Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — AGA Financial Forum 2008
20 slides from Northwestern Energy's conference presentation, May 5, 2008
Slide 1: AGA Financial Forum
AGA Financial Forum May 5, 2008
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 financia
Slide 3: Who we are
who we are … 650,000 customers 388,000 electric 262,000 natural gas Approximately 123,000 square miles of service territory in Montana, Nebraska and South Dakota Total Generation (mostly base load coal) Electric transmission lines Natural gas distribution lines Supplier-owned electric or natural gas
Slide 4: Business overview
business overview … Regulated Operations (89% of Gross Margins) One of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 650,000 customers in Montana, South Dakota and Nebraska Electric Operations (65%) Gas Operations (24%) Montana Montana
Slide 5: 2007 segment information
2007 segment information … Unaudited (Dollars in 000's) ELECTRIC GAS UNREGULATED OTHER / YE Dec 31, 2007 TOTAL UTILITY UTILITY ELECTRIC ELIMINATIONS Gross Margin 346,976 127,626 56,152 901 531,655 % of Total 65% 24% 11% 0% Operating Income 90,692 36,067 20,407 (7,073) 140,093 % of Total 65% 26% 15%
Slide 6: 2008 1Q results
2008 1Q results … (000's) Three Months Ended March 31, 2008 2007 B(W) % change Operating Revenues 385,975 366,565 19,410 5.3% Cost of Sales 229,084 219,278 (9,806) -4.5% Gross Margin 156,891 147,287 9,604 6.5% Operating Expenses Operating, general & administrative 60,071 62,448 2,377 3.8% Property a
Slide 7: Strong balance sheet
strong balance sheet … Unaudited (Dollars in 000's) Debt31Ratings December 31 March 2008 2007 Cash 33,755 12,773 Restricted Cash 13,904 14,482 Accounts Receivable, Net 142,280 143,482 Inventories 29,579 63,586 Other Current Assets 51,619 44,031 Goodwill 355,128 355,128 PP&E and Other Non-current Ass
Slide 8: Colstrip Unit 4 strategic alternatives update
Colstrip Unit 4 strategic alternatives update … Considerations Sale of the plant Evaluate possible transfer to rate base Retain plant as unregulated Analyze a long-term index sale to NorthWestern’s regulated customers Possible sale of NorthWestern’s 30% interest in CU4 Confidential Information Memor
Slide 9: 2008 guidance bridge from 2007 results
2008 guidance bridge from 2007 results … 2008 Guidance Reported 2007 - EPS fully diluted $ 1.44 Mid-point Guidance for 2008 - diluted $ 1.60 $ 1.75 $ 1.68 Yr over yr increase $ 0.24 per share Bridge to 2008: Rates - MT $ 0.23 Rates - FERC $ 0.01 Rates - SD $ 0.04 Rates - NE $ 0.02 Anticipated reduct
Slide 10: NorthWestern's future
NorthWestern’s future … Operationally strong Cost competitive Above-average reliability Award-winning customer service Financially strong Steady earnings growth Strong cash flows Approximately a 50/50 debt to total capitalization ratio Secured credit ratings of A-(MT) BBB+(SD) / BBB / Baa3 Unsecured
Slide 11: Montana proposed generation landscape
Montana proposed generation landscape … Potential Generation Development in Montana 4,500 4,012 4,000 3,500 3,000 3,000 2,500 2,000 1,526 1,500 1,000 722 770 300 375 268 500 52 - Coal Gas Hydro Wind MATL In-Service Signed Total MT LGIA Existing Generation New transmission is needed to support new ge
Slide 12: Generation project developments
generation project developments … Mill Creek Generation Plant Site selected at Mill Creek, near Anaconda, Montana Design phase Filing expected by end of 2Q ‘08 Construction to begin upon approval Estimated to be on-line at beginning of 2011 Approximately 120 MW of installed capacity Approximately $1
Slide 13: Transmission pathway considerations
transmission pathway considerations … 13
Slide 14: Transmission project developments
transmission project developments … Colstrip 500 KV Upgrade NorthWestern currently assumes it will be only partner Renewed interest by certain of the other owners Significant proposed generation but mix is changing May effect the timing and the configuration of the project Looking to make the upgrad
Slide 15: Transmission project developments cont'd
transmission project developments cont’d … MSTI Permitting for 500 KV line Will scale this project to committed long term contracts 230KV, 270 mile line to move 430 MWs; cost = $250M - $300M 345KV, 370 mile line to move 800 MWs; cost = $650M - $700M 500KV, 400 mile line to move 1,500 MWs; cost = $75
Slide 16: Growth project timing
growth project timing… Mill Creek Generation Plant 2008 2009 2010 2011 Planning Construction Operation Cumulative Dollars Spent: $4M-$5M $100M $150 M Colstrip 500 KV upgrade 2008 2009 2010 2011 2012 2013 Planning & Technical Studies Construction Operation Cumulative Dollars Spent: $1M-$2M $100M $200
Slide 17: Growth project actions '08/'09
growth project actions ‘08/’09 … Mill Creek Mill Creek 2008 2009 File for approval with the MPSC Q2 Reserve equipment Q1 Air quality permit received Q4 Engineering design Q1 Expect decision from the MPSC Q4 Begin construction Q3 500 KV upgrade 500 KV upgrade 2008 2009 Complete facilities studies Q4
Slide 18: Growth project potential
growth project potential … (in millions) Annual Earnings Opportunity* Cost of Project Timing MSTI transmission line 500 KV scenario $ 37.5 to $45.0 $ 750.0 to $ 900.0 Jan 2013 345 KV scenario $ 32.5 to $35.0 $ 650.0 to $ 700.0 Jan 2013 230 KV scenario $ 12.5 to $15.0 $ 250.0 to $ 300.0 Jan 2013 Cols
Slide 19: NorthWestern – value and growth
Northwestern – value and growth … Value Dividend yield of 5.1% Currently trading at approximately 1.2x book value Opportunity for Growth Possibility of rate base growth in excess of $1 billion Potential additional annual earnings of approximately $50 million by 2013 Strong balance sheet/credit ratin
Slide 20: Summary
summary … Attractive Regional T&D utility with stable customer growth Transmission & Attractive mix of electric and natural gas customers Distribution Business Reliable and cost competitive operations Regulated electric and gas contribute 90% of gross margins Stable and Predictable Cost-based operat