Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (July 2005)
20 slides from Northwestern Energy's shareholder meeting presentation, Jul 15, 2005
Slide 1: Annual Stockholders' Meeting July 14, 2005
Western Annual Stockholders’ Meeting July 14, 2005 NEW STRENGTH. NEW STRATEGY. NEW ENERGY.
Slide 2: Forward-Looking Statement
Forward-Looking Statement During the course of this presentation today, we will be discussing certain subjects including those pertaining to our strategy, and our discussions may contain forward-looking information. Although our expectations and beliefs are based on reasonable assumptions, actual re
Slide 3: Introduction
Introduction + NorthWestern is a new and stronger company after successful reorganization in 2004 + Significantly reduced debt, strengthened balance sheet * Transmission and distribution utility operations performing well with solid cash flow + Demonstrated top quartile customer service and reliabil
Slide 4: NorthWestern Energy Today
NorthWestern Energy Today ¢ Serving 617,000 electric and natural gas customers in Montana, South Dakota and Nebraska « Approximately 1,350 employees « Listed on NASDAQ: NWEC * Approximately $1.1 billion market capitalization * Quarterly dividend of 22 cents (88 cents annualized or approximately 3.0%
Slide 5: NorthWestern Energy Today
NorthWestern Energy Today + Regulated operations + Electric utility provides 52% of revenues and 63% of gross margin = Natural gas utility provides 28% of revenues and 22% of gross margin + Unregulated operations = Electric operations include 30% share of Colstrip Unit 4 and Milltown Hydro + Electri
Slide 6: 2004 Financial Overview
2004 Financial Overview * 2004 results utilized fresh-start reporting = Consolidated net income was $544.4 million in 2004 vs. loss of $128.7 million in 2003 = Earnings improvement primarily result of reorganization «On an adjusted basis (excluding reorganization impacts), company had estimated basi
Slide 7: 2005 First Quarter Financial Overview
2005 First Quarter Financial Overview Consolidated Operations (millions) Q1 2005 Q1 2004 Increase - Gross Margin $144.7 $132.7 9.0% = Increase due to a gain on amendment to a Montana Qualifying Facility of approximately $4.9 million + Unregulated electric segment (Colstrip 4) margins increased appro
Slide 8: 2005 Outlook
2005 Outlook « Projecting earnings from continuing operations of $1.30 to $1.45 per share (basic) « Bridge from 2004 to 2005 = Significant reduction in interest expense = Reduced G&A expense = Modest increase in margins due to growth
Slide 9: 2005 Cash Flow Overview
2005 Cash Flow Overview & &D & $215-$220 million* Value Creation Strategy dtnhance) $80 milli land Enhance Operations $ million $30-$35 million Reduce Debt ‘Assunmes asset sales proceeds of $65.70 rion aed Uses 2004 cash fow komoperstons oF8t00 calor arnt 35:1 proxy for ongoing cash fow femmoparston
Slide 10: Significant Accomplishments in 2005
Significant Accomplishments in 2005 « Regulatory achievements = Stipulation reached with Montana PSC to recover $4.6 ion in natural gas costs previously disallowed = Montana PSC approves Judith Gap wind project « Postbankruptcy achievements = Settling PPL litigation - $9 million cash gain — All PPL
Slide 11: Significant Accomplishments in 2005
Significant Accomplishments in 2005 ° Reduced total debt from NorthWestern has reduced debt $909 million to $755 million by $154 million since July 2004. from available cash oan scoured Unsecured = Debt to capitalization ratio down to approximately 50% = Debt reduction plans $200 $700 (nitions) met
Slide 12: Opportunities to Improve Shareholder Value
Opportunities to Improve Shareholder Value NorthWestern may use excess cash in one or more of the following ways: «Increase common stock dividend = Board increases dividend to $.25 per share payable September 30, 2005 « Share and/or warrant repurchase « Balance sheet liabilities improvement = Buy do
Slide 13: Value Creation Opportunity — Transmission Investment
Value Creation Opportunity — Transmission Investment * Take advantage of our @ () ee str ically located position + Pursue opportunities to expand electric and gas transmission infrastructure to meet increased needs + Evaluate strategic opportunities in northwestern U.S.
Slide 14: Montana Public Power, Inc. Proposal
Montana Public Power, Inc. Proposal ¢ MPPI would purchase in cash all NorthWestern common stock at $32.50 per share « Subsequent sale of non-Montana assets and liabilities to South Dakota Power « MPPI to fund purchase entirely by debt financing raised through taxable bonds ¢ Maintain rate regulation
Slide 15: NorthWestern's Response to MPPI Proposal
NorthWestern’s Response to MPPI Proposal « NorthWestern’s Board, in conjunction with financial and legal advisors, has evaluated MPPIs informal and formal proposals ¢ Board’s review process included numerous meetings with advisors, who also met with MPPI and its advisors « At each stage, NorthWester
Slide 16: NorthWestern's Concerns with the MPPI Proposal
NorthWestern’s Concerns with the MPPI Proposal Unacceptable risks exist raise doubt in ability to reach closing + Significant legal, regulatory, financial and tax risks exist due to the transaction’s complex structure = Untested legal and authority questions = Assumes unprecedented regulatory flexib
Slide 17: NorthWestern's Concerns About the MPPI Proposal
NorthWestern’s Concerns About the MPPI Proposal The financial consideration is not compelling vs. NorthWestern’s stand-alone prospects + Company’s improved financial and operational performance provides significant opportunities for near and long-term growth prospects + Enhanced opportunities exist
Slide 18: Why Should Stockholders Own NWEC Long Term?
Why Should Stockholders Own NWEC Long Term? ¢ Significant cash flow from operations = Strong earnings profile of core utility business = Significant reduction in interest expense due to debt reduction/refinancing = Company will not pay significant cash taxes through 2008 ¢ Solid dividend with opport
Slide 19: Our Employees Make the Difference
R, ““"_Our Employees Make the Difference ih + 2004 Service One Award winner - Consistent top quartile reliability 24/7 dedication to service ¢ Giving back to our communities
Slide 20: Searchable text section of graphics shown above
Searchable text section of graphics shown above [ G RAPHIC] [LOGO] Annual Stockholders’ Meeting July 14, 2005 NEW STRENGTH. NEW STRATEGY. NEW ENERGY. F orward-Looking Statement During the course of this presentation today, we will be discussing certain subjects including those pertaining to our stra