NorthWestern Energy Group (NWE) Q4 2023 earnings summary

Executive summary

• FY 2023 net income rose $11.1M to $194.1M; diluted GAAP EPS was $3.22 versus $3.25, while adjusted EPS rose 2.8% to $3.27 and exceeded prior guidance.

• Earnings growth reflected new Montana base rates, lower non-recoverable electric supply costs and tax effects, partly offset by lower retail volumes, depreciation, interest and operating costs.

Financial highlights

• Q4 revenue fell 16.3% to $356.0M; operating income rose 23.9% to $103.2M and net income rose 24.6% to $83.1M. Diluted EPS was $1.37 GAAP and $1.38 adjusted, versus $1.16 and $1.13.

• FY revenue fell 3.8% to $1,422.1M; operating income rose to $300.5M from $263.1M and net income to $194.1M from $183.0M.

• FY gross margin increased 10.5% to $416.3M; operating expenses excluding fuel, purchased supply and direct transmission fell $21.3M to $701.4M, while interest expense rose to $114.6M from $100.1M.

• Adjusted non-GAAP net income was $197.3M versus $178.9M in FY 2022; utility margin rose 1.6% to $1,001.9M.

• Q4 revenue decline primarily reflected pass-through property-tax and supply trackers and non-cash regulatory amortizations.

Outlook and guidance

• 2024 adjusted diluted EPS guidance affirmed at $3.42–$3.62, assuming normal weather, a 12%–14% effective tax rate and 61.3M diluted average shares.

• Five-year diluted EPS and rate-base growth targets remain 4%–6%, based on 2022 adjusted EPS of $3.18 and estimated rate base of $4.54B.

• The 2024–2028 capital plan totals $2.5B; the 2024 plan is $500M. Current investments are sized to avoid equity issuance, though generation additions or strategic opportunities could require it.

• Yellowstone County Generating Station is expected to be operational by Q3 2024; estimated project costs are $310M–$320M, with $240M incurred through year-end 2023.

• Earnings growth is expected to exceed dividend growth until the payout ratio returns to the 60%–70% target; FFO/debt target is above 14% by end-2024 and beyond.