Avista 2025 Q2 Earnings Misses Targets as Net Income Drops 39.1%

Avista Corp. (AVA) reported its fiscal 2025 Q2 earnings on Aug 7, 2025, with results falling short of expectations. The company confirmed its 2025 consolidated earnings guidance of $2.52 to $2.72 per diluted share but expects to land at the lower end due to investment losses in the first half. Avista Utilities, however, is projected to perform toward the upper end of its guidance, reflecting strong regulatory settlements and operational performance.

Revenue

Avista's total revenue increased by 2.2% year-over-year to $411 million in Q2 2025, driven primarily by its core utility operations. Avista Utilities accounted for the majority of the revenue with $400 million, reflecting its dominant role in the company's portfolio. Alaska Electric Light and Power Company (AEL&P) contributed $11 million, maintaining a smaller but stable segment of the revenue. The Total Utility segment reported $411 million, consolidating the performance across all business lines.

Earnings/Net Income

Avista's earnings per share (EPS) declined 41.4% year-over-year to $0.17 in Q2 2025, compared to $0.29 in Q2 2024. Net income also saw a significant drop, declining to $14 million in Q2 2025 from $23 million in the same period last year. This marks a 39.1% decrease and highlights the impact of unrealized investment losses, particularly in clean technology. Despite this, the company has maintained profitability for over 20 years, underscoring its operational resilience. The drop in EPS indicates a challenging earnings performance this quarter.

Price Action

The stock price of Avista has experienced a decline in recent trading periods. Over the latest trading day, the stock edged down 1.61%. The downward trend continued with a 1.53% drop during the most recent full trading week, and a 3.88% month-to-date decline. The post-earnings price action reflects market uncertainty and investor sentiment influenced by the disappointing earnings results.

Post-Earnings Price Action Review

The investment strategy of buying AVA when earnings beat and holding for 30 days delivered a 12.50% return in the current period, which, although moderate, significantly underperformed the benchmark's 84.77% return. This resulted in an excess return of -72.26%, indicating the strategy's limitations. The strategy exhibited minimal downside risk, as evidenced by a maximum drawdown of 0.00%, but lacked the upside potential for significant growth. The Sharpe ratio of 0.11 suggests limited risk-adjusted returns, indicating that the strategy's performance was not adequately compensating for the risks undertaken.

CEO Commentary

Heather Rosentrater, President and CEO of Avista Corp, emphasized the strength of core utility operations and the recent regulatory settlements in Washington, Oregon, and Idaho as confidence boosters. While expressing disappointment with the lower valuations of clean technology investments, she remained optimistic about future opportunities to meet customer needs and continue strategic progress. Rosentrater reaffirmed the company's commitment to strong business execution and highlighted the upper-end performance expectation for Avista Utilities despite the consolidated earnings challenge.

Guidance

Avista Corp. confirmed its 2025 consolidated earnings guidance of $2.52 to $2.72 per diluted share but anticipates being at the lower end due to investment losses recorded in the first half. Avista Utilities is expected to perform at the upper end of its guidance range of $2.43 to $2.61 per diluted share, reflecting strong performance and cost management. AEL&P is projected to contribute between $0.09 and $0.11 per diluted share in 2025. The company expects earnings growth in the 4-6 percent range over the long term from its 2025 base year. Avista also anticipates $525 million in utility capital expenditures for 2025 and up to $80 million in common stock issuance.

Additional News

Avista Corp. issued $120 million in long-term debt in July 2025 to repay borrowings on its committed line of credit. Additionally, AEL&P secured a $20 million term loan to fund capital expenditures and repay its line of credit. The company anticipates issuing up to $80 million in common stock in 2025 and has no plans for further long-term debt issuance. Capital expenditures for Avista Utilities are expected to total $3 billion over the five-year period ending in 2029. The company also plans to invest $5 million in non-regulated investment opportunities and economic development projects within its service territory in 2025. Avista Corp. will host a conference call with financial analysts and investors on Aug. 6, 2025, to discuss these developments.