AVISTA CORP (AVA): Results of Operations and Financial Condition

Avista reported second-quarter GAAP net income of $35 million and GAAP earnings per diluted share of $0.43, compared with $14 million and $0.17, respectively, in the second quarter of 2025. The company attributed the increase primarily to investment performance at its other businesses. For the six months ended June 30, 2026, GAAP net income was $127 million and GAAP earnings per diluted share were $1.54, compared with $93 million and $1.15, respectively. First-half GAAP results also benefited from the impacts of general rate cases.

Underlying utility results were comparatively stable in the quarter. Non-GAAP utility earnings were $23 million, compared with $24 million, while non-GAAP utility earnings per diluted share were unchanged at $0.29. First-half non-GAAP utility earnings increased to $114 million from $105 million, and non-GAAP utility earnings per diluted share increased to $1.38 from $1.30. The first-half effective tax rate was 12%, compared with 14% in the same period of 2025.

The utility earnings bridge shows pressure from lower year-to-date electric and natural gas revenues, offset by lower electric and natural-gas resource costs, lower depreciation and amortization, and other items. Electric-revenue pressure reflected lower wholesale revenues, removal of Colstrip cost-recovery revenues, and reduced industrial sales volumes following the departure of a large industrial customer. Natural-gas revenue declines reflected purchased gas adjustments and Climate Commitment Act related revenues, with corresponding resource-cost reductions. Other operating expenses increased, primarily because of employee salaries and benefit costs.

Non-regulated other business income was $13 million in the first half of 2026, compared with losses of $12 million in the first half of 2025. The improvement was primarily related to net investment gains from equity method investments in the second quarter of 2026, compared with net investment losses in the prior-year quarter. The company estimates a $17 million portion of a fair value increase from an underlying investment will be recognized in the third quarter on a quarter lag, while it estimates a loss of $13 million for the fourth quarter based on the underlying investment's July 31 fair value.

Capital needs remain notable. Avista Utilities' capital expenditures were $314 million in the first half, and the company expects $615 million of capital expenditures for the year. It expects to issue up to $90 million of common stock and $230 million of long-term debt during 2026, including $58 million and $160 million, respectively, issued in the first half. The company also cited increased regulatory deferrals and delayed recovery in evaluating a need for up to $100 million of additional short-term liquidity by the end of the fourth quarter.

Management confirmed 2026 non-GAAP utility earnings guidance of $2.52 to $2.72 per diluted share. The outlook assumes normal weather for the remainder of the year, a negative ERM impact of ($0.10) cents per diluted share within the specified sharing band, a 12 percent effective tax rate, and $615 million of capital expenditures. The maintained guide places attention on utility cost control, resource-cost trends, regulatory recovery, ERM outcomes, and the timing and magnitude of investment valuation effects excluded from non-GAAP utility earnings.