NorthWestern (US:NWE)2025-10-30 13:48Financial Performance - Net income for Q3 2025 was $38.2 million, or $0.62 per diluted share, down from $46.8 million, or $0.76 per diluted share in Q3 2024, primarily due to higher operating expenses and interest expense [2][5]. - Adjusted non-GAAP net income for Q3 2025 was $48.4 million, or $0.79 per diluted share, compared to $39.7 million, or $0.65 per diluted share in Q3 2024 [3][5]. - The company affirms its 2025 earnings guidance range of $3.53 to $3.65 per diluted share, with a long-term EPS growth rate of 4% to 6% [5][9]. - Consolidated operating income for Q3 2025 was $80.3 million, compared to $67.9 million in Q3 2024, driven by new rates and increased customer usage [34]. - Consolidated interest expense rose to $38.4 million in Q3 2025, up from $33.4 million in Q3 2024, attributed to higher borrowings and interest rates [35]. - Consolidated income tax expense for Q3 2025 was $8.8 million, compared to an income tax benefit of $3.2 million in Q3 2024, with an effective tax rate of 18.7% [37]. - Basic earnings per share for Q3 2025 were $0.62, down from $0.76 in Q3 2024, while adjusted non-GAAP earnings per diluted share increased to $0.79 from $0.65 [44]. - Total net liquidity as of September 30, 2025, was approximately $262.2 million, a decrease from $316.5 million a year earlier [41]. - Consolidated other income decreased to $5.1 million in Q3 2025 from $9.1 million in Q3 2024, primarily due to lower capitalization of Allowance for Funds Used During Construction (AFUDC) [36]. Revenue and Margin - Total revenues for Q3 2025 were $387.0 million, an increase from $345.2 million in Q3 2024, driven by higher electric and gas revenues [25]. - Consolidated gross margin for Q3 2025 was $127.1 million, an increase of $24.3 million or 23.6% compared to Q3 2024 [27]. - Utility margin for Q3 2025 reached $300.1 million, up $42.8 million or 16.6% from $257.3 million in Q3 2024 [30]. - Electric retail volumes contributed $5.8 million to the utility margin, driven by favorable weather and customer growth [31]. - Natural gas retail volumes increased by $0.6 million, including $1.4 million from the acquisition of Energy West Operations [31]. - Operating revenues for Q3 2025 were $387.0 million, compared to $345.2 million in Q3 2024 [28]. Operating Expenses - Higher operating and maintenance costs were $64.1 million in Q3 2025, up from $55.9 million in Q3 2024 [28]. - The company under-collected supply costs of $21.1 million in Q3 2025, resulting in a pre-tax earnings decrease of $2.3 million [31]. - The increase in operating expenses was primarily driven by higher depreciation expenses and wildfire mitigation costs [32]. - Consolidated operating expenses (excluding fuel, purchased supply, and direct transmission expense) increased to $219.7 million for Q3 2025, up 16.0% from $189.4 million in Q3 2024 [32]. - Merger-related costs impacted net income by $7.6 million, contributing to the increase in operating expenses [32]. Mergers and Acquisitions - The company incurred $7.6 million in merger-related costs during Q3 2025, included in administrative and general expenses [8]. - The merger with Black Hills Corporation is anticipated to close in the second half of 2026, with regulatory filings submitted in October 2025 [4][7]. - The company completed the acquisition of Energy West for approximately $35.9 million in cash, serving about 33,000 customers [23]. - The company is currently involved in a pending merger with Black Hills Corporation, with potential risks including regulatory approvals and realization of projected synergies [52]. - The merger with Black Hills Corporation is expected to enhance operational capabilities and market reach, pending successful completion [52]. Future Outlook and Strategic Initiatives - A capital investment plan of $2.7 billion for 2025-2029 has been affirmed, supporting a rate base growth of 4% to 6% [10]. - The company plans to construct a 131 MW natural gas generating facility in South Dakota, with anticipated costs of approximately $300 million [22]. - Factors affecting future results include supply chain constraints, inflation, and changes in trade credit availability, which may impact revenues and operating costs [57]. - NorthWestern Energy's operations are subject to various regulatory mechanisms that influence the recovery of energy costs from customers [50]. - The company emphasizes the importance of understanding its financial performance through both GAAP and non-GAAP measures for investors [51]. - NorthWestern Energy's investor relations can be contacted for further information regarding financial performance and strategic initiatives [59]. Customer Base and Service Areas - NorthWestern Energy serves approximately 842,100 customers across Montana, South Dakota, Nebraska, and Yellowstone National Park [47]. - The company has been providing services in South Dakota and Nebraska since 1923 and in Montana since 2002 [47]. Investor Communication - The company plans to host an investor earnings webinar on October 30, 2025, to discuss financial results for the quarter [46]. - NorthWestern Energy's financial performance includes non-GAAP measures such as Utility Margin, which excludes certain operating costs to provide a clearer view of revenue performance [49][50]. - Adjusted Non-GAAP pre-tax income, net income, and Diluted EPS are presented to better reflect ongoing earnings, excluding impacts not indicative of normal operations [51].