Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — FY2019 Earnings Presentation
40 slides from Northwestern Energy's earnings presentation, Feb 13, 2020
Slide 1: 2019 - Full Year Earnings Webcast
2019 - Full Year Earnings Webcast February 13, 2020
Slide 2: Presenting Today / Forward Looking Statements
Presenting Today 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 Bob Rowe, Litigation Reform Act of 1995. Forward-looking statements often address our expected fut
Slide 3: 2019 and Recent Highlights
2019 and Recent Highlights • Net income for 2019 was $202.1 million. This is a $5.1 million, or 2.6%, increase as compared to the same period in 2018. • Diluted earnings per share (EPS) were $3.98. This is a $0.06, or 1.5%, increase as compared to 2018 o Non-GAAP Adjusted EPS were $3.42. This is a $
Slide 4: Summary Financial Results
Summary Financial Results (Full Year) (1) 4 (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure.
Slide 5: Gross Margin
Gross Margin (Full Year) (dollars in millions) Twelve Months Ended December 31, 2019 2018 Variance Electric $ 741.6 $ 726.5 $ 15.1 2.1% Natural Gas 198.3 192.6 5.7 3.0% (1) Total Gross Margin $ 939.9 $ 919.1 $ 20.8 2.3% Increase in gross margin due to the following factors: $ 22.1 Tax Cuts and Jobs
Slide 6: Weather
Weather (Full Year) We estimate overall favorable weather in 2019 resulted in a $7.3 million pretax benefit as compared to normal and a $6.0 million benefit as compared to 2018. 6
Slide 7: Operating Expenses
Operating Expenses (Full Year) (dollars in millions) Twelve Months Ended December 31, 2019 2018 Variance Operating, general & admin. $ 318.2 $ 307.1 $ 11.1 3.6% Property and other taxes 171.9 171.3 0.6 0.4% Depreciation and depletion 172.9 174.5 (1.6) (0.9%) Operating Expenses $ 663.0 $ 652.9 $ 10.1
Slide 8: Operating to Net Income
Operating to Net Income (Full Year) (dollars in millions) Twelve Months Ended December 31, 2019 2018 Variance Operating Income $ 276.9 $ 266.3 $ 10.6 4.0% Interest Expense (95.1) (92.0) (3.1) (3.4%) Other Income 0.4 4.0 (3.6) (91.0%) Income Before Taxes 182.2 178.3 3.9 2.2% Income Tax Benefit 19.9 1
Slide 9: Income Tax Reconciliation
Income Tax Reconciliation (Full Year) 9
Slide 10: Balance Sheet
Balance Sheet Debt to Capitalization remains at lower end of our targeted 50% - 55% range. 10
Slide 11: Cash Flow
Cash Flow Cash from operating activities decreased by $85.3M primarily due to: •Under collection of supply costs………..($35.5M) •Tax Cuts and Jobs Act customer refunds...($20.5M) •Generation inter- connection refunds…...($22.1M) •Receipt of insurance proceeds in 2018……....($6.1M) •Other miscellaneous…
Slide 12: Adjusted Non-GAAP Earnings
Adjusted Non-GAAP Earnings (Full Year) The adjusted non-GAAP measures presented in the table are being shown to reflect significant items that are non-recurring or variance from normal weather, however they should not be considered a substitute for financial results and measures determined or calcul
Slide 13: Diluted Earnings Per Share
Diluted Earnings Per Share Non-GAAP Adjusted EPS Growth Averaged 5.4% from 2013 - 2019 NorthWestern affirms its 2020 earnings guidance range of $3.45 - $3.60 per diluted share based upon, but not limited to, the following major assumptions and expectations: • Normal weather in our electric and natur
Slide 14: 2019 Non-GAAP to 2020 EPS Bridge
2019 Non-GAAP to 2020 EPS Bridge NorthWestern affirms its 2020 earnings guidance range of $3.45 - $3.60 per diluted share based upon, but not limited to, the following major assumptions and expectations: • Normal weather in our electric and natural gas service territories; • A consolidated income ta
Slide 15: Our Carbon Reduction Vision for Montana
Our Carbon Reduction Vision for Montana 90% carbon reduction by 2045 NorthWestern Energy commits to reduce the carbon intensity of our electric energy portfolio for Montana 90% by 2045.* * As compared with our 2010 carbon intensity as a baseline Already over 60% carbon free Today, NorthWestern Energ
Slide 16: 25% of Colstrip Unit 4 Acquisition
25% of Colstrip Unit 4 Acquisition On December 9, 2019 NorthWestern (NWE) executed a Purchase and Sale Agreement for the acquisition of Puget Sound Energy’s (PSE) 25% ownership interests in Colstrip Unit 4 (CU4). • Generating Capacity: 185 MW (bringing our total ownership to 407 MW, or 55% of CU4) •
Slide 17: NWE Energy Supply Resource Plans
NWE Energy Supply Resource Plans South Dakota Electricity Supply Resource Plan • Published fall of 2018, the plan focuses on modernization of our fleet to improve reliability and flexibility, maintain compliance in Southwest Power Pool, and lowering operating costs. The plan identified 90MWs of exis
Slide 18: Looking Forward
Looking Forward Regulatory • In December 2019, the MPSC issued a final order approving our electric rate case settlement in our Montana electric rate case, effective April 1, 2019, that would result in an annual increase to electric revenue of approximately $6.5 million (based upon a 9.65% ROE, rate
Slide 19: Capital Investment Forecast
Capital Investment Forecast $1.8 billion of total capital investment over five years We anticipate financing this capital with a combination of cash flow from operations (aided by NOLs available into 2021), first mortgage bonds and equity issuances. Based on current expectations, any equity issuance
Slide 20: Conclusion
Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects 20
Slide 21: Appendix
Cr Appendix 21
Slide 22: Segment Results
Appendix Segment Results (Full Year) (1) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure. 22
Slide 23: Electric Segment
Appendix Electric Segment (Full Year) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 23 See appendix for additional disclosure.
Slide 24: Natural Gas Segment
Appendix Natural Gas Segment (Full Year) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 24 See appendix for additional disclosure.
Slide 25: Summary Financial Results
Appendix Summary Financial Results (Three Months Ended December 31) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 25 See appendix for additional disclosure.
Slide 26: Gross Margin
Appendix Gross Margin (Three Months Ended December 31) (dollars in millions) Three Months Ended December 31, 2019 2018 Variance(1) Electric $ 186.1 $ 176.6 $ 9.5 5.4% Natural Gas 59.7 59.8 (0.1) 0.1% Total Gross Margin $ 245.8 $ 236.4 $ 9.4 4.0% Increase in gross margin due to the following factors:
Slide 27: Weather
Appendix Weather (Three Months Ended December 31) We estimate unfavorable weather for the 4th quarter 2019 has contributed approximately $0.7M pretax detriment as compared to normal but $0.3M pretax benefit as compared to the same period in 2018. 27
Slide 28: Operating Expenses
Appendix Operating Expenses (Three Months Ended December 31) (dollars in millions) Three Months Ended December 31, 2019 2018 Variance Operating, general & admin. $ 79.3 $ 85.2 $ (5.9) (6.9%) Property and other taxes 38.7 43.0 (4.3) (10.0%) Depreciation and depletion 43.1 43.6 (0.5) (1.1%) Operating
Slide 29: Operating to Net Income
Appendix Operating to Net Income (Three Months Ended December 31) (dollars in millions) Three Months Ended December 31, 2019 2018 Variance Operating Income $ 84.7 $ 64.6 $ 20.1 31.1% Interest Expense (24.1) (23.8) (0.3) (1.3%) Other (Expense) / Income (0.5) 2.2 (2.7) (120.5%) Income Before Taxes 60.
Slide 30: Income Tax Reconciliation
Appendix Income Tax Reconciliation (Three Months Ended December 31) 30
Slide 31: Adjusted Non-GAAP Earnings
Appendix Adjusted Non-GAAP Earnings (Three Months Ended December 31) The adjusted non- GAAP measures presented in the table are being shown to reflect significant items that were non- recurring or variance from normal weather, however they should not be considered a substitute for financial results
Slide 32: Segment Results
Appendix Segment Results (Three Months Ended December 31) (1) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 32 See appendix for additional disclosure.
Slide 33: Electric Segment
Appendix Electric Segment (Three Months Ended December 31) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 33 See appendix for additional disclosure.
Slide 34: Natural Gas Segment
Appendix Natural Gas Segment (Three Months Ended December 31) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 34 See appendix for additional disclosure.
Slide 35: Montana Electric Rate Case
Appendix Montana Electric Rate Case September 2018 Filing (Docket D2018.2.12) • Filed based on 2017 test year and $2.34 billion of rate base. The filing also requests approval to: • Requested $34.9 million annual increase to electric rates. • Capitalize Demand Side Management Costs; • Establish a ne
Slide 36: Qualified Facility Earnings Adjustment
Appendix Qualified Facility Earnings Adjustment The gain in 2019 for our QF liability was $6.3 million in total, it was comprised of $3.3 million adjustment to the liability and $3.0 million lower actual costs over last 12 months (QF contract year). This $6.6 million benefit is $20.9 million less th
Slide 37: Quarterly PCCAM Impacts
Appendix Quarterly PCCAM Impacts In 2017, the Montana legislature revised the statute regarding our recovery of electric supply costs. In response, the MPSC approved a new design for our electric tracker in 2018, effective July 1, 2017. The revised electric tracker, or PCCAM established a baseline o
Slide 38: Rate Base & Authorized Return Summary
Appendix Rate Base & Authorized Return Summary 38
Slide 39: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures 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 num
Slide 40: Upetivering a
Upetivering a bright future NorthWestern Energy
NorthWestern Energy Group — FY2019 Earnings Presentation on 6ix