NorthWestern Energy Group 2026 Q2 Earnings Call

Good afternoon, and thank you for joining NorthWestern Energy Group's financial results webcast for the quarter ended June 30th, 2026. Joining us on the call today are Brian Bird, President and Chief Executive Officer, and Crystal Lail, Chief Financial Officer. Brian and Crystal will walk us through the results and provide an overall update on the great progress we've made this quarter. Before handing the call over, however, a few reminders regarding today's call. NorthWestern's results have been released and the release is available on our website at northwesternenergy.com. We also released our 10-Q pre-market this morning. Please note that the company's press release, this presentation, comments by presenters, and responses to your questions may contain forward-looking statements. As such, I will direct you to the disclosures contained within our SEC filings and the safe harbor provisions included on the second slide of this presentation.

Also note that this presentation includes non-GAAP financial measures and information regarding the pending merger transaction. See the non-GAAP disclosures, definitions, and reconciliations in the merger-related disclosures in the appendix of today's materials. The webcast is being recorded. An archive replay will be available shortly after the event and will remain active for one year. Please visit the financial results section of our website to access the replay. With those details behind us, I'll hand the presentation over to Brian Bird for his opening remarks.

Thank you, Travis. For recent highlights for the quarter, we reported GAAP diluted EPS of $0.40 and a non-GAAP diluted EPS of $0.50. We are also affirming our 2026 earnings guidance range of $3.68-$3.83, and also affirming our long-term rate base and EPS growth rate targets of 4%-6%. Regarding the merger, during the quarter, we received approvals from the Nebraska PSC, the South Dakota PUC, and FERC. We also had our Montana hearing, and the final briefing is now completed, and we're awaiting the final order. Lastly, in terms of dividend, we declared $0.67 per share payable September 1st, 2026. You might note there's a change in the payment date and August 17th record date to make sure we align with Black Hills Corporation's dividend dates, which was intended to simplify the closing mechanics in the merger.

With that, I'm going to hand it over to Crystal to cover the second quarter financial review.

Thank you, Brian. I will begin my comments on slide seven. In my comments today, I will cover our second quarter results, our 2026 earnings outlook, and our capital plan. As Brian mentioned, for the second quarter, we delivered GAAP earnings of $0.40. That $0.40 includes merger-related costs related to incremental Colstrip ownership, and weather impacts. On an adjusted basis, we delivered $0.50, which reflects a $0.10 increase from 2025. Moving to slide eight. On a year-to-date basis, we have GAAP earnings of $1.43 versus $1.60 in the prior period. On an adjusted basis, that's $1.81 versus $1.62. I'll remind you that we started off the year with an unseasonably warm winter, reflecting a significant adjustment to adjust out that weather impact for Q1 impacting our year-to-date results.

Slide nine moves to a bit more of the key drivers for the quarter in particular. Key drivers include improved margin, net of weather, offset by higher costs, depreciation, and interest expense. Increased operating costs includes $0.12 from incremental Colstrip ownership, which we spoke about a lot on our Q1 call as to the impact of us owning those assets and the importance to resource adequacy. Moving to slide 10, I'll discuss in more detail our margin impact, including the $0.38 improvement over the prior period. Margin for the second quarter reflects new rates in Montana. We'll remind you that we implemented rates in the rate review from 2024 in May of 2025 toward the end, you can see the continued improvement from that and impacting the first half of the year for us.

It also reflects the sales from the Puget Colstrip interest and growth in transmission revenues. Moving to slide 11 to address our adjusted second quarter earnings. Again, as I alluded to, while the first quarter had a very significant weather impact, we returned to a closer to normal impact here. You'll see weather was unfavorable by $0.01 versus normal. The quarter also included $0.04 of merger costs and $0.05 of operating expenses from Colstrip that were not recovered. These adjustments moved from a $0.40 on a GAAP basis to $0.50 delivered on a non-GAAP adjusted basis versus $0.40 in the prior quarter of 2025 as compared, again, noting that that growth was really driven off of improved base rate recovery versus last year. Moving to slide 12. As Brian indicated, we are pleased with our start to 2026.

It is in line with our expectations, and we are reaffirming our guidance. We have executed any financing plans for the year and expect that to not have an impact in the back part of the year. Moving to slide 13 and concluding my comments, our capital plan of $3.2 billion from 2026 through 2030 remains on track and unchanged and is driven by the essential investments we need to meet our customers' needs. This plan does not include any incremental investment that may be driven by additional opportunities related to regional transmission growth or serving large loads. We are excited to continue pursuing those opportunities. With that, I will turn it back to Brian for a further business update.

Thanks, Crystal. My comments on page 15, specific to the merger with Black Hills and the benefits to stakeholders. We certainly have talked quite a bit about the benefits to shareholders, and certainly want to thank all of those who voted on the approval from a shareholder perspective of the transaction and acknowledge the overwhelming support. That also took place in the second quarter. Also opportunity on this page, in the center of the page, also remind folks that there is also substantial long-term value for customers. Not only are we bringing together two strong teams from a service perspective, we are going to continue to provide great service on a going-forward basis on a combined basis. Not only that, any benefits that are accrued for putting these two companies together from a cost savings perspective, that will ultimately accrue to customers in future rate reviews. Moving forward to page 16.

If you think about the timeline, we now have all the necessary approvals other than the MPSC Commission's approval. As you note on this page, you see a lot of green checks. Matter of fact, then like we said earlier, shareholder approval, FERC, Nebraska, South Dakota, and you think about what was all done in the second quarter, it was a pretty busy quarter from a merger perspective. We also, as we sit here today, we are working extremely hard with our friends at Black Hills from an integration planning perspective. So we are prepared, we will be prepared if in fact we do get approval from the Montana Commission to close and actually start providing the benefits of the merger to our customers and other stakeholders.

Speaking of the decision, waiting on a decision from the Montana Public Service Commission, we note on this slide that that is in the fourth quarter. I think people understand from the timing that is in front of the Commission that we believe that upon our filing our briefing in mid-July, that we would see a decision sometime in 90 days. They can extend another 30 days. 90-120 days, we should see a decision. That should mean a decision sometime between mid-October and mid-November. We are certainly cautiously optimistic about that decision and working really hard so that we are prepared to provide benefits to stakeholders on a going-forward basis if in fact we get that approval. Moving forward to data centers. We continue to work hard on the data center process on page 17.

I think you can see some change in the high-level assessments. We're still very active in terms of folks looking at primarily Montana and South Dakota from a data center perspective. More importantly, we continue to work with those folks that we have development agreements with and striving to get to ESAs with those parties. As I mentioned on the prior quarter's call, I noted no guarantees, but I mentioned on that call, and I do it again, no guarantees here. We still expect to have ESAs with at two of those three parties. Reason two of those three, I said three the last quarter, two parties, Quantica and Atlas, we still believe by year-end.

The issue where we sit here today with Sabe is they still are dealing with land procurement items, and so until that happens, it's difficult to say we would have an ESA done with them by the end of the year as we sit here today. We continue to work with all three parties and those parties in the, both the data center request and high-level assessment to continue to move forward to ultimately have data center load that we can provide in Montana and South Dakota. Moving forward, just a little bit more on large load customers. I think you're also aware in March of this year, we did submit our large new load tariff. The hope at that time when we filed it, we'd be filing it with an ESA. We did not. We wanted to make sure that people were aware that we're trying to protect customers with this large load tariff, so we wanted to get that in front of the commission.