NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — Investor Presentation (September 2010)
25 slides from NorthWestern Energy's investor presentation, September 2010
Slide 1: Midwest Investor Update
Midwest Investor Update September 1 - 2, 2010
Slide 2: Forward-looking statement
forward-looking statement… 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 future business and financial
Slide 3: Who we are
who we are… 661,000 customers » 397,000 electric » 264,000 natural gas Approximately 123,000 square miles of service territory in Montana, South Dakota, and Nebraska » 32,000 miles of electric T&D lines » 8,400 miles of natural gas T&D pipelines » 18 Bcf natural gas storage Total generation (m
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… Solid operations » Cost competitive » Above-average reliability » Award-winning customer service Low single A secured credit ratings with a strong balance sheet and liquidity » April 15, 2010 Fitch upgraded secured and unsecured ratings to A- and BBB+ respectively Po
Slide 5: Improving credit ratings
improving credit ratings… SECURED CREDIT RATINGS S&P Moody's Fitch A-/A3/A- BBB+/Baa1/BBB+ BBB/Baa2/BBB Investment Grade BBB-/Baa3/BBB- BB+/Ba1/BB+ 2005 2006 2007 2008 2009 2010 Agency Secured Unsecured Outlook Standard & Poor's A- BBB Stable Moody's Investor Services A3 Baa2 Positive Fitch Ratings
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity… Total Debt / Total capitalization of 55.4%(1) May 2010 » We refinanced existing $225 million, 5.875% Senior Secured Notes due 2014 with 15 year First Mortgage Bonds due 2025. Bonds priced April 15th at 5.01%. Total liquidity approximately $180 million Near
Slide 7: Positive earnings and ROE trend
positive earnings and ROE… 12.0% $100 Authorized ROE's in Utility Industry 11.0% $90 10.0% $80 9.0% $71-77 $73.4 $70 $67.6 Net Income (millions) 8.0% Return on Equity 7.0% $59.5 $60 6.0% $53.2 $50 5.0% $40 $37.9 4.0% $30 3.0% $20 2.0% 1.0% $10 0.0% $- 2005 2006 2007 2008 2009 2010 Est.* NWE Return o
Slide 8: Strong cash flows
strong cash flows… $250 $200 $150 $100 $57M (millions) $50 $47M $30M $23M $43M $- $(41M) $(50) $(100) $(150) $(200) 2005 2006 2007 2008 2009 2009 Adj.(2) CFO Capex (1) Dividends CFO less capex(1) & dividends (1) Utility maintenance capex only, excludes investment project opportunities. (2) 2009 Cash
Slide 9: Reduced pension funding anticipated
reduced pension funding anticipated… $100 Pension Expense $90 Pension Funding $80 $70 $60 (millions) $50 $40 $30 $20 $10 $- 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Estimates Note: Expense and funding estimates are revised annually based upon actuarial assumptions and actual return on asset
Slide 10: 12/31/09 pension funded status
12/31/09 pension funded status… Timing of 2009 pension investment and solid market returns in 2009 allow us to be better positioned than our peers to shift cash flow toward growth. Data source: SNL Financial 10
Slide 11: Competitive total shareholder return
competitive total shareholder return… 100% B&B Transaction Terminated 80% TSR NWE added to NWE 45.16% S&P Small Cap 600 Index 60% UNS 61.54% B&B Transaction WR-U 51.79% announced Start of economic downturn MG 49.32% AVA 45.90% 40% IDA 42.31% EDE 36.53% BKH 36.12% 20% ALE 34.20% VVC 26.42% POR -21.13
Slide 12: Growing dividend
and growing dividend… $1.40 130% 120% $1.20 110% Dividend Payout Ratio 100% Dividend Per Share $1.00 90% 80% $0.80 70% Targeted payout range 60% $0.60 50% $0.40 40% 30% $0.20 20% $1.00 $1.24 $1.28 $1.32 $1.34 $1.36 10% $- 0% 2005 2006 2007 2008 2009 2010 Est. (1) Annual Dividend Per Share Dividend P
Slide 13: Constructive regulatory environment (Montana)
constructive regulatory environment… Montana » Rate cases filed October 2009 requesting $17.5 million revenue increase ♦ July 2010 revised rate request to $15.1 million reflecting lower updated costs ♦ July 2010 interim rate relief of $13.8 million granted, subject to refund ♦ Hearing schedule for
Slide 14: Constructive regulatory environment (FERC)
constructive regulatory environment… FERC » Working with FERC for MSTI rate design ♦ FERC encouraged Company to develop MSTI on a cost of service basis by requesting appropriate tariff waivers for existing OATT » FERC approved 230kV Renewable Collector Open Season » Initial Open Season information
Slide 15: Near-term potential earnings drivers
near-term potential earnings drivers… In 2010 we anticipate » Mill Creek AFUDC ♦ Approximately $9 million full year pre-tax contribution » Modest recovery in volumes and economic activity in 2010 ♦ High ratio of residential/commercial vs. industrial customers ● Electric: 69% Residential & Commerci
Slide 16: Longer term investment opportunities
longer term investment opportunities… Distribution system enhancements » Incremental rate based investment to enhance reliability and capacity, improve rural service, and prepare the system for potential smart grid applications (early stages) Energy supply » Mill Creek Generation Station » South
Slide 17: Our proposed transmission projects
our proposed transmission projects… 17
Slide 18: Potential project summary
potential project summary… (millions) Annual Earnings Estimated Project Cost Estimate Opportunity * Timeline Energy supply Mill Creek Generation Station $202 to $202 $10 to $10 2011 Montana renewable generation (25-50 MW's) $40 to $100 $2 to $5 2011-12 South Dakota peaking generator $50 to $60 $3 to
Slide 19: In summary
in summary… Solid operations Low single A secured credit ratings with a strong balance sheet and liquidity Positive earnings and ROE trend Strong cash flows Competitive total shareholder return and dividend that has increased every year since 2005 Constructive regulatory environment Fo
Slide 20: Appendix
Appendix NorthWestern Energy 20 Delivering a Bright Future ee PPP! eee
Slide 21: Income statement
Appendix income statement… (in thousands) Six Months Ended June 30, 2010 2009 Variance Operating Revenues $ 578,232 $ 606,616 $ (28,384) Cost of Sales 284,763 314,850 (30,087) Gross Margin 293,469 291,766 1,703 Operating Expenses Operating, general & administrative 115,434 126,317 (10,883) Property
Slide 22: Balance sheet
Appendix balance sheet… (in thousands) June 30, December 31, 2010 2009 Cash 6,149 4,344 Restricted cash 14,812 13,608 Accounts receivable, net 91,985 143,759 Inventories 42,065 47,305 Other current assets 70,085 55,811 Goodwill 355,128 355,128 PP&E and ther non-current assets 2,251,725 2,175,177 Tot
Slide 23: Cash flow
Appendix cash flow… Six Months Ended June 30, (in thousands) 2010 2009 Net Income $ 40,409 $ 28,911 Depreciation 45,872 44,982 Amort. of debt issue costs, discount, deferred hedge gain and restricted stock 1,891 2,286 Equity portion of allowance for funds used during construction (2,585) (275) Loss
Slide 24: 2009 - 2010 earnings bridge
Appendix 2009 - 2010 earnings bridge… Low High 2009 Fully Diluted Earnings Per Share $2.02 $2.02 Increased AFUDC (Mill Creek) 0.08 to 0.10 Increasing loads - economy and w eather 0.05 to 0.07 Montana transmission recovery 0.03 to 0.05 Colstrip Unit 4 rotor repair costs in 2009 0.03 to 0.03 South Dak
Slide 25: Reaffirming 2010 EPS guidance
Appendix reaffirming 2010 EPS guidance… $2.15 $2.10 $2.02 $1.95 $1.95 $1.75 $1.77 $1.65 $1.55 $1.44 $1.35 $1.15 High $1.01 Low $0.95 $0.75 2005 2006 2007 2008 2009 2010 Est. The major assumptions include, but are not limited to, the following expectations: » No impact from requested rate increase
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