NorthWestern Energy Q2 2025 slides: EPS declines amid strategic growth initiatives

Introduction & Market Context

NorthWestern Energy (NYSE:NWE) reported second quarter 2025 results on July 31, showing a significant year-over-year decline in earnings per share despite revenue growth. The utility company, which serves customers in Montana and South Dakota, posted GAAP diluted earnings per share of $0.35, down 32.7% from $0.52 in the same quarter last year. Non-GAAP EPS came in at $0.40, a 24.5% decrease from $0.53 in Q2 2024.

Despite the quarterly earnings pressure, NorthWestern’s stock has remained relatively stable, trading at $52.61 as of July 30, 2025, up slightly by 0.13%. The stock has traded between $50.43 and $59.89 over the past 52 weeks, reflecting investor confidence in the company’s long-term strategy despite near-term challenges.

Quarterly Performance Highlights

NorthWestern’s second quarter showed mixed financial results. While operating revenues increased by 7.1% to $342.7 million compared to $319.9 million in Q2 2024, net income fell to $21.2 million from $31.7 million, a 33.1% decrease.

As shown in the following quarterly financial results:

The company’s utility margin improved significantly, rising 9.9% to $267.4 million from $243.4 million in the prior year period. However, this positive development was more than offset by increases in operating expenses, particularly property taxes, operations and maintenance costs, and depreciation.

The following chart illustrates the comparison between GAAP and Non-GAAP metrics for both Q2 2025 and Q2 2024:

A detailed breakdown of the factors affecting the quarterly earnings reveals that higher utility margin contributed positively (+$0.29 per share), but was more than offset by increases in property and other taxes (-$0.15), operations and maintenance expenses (-$0.09), depreciation (-$0.07), interest expense (-$0.05), and other factors (-$0.10):

The improvement in utility margin was driven primarily by interim rates (+$17.9 million), transmission revenue (+$5.7 million), and Montana gas transportation (+$1.6 million), partially offset by decreases in natural gas and electric retail volumes:

Strategic Initiatives

Despite the quarterly earnings pressure, NorthWestern is actively pursuing several strategic initiatives aimed at long-term growth. Most notably, the company has signed three Letters of Intent with data center developers, representing significant potential load growth.

As detailed in the company’s presentation on large load customers:

These data center agreements could substantially increase NorthWestern’s customer base and revenue. The company has established a structured process for evaluating and implementing data center projects:

In addition to data center opportunities, NorthWestern is investing in transmission infrastructure, including participation in the North Plains Connector project, a $3.6 billion high-voltage direct-current transmission line that will connect Montana’s Colstrip substation to the broader grid:

The company has also increased its ownership stake in the Colstrip power plant from 15% to 55%, providing additional capacity to serve both existing customers and potential new large-load customers:

Forward-Looking Statements

NorthWestern initiated its 2025 earnings guidance with a non-GAAP EPS range of $3.53 to $3.65 per diluted share. The company also affirmed its long-term growth targets of 4% to 6% for both EPS and rate base growth.

The company’s value proposition includes a dividend yield of approximately 5%, with a base capital plan expected to deliver 4-6% EPS growth and potential for higher growth from incremental opportunities:

For 2025-2029, NorthWestern plans capital investments of $2.74 billion, with no equity issuance expected to fund this plan. The company anticipates maintaining an FFO to Debt ratio above 14% to support its current credit ratings.

The following chart illustrates the factors contributing to the company’s 2025 earnings guidance:

Financial Analysis

NorthWestern’s five-year capital forecast totals $2.74 billion, with investments spread relatively evenly across the period. The majority of capital expenditures (71%) will be directed toward electric infrastructure, with the remaining 29% allocated to natural gas:

Year-to-date performance shows more stability than the quarterly results alone. For the first six months of 2025, GAAP net income increased by 1.6% to $98.2 million from $96.7 million in the same period of 2024. GAAP diluted EPS rose 1.3% to $1.60 from $1.58, while non-GAAP diluted EPS remained unchanged at $1.62:

The company declared a quarterly dividend of $0.66 per share, payable on September 30, 2025, to shareholders of record as of September 15, 2025. NorthWestern expects earnings growth to exceed dividend growth until it returns to its targeted payout ratio of 60% to 70%.

NorthWestern’s recent highlights also include the completion of the acquisition of Energy West and Cut Bank Gas, adding approximately 33,000 customers and 43 employees to its operations:

In summary, while NorthWestern Energy faces near-term earnings pressure in Q2 2025, the company’s strategic initiatives focused on data center growth, transmission infrastructure, and increased generation capacity position it for potential long-term growth. Investors will be watching closely to see if these initiatives can overcome the current challenges and deliver on the company’s 4-6% growth targets.

Full presentation:

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