Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Q1 2018 Earnings Presentation
25 slides from Northwestern Energy's earnings presentation, Apr 25, 2018
Slide 1: 2018 First Quarter Earnings Webcast
2018 First Quarter Earnings Webcast April 25, 2018 Black Eagle Dam
Slide 2: Presenting Today; Forward Looking Statements
Presenting Today 2 Bob Rowe, President & CEO Brian Bird, Vice President & CFO 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. Forwar
Slide 3: First Quarter Highlights
• First quarter operating income decreased $3.3 million as compared to the same period in 2017. However, if adjusted to remove the $7.3 million revenue deferral recorded during the quarter related to the Tax Cuts and Jobs Act, operating income would have increased by $4.0 million, or 4.6%. • Net inc
Slide 4: Summary Financial Results (First Quarter)
Summary Financial Results (First Quarter) 4 (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure.
Slide 5: Gross Margin (First Quarter)
5 Gross Margin (First Quarter) (dollars in millions) Three Months Ended March 31, 2018 2017 Variance(1) Operating Revenues $ 341.5 $ 367.3 ($ 25.8) (7.0%) Cost of Sales 96.1 119.8 (23.7) (19.8%) Gross Margin $ 245.4 $ 247.5 ($ 2.1) (0.8%) Decrease in gross margin due to the following factors: $ 1.9
Slide 6: Weather (First Quarter)
Weather (First Quarter) 6 Mean Temperature from Normal We estimate favorable weather in Q1 2018 contributed approximately $4.8M pretax benefit as compared to normal and $1.6M pretax benefit as compared to Q1 2017.
Slide 7: Operating Expenses (First Quarter)
Operating Expenses (First Quarter) 7 Increase in operating expenses due mainly to the following factors: $4.0 million decrease in OG&A $ (2.3) Non-employee directors deferred compensation $ (1.5) Maintenance costs $ (1.3) Labor $ (0.9) Distribution System Infrastructure Project expenses $ 2.9 Employ
Slide 8: Operating to Net Income (First Quarter)
Operating to Net Income (First Quarter) 8 $0.4 million decrease in interest expenses was primarily due to debt refinancing of debt in 2017, partly offset by rising interest rates. No change in other expense. A decrease in other pension expense, offset by a increase in expense associated with the cha
Slide 9: Pre-Tax Earnings Bridge (First Quarter '18 vs '17)
Pre-Tax Earnings Bridge (First Quarter ‘18 vs ’17) 9 Pre-Tax income decreased by $2.8 million in the 1st quarter 2018 vs the same period in 2017. This was primarily due to the decrease in gross margin resulting from the $7.3 million TCJA deferral (which is largely offset by reduced income tax expens
Slide 10: Income Tax Reconciliation
Income Tax Reconciliation 10
Slide 11: Balance Sheet
Balance Sheet 11 NorthWestern’s Ratio of debt to total capitalization decreased from 53.7% at 12/31/17 to 52.0% at 3/31/18.
Slide 12: Cash Flow
Cash Flow 12 Cash from operating activities improved by $15.8 million primarily due to the receipt of insurance proceeds and improved collections of supply costs in 2018. During 2017, we received net proceeds of approximately $54 million from the sale our common stock. There were no issuances during
Slide 13: Adjusted Non-GAAP Earnings (First Quarter)
Adjusted Non-GAAP Earnings (First Quarter) 13 The adjusted non-GAAP measures presented in the table above are being shown to reflect significant items that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined
Slide 14: 2018 Earnings Guidance
2018 Earnings Guidance 14 $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 15: Looking Forward
Looking Forward 15 $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 Regulatory • Regulatory treatment of tax reform - determine best way to provide long-term benefit to customers and system while keeping i
Slide 16: Regulatory & Legal Update
Regulatory & Legal Update 16 Montana Property Tax Tracker Filing • On January 29th the MPSC issued an order in our 2017 property tax tracker filing by further reducing our recovery of Montana property taxes by a total of $3.5 million impacting both 2017 and 2018 (approximately $1.75 million each yea
Slide 17: Estimated Impacts of the Tax Cuts & Jobs Act
Estimated Impacts of the Tax Cuts & Jobs Act 17 We currently believe our debt coverage ratios will be adequate to maintain existing credit ratings. However, further negative regulatory actions will likely lead to credit downgrades and could necessitate additional equity issuances. • Dockets have bee
Slide 18: Capital Spending Forecast
Capital Spending Forecast 18 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 19: Conclusion
Conclusion 19 Best Practices Corporate Governance Pure Electric & Gas Utility Solid Utility Foundation Strong Earnings & Cash Flows Attractive Future Growth Prospects
Slide 20: Appendix
20 Appendix
Slide 21: Segment Results (First Quarter)
21 Segment Results (First Quarter)Appendix (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure. (1)
Slide 22: Electric Segment (First Quarter)
22 Electric Segment (First Quarter)Appendix (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure.
Slide 23: Natural Gas Segment (First Quarter)
23 Natural Gas Segment (First Quarter)Appendix (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure.
Slide 24: Non-GAAP Financial Measures
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 measure of a company's financi
Slide 25: Delivering a bright future
Upelivering a bright future