NorthWestern Energy Group, Inc.

Hello, everyone. Thank you for joining us and welcome to the Northwestern Energy Second Quarter 2026 Financial Results Webinar. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Travis Meyer, Director of Corporate Development and Investor Relations Officer. Travis, please go ahead.

Thank you, Kendra. 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 release is available on our website at northwesterenergy.com. We also released our 10Q 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 archived 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. For 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 40 cents and non-GAAP diluted EPS of 50 cents. We're also affirming our 2026 earnings guidance range of $3.68 to $3.83. and also affirming our long-term rate-based and EPS growth rate targets of 4% to 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 67 cents 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. And 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. And 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 gap earnings of 40 cents. That 40 cents includes merger related costs, costs related to incremental coal strip ownership and weather impacts. On an adjusted basis, we delivered 50 cents, which reflects a 10 cent increase from 2025. Moving to slide eight. On a year-to-date basis, we have gap 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 9 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 12 cents from incremental coal strip 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 38 cents 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 and May of 2025 toward the end. So 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 Coal Strip 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 return to a closer to normal impact here. You'll see weather was unfavorable by one cents versus normal. The quarter also included four cents of merger costs and five cents of operating expenses from Coal Strip that were not recovered. These adjustments move 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. And 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 and 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 26 through 2030 remains on track and unchanged and is driven by the essential investments we need to meet our customers' needs. Thank you so much for joining us today.

on the approval from a shareholder perspective of the transaction and acknowledged the overwhelming support that also took place in the second quarter. And also, opportunity on this page and the center of the page also to remind folks that there's also substantial long-term value for customers. Not only are we bringing together two strong teams from a service perspective, we're 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. And matter of fact, 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're working extremely hard with our friends at Black Hills from an integration planning perspective. And so we're 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 decision from the Montana Public Service Commission, we note on this slide that that's in the fourth quarter. I think people understand from the timing that is in front of the commission that we believe that upon filing our briefing in mid-July, that we would see a decision sometime in 90 days to extend another 30 days. So 90 to 120 days, we should see a decision. That should mean a decision sometime between mid-October and mid-November. And so we are certainly cautiously optimistic about that decision and working really hard so that we're 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 two of those three parties. And 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 procurements. 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. But we continue to work with all three parties and those parties in 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, 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. It's there for people to see. In addition, we'd like to, when we do sign an ESA, file that ESA with the large load tariff and ultimately have a decision on that ESA as well. In South Dakota, any new large load customers, we require incremental capacity, but we do have an infrastructure rider there to help us with generation cost recovery. And the South Dakota PUC already has an established large load tariff that we can serve large load customers with. The one issue in South Dakota continues to be the sales tax issue on equipment purchase, and we're hopeful in the upcoming legislative session that issue will be dealt with. On the right-hand side of the slide here, I continue to show, from a megawatt perspective, each of those three entities in the development stage. Nothing's necessarily changed there, so we continue to forge ahead with them on their current plans. Lastly, on slide 19, is our standalone value proposition with an approximate 4% dividend yield with our base capital plans. We can achieve a 4% to 6% EPS growth, ultimately today provide an 8% to 10% total return. If we're able to take an opportunity and execute on data center and other large load opportunities for regional transmission and any incremental generating capacity, we should be able to grow at a faster rate and that above the 6% range, that plus that dividend yield I talked about earlier, around 4%. We could see total returns greater than 10%. Obviously, that's our standalone proposition. As we sit here today, we think we could be able to deliver a 5% to 7% EPS growth on a combined basis in our merger with Black Hills. That's ultimately what we believe is the best thing we can do from a shareholder perspective. But as I mentioned earlier, another thing we really want to do for customers in particularly this day and age where affordability is a key issue, we want to make sure we continue to be as efficient as we can and even more so on a merged basis to provide those cost saving benefits to customers on a going forward basis. And with that, I'll turn it back over to Kendra to conduct the Q&A session.

We will now begin the question and answer session. Please limit yourself to one question and one follow up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Aiden Kelly with JP Morgan Securities. Aiden, your line is open. You may now go ahead.

Thanks. Hey guys, good afternoon. Thanks for the time today. Thanks, Aiden. Yeah, just want to hone in on the Quantica project first. I think many are focused on the quoted 7.2 gigawatt interconnection request laid out there, you know, which is clearly a substantial number. And I understand when you capacity adjust, it could be closer to like the three gigawatt range, but still clearly implies some upside beyond phase one, what you've disclosed. So we'd just be curious to hear your take on the probability of realizing the full seven gigawatts and any physical considerations that come to mind here.

I put in this context, Aiden, I don't want to speak for Quantica here. I think, as you noted on the document we shared here, 1.1 gig is what we're talking about from a Quantica perspective. I think we all need to have success at these lower gigawatt levels. And if we're ultimately in an ESA situation, Perspective, and we're moving forward with Quantica. We'll let them talk about their relative success and how to ultimately build up to that level. But as we sit here today, we're focused on the 1.1 gig.

Understood. Understood. Thanks, Brian. And then just maybe wanted to ask a high-level question on the coal strip ownership pieces. You know, in the 10Q, you guys lay out that the PCAM tariff waiver, you know, was insufficient to contribute to the recovery of the O&M for the Avista share. Could you just remind us on the action plan for getting better protection on these costs? How are you thinking about the timing there?

Hi, Aiden. I'll take that one. Fair question. We've laid out the impact year-to-date, and we do have a tariff waiver currently for how the impact of those cells flows through PCAM. If you listened to the merger hearing, you would have heard a lot of commentary from the commission on their overall support for Cold Strip. and their view on what that asset means to Montanans and keeping costs low. So our action plan eventually is to file a rate review and put that asset into base rates where it should be. The thing I would mention and remind you all of is we are waiting for a motion for reconsideration on our 2024 rate review. And by my clock here, we're close to the last day of July of 2026. We need to see that order. We're continuing to invest significantly in Montana, and to your point, an action plan for ultimately adjudicating that piece of coal strip with the commission. I think we'll need to file a rate review to address that, and that is something that we're considering timing of. Meanwhile, the PCAM docket where that tariff waiver sits progresses, that was granted on an interim basis, and we expect that docket to move through probably timeline of Q4 of this year and maybe end early of 2027. Great.

That's helpful. Thanks, Crystal. I'll leave it there.

Thank you, Aiden. Thanks, Aiden. Your next question from the line of Char Peruzza from Wells Fargo Securities. Char, your line is open. You may now go ahead.

Good afternoon, Brian and Crystal. This is Whitney Motilema on for SHAR.

Yep, hi there.

Hey, so I'm looking through the IRP materials and they show available import capacity on your transmission path declining through 2028, even before accounting for the large load pipeline. Obviously, there's the North Plains connector and The utility has 10% stake that's still contingent on permits. Is that 300 megawatts enough to matter given how much load you're now discussing? Or does the real transmission answer have to be a bigger Bright Horizons-led project rather than a minority position in someone else's line?

I feel bad now I didn't include our regional transmission materials in our presentation, which we've certainly spoken about in the past. North Plains Connector is certainly something that we think is necessary. Our Montana to Idaho line that we're working with, we think is also crucial to provide capacity on a going forward basis. Those are in addition to some other opportunities. On Path 8, which is our current coal strip, Thank you for joining us. But I'd argue that there's a lot of transmission capacity that we're going to need, particularly if there's going to be growth in the Pacific Northwest and certainly in Montana. So we're excited about that opportunity and our ability to invest in transmission on a going forward basis.

Sounds good. Well said. And then just to squeeze in a tiny question, there have been a run of Yeah, I could spend a half an hour discussing

I would say it this way. We as an industry and certainly the data centers themselves and the developers that may be between the utilities and the data centers, we all need to do a better job in terms of communicating and working with communities to find out what the communities want, not necessarily what we think they want. And I think there is a lot of misinformation about data centers. We believe data centers are going to be great things for Our service territory, and we think it's going to help our communities in so many ways. We're going to continue to be supportive of their efforts, but we have to work collectively as a group and demonstrate benefits in a more concise way so they understand that these are actually good projects that are going to help their communities. And so there's work to be done. I'd argue that's something that needs to be done in all states, not just the two states that we operate in from an electric perspective. I think it's more of an industry issue than just a Northwestern Energy issue. There are certain states, of course, that support this, support data centers, and we can certainly name those states. But even those are running into some public pushback. I think as we continue to educate folks around energy use and around water use, I think what has been recently done here in terms of and acknowledgement by utilities and data centers that we're not going to pass on higher cost to customers, that data centers are going to pay their own way. Those commitments are going to help deal with some of these issues. But this is going to be continuing an issue for the industry for some time.

Well said. Thank you.

Thank you.

Your next question from the line of Chris Ellinghaus. with Seibert Williams-Shank. Chris, your line is open. Please go ahead.

Hey, everybody. Hey, Chris. Hey, Chris. Crystal, can you give us a breakdown of the weather adjustment by segment?

Chris, I think that's in our appendix, but I'd remind you for Q2, it's only one cent, so it's pretty small. As it relates to the quarter, obviously a much bigger impact for Q1 as we saw really mild weather there. Travis might have it off the top of his head.

Yeah, and we haven't disclosed that, Chris, by segment. So I assume you're looking between electric gas, South Dakota, Montana. We don't disclose that. That's something we can consider in the future.

Okay, that'd be helpful. The weather seems like it was pretty warm for July, certainly across Montana anyway I saw. Crystal, can you give us any sense of how you see the progression of the two, you know, Puget and the Vista coal strip pieces through the rest of the year, particularly with what the third quarter weather looks like so far?

Sure, Chris. And by the way, I will comment that I did see that you've come around to our way of thinking on the weather. So I don't know if that's been a 10 or 15 year running conversation, but glad to see we finally got you there. The next question is after a super mild kind of winter weather in the whole Pacific Northwest and abnormal, call it Q2 shoulder, what that had done. And we had talked a lot about market prices and the impact to finally being resource adequate in Montana. Thank you for joining us. I haven't necessarily, there haven't been kind of those big peaking events that you sometimes see in the market, but certainly an improvement as you're about through July here as to what we've seen for prices and the ability to cover our costs of those assets. What that continues into late summer and fall, I don't know that I'll be on the record for predicting the weather since meteorologists can't seem to do it for the next day or so, but I will say we did see some improvement here in July based off that demand and TEMPS being hired across the West and hope to see that continue as we go through the year. Obviously, we'd like to see those market sales impact our ability to cover those costs and culture and hopefully earn back a bit of what happened in the first half of the year. But I won't give you any predictions as to where that might be.

Okay, that's helpful. Brian, one more thing. Now that the word Voldemort is gone from the MPSD, Do you still stick to the sort of 90 to 120 day expectation? Does that sort of slow or speed the process of the merger approval? And how does that affect the large tariff docket also?

Yeah, Chris, I assume you're talking about Commissioner Molnar. I don't think that has bearing on the timing here. I think the 90 to 120 days... still should hold. And my expectation is, as folks know, there are many times when commissioners aren't present to vote. And as long as there's a quorum, they can continue to vote on any matters. And I expect that to be the case here as we move forward.

Okay. Thanks. Appreciate it. Thanks, Chris.

Thank you, Chris. Your next question from the line of Paul Fremont from Ludenburg. Paul, your line is open. Please go ahead.

Thanks. I guess I'd like to start with the high-level assessment pool, which seemed to have doubled to eight customers. Can we get a sense of sort of the megawatt size of demand that's in that queue?

Paul, no, we haven't shared, nor do we share who's in that queue, nor do we share the megawatts that folks are talking about at this point in time.

Well, how about in terms of with the customers doubling, should we assume that that also represents a doubling of the megawatt demand in that bucket?

I'd say it this way. I wouldn't concern yourself too much with megawatts until you see development agreements.

and then it looks like two may have come from the data center request bucket and that two of those customers would have come from somewhere else. Is that a fair way to look at it?

Yeah, I'd say what happens many times when you get to assessment, some people fall away because they find out they've got a preliminary idea of what the costs are going to be and so they may fall away. So I can't speak to How the bucket shifted from requests to the high-level assessment. But typically what happens when you get to a certain point, you actually know your costs. You do see some folks fall away. You also see some folks that work pretty quickly through that process.

And then maybe the last question for me are, is there sort of anything you can tell us about the geography of where those new Your final question comes from the line of Rex Savage with Clear Street. Rex, your line is open. Please go ahead.

Hi, thank you. I wanted to ask a version of a prior question on the commissioner's status and so forth. It appears that commissioner is challenging his removal in Lewis and Clark State Court. I was wondering if you had any thoughts about that. Plus, it appears the governor is maybe moving to replace him for this one-year period. Does that potentially change the 90 to 120 days? And then a related question is, Okay, on Quantico, which was brought up, I believe, on the first question, that 7.2 in the filing did seem to activate one of the opposers on the merger docket to ask to reopen the record. Are we past that point? Do you believe that the commission is going to look at it as is?

From my understanding, I think the commission's forging ahead here. I don't think I think they've done a good enough job through this process to say that this transaction is not about data centers. I think that conversation was had frequently during the hearing. And so I do not believe we're going to see a delay as a result of anything that's happening with Commissioner Mulder at this point in time or any incremental information that may have happened since the hearing.

Thank you. Thanks, Rex.

There are no further questions at this time. I will now turn the call back to Brian Bird for closing remarks.

From a closing remarks perspective, I just want to say this again. I think we think about what we need to do as a company to grow and what's changing in the energy space. This merger is really important, not only obviously to the folks listening to this call today, But our customers and ultimately our employees, we need to be bigger. It's more of a competitive environment that we sit in today than utilities have seen in certainly their first hundred years of existence. And so it's critical that we move forward, we become bigger. It allows us to better serve our customers and all of you. We continue to be very, very focused on that, as do our friends at Black Hills. And we hope to be talking about that with you, if not in October, sometime shortly thereafter. and until that next time, I want to continue to thank you for your support of Northwestern Energy and obviously our friends at Black Hills. Thank you very much.

This concludes today's call. Thank you for attending. You may now disconnect.