- Third quarter 2024 GAAP EPS of $0.76, compared to $0.48 in
2023
- Third quarter 2024 adjusted non-GAAP EPS of $0.65, compared
to $0.49 in 2023
- Announces $0.65 per share quarterly dividend
- Revises 2024 earnings guidance in light of delayed Montana
interim rate decision
NorthWestern Energy Group, Inc. d/b/a NorthWestern Energy
(Nasdaq: NWE) reported financial results for the third quarter
2024. Net income for the period was $46.8 million, or $0.76 per
diluted share, as compared with net income of $29.3 million, or
$0.48 per diluted share, for the same period in 2023.
NorthWestern’s third quarter 2024 non-GAAP net income and non-GAAP
earnings per share were $39.7 million and $0.65, respectively,
compared to $30.0 million and $0.49 in 2023. See “Adjusted Non-GAAP
Earnings” and “Non-GAAP Financial Measures” sections below for more
information on these measures.
Third quarter earnings were driven by rate relief in Montana and
South Dakota, higher electric transmission revenues, and an income
tax benefit, partly offset by mild weather, insurance costs,
depreciation, and interest expense.
"As we continue to execute on our strategic
priorities, we are pleased to report another quarter of solid
earnings growth," said Brian Bird, President and CEO. "We remain
committed to providing reliable and affordable energy for our
customers. Yellowstone County Generating Station began to serve
customers in October, providing critical capacity as we go into the
winter season. Meanwhile, we are actively working with the
commissions in Montana, South Dakota, and Nebraska to advance our
rate reviews and ensure timely recovery of the substantial
investments we’ve made on our customers behalf."
THIRD QUARTER 2024 COMPARED TO THIRD
QUARTER 2023
The increase in net income was primarily due to new base rates
in Montana and South Dakota, electric transmission revenues,
electric retail volumes, Montana property tax tracker collections,
lower non-recoverable Montana electric supply costs, and an income
tax benefit from a change to the gas repairs safe harbor method.
These were offset in part by natural gas retail volumes,
depreciation, operating, administrative and general costs, and
interest expense. Diluted earnings per share increased as a result
of higher net income but was partially offset by increased average
shares outstanding due to equity issuances during 2023.
EARNINGS GUIDANCE
We are revising our 2024 non-GAAP EPS guidance range to $3.32 to
$3.47 from our original guidance of $3.42 to $3.62 in light of the
delay in interim rate relief in our Montana rate review. The
revised 2024 midpoint of approximately $3.40 represents a 4%
increase off our 2023 non-GAAP earnings per share of $3.27.
This guidance is based upon, but not limited to, the following
major assumptions:
- Normal weather in our service territories;
- Interim rates in Montana in December 2024;
- An effective income tax rate of approximately 9%-11%; 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 4% to 6% from a 2022 base year of
$3.18 diluted earnings per share on a non-GAAP basis. We expect
rate base growth of 4% to 6%. Our current capital investment
program is sized to provide for no equity issuances. Future
generation capacity additions or other strategic opportunities may
require equity financing.
Dividend Declared
NorthWestern Energy Group's Board of Directors declared a
quarterly common stock dividend of $0.65 per share payable December
31, 2024 to common shareholders of record as of December 13, 2024.
While currently above our targeted 60-70 percent dividend payout
range, over the longer-term we expect to maintain a payout within
the range.
Additional information regarding this release can be found in
the earnings presentation at
https://www.northwesternenergy.com/investors/earnings.
COMPANY UPDATES
Yellowstone County 175 MW plant
Construction of the new generation facility was substantially
completed and the plant placed in service in October 2024. The
lawsuit challenging the Yellowstone County Generating Station 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 September 30, 2024, total costs of
approximately $305.6 million have been incurred, with expected
total costs of approximately $310.0 million to $320.0 million.
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 - In July 2024, we filed a Montana electric
and natural gas rate review with the Montana Public Service
Commission (MPSC). The filing requests a base rate annual revenue
increase of $156.5 million for electric and $28.6 million for
natural gas. Our request is based on a return on equity of 10.80
percent with a capital structure including 46.81 percent equity,
and forecasted 2024 electric and natural gas rate base of $3.45
billion and $731.9 million, respectively. The electric rate base
investment includes the 175-megawatt natural gas-fired Yellowstone
County Generating Station, which was placed in service in October
2024.
Our filing included a request for interim base rates to be
effective October 1, 2024. Implementation of interim base rates, if
any, has been delayed beyond our requested effective date as the
MPSC has not yet made a decision on the interim rate request.
The MPSC has developed its procedural schedule for our rate
review request including a hearing scheduled to commence on April
22, 2025. If a final order is not received by May 23, 2025, which
is 270 days from acceptance of our filing, we intend to implement,
as permitted by the MPSC regulations, our requested rates, which
will be subject to refund, until a final order is received.
South Dakota Natural Gas Rate Review - In June 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 $6.0 million. Our request is based on a return on equity of
10.70 percent, a capital structure including 53.13 percent equity,
and rate base of $95.6 million. If a final order is not received by
December 21, 2024, interim base rates may go into effect.
Nebraska Natural Gas Rate Review - In June 2024, we filed a
natural gas rate review with the Nebraska Public Service Commission
(NPSC). The filing requests a base rate annual revenue increase of
$3.6 million. Our request is based on a return on equity of 10.70
percent, a capital structure including 53.13 percent equity, and
rate base of $47.4 million. Interim rates, which increased base
natural gas rates $2.3 million, were implemented on October 1,
2024. Interim rates will remain in effect on a refundable basis
until the NPSC issues a final order.
Environmental Protection Agency (EPA) Rules
On April 25, 2024, the EPA released Greenhouse Gas (GHG) Rules
for existing coal-fired facilities and new coal and natural
gas-fired facilities as well as Mercury and Air Toxics Standard
(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.
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 $39.0 million in cash, subject to certain
working capital and other agreed upon closing adjustments. The
transaction is subject to a number of customary closing conditions,
including MPSC approval, and we expect the acquisition to be
completed by the end of the first quarter of 2025.
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
$0. The acquisition would be effective December 31, 2025, subject
to the satisfaction of the closing conditions contained within the
Agreement. Under the terms of the Agreement, we will be responsible
for operating costs starting on January 1, 2026; while Puget will
retain responsibility for its pre-closing share of environmental
and pension liabilities attributed to events or conditions existing
prior to the closing of the transaction and for any future
decommission and demolition costs associated with the existing
facilities that comprise Puget's interest. The Agreement is subject
to customary conditions and approvals. The ultimate amount of
Puget's ownership interest we acquire is contingent on a
right-of-first-refusal held by other Colstrip owners which, if
exercised prior to expiration in fourth quarter 2024, would reduce
our acquired interest proportionately.
Acquisition of Puget’s entire 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), would 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.
Transmission Investment
In August 2024, the U.S. Department of Energy awarded a $700
million grant through the Grid Resilience and Innovation
Partnership (GRIP) program to advance the North Plains Connector
(NPC) Consortium project. The 415-mile, high-voltage direct-current
transmission line is intended to connect Montana's Colstrip
substation, of which we are the operator and a joint owner, to
central North Dakota, bridging the eastern and western U.S. energy
grids. The NPC Consortium includes potential upgrades to our
jointly owned Colstrip Transmission System and $70 million of the
award is earmarked for the Colstrip Transmission System Upgrade.
The NPC project, estimated to be a $3.6 billion investment, aims to
enhance grid reliability, support renewable energy integration, and
provide additional capacity across multiple states. We collaborated
with Grid United, the Montana Department of Commerce, and other
regional utilities on the successful GRIP grant application. The
project is a critical infrastructure investment that aligns with
our commitment to providing reliable and affordable energy to our
customers while also supporting broader grid resilience efforts in
the region. In addition to the Colstrip Transmission System
Upgrade, we are considering an investment in NPC and are engaged in
regional transmission development activities.
CONDENSED CONSOLIDATED STATEMENT OF
INCOME
(in millions)
Three Months Ended September
30,
Nine Months Ended September
30,
Reconciliation of gross margin to
utility margin:
2024
2023
2024
2023
Operating Revenues
$
345.2
$
321.1
$
1,140.4
$
1,066.1
Less: Fuel, purchased supply and direct
transmission expense (exclusive of depreciation and depletion shown
separately below)
87.9
88.9
339.1
322.0
Less: Operating and maintenance
55.9
53.2
167.4
163.9
Less: Property and other taxes
41.6
43.3
125.0
132.6
Less: Depreciation and depletion
57.0
52.2
170.6
157.8
Gross Margin
102.8
83.5
338.3
289.8
Operating and maintenance
55.9
53.2
167.4
163.9
Property and other taxes
41.6
43.3
125.0
132.6
Depreciation and depletion
57.0
52.2
170.6
157.8
Utility Margin(1)
$
257.3
$
232.2
$
801.3
$
744.1
(1) Non-GAAP financial measure. See
“Non-GAAP Financial Measures” below.
Three Months Ended September
30,
Nine Months Ended September
30,
(in millions, except per share
amounts)
2024
2023
2024
2023
Revenues
$
345.2
$
321.1
$
1,140.4
$
1,066.1
Fuel, purchased supply and direct
transmission expense(1)
87.9
88.9
339.1
322.0
Utility Margin (2)
257.3
232.2
801.3
744.1
Operating and maintenance
55.9
53.2
167.4
163.9
Administrative and general
34.9
29.4
106.7
94.1
Property and other taxes
41.6
41.8
125.0
131.0
Depreciation and depletion
57.0
52.2
170.6
157.8
Total Operating Expenses (3)
189.4
176.6
569.7
546.8
Operating income
67.9
55.6
231.6
197.3
Interest expense, net
(33.4
)
(28.7
)
(96.3
)
(85.1
)
Other income, net
9.1
4.1
19.6
12.9
Income before income taxes
43.7
31.0
155.0
125.1
Income tax benefit (expense)
3.2
(1.7
)
(11.4
)
(14.1
)
Net Income
46.8
29.3
143.6
111.0
Basic Shares Outstanding
61.3
60.4
61.3
60.0
Earnings per Share - Basic
$
0.76
$
0.48
$
2.34
$
1.85
Diluted Shares Outstanding
61.4
60.5
61.4
60.0
Earnings per Share - Diluted
$
0.76
$
0.48
$
2.34
$
1.85
Dividends Declared per Common Share
$
0.65
$
0.64
$
1.95
$
1.92
(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.
Note: Subtotal variances may exist due to
rounding.
RECONCILIATION OF PRIMARY CHANGES
DURING THE QUARTER
Three Months Ended
September 30, 2024 vs. 2023
Pre-tax Income
Income Tax (Expense) Benefit
(3)
Net Income
Diluted Earnings
Per Share
(in millions, except
EPS)
Third Quarter, 2023
$
31.0
$
(1.7
)
$
29.3
$
0.48
Variance in revenue and fuel, purchased
supply, and direct transmission expense(1) items impacting net
income:
Base rates
17.2
(4.4
)
12.8
0.21
Electric transmission revenue
5.9
(1.5
)
4.4
0.07
Electric retail volumes
3.6
(0.9
)
2.7
0.04
Montana property tax tracker
collections
1.5
(0.4
)
1.1
0.02
Montana natural gas transportation
0.9
(0.2
)
0.7
0.01
Non-recoverable Montana electric supply
costs
0.6
(0.2
)
0.4
0.01
Natural gas retail volumes
(0.3
)
0.1
(0.2
)
—
Production tax credits, offset within
income tax benefit
(0.2
)
0.2
—
—
Other
(1.2
)
0.3
(0.9
)
(0.01
)
Variance in expense items(2)
impacting net income:
Operating, maintenance, and
administrative
(5.5
)
1.4
(4.1
)
(0.07
)
Depreciation
(4.8
)
1.2
(3.6
)
(0.06
)
Interest expense
(4.7
)
1.2
(3.5
)
(0.06
)
Property and other taxes not recoverable
within trackers
(1.9
)
0.5
(1.4
)
(0.02
)
Gas repairs safe harbor method change
—
7.0
7.0
0.12
Other
1.5
0.6
2.1
0.03
Dilution from higher share count
(0.01
)
Third Quarter, 2024
$
43.6
$
3.2
$
46.8
$
0.76
Change
$
17.5
$
0.28
(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 25.3%.
EXPLANATION OF CONSOLIDATED
RESULTS
Three Months Ended September 30, 2024 Compared with the Three
Months Ended September 30, 2023
Consolidated gross margin for the three months ended
September 30, 2024 was $102.8 million as compared with $83.5
million in 2023, an increase of $19.3 million, or 23.1 percent.
This increase was primarily due to new base rates in Montana and
South Dakota, electric transmission revenues, electric retail
volumes, Montana property tax tracker collections, and lower
non-recoverable Montana electric supply costs. These were offset in
part by natural gas retail volumes, depreciation, and operating and
maintenance costs.
Three Months Ended
September 30,
(in millions)
2024
2023
Reconciliation of gross margin to
utility margin:
Operating Revenues
$
345.2
$
321.1
Less: Fuel, purchased supply and direct
transmission expense (exclusive of depreciation and depletion shown
separately below)
87.9
88.9
Less: Operating and maintenance
55.9
53.2
Less: Property and other taxes
41.6
43.3
Less: Depreciation and depletion
57.0
52.2
Gross Margin
102.8
83.5
Operating and maintenance
55.9
53.2
Property and other taxes
41.6
43.3
Depreciation and depletion
57.0
52.2
Utility Margin(1)
$
257.3
$
232.2
(1) Non-GAAP financial measure. See
“Non-GAAP Financial Measures” below.
Three Months Ended September
30,
2024
2023
Change
% Change
(dollars in millions)
Utility Margin
Electric
$
225.7
$
202.0
$
23.7
11.7
%
Natural Gas
31.6
30.2
1.4
4.6
Total Utility Margin(1)
$
257.3
$
232.2
$
25.1
10.8
%
(1) Non-GAAP financial measure. See
“Non-GAAP Financial Measures” below.
Consolidated utility margin for the three months ended
September 30, 2024 was $257.3 million as compared with $232.2
million for the same period in 2023, an increase of $25.1 million,
or 10.8 percent.
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
$
17.2
Transmission revenue due to market
conditions and rates
5.9
Electric retail volumes
3.6
Montana property tax tracker
collections
1.5
Montana natural gas transportation
0.9
Non-recoverable Montana electric supply
costs
0.6
Natural gas retail volumes
(0.3
)
Other
(1.2
)
Change in Utility Margin Items
Impacting Net Income
28.2
Utility Margin Items Offset Within Net
Income
Property and other taxes recovered in
revenue, offset in property and other taxes
(2.0
)
Operating expenses recovered in revenue,
offset in operating and maintenance expense
(0.9
)
Production tax credits, offset in income
tax expense
(0.2
)
Change in Utility Margin Items Offset
Within Net Income
(3.1
)
Increase in Consolidated Utility
Margin(1)
$
25.1
(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 commercial and
industrial demand, and customer growth in all jurisdictions, partly
offset by unfavorable weather in South Dakota impacting residential
demand. Lower natural gas retail volumes were driven by unfavorable
weather in Montana partly offset by customer growth in all
jurisdictions.
Under the PCCAM, net supply costs higher or lower than the PCCAM
base rate (PCCAM Base) (excluding qualifying facility costs) are
allocated 90 percent to Montana customers and 10 percent to
shareholders. For the three months ended September 30, 2024, we
over-collected supply costs of $5.9 million resulting in a
reduction to our under collection of costs, and recorded an
increase in pre-tax earnings of $0.7 million (10 percent of the
PCCAM Base cost variance). For the three months ended September 30,
2023, we over-collected supply costs of $1.0 million resulting in a
reduction to our under collection of costs, and recorded an
increase in pre-tax earnings of $0.1 million.
Three Months Ended September
30,
2024
2023
Change
% Change
($ in millions)
Operating Expenses (excluding fuel,
purchased supply and direct transmission expense)
Operating and maintenance
$
55.9
$
53.2
$
2.7
5.1
%
Administrative and general
34.9
29.4
5.5
18.7
Property and other taxes
41.6
41.8
(0.2
)
(0.5
)
Depreciation and depletion
57.0
52.2
4.8
9.2
Total Operating Expenses (excluding
fuel, purchased supply and direct transmission expense)
$
189.4
$
176.6
$
12.8
7.2
%
Consolidated operating expenses, excluding fuel,
purchased supply and direct transmission expense, were $189.4
million for the three months ended September 30, 2024, as compared
with $176.6 million for the three months ended September 30, 2023.
Primary components of the change include the following (in
millions):
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
$
4.8
Insurance expense, primarily due to
increased wildfire risk premiums
3.4
Labor and benefits(1)
3.0
Electric generation maintenance
1.9
Property and other taxes not recoverable
within trackers
1.9
Technology implementation and maintenance
expenses
(0.1
)
Partial recovery from previously impaired
alternative energy storage investment
(0.5
)
Uncollectible accounts
(1.1
)
Other
(1.1
)
Change in Items Impacting Net
Income
12.2
Operating Expenses Offset Within Net
Income
Property and other taxes recovered in
trackers, offset in revenue
(2.0
)
Operating and maintenance expenses
recovered in trackers, offset in revenue
(0.9
)
Deferred compensation, offset in other
income
2.8
Pension and other postretirement benefits,
offset in other income(1)
0.7
Change in Items Offset Within Net
Income
0.6
Increase in Operating Expenses
(excluding fuel, purchased supply and direct transmission
expense)
$
12.8
(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 Federal
Energy Regulatory Commission-jurisdictional customers and net of
the associated income tax benefit.
Consolidated operating income for the three months ended
September 30, 2024 was $67.9 million as compared with $55.6 million
in the same period of 2023. This increase was primarily due to new
base rates in Montana and South Dakota, electric transmission
revenues, electric retail volumes, Montana property tax tracker
collections, and lower non-recoverable Montana electric supply
costs. These were offset in part by natural gas retail volumes,
depreciation, operating, and administrative and general
expenses.
Consolidated interest expense was $33.4 million for the
three months ended September 30, 2024 as compared with $28.7
million for the same period of 2023. This increase was due to
higher borrowings and interest rates, partly offset by higher
capitalization of Allowance for Funds Used During Construction
(AFUDC).
Consolidated other income was $9.1 million for the three
months ended September 30, 2024 as compared with $4.1 million for
the same period of 2023. This increase was primarily due to higher
capitalization of AFUDC, a decrease in the non-service component of
pension expense, and an increase in the value of deferred shares
held in trust for deferred compensation.
Consolidated income tax benefit was $3.2 million for the
three months ended September 30, 2024 as compared to income tax
expense of $1.7 million for the same period of 2023. Our effective
tax rate for the three months ended September 30, 2024 was (7.3)%
as compared with 5.5% for the same period in 2023. During the third
quarter of 2024 we filed a tax accounting method change with the
Internal Revenue Service consistent with the guidance for natural
gas transmission and distribution property. This resulted in an
income tax benefit of $7.0 million during the three months ended
September 30, 2024, related to repair costs that were previously
capitalized for tax purposes in the 2022 and prior tax years.
The following table summarizes the differences between our
effective tax rate and the federal statutory rate ($ in
millions):
Three Months Ended September
30,
2024
2023
Income Before Income Taxes
$
43.7
$
31.0
Income tax calculated at federal statutory
rate
9.2
21.0
%
6.5
21.0
%
Permanent or flow-through adjustments:
State income tax, net of federal
provisions
0.1
0.1
0.1
0.4
Gas repairs safe harbor method change
(7.0
)
(16.0
)
—
—
Flow-through repairs deductions
(4.6
)
(10.5
)
(4.2
)
(13.5
)
Production tax credits
(2.4
)
(5.6
)
(1.3
)
(4.1
)
Amortization of excess deferred income
tax
(0.2
)
(0.5
)
(0.3
)
(1.0
)
Income tax return to accrual
adjustment
—
—
0.4
1.3
Plant and depreciation flow-through
items
1.8
4.2
0.4
1.2
Other, net
(0.1
)
—
0.1
0.2
(12.4
)
(28.3
)
(4.8
)
(15.5
)
Income tax (benefit) expense
$
(3.2
)
(7.3
)%
$
1.7
5.5
%
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
September 30, 2024 was $46.8 million as compared with $29.3 million
for the same period in 2023. This increase was primarily due to new
base rates in Montana and South Dakota, electric transmission
revenues, electric retail volumes, Montana property tax tracker
collections, lower non-recoverable Montana electric supply costs,
and an income tax benefit from a change to the gas repairs safe
harbor method. These were offset in part by natural gas retail
volumes, depreciation, operating, administrative and general costs,
and interest expense.
LIQUIDITY AND OTHER
CONSIDERATIONS
Liquidity and Capital Resources
As of September 30, 2024, our total net liquidity was
approximately $316.5 million, including $2.5 million of cash and
$314.0 million of revolving credit facility availability with no
letters of credit outstanding. This compares to total net liquidity
one year ago at September 30, 2023 of $378.1 million.
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
September 30, 2024
September 30, 2023
Basic computation
61,301,696
60,442,164
Dilutive effect of:
Performance share awards(1)
95,279
35,533
Diluted computation
61,396,975
60,477,697
Nine Months Ended
September 30, 2024
September 30, 2023
Basic computation
61,285,570
60,010,609
Dilutive effect of:
Performance share awards(1)
69,136
31,311
Diluted computation
61,354,706
60,041,920
(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 September 30, 2024, there were 16,015 shares from
performance and restricted share awards which were antidilutive and
excluded from the earnings per share calculations, compared to
32,649 shares as of September 30, 2023.
Adjusted Non-GAAP Earnings
We reported GAAP earnings of $0.76 per diluted share for the
three months-ended September 30, 2024 and $0.48 per diluted share
for the same period in 2023. Adjusted Non-GAAP earnings per diluted
share for the same periods are $0.65 and $0.49, respectively. A
reconciliation of items factored into our Adjusted Non-GAAP diluted
earnings are summarized below. The amount below represents a
non-GAAP measure that may provide users of this data with
additional meaningful information regarding the impact of certain
items on our expected earnings. More information on this measure
can be found in the "Non-GAAP Financial Measures" section
below.
(in millions, except EPS)
Three Months Ended September
30, 2024
Pre-tax Income
Net(1) Income
Diluted EPS
2024 Reported GAAP
$
43.7
$
46.8
$
0.76
Non-GAAP
Adjustments:
Unfavorable
weather as compared to normal
0.4
0.3
0.01
Partial recovery from a previously
impaired alternative energy storage investment
(0.5
)
(0.4
)
(0.01
)
Natural gas repairs safe harbor method
change
—
(7.0
)
(0.11
)
2024 Adj. Non-GAAP
$
43.6
$
39.7
$
0.65
Three Months Ended September
30, 2023
Pre-tax Income
Net(1) Income
Diluted EPS
2023 Reported GAAP
$
31.0
$
29.3
$
0.48
Non-GAAP
Adjustments:
Unfavorable
weather as compared to normal
0.9
0.7
0.01
2023 Adj. Non-GAAP
$
31.9
$
30.0
$
0.49
(1) Income tax rate on reconciling items
assumes blended federal plus state effective tax rate of 25.3%.
Company Hosting Earnings Webcast
NorthWestern will also host an investor earnings webcast on
Wednesday, October 30, 2024, at 3:00 p.m. Eastern time to review
its financial results for the quarter ending September 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, NorthWestern Corporation, and our
operations in South Dakota and Nebraska are conducted through our
subsidiary, NorthWestern Energy Public Service Company. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028378519/en/
Investor Relations Contact: Travis Meyer (605) 978-2967
travis.meyer@northwestern.com
Media Contact: Jo Dee Black (866) 622-8081
jodee.black@northwestern.com
NorthWestern Energy (NASDAQ:NWE)
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