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

NorthWestern Energy (NYSE:NWE) reported a decline in second-quarter earnings while maintaining its long-term growth outlook, according to the company’s July 31, 2025 earnings presentation. Despite the quarterly setback, management emphasized strategic initiatives in data centers and transmission projects as key drivers for future growth.

Quarterly Performance Highlights

NorthWestern reported second-quarter GAAP diluted earnings per share of $0.35, a 32.7% decrease from $0.52 in the same period last year. Non-GAAP diluted EPS also declined to $0.40 from $0.53, representing a 24.5% drop. Despite these decreases, operating revenues increased by 7.1% to $342.7 million, and utility margin improved by 9.9% to $267.4 million.

As shown in the following comprehensive financial results table, net income fell to $21.2 million, down 33.1% from the prior year:

The earnings decline was primarily driven by higher operating and other expenses, partially offset by improved utility margin. The company’s waterfall chart illustrates how various factors contributed to the EPS decrease:

The utility margin bridge reveals that while interim rates (subject to refund) contributed $17.9 million and transmission revenue added $5.7 million, these gains were partially offset by property tax tracker collections, lower retail volumes, and other factors:

Year-to-date performance showed slight improvement, with GAAP net income up 1.6% and GAAP EPS increasing by 1.3% compared to the first half of 2024. Weather conditions were estimated to be a $2.5 million pre-tax detriment compared to normal and a $1.8 million detriment compared to second quarter 2024.

Strategic Growth Initiatives

NorthWestern continues to focus on data center opportunities as a key growth driver. The company announced its third Letter of Intent with a 500+ megawatt data center developer, adding to previously announced agreements with Sabey Data Centers (250 MW) and Atlas Power (150 MW).

As illustrated in the company’s presentation of large load customers:

In transmission infrastructure, NorthWestern is participating in the North Plains Connector Consortium Project, a $3.6 billion, 415-mile transmission line that received a $700 million Grid Resilience and Innovation award. The company will own 10% of this project and is exploring additional expansion opportunities for Montana’s southwest transmission.

Another strategic initiative involves the company’s increased ownership in Colstrip from 15% to 55%, providing significant capacity surplus to support new large-load customers:

Capital Investment & Financial Outlook

NorthWestern initiated 2025 earnings guidance in the range of $3.53 to $3.65 per diluted share and affirmed its long-term rate base and earnings per share growth rate targets of 4% to 6%. The company’s five-year capital investment plan totals $2.74 billion, allocated across various segments including distribution, electric transmission, and gas transmission.

The company’s value proposition emphasizes a combination of dividend yield and growth potential:

The 2025-2029 capital forecast shows the distribution of investments across Montana electric and gas operations:

NorthWestern’s 2025 earnings bridge provides a detailed breakdown of factors expected to influence earnings performance:

Financial Position and Outlook

The company maintains stable credit ratings with a Funds From Operations (FFO) to Debt ratio of 13.4% for the trailing twelve months ended Q2 2025, with a forecast to exceed 14% for the full year 2025. Management emphasized that no equity issuance is expected to fund the current $2.74 billion five-year capital plan.

NorthWestern declared a quarterly dividend of $0.66 per share payable on September 30, 2025, to shareholders of record as of September 15, 2025. The company noted that earnings growth is expected to exceed dividend growth until they return to the targeted 60-70% payout ratio.

Forward-Looking Statements

CEO Brian Byrd emphasized the company’s strategic focus on energy hubs and data centers during the earnings call, stating, "We see Colstrip as an energy hub and a great opportunity for us to continue to operate that plant until we can find something that’s cleaner." He also highlighted the company’s commitment to serving data center customers, saying, "We intend to serve these customers regardless."

The company faces several challenges, including the impact of Montana property tax legislation, which affected earnings by $0.05, and unfavorable weather conditions that contributed to a $0.09 reduction in earnings. Regulatory outcomes from ongoing rate reviews in Montana could also impact future performance, with decisions expected in Q4 2025.

NorthWestern stock closed at $57.33 on October 14, 2025, near its 52-week high of $59.89, suggesting investor confidence in the company’s long-term strategy despite the quarterly earnings decline. In aftermarket trading, the stock saw a minimal decrease of 0.02%.

Full presentation:

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