Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2014)
28 slides from Northwestern Energy's shareholder meeting presentation, Apr 24, 2014
Slide 1: NorthWestern Energy Annual Meeting | April 24, 2014
NorthWestern Energy Annual Meeting | April 24, 2014
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 Our Vision: Enriching lives through a safe, sustainable energy future Our Mission: Working together to deliver safe, reliable and innovative energy solutions Our Values: S - safety E - excellence R - respect V - value I - integrity C - community E - environment
Slide 4: NWE: An Investment For The Long Term
NWE: An Investment For The Long Term 4 We’re a fully-regulated and financially solid utility; with – Diversity across states, service type and customer segments – A 100 year history of competitive customer rates, system reliability and customer satisfaction – A strong track record of significant ear
Slide 5: Well Rounded Board of Directors
Well Rounded Board of Directors 5 Members of the Board of Directors tour backstage at The Mansfield Center for the Performing Arts in Great Falls, Montana. From the left: Dana J. Dykhouse – Chief Executive Officer of First PREMIER Bank. Director since 2009 Dorothy M. Bradley – Retired District Court
Slide 6: Strong Executive Team
Strong Executive Team 6 NorthWestern Energy’s executive officers tour backstage at The Mansfield Center for the Performing Arts in Great Falls, Montana. From the left: Michael R. Cashell – VP of Transmission. 27 years utility industry experience; current position since 2011 Curtis T. Pohl – VP of Di
Slide 7: Recognition: Fortnightly 40, NYSE Ethics, Forbes
Fortnightly 40 NorthWestern Energy was recently recognized as one of the top 40 best energy companies in the United States by Fortnightly 40. The report compares shareholder value performance by looking at uniform data sets among the leading publicly traded electric and gas companies across a range
Slide 8: 2014 Earnings Guidance
$2.02 $2.14 $2.53 $2.66 $2.46 $- $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 $3.00 2009 2010 2011 2012 2013 2014E GAAP Diluted EPS 2014 Earnings Guidance 8 2014 guidance range of $2.60-$2.75 based upon, but not limited to, the following major assumptions and expectations: • Normal weather in our electric an
Slide 9: Track Record of Delivering Results
Track Record of Delivering Results 9 Notes: - ROE in 2011, 2012 & 2013, on a Non-GAAP Adjusted basis, would be 10.5%, 9.8% & 9.7% respectively. - 2014 ROE and 2014 Dividend payout ratio estimate based on midpoint of guidance range of $2.60- $2.75. - 2011 and 2012 Dividend Payout Ratio based upon Non
Slide 10: Total Shareholder Return
Total Shareholder Return 10 Ranked 5th out of 15 Peers and outperformed Peer Average as well as all indices for Total Shareholder Return since emerging from Bankruptcy in 2004. Peer group includes: ALE, AVA, BKH, CNL, EDE, EE, GXP, IDA, MGEE, PNM, POR, UIL, UNS, VVC & WR. NWE 29.48% Peer Avg. 23.35%
Slide 11: Investment for Our Customers' Benefit
$60 $70 $80 $90 $100 $110 $120 $130 2008 2009 2010 2011 2012 2013 Typical NorthWestern Electric and Natural Gas Bill (average Montana, South Dakota and Nebraska monthly residential customer bill) Electric (750 kW) Natural Gas (10 Dkt) Investment for Our Customers’ Benefit Over the past 5 years we ha
Slide 12: Strong Cash Flows
$(200) $(150) $(100) $(50) $- $50 $100 $150 $200 $250 $300 2009 2010 2011 2012 2013 Dividends Maintenance Capex CFO CFO Less CapEx & Dividends Mil lion s While maintenance capex and total dividend payments have continued to grow since 2009 (4.1% and 4.6% CAGR respectively), Cash Flow from Operations
Slide 13: Credit Ratings
Credit Ratings 13 In January 2014, NWE was upgraded by Moody’s on both our Secured and Unsecured ratings. Moodys: A1 Fitch: A- S&P: A-
Slide 14: Investment Project Summary
High High High High High MT - Distribution System Infrastructure Project (DSIP) MT - Natural gas reserves MT - Spion Kop - wind (40 MW) SD - Aberdeen peaking generator (60 MW) SD - Neal pollution control equipment SD - Big Stone pollution control equipment MT - pending hydro asset acquisition Invest
Slide 15: Hydro - A Great Fit at the Right Time
Hydro - A Great Fit at the Right Time 15 – Strong balance sheet, low interest rates and favorable utility equity valuations to finance the transaction. – Assets valuations at favorable (lower) prices as compared to buying during high commodity price periods. Thompson Falls Dam • Existing resources w
Slide 16: Meeting Customer Demands
Meeting Customer Demands 16 We expect to be able to provide nearly all the power during the light load periods with some flexibility to use market purchases or other resources to meet demand during heavy load periods. The addition of the hydro generation assets into our Montana electric portfolio al
Slide 17: Hydro - Montana Generation Profile
Hydro - Montana Generation Profile 17 99% 31% 44% NWE SD NWE MT NWE Total 99% 63% 69% NWE SD NWE MT NWE Total This transaction will allow us to approximately double owned resources in MT and significantly reduce our reliance on third-party power purchase agreements and spot market purchases. Pro for
Slide 18: Hydro - Process and Timeline (Past)
• Transaction announced on September 26, 2013 • Pre-filing informational meeting with the Montana PSC on October 18, 2013 • Bridge facility – entered into a $900 million 364-day senior bridge credit facility on November 12, 2013 • Filed Application for Approval to Purchase and Operate the Hydro Elec
Slide 19: Hydro - Process and Timeline (Anticipated)
Hydro - Process and Timeline (Anticipated) 19 • Montana PSC hearing set for July 8, 2014 • Final day for Montana PSC to issue an order on September 16, 2014 – MPSC can extend timeline for final order if it determines that extraordinary circumstances require additional time. • On approval, we plan to
Slide 20: Big Stone and Neal Air Quality Projects
Big Stone and Neal Air Quality Projects 20 Big Stone Power Plant Neal Power Plant Big Stone Neal Location Northeast South Dakota Northwest Iowa Ownership 23.4% of 475 MW coal plant 8.7% of 644 MW coal plant Project Subject to Best Available Retrofit Technology (BART) requirements of the Regional Haz
Slide 21: Southern Bear Paw Transaction
Southern Bear Paw Transaction 21 • Finalized acquisition of Bear Paw South – On December 2, 2013, we finalized the purchase of 63 Bcf proven reserves and 82% interest in Havre Pipeline Company for $68.7 million. – Our largest natural gas reserves acquisition to date adding 29 employees to our 14 exi
Slide 22: Natural Gas Reserves Opportunity
Natural Gas Reserves Opportunity 22 We continue to pursue opportunities to secure low cost gas reserves for our customers. • Remaining 18% unfilled position to reach our targeted 50% owned supply. • Other potential opportunities to procure reserves to provide up to 50% (or 3-4 Bcf of natural gas ann
Slide 23: Distribution System Infrastructure Project
Distribution System Infrastructure Project 23 • Montana Distribution System Infrastructure Project (DSIP) to maintain a safe and reliable electric and natural gas distribution system. – The primary goals: reverse the trend in aging infrastructure, maintain reliability, proactively manage safety, bui
Slide 24: Capital Spending
$182 $200 $170 $156 $147 $52 $50 $50 $50 $38 $29 $- $50 $100 $150 $200 $250 $300 2014 2015 2016 2017 2018 $M illio ns Capital Spending Maintenance Capex Distribution System Infrastructure Project (DSIP) Energy Supply (primarily SD environmental projects) Capital Spending 24 DSIP – Distribution Syste
Slide 25: Dave Gates Generating Station Update (DGGS)
Dave Gates Generating Station Update (DGGS) 25 • We operate a transmission system and balancing authority within Montana and are responsible for providing safe and reliable electric services to both retail and wholesale customers, or face stiff penalties for non-compliance. • DGGS was designed and c
Slide 26: Conclusion
Conclusion 26 Fully- regulated utility Best practices corporate governance Strong track record of earnings and dividend growth Strong cash flows aided by Net Operating Loss (NOL) carryforwards Realistic investment opportunities to invest Free Cash Flow Aberdeen Peaker Plant Ground Breaking October 1
Slide 27: Delivering a bright future
Upelivering a bright future
Slide 28: FERC's April 17, 2014 Order
FERC’s April 17, 2014 Order 28 Relying on the regulatory process to provide an equitable outcome should be as American as…. apple pie.