Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — FY2024 Earnings Presentation
53 slides from Northwestern Energy's earnings presentation, Feb 13, 2025
Slide 1: 2024 Year-End Earnings Webcast
1 2024 Year-End Earnings Webcast February 13, 2025 8-K February 13, 2025
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 b
Slide 3: 2024 In Review
2024 In Review Critical Infrastructure Investment • Maintained safe & reliable service while reaching new all-time winter & summer electric system peaks in Montana • Safely completed over $550 million of capital investment • Yellowstone County Generating Station online & serving customers • Strength
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 ✓ Data centers & new large- load opportunities ✓ FERC Regional Transmission ✓ Incremental generating capacity (subject to successful resource procurement bids) $2.7
Slide 5: 2024 Financial Results
2024 Financial Results 5 1.) See “Fourth Quarter 2024 Non-GAAP Earnings” and “Full Year 2024 Non-GAAP Earnings” below and “Non-GAAP Financial Measures” in appendix. Fourth Quarter 2024 EPS vs Prior Period • GAAP: $0.06 or (4.4%) • Non-GAAP1: $0.25 or (18.1%) Full Year 2024 EPS vs Prior Period • GAAP
Slide 6: Fourth Quarter Financial Review
Thank youFourth Quarter Financial Review 6
Slide 7: Fourth Quarter Earnings Drivers
Fourth Quarter Earnings Drivers 7 The decrease in diluted EPS was primarily driven by higher operating, depreciation, interest, and income tax expenses, partially offset by increased utility margin and income tax benefits. After-tax EPS vs Prior Year 1.) Utility Margin is a non-GAAP Measure. See app
Slide 8: Fourth Quarter 2024 Non-GAAP Earnings
We estimate weather to be a $8.3 million pre-tax detriment as compared to normal and a $3.1 million detriment as compared to fourth quarter 2023. (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 th
Slide 9: Full Year Financial Review
Thank youFull Year Financial Review 9
Slide 10: Year-Over-Year Earnings Drivers
Year-Over-Year Earnings Drivers 10 The increase in diluted EPS was primarily driven by higher base rates, increased transmission revenues, and income tax benefits, partially offset by higher operating, interest, and depreciation expenses. After-tax EPS vs Prior Year 1.) Utility Margin is a non-GAAP
Slide 11: Year-Over-Year Utility Margin Bridge
Year-Over-Year Utility Margin Bridge Pre-tax Millions vs. Prior Year $69.2 million or 6.9% increase in Utility Margin items that impact Net Income NOTE: Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 11
Slide 12: Full Year 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 13: Credit, Cash Flow, and Financing Plans
Credit, Cash Flow, and Financing Plans 13 Credit Ratings No equity expected to fund the current $2.74 billion 5-year 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 2028 due to utilizatio
Slide 14: Looking Forward
Thank youLooking Forward 14
Slide 15: Strong Growth Outlook
Strong Growth Outlook 15 ✓ 2025 EPS guidance expected to be provided following the outcome of our pending Montana rate review ✓ Affirming long-term growth rates from 2024 base1 • EPS growth of 4% to 6% • Rate base growth of 4% to 6% • Continued focus on closing the gap between earned & authorized re
Slide 16: 11% increase in 5-year capital investment plan
11% increase in 5-year capital investment plan $2.74 billion of highly-executable and low-risk critical capital investment Regulated Utility Five-Year Capital Forecast (millions) 16
Slide 17: Rate Review Summary
17 Rate Review Summary Key Dates of Montana procedural Schedule • 1/17/25: Intervenor testimony received • 3/14/25: NWE rebuttal and cross- intervenor testimony due • 3/24/25: Final day to file settlements • 4/22/25: Hearing Commences • 5/23/25: Implementation of requested rates (subject to refund)
Slide 18: Incremental Colstrip Capacity
18 Incremental Colstrip Capacity NorthWestern’s planned no cost acquisition of 592 MW of additional Colstrip capacity supports the integration of large-load customers, delivering substantial benefits to our customers, communities, and investors. 760 MW Existing Ownership Montana Average Load ✓ No co
Slide 19: Large Load Customers
MT ✓ Montana ▪ Served by overall utility portfolio, which is expected to be long capacity beginning in 2026 ▪ Over 60% carbon free ▪ If data center demand interest develops beyond existing capacity, we will work with the Montana PSC to structure appropriate tariffs ✓ South Dakota ▪ Significant indic
Slide 20: Regional Transmission Opportunities
20 Regional Transmission Opportunities 20 Colstrip Transmission System North Plains Connector (NPC) Consortium Project • $3.6 billion, 415-mile, high-voltage direct-current transmission line connecting to Montana's Colstrip substation, bridging the eastern and western U.S. energy grids • Project awa
Slide 21: Conclusion
Conclusion Pure Electric & Gas Utility Solid Utility Foundation Best Practices Corporate Governance Attractive Future Growth Prospects Strong Earnings & Cash Flows 21 NorthWestern Energy Group, Inc. dba: NorthWestern Energy Ticker: NWE (Nasdaq) www.northwesternenergy.com Corporate Support Office 301
Slide 22: Appendix
Thank youAppendix: 22
Slide 23: Rate base and authorized returns by jurisdiction
(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 24: Full Year Appendix
Thank youFull Ye r Appendix 24
Slide 25: Full Year Financial Results
Full Year Financial Results 25 1.) Utility Margin is a non- GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. Note: Subtotal variances may exist due to rounding. Appendix (in millions except per share amounts) 2024 2023 Variance % Varianc
Slide 26: Utility Margin (Full Year)
Utility Margin (Full Year) (dollars in millions) Twelve Months Ended December 31, 2024 2023 Variance Electric $ 871.1 $ 806.1 $ 65.0 8.1% Natural Gas 209.0 195.8 13.2 6.7% Total Utility Margin(1) $ 1,080.1 $ 1,001.9 $ 78.2 7.8% Increase in utility margin due to the following factors: $ 62.4 Base rat
Slide 27: Operating Expenses (Full Year)
(dollars in millions) Twelve Months Ended December 31, 2024 2023 Variance Operating & maintenance $ 227.8 $ 220.5 $ 7.3 3.3% Administrative & general 137.4 117.3 20.1 17.1% Property and other taxes 163.9 153.1 10.8 7.1% Depreciation and depletion 227.6 210.5 17.1 8.1% Operating Expenses $ 756.7 $ 70
Slide 28: Operating to Net Income (Full Year)
Operating to Net Income (Full Year) (dollars in millions) Twelve Months Ended December 31, 2024 2023 Variance Operating Income $ 323.3 $ 300.5 $ 22.8 7.6% Interest expense (131.7) (114.6) (17.1) (14.9)% Other income, net 23.0 15.8 7.2 45.6% Income Before Taxes 214.7 201.6 13.1 6.5% Income tax benefi
Slide 29: Tax Reconciliation (Full Year)
Tax Reconciliation (Full Year) 29 Appendix (in millions) Variance Income Before Income Taxes $214.7 $201.6 $13.1 Income tax calculated at federal statutory rate 45.1 21.0% 42.4 21.0% 2.7 Permanent or flow-through adjustments: State income taxes, net of federal provisions 0.4 0.2% 0.6 0.3% (0.2) Flow
Slide 30: Segment Results (Full Year)
Segment Results (Full Year) *Direct transmission expense excludes depreciation and depletion. (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. (2) Consists of unallocated corporate costs and some limited unreg
Slide 31: Electric Segment (Full Year)
Electric Segment (Full Year) (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 31 Appendix
Slide 32: Natural Gas Segment (Full Year)
Natural Gas Segment (Full Year) 32 Appendix (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure.
Slide 33: Balance Sheet and Capitalization
(dollars in millions) As of December 31, As of December 31, 2024 2023 Cash and cash equivalents 4.3$ 9.2$ Restricted cash 24.7 16.0 Accounts receivable, net 187.8 212.3 Inventories 122.9 114.5 Other current assets 78.5 55.0 Goodwill 357.6 357.6 PP&E and other non-current assets 7,221.8 6,836.1 Total
Slide 34: Cash Flow Summary
(dollars in millions) 2024 2023 Operating Activities Net Income 224.1$ 194.1$ Non-Cash adjustments to net income 213.5 210.1 Changes in working capital (18.9) 115.6 Other noncurrent assets & liabilities (11.9) (30.6) Cash Provided by Operating Activities 406.8 489.2 Cash Used in Investing Activities
Slide 35: 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 36: Montana property tax tracker and PCCAM history
Q1 Q2 Q3 Q4 Full Year '17/'18 Tracker $3.3 $3.3 '18/'19 Tracker ($5.1) $0.3 (4.8) 2018 (Expense) Benefit $0.0 $0.0 ($1.8) $0.3 ($1.5) Full Year '18/'19 Tracker ($1.6) $4.6 $3.0 '19/'20 Tracker $0.1 ($0.7) (0.6) 2019 (Expense) Benefit ($1.6) $4.6 $0.1 ($0.7) $2.4 Full Year ($9.4) ($9.4) '19/'20 Track
Slide 37: Fourth Quarter Appendix
Thank youFourth Quarter Appendix 37
Slide 38: Fourth Quarter Financial Results
Fourth Quarter Financial Results 38 1.) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. Note: Subtotal variances may exist due to rounding. Appendix (in millions except per share amounts) 2024 2023 Variance % Var
Slide 39: Utility Margin (Q4)
Utility Margin (Q4) (dollars in millions) Three Months Ended December 31, 2024 2023 Variance Electric $ 218.3 $ 200.0 $ 18.3 9.2% Natural Gas 60.5 57.8 2.7 4.7% Total Utility Margin1 $ 278.8 $ 257.8 $ 21.0 8.1% (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Ma
Slide 40: Operating Expenses (Q4)
Operating Expenses (Q4) Increase in operating expenses due to the following factors: $ 4.3 Depreciation expense due to plant additions and higher depreciation rates 3.3 Insurance expense, primarily due to increased wildfire risk premiums 2.2 Property and other taxes not recoverable within trackers 1
Slide 41: Operating to Net Income (Q4)
Operating to Net Income (Q4) (dollars in millions) Three Months Ended December 31, 2024 2023 Variance Operating Income $ 91.7 $ 103.2 $ (11.5) (11.1)% Interest expense (35.4) (29.5) (5.9) (20.2)% Other income, net 3.4 2.9 0.5 18.0% Income Before Taxes 59.7 76.6 (16.9) (22.1)% Income tax benefit (exp
Slide 42: Tax Reconciliation (Q4)
(in millions) Variance Income Before Income Taxes $59.7 $76.6 (16.9) Income tax calculated at federal statutory rate 12.6 21.0% 16.1 21.0% (3.5) Permanent or flow-through adjustments: State income taxes, net of federal provisions (0.3) (0.5%) (0.8) (1.0%) 0.5 Release of unrecognized tax benefits (20
Slide 43: Segment Results (Q4)
Segment Results (Q4) 43 Appendix *Direct transmission expense excludes depreciation and depletion. (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. (2) Consists of unallocated corporate costs and some limited
Slide 44: Electric Segment (Q4)
Electric Segment (Q4) (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 44 Appendix
Slide 45: Natural Gas Segment (Q4)
Natural Gas Segment (Q4) 45 Appendix (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure.
Slide 46: Rate Review Appendix
Thank youRate Review Appendix 46
Slide 47: Montana Electric Rate Review
Montana Electric Rate Review Montana Electric: • $69.4M Net Request • $874M Plant-in-Service additions (’23-’24F) • Operating Costs 1.1% CAGR (’21-’23) • Typical Residential Bill: 8.3% at full request 47 $156.5 Million Base Rate Increase Requested & $69.4 Million Total Request Typical 750 kWh Reside
Slide 48: Montana Gas Rate Review
Montana Gas Rate Review 48 $28.6 Million Base Rate Increase Requested Montana Natural Gas: • $28.6M Total Request • $174M Plant-in-Service additions (’23-’24F) • Operating Costs 3.3% CAGR (’21-’23) • Typical Residential Bill: 17.0% at full request Typical 65 Therm Residential Natural Gas Bill Append
Slide 49: Nebraska Natural Gas Rate Review
Nebraska Natural Gas Rate Review 49 $3.6 Million Rate Increase Requested Typical 100 Therm Residential Natural Gas Bill Nebraska Natural Gas: • $3.6M Total Request • $42M Plant-in-Service additions (’07-’23) • Operating Costs 1.3% CAGR (’07-’23) • Typical Residential Bill: 5.8% at full request • Int
Slide 50: South Dakota Natural Gas Rate Review
50 South Dakota Natural Gas Rate Review Unanimous approval from the South Dakota Public Utilities Commission of a constructive settlement with the PUC staff. • First natural gas rate review since 2010 with base rates driven by more than $80 million invested in South Dakota critical infrastructure. •
Slide 51: Non-GAAP Financial Measures
Non-GAAP Financial Measures 51 Appendix Pre-Tax Adjustments ($ Millions) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Reported GAAP Pre-Tax Income 181.2$ 156.5$ 176.1$ 178.3$ 182.2$ 144.2$ 190.2$ 182.4$ 201.6$ 214.7$ Non-GAAP Adjustments to Pre-Tax Income: Weather 13.2 15.2 (3.4) (1.3) (7.3) 9.
Slide 52: 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 53: Thank you
Thank youDelivering a bright future 53
NorthWestern Energy Group — FY2024 Earnings Presentation on 6ix