Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2016)
34 slides from Northwestern Energy's shareholder meeting presentation, Apr 20, 2016
Slide 1: NorthWestern Energy Annual Meeting April 20, 2016
NorthWestern Energy Annual Meeting April 20, 2016 Artist – Monte Dolack Black Eagle dam – Missouri River – Montana
Slide 2: Company Information & Forward Looking Statements
2 Company Information & Forward Looking Statements 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
Slide 3: About NorthWestern
About NorthWestern 3 Montana Operations Electric 359,000 customers 24,350 miles – transmission & distribution lines 851 MW nameplate owned power generation Natural Gas 191,500 customers 7,200 miles of transmission and distribution pipeline 18 Bcf of gas storage capacity Owns 66 Bcf of proven natural
Slide 4: NWE: An Investment for the Long Term
NWE: An Investment for the Long Term 4 • 100% Regulated electric & natural gas utility business • 100 year history of competitive customer rates, system reliability and customer satisfaction • Solid economic indicators in service territory • A diverse electric supply portfolio that is approximately
Slide 5: Strong Corporate Governance
Strong Corporate Governance 5
Slide 6: Strong Corporate Governance
Strong Corporate Governance 6
Slide 7: Experienced & Engaged Board of Directors
Experienced & Engaged Board of Directors 7 Dr. E. Linn Draper Jr. • Chairman of the Board • Independent • Director since November 1, 2004 Stephan P. Adik • Committees: Audit (chair), Human Resources • Independent • Director since November 1, 2004 Dorothy M. Bradley • Committees: Human Resources, Gov
Slide 8: Strong Executive Team
Strong Executive Team 8 Robert C. Rowe • President and Chief Executive Officer • Current position since 2008 Brian B. Bird • Vice President and Chief Financial Officer • Current position since 2003 Michael R. Cashell • Vice President - Transmission • Current Position since 2011 Patrick R. Corcoran •
Slide 9: 2016 Earnings Guidance
2016 Earnings Guidance 9 Our updated and narrowed 2016 guidance range of $3.20 - $3.35 (previously $3.20 - $3.40) per diluted share is based upon, but not limited to, the following major assumptions and expectations: • Normal weather in our electric and natural gas service territories; • Excludes an
Slide 10: Track Record of Delivering Results
Track Record of Delivering Results 10 Notes: - ROE in 2011, 2012 , 2013, 2014 & 2015 on a Non-GAAP Adjusted basis, would be 10.5%, 9.8%, 9.6% ,9.4% & 9.9% respectively. - 2016 ROAE and 2016 Dividend payout ratio estimate based on midpoint of our updated guidance range of $3.20-$3.35. - Details regar
Slide 11: Investment for Our Customers' Benefit
Investment for Our Customers’ Benefit 11 Over the past 7 years we have been reintegrating our Montana energy supply portfolio and making additional investments across our entire service territory to enhance system safety, reliability and capacity. We have made these enhancements with minimal impact
Slide 12: Strong Cash Flows
While maintenance capex and total dividend payments have continued to grow since 2011 (16.6% and 14.8% CAGR respectively), Cash Flow from Operations has continued to outpace maintenance capex and averaged approximately $38 million of positive Free Cash Flow per year. With the addition of production
Slide 13: Total Shareholder Return
Total Shareholder Return 13 • 15 member peer group: ALE (Allete), AVA (Avista), BKH (Black Hills), CNL (Cleco), EDE (Empire District Electric), EE (El Paso Electric), GXP (Great Plains), IDA (IDA Corp), MGEE (Madison Gas & Electric), PNM (PNM Resources), POR (Portland Electric), STR (Questar), VVC (
Slide 14: Strong Utility Foundation
Strong Utility Foundation 14 Electric source: Edison Electric Institute Typical Bills and Average Rates Report, 1/1/16 Natural gas source: US EIA - Monthly residential supply and delivery rates as of 1/29/16 Customer service satisfaction scores in line or better than survey average (JD Powers) R
Slide 15: Balance Sheet Strength and Liquidity
Balance Sheet Strength and Liquidity 15
Slide 16: Credit Ratings
Credit Ratings 16 Single A secured credit rating by all three rating agencies. In February 2016, Moody’s changed their outlook on NWE from Stable to Negative. Moodys: A1 Fitch: A S&P: A-
Slide 17: Solid Economic Indicators
Solid Economic Indicators 17 • Unemployment rates in all three of our states are meaningfully below National Average. • Customer growth rates historically exceed National Averages. Source: NorthWestern customer growth - 2008-2015 Forms 10-K Unemployment Rate: US Department of Labor via SNL Database
Slide 18: The Hydro Facilities
The Hydro Facilities 18 Overview of Hydro Facilities Black Eagle Hydro Asset Integration • Montana Asset Optimization Study: As part of reintegrating the hydro facilities into our generation portfolio, we initiated an asset optimization study to maximize the value of our diverse generation portfolio
Slide 19: Montana 2015 Electric Supply Resource Plan
Montana 2015 Electric Supply Resource Plan 19 The resource initiatives and actions developed in 2015 Electricity Supply Resource Procurement Plan identify the critical future needs of our portfolio. The plan identifies how to co- optimize hydro, wind and thermal resources to best meet the anticipate
Slide 20: Completed Air Quality Projects
Completed Air Quality Projects 20 Big Stone Power Plant Neal Power Plant
Slide 21: South Dakota Electric Operations
21 South Dakota Electric Operations The owned and rate-based cost of energy from the Beethoven wind project over the next 20 years is expected to be $44 million ($25 million net present value) less than the PPA alternative, thus benefitting our customers’ bills over the long-term. Beethoven Wind Pro
Slide 22: Natural Gas Reserves Opportunity
Owned Owned Target Total Annual Need Natural Gas Reserves Opportunity 22 As we continue to add to our natural gas reserves portfolio, we anticipate a reduction in supply cost volatility for our customers. As a result of the October 2015 natural gas tracker order, we are required to make a filing pri
Slide 23: Infrastructure Projects
Infrastructure Projects 23 • In Montana, our Distribution System Infrastructure Project (DSIP) and Transmission System Infrastructure Project (TSIP), both of which are currently in process, are to maintain a safe and reliable electric and natural gas distribution and transmission system. –The primar
Slide 24: 'Clean' Owned & Contracted Supply Portfolio
24 ‘Clean’ Owned & Contracted Supply Portfolio Based upon 2015 delivered electric portfolio, approximately 54% of our total company owned and contracted supply is renewable or supports renewables. * Wind Owned delivered in 2015 includes a partial year of production from the Beethoven wind farm, whic
Slide 25: EPA's Clean Power Plan (CPP)
25 EPA’s Clean Power Plan (CPP) The February 9th Supreme Court 5-4 vote to stay the EPA CPP rules • We will be working with state agencies and other stakeholders to evaluate the implications. • We hope the EPA takes this opportunity to address Montana’s serious concerns with the 47% statewide reduct
Slide 26: EPA's 2030 carbon target for Montana
EPA’s 2030 carbon target for Montana NWE’s CO2 intensity* decreased by approximately 37% with the addition of the hydro facilities to our Montana generation portfolio. However EPA’s Clean Power Plan targets are statewide and not utility specific targets. * lbs CO2 per MWH produced CO2 Intensity* 37%
Slide 27: Capital Spending Forecast
Capital Spending Forecast 27 Current estimated cumulative capital spending for 2016 through 2020 is $1.66 billion. This reflects a $187 million increase from the capital plan included in our 2015 10-K; approximately $122 million increase for internal combustion units in Montana and $65 million incre
Slide 28: DGGS Update – Still waiting on FERC
DGGS Update – Still waiting on FERC 28
Slide 29: Other Significant Achievements in 2015
Other Significant Achievements in 2015 29 Strong year for safety at NorthWestern • Fewest OSHA recordable events of any year. • One of the best years for Lost Time Incidents. • Tragic fatality of a respected senior lineman. Record best customer satisfaction scores with JD Power & Associates • Receiv
Slide 30: Farewell and Thank You Lou
Farewell and Thank You Lou 30 “After a decade of service on our board of directors, Lou Peoples is retiring. Lou is passionate about NorthWestern Energy. We are a much better company because of his clear thinking, tough questioning and keen focus on areas such as technology deployment. During my ear
Slide 31: Conclusion
Conclusion 31 Pure Electric and Gas Utility Solid Utility Foundation Strong Earnings and Cash Flows Attractive Future Growth Prospects Best Practices Corporate Governance
Slide 32: Delivering a bright future
Upelivering a bright future Energy
Slide 33: NorthWestern Energy Profile
NorthWestern Energy Profile 33 Financial and Company Statistics See “Non-GAAP Financial Measure” slide in appendix for Net Debt and EBITDA reconciliation
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures 34 The data presented above includes financial information prepared in accordance with GAAP, as well as another financial measure, Gross Margin, Free Cash Flows, Net Debt and EBITDA, but is considered a “Non-GAAP financial measure.” Generally, a Non-GAAP financial measure