Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2018)
29 slides from Northwestern Energy's shareholder meeting presentation, Apr 25, 2018
Slide 1: NorthWestern Energy Annual Meeting of Stockholders
NorthWestern Energy Annual Meeting of Stockholders - April 25, 2018 Dr. E. Linn Draper Jr. addressing NWE employees in April 2017
Slide 2: Forward Looking Statements
2 Forward Looking Statements Forward Looking Statements During the course of this presentation, there will be forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected f
Slide 3: About NorthWestern
About NorthWestern 3 Montana Operations Electric 369,100 customers 24,495 miles – transmission & distribution lines 809 MW nameplate owned power generation Natural Gas 196,700 customers 7,287 miles of transmission and distribution pipeline 17.75 Bcf of gas storage capacity Own 55.9 Bcf of proven nat
Slide 4: NWE - An Investment for the Long Term
NWE - An Investment for the Long Term 4 • 100% regulated electric & natural gas utility business with over 100 years of operating history • Solid economic indicators in service territory • Diverse electric supply portfolio ~56% hydro & wind Black Eagle damPure Electric & Gas Utility Solid Utility Fo
Slide 5: A Diversified Electric and Gas Utility
A Diversified Electric and Gas Utility 5 NorthWestern’s ‘80/20’ rules: Approximately 80% Electric, 80% Residential and 80% Montana. Over $3.5 billion of rate base investment to serve our customers Data as of 12/31/2017. (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Meas
Slide 6: Highly Carbon-Free Supply Portfolio
6 Highly Carbon-Free Supply Portfolio Based upon 2017 MWH’s of owned and long-term contracted resources. Approximately 56% of our total company owned and contracted supply is carbon-free. NorthWestern does not own all the renewable energy certificates (RECs) generated by contracted wind, and periodi
Slide 7: Strong Utility Foundation
Strong Utility Foundation 7 Solid and improving JD Power Overall Customer Satisfaction Scores Residential electric and natural gas rates below national average Solid electric system reliability and low gas leaks per mile
Slide 8: Solid Economic Indicators
Solid Economic Indicators 8 • Customer growth rates historically exceed National Averages. • Unemployment rates in all three of our states are below or in-line with National Average. Source: NorthWestern customer growth - 2008-2016 Forms 10-K Unemployment Rate: US Department of Labor via SNL Databas
Slide 9: A History of Growth
A History of Growth 9 2008-2017 CAGR’s: GAAP EPS: 7.3% - Non-GAAP EPS: 6.8% - Dividend: 5.3% See appendix for “Non-GAAP Financial Measures” $2.60 - $2.75 $3.10 - $3.30 $3. 0-$3.40 $3.30-$3.50
Slide 10: Track Record of Delivering Results
Track Record of Delivering Results 10 Return on equity within 9.3% - 11.0% band over the last 6 years. See appendix for “Non-GAAP Financial Measures” Total Shareholder Return is better than our 13 peer average for the 10 year period but lags in the 1, 3 & 5 year periods, due primarily to concerns ov
Slide 11: Investment for Our Customers' Benefit
Investment for Our Customers’ Benefit 11 Over the past 8 years we have been reintegrating our Montana energy supply portfolio and making additional investments across our entire service territory to enhance system safety, reliability and capacity. We have made these enhancements with minimal impact
Slide 12: Balance Sheet Strength and Liquidity
Balance Sheet Strength and Liquidity 12 Investment grade credit ratings, liquidity generally in excess of $100 million target, and debt to cap moving lower within our targeted 50%-55% range.
Slide 13: Credit Ratings
Credit Ratings 13 Moody’s downgraded our senior secured and unsecured credit rating on March 10, 2017 and has placed us on a Negative Outlook. Moody’s is now in line with Fitch and still above S&P on a secured basis. On February 5, 2018, Fitch also placed us on Negative Outlook. Electric and natural
Slide 14: Strong Cash Flow
While maintenance capex and total dividend payments have continued to grow since 2011 (12.9% and 13.0% CAGR respectively), Cash Flow from Operations (CFO) has, on average, exceeded maintenance capex and dividend payments by approximately $24 million per year. 2016 CFO is less than 2015 largely due t
Slide 15: Exemplary Board of Directors
Exemplary Board of Directors 15 Board of Directors (left to right) Linda G. Sullivan – Independent Director since April 27, 2017 – Audit Committee Dana J. Dykhouse – Independent Director since January 30, 2009 – Human Resources (chair) and Audit Committees Britt E. Ide – Independent Director since A
Slide 16: Experienced Executive Team
Experienced Executive Team 16 Executive Management Team (left to right) Crystal D. Lail – VP & Controller – current position since 2015 Curtis T. Pohl – VP Distribution – current position since 2003 Bobbi L. Schroeppel – VP Customer Care, Communications & Human Resources – current position since 200
Slide 17: Strong Corporate Governance
Strong Corporate Governance 17
Slide 18: Strong Corporate Governance
Strong Corporate Governance 18
Slide 19: 2018 Earnings Guidance
2018 Earnings Guidance 19 $2.60 - $2.75 $3.10 - $3.30 $3. 0-$3.40 $3.30-$3.50 See appendix for additional disclosures regarding “Non-GAAP Financial Measures” $3.30-$3.45 NorthWestern’s 2018 earnings guidance range of $3.35 - $3.50 per diluted share is based upon, but not limited to, the following ma
Slide 20: Recent Significant Achievements
Recent Significant Achievements 20 Echo Lake Nordic Trail Strong year for safety at NorthWestern • Continue to be a top performer among Edison Electric Institute member companies. Record best customer satisfaction scores with JD Power & Associates • Once again received our best JD Powers overall sat
Slide 21: Looking Forward
Looking Forward 21 Echo Lake Nordic Trail Much of our focus in the next year will be on the electric rate case in Montana and controlling our costs to benefit all stakeholders while continuing to invest in our core business to provide safe and reliable energy for our all of our customers. Black Eagl
Slide 22: Capital Spending Forecast
Capital Spending Forecast 22 2018 Significant Updates Out: Approximately $123 million of previously included investment in capacity generation has been removed pending update of Integrated Resource Plans in both Montana and South Dakota (expected to be completed by year-end 2018). In: Approximately
Slide 23: Tribute to Dr. E. Linn Draper Jr.
"Linn has been a tremendous Board member. His distinguished career, experience, and stature within the utility industry is unmatched and will be difficult to replace. As Chair, his leadership beginning with our emergence from bankruptcy in 2004 and continuing today has been a significant factor in o
Slide 24: Conclusion
Conclusion 24 Best Practices Corporate Governance Pure Electric & Gas Utility Solid Utility Foundation Strong Earnings & Cash Flows Attractive Future Growth Prospects
Slide 25: Delivering a bright future
Upelivering a bright future
Slide 26: NorthWestern Energy Profile
NorthWestern Energy Profile 26
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures 27 These materials include financial information prepared in accordance with GAAP, as well as other financial measures, such as Gross Margin and Adjusted Diluted EPS, that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical
Slide 28: Non-GAAP Financial Measures Disclaimer on Net Operating Losses
Non-GAAP Financial Measures 28 Disclaimer on Net Operating Net Operating Losses (NOL’s): The expected tax rate and the expected availability of NOLs are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures 29 The data presented in this presentation includes financial information prepared in accordance with GAAP, as well as other Non- GAAP financial measures such as Gross Margin (Revenues less Cost of Sales), Free Cash Flows (Cash flows from operations less maintenance capex