Slide 1: Third Quarter 2005 Update
Western Third Quarter 2005 Update November 2005 NEW STR NEW STRATEGY. NEW ENE
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: 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
Slide 4: NorthWestern Energy Today (cont'd)
NorthWestern Energy Today (cont'd) + 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
Slide 5: Senior Leadership
Senior Leadership Michael J. Hanson, President and Chief Executive Officer = In current position since May 20, 2005; President since March 2005; named Chief Operating Officer in August 2003. = Nearly 25 years utility industry experience in operations, finance and legal leadership. + Brian B, Bird, V
Slide 6: Senior Leadership (cont'd)
Senior Leadership (cont'd) Patrick R. Corcoran, Vice President - Governmental and Regulatory Affairs = Incurrent position since 2001. = 26 years utility industry experience Bobbi L. Schroeppel, Vice President - Customer Care and Communications = In current position since June 2002. = 11 years utilit
Slide 7: Third Quarter 2005 Highlights
Third Quarter 2005 Highlights + Finalized settlement with PPL « Nearly all bankruptcy claims have been settled = Magten only significant claim remaining * Sold last Blue Dot operation location * Continuing work on Jackrabbit line and substations to meet demand for increasing loads in high-growth are
Slide 8: Third Quarter 2005 Financial Results
Third Quarter 2005 Financial Results * Revenues increased 4.2% «Gross margin increased 7.5% « Consolidated income from continuing operations was $9.3 million vs. loss of $25.2 million in 3Q 2004 * Consolidated net income was $8.8 million vs. consolidated net loss of $29.6 million in 3Q 2004 «Increas
Slide 9: Year-to-Date 2005 Financial Results
Year-to-Date 2005 Financial Results * Revenues increased 9.4% ¢ Gross margin increased 10.1% « Consolidated income from continuing operations was $34.1 million vs. loss of $27.4 million year-to- date in 2004 « Consolidated net income was $23.8 million vs. loss of $17.4 million year-to-date in 2004
Slide 10: Balance Sheet at September 30, 2005
Balance Sheet at September 30, 2005 * Unrestricted cash was $20.3 million vs. $17.1 million at year-end 2004 «Increase in open credit from suppliers = Company has secured lines of credit from energy suppliers at approximately 1.5 times expected commodity purchases for winter season * Long-term debt
Slide 11: Cash Flow for Nine Months Ended September 30, 2005
Cash Flow for Nine Months Ended September 30, 2005 ¢ Cash provided by continuing operations totaled $146.4 million vs. $155.0 million for same period in 2004 «Includes the following uses of cash in the first nine months of 2005 = Voluntary contribution to pension fund during the quarter of $31 milli
Slide 12: Capital Resources at September 30, 2005
Capital Resources at September 30, 2005 ¢ Company currently has $200 million senior revolving line of credit ¢ $75 million drawn on the facility ¢ $41 million in letters of credit ¢ Current availability $104 million = $84 million on the revolver = $20 million cash
Slide 13: Status of Noncore Asset Sales
Status of Noncore Asset Sales ¢ Netexit Bankrupcty = Company received in September an initial $20 million distribution as a creditor « Anticipates receiving additional $20 million by end of 2005 « Montana First Megawatts = Continue work to sell equipment « Anticipate receiving approximately $20 mill
Slide 14: Share Repurchase Program
Share Repurchase Program ¢ For up to $75 million, or approximately 7% of outstanding shares of common stock - Anticipate using cash from asset sales and 2006 cash flow from operations to fund program «Intend to maintain debt to capitalization levels at approximately 50%
Slide 15: Other Opportunities for Value Creation
Other Opportunities for Value Creation ¢ Buy down Qualifying Facility contract liability « Buy out Colstrip 4 lease «Invest in utility transmission and distribution assets to grow earnings and cash flow
Slide 16: Earnings Guidance
Earnings Guidance ¢ Reaffirmed 2005 guidance of $1.30 to $1.45 per share on continuing operations (basic) = Expects to be on the high end of the range « Projecting earnings from continuing operations of $1.70 to $1.90 per share (basic) ¢ Expect cash flow provided from continuing operations for 2006
Slide 17: Dividend Growth
Dividend Growth ¢ Quarterly dividend increased to 31 cents per share from previous amount 25 cents per share = Dividend payable on Dec. 31 (Dec. 15 record date) ¢ Annualized rate of $1.24 per share * 60% - 70% payout ¢ Board will continue to review dividend policy to insure competitive return to sha
Slide 18: Credit Ratings
Credit Ratings Fitch = Secured debt: BBB- = Corporate rating: BB+ = Positive outlook * Standard & Poors = Secured debt: BB+ = Corporate rating: BB+ = Negative outlook (based on uncertainty of MPPI proposal) * Moody’s = Secured debt: Bat = Corporate rating: Ba2 = Positive outlook
Slide 19: Searchable text section of graphics
Searchable text section of graphics shown above [ GRAPHIC] [LOGO] Third Quarter 2005 Update November 2005 NEW STRENGTH. NEW STRATEGY. NEW ENERGY. Fo rward-Looking Statement During the course of this presentation today, we will be discussing certain subjects including those pertaining to our strategy