Avista Corp (AVA) Q3 2026 Earnings Call Transcript

Avista reported Q3 2026 GAAP EPS of $0.57, up from $0.36 a year earlier, while non-GAAP utility EPS rose to $0.38 from $0.37. Management reaffirmed 2026 utility EPS guidance of $2.52–$2.72 per diluted share and expects results near the midpoint, but cited a $0.09-per-share ERM headwind and plans for up to $100 million in short-term borrowing amid regulatory deferrals and delayed cost recovery. Avista plans $615 million of 2026 utility capital expenditures and a 12-month pause on processing new large data-center applications requiring significant generation or transmission investment.

Analysis

The earnings quality is less strong than the headline EPS comparison suggests: the more decision-useful utility result is nearly flat year over year, while consolidated upside came from volatile nonregulated investment marks. Treat that contribution as nonrecurring until cash realization and repeatability are clear; it does not establish a higher utility run rate.

For AVA, the near-term valuation hinge is the Washington rate order, not the data-center narrative. A constructive order could reduce recovery uncertainty and help narrow the disclosed structural lag, while a weaker outcome would leave earnings growth dependent on cost control despite a large base investment program. The planned short-term borrowing to bridge delayed recovery is not, by itself, evidence of distress, but it highlights the cash-flow cost of regulatory timing. Equity issuance in 2027 also makes per-share growth more sensitive to allowed returns and capital recovery.

The data-center pause trades near-term growth optionality for lower stranded-cost and affordability risk. That may protect existing customers and the regulatory compact, but the cited alternative loads and prospective transmission/resource projects remain conditional—not bankable growth in our view. The North Plains Connector is a potential capital call, not yet an earnings catalyst; ownership terms, timing, and cost recovery remain unverified. No basis for a read-through to EROC from Avista’s investment valuation disclosure.

Over days, guidance confirmation is modestly supportive; over 1–3 months, the Washington decision is the key catalyst. Over 6–18 months, Idaho/Oregon filings, resource procurement, financing mix, and load conversion determine whether stated growth targets translate into per-share returns.

Key Decisions for Investors

• Avoid chasing AVA on consolidated EPS strength; the utility segment is the cleaner signal and the investment-mark contribution is volatile.
• Keep AVA on a catalyst watch through the mid-December Washington order. Consider adding only if the decision supports recovery mechanisms and authorized returns without material deterioration in capital recovery; reassess on the order rather than assuming management’s expected outcome.
• Monitor 2027 equity issuance, short-term borrowing, and regulatory deferrals together. Rising funding needs without corresponding recovery or a credible improvement in the roughly 60-basis-point structural lag would weaken the per-share growth case.
• Do not capitalize the prospective 85 MW loads, paused data-center pipeline, or North Plains Connector into base estimates until customer commitments, definitive agreements, project economics, and regulatory cost-recovery terms are disclosed.