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DATE

Thursday, July 31, 2025, at 3:30 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Brian Bird
  • Chief Financial Officer — Crystal Lail

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RISKS

  • Montana property tax legislation: Crystal Lail reported a $0.05 detriment in Q2 2025. We do expect that detriment to have some continuance throughout the back part of the year.
  • PCM headwinds: Crystal Lail stated that PCM was a detriment of $0.02 in Q2 2025, with ongoing headwinds expected through the remainder of 2025.

TAKEAWAYS

  • GAAP Diluted EPS: $0.35 GAAP diluted EPS in Q2 2025, down from $0.52, reflecting lower earnings primarily due to the timing of rate decisions and unfavorable weather.
  • Non-GAAP Diluted EPS: $0.40 non-GAAP in Q2 2025, down from $0.53 non-GAAP in Q2 2024, including a $0.03 adverse weather adjustment and a CREP penalty adjustment consistent with prior treatment.
  • 2025 Non-GAAP Guidance: Initiated 2025 non-GAAP guidance at $3.53–$3.65 per share, contingent upon the outcome of the Montana rate review, with a final decision expected in the fourth quarter of 2025 and retroactive to May 23.
  • Dividend: Declared a dividend of $0.66 per share, payable Sept. 30, 2025, to shareholders of record as of Sept. 15, 2025, with a stated dividend yield of approximately 5%.
  • Rate Impact and Regulatory Settlement: $0.24 margin improvement attributed to interim and permanent rate actions in Montana, South Dakota, and Nebraska in Q2 2025; full settlement achieved for Montana gas case and partial settlement for Montana electric case, with remaining contested items focused on facility cost recovery.
  • Capital Investment Plan: Five-year regulated capital investment target affirmed at $2.75 billion, with approximately 80% allocated to transmission and distribution investment over the five-year capital plan.
  • Transmission and Gas Segment Operating Margin: Quarterly improvement of $0.07 from electric transmission in Q2 2025, $0.02 from gas transportation in Q2 2025, offset by other margin impacts in the period.
  • Wildfire Legislation: Brian Bird highlighted the newly enacted Montana bill eliminating strict liability for utility wildfire operations and introducing a “negligent standard” based on an approved mitigation plan.
  • Data Center Expansion: Third letter of intent signed with Quantica for a 500+ MW data center project; The company is confident that at least one energy service agreement related to a data center letter of intent will be signed by October 2025, with nine large-load customer requests in the data center request stage, divided between Montana and South Dakota.
  • Colstrip Resource Acquisition: An additional 370 MW from Puget will be acquired on Jan. 1, 2026, bringing NorthWestern’s Colstrip ownership to 55% and shifting to a long generation position, which enables new large-load customer opportunities.

SUMMARY

NorthWestern Energy Group (NWE 0.64%) reported lower diluted EPS on both GAAP and non-GAAP bases in Q2 2025 compared to the prior year, primarily citing the timing of rate relief and adverse weather, but management stated results align with expectations. The company initiated non-GAAP earnings guidance of $3.53–$3.65 per share for 2025, conditional on the outcome of the Montana rate review, with adjustments anticipated retroactive to May 23. Management underlined the impact of newly enacted Montana legislation on wildfire liability, which provides significant risk reduction and regulatory clarity for future utility operations.

  • Crystal Lail clarified that first-half net income and EPS remain relatively flat compared to the prior period (first half of 2024), with year-to-date performance supported by a solid first quarter.
  • Brian Bird said, the company will go from a short position to a long position with the 592 megawatts associated with Colstrip on Jan. 1, 2026, pointing to future capacity available for large customers.
  • The company indicated all 2025 debt financing needs have been completed, with the current quarter cash flow lower due to rate recovery timing, but projected to conclude above the downside threshold for the year.
  • Brian Bird emphasized, “We intend to serve these [data center] customers regardless, but we certainly intend and would like to … serve them in a state-regulated basis,” expressing flexibility between state and FERC regulation for large load projects.
  • A regulatory filing to address the recovery of Colstrip-related costs is expected in Q3 2025, with management maintaining options for both state and FERC-regulated service structures depending on commission decisions.

INDUSTRY GLOSSARY

  • CREP penalty: Cost Recovery and Expense Penalty adjustment excluded in non-GAAP results.
  • PCM: Power Cost Mechanism, a variable cost recovery mechanism impacting company margin.
  • LOI (Letter of Intent): A preliminary agreement indicating planned negotiation of more detailed contracts, such as for data center projects or major customers.
  • FERC: Federal Energy Regulatory Commission, the U.S. federal agency overseeing interstate transmission of electricity and wholesale energy sales.
  • ESA (Energy Service Agreement): A binding contract for the provision and purchase of electricity between a utility and a large load or data center customer.
  • CPCN: Certificate of Public Convenience and Necessity, authorization from a regulator permitting investment in new utility infrastructure.
  • MPSC: Montana Public Service Commission, regulatory authority over Montana utility rates and service terms.

Full Conference Call Transcript

Brian Bird: Thanks, Travis. Recent highlights for the quarter. We have reported GAAP diluted EPS of $0.35. With some adjustments, the non-GAAP diluted EPS is $0.40 for the quarter. We're initiating our 2025 earnings guidance range of $3.53 to $3.65. We're earning our long-term rate base and earnings per share growth rate targets of 4% to 6%. We completed our acquisition of the Energy West and Cutbank Gas facilities, adding 33,043 valued employees. We entered into our third letter of intent with Quantica, a 500-plus megawatt data center developer. And we declared a dividend of $0.66 per share payable September 30, 2025, to shareholders of record as of September 15, 2025. The Northwestern value proposition continues.

We continue to have a very strong dividend yield right around 5%. That plus our 4% to 6% EPS growth range based upon a five-year capital worth about $2.75 billion. And arguing about 80% of that is in certainly noncontroversial transmission and distribution investment. On a combined basis, that gets us to a 9% to 11% total return. We do have some incremental opportunities to invest incremental capital and grow our earnings. Things like data centers and new large load opportunities that we'll discuss. And plus FERC regional transmission and also any incremental generating capacity or gas transmission, for instance, anything like that to get us over 11% total return.

And with that, I'm gonna hand it back over to Crystal for the second quarter financial review.

Crystal Lail: Thank you, Brian. Coming to you from Sunny Bozeman here in my comments today, I will cover our second quarter 2025 results. Update you on some key regulatory proceedings. I think you all know we've been busy here in the quarter on that front. And then also provide you our 2025 outlook which we had indicated we would provide following the month in a rate review hearing. So starting on slide seven, you will see that our earnings for the second quarter were $0.35 on a GAAP basis. That's compared with $0.52 in the prior period. On an adjusted non-GAAP basis, earnings were $0.40 as compared with $0.53 in the prior period.

Obviously, a notable decline there in our second quarter results when you think about and compare them to the prior year. Certainly impacted by the lack of interim rates and timing of those decisions. But I would point out that these results are in line with our expectations and start the year where we think we need to be. I'll provide more color on that and our outlook as I get to those slides. Moving to slide eight, just to remind you then what does that look like from a year-to-date results perspective? You'll see we're pretty flat against the prior period. Our earning results for the first half with net income and EPS in line with 2024.

You'll recall that we started out the year with a solid first quarter, and then our year-to-date results reflect that. Moving to Slide nine to give you a bit more detail on what happened during the quarter. You'll see the bar charts here of what are the significant drivers, quarterly earnings were driven primarily by the key topics of rate recovery. You'll see that in the first part of the left here. Offset by, in the second quarter, a bit of unfavorable weather. And certainly pressures at the operating cost, depreciation, and interest lines. Again, all in line with our expectations of where we thought we'd be here in the second quarter.

To give you a bit more detail on the margin portion of that, Slide 10. You'll see that the impact of rates, both interim rates and final rates, drove $0.24 of margin in improvement in the quarter. Again, that reflects the impact of the Montana rate review moving from the amount of interim results that were in there from, think, up till late May. To the adjusted interim rates that were put in at that point, and then also gas rates in both South Dakota and Nebraska. Again, $0.24 from the impacts of those two buckets. In addition, I think Brian mentioned lots around transmission, but you'll see both electric and gas transmission, show improved results for us.

That's $0.07 on the electric transmission side and $0.02 on the gas transportation side, respectively. Those are offset by unfavorable weather, and usage of $0.09 for the quarter and then also impacts of Montana property tax legislation, you'll see that's a $0.05 detriment for the quarter. We do expect that detriment to have some continuance throughout the back part of the year. Again, there was new property tax legislation enacted in the state of Montana. Adjusting the amount that is collected through our bill. In addition, the PCM was a detriment of $0.02 and a quarter. We talked about that last quarter that we would expect to see some continued headwinds there. Throughout 2025.

Moving to slide 11, to discuss our adjusted items. So I've already just mentioned on the margin, slide that weather unfavorably impacted us. You'll see here that was $0.03 in the second quarter. And that compares to a $0.01 unfavorable add back in 2024. So you can see a $0.02 swing there. Versus the prior period. In addition, we've adjusted out the impact of a CREP penalty, and that is consistent with prior treatment of that item. And when we reported an amount related to that, we have adjusted that out. That results in adjusted earnings as I have reflected earlier, of $0.40 for the second quarter compared to $0.53 in 2024.

Moving to slide 12, We talked about on our first quarter call our financing plans remain unchanged from that. We'd also discussed that we'd already executed upon any financing needs for the year, so our debt financing needs were taken care of. So no changes to our view on financing for the year. And you'll see from a credit cash flow perspective, a little bit of a dip in our cash flows for the quarter, again, reflecting the timing of that rate recovery and relief, but we expect to conclude the year above our downside threshold. We are making good progress there. Moving to Slide 13 to discuss regulatory updates. I'll comment on our Montana rate review proceedings.

We have previously announced a full settlement on our gas case. And a partial settlement in the electric case. The remaining contested items are primarily related to the recovery of our Yelp's own generating facility and the Pecan base. We were pleased to be able to know, the tremendous work it took to narrow the focus of that proceeding, having a solid hearing where, I would say, largely really impressive group of about 30 employees who represented the company and how we serve our customers very well in front of the commission. With that hearing concluded, we moved on and filed opening brief and we expect an outcome in the ultimate proceeding sometime in the fourth quarter.

So with that hearing concluded, moving to slide 15, I'll discuss our outlook for 2025. We are pleased with our start to the year. And introducing our 2025 Brian alluded to, our non-GAAP guidance of $3.53 to $3.65. Would note that this includes some significant assumptions, and one of those is with regard to the outcome in our Montana rate review. While we await an outcome, we are reporting revenue consistent with our settlement position. And we expect to record ultimately a final adjustment to whatever if that's applicable, whatever the outcome in the proceeding.

But I would note that final decision when received and, again, likely in the fourth quarter of this year will be retroactive back to May 23. This guidance is consistent with our commitment to deliver on a board of 6% long-term earnings growth off of our base of 2024, which is $3.40. Additional key and important details are available on slide 16 for your review. Moving to slide 17 and concluding my comments, you'll see our five-year regulated capital investment expectations remain unchanged. And our execution in the first half of the year is on track. And with that, I will turn it back to Brian.

Brian Bird: Thanks, Crystal. On page 19, it mentions the Montana wildfire bill. I should say we should not call that Montana wild law. Four nineties now been passed as you probably all well aware had nearly unanimous support in the state. I would argue, and I think Chad GBT would agree with me. I think the Montana and Utah bills are seen as the best protection for utilities in the industry. The nice thing about the lot south, the very you know, half the battle is the fact we no longer have to deal with strict liability in the state for any utility operations related to wildfire. Strict liability cannot be applied to utility operations related to wildfire.

Incrementally, we do need to get our wildfire mitigation plan ultimately approved. But with that approval, we will receive a negligent standard that's based on Montana-specific circumstances, not California, for instance. More importantly to me, there'd be a rebuttable presumption that utility acted reasonably if it substantially followed the approved wildfire plan. In other words, that burden of proof were now rest on the plaintiffs. Not on the utility. And damages associated with that, we as we'd expect, we should be responsible for economic damages to property. Always have been.

But the protections we receive on noneconomic damages would only be bodily injury or death occurs, And from a punitive perspective, only would come into play with clear and convincing evidence of gross negligent intent. So feel very, very good about this. Obviously, like to get our wildfire plan approved in front of the commission. And we will be making that filing here shortly sometime in August. Our that was our number one priority from a bill perspective. During the legislative session. And so that was great. And I'll come our second most important bill was senate bill three zero one, which is the transit transmission bill that's also law.

And effectively has given us a CPCN, a associated with our regional transmission investment. In essence, giving us better certainty or greater certainty we'll we can prudently invest in our utilities and get fair treatment upon receiving our CPCN. In essence, once the project's done, we can argue if we spent more than we invested more than we initially planned, obviously, that comes into place. But this gives us much greater certainty as we continue to think about how we invest from a regional transmission perspective in large projects. I'll talk more about those projects in a moment. So great legislative outcome.

I know we talked about it in the first quarter, but the second quarter is when these things became law. So I wanna reiterate those two great outcomes. In 2025. Large load customers, slide 21, those are primarily data centers. And as you saw the announcement today, regarding Quantica, we now have our third letter of intent in Montana. And I think what I would say here on Montana is on January 1, 2026, we will go from a short position to a long position with the 592 megawatts associated with Colstrip. And I'll speak to Colstrip specifically in a moment. But being in that long position has given us an opportunity to serve large load customers.

And, what we need to do ultimately is go arm and arm with these large load customers You go into the MPSC with a tariff that protects customers. But also certainly something that they want to they can live with as a data center. We're we're intend to do just that, We have some time. The these large load data centers aren't really coming into play really until 2027. We have some time, and we plan to file in probably 26 tariffs with them to get service as a state regulated resource, if you will. But if in fact, we are turned down from the commission for whatever reason, we intend to serve these customers on a FERC regulated basis.

So we intend to serve these customers regardless but we certainly intend and would like to with the support of the Montana Public Service Commission, serve them in a state regulated basis. In South Dakota, we continue to have significant interest there as well. I'll acknowledge that the lack of a sales tax certainly helps prospects and or hurts. Prospects in South Dakota. We still have quite a bit of interest and continue to work with hyperscalers and others there. And so we're excited about the opportunities that we're seeing in front of us on data centers.

We need to capture those, and I'll and from a lot of intent perspective, I think by the time we have this next call in October, we expect to have at least one of these LOIs in place. At that point in time. Moving forward, the data center process on page 22, we at our we have increasing interest in data center requests and high level assessments. Continue to moving through those processes. Letter of intent, mentioned our third and I'm sure you saw the press release separately on Quantica. And excited. We're and working with them. These are folks that have worked in Montana in the past. With talent and at the Colstrip Plan and many of their employees.

And so we know them well, and, we're excited to work with them. To move their projects forward. And I mentioned energy service agreements. We'd like the next time we talk, at least I wanna see one or two in that queue count. That particular item. I mentioned regional transmission opportunities on slide 23. Continue to stay very active with Bridge United and North Plains Connector and the and our own project we're working with them I call the Montana, the Idaho project through the Southwest Montana into Idaho and thus elsewhere from there, of course, We continue to look at other opportunities on our path and also with the toll strip transmission line itself to increase capacity.

So excited about transmission opportunities, and I'd argue even more so now that we have our CPC in. Regarding incremental full strip capacity, little bit of history on upholstered for a second. You might recall when we acquired the Avista piece, we were definitely short from a resource adequacy perspective, and that incremental 222 megawatts fits perfectly into our portfolio to serve our existing customers. And actually help us achieve resource adequacy on January 1, 2026. In addition, we bought the 370 megawatts from Puget. That we will be buying on January 1, 2026.

That incremental 370 really helped us achieve a 55% ownership at Colstrip as a whole And I think many of you are well aware many of those owners didn't intend to be in Colstrip long term. And so we believe that 55% ownership actually protected the plant from being shut down. Having said that, when we made those decisions, a couple things weren't necessarily well known at the time. We didn't know the federal actions that have been taken that have certainly helped pull strip from a viability standpoint and a cost perspective on it going forward. That has certainly been a tailwind. And, obviously, the ability to serve large load customers at data centers work much of a thing.

When you're negotiating this. So this is just a great opportunity for us. To continue to stay engaged in FOLstrip And, ultimately, as we've mentioned before, we see Colstrip as an energy hub. And a great opportunity for us to continue to operate at that plant till we can find something that's cleaner, provides the same dispatch characteristics sometime in the future and we're excited to working with the Polar community and the state of Montana to ultimately see that come to fruition. And with that, from a conclusion standpoint, I mean, I think it's a pretty good quarter. I think we're in pretty good shape on a year to date basis. We feel good about where we are.

From year end guidance perspective. And I think, as Crystal pointed out, we've working on a lot of things for the quarter and continue to move the ball in terms of improving shareholder value for our shareholders. Thank you very much. And I guess we'll go to mister Meyer to ask about Yep. I will open the queue up for questions.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from the line of Jeremy Tonet with JPMorgan.

Aidan Kelly: Hey. Good afternoon. This is actually Aidan Kelly on for Jeremy.

Brian Bird: Aidan. Hey.

Aidan Kelly: Yeah. So just on the data center front, could you give could you offer an updated sense on the potential timing to sign ESAs for the three data centers that are currently under LOIs. Are you waiting on a transmission service agreement study to wrap up at this point, or are there any other gating items here to move these projects forward?

Brian Bird: Yeah. We're wrapping up on the transmission service issue side in the first two. And I'd argue those are certainly in earlier stages from an LOI we just signed the plan of if you will, here recently. And so as I mentioned earlier, I think by the time we have this call, in October I'd like to think at least one of the either Atlas or Sevi will be an ESA, have an assigned ESA by that point. I'd like to think both of them will. Very confident at least one of them.

Aidan Kelly: Understood. Understood. That's good to hear. And then, I guess, just know, with this pipeline kind of expanding today, could you speak to how you are thinking about addressing load requirements, like, in the scenario that this data center interest develops beyond existing capacity. I know you mentioned you would also look to work with regulators to kinda structure tariffs. In '26, so maybe just curious on that end. Then also, like, you know, the thoughts on the possibility to integrate more utility owned generation in the scenario of excess demand in Montana.

Brian Bird: Yeah. I think the because of the need, obviously, for speed of deliverability here, We're working with these data centers, and in fact, they are planning to build some of their own generation to serve these data centers. We want to work with them on that. And, ultimately, from our ability to put those into rates, we talked to have been talking to them potentially about build own transfer, build transfer capabilities. That allows us to demonstrate that those resources from a preapproval perspective gives us time to ultimately get approval from the Commission to actually own them.

And, again, if for whatever reason, if the MPSC doesn't support that, we will find a means and a FERC regulated basis to do the same.

Aidan Kelly: Got it. Got it. Understood. And then maybe just one last one if I could. Just looking at the queue count of nine customers in the data center, like, request stage, Could you just kinda quantify, if you could, like, how many are in Montana you know, versus South Dakota? That's a that's a good question.

Brian Bird: I would say I think it's a about the same. And you could say, jeez, Brian, you can't divide nine and a half four and a half. But I'd argue they're relatively the same.

Aidan Kelly: Okay. Okay. That's good to know. Thanks. I'll leave it there.

Operator: Next question comes from the line of Ross Fowler with Bank of America.

Ross Fowler: Good afternoon, Brian Crystal. Congrats on a good quarter and a good update here. So maybe following on Jeremy's question a little bit. Obviously, these data that are coming in by the end of the next decade Obviously, that keeps the tariff under the right tariff would help affordability. But when do we flip over to that new generation need capital being deployed? Like, when do we drive to that sort of what you're talking about on slide four there, 6% or higher growth? And is there a transmission component to that as well? Yeah. I would say this. In essence, to serve them, there's gonna be necessary investment on our system.

I'd argue from a interconnection standpoint, from a transmission perspective. So that capital being deployed relatively quickly during this process. If in fact from a build transfer perspective, we'd like to do that as soon as the generation is available to serve those customers. So that would be you know, relatively soon. Okay. And it's, know, in quant I'm sorry. Go ahead. Sorry, Ross. Just to be more clear on that point. You're seeing a 2027 timetable, and that is a bit of a ramp up. You'll notice that much of the build of particularly I'll pick on the 500 megawatts. It's gonna be twenty thirty for them. So this is gonna be over time, a relative built.

But we want to be and talking particularly with Cheyvi and Quantica because these are large data center plans. We've had very, very good conversations about the build transfer aspects here. Yeah. And if I if I understand Quantica, correctly, I mean, it was created three days ago, but this is this is backed by private equity. Right? It's backed by uncapic investments. It's been around since, like, 1990. Yeah. And I pretty close. We've met Customer. Yeah, Ross. And I know one day they rolled out their plan, but we've been talking to Quantica for some time now. It's it's been at least six months. And we know these folks well from their talent days.

We met with all of Quantica and the NCAP folks early on in this process, and so we feel good about who they are and what they're gonna bring to the table to Montana. Fantastic. And I apologize for the feedback on this end of the line. We're having a thunderstorm roll through New York right now. So there you go. Hey. Have a great afternoon, Rob.

Brian Bird: Good to hear your voice, Ross. Thanks, Ross. No worries.

Operator: Take care. Your next question comes from the line of Nicholas Campanella with Barclays.

Nicholas Campanella: Hey. Good afternoon. Thanks for all the updates.

Brian Bird: Hey, Nick. Nick, I only your mother calls you Nicholas. Right? Sorry, Nick. Just kidding. You hear me? Either or. Either or. Nicholas is more respectful of you. Hey. So just on the on the DC ramp, just thanks for clarifying on, like, when you think you're gonna get the ESAs in place. If you do get that by the third quarter, just what is the ramp of the megawatts on the system? Like, what year would it hit? Is it is it more '27 and beyond? Could it could you see some uptake in '26? Just how are you kinda thinking through that? Yeah.

I would say that the step in '26 is gonna be relatively small, just in essence from a construction standpoint, whatever megawatts are needed there. So I would stay focused on '27. Appreciate it. And then just you kind of anticipate handling the cold strip cost once you acquire the facility in '26? I know that there's some pending processes and we have you know, some variability about how that would get kinda captured in the rates. But you know, if you were able to keep that merchant, is that an option? And how do you feel about the growth rate in that scenario?

Crystal Lail: Yeah. Nick, I'll take a stab at it, and Brian will bet clean up on this one. Your question is excellent as to our where we're headed with Colstrip. I would just say two things related to that. One, there's, as you guys know, we've entered into two transactions, one to take a business portion and another to take Puget's Vista portion. We believe, is needed to serve existing customers, at least a portion of that. And expect to make a filing here sometime in Q3 propose a process to get us really to the next rate review to recover those costs. The Puget megawatts wouldn't be needed to as you look at our load today, just serve regulated load.

This kinda goes back to what Brian was addressing with our ability to serve large load We expect to serve large loads. Whether it's Montana regulated or FERC regulated, we wanna make sure we leave our options open if the Montana commission well. And I think the comment earlier alluded to a tariff that can help affordability for others. We absolutely believe there's a path for that.

But if the commission doesn't wanna go down that road, we're certainly keeping and working to have our FERC regulated approach open to be able to serve out of that what would be the Pugetron So, again, to deliver from a data center perspective, whether it be Montana regulated or it be Puget piece that might be FERC regulated. All that being said to say, we do expect to make a filing here in this quarter to address recovery of some of those culture costs. Brian, anything you'd add there?

Brian Bird: No. That was great. Thanks.

Nicholas Campanella: Alright. Thank you. Appreciate it.

Brian Bird: Thanks, Nick.

Operator: At this time, there are no further I will now turn the call back over to Brian Bird for closing remarks.

Brian Bird: Closing remarks my perspective, hey, I continue progress on a lot of fronts. What we've done from a wildfire perspective both operationally and from a legislative standpoint, extremely proud of that. Extremely proud of the abilities of company's ability to address our capacity shortfall and put us in a long position particularly in the generation front. Certain good movement on the data center Ultimately, we need to get a good outcome on the rate review and continue to move forward and provide returns in line with your expectations. So I appreciate your interest today. And going forward. Thank you.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.