Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Q2 2022 Earnings Presentation
43 slides from Northwestern Energy's earnings presentation, Jul 28, 2022
Slide 1: 2022 Second Quarter Earnings Webcast
Sunrise from Swords Park | Billings, MT 2022 Second Quarter Earnings Webcast July 28, 2022
Slide 2: Presenting Today / Forward Looking Statements
Presenting Today Bob Rowe Brian Bird Crystal Lail CEO President & COO 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
Slide 3: Recent Highlights
Recent Highlights Financial results in line with expectations for the quarter… • Net income of $29.8 million or $0.54 diluted earnings per share • Non-GAAP EPS of $30.1 or $0.54 diluted earning per share • Expected long-term annual EPS growth rate of 3% - 6% • Reaffirming full year non-GAAP guidanc
Slide 4: Summary Financial Results
Summary Financial Results (Second Quarter) (1) 4 (1) Utility Margin is a non-GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional disclosure.
Slide 5: EPS Bridge to Second Quarter 2022
EPS Bridge to Second Quarter 2022 After-tax Earnings Per Share Second quarter earnings in line with our expectations. See slide 8 and “Non-GAAP We estimate favorable weather in Q2 2022 resulted in a $3.0 million Financial Measures” slide in the appendix for additional pretax benefit as compared to n
Slide 6: Utility Margin Bridge to Q2 2022
Utility Margin Bridge to Q2 2022 Pre-tax Earnings NOTE: Utility Margin is a non- GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional $2.0 Million (0.9%) decrease in Utility Margin disclosure. 6 due to items that impact Net Income.
Slide 7: Operating Expense Bridge to Q2 2022
Operating Expense Bridge to Q2 2022 Pre-tax Earnings NOTE: Operating Expense excludes fuel, purchased supply and direct $2.8 Million (1.6%) increase in Operating Expenses transmission expense. due to items that impact Net Income. 7
Slide 8: Q2 2022 GAAP to Non-GAAP Earnings
Q2 2022 GAAP to Non-GAAP Earnings The adjusted non-GAAP measures presented in the table are being shown to reflect significant items that are non- recurring or a variance from normal weather, however they should not be considered a substitute for financial results and measures determined or calculat
Slide 9: Cash Flow
Cash Flow (YTD thru 6/30) Cash from Operating Activities increased by $128.3 million primarily due to: • $87.3 million increase* in collection of energy supply costs from customers, which includes costs incurred during a February 2021 prolonged cold weather event, and the under-collected position of
Slide 10: 2022 Earnings Bridge
2022 Earnings Bridge Guiding down to $3.20 to $3.40 primarily due to equity needed to support increased capital investment. • An increased, yet more sustainable, level of operating expenses, along with dilution from equity financing of capital investment, is expected to be partially offset by organi
Slide 11: Capital Investment Forecast and Funding
Capital Investment Forecast and Funding NorthWestern’s $582 million Capital Plan for 2022 remains on track… $2.4 billion of low-risk capital investment forecasted over the next five years to address grid modernization and renewable energy integration. This sustainable level of capex is expected to d
Slide 12: Looking Forward
Looking Forward Montana electric and natural gas rate filing… Updating investment and cost of service from prior test periods (2015 natural gas and 2017 electric) Expect to file in August 2022 We anticipate including proposals to reduce regulatory lag, improve cash flow to support credit rati
Slide 13: Conclusion
Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects 13
Slide 14: Appendix
CT Appendix 14
Slide 15: Our Net-Zero Vision
Appendix Our Net-Zero Vision Over the past 100 years, NorthWestern Energy has maintained our commitment to provide customers with reliable and affordable electric and natural gas service while also being good stewards of the environment. We have responded to climate change, its implications and risk
Slide 16: Utility Margin
Appendix Utility Margin (Second Quarter) (dollars in millions) Three Months Ended June 30, 2022 2021 Variance Electric $ 185.7 $ 192.2 $ (6.5) (3.4%) Natural Gas 42.3 38.1 4.2 11.0% (1) Total Utility Margin $ 228.0 $ 230.3 $ (2.3) (1.0%) Decrease in utility margin due to the following factors: $ (4.
Slide 17: Operating Expenses
Appendix Operating Expenses (Second Quarter) (dollars in millions) (1) We have included Three Months Ended June 30, the change in the non- service cost component 2022 2021 Variance of our pension and other postretirement benefits, which is Operating & maintenance $ 53.3 $ 51.5 $ 1.8 3.5% recorded wi
Slide 18: Operating to Net Income
Appendix Operating to Net Income (Second Quarter) (dollars in millions) Three Months Ended June 30, 2022 2021 Variance Operating Income $ 52.4 $ 59.1 $ (6.7) (11.3%) Interest expense (24.0) (23.5) (0.5) (2.1%) Other income, net 2.9 3.0 (0.1) (3.3%) Income Before Taxes 31.2 38.6 (7.4) (19.2%) Income
Slide 19: Tax Reconciliation
Appendix Tax Reconciliation (Second Quarter) 19
Slide 20: 2022 Earnings Bridge (detailed)
Appendix 2022 Earnings Bridge (detailed) NorthWestern affirms its 2022 earnings guidance range of $3.20 - $3.40 per diluted share and remains on track for its $582 million capital plan for 2022. Cash Tax Outlook We anticipate production tax and other credits to largely offset federal cash tax obliga
Slide 21: EPS Range to Meet Guidance
Appendix EPS Range to Meet Guidance The adjusted non- GAAP measures presented in the table are being shown to reflect significant items that are non- recurring or a variance from normal weather, however they should not be considered a substitute for financial results and measures determined or calcu
Slide 22: 2022 YTD GAAP to Non-GAAP Earnings
Appendix 2022 YTD GAAP to Non-GAAP Earnings The adjusted non-GAAP measures presented in the table are being shown to reflect significant items that are non- recurring or a variance from normal weather, however they should not be considered a substitute for financial results and measures determined o
Slide 23: Weather / Hydro Conditions
Appendix Weather / Hydro Conditions We estimated a $3.0 million pre-tax benefit as compared to normal and a $1.0 million benefit as compared to Q2 2021 with a longer heating season in April and May, partially offset by an overall cooler June. Much needed snowfall blanketed Western Montana this sprin
Slide 24: Quarterly PCCAM Impacts
Appendix Quarterly PCCAM Impacts Pre-tax Millions In 2017, the Montana legislature revised the statute regarding our recovery of electric supply costs. In response, the MPSC approved a new design for our electric tracker in 2018, effective July 1, 2017. The revised electric tracker, or PCCAM establi
Slide 25: Qualified Facility Earnings Adjustment
Appendix Qualified Facility Earnings Adjustment Our electric QF liability consists of unrecoverable costs associated with contracts covered under PURPA that are part of a 2002 stipulation with the MPSC and other parties. Risks / losses associated with these contracts are born by shareholders, not cu
Slide 26: Balance Sheet
Appendix Balance Sheet Debt to Total Capitalization down from last year and remains within our targeted 50% - 55% range. 26
Slide 27: Segment Results
Appendix Segment Results (Second Quarter) (1) (1) 27 (1) Utility Margin is a non-GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional disclosure.
Slide 28: Electric Segment
Appendix Electric Segment (Second Quarter) (1) 28 (1) Utility Margin is a non-GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional disclosure.
Slide 29: Natural Gas Segment
Appendix Natural Gas Segment (Second Quarter) (1) 29 (1) Utility Margin is a non-GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional disclosure.
Slide 30: Utility Margin
Appendix Utility Margin (YTD Through 6/30) (dollars in millions) Six Months Ended June 30, 2022 2021 Variance Electric $ 379.8 $ 382.1 ($ 2.3) (0.6%) Natural Gas 107.5 104.4 3.1 3.0% (1) Total Utility Margin $ 487.3 $ 486.5 $ 0.8 0.2% Increase in utility margin due to the following factors: $ 3.5 Hi
Slide 31: Operating Expenses
Appendix Operating Expenses (YTD Through 6/30) (dollars in millions) (1) We have included Six Months Ended June 30, the change in the non- service cost component 2022 2021 Variance of our pension and other postretirement benefits, which is Operating & maintenance $ 106.1 $ 103.3 $ 2.8 2.7% recorded
Slide 32: Operating to Net Income
Appendix Operating to Net Income (YTD Through 6/30) (dollars in millions) Six Months Ended June 30, 2022 2021 Variance Operating Income $ 131.5 $ 140.0 $ (8.5) (6.1%) Interest expense (47.7) (47.0) (0.7) (1.5%) Other income, net 7.6 8.6 (1.0) (11.6%) Income Before Taxes 91.4 101.7 (10.3) (10.1%) Inc
Slide 33: Tax Reconciliation
Appendix Tax Reconciliation (YTD Through 6/30) 33
Slide 34: Segment Results
Appendix Segment Results (YTD Through 6/30) (1) (1) 34 (1) Utility Margin is a non-GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional disclosure.
Slide 35: Electric Segment
Appendix Electric Segment (YTD Through 6/30) (1) 35 (1) Utility Margin is a non-GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional disclosure.
Slide 36: Natural Gas Segment
Appendix Natural Gas Segment (YTD Through 6/30) (1) 36 (1) Utility Margin is a non-GAAP Measure See appendix slide titled “Explaining Utility Margin” for additional disclosure.
Slide 37: De-risking the Montana Capacity Deficit
Appendix De-risking the Montana Capacity Deficit NorthWestern has made significant progress to de-risk the capacity deficit between now and 2025. These near term capacity solutions allow time for clarity on Colstrip arbitration, further development in the western markets, and ongoing technological a
Slide 38: Alternative Capacity Considerations
Appendix Alternative Capacity Considerations We expect to build the 175MW nameplate Yellowstone County Reciprocating Internal Combustion Engine (RICE) generation facility for approximately $275 million with capacity generation output of roughly 160 MW*. If we were to build wind or solar to provide t
Slide 39: Rate Base & Authorized Return Summary
Appendix Rate Base & Authorized Return Summary (1) The revenue requirement associated with the FERC regulated portion of Montana electric transmission and ancillary services are included as revenue credits to our MPSC jurisdictional customers. Therefore, we do not separately reflect FERC authorized
Slide 40: Explaining Utility Margin
Appendix Explaining Utility Margin Management believes that Utility Margin provides a useful measure for investors and other financial statement users to analyze our financial performance in that it excludes the effect on total revenues caused by volatility in energy costs and associated regulatory
Slide 41: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures 41
Slide 42: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures This presentation includes financial information prepared in accordance with GAAP, as well as other financial measures, such as Utility Margin, Adjusted Non-GAAP pretax income, Adjusted Non-GAAP net income and Adjusted Non-GAAP Diluted EPS that are considered “no
Slide 43: Upetivering a bright future
Upetivering a bright future
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