per share, payable on September 30, 2025. The company remains committed to its long-term dividend payout ratio target - A quarterly dividend of $0.66 per share was declared, payable September 30, 2025, to shareholders of record as of September 15, 20259 - The company maintains its long-term target dividend payout ratio of 60-70%9 Company Updates Regulatory Update The company is progressing through a major electric and natural gas rate review in Montana, with partial settlements filed and a final order expected in Q4 2025. Revised interim electric rates were implemented in July 2025. In Nebraska, a settlement was approved, increasing natural gas base rate revenue by $2.4 million annually - In the Montana rate review, partial settlements have been filed for both electric and natural gas services. A hearing was held in June 2025, with a final MPSC order expected to determine final rates1121 Montana Rate Review - Total Requested Revenue Increase (Settlement Agreements) | Service | Requested Revenue Increase (in millions) | | :--- | :--- | | Electric | $14.6 | | Natural Gas | $18.1 | - The Nebraska Public Service Commission approved a settlement increasing annual natural gas base rate revenue by $2.4 million, with new rates effective July 1, 202521 Strategic and Operational Developments NorthWestern Energy is actively pursuing strategic growth and operational enhancements. The company completed the acquisition of Energy West's Montana assets, signed a third letter of intent for a major data center load, and will benefit from new state legislation that streamlines transmission construction and provides wildfire liability protections. Additionally, the company is moving forward with acquiring partners' shares in the Colstrip power plant - Energy West Acquisition: Completed the acquisition of Energy West's Montana natural gas assets on July 1, 2025, for ~$36.5 million, adding approximately 33,000 customers24 - Data Center Growth: Signed a third nonbinding letter of intent with Quantica Infrastructure for a data center with a potential load of up to 500 megawatts by 203026 - Wildfire Mitigation: New Montana legislation (House Bill 490) establishes liability protections for electric providers related to wildfire prevention efforts, contingent on following an approved wildfire mitigation plan25 - Transmission Construction: New Montana law (Senate Bill 301) aims to expedite and streamline the construction process for electric transmission lines to meet growing demand27 - Colstrip Acquisitions: Entered definitive agreements to acquire Avista's and Puget's interests in Colstrip Units 3 and 4 for $0, with the transaction expected to close on December 31, 202528 Environmental Update The company is navigating new EPA rules for coal-fired facilities. A presidential proclamation has provided a temporary exemption through mid-2029 from the MATS Rule for key plants, including Colstrip, and the EPA has proposed rescinding the 2024 MATS Rule - Final EPA GHG and MATS rules released in April 2024 would require expensive, potentially unachievable upgrades at Colstrip Units 3 and 4, with compliance dates as early as 202722 - A presidential proclamation issued on April 8, 2025, exempts Colstrip, Big Stone, and Coyote plants from the MATS Rule through July 8, 202922 - On June 11, 2025, the EPA issued a Notice of Proposed Rulemaking to rescind the 2024 MATS Rule23 Financial Results Consolidated Statement of Income For the second quarter of 2025, total revenues increased to $342.7 million from $319.9 million in the prior-year period. However, higher operating expenses, particularly in property taxes and depreciation, led to a slight decrease in operating income and a more significant drop in net income to $21.2 million, compared to $31.7 million in Q2 2024 Consolidated Statement of Income (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $342.7 | $319.9 | $809.3 | $795.3 | | Total Operating Expenses | $281.9 | $258.3 | $623.8 | $631.6 | | Operating Income | $60.8 | $61.6 | $185.5 | $163.7 | | Net Income | $21.2 | $31.7 | $98.2 | $96.7 | | Diluted EPS | $0.35 | $0.52 | $1.60 | $1.58 | Reconciliation of Quarterly Changes (Variance Analysis) The diluted EPS decreased by $0.17 from Q2 2024 to Q2 2025. Positive impacts from higher rates (+$0.23) and transmission revenue (+$0.07) were more than offset by increased operating expenses (-$0.12), depreciation (-$0.07), interest expense (-$0.05), and lower retail volumes for both gas and electric (-$0.09 combined) Key Drivers of Change in Diluted EPS (Q2 2025 vs. Q2 2024) | Driver | Impact on Diluted EPS | | :--- | :--- | | Positive Drivers | | | Rates | +$0.23 | | Electric transmission revenue | +$0.07 | | Negative Drivers | | | Operating, maintenance, and administrative | -$0.12 | | Depreciation | -$0.07 | | Interest expense | -$0.05 | | Natural gas retail volumes | -$0.05 | | Montana property tax tracker collections | -$0.05 | | Electric retail volumes | -$0.04 | Explanation of Consolidated Results The company's non-GAAP Utility Margin increased by 9.9% to $267.4 million, driven by interim rates and higher transmission revenue, but partially offset by lower retail volumes due to unfavorable weather. Operating expenses (excluding fuel) rose 13.6%, primarily due to higher property taxes, depreciation from plant additions, and increased insurance premiums. Higher interest expense and lower other income also contributed to the decline in net income - Consolidated non-GAAP Utility Margin increased by $24.0 million (9.9%) YoY, primarily due to interim rates (+$17.9M) and higher transmission revenue (+$5.7M)343536 - Lower electric and natural gas retail volumes were driven by unfavorable spring weather, which impacted residential demand37 - Operating expenses (excluding fuel) increased by $24.8 million (13.6%), driven by property taxes (+$11.9M), depreciation (+$5.5M), and O&M (+$4.9M). Key O&M drivers were maintenance, insurance, and wildfire mitigation costs3940 - Interest expense increased by $4.4 million due to higher borrowings and interest rates43 - The effective tax rate for Q2 2025 was 13.7%, compared to 11.8% in Q2 202445 Adjusted Non-GAAP Earnings The company provides a reconciliation of GAAP to non-GAAP earnings to adjust for items not reflective of ongoing performance. For Q2 2025, adjustments were made for unfavorable weather and a penalty related to the Community Renewable Energy Project. This resulted in an adjusted non-GAAP diluted EPS of $0.40, compared to the GAAP EPS of $0.35 Reconciliation of GAAP to Non-GAAP EPS (Q2 2025) | Item | Pre-tax Income (in millions) | Net Income (in millions) | Diluted EPS | | :--- | :--- | :--- | :--- | | Reported GAAP | $24.6 | $21.2 | $0.35 | | Unfavorable weather | $2.5 | $1.9 | $0.03 | | CREP Penalty | $1.0 | $1.0 | $0.02 | | Adjusted Non-GAAP | $28.1 | $24.1 | $0.40 | - Adjusted non-GAAP diluted EPS for Q2 2025 was $0.40, compared to $0.53 in the same period of 202451 Liquidity and Other Considerations Liquidity and Capital Resources As of June 30, 2025, NorthWestern Energy maintained a solid liquidity position with total net liquidity of approximately $317.9 million. This figure includes cash on hand and availability under its revolving credit facility - Total net liquidity was $317.9 million as of June 30, 2025, consisting of $2.9 million in cash and $315.0 million in revolving credit facility availability47 - This represents a decrease from the $393.4 million in total net liquidity reported on June 30, 202447 Earnings Per Share Calculation The calculation of diluted earnings per share for Q2 2025 was based on a weighted average of 61.5 million shares outstanding. This includes the dilutive effect of performance share awards, which are factored in using the treasury stock method Weighted Average Shares Outstanding (Diluted) | Period | Diluted Shares | | :--- | :--- | | Three Months Ended June 30, 2025 | 61,483,946 | | Three Months Ended June 30, 2024 | 61,357,348 |
NorthWestern (NWE) - 2025 Q2 - Quarterly Results