Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Investor Presentation (March 2010)
30 slides from Northwestern Energy's investor presentation, Mar 3, 2010
Slide 1: Investor Update
Investor Update San Francisco, CA March 3 - 4, 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
Located in states with relatively stable economies with potential grid expansion in the Northwest region. who we are… Above data as of 12/31/09 (1) Book capitalization calculated as total debt, excluding capital leases, plus shareholders’ equity. ¾ 661,000 customers » 396,000 electric » 265,000 natu
Slide 4: NorthWestern's attributes
¾ Solid operations » Cost competitive » Above-average reliability » Award-winning customer service ¾ Improving credit ratings and strong balance sheet and liquidity » Secured and unsecured investment grade ratings » Moody’s has us on “positive” outlook ¾ Positive earnings and ROE trend » Colstrip Un
Slide 5: Secured credit ratings
SECURED CREDIT RATINGS AIASIA- BBB+/Baa1/BBB BBB/Baa2/BBB BBB/Baa3/BBB- jam BB+/Bat/BB+ + 2005 2006 2007 2008 2009 Agency ‘Secured Unsecured Outlook Standard & Poor's A- (MT) BBB Stable BBB+ (SD) ‘Moods Investor Services A3 Baad Positive Fitch Ratings BBB+ BBB Stable NorthWestern Energy
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity… ¾ Debt / Total capitalization of 55.6% (12/31/09) ¾ October » $55 million, 30 year First Mortgage Bonds issued at 5.71% ¾ June » Extended unsecured revolver maturity to June 30, 2012 » Increased size from $200 million to $250 million ¾ March » $250 million, 10 yea
Slide 7: Positive earnings and ROE trend
Recent authorized ROE’s: Mill Creek (10.25%) and Colstrip Unit 4 (10.00%). positive earnings and ROE trend…
Slide 8: Strong cash flows
strong cash flows… Earnings growth, NOLs, and repairs tax deduction provide strong cash flows to fund future growth projects.
Slide 9: Pension funding and expense
2009 return in excess of 20%. Moved from 62% funded at 12/31/2008 to 94% funded at 12/31/2009. pension funding and expense…
Slide 10: Competitive dividend
Goal for dividend payout ratio of 60% - 70%. Current dividend yield about 5.2%. competitive dividend…
Slide 11: Regulatory update
Establishing positive regulatory regulations in all jurisdictions. regulatory update… ¾ Montana » Rate cases filed October 2009 requesting $17.5 million revenue increase ♦ November 2009 the MPSC determined the initial filing failed to comply with MPSC applicable minimum filing requirements, primaril
Slide 12: Near-term potential earnings drivers
Near-term earnings drivers independent of transmission projects. near-term potential earnings drivers… ¾ 2010 » Expecting modest growth in volumes and economic activity ♦ Due to higher mix of residential/commercial vs. industrial customers as compared to other utilities ● Electric: 69% Residential &
Slide 13: Longer-term potential earnings drivers
Balanced growth opportunities across the business. longer-term potential earnings drivers… ¾ Distribution system enhancements » Exploring incremental rate based investment (early stages) ¾ Energy supply » Mill Creek Generation Station » South Dakota peaking generation » Natural gas reserves (early s
Slide 14: Great wind potential in our service territory
great wind potential in our service territory…
Slide 15: Service territory is a link between supply and demand
service territory is a link between supply…
Slide 16: Incremental Electricity Demand 2007-2030 and Renewable Portfolio Standards
Incremental Electricity Demand 2007-2020 and 2007-2030 (6Wh/yr) Demand 2007 - 2030 (GWh) Califomia 92,108 Man ‘Arizona 79.306 Washington 40,821 Colorado | 25017 Utah = 22,749 Oregon 21,059 Nevada 17.494 e c E t Renewable Portfolio Standards in the West Wa 15% by 2020 [Dstt ce eeray stir MT 15% by 20
Slide 17: Our proposed transmission projects
our proposed transmission projects…
Slide 18: Capex spending - next few years
Additional equity not anticipated until we proceed with MSTI or other major investments not shown here. We will move forward with the funding of these projects only when they make economic sense. MSTI project is now slated for early 2015 and capex has been modified accordingly. Capital still shown a
Slide 19: Growth project potential
Opportunity to double and diversify earnings as compared with our existing $1.5 billion rate base. growth project potential…
Slide 20: Growth project milestones '10 & '11
Mill Creek 500 kV Upgrade 230 kV Collector System MSTI 2011 Mill Creek ¾ Providing regulating services ¾ Tariffs filed for rates ¾ MPSC prudence review filing Q1 Q1 Q1 500 kV Upgrade ¾ WECC phase 2 rating Q3 ¾ Construction begins Q3 230 kV Collector System ¾ Open season results posted Q1 ¾ Customers
Slide 21: In summary
in summary… ¾ Solid operations ¾ Improving credit ratings and strong balance sheet and liquidity ¾ Positive earnings and ROE trend ¾ Strong cash flows ¾ Competitive dividend ¾ Improving regulatory environment ¾ Realistic growth prospects
Slide 22: Appendix
Appendix
Slide 23: Income statement, year ended December 31, 2009
(in thousands, except per share amounts) Year Ended December 31, 2009 2008 Variance Operating Revenues $ 1,141,910 $ 1,260,793 $ (118,883) Cost of Sales 573,686 698,740 (125,054) Gross Margin 568,224 562,053 6,171 Operating Expenses Operating, general & administrative 245,618 226,164 19,454 Property
Slide 24: 2008-2009 earnings bridge
Prior earnings guidance for 2009 of $1.75 - $1.85 was revised upward to $1.95 - $2.05 on October 28, 2009 due to repairs tax deduction. 2008 - 2009 earnings bridge… Appendix
Slide 25: 2009-2010 earnings bridge
2009 - 2010 earnings bridge… Appendix
Slide 26: Balance sheet, December 31, 2009
(in thousands) December 31, 2009 2008 Cash 4,344 11,292 Restricted cash 13,608 14,727 Accounts receivable, net 143,759 155,672 Inventories 47,305 70,741 Other current assets 55,811 60,985, Goodwill 355,128 355,128 PP&E and ther non-current assets 2,175,177 2,093,492 Total Assets $ 2,795,132 $ 2,762,
Slide 27: Cash flow statement, year ended December 31
Year Ended December 31, (in thousands) 2009 2008 Net Income $ 73420 $ 67,601 Depreciation. 89,039 85,071 Amort. of debt issue costs, discount, deferred hedge gain and restricted stock 3,795 5,532 Equity portion of allowance for funds used during construction (2,113) (641) (Gain) Loss on sale of asse
Slide 28: MPSC rate request
Rate request excludes Colstrip Unit 4 generation and the under-construction Mill Creek Generation Plant. MPSC rate request… ¾ Requested revenue increase of $17.5 million » Electric T&D = $15.5 million (6.98%) » Natural gas T&D = $2.0 million (1.89%) » Expect decision by October 11, 2010 » Interim ra
Slide 29: Repairs tax deduction impact
As pre-tax income increases the repairs tax deduction benefit, as a % of the effective tax rate, decreases. repairs tax deduction impact… Appendix Sample calculation
Slide 30: Montana rate filing
The above demonstrates the impact of our repairs tax deduction on our current rate filing in Montana. The reduction in our income tax expense has been passed through to customers in the form of a lower rate request while leaving NorthWestern “whole”. Montana rate filing… Appendix