Slide 1: First Quarter 2015 Earnings Webcast
First Quarter 2015 Earnings Webcast April 23, 2015 Thompson Falls
Slide 2: Presenting Today
Presenting Today 2 Bob Rowe, President & CEO Brian Bird, Vice President & CFO
Slide 3: Forward Looking Statements
3 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 business and financia
Slide 4: Recent Significant Activities
• Successful first full quarter of owning and operating our recently acquired fleet of hydro assets. • Improvement in net income of $5.8 million, or 13%, in the first quarter of 2015 as compared with the same period in 2014. • GAAP Diluted EPS of $1.09 as compared to $1.17 for the same period in 201
Slide 5: Summary Financial Results (First Quarter)
Summary Financial Results (First Quarter) 5
Slide 6: Gross Margin (First Quarter)
6 Gross Margin (First Quarter) (dollars in millions) Three Months Ended March 31, 2015 2014 Variance Electric $ 172.1 $ 132.9 $ 39.2 29.5% Natural Gas 61.5 69.4 (7.9) (11.4%) Gross Margin $ 233.6 $ 202.3 $ 31.3 15.5% Increase in gross margin due to the following factors: $ 42.1 Hydro operations $ (6
Slide 7: Heating Degree Days (First Quarter)
Heating Degree Days (First Quarter) 7 Maximum Temperature from Normal Minimum Temperature from Normal Source: National Climatic Data Center, NOAA
Slide 8: Operating Expenses (First Quarter)
Operating Expenses (First Quarter) 8 Increase in operating expenses due mainly to the following factors: $9.0 million increase in OG&A $ 10.7 Hydro operations $ 2.0 Employee benefit costs $ (2.0) Non-employee directors deferred compensation $ (1.1) Bad debt expenses $ (0.8) Hydro transaction costs $
Slide 9: Operating to Net Income (First Quarter)
Operating to Net Income (First Quarter) 9
Slide 10: Balance Sheet
Balance Sheet (dollars in mittions) As of March 31, As of December 31, 2015, 2014 ash Restricted cash Accounts receivable, net Inventories Other current assets Goodwill PP&E and other non-current assets Total Assets Payables Short-term borrowings Other current liabilities Long-term debt & capital le
Slide 11: Cash Flow (First Quarter)
Cash Flow (First Quarter) 11 $14.6 million improvement in cash flow provided by operating activities primarily due to: • a reduction in our under collection of supply costs in our trackers; • Improved collections of customer receivables; and • improved earnings from the hydro acquisition. These impr
Slide 12: Non-GAAP Adjusted EPS
Non-GAAP Adjusted EPS [2015 2015 Q22015 Q32015 Qa2015 | yTD 2015 [Reported GAAP diluted EPS $ 1.09 $ 1.09 Non-GAAP Adjustments: Weather (favorable) / unfavorable 0.09 $ 0.09 Adjusted diluted EPS $ 14s s $ - $ - |$ 1.18 2014 12014 Q22014 932014 © Qa2014 | FY 2014 [Reported GAAP diluted EPS $ 117 $ 02
Slide 13: Adjusted Earnings (First Quarter '15 vs '14)
Adjusted Earnings (First Quarter ’15 vs ’14) 13 Non-GAAP adjusted Net Income increased 23.5% over same period prior year. However, due to $400 million equity issuance in November 2014, our adjusted diluted EPS only increased by 1.7%. We anticipate realizing a majority of the expected accretion benef
Slide 14: Hypothetical Accretion Illustration
Hypothetical Accretion Illustration 14 As shown in the example above, a company making an acquisition that would contribute relatively consistent net income over each of the four quarters could anticipate the most earnings per share benefit in the quarters with the ‘lightest’ earnings. (Illustrative
Slide 15: Reaffirm 2015 Earnings Guidance
Reaffirm 2015 Earnings Guidance 15 We reaffirm the 2015 adjusted earnings guidance range of $3.10 - $3.30 per diluted shares based upon, but not limited to, the following major assumptions and expectations: • Normal weather in our electric and natural gas service territories for the remainder of 201
Slide 16: South Dakota Rate Filing
South Dakota Rate Filing 16 34 Years of Declining ‘Real’ Rates Docket EL14-106 In December 2014, we filed a request with SDPUC for an annual increase of $26.5 million revenue. This increase is primarily due to investments made to meet federal environmental mandates and to maintain our high-level of
Slide 17: Other Activity
Other Activity 17 • Hydro Asset Integration • Initiated study to help optimize the way we operate our fleet of assets. The study will evaluate our energy system needs in light of resource capabilities and the potential to provide ancillary services. • Kerr Dam: We assumed temporary ownership of the
Slide 18: Capital Spending Forecast
Capital Spending Forecast 18 Current estimated cumulative capital spending for 2015 through 2019 is $1.45 billion. We anticipate funding the capital projects with a combination of cash flows (aided by NOLs) and long-term debt. If other opportunities arise that are not in the above projections (natur
Slide 19: Delivering a bright future
Upelivering a bright future
Slide 20: 2014 to 2015 Reconciliation (First Quarter)
20 2014 to 2015 Reconciliation (First Quarter) Appendix
Slide 21: Electric Segment (First Quarter)
21 Electric Segment (First Quarter) Appendix
Slide 22: Natural Gas Segment (First Quarter)
22 Natural Gas Segment (First Quarter) Appendix
Slide 23: Segment Results (First Quarter)
23 Segment Results (First Quarter) Appendix
Slide 24: Income Tax Reconciliation (First Quarter)
Income Tax Reconciliation (First Quarter) 24 Appendix
Slide 25: Non-GAAP financial measures notice
These materials include financial information prepared in accordance with GAAP, as well as other financial measures, such as Gross Margin and Adjusted Diluted EPS, that are considered “non-GAAP financial measures.” Generally, a non- GAAP financial measure is a numerical measure of a company's financ