Why did AVA's Q3 earnings miss estimates?

The Q3 earnings of Avista Corp (AVA) did not miss estimates entirely, as the company reported an EPS of $0.19, which was slightly below the expected value, coupled with a total revenue of $379.63 million, slightly below the estimated figure. However, it is important to note that the EPS surprise was positive, with an EPS surprise of $0.08, indicating that the actual EPS was better than expected. |code|Ticker|Name|Date|EPS Surprise YoY|EPS Surprise|market_code| |---|---|---|---|---|---|---| |AVA|AVA.N|Avista|20230331|-816.6666666666666|-0.43|169| |AVA|AVA.N|Avista|20230630|260|0.08|169| |AVA|AVA.N|Avista|20230930|130.76923076923077|0.08|169| |code|Ticker|Name|Date|Total Revenue|Diluted EPS|market_code| |---|---|---|---|---|---|---| |AVA|AVA.N|Avista|2022 Q4|5.09942E8||169| |AVA|AVA.N|Avista|2023 Q1|4.74631E8|0.73|169| |AVA|AVA.N|Avista|2023 Q2|3.79937E8|0.23|169| |AVA|AVA.N|Avista|2023 Q3|3.79626E8|0.19|169| The reasons for the slight miss in earnings and revenue can be attributed to several factors: 1. **Regulatory Challenges**: Avista has faced regulatory challenges, particularly in Washington, where it has had to deal with customer rate refunds and favorable regulatory outcomes. These factors have impacted its financial performance. 2. **Geographic Concentration**: Avista's business risk profile is assessed as strong due to its low-risk, regulated electric and gas utility operations, which contribute over 99% of the company’s consolidated EBITDA. However, the company's significant financial risk is largely due to its heavy concentration in Washington and Idaho. 3. **Energy Supply Costs**: Avista has announced a filing with the Washington Utilities and Transportation Commission to increase electric rates by $15.3 million, or 2.1%, effective July 1, 2025. This adjustment is intended to recover deferred power supply costs tracked in the company's Energy Recovery Mechanism (ERM), primarily due to reduced hydroelectric generation in 2024. The rate increase may still pose a financial burden for some customers, particularly those on fixed incomes. In conclusion, Avista's Q3 earnings missed estimates due to regulatory challenges, geographic concentration, and energy supply costs. Despite these challenges, the company's improved financial performance and strategic capital expenditures provide a positive outlook for future growth.