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NorthWestern Energy Group, Inc. (NWE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid results: GAAP EPS $1.25 and adjusted EPS $1.22, up 17.9% and 11.9% YoY, driven by new rates, higher volumes, and stronger transmission/transport revenues .
  • Against S&P Global consensus, EPS modestly beat while revenue missed: EPS $1.22 vs $1.18 (+$0.04), revenue $0.467B vs $0.494B (–5.5%); management cited Montana property tax tracker, depreciation, interest, and OG&A as offsets (S&P Global; see Estimates Context) .
  • Regulatory positioning improved: Montana rate review settlements (full gas, partial electric), revised interim rate motions, and passage of the Montana wildfire liability bill (HB 490) and transmission CPCN bill (SB 301) pending the Governor’s signature .
  • Capital and liquidity remain constructive: $2.7B five‑year plan affirmed; no planned equity for core plan; net liquidity ~$630M; dividend $0.66 declared; long‑term EPS and rate base growth guidance maintained at 4–6% .

What Went Well and What Went Wrong

What Went Well

  • Rate execution and volume tailwinds: Interim and base rates plus higher electric and gas retail volumes, and stronger transmission revenues lifted net income and EPS; utility margin rose $27.8M (+9.2%) YoY .
  • Legislative risk mitigation: HB 490 clarifies wildfire liability (no strict liability; narrowed noneconomic/punitive damages); management called it “one of the strongest wildfire bills in the country” pending signature .
  • Financing and liquidity: 2025 financing needs largely addressed; net liquidity ~$630M (cash $56M + $574M revolver availability) .

Quotes:

  • “We’re pleased with the solid financial and operational results achieved this quarter…” — Brian Bird, President & CEO .
  • “We delivered a solid first quarter driven by strong margin contributions… and ongoing consistent expense management.” — Crystal Lail, CFO .
  • “We believe this is one of the strongest wildfire bills in the country…” — Brian Bird .

What Went Wrong

  • Revenue shortfall vs Street: Revenue came in at $466.6M vs ~$493.5M consensus, a miss driven in part by Montana property tax tracker collections and other offsets .
  • Cost pressure: Depreciation (+$5.7M), interest (+$5.5M), and insurance (wildfire risk premiums +$3.3M) weighed on results; OG&A rose modestly .
  • PCCAM headwind persists: Under-collected Montana supply costs of $24.3M increased the under-collection and reduced pre-tax earnings by $2.7M, with management flagging continued 2025 headwinds until base reset .

Financial Results

Sequential performance (last three quarters)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$345.2 $373.5$466.6
Net Income ($USD Millions)$46.8 $80.6 $76.9
GAAP Diluted EPS ($)$0.76 $1.31 $1.25
Adjusted Diluted EPS ($)$0.65 $1.13 $1.22

Q1 2025 vs prior quarter, prior year, and consensus

MetricQ1 2024Q4 2024Q1 2025ConsensusResult vs Consensus
Revenue ($USD Billions)$0.475 $0.374$0.467 $0.494Miss (–5.5%)
GAAP Diluted EPS ($)$1.06 $1.31 $1.25 n/an/a
Adjusted Diluted EPS ($)$1.09 $1.13 $1.22 $1.18Beat (+$0.04)

Note: Consensus values retrieved from S&P Global.

Margins (S&P Global fundamentals)

MetricQ3 2024Q4 2024Q1 2025
EBIT Margin %19.91%*24.76%*26.73%*
EBITDA Margin %36.41%*40.03%*40.10%*
Net Income Margin %13.56%*21.57%*16.49%*

*Values retrieved from S&P Global.

Segment breakdown (Q1 2025)

SegmentRevenue ($USD Millions)Utility Margin ($USD Millions)
Electric$335.5 $242.7
Natural Gas$131.1 $85.7
Total$466.6 $328.4

KPIs (Q1 2025)

KPIValue
Utility Margin ($USD Millions)$328.4
PCCAM under-collection (supply costs)$24.3M under-collected; –$2.7M pre-tax earnings impact
Net Liquidity~$630.0M (Cash $56.0M; Revolver availability $574.0M)
Dividend Declared$0.66 per share, payable June 30, 2025
Funds From Operations (FFO)$153.5M (company presentation)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Long-term EPS Growth5-year4–6%4–6%Maintained
Long-term Rate Base Growth5-year4–6%4–6%Maintained
Capex Plan2025–2029$2.7B$2.7BMaintained
Capex (Annual)2025$531M$531MAffirmed
2025 EPS GuidanceFY 2025Not provided“To be provided following Montana rate review outcome”Maintained approach
Dividend PolicyOngoingTarget 60–70% payoutTarget 60–70% payoutMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Montana rate review and interim ratesDelay in interim rates; detailed bridge rate/PCCAM context; settlements expected early 2025 Filed partial electric and full gas settlements; motions for revised interim rates; hearing set June 9 Progressing; near-term resolution focus
Wildfire liability legislationUtility bills proposed; importance noted HB 490 passed Legislature (awaiting signature); no strict liability; narrowed damages; strong protections Positive regulatory tailwind
Transmission CPCN (SB 301)Transmission opportunities; GRIP grant for NPC; regulatory timelines discussed CPCN process codified (300-day decision; 90-day prudency response); supportive of modernization Improves regulatory clarity
Large-load customers (data centers)LOIs announced; capacity planning; tariff considerations Serving initial data centers under existing MT tariffs; multiple prospects at various stages; SD deviated tariff in place Pipeline building; nearer contracting
Colstrip capacity acquisitionNo-cost acquisition agreements; baghouse/retrofit considerations; regulatory support required Reiterated benefits: energy independence, reliability; increased ownership to 55% post-close Strategic cornerstone asset
Credit metrics (FFO/Debt)Below threshold without interim; path to improve with regulatory outcomes Q1 near/above 14% threshold; financing completed; monitoring 2025 distribution skew Stabilizing contingent on rate outcomes
NPC (North Plains Connector) / GRIP$700M GRIP award with $70M for Colstrip transmission; timing uncertain due to EO review Continued collaboration; federal GRIP disbursement under review; aiming for commercial agreements mid-year Development continues; funding timing variable

Management Commentary

  • Strategic focus: “We are affirming our long-term (five-year) diluted earnings per share growth guidance of 4% to 6%… [and] our $2.7 billion capital investment plan for 2025-2029” .
  • Regulatory stance: “If approved, these settlements will allow us to recover increased operating costs and provide an opportunity to earn a fair return…” — Brian Bird .
  • Operational drivers: “New rates… higher electric and natural gas retail volumes, higher electric transmission revenues, and higher natural gas transportation revenues” lifted Q1 earnings .
  • Legislative wins: “We believe this is one of the strongest wildfire bills in the country…” — Brian Bird .

Q&A Highlights

  • Data center tariffs and contracting pipeline: Management outlined a 5-step process (request → assessment → contractual estimate → contract → construction), serving initial MT customers under existing tariffs and SD via deviated tariffs; broader tariff refinements likely for incremental loads .
  • 2025 earnings distribution: Expect Q2 contribution ~10% of FY due to timing of MT rate implementation; skew to 2H 2025 .
  • Growth guidance: Team reiterated long-term 4–6% EPS CAGR; near-term variability acknowledged pending rate outcomes .
  • Colstrip long-term replacement options: Near-term reliability via natural gas if needed; longer-term evaluation of SMRs/nuclear around Colstrip; adequate land and interconnection .
  • Credit metrics and interim rates: Absence of interim rates pressures FFO/Debt below thresholds; revised interim rates and final orders are crucial .

Estimates Context

  • Q1 2025 Consensus vs Actual (S&P Global):
    • Primary EPS Consensus Mean: $1.18; Actual (Adjusted): $1.22 — modest beat.
    • Revenue Consensus Mean: $493.5M; Actual: $466.6M — miss.
    • EPS # of Estimates: 7; Revenue # of Estimates: 3.

Where estimates may adjust:

  • Revenue miss (property tax tracker collections, higher depreciation/interest/insurance) suggests potential fine‑tuning of FY 2025 topline/OG&A assumptions until MT final rates are set . Note: Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term trading: Expect stock sensitivity to June Montana rate review hearing and any approvals of revised interim rates; HB 490 and SB 301 passage are positive sentiment catalysts .
  • Fundamental setup: EPS beat (adjusted) despite cost headwinds demonstrates rate execution and load resilience; watch PCCAM base reset to relieve ongoing headwinds .
  • Regulatory risk de‑risked: Wildfire liability framework materially reduces tail risk; transmission CPCN enhances cost recovery confidence — both supportive of longer-term multiple .
  • Capital plan intact with no planned equity: $2.7B five‑year program supports 4–6% EPS and rate base growth; incremental opportunities (data centers, transmission) may later require equity if pursued .
  • Liquidity/credit: Net liquidity ~$630M and completed 2025 financing underpin flexibility; FFO/Debt tracking depends on rate timing; monitor Q2 contribution (~10% FY) .
  • Strategic assets: Colstrip majority ownership (post-close) and YCGS enhance reliability and capacity, central to serving large-load growth while moderating customer bills over time .
  • Dividend visibility: $0.66 declared; payout ratio target 60–70% maintained, with earnings growth expected to outpace dividend growth until target payout regained .

Appendix Details (Drivers and Variance)

  • Q1 2025 variance bridge: Rates (+$12.3M net income), electric volumes (+$5.2M), gas volumes (+$3.2M), transmission (+$3.1M), gas transport (+$1.0M); offsets: property tax tracker (–$1.9M), depreciation (–$4.3M), interest (–$4.1M), OG&A (–$1.3M) .
  • Operating expense components: Depreciation (+$5.7M), generation maintenance (+$3.5M), insurance (+$3.3M), labor/benefits (+$1.1M); offsets include litigation outcome and prior-year impairment .

Special notes:

  • All company financials and operational data cited above originate from NorthWestern’s Q1 2025 8‑K, earnings materials, and related press releases – –.
  • Consensus/estimates and margin metrics marked with asterisks are values retrieved from S&P Global.