NorthWestern Reports Second Quarter 2024 Financial Results
NorthWestern Energy reported its second quarter 2024 GAAP diluted EPS of $0.52, an increase from $0.32 in Q2 2023. Net income rose to $31.7 million from $19.1 million year-over-year.
The company reaffirmed its 2024 earnings guidance of $3.42-$3.62 per diluted share and a $500 million capital investment plan. Additionally, it declared a quarterly dividend of $0.65 per share, payable on September 30, 2024.
Two strategic acquisitions were announced: the $39 million purchase of Energy West Montana's natural gas distribution system and the acquisition of Puget Sound Energy's 370 MW ownership in Colstrip at no cost.
The company also filed rate reviews in Montana, South Dakota, and Nebraska to support ongoing infrastructure investments. The filing includes a base rate increase request of $156.5 million for electric and $28.6 million for natural gas in Montana.
NorthWestern Energy expects no need for equity issuances for its current capital investment plan and targets a long-term EPS growth of 4-6%.
NorthWestern Energy ha riportato un EPS diluito GAAP del secondo trimestre 2024 di $0.52, in aumento rispetto a $0.32 nel Q2 2023. Il reddito netto è salito a $31.7 milioni rispetto ai $19.1 milioni dell'anno precedente.
La società ha confermato le sue previsioni di guadagno per il 2024 tra $3.42 e $3.62 per azione diluita e un piano di investimento di capitale di $500 milioni. Inoltre, ha dichiarato un dividendo trimestrale di $0.65 per azione, che sarà pagato il 30 settembre 2024.
Sono state annunciate due acquisizioni strategiche: l'acquisto di $39 milioni del sistema di distribuzione di gas naturale di Energy West Montana e l'acquisizione della partecipazione di 370 MW di Puget Sound Energy a Colstrip senza alcun costo.
La società ha anche presentato richieste di revisione tariffaria in Montana, Dakota del Sud e Nebraska per supportare gli investimenti in infrastrutture in corso. La richiesta include un aumento della tariffa base di $156.5 milioni per l'elettricità e $28.6 milioni per il gas naturale in Montana.
NorthWestern Energy non prevede la necessità di emissioni di azioni per il suo attuale piano di investimento di capitale e mira a una crescita dell'EPS a lungo termine del 4-6%.
NorthWestern Energy reportó un EPS diluido GAAP de $0.52 para el segundo trimestre de 2024, un aumento desde $0.32 en el Q2 de 2023. Los ingresos netos aumentaron a $31.7 millones desde $19.1 millones interanualmente.
La empresa reafirmó su guía de ganancias para 2024 de $3.42 a $3.62 por acción diluida y un plan de inversión de capital de $500 millones. Además, declaró un dividendo trimestral de $0.65 por acción, pagadero el 30 de septiembre de 2024.
Se anunciaron dos adquisiciones estratégicas: la compra de $39 millones del sistema de distribución de gas natural de Energy West Montana y la adquisición de la participación del Puget Sound Energy de 370 MW en Colstrip sin costo alguno.
La empresa también presentó revisiones de tarifas en Montana, Dakota del Sur y Nebraska para respaldar las inversiones en infraestructura en curso. La presentación incluye una solicitud de aumento de tarifa base de $156.5 millones para electricidad y $28.6 millones para gas natural en Montana.
NorthWestern Energy no espera necesitar emisiones de capital para su actual plan de inversión de capital y apunta a un crecimiento del EPS a largo plazo del 4-6%.
NorthWestern Energy는 2024년 2분기 GAAP 희석 주당 순이익(EPS)이 $0.52로, 2023년 2분기의 $0.32에서 증가했다고 보고했습니다. 순이익은 작년 대비 $31.7백만에서 $19.1백만으로 증가했습니다.
회사는 2024년 수익 가이던스를 주당 $3.42-$3.62로 재확인하고, $500백만 자본 투자 계획을 발표했습니다. 또한 2024년 9월 30일에 지급될 분기 배당금을 주당 $0.65로 공표했습니다.
전략적 인수 두 건이 발표되었습니다: Energy West Montana의 천연가스 분배 시스템을 $39백만에 구입하고, Puget Sound Energy의 Colstrip에서의 370 MW 소유권을 무상으로 인수했습니다.
회사는 또한 몬타나, 사우스다코다, 네브래스카에서 지속적인 인프라 투자 지원을 위해 요금 검토를 신청했습니다. 이 신청에는 몬타나에서 전기에 대해 $156.5백만, 천연가스에 대해 $28.6백만의 기본 요금 인상 요청이 포함됩니다.
NorthWestern Energy는 현재 자본 투자 계획에 대한 주식 발행의 필요성을 예상하지 않으며, 장기적으로 4-6%의 EPS 성장을 목표로 하고 있습니다.
NorthWestern Energy a annoncé un BPA dilué GAAP de 0,52 $ pour le deuxième trimestre 2024, en hausse par rapport à 0,32 $ au T2 2023. Le revenu net a augmenté à 31,7 millions $ contre 19,1 millions $ l'année dernière.
La société a réaffirmé ses prévisions de bénéfices pour 2024 entre 3,42 $ et 3,62 $ par action diluée et un plan d'investissement en capital de 500 millions $. De plus, un dividende trimestriel de 0,65 $ par action a été déclaré, payable le 30 septembre 2024.
Deux acquisitions stratégiques ont été annoncées : l'achat de 39 millions $ du système de distribution de gaz naturel de Energy West Montana et l'acquisition sans frais de la participation de 370 MW de Puget Sound Energy à Colstrip.
La société a également déposé des revues de tarifs dans le Montana, le Dakota du Sud et le Nebraska pour soutenir les investissements en infrastructure en cours. Le dépôt comprend une demande d'augmentation du tarif de base de 156,5 millions $ pour l'électricité et de 28,6 millions $ pour le gaz naturel dans le Montana.
NorthWestern Energy ne prévoit pas de besoin d'émissions d'actions pour son plan d'investissement en capital actuel et vise une croissance du BPA à long terme de 4 à 6 %.
NorthWestern Energy meldete einen verwässerten Bereinigten Gewinn pro Aktie (EPS) von $0.52 im zweiten Quartal 2024, ein Anstieg von $0.32 im Q2 2023. Der Nettogewinn stieg auf $31.7 Millionen von $19.1 Millionen im Vorjahresvergleich.
Das Unternehmen bestätigte seine Gewinnprognose für 2024 von $3.42-$3.62 pro verwässerter Aktie und einen $500 Millionen Investitionsplan. Darüber hinaus wurde eine vierteljährliche Dividende von $0.65 pro Aktie erklärt, die am 30. September 2024 zahlbar ist.
Es wurden zwei strategische Akquisitionen angekündigt: der Kauf des Gasverteilungssystems von Energy West Montana für $39 Millionen sowie die Übernahme des 370 MW Anteils von Puget Sound Energy in Colstrip ohne Kosten.
Das Unternehmen hat auch Tarifüberprüfungen in Montana, South Dakota und Nebraska eingereicht, um laufende Infrastrukturinvestitionen zu unterstützen. Der Antrag umfasst eine Anfrage zur Erhöhung des Basistarifs um $156.5 Millionen für Elektrizität und $28.6 Millionen für Erdgas in Montana.
NorthWestern Energy erwartet keine Notwendigkeit zur Emission von Eigenkapital für seinen aktuellen Investitionsplan und strebt ein langfristiges EPS-Wachstum von 4-6% an.
- EPS increased to $0.52 from $0.32 year-over-year.
- Net income rose to $31.7 million from $19.1 million.
- Reaffirmed 2024 earnings guidance of $3.42-$3.62 per diluted share.
- Declared a quarterly dividend of $0.65 per share.
- Announced strategic acquisitions including a $39 million purchase of Energy West Montana's natural gas distribution.
- Filed rate reviews with potential base rate increases to support infrastructure investments.
- QF liability adjustment was less favorable compared to the previous year.
- Higher depreciation, operating, administrative, and general costs.
- Increased interest expenses due to higher borrowings and interest rates.
Insights
NorthWestern Energy's Q2 2024 results show solid financial performance and strategic moves to strengthen its position. Key highlights include:
- Earnings growth: Net income increased to
$31.7 million ($0.52 per diluted share) compared to$19.1 million ($0.32 per diluted share) in Q2 2023. - Strategic acquisitions: Agreement to acquire Energy West Montana's natural gas distribution system serving 33,000 customers for
$39 million . Also, a no-cost acquisition of Puget Sound Energy's 25% interest in Colstrip Units 3 and 4, effective December 31, 2025. - Regulatory updates: Filed rate reviews in Montana, South Dakota and Nebraska to recover costs and support infrastructure investments.
- Affirmed guidance: 2024 diluted earnings guidance of
$3.42 -$3.62 per share and$500 million capital plan. - Dividend declared: Quarterly dividend of
$0.65 per share payable September 30, 2024.
The company's strategic acquisitions and regulatory filings demonstrate a proactive approach to growth and cost recovery. However, challenges remain, including potential environmental compliance costs for Colstrip and the delayed Yellowstone County plant. Overall, NorthWestern appears well-positioned for steady growth, supported by its regulated utility model and strategic investments.
NorthWestern Energy's recent moves highlight the complex landscape utilities are navigating:
- Colstrip acquisitions: The no-cost acquisitions of Puget Sound Energy's and Avista's stakes in Colstrip Units 3 and 4 are intriguing. While this provides NorthWestern with more control over a reliable baseload power source, it also increases exposure to potential environmental liabilities and compliance costs.
- EPA regulations: The new EPA rules on greenhouse gas emissions and mercury air toxics standards pose significant challenges for coal-fired plants like Colstrip. The required upgrades by 2027 and 2032 could be prohibitively expensive or technically unfeasible.
- Transition strategy: NorthWestern's approach seems to balance maintaining reliable baseload power while preparing for a lower-carbon future. The Yellowstone County natural gas plant and potential future investments in newer technologies reflect this dual strategy.
- Regulatory environment: The multiple rate review filings underscore the importance of supportive regulatory frameworks for utilities to recover costs and make necessary investments in infrastructure and new technologies.
NorthWestern's strategy reflects the broader industry challenges of maintaining reliability, managing costs and transitioning to cleaner energy sources. The success of this approach will depend on regulatory support, technological advancements and the company's ability to navigate evolving environmental regulations.
Company reports GAAP diluted earnings per share of
BUTTE, Mont. and SIOUX FALLS, S.D., July 30, 2024 (GLOBE NEWSWIRE) -- NorthWestern Energy Group, Inc. d/b/a NorthWestern Energy (Nasdaq: NWE) reported financial results for the three months ended June 30, 2024. Net income for the period was
“We are pleased to report solid earnings growth this quarter, a clear testament to our team’s dedication and hard work,” said Brian Bird, President and CEO. “We are also happy to announce two strategic transactions that position us for future success. First, we have entered into an agreement to acquire Energy West Montana’s natural gas distribution system, which serves 33,000 customers, most of whom are already our electric customers. Second, we also entered an agreement to acquire Puget’s 370 megawatt ownership in Colstrip at no cost. The agreement features the same structure and December 31, 2025 transfer date as we currently have in place in the previously announced deal with Avista. The no-cost acquisition of Puget’s share of Colstrip will allow us to leverage existing infrastructure that is well established, dependable, reliable and consistently available when our customers need energy the most. Additionally, over the last two months we filed rate reviews in all three of our service territories to enable us to continue to make critical infrastructure investments. All of these actions highlight our commitment to providing reliable, affordable and sustainable energy services to our valued customers while providing a reasonable return on invested shareholder capital.”
SECOND QUARTER 2024 COMPARED TO SECOND QUARTER 2023
The increase in net income was primarily due to new base rates in Montana and South Dakota, electric transmission revenues, Montana property tax tracker collections, and electric and natural gas retail volumes. These were offset in part by a less favorable Qualifying Facility (QF) liability adjustment in the current year, non-recoverable Montana electric supply costs, depreciation, operating, administrative and general costs, and interest expense. Diluted earnings per share also increased as a result of higher net income but was partially offset by increased average shares outstanding due to equity issuances during 2023.
Adjusted non-GAAP diluted earnings per share for the quarter ended June 30, 2024 was
COMPANY UPDATES
Acquisition of Energy West Montana Assets
On July 29, 2024, we entered into an Asset Purchase Agreement with Hope Utilities to acquire its Energy West natural gas utility distribution system and operations serving approximately 33,000 customers located near Great Falls, Cut Bank, and West Yellowstone, Montana for approximately
Colstrip – Puget Sound Energy Transaction
On July 30, 2024, we entered into a definitive agreement (the Agreement) with Puget Sound Energy (Puget) to acquire Puget's 25 percent interest in each of Units 3 and 4 (collectively representing 370 megawatts) at the Colstrip Generating Station for
Acquisition of Puget’s ownership interest, in addition to the previously disclosed acquisition of Avista’s 15 percent interest in each of Colstrip Units 3 and 4 (collectively representing 222 megawatts), will result in our ownership of 55 percent of the facility with the ability to guide operating and maintenance investments. This provides capacity to help us meet our obligation to provide reliable and cost effective power to our customers in Montana, while allowing opportunity for us to identify and plan for newer lower or no-carbon technologies in the future.
Regulatory Update
Rate reviews are necessary to recover the cost of providing safe, reliable service, while contributing to earnings growth and achieving our financial objectives. We regularly review the need for electric and natural gas rate relief in each state in which we provide service. Our ongoing rate review activity includes the following:
Montana Rate Review - On July 10, 2024, we filed a Montana electric and natural gas rate review with the MPSC. The filing requests a base rate annual revenue increase of
South Dakota Natural Gas Rate Review - On June 21, 2024, we filed a natural gas rate review with the South Dakota Public Utilities Commission. The filing requests a base rate annual revenue increase of
Nebraska Natural Gas Rate Review - On June 6, 2024, we filed a natural gas rate review with the Nebraska Public Service Commission. The filing requests a base rate annual revenue increase of
Yellowstone County 175 MW plant
Construction of the new generation facility continues to progress and we expect the plant to be in service during the third quarter of 2024. The lawsuit challenging the YCGS air quality permit, which required us to suspend construction activities for a period of time, as well as additional related legal and construction challenges, delayed the project timing and have increased costs. As of June 30, 2024, total costs of approximately
Environmental Protection Agency (EPA) Rules
On April 25, 2024, the EPA released final rules related to Greenhouse Gas (GHG) emission standards (GHG Rules) for existing coal-fired facilities and new coal and natural gas-fired facilities as well as final rules strengthening the Mercury Air Toxics Standard (MATS) requirements (MATS Rules). Compliance with the rules will require expensive upgrades at Colstrip Units 3 and 4 with proposed compliance dates that may not be achievable and / or require technology that is unproven, resulting in significant impacts to costs of the facilities. The final MATS and GHG Rules require compliance as early as 2027 and 2032, respectively.
Affirming 2024 Earnings Guidance, Capital Plan and Long-Term EPS Growth
We are affirming 2024 diluted earnings guidance of
- Normal weather in our service territories;
- Interim rates in Montana in the fourth quarter;
- An effective income tax rate of approximately
12% -14% ; and - Diluted average shares outstanding of approximately 61.4 million.
We are also affirming our long-term (5 year) diluted earnings per share growth guidance of
Dividend Declared
NorthWestern Energy Group's Board of Directors declared a quarterly common stock dividend of
Additional information regarding this release can be found in the earnings presentation at https://www.northwesternenergy.com/investors/earnings
CONDENSED CONSOLIDATED STATEMENT OF INCOME
| (in millions) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| Reconciliation of gross margin to utility margin: | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Operating Revenues | $ | 319.9 | $ | 290.5 | $ | 795.3 | $ | 745.1 | |||||||
| Less: Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below) | 76.5 | 67.6 | 251.2 | 233.1 | |||||||||||
| Less: Operating and maintenance | 57.4 | 54.9 | 111.6 | 110.7 | |||||||||||
| Less: Property and other taxes | 36.2 | 40.1 | 83.4 | 89.3 | |||||||||||
| Less: Depreciation and depletion | 57.0 | 52.4 | 113.7 | 105.6 | |||||||||||
| Gross Margin | 92.8 | 75.5 | 235.4 | 206.4 | |||||||||||
| Operating and maintenance | 57.4 | 54.9 | 111.6 | 110.7 | |||||||||||
| Property and other taxes | 36.2 | 40.1 | 83.4 | 89.3 | |||||||||||
| Depreciation and depletion | 57.0 | 52.4 | 113.7 | 105.6 | |||||||||||
| Utility Margin(1) | $ | 243.4 | $ | 222.9 | $ | 544.1 | $ | 512.0 | |||||||
| (1) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below. | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in millions, except per share amounts) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Revenues | $ | 319.9 | $ | 290.5 | $ | 795.3 | $ | 745.1 | |||||||
| Fuel, purchased supply and direct transmission expense(1) | 76.5 | 67.6 | 251.2 | 233.1 | |||||||||||
| Utility Margin(2) | 243.4 | 222.9 | 544.1 | 512.0 | |||||||||||
| Operating and maintenance | 57.4 | 54.8 | 111.5 | 110.7 | |||||||||||
| Administrative and general | 31.3 | 30.0 | 71.7 | 64.7 | |||||||||||
| Property and other taxes | 36.3 | 40.1 | 83.4 | 89.3 | |||||||||||
| Depreciation and depletion | 56.9 | 52.4 | 113.7 | 105.6 | |||||||||||
| Total Operating Expenses(3) | 181.9 | 177.3 | 380.3 | 370.3 | |||||||||||
| Operating income | 61.6 | 45.6 | 163.7 | 141.7 | |||||||||||
| Interest expense, net | (31.9 | ) | (28.4 | ) | (62.9 | ) | (56.4 | ) | |||||||
| Other income, net | 6.2 | 4.1 | 10.5 | 8.8 | |||||||||||
| Income before income taxes | 35.9 | 21.3 | 111.3 | 94.0 | |||||||||||
| Income tax expense | (4.2 | ) | (2.1 | ) | (14.6 | ) | (12.4 | ) | |||||||
| Net Income | 31.7 | 19.1 | 96.7 | 81.7 | |||||||||||
| Basic Shares Outstanding | 61.3 | 59.8 | 61.3 | 59.8 | |||||||||||
| Earnings per Share - Basic | $ | 0.52 | $ | 0.32 | $ | 1.58 | $ | 1.37 | |||||||
| Diluted Shares Outstanding | 61.4 | 59.8 | 61.3 | 59.8 | |||||||||||
| Earnings per Share - Diluted | $ | 0.52 | $ | 0.32 | $ | 1.58 | $ | 1.37 | |||||||
| Dividends Declared per Common Share | $ | 0.65 | $ | 0.64 | $ | 1.30 | $ | 1.28 | |||||||
| (1) Exclusive of depreciation and depletion expense. (2) Utility Margin is a Non-GAAP financial measure. See "Reconciliation of gross margin to utility margin" above and “Non-GAAP Financial Measures” below. (3) Excluding fuel, purchased supply and direct transmission expense. | |||||||||||||||
RECONCILIATION OF PRIMARY CHANGES DURING THE QUARTER
| Three Months Ended June 30, 2024 vs. 2023 | |||||||||||||||
| Pre-tax Income | Income Tax (Expense) Benefit(3) | Net Income | Diluted Earnings Per Share | ||||||||||||
| (in millions, except EPS) | |||||||||||||||
| Second Quarter, 2023 | $ | 21.3 | $ | (2.2 | ) | $ | 19.1 | $ | 0.32 | ||||||
| Variance in revenue and fuel, purchased supply, and direct transmission expense(1)items impacting net income: | |||||||||||||||
| Base rates | 16.4 | (4.2 | ) | 12.2 | 0.20 | ||||||||||
| Electric transmission revenue | 4.1 | (1.0 | ) | 3.1 | 0.05 | ||||||||||
| Montana property tax tracker collections | 2.5 | (0.6 | ) | 1.9 | 0.03 | ||||||||||
| Natural gas retail volumes | 1.1 | (0.3 | ) | 0.8 | 0.01 | ||||||||||
| Montana natural gas transportation | 0.8 | (0.2 | ) | 0.6 | 0.01 | ||||||||||
| Electric retail volumes | 0.6 | (0.2 | ) | 0.4 | 0.01 | ||||||||||
| QF liability adjustment | (4.2 | ) | 1.1 | (3.1 | ) | (0.05 | ) | ||||||||
| Non-recoverable Montana electric supply costs | (0.9 | ) | 0.2 | (0.7 | ) | (0.01 | ) | ||||||||
| Production tax credits, offset within income tax benefit | (0.8 | ) | 0.8 | — | — | ||||||||||
| Other | 3.7 | (0.9 | ) | 2.8 | 0.05 | ||||||||||
| Variance inexpenseitems(2)impacting net income: | |||||||||||||||
| Depreciation | (4.5 | ) | 1.1 | (3.4 | ) | (0.06 | ) | ||||||||
| Interest | (3.5 | ) | 0.9 | (2.6 | ) | (0.04 | ) | ||||||||
| Operating, maintenance, and administrative | (2.3 | ) | 0.6 | (1.7 | ) | (0.03 | ) | ||||||||
| Other | 1.6 | 0.7 | 2.3 | 0.04 | |||||||||||
| Dilution from higher share count | (0.01 | ) | |||||||||||||
| Second Quarter, 2024 | $ | 35.9 | $ | (4.2 | ) | $ | 31.7 | $ | 0.52 | ||||||
| Change in Net Income | $ | 12.6 | $ | 0.20 | |||||||||||
| (1) Exclusive of depreciation and depletion shown separately below (2) Excluding fuel, purchased supply, and direct transmission expense (3) Income Tax (Expense) Benefit calculation on reconciling items assumes blended federal plus state effective tax rate of | |||||||||||||||
EXPLANATION OF CONSOLIDATED RESULTS
Three Months Ended June 30, 2024 Compared with the Three Months Ended June 30, 2023
Consolidated gross margin for the three months ended June 30, 2024 was
| Three Months Ended June 30, | |||||||
| (in millions) | 2024 | 2023 | |||||
| Reconciliation of gross margin to utility margin: | |||||||
| Operating Revenues | $ | 319.9 | $ | 290.5 | |||
| Less: Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below) | 76.5 | 67.6 | |||||
| Less: Operating and maintenance | 57.4 | 54.9 | |||||
| Less: Property and other taxes | 36.2 | 40.1 | |||||
| Less: Depreciation and depletion | 57.0 | 52.4 | |||||
| Gross Margin | 92.8 | 75.5 | |||||
| Operating and maintenance | 57.4 | 54.9 | |||||
| Property and other taxes | 36.2 | 40.1 | |||||
| Depreciation and depletion | 57.0 | 52.4 | |||||
| Utility Margin(1) | $ | 243.4 | $ | 222.9 | |||
| (1) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below. | |||||||
| Three Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | Change | % Change | ||||||||||||
| (dollars in millions) | |||||||||||||||
| Utility Margin | |||||||||||||||
| Electric | $ | 199.2 | $ | 186.9 | $ | 12.3 | 6.6 | % | |||||||
| Natural Gas | 44.2 | 36.0 | 8.2 | 22.8 | |||||||||||
| Total Utility Margin(1) | $ | 243.4 | $ | 222.9 | $ | 20.5 | 9.2 | % | |||||||
| (1) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below. | |||||||||||||||
Consolidated utility margin for the three months ended June 30, 2024 was
Primary components of the change in utility margin include the following (in millions):
| Utility Margin 2024 vs. 2023 | |||
| Utility Margin Items Impacting Net Income | |||
| Base rates | $ | 16.4 | |
| Transmission revenue due to market conditions | 4.1 | ||
| Montana property tax tracker collections | 2.5 | ||
| Natural gas retail volumes | 1.1 | ||
| Montana natural gas transportation | 0.8 | ||
| Electric retail volumes | 0.6 | ||
| QF liability adjustment | (4.2 | ) | |
| Non-recoverable Montana electric supply costs | (0.9 | ) | |
| Other | 3.7 | ||
| Change in Utility Margin Items Impacting Net Income | 24.1 | ||
| Utility Margin Items Offset Within Net Income | |||
| Property and other taxes recovered in revenue, offset in property and other taxes | (3.8 | ) | |
| Production tax credits, offset in income tax expense | (0.8 | ) | |
| Operating expenses recovered in revenue, offset in operating and maintenance expense | 1.0 | ||
| Change in Utility Margin Items Offset Within Net Income | (3.6 | ) | |
| Increase in Consolidated Utility Margin(1) | $ | 20.5 | |
| (1) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below. | |||
Higher electric retail volumes were driven by favorable weather in Montana impacting residential demand, higher industrial demand, and customer growth in all jurisdictions, partly offset by unfavorable weather in South Dakota impacting residential demand and lower commercial demand. Higher natural gas retail volumes were driven by favorable weather in Montana and customer growth, partly offset by unfavorable weather in South Dakota and Nebraska.
The less favorable adjustment to our electric QF liability (unrecoverable costs associated with contracts covered by the Public Utility Regulatory Policies Act of 1978 as part of a 2002 stipulation with the MPSC and other parties) reflects a
Under the PCCAM, net supply costs higher or lower than the PCCAM base rate (excluding QF costs) are allocated 90 percent to Montana customers and 10 percent to shareholders. For the three months ended June 30, 2024, we over-collected supply costs of
| Three Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | Change | % Change | ||||||||||||
| ($ in millions) | |||||||||||||||
| Operating Expenses (excluding fuel, purchased supply and direct transmission expense) | |||||||||||||||
| Operating and maintenance | $ | 57.4 | $ | 54.8 | $ | 2.6 | 4.7 | % | |||||||
| Administrative and general | 31.3 | 30.0 | 1.3 | 4.3 | |||||||||||
| Property and other taxes | 36.3 | 40.1 | (3.8 | ) | (9.5 | ) | |||||||||
| Depreciation and depletion | 56.9 | 52.4 | 4.5 | 8.6 | |||||||||||
| Total Operating Expenses (excluding fuel, purchased supply and direct transmission expense) | $ | 181.9 | $ | 177.3 | $ | 4.6 | 2.6 | % | |||||||
Consolidated operating expenses, excluding fuel, purchased supply and direct transmission expense, were
| Operating Expenses | |||
| 2024 vs. 2023 | |||
| Operating Expenses (excluding fuel, purchased supply and direct transmission expense) Impacting Net Income | |||
| Depreciation expense due to plant additions and higher depreciation rates | $ | 4.5 | |
| Electric generation maintenance | 2.0 | ||
| Labor and benefits(1) | 1.8 | ||
| Insurance expense | 0.5 | ||
| Technology implementation and maintenance expenses | 0.4 | ||
| Uncollectible accounts | (0.5 | ) | |
| Other | (1.9 | ) | |
| Change in Items Impacting Net Income | 6.8 | ||
| Operating Expenses Offset Within Net Income | |||
| Property and other taxes recovered in trackers, offset in revenue | (3.8 | ) | |
| Pension and other postretirement benefits, offset in other income(1) | 0.7 | ||
| Operating and maintenance expenses recovered in trackers, offset in revenue | 1.0 | ||
| Deferred compensation, offset in other income | (0.1 | ) | |
| Change in Items Offset Within Net Income | (2.2 | ) | |
| Increase in Operating Expenses (excluding fuel, purchased supply and direct transmission expense) | $ | 4.6 | |
| (1) In order to present the total change in labor and benefits, we have included the change in the non-service cost component of our pension and other postretirement benefits, which is recorded within other income on our Condensed Consolidated Statements of Income. This change is offset within this table as it does not affect our operating expenses. | |||
We estimate property taxes throughout each year, and update those estimates based on valuation reports received from the Montana Department of Revenue. Under Montana law, we are allowed to track the increases and decreases in the actual level of state and local taxes and fees and adjust our rates to recover the increase or decrease between rate cases less the amount allocated to FERC-jurisdictional customers and net of the associated income tax benefit.
Consolidated operating income for the three months ended June 30, 2024 was
Consolidated interest expense was
Consolidated other income was
Consolidated income tax expense was
The following table summarizes the differences between our effective tax rate and the federal statutory rate ($ in millions):
| Three Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | ||||||||||||||
| Income Before Income Taxes | $ | 35.9 | $ | 21.3 | |||||||||||
| Income tax calculated at federal statutory rate | 7.5 | 21.0 | % | 4.5 | 21.0 | % | |||||||||
| Permanent or flow-through adjustments: | |||||||||||||||
| State income tax, net of federal provisions | 0.0 | 0.1 | 0.3 | 1.3 | |||||||||||
| Flow-through repairs deductions | (3.0 | ) | (8.5 | ) | (1.7 | ) | (8.0 | ) | |||||||
| Production tax credits | (2.0 | ) | (5.6 | ) | (1.1 | ) | (5.4 | ) | |||||||
| Amortization of excess deferred income tax | (0.2 | ) | (0.5 | ) | (0.2 | ) | (1.1 | ) | |||||||
| Plant and depreciation flow-through items | 1.1 | 3.0 | 0.2 | 0.9 | |||||||||||
| Other, net | 0.8 | 2.3 | 0.1 | 1.4 | |||||||||||
| (3.3 | ) | (9.2 | ) | (2.4 | ) | (10.9 | ) | ||||||||
| Income tax expense | $ | 4.2 | 11.8 | % | $ | 2.1 | 10.1 | % | |||||||
We compute income tax expense for each quarter based on the estimated annual effective tax rate for the year, adjusted for certain discrete items. Our effective tax rate typically differs from the federal statutory tax rate primarily due to the regulatory impact of flowing through federal and state tax benefits of repairs deductions, state tax benefit of accelerated tax depreciation deductions (including bonus depreciation when applicable) and production tax credits.
Consolidated net income for the three months ended June 30, 2024 was
LIQUIDITY AND OTHER CONSIDERATIONS
Liquidity and Capital Resources
As of June 30, 2024, our total net liquidity was approximately
Earnings Per Share
Basic earnings per share are computed by dividing earnings applicable to common stock by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of common stock equivalent shares that could occur if unvested shares were to vest. Common stock equivalent shares are calculated using the treasury stock method, as applicable. The dilutive effect is computed by dividing earnings applicable to common stock by the weighted average number of common shares outstanding plus the effect of the outstanding unvested restricted stock and performance share awards. Average shares used in computing the basic and diluted earnings per share are as follows:
| Three Months Ended | |||||||
| June 30, 2024 | June 30, 2023 | ||||||
| Basic computation | 61,288,870 | 59,804,283 | |||||
| Dilutive effect of: | |||||||
| Performance share awards(1) | 68,478 | 45,391 | |||||
| Diluted computation | 61,357,348 | 59,849,674 | |||||
| Six Months Ended | |||||||
| June 30, 2024 | June 30, 2023 | ||||||
| Basic computation | 61,277,418 | 59,790,316 | |||||
| Dilutive effect of: | |||||||
| Performance share awards(1) | 56,065 | 29,200 | |||||
| Diluted computation | 61,333,483 | 59,819,516 | |||||
| (1) Performance share awards are included in diluted weighted average number of shares outstanding based upon what would be issued if the end of the most recent reporting period was the end of the term of the award. | |||||||
As of June 30, 2024, there were 35,933 shares from performance and restricted share awards which were antidilutive and excluded from the earnings per share calculations, compared to 21,890 shares as of June 30, 2023.
Adjusted Non-GAAP Earnings
We reported GAAP earnings of
| (in millions, except EPS) | ||||||
| Three Months Ended June 30, 2024 | ||||||
| Pre-tax Income | Net(1) Income | Diluted EPS | ||||
| 2024 Reported GAAP | $ | 35.9 | $ | 31.7 | $ | 0.52 |
| Non-GAAP Adjustments: | ||||||
| Unfavorableweather as compared to normal | 0.7 | 0.5 | 0.01 | |||
| 2024 Adj. Non-GAAP | $ | 36.6 | $ | 32.2 | $ | 0.53 |
| Three Months Ended June 30, 2023 | ||||||
| Pre-tax Income | Net(1) Income | Diluted EPS | ||||
| 2023 Reported GAAP | $ | 21.3 | $ | 19.1 | $ | 0.32 |
| Non-GAAP Adjustments: | ||||||
| Unfavorableweather as compared to normal | 1.8 | 1.3 | 0.03 | |||
| 2023 Adj. Non-GAAP | $ | 23.1 | $ | 20.4 | $ | 0.35 |
| (1) Income tax rate on reconciling items assumes blended federal plus state effective tax rate of | ||||||
Company Hosting Earnings Webcast
NorthWestern will also host an investor earnings webcast on Wednesday, July 31, 2024, at 3:30 p.m. Eastern time to review its financial results for the quarter ending June 30, 2024. To register for the webcast, please visit www.northwesternenergy.com/earnings-registration. After registration, a link to access the event will be emailed to the address provided. Please note that a unique and valid email address is required for each attendee to access the webinar. Please go to the site at least 10 minutes in advance of the webinar to register. An archived webcast will be available shortly after the event and remain active for one year.
NorthWestern Energy - DELIVERING A BRIGHT FUTURE
NorthWestern Energy Group, Inc., doing business as NorthWestern Energy, provides essential energy infrastructure and valuable services that enrich lives and empower communities while serving as long-term partners to our customers and communities. We work to deliver safe, reliable, and innovative energy solutions that create value for customers, communities, employees, and investors. We do this by providing low-cost and reliable service performed by highly-adaptable and skilled employees. We provide electricity and / or natural gas to approximately 775,300 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. Our operations in Montana and Yellowstone National Park are conducted through our subsidiary, NW Corp, and our operations in South Dakota and Nebraska are conducted through our subsidiary, NWE Public Service. We have provided service in South Dakota and Nebraska since 1923 and in Montana since 2002.
Non-GAAP Financial Measures
This press release includes financial information prepared in accordance with GAAP, as well as other financial measures, such as Utility Margin, Adjusted Non-GAAP pretax income, Adjusted Non-GAAP net income and Adjusted Non-GAAP Diluted EPS that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.
We define Utility Margin as Operating Revenues less fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion) as presented in our Condensed Consolidated Statements of Income. This measure differs from the GAAP definition of Gross Margin due to the exclusion of Operating and maintenance, Property and other taxes, and Depreciation and depletion expenses, which are presented separately in our Condensed Consolidated Statements of Income. A reconciliation of Utility Margin to Gross Margin, the most directly comparable GAAP measure, is included in the press release above.
Management believes that Utility Margin provides a useful measure for investors and other financial statement users to analyze our financial performance in that it excludes the effect on total revenues caused by volatility in energy costs and associated regulatory mechanisms. This information is intended to enhance an investor's overall understanding of results. Under our various state regulatory mechanisms, as detailed below, our supply costs are generally collected from customers. In addition, Utility Margin is used by us to determine whether we are collecting the appropriate amount of energy costs from customers to allow for recovery of operating costs, as well as to analyze how changes in loads (due to weather, economic or other conditions), rates and other factors impact our results of operations. Our Utility Margin measure may not be comparable to that of other companies' presentations or more useful than the GAAP information provided elsewhere in this report.
Management also believes the presentation of Adjusted Non-GAAP pre-tax income, Adjusted Non-GAAP net income and Adjusted Non-GAAP Diluted EPS is more representative of normal earnings than GAAP pre-tax income, net income and EPS due to the exclusion (or inclusion) of certain impacts that are not reflective of ongoing earnings. The presentation of these non-GAAP measures is intended to supplement investors' understanding of our financial performance and not to replace other GAAP measures as an indicator of actual operating performance. Our measures may not be comparable to other companies' similarly titled measures.
Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, the information under "Reconciliation of Non-GAAP Items." Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. We caution that while we make such statements in good faith and believe such statements are based on reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that we will achieve our projections. Factors that may cause such differences include, but are not limited to:
- adverse determinations by regulators, as well as potential adverse federal, state, or local legislation or regulation, including costs of compliance with existing and future environmental requirements, and wildfire damages in excess of liability insurance coverage, could have a material effect on our liquidity, results of operations and financial condition;
- the impact of extraordinary external events and natural disasters, such as a wide-spread or global pandemic, geopolitical events, earthquake, flood, drought, lightning, weather, wind, and fire, could have a material effect on our liquidity, results of operations and financial condition;
- acts of terrorism, cybersecurity attacks, data security breaches, or other malicious acts that cause damage to our generation, transmission, or distribution facilities, information technology systems, or result in the release of confidential customer, employee, or Company information;
- supply chain constraints, recent high levels of inflation for product, services and labor costs, and their impact on capital expenditures, operating activities, and/or our ability to safely and reliably serve our customers;
- changes in availability of trade credit, creditworthiness of counterparties, usage, commodity prices, fuel supply costs or availability due to higher demand, shortages, weather conditions, transportation problems or other developments, may reduce revenues or may increase operating costs, each of which could adversely affect our liquidity and results of operations;
- unscheduled generation outages or forced reductions in output, maintenance or repairs, which may reduce revenues and increase operating costs or may require additional capital expenditures or other increased operating costs; and
- adverse changes in general economic and competitive conditions in the U.S. financial markets and in our service territories.
Our 2023 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, reports on Form 8-K and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| Investor Relations Contact: | Media Contact: |
| Travis Meyer (605) 978-2967 | Jo Dee Black (866) 622-8081 |
| travis.meyer@northwestern.com | jodee.black@northwestern.com |
FAQ
What were NorthWestern Energy's Q2 2024 earnings per share?
What is the 2024 earnings guidance for NorthWestern Energy?
What strategic acquisitions did NorthWestern Energy announce in Q2 2024?
What rate review filings did NorthWestern Energy submit?
What is the dividend declared by NorthWestern Energy?
