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NorthWestern Energy Group, Inc. (NWE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was mixed: GAAP EPS fell to $0.62 from $0.76 due to higher OpEx (merger costs, depreciation), interest expense, and the absence of last year’s tax benefit; however, adjusted EPS rose to $0.79 from $0.65, driven by new rates and stronger usage, and management affirmed FY25 guidance ($3.53–$3.65) .
  • Revenue increased 12.1% year over year to $387.0M on higher electric and gas volumes and transmission/transport revenues; utility margin rose 16.6% YoY to $300.1M .
  • Versus consensus, the company delivered an adjusted EPS beat (+$0.04), revenue beat (+$10.9M), and EBITDA beat (~$4.0M), supporting guidance and narrative momentum around rate execution and load growth initiatives (S&P Global data)*.
  • Strategic catalysts: pending Montana rate review final order (expected Q4 2025), execution on large-load data centers (development agreements progressing), 131 MW South Dakota gas capacity proposal, and integration of Energy West; merger-of-equals with Black Hills advancing through filings .

What Went Well and What Went Wrong

What Went Well

  • Utility margin expanded 16.6% YoY (to $300.1M) on interim/base rates and higher volumes; electric utility margin +16.3%, gas +18.7% .
  • Adjusted diluted EPS improved to $0.79 from $0.65; management highlighted rate execution and customer usage as key drivers despite mild weather headwinds .
  • Strategic progress: Energy West integration completed (33k customers), and filings/updates tied to large-load data centers and capacity additions (e.g., 131 MW Aberdeen, SD project) .
    • CEO: “We are pleased to deliver on another quarter of strong operational and financial results… closing the Energy West transaction… and welcoming roughly 40 employees and 33,000 customers” .

What Went Wrong

  • GAAP EPS declined to $0.62 due to $7.6M merger-related costs, higher depreciation/interest, and the prior-year gas repairs safe harbor benefit; effective tax rate climbed to 18.7% from -7.3% .
  • PCCAM under-collection increased: Q3 under-collected supply costs of $21.1M (10% shareholder share reduced pre-tax earnings by $2.3M), reversing an over-collection in Q3 2024 .
  • Operating expenses ex-fuel rose 16.0% YoY on A&G (+33.8%), O&M (+14.7%), taxes (+10.8%), depreciation (+10.2%)—including wildfire mitigation and insurance premium increases .

Financial Results

Performance vs prior quarters (Q1→Q3 2025)

MetricQ1 2025Q2 2025Q3 2025
Revenues ($USD Millions)$466.6 $342.7 $387.0
Diluted EPS (GAAP) ($)$1.25 $0.35 $0.62
Diluted EPS (Adjusted, Non-GAAP) ($)$1.22 $0.40 $0.79
Gross Margin ($USD Millions)$166.2 $94.5 $127.1
Utility Margin ($USD Millions)$328.4 $267.4 $300.1
Operating Income ($USD Millions)$124.7 $60.8 $80.3
Net Income ($USD Millions)$76.9 $21.2 $38.2

Year-over-year and sequential comparison (focus on Q3)

MetricQ3 2024Q2 2025Q3 2025
Revenues ($USD Millions)$345.2 $342.7 $387.0
Diluted EPS (GAAP) ($)$0.76 $0.35 $0.62
Diluted EPS (Adjusted, Non-GAAP) ($)$0.65 $0.40 $0.79
Utility Margin ($USD Millions)$257.3 $267.4 $300.1
Total OpEx ex-fuel ($USD Millions)$189.4 $206.7 $219.7
Interest Expense ($USD Millions)$33.4 $36.3 $38.4

Segment breakdown (Q3 2025 vs Q3 2024)

Segment MetricQ3 2024Q3 2025
Electric Revenues ($USD Millions)$306.5 $339.8
Gas Revenues ($USD Millions)$38.7 $47.2
Electric Utility Margin ($USD Millions)$225.7 $262.6
Gas Utility Margin ($USD Millions)$31.6 $37.5

KPIs (Q3 2025)

  • PCCAM: Under-collected supply costs $21.1M; shareholder share impacted pre-tax by -$2.3M .
  • Effective tax rate: 18.7% (vs -7.3% in Q3 2024) .
  • Net liquidity: $262.2M (cash $6.2M; revolver availability $256.0M), down from $316.5M YoY .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP Diluted EPSFY 2025$3.53–$3.65 (initiated Q2) $3.53–$3.65 (affirmed) Maintained
Effective Tax RateFY 2025~12%–15% ~12%–15% Maintained
Diluted Avg SharesFY 2025~61.5M ~61.5M Maintained
5-Yr EPS Growth2025–20294%–6% 4%–6% Maintained
5-Yr Rate Base Growth2025–20294%–6% 4%–6% Maintained
Capital PlanFY 2025$531M $531M (affirmed) Maintained
Capital Plan2025–2029$2.7B $2.7B (affirmed) Maintained
DividendQ4 2025$0.66 (prior quarter announced for 9/30) $0.66 payable 12/31/2025 Maintained
Capacity Project (SD)2030 targetNot in current plan 131 MW gas plant submitted to SPP; ~$300M (incremental, to be added in 1H26 update) New project, off-plan

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Large-load/data centersTwo LOIs (Sabey 50→250MW; Atlas 75→150MW) and process roadmap Development agreement with Sabey; queue counts moved to high-level assessment; filing planned for Montana large-load tariff in Q4 Progressing from LOIs to development agreements and tariff design
Rate review – MontanaPartial electric & gas settlements; revised interim rates; final order expected Q4 Final order still expected in Q4; guidance maintained pending outcome Nearing resolution
Wildfire mitigation/insuranceHB 490 legislative protection; rising insurance costs noted Ongoing wildfire mitigation expenses and higher premiums impacting OpEx Costs continuing; regulatory mitigation supports recovery
Capacity/resource adequacyYellowstone County Gen. Station in service; Colstrip incremental capacity strategy outlined Colstrip Avista/Puget transfers effective 1/1/26; PCCAM waiver request for Avista costs; PPA planned for Puget capacity through late 2027 Executing near-term cost recovery and contracts
South Dakota capacity buildNot reflected in 5-year plan; feasibility/study windows opened 131 MW gas plant proposal submitted to SPP Expedited RAS; capex ~$300M; transmission study feedback expected early 2026 Advancing studies; timeline guidance
Financing/ratingsPlan to maintain FFO/Debt >14%; no equity for current 5-year plan; stable outlooks S&P outlook upgraded to Positive (Aug 19, 2025); financing plans intact Constructive credit backdrop

Management Commentary

  • CEO Brian Bird: “We are excited about the announcement of the merger with Black Hills Corporation, creating a stronger regional utility… anticipate approvals that will enable us to close the transaction in the back half of 2026” .
  • CFO Crystal Lail: “We delivered a solid quarter in line with expectations… margin improvement drove $0.52, offset by $0.12 merger-related costs, higher depreciation and interest, and prior-year $0.11 tax benefit” .
  • CEO Brian Bird (Colstrip strategy): “55% ownership… provides the ability to determine strategic direction… planning a PPA through late 2027 to largely offset $30 million of incremental operating costs” .

Q&A Highlights

  • Data center pipeline: Queue progressed with three parties moving into high-level assessment; at least one could progress to LOI or development agreement soon (JP Morgan) .
  • South Dakota capacity timeline: SPP initial feedback confirms requirements met; transmission piece feedback expected early 2026; inclusion in capex plan likely at Q4 call (February) .
  • Cost recovery mechanics: PCCAM waiver for Avista interests intended to offset ~$18M annual O&M; PPA for Puget portion to offset ~$30M O&M; regulatory rationale explained to balance shareholder/customer interests .

Estimates Context

  • Q3 2025 consensus vs actual: EPS $0.754 est vs $0.79 act; Revenue $376.0M est vs $387.0M act; EBITDA $145.7M est vs $149.7M act — all beats (S&P Global)*.
  • Prior quarters: Q1 EPS $1.176 est vs $1.22 act; Q2 EPS $0.377 est vs $0.40 act; Q2 revenue also modest beat, supporting sequential consistency (S&P Global)*.
MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus Mean ($)1.176*0.377*0.754*
Primary EPS Actual ($)1.22*0.40*0.79*
Revenue Consensus Mean ($USD Millions)493.5*336.7*376.0*
Revenue Actual ($USD Millions)466.6*342.7*387.0*
EBITDA Consensus Mean ($USD Millions)171.0*122.1*145.7*
EBITDA Actual ($USD Millions)187.1*123.1*149.7*
# EPS Estimates7*7*7*
# Revenue Estimates3*3*3*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Rate execution and interim/base rate benefits are now visible in utility margin, offsetting weather and PCCAM under-collection; watch for the Q4 Montana final order as a stock-moving catalyst .
  • Adjusted earnings quality improved despite GAAP noise from merger expenses; management affirmed FY25 guidance, implying confidence in second-half trajectory .
  • Large-load data center pipeline is advancing from LOIs to development agreements and tariff design; combined with Colstrip capacity strategy, this creates optionality for load-driven earnings growth .
  • The 131 MW South Dakota gas project (not in the current plan) is an incremental capex opportunity; early 2026 transmission feedback is a milestone to monitor .
  • Credit profile constructive (S&P Positive Outlook) and funding strategy targets FFO/Debt >14% with no equity for the current 5-year capex; supports valuation resilience .
  • Near-term trading: potential positive re-rating on a constructive Montana order or additional data center agreements; risk skew from PCCAM variability and OpEx inflation (wildfire/insurance) .
  • Medium-term thesis: regulated rate base growth 4–6%, earnings CAGR 4–6%, and potential upside from large-load integration and regional transmission participation .

Additional Q3 Materials and Prior Quarters

  • Q3 press release/8-K: revenue/EPS, guidance affirmation, dividend declaration, merger update .
  • Q3 earnings webinar/transcript: prepared remarks and Q&A on data center pipeline, Colstrip cost recovery, SD capacity .
  • Q2 press release/8-K (initiated FY25 guidance; Energy West close; Quantica LOI): baseline for “previous guidance” .
  • Q1 press release/8-K: rate settlement progress; HB 490 wildfire legislation; early-year margin drivers .

Non-GAAP adjustments noted:

  • Q3 2025 adjustments: +$7.6M merger transaction costs (not tax-deductible) and +$2.6M weather add-back in arriving at $0.79 adjusted EPS .
  • Q3 2024 adjustments: gas repairs safe harbor tax benefit ($7.0M) impacted comparability .

Liquidity and dividend:

  • Net liquidity $262.2M; declared $0.66 dividend payable December 31, 2025 .