Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Q1 2024 Earnings Presentation
40 slides from Northwestern Energy's earnings presentation, Apr 26, 2024
Slide 1: 2024 First Quarter Earnings Webcast
2024 First Quarter Earnings Webcast April 26, 2024 18-K April 26, 2024
Slide 2: Forward Looking Statements
NorthWestern Energy 2 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. Forward-looking statements often address our expected future
Slide 3: Recent Highlights
Recent Highlights • Reported GAAP diluted EPS of $1.06 o Non-GAAP diluted EPS of $1.091 • Affirming 2024 diluted EPS guidance of $3.42 - $3.62 • Affirming long-term (5 year) rate base and earnings per share growth rates targets of 4% - 6%2 • Completed debt financing needed for 2024 • Dividend Declar
Slide 4: The NorthWestern Value Proposition
9%-11% Total Growth 11%+ Total Growth Incremental Opportunities: 6% + EPS Growth ~5% Dividend Yield Base Capital Plan: 4%-6% EPS Growth FERC Transmission Incremental generating capacity (subject to successful resource procurement bids) Qualifying Facility and / or Power Purchase Agreement buyo
Slide 5: First Quarter 2024 Financial Results
First Quarter 2024 Financial Results 5 1.) See reconciliation of Non-GAAP adjustments on page 9 and “Non-GAAP Financial Measures” in appendix First Quarter Net Income vs Prior Period •GAAP: 2.6 million or 4.2% •Non-GAAP1: 4.2 million or 6.7% First Quarter EPS vs Prior Period •GAAP: $0.01 or 1.0% •No
Slide 6: First Quarter Income Statement Comparison
(in millions except per share amounts) 2024 2023 Variance % Variance Operating Revenues 475.3$ 454.5$ 20.8$ 4.6% 174.7 165.5 9.2 5.6% Utility Margin 300.6 289.0 11.6 4.0% Operating Expenses Operating and maintenance 54.2 55.9 (1.7) (3.0%) Administrative and general 40.4 34.7 5.7 16.4% Property and o
Slide 7: First Quarter Earnings Drivers
After-tax EPS vs Prior Year First Quarter Earnings Drivers 7 1 2 Improvement in Utility Margin offset mild weather, higher OA&G expense, depreciation, interest expense, and share count dilution. 1.) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility
Slide 8: First Quarter Utility Margin Bridge
First Quarter Utility Margin Bridge Pre-tax Millions vs. Prior Year $11.6 million or 4.0% increase in Utility Margin NOTE: Utility Margin is a non- GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 8
Slide 9: First Quarter 2024 Non-GAAP Earnings
(1) As a result of the adoption of Accounting Standard Update 2017-07 in March 2018, pension and other employee benefit expense is now disaggregated on the GAAP income statement with portions now recorded in both OG&A expense and Other (Expense) Income lines. To facilitate better understanding of tr
Slide 10: Credit, Cash flow and Financing Plans
Credit, Cash flow and Financing Plans 10 Credit Ratings 2024 Financing Plan No equity expected to fund the current 5-year | $2.5 billion capital plan Financing plans (targeting a FFO to Debt ratio > 14%) are expected to maintain our current credit ratings. We expect to pay minimal cash taxes into 20
Slide 11: Strong Growth Outlook
Strong Growth Outlook This guidance range is based upon, but not limited to, the following major assumptions: • Normal weather in our service territories; • An effective income tax rate of approximately 12%-14%; and • Diluted average shares outstanding of approximately 61.3 million. 2024 Non-GAAP EP
Slide 12: Regulated Utility Five-Year Capital Forecast
$2.5 billion of highly-executable and low-risk capital investment Regulated Utility Five-Year Capital Forecast 12
Slide 13: Montana Wildfire Mitigation Plan
Montana Wildfire Mitigation Plan 13 Reduction of Ignition Potential System and Environmental Monitoring Enhanced Vegetation Maintenance Enriched Public Communication and Outreach Comprehensive summary of wildfire mitigation activities Expect to update plan with each electric rate review filing
Slide 14: Conclusion
Conclusion Pure Electric & Gas Utility Solid Utility Foundation Best Practices Corporate Governance Attractive Future Growth Prospects Strong Earnings & Cash Flows 14 NorthWestern Energy Group, Inc. dba: NorthWestern Energy Ticker: NWE (Nasdaq) www.northwesternenergy.com Corporate Support Office 301
Slide 15: Appendix
Appendix: 15
Slide 16: Disciplined Expense Program
16 Disciplined Expense Program Source: FERC Form 1 Reports - 2022 expenses and company filings through S&P Global IQ Electric Non-Fuel O&M excludes fuel and steam costs for power generation, water costs for hydro operations and purchased power cost unless identified in company disclosures, electric
Slide 17: Rate Case and Rate Base 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 rate base or authorized returns. (2) The Montan
Slide 18: Generation Investment
Generation Investment 18 * See NorthWestern Energy Group’s 2023 10-K for additional detail associated with litigation challenging the Yellowstone County Generating Station air quality permit. This litigation could further delay the project and increase costs. Construction of our 175 MW Yellowstone C
Slide 19: 2024 Earnings Bridge
2024 Earnings Bridge This guidance range is based upon, but not limited to, the following major assumptions: • Normal weather in our service territories; • An effective income tax rate of approximately 12%- 14%; and • Diluted average shares outstanding of approximately 61.3 million. 19 Appendix
Slide 20: Colstrip Transfer
Colstrip Transfer 20
Slide 21: Colstrip Transfer Overview
Colstrip Transfer Overview NorthWestern Energy executed an agreement with Avista Corporation (Exit Agreement) for the transfer of Avista’s ownership interests in Colstrip Units 3 and 4. • Effective date of transfer: December 31, 2025 • Generating capacity: 222 MW (bringing our total ownership to 444
Slide 22: Colstrip Facility Ownership Overview
Colstrip Facility Ownership Overview NorthWestern is actively working with the other owners to resolve outstanding issues, including the associated pending legal proceedings. Additionally, the owners intend to pursue a mutually beneficial reallocation (swap) of megawatts between the two units that w
Slide 23: Why Colstrip?
Why Colstrip? Reliable Existing resource, ready to serve our Montana customers. Avoids lengthy planning, permitting and construction of a new facility that would stretch in-service beyond 2026. Reduces reliance on imported power and volatile markets, providing increased energy independence. In
Slide 24: Why Colstrip? Reduces Risk
Why Colstrip? Reduces Risk We are in a supply capacity crisis due to lack of resource adequacy, with approx. 40% of our customers’ peak needs on the market. This transaction will reduce our need to import expensive capacity during critical times. Establishes clarity regarding operations past 202
Slide 25: January 2024 Cold Weather Event - Montana
25 Appendix January 2024 Cold Weather Event - Montana The above charts illustrate our resource nameplate capacity, the actual resource specific contribution of energy, the capacity deficit we faced, and the market price of power during the January 2024 multi-day cold weather event in Montana. As a r
Slide 26: Our Net-Zero Vision
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 risks, by inc
Slide 27: First Quarter Appendix
First Quarter Appendix 27
Slide 28: Utility Margin (Q1)
Utility Margin (Q1) (dollars in millions) Three Months Ended March 31, 2024 2023 Variance Electric $ 227.9 $ 217.2 $ 10.7 4.9% Natural Gas 72.7 71.8 0.9 1.3% Total Utility Margin $ 300.6 $ 289.0 $ 11.6 4.0% (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin
Slide 29: Operating Expenses (Q1)
Operating Expenses (Q1) Increase in operating expenses due to the following factors: $ 3.5 Higher depreciation expense due to plant additions and higher depreciation rates 2.4 Litigation outcome (Pacific Northwest Solar) 2.2 Non-cash impairment of alternative energy storage investment 1.6 Higher lab
Slide 30: Operating to Net Income (Q1)
Operating to Net Income (Q1) (dollars in millions) Three Months Ended March 31, 2024 2023 Variance Operating Income $ 102.1 $ 96.0 $ 6.1 6.4% Interest expense (31.0) (28.0) (3.0) (10.7)% Other income, net 4.3 4.7 (0.4) (8.5)% Income Before Taxes 75.4 72.7 2.7 3.7% Income tax expense (10.3) (10.2) (0
Slide 31: Tax Reconciliation (Q1)
Tax Reconciliation (Q1) 31 Appendix
Slide 32: Segment Results (Q1)
Segment Results (Q1) (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 32 Appendix Three Months Ended March 31, 2024 Electric Gas Other Total Operating revenues 343,186$ 132,156$ -$ 475,342$ Fuel, purchased sup
Slide 33: Electric Segment (Q1)
Electric Segment (Q1) (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 33 Appendix
Slide 34: Natural Gas Segment (Q1)
Natural Gas Segment (Q1) 34 Appendix (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure.
Slide 35: PCCAM Impact by Quarter
PCCAM Impact by Quarter 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 share
Slide 36: Balance Sheet
(dollars in millions) As of March 31, As of December 31, 2024 2023 Cash and cash equivalents 4.2$ 9.2$ Restricted cash 16.2 16.0$ Accounts receivable, net 186.9 212.3$ Inventories 103.8 114.5$ Other current assets 85.7 55.0$ Goodwill 357.6 357.6$ PP&E and other non-current assets 6,879.0 6,836.1$ To
Slide 37: Reconciling Gross Margin to Utility Margin
Reconciling Gross Margin to 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 reg
Slide 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures 38 Appendix
Slide 39: Non-GAAP Financial Measures
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 “non-GAAP fi
Slide 40: Delivering a bright future
Delivering a bright future 40
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