Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — KeyBank presentation (July 2008)
21 slides from Northwestern Energy's conference presentation, Jul 22, 2008
Slide 1: Investor Update
Investor Update July 22, 2008
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… 650,000 customers 388,000 electric 262,000 natural gas Approximately 123,000 square miles of service territory in Montana, Nebraska and South Dakota Total Generation (mostly base load coal) Electric transmission lines Natural gas distribution lines Supplier-owned electric or natural gas
Slide 4: Business overview
business overview… Regulated Operations (89% of Gross Margins) One of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 650,000 customers in Montana, South Dakota and Nebraska Electric Operations (65%) Gas Operations (24%) Montana Montana
Slide 5: 2007 segment information
2007 segment information… Unaudited (Dollars in 000's) ELECTRIC GAS UNREGULATED OTHER / YE Dec 31, 2007 TOTAL UTILITY UTILITY ELECTRIC ELIMINATIONS Gross Margin 346,976 127,626 56,152 901 531,655 % of Total 65% 24% 11% 0% Operating Income 90,692 36,067 20,407 (7,073) 140,093 % of Total 65% 26% 15% -
Slide 6: 2008 1Q results
2008 1Q results… (000's) Three Months Ended March 31, 2008 2007 B(W) % Change Operating Revenues 385,975 366,565 19,410 5.3% Cost of Sales 229,084 219,278 (9,806) -4.5% Gross Margin 156,891 147,287 9,604 6.5% Operating Expenses Operating, general & administrative 60,071 62,448 2,377 3.8% Property an
Slide 7: Earnings trend
earnings trend… ($ in millions) Net Income Source: Company reports and SEC filings. Note: Full year 2004 results show combined results for NorthWestern's predecessor company from January 1, 2004 to October 31, 2004 and for NorthWestern from November 1, 2004 to December 31, 2004 and excludes debt ext
Slide 8: Strong balance sheet
strong balance sheet… Unaudited (Dollars in 000's) Debt31Ratings December 31 March 2008 2007 Cash 33,755 12,773 Restricted Cash 13,904 14,482 Accounts Receivable, Net 142,280 143,482 Inventories 29,579 63,586 Other Current Assets 51,619 44,031 Goodwill 355,128 355,128 PP&E and Other Non-current Asse
Slide 9: 2008 guidance bridge from 2007 results
2008 guidance bridge from 2007 results… 2008 Guidance Reported 2007 - EPS fully diluted $ 1.44 Mid-point Guidance for 2008 - diluted $ 1.60 $ 1.75 $ 1.68 Yr over yr increase $ 0.24 per share Bridge to 2008: Rates - MT $ 0.23 Rates - FERC $ 0.01 Rates - SD $ 0.04 Rates - NE $ 0.02 Anticipated reducti
Slide 10: NorthWestern's future
NorthWestern’s future… Operationally strong Cost competitive Above-average reliability Award-winning customer service Financially strong Steady earnings growth Strong cash flows Approximately a 50/50 debt to total capitalization ratio Secured credit ratings of A-(MT) BBB+(SD) / BBB / Baa2 Unsecured
Slide 11: Generation growth highlights
generation growth highlights… Mill Creek Generating Unit in Montana What: 120-150 MW – built for regulation services to balance supply and load; estimated to cost around $200 million to complete Why: Existing services are becoming more expensive and scarce Anticipated 3Q 2008 filing with the MPSC So
Slide 12: Montana proposed generation landscape
Montana proposed generation landscape… Potential Generation Development in Montana 5,000 4,500 4,213 4,000 3,500 3,000 3,000 2,606 2,500 2,000 1,500 722 770 1,000 500 116 - Coal Gas Hydro Wind Total MT Existing Generation New transmission is needed to support new generation 12
Slide 13: Transmission project developments
transmission project developments… Colstrip 500 KV Upgrade NorthWestern may partner with others on the project Renewed interest by certain of the other line owners Significant proposed generation but mix is changing May effect the timing and the configuration of the project Looking to make the upgra
Slide 14: Transmission project developments cont'd
transmission project developments cont’d… MSTI Permitting for 500 KV line Will scale this project to committed long term contracts 230KV, 270 mile line to move 430 MWs; cost = $250M - $300M 345KV, 370 mile line to move 800 MWs; cost = $650M - $700M 500KV, 400 mile line to move 1,500 MWs; cost = $750
Slide 15: Distribution growth highlights
distribution growth highlights… South Dakota/Nebraska Natural Gas Pipeline Expansions What: Potential acquisition of a South Dakota pipeline Upgrade that pipeline for POET, Big Stone Ethanol expansion in SD ($10.5M) Construction of a 44-mile pipeline from Trailblazer pipeline to Grand Island, Nebras
Slide 16: Growth project potential
growth project potential… (in millions) Annual Earnings Current Estimated Estimated Opportunity * Cost of Project Timing Mill Creek Generation Station $ 8.8 to $10.0 $175.0 to $ 200.0 Jan 2011 South Dakota Peaking generation $ 3.8 to $ 4.5 $ 75.0 to $ 90.0 Jan 2011 South Dakota Baseload generation $
Slide 17: Colstrip Unit 4 update
Colstrip Unit 4 update… Announced proposed transaction with Bicent on June 10, 2008 Proposal to pay NorthWestern $404 million in cash Offer for the balance of plant (111 MW to 222 MWs) to NorthWestern at price of Mid C minus $3/MWh from Nov 2010 to Dec 2020 Offer for an additional 50 MW to NorthWest
Slide 18: NorthWestern scorecard
NorthWestern scorecard… What we said at EEI (Nov 6, 2007) – What occurred since then – Rate case revenue opportunity Rate increases approved up to $57 million annually of approx. $21 million annually Mill Creek site selected Natural Gas generation for wind $175 -$200 million project firming in Monta
Slide 19: NorthWestern scorecard cont'd
NorthWestern scorecard cont’d… What we said at EEI (Nov 6, 2007) – What occurred since then – GE Lease opportunity GE Lease bought out Approx $4 million annual savings Colstrip Unit 4 Colstrip Unit 4 Reprice opportunity approx. $23 million Transaction announced with Bicent at approx. $200 million ov
Slide 20: Northwestern – value and growth
Northwestern – value and growth… Value Dividend yield of 5.4% Currently trading at approximately 1.14x book value Opportunity for Growth Possibility of rate base growth in excess of $1 billion Potential additional annual earnings of more than $50 million by 2013 Strong balance sheet/credit ratings M
Slide 21: Summary
summary… Nearly all consolidated earnings from regulated business Core regulated Rate relief received in all jurisdictions business Outstanding bankruptcy litigation nearly completed Attained investment grade ratings Superior cash flows Strong balance sheet Solid foundation Investment grade rated de