Avista Earnings Call: Steady EPS, Bigger Capital Bet
Avista ((AVA)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Avista’s latest earnings call struck a cautiously optimistic tone as management balanced modest earnings growth with a clearer long‑term plan. Executives highlighted steady utility performance, major resource wins, and a larger capital plan that supports grid upgrades, even as regulatory setbacks, customer shifts, and higher financing needs add pressure to near‑term returns.
Annual EPS Growth
Avista reported 2025 consolidated earnings of $2.38 per diluted share, up 3.9% from $2.29 in 2024, signaling steady bottom‑line progress. Non‑GAAP utility earnings rose more strongly, advancing 7.1% to $2.55 per share from $2.38, underscoring the core regulated business as the main driver of growth.
Quarterly EPS Stability
Fourth‑quarter 2025 consolidated EPS came in at $0.87 versus $0.84 a year earlier, a 3.6% increase that reflects resilient performance late in the year. However, Q4 non‑GAAP utility EPS edged down to $0.88 from $0.89, showing slight timing‑related headwinds despite overall stability.
RFP Project Wins Increasing Flexibility and Capacity
Management spotlighted a series of selected projects from recent resource solicitations that expand system flexibility while supporting decarbonization. These include a 14 MW natural gas turbine upgrade with no added emissions, a 100 MW battery storage build‑transfer deal, a 200 MW wind power contract from Montana, and roughly 40 MW of demand response.
Large Potential Customer Development
Investor attention focused on a significant new data center customer, which has posted a large deposit and plans an initial 125 MW load that could ramp to 500 MW by 2030. Avista also retains about 1,700 MW of additional large‑load prospects in its queue, pointing to substantial upside optionality if these projects materialize.
Capital Investment Plan and Growth Outlook
Capital spending at Avista Utilities reached $553 million in 2025 and is expected to rise to $585 million in 2026, an increase of 5.8%. The 2026–2030 base capital plan totals $3.4 billion with a projected 5% annual growth rate, aimed at grid modernization and reliability investments that support long‑term earnings.
Dividend Increase and Shareholder Return Focus
The board increased the annual dividend to $1.97 per share, reinforcing its commitment to shareholder returns amid a heavy investment cycle. Avista has now raised its dividend for 24 consecutive years with more than 5% compound annual growth and continues to target a payout ratio between 60% and 70% of earnings.
Expanded Customer Assistance Programs
Alongside its financial updates, the company emphasized customer affordability and community support as part of its strategy. Enhanced energy assistance programs now reach up to four times as many customers in need compared with two years ago, helping to mitigate rate impacts from rising capital spending.
2026 Utility Earnings Guidance and Long-Term Growth Target
Looking ahead, Avista introduced 2026 non‑GAAP utility earnings guidance of $2.52 to $2.72 per diluted share, excluding nonregulated businesses. Management reiterated a long‑term EPS growth goal of 4% to 6% annually from the midpoint of 2025 guidance, positioning the utility for steady, if not rapid, expansion.
Colstrip Regulatory Order Impact
A December order from Washington regulators on Colstrip cost recovery weighed on results and highlighted ongoing policy risk. The ruling forced a reduction in Colstrip‑related investment recovery, trimming earnings by $0.07 per share and keeping Avista Utilities from finishing 2025 above the midpoint of its guidance range.
Large Customer Early Departure
Further near‑term pressure will come from a large industrial customer shifting back to procuring its own power sooner than expected. This contract change is expected to shave about $0.12 from 2026 earnings per share on a one‑time basis, forcing Avista to absorb lost volume while it repositions its portfolio.
Energy Recovery Mechanism Headwind
The company also highlighted a headwind from its energy recovery mechanism, which shares certain cost differences between customers and the utility. For 2026, Avista expects the mechanism to reduce earnings by about $0.10 at the midpoint, under a structure where 90% of variances are borne by customers and 10% by the company.
Nonregulated Business Valuation Volatility
Outside the core utility, nonregulated businesses posted valuation losses in 2025 as shifts in public policy and administration weighed on their outlook. Management signaled it will de‑emphasize these segments, focusing investor attention on regulated results and possibly selling noncore equity interests valued at about $148 million as of year‑end 2025.
Higher Expected Financing Needs in 2026
To fund its growing capital plan, Avista expects to sharply increase long‑term debt issuance to about $230 million in 2026 from $120 million in 2025. Planned common stock issuance is set to rise more modestly to up to $90 million from $78 million, with potential nonregulated asset sales helping to limit equity dilution.
Near-Term ROE Pressure and Structural Lag
Despite lifting its long‑run utility return on equity target to about 9%, excluding energy recovery impacts, Avista cautioned that near‑term returns will run lower. Structural lag of roughly 60 basis points and regulatory timing issues are expected to hold 2026 utility ROE in the low‑ to mid‑8% range, underscoring the importance of future rate cases.
Forward-Looking Guidance and Capital Strategy
Guidance for 2026 centers on non‑GAAP utility EPS of $2.52 to $2.72, which already factors in the departing industrial customer and the energy recovery headwind. The base $3.4 billion capital plan through 2030, plus a potential additional $350 million to serve the new data center load, could lift capital growth toward 12%, funded by higher 2026 debt and equity issuance, possible monetization of nonregulated stakes, and a dividend now set at $1.97.
Avista’s earnings call painted a picture of a utility in transition, balancing solid core growth and new customer opportunities against regulatory setbacks and higher funding demands. For investors, the story hinges on management’s ability to execute its capital plan, secure constructive regulatory outcomes, and convert its project and customer pipeline into sustained earnings within its 4% to 6% growth ambition.
