Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NorthWestern Energy Group Inc (NWE, Financial) reported a GAAP EPS of 76¢ for the quarter, showing an improvement from the previous quarter.
- The company reaffirmed its long-term EPS growth rate target of 4 to 6%, indicating confidence in future performance.
- A dividend of 65¢ per share was declared, maintaining shareholder returns.
- The Yellowstone County Generation Station began serving customers, enhancing service capabilities.
- The US Department of Energy awarded a $700 million grant to the North Plains Connector Consortium project, with $21 million earmarked for NWE's investment.
Negative Points
- The delay in Montana interim rates has led to a revision of the 2024 non-GAAP EPS guidance to $3.32 to $3.47, down from the original range.
- Higher insurance costs driven by wildfire coverage have negatively impacted financial performance.
- The company faces a complex regulatory landscape, particularly in Montana, which could affect future earnings.
- There is uncertainty regarding interim rate relief in Montana, which could impact financial metrics if not resolved.
- The company's stock is underperforming, with a 5% yield indicating market concerns about regulatory outcomes.
Q & A Highlights
Q: What's driving the delays in interim rates in Montana, and why is there confidence in a December order? Could there be further impacts in Q1?
A: Brian Bird, President and CEO, explained that the delay might be due to the commission handling multiple rate cases. The company initially expected an October outcome based on past experiences. Despite the delay, they remain confident in their interim rate filing due to the unique aspects of their request, particularly the inclusion of the Yellowstone generation facility, which is currently serving customers. Crystal Lail, CFO, added that the electric side of the request is differentiated, which should support their case.
Q: How should we think about the incremental CapEx opportunities, and what's holding back other buckets like PPA buyout and transmission opportunities?
A: Brian Bird stated that they are actively working on various fronts, including transmission and generation, but these processes can take time. He encouraged stakeholders to stay tuned for updates.
Q: Do commissions need to notify companies about deadlines for decisions, especially regarding interim rates?
A: Brian Bird noted that while there is a 270-day deadline for implementing rates, the timing of interim rate decisions has varied historically. The company expected an October decision based on recent precedents.
Q: How does the company's stock performance and dividend yield reflect on the Montana Commission's decisions?
A: Brian Bird acknowledged that the company's higher dividend yield compared to peers indicates underperformance, which should be apparent to the commission. Crystal Lail emphasized that a strong regulatory framework lowers the cost of capital, benefiting customers, and that the current stock performance reflects the need for regulatory support.
Q: What is the status of the North Plains Connector, and when might there be a resolution?
A: Brian Bird mentioned that NorthWestern Energy is well-positioned with the North Plains Connector and is actively evaluating opportunities, maintaining good relationships with utilities to the east and west.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
