Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Investor Presentation (September 2010)
25 slides from Northwestern Energy's investor presentation, Sep 1, 2010
Slide 1: Midwest Investor Update
Midwest Investor Update September 1 - 2, 2010
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 financial
Slide 3: Who we are
who we are… Above data as of 6/30/10 (1) Book capitalization calculated as total debt, excluding capital leases, plus shareholders’ equity. ¾ 661,000 customers » 397,000 electric » 264,000 natural gas ¾ Approximately 123,000 square miles of service territory in Montana, South Dakota, and Nebraska »
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… ¾ Solid operations » Cost competitive » Above-average reliability » Award-winning customer service ¾ Low single A secured credit ratings with a strong balance sheet and liquidity » April 15, 2010 Fitch upgraded secured and unsecured ratings to A- and BBB+ respectively ¾ Po
Slide 5: Improving credit ratings
improving credit ratings… A security rating is not a recommendation to buy, sell or hold securities. Such rating may be subject to revision or withdrawal at any time by the credit rating agency and each rating should be evaluated independently of any other rating.
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity… ¾ Total Debt / Total capitalization of 55.4% (1) ¾ May 2010 » We refinanced existing $225 million, 5.875% Senior Secured Notes due 2014 with 15 year First Mortgage Bonds due 2025. Bonds priced April 15th at 5.01%. ¾ Total liquidity approximately $180 million ¾ Nea
Slide 7: Positive earnings and ROE
Recent authorized ROE’s: Mill Creek (10.25%) and Colstrip Unit 4 (10.00%). positive earnings and ROE… * 2010 Estimate for illustrative purposes only and based on guidance range $1.95 - $2.10 and 36.5 million fully diluted shares
Slide 8: Strong cash flows
Earnings trend and NOLs provide strong cash flows to fund future investment. strong cash flows… (1) Utility maintenance capex only, excludes investment project opportunities. (2) 2009 Cash Flow from Operations adjusted to add back pension funding in excess of expense and Ammondson settlement paid.
Slide 9: Pension investment to free up cash flow
It is also anticipated that our $93 million investment to fund pension in 2009 will free up significant cash flow for future investment.
Slide 10: Pension funded status
12/31/09 pension funded status… Data source: SNL Financial
Slide 11: Competitive total shareholder return
competitive total shareholder return… Data source: SNL Financial
Slide 12: Growing dividend
Goal for dividend payout ratio of 60% - 70%. Current dividend yield about 5% . and growing dividend… (1) 2010 estimated payout range assumes midpoint of $1.95 - $2.10 guidance range
Slide 13: Constructive regulatory environment
Maintaining positive regulatory relations in all jurisdictions constructive regulatory environment… ¾ Montana » Rate cases filed October 2009 requesting $17.5 million revenue increase ♦ July 2010 revised rate request to $15.1 million reflecting lower updated costs ♦ July 2010 interim rate relief of
Slide 14: Constructive regulatory environment (FERC)
Maintaining positive regulatory relations in all jurisdictions constructive regulatory environment… ¾ FERC » Working with FERC for MSTI rate design ♦ FERC encouraged Company to develop MSTI on a cost of service basis by requesting appropriate tariff waivers for existing OATT » FERC approved 230kV Re
Slide 15: Near-term potential earnings drivers
near-term potential earnings drivers… ¾ In 2010 we anticipate » Mill Creek AFUDC ♦ Approximately $9 million full year pre-tax contribution » Modest recovery in volumes and economic activity in ♦ High ratio of residential/commercial vs. industrial customers ● Electric: 69% Residential & Commercial, 3
Slide 16: Longer term investment opportunities
longer term investment opportunities… ¾ Distribution system enhancements » Incremental rate based investment to enhance reliability and capacity, improve rural service, and prepare the system for potential smart grid applications (early stages) ¾ Energy supply » Mill Creek Generation Station » South
Slide 17: Our proposed transmission
our proposed transmission —_RLOE.cis IDAHO NorthWeste m nerzy ring Bri re
Slide 18: Potential project summary
Opportunity to increase and diversify earnings as compared with our existing $1.6 billion rate base. potential project summary…
Slide 19: In summary
in summary… ¾ Solid operations ¾ Low single A secured credit ratings with a strong balance sheet and liquidity ¾ Positive earnings and ROE trend ¾ Strong cash flows ¾ Competitive total shareholder return and dividend that has increased every year since 2005 ¾ Constructive regulatory environment ¾ Fo
Slide 20: Appendix
Appendi x
Slide 21: Income statement, six months ended June 30
(in thousands) Six Months Ended June 30, 2010 2009 Variance Operating Revenues $ 578,232 $ 606,616 $ (28,384) Cost of Sales 284,763 314,850 (30,087) Gross Margin 293,469 291,766 4,703 Operating Expenses Operating, general & administrative 115,434 126,317 (10,883) Property and other taxes 47,952 42,5
Slide 22: Balance sheet, June 30, 2010
(in thousands) June 30, December 31, 2010 2009 Cash 6149 4,344 Restricted cash 14812 13,608 ‘Accounts receivable, net 91,985 143,759 Inventories 42,065 47,305 Other current assets 70,085 55,811 Goodwill 355,128 355,128 PPE and ther non-current assets 2,251,725, 2,175,177 Total Assets $__ 2,831,949 $
Slide 23: Cash flow, six months ended June 30
‘Sh Months Ended June 30, (in thousands) 2010 2009 Net Income $ 40,409 $ 28,911 Depreciation 45,872 (44,982 Amort of debt issue costs, discount, deferred hedge gain and restricted stock 1,891 2,286 Equity portion of allowance for funds used during construction (2,585) (275) Loss (Gain) on sale of as
Slide 24: 2009 - 2010 earnings bridge
2009 - 2010 earnings bridge… Appendi x
Slide 25: Reaffirming 2010 EPS guidance
reaffirming 2010 EPS guidance… ¾ The major assumptions include, but are not limited to, the following expectations: » No impact from requested rate increase in Montana (including interim rates) due to anticipated final order in the rate case during the fourth quarter of 2010; » The release of the va
NorthWestern — Investor Presentation (September 2010) on 6ix