Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Western Electric Utility Companies Corporate Access Day (September 2011)
21 slides from Northwestern Energy's conference presentation, Sep 27, 2011
Slide 1: Western Electric Utility Companies Corporate Access Day
September 27, 2011 Western Electric Utility Companies Corporate Access Day
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
Located in states with relatively stable economies with opportunity for system investment and grid expansion. Footprint of service territory covers some of the best wind regimes in the United States Unique opportunity to provide transmission services in to two different power markets (West and Midwe
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… ¾ Solid operations » Cost competitive » Above-average reliability » Award-winning customer service ¾ Single A secured credit ratings with a strong balance sheet and liquidity » January 21, 2011 Moody’s upgraded secured and unsecured ratings to A2 and Baa1, respectively » A
Slide 5: Strong credit ratings
strong credit ratings… A security rating is not a recommendation to buy, sell or hold securities. Such rating may be subject to revision or withdrawal at any time by the credit rating agency and each rating should be evaluated independently of any other rating.
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity… ¾ Total liquidity of approximately $220 million as of August 26, 2011 ¾ Total debt / total capitalization of 54.4% ( 1 ) ¾ In past two years refinanced nearly all outstanding debt » Amended and restated revolving credit facility in July of 2011, extending term to
Slide 7: Strong cash flows
Earnings trend and NOLs provide strong cash flows to fund future investment. strong cash flows… (1) Utility maintenance capex only, excludes investment growth projects. (2) 2009 Cash Flow from Operations adjusted to add back pension funding in excess of expense and Ammondson settlement paid.
Slide 8: Solid pension funding position
As a result of significant contributions to our pension plan over the past several years and solid market returns in 2009 and 2010, we are better positioned than our peers at December 31, 2010. solid pension funding position… Data source: SNL Financial
Slide 9: Sustainable dividend
Goal for dividend payout ratio of 60% - 70%. Current dividend yield about 5% with year-over-year dividend growth of approximately 6.3% (2005-2011 CAGR) . and sustainable dividend… (1) 2011 estimated payout range assumes midpoint of guidance range $2.25 - $2.40
Slide 10: Reaffirming 2011 EPS guidance
reaffirming 2011 EPS guidance… ¾ The major assumptions include, but are not limited to, the following expectations: » We expect strong hydro conditions west of our Colstrip Transmission System to persist, causing additional declines to our wholesale transmission revenues for the third quarter of 201
Slide 11: Constructive regulatory environment
constructive regulatory environment… ¾ Montana » Electric and natural gas general rate case ♦ April 2011: MPSC and Company settled the overall rate increase in Montana: ● A net $6.1 million increase in annual revenue with authorized electric and natural gas ROE’s set at 10.25% » Dave Gates Generatin
Slide 12: Regulatory environment cont'd
regulatory environment cont’d… ¾ South Dakota » Filed natural gas rate case on May 20, 2011 ♦ Requesting $4.1 million annual increase (7.2% average increase in rates) ♦ $2.7M related to rates (would impact earnings) - $1.4M related to recovery of manufactured gas plant remediation costs (no earnings
Slide 13: Regulatory milestones in 2011
Distribution Infrastructure Prudency Review for DGGS Approval for Montana Wind Project Natural Gas - Rate Base Battle Creek South Dakota Natural Gas Rate Case ü Rate filing requesting $4.1M increase (SDPUC) Q2 regulatory milestones in 2011… Montana P Decision in favor of accounting order (MPSC) Q1 P
Slide 14: Longer term investment opportunities
longer term investment opportunities… ¾ Distribution System Infrastructure Plan (DSIP) » Incremental rate based investment to enhance safety, reliability and capacity, improve rural service, and prepare the system for adaptation of new technologies. ¾ Energy supply » Big Stone and Neal plants’ pollu
Slide 15: Potential project summary
Opportunity to increase and diversify earnings as compared with our existing $1.8 billion rate base. potential project summary… Note: Color / label indicate NorthWestern Energy's current probability of execution and timing of expenditures.
Slide 16: In summary
in summary… ¾ Solid operations ¾ Single A secured credit ratings with a strong balance sheet and liquidity ¾ Positive earnings and ROE trend ¾ Strong cash flows ¾ Competitive total shareholder return with a dividend that has increased every year since 2005 ¾ Constructive regulatory environment ¾ For
Slide 17: Appendix
appendix…
Slide 18: Six Months Ended June 30 income statement
(i thousands) Six Months Ended June 30, 2011 2010 Variance Operating Revenues $ 590,066 $ 578,232 $ 11,834 Cost of Sales 272,478 284,763 (12,285) Gross Margin 317,588 293,469 24,119 Operating Expenses Operating, general & administrative 136,922 115,434 21,488 Property and other taxes 45,946 47,952 (
Slide 19: Balance sheet and capitalization
(thousands) Cash Restricted cash Accounts receivable, net Inventories Other current assets Goodwill PP&E and ther non-current assets, Total Assets Payables ‘Current maturities of long-term debt & capital leases Short-term borrowings Other current labilties Long-term debt & capital leases (Other non-
Slide 20: Six Months Ended June 30 cash flows
‘Six Months Ended June 30, (in thousands) 2011 2010 Net income $43,545 $40,409 Depreciation 50,381 45872 ‘Amor. of debtissue costs, discount, deferred hedge gain and restricted stock «1,864 1891 Equity portion of allowance for funds used during construction (652) (2.585) (Gain) oss on sale of assets
Slide 21: Year over year earnings impacts
year over year earnings impacts…
NorthWestern — Western Electric Utility Companies Corporate Access Day (September 2011) on 6ix