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AVISTA CORP (AVA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 diluted EPS was $0.84, down from $1.08 in Q4 2023 but up sequentially from $0.23 in Q3 2024; consolidated net income was $67M vs $84M y/y, while Avista Utilities’ operating revenues rose to $517M from $504M y/y .
  • Management initiated 2025 consolidated EPS guidance of $2.52–$2.72 and expects Avista Utilities to contribute $2.43–$2.61; the midpoint embeds a negative $0.12 ERM impact, and “Other” businesses are guided to zero contribution .
  • Washington rate cases concluded constructively (ROE 9.8%), with continued support for wildfire and insurance balancing accounts; ERM mechanics were not modified, leaving ERM as a continuing headwind .
  • Dividend increased ~3% to $1.96 annualized; 2025 capital plan is ~$525M at Avista Utilities with nearly $3B through 2029, and 2025 financings include ~$120M debt and up to $80M equity—key catalysts tied to regulatory execution in OR/ID, ERM outcomes, and transmission/large-load opportunities .

What Went Well and What Went Wrong

What Went Well

  • Constructive Washington general rate case outcome: ROE set at 9.8%, with support for wildfire/insurance balancing accounts and decoupling; management called it “a positive outcome for both our customers and our shareholders” .
  • Utility operations improved y/y; Avista Utilities’ Q4 operating revenues increased to $517M (from $504M), and total utility margin (net of tax) rose to $236M (from $224M) .
  • Strategic progress: Memorandum of understanding for the North Plains Connector identified in the IRP preferred strategy; management highlighted increased access to markets and reliability benefits (“important step to improve regional reliability and resource adequacy”) .

What Went Wrong

  • ERM remains a structural headwind; 2024 recognized an $8M pre-tax ERM expense, and 2025 guidance embeds a ~$0.12 negative EPS impact due to poor hydro and power supply cost dynamics and forward market uncertainty .
  • Q4 EPS down y/y to $0.84 (from $1.08) as higher operating, depreciation, interest expense, and a shift in effective tax rate weighed on results; consolidated net income fell to $67M (from $84M) .
  • “Other” businesses posted losses due to investment fair value marks and early-stage JV costs; management reset guidance to zero contribution for 2025 given historical volatility and limited visibility .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Avista Utilities Operating Revenues ($USD Millions)$504 $383.746 $517
Consolidated Net Income ($USD Millions)$84 $18.487 $67
Diluted EPS ($USD)$1.08 $0.23 $0.84
Utility Margin, Net of Tax ($USD Millions)$224 $192.031 $236

Segment breakdown (Q4):

SegmentQ4 2023 Net Income ($M)Q4 2024 Net Income ($M)Q4 2023 EPS ($)Q4 2024 EPS ($)
Avista Utilities$83 $68 $1.07 $0.85
AEL&P$3 $3 $0.04 $0.04
Other$(2) $(4) $(0.03) $(0.05)

KPIs and operating context:

  • ERM pre-tax expense: $8M in 2024 (also $8M in 2023) .
  • Utility capex (2024): Avista Utilities $510M; AEL&P $23M; 2025 expected $525M (Utilities) and $12M (AEL&P); ~$3B Utilities capex through 2029 .
  • Liquidity (12/31/24): $153M available under line of credit; $38M under letter of credit; AEL&P $13M available .
  • Financing plan (2025): ~$120M long-term debt and up to $80M common stock issuance .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated EPSFY 2024$2.26–$2.46 (lowered in Nov.) N/AN/A
Consolidated EPSFY 2025N/A$2.52–$2.72 Initiated (raised vs 2024 base)
Avista Utilities EPSFY 2024$2.23–$2.39; near low end (incl. ERM -$0.08) N/AN/A
Avista Utilities EPSFY 2025N/A$2.43–$2.61 (midpoint includes ERM -$0.12) Initiated
AEL&P EPSFY 2024$0.09–$0.11 N/AN/A
AEL&P EPSFY 2025N/A$0.09–$0.11 Maintained run-rate
“Other” EPSFY 2024$(0.06)–$(0.04) (loss) N/AN/A
“Other” EPSFY 2025N/A$0.00 (zero contribution) Reset to zero
O&M ExpenseFY 2025N/A~$470M; ~15% y/y increase; ~40% due to wildfire/insurance amortizations with offsetting revenues New disclosure
Expected ROE (Utilities)Go-forward8.1% expected in 2024 (structural/reg timing lag) ~8.8% expected go-forward (jurisdiction lag) Higher run-rate post WA case
Dividend2025$1.945 annualized (implied)$1.96 annualized (quarterly $0.49) Increased ~3%

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
ERM and power supply volatilityYTD ERM at $(4.7)M pre-tax; expect $(0.07) EPS impact; large customer offsets higher power costs Q3 ERM $(3.2)M pre-tax; YTD $(7.8)M; seek ERM modification 2024 ERM $(8)M pre-tax; 2025 includes $(0.12) EPS ERM at midpoint; no modification approved Persistent headwind; embedded in guidance
Regulatory outcomesWA case hearing scheduled; optimism on support WA decision mid-Dec expected; OR case filed; ID planned WA concluded constructively; ROE 9.8%; ERM mechanics unchanged; OR/ID execution next Constructive, multi-year execution
Transmission/IRP (North Plains Connector)In talks; aligned with IRP; ownership options possible MOU signed; next steps in 6–9 months; limited early payments Identified as preferred resource in IRP; improves reliability and market access Advancing toward definitive agreements
Wildfire mitigation & AIFire safety mode tools; PSPS readiness; grid upgrades Successful PSPS executed; 9 AI-enabled cameras deployed Continued AI camera deployment; legislative push for securitization and plan approvals Building resiliency; tech-enabled detection
Capital plan & financing2024 capex ~$500M; equity ~$70M; no long-term debt 3-year plan $525M/$575M/$600M; equity ~$70M; liquidity $212M 2025 Utilities capex ~$525M; ~$3B through 2029; 2025 debt ~$120M; equity up to $80M; liquidity $153M Elevated capex; balanced financing
Dividend & payoutNoted payout and guidance confirmation —Dividend increased to $1.96; target payout 65–75%; EPS growth to exceed dividend growth until payout normalized Consistent increases; discipline on payout

Management Commentary

  • “We made significant progress with our regulatory strategy in 2024, with constructive outcomes in our Washington general rate cases… we are initiating our consolidated earnings guidance for 2025 with a range of $2.52 to $2.72 per diluted share” — CEO Heather Rosentrater .
  • “Current hydro forecasts show our generation at approximately 94% of normal… there is no probable scenario in which the ERM can turn around in 2025” — CFO Kevin Christie, explaining why ERM is now embedded in guidance .
  • “Completion of the North Plains project will connect our region to generation in markets we previously have not been able to access… important step to improve regional reliability and resource adequacy” — CEO Heather Rosentrater .
  • “We are initiating our earnings guidance for 2025… we think we’ve given ourselves a very good chance of meeting our guidance range and certainly being towards the midpoint” — CFO Kevin Christie .

Q&A Highlights

  • Guidance positioning: Management targets the midpoint ($2.62) and believes assumptions (O&M, ERM, “Other” at zero) provide a path to meet/beat midpoint; longer-term EPS CAGR targeted at 4–6% off 2025 base .
  • Idaho case timeline: Procedural schedule being set; technical hearing could occur in late July; potential for settlement given past success .
  • Rebasing: Company aims to rebase annually contingent on rate case cadence and investment opportunities; will update quarter to quarter .
  • “Other” segment treatment: Guidance assumes zero run-rate given historical volatility and limited exit visibility; reassessment if exits/valuations materialize .
  • ERM inclusion: Explicit $(0.12) EPS negative impact included in 2025 midpoint; change from past practice due to WA outcome and market dynamics .

Estimates Context

  • We attempted to retrieve S&P Global consensus (EPS and revenue) for Q4 2024, but data were unavailable due to a daily request limit error. As a result, we cannot assess beats/misses versus Wall Street consensus in this recap. We anchor estimate comparisons on S&P Global and will update when access is restored [GetEstimates error].

Key Takeaways for Investors

  • 2025 setup is cleaner: guidance embeds ERM drag and zeros out “Other,” increasing the chance of meeting the midpoint; constructive WA rate case (ROE 9.8%) improves visibility, with OR/ID as the next execution milestones .
  • Watch ERM and hydro: Management does not foresee ERM turning favorable in 2025; hydro ~94% of normal and market uncertainty are key variables to track for quarterly EPS cadence .
  • Capex and growth optionality: ~$525M 2025 Utilities capex with nearly $3B through 2029; potential incremental upside from North Plains Connector, large-load additions, and IRP-driven owned generation or BTAs .
  • Financing and payout discipline: 2025 plan includes ~$120M debt and up to $80M equity; dividend at $1.96 with a commitment to bring payout back to 65–75% by growing EPS faster than dividends .
  • Regulatory cadence: Expect Idaho hearing timing and potential settlement updates; Oregon case progress and outcomes will influence ROE realization and recovery of structural costs .
  • Narrative catalyst: Transmission participation and IRP All-Source RFP in 2025 can signal future-owned asset growth, enhancing rate base and long-term earnings trajectory .
  • Near-term trading: Without consensus comparisons, use sequential improvement (Q3→Q4 EPS) and constructive regulatory backdrop as positives; ERM/headwinds and “Other” volatility now de-risked in guidance support more stable expectations .