NorthWestern Energy Group, Inc. (NWE)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 printed mixed: revenue rose 7.1% year over year to $342.7M while GAAP EPS fell to $0.35 (from $0.52); adjusted EPS was $0.40. Management initiated FY25 non-GAAP EPS guidance of $3.53–$3.65 and declared a $0.66 dividend .
• Versus S&P Global consensus, Q2 revenue beat by ~$6.0M and adjusted EPS beat by ~$0.02; prior quarter Q1’25 was an EPS beat but a revenue miss, and Q4’24 was in-line EPS with a revenue miss (see Estimates Context) (Values retrieved from S&P Global).
• Regulatory momentum is a key catalyst: revised Montana electric interim rates began July 2, with final rate review decision expected early Q4; CFO highlighted ongoing PCCAM headwinds and higher O&M, depreciation, and interest costs .
• Strategic load growth narrative strengthened: signed third LOI with Quantica Infrastructure (up to 500 MW by 2030) and reiterated “no equity” for the current $2.7B five-year capex plan, expanding the medium-term EPS growth pathway .

What Went Well and What Went Wrong

• What Went Well

  • Utility margin increased 9.9% YoY to $267.4M, driven by interim/base rates and transmission; electric utility margin +10.3% to $219.8M, gas +7.7% to $47.6M .
  • Data center pipeline expanded: LOI signed with Quantica (Phase 1 500 MW, growth to 1 GW), management expects ESAs for at least one LOI by next call; large loads seen as rate-moderating and grid-efficiency enhancers .
  • Initiated FY25 non-GAAP EPS guidance of $3.53–$3.65; long-term EPS and rate base growth of 4–6% affirmed; dividend maintained at $0.66 .

• What Went Wrong

  • GAAP EPS declined to $0.35 from $0.52 YoY due to lower retail volumes (weather), Montana property tax tracker collections, non-recoverable supply costs, higher depreciation/O&M/interest; adjusted EPS fell to $0.40 from $0.53 .
  • Operating expenses excluding fuel rose 13.6% YoY (+$24.8M), driven by depreciation, generation maintenance, higher wildfire insurance premiums, and taxes not recovered in trackers .
  • PCCAM continued to be a headwind: under-collected supply costs of $7.6M (10% shareholder share ~$0.8M detriment to pre-tax); management expects continued PCCAM pressure through 2025 .

Financial Results

Segment breakdown: Q2 Electric utility margin increased on interim/base rates and transmission; gas benefitted from transportation, both offset by lower volumes and property tax tracker collections .

KPIs:

• Liquidity: $317.9M (cash $2.9M + $315.0M revolver availability) at 6/30/25 vs $393.4M at 6/30/24 .
• Dividend: $0.66 declared, payable Sep 30, 2025 .
• Shares Diluted (Q2): 61.48M .

Guidance Changes

Assumptions embedded in FY25 guidance: approval of material aspects of Montana settlements; normal weather; effective tax ~12–15%; diluted average shares ~61.5M .

Earnings Call Themes & Trends

Management Commentary

• CEO Brian Bird on performance and strategy: “Earnings for the second quarter met our expectations, though they were lower than last year, primarily due to the delay in implementing updated interim rates in Montana... An outcome in the rate review is expected early in the fourth quarter this year.”
• CFO Crystal Lail on quarterly drivers: “Quarterly earnings were driven primarily by... rates... offset by unfavorable weather and pressures at the operating cost, depreciation, and interest lines... these results are in line with our expectations.”
• CEO on data centers: “By the time we have this next call in October, we expect to have at least one of these LOIs in place... If turned down by the commission, we intend to serve these customers on a FERC-regulated basis.”
• CEO on wildfire bill: “We feel very, very good about this... no longer have to deal with strict liability... and a rebuttable presumption that a utility acted reasonably if it substantially followed the approved wildfire plan.”

Q&A Highlights

• Data center ESAs/timing: Management expects at least one ESA (Atlas or Sabey) by next call; Quantica is in earlier stages; ramp concentrated in 2027–2030 .
• Tariff/regulatory approach: Initial Montana large loads can be served under existing tariffs; future tariff modifications likely for incremental capacity; fallback FERC-regulated service if state denies .
• Colstrip recovery: Avista tranche intended to serve regulated load; Puget tranche preserves FERC optionality to serve large load; filings planned in Q3 to bridge to next rate review .
• PCCAM headwinds: Continued detriment expected through 2025; Q2 under-collection increased the variance vs base .
• Load geography: Interest is balanced between Montana and South Dakota; SD has established deviated rate tariff for large loads .

Estimates Context

• Q2 2025: Revenue beat ($6.0M), EPS beat ($0.02); Q1 2025: EPS beat but revenue miss; Q4 2024: EPS in-line, revenue miss.
• Adjusted comparisons use company non-GAAP “Adjusted Diluted EPS”; consensus series reflects “Primary EPS.”
• Values retrieved from S&P Global.

Key Takeaways for Investors

• Q2 showed underlying margin strength but earnings pressure from weather, PCCAM, and rising cost line items; the EPS and revenue beats vs consensus support near-term sentiment.
• The Montana rate outcome (expected early Q4) is the principal 2H catalyst; revised interim rates already implemented, reducing near-term regulatory lag .
• The expanding data center pipeline (three LOIs) and impending Colstrip acquisitions create a credible path to above-trend EPS growth beyond the base plan; watch for ESA signings and tariff developments .
• Wildfire liability reforms (HB 490) and SB 301 transmission legislation reduce risk and improve investment recoverability, underpinning the “no equity” funding stance for the current five-year plan .
• Estimate revisions likely skew positive for FY25 given guidance initiation ($3.53–$3.65), narrowed/lowered tax-rate assumption (12–15%), and interim rate implementation timing .
• Trading: stock sensitivity remains high to rate review headlines and ESA signings; near-term upside on constructive Montana order, downside if PCCAM headwinds persist beyond expectations .
• Medium term: execution on Colstrip filings, ESA conversions, and transmission CPCNs can lift growth above the 4–6% base and support re-rating on improved regulatory construct and load growth .