Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2019)
29 slides from Northwestern Energy's shareholder meeting presentation, Apr 24, 2019
Slide 1: NorthWestern Energy Annual Meeting of Stockholders
NorthWestern Energy Annual Meeting of Stockholders - April 24, 2019
Slide 2: Forward Looking Statements
Forward Looking Statements Forward Looking Statements O’Dell Creek - Madison River Valley - Montana 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-loo
Slide 3: About NorthWestern
About NorthWestern South Dakota Operations Electric 63,800 customers 3,572 miles – transmission & distribution lines 440 MW nameplate owned power generation Natural Gas 46,900 customers 1,697 miles of transmission and distribution pipeline Montana Operations Electric 374,000 customers 24,767 miles –
Slide 4: NWE - An Investment for the Long Term
NWE - An Investment for the Long Term • 100% regulated electric & natural gas utility business Black Eagle dam Pure Electric & with over 100 years of operating history Gas Utility • Solid economic indicators in service territory • Diverse electric supply portfolio ~55% hydro, wind & solar • Resident
Slide 5: A Diversified Electric and Gas Utility
A Diversified Electric and Gas Utility (1) (1) September 2018 Montana electric rate review, filed with rate base of $2.34 billion, calculated with 13-month average and known and measurable adjustments. NorthWestern’s ‘80/20’ rules: Approximately 80% Electric, 80% Residential and 80% Montana. Over $3
Slide 6: Highly Carbon-Free Supply Portfolio
Highly Carbon-Free Supply Portfolio Based upon 2018 MWH’s of owned and long-term contracted resources. Approximately 55% of our total company owned and contracted supply is carbon-free. NorthWestern does not own all the renewable energy certificates (RECs) generated by contracted wind, and periodica
Slide 7: Strong Utility Foundation
Strong Utility Foundation . Solid and improving JD Power Overall Customer Satisfaction Scores . Residential electric and natural gas rates below national average 7 . Solid electric system reliability and low gas leaks per mile
Slide 8: Solid Economic Indicators
Solid Economic Indicators Source: NorthWestern customer growth - 2008-2016 Forms 10-K Unemployment Rate: US Department of Labor via SNL Database 2/21/17 Electric: EEI Statistical Yearbook (published December 2015, table 7.2) Natural Gas: EIA.gov (Data table "Number of Natural Gas Consumers") Source:
Slide 9: A History of Growth
A History of Growth $3.30-$3.50 $3.10 - $3.30 $2.60$3.20 - $2.75-$3.40 2009-2018 CAGR’s: GAAP EPS: 7.6% - Non-GAAP EPS: 5.9% - Dividend: 5.7% 9 See appendix for “Non-GAAP Financial Measures”
Slide 10: Earnings Growth
Earnings Growth $3.30$3.30-$3.45-$3.50 $3.10 - $3.30 $2.60$3.20 - $2.75-$3.40 Non-GAAP Adjusted EPS Growth averaged 6.3% from 2013-2018 We are not providing 2019 EPS guidance at this time due to the pending Montana rate case. However, continued investment in our system to serve our customers and com
Slide 11: Track Record of Delivering Results
Track Record of Delivering Results * Peer Group: ALE, AVA, BKH, EE, IDA, MGEE, NWN, OGE, OTTR, PNM, POR & SR Return on Equity on GAAP Earnings within 9.5% - 11.0% band over the last 8 years with average of 10.3%. Total Shareholder Return is better than our 12 peer average for the 10 year period but
Slide 12: Recent Shareholder Return
Recent Shareholder Return 2018 TSR: NWE TSR: 3.47% Peer TSR: 6.29% Rank: 10th of 12 peers 1st Quarter: NWE TSR: 19.43% Peer TSR: 10.58% Rank: 1st of 12 peers We reached an all- time high closing stock price of $71.30 on March 26th and an all-time high intra-day trading price of $71.77 also on March
Slide 13: Investment for Our Customers' Benefit
Investment for Our Customers’ Benefit Over the past 8 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 to
Slide 14: Balance Sheet Strength and Liquidity
Balance Sheet Strength and Liquidity Investment grade credit ratings, liquidity generally in excess of $100 million target, and debt to cap moving lower within our targeted 50%-55% range. 14
Slide 15: Credit Ratings
Credit Ratings While great strides have been made since emergence from bankruptcy in 2004, regulatory concerns in Montana have put pressure on credit ratings over the last few years. On February 5, 2018, Fitch placed us on Negative Outlook. On May 18, 2018, Moody’s downgraded our senior secured 15 a
Slide 16: Strong Cash Flows
Strong Cash Flows While maintenance capex and total dividend payments have continued to grow since 2011 (11.9% and 11.2% CAGR respectively), Cash Flow from Operations (CFO) has, on average, exceeded maintenance capex and dividend payments by approximately $7 million per year. Note: 2016 CFO is less
Slide 17: Capital Spending Forecast
Capital Spending Forecast $1.6 billion of total capital investment over five years. Increased investment in first three years (relative to last two years) is primarily a result of advanced metering infrastructure (AMI) project. We anticipate funding the expenditures with a combination of cash flows
Slide 18: Recent Significant Achievements
Recent Significant Achievements Strong year for safety at NorthWestern • Continue to be a top performer among Edison Electric Institute member companies. Record best customer satisfaction scores with JD Power & Associates • Once again received our best JD Powers overall satisfaction survey score. Be
Slide 19: Looking Forward
Looking Forward Regulatory • MPSC to review Montana general electric rate review, filed in September 2018. $3.30$3.30-$3.45-$3.50 $3.10 - $3.30 • We expect to file an associated FERC rate case for $2.60$3.20 - $2.75-$3.40 our Montana transmission assets in the second quarter 2019. Continue to Invest
Slide 20: Exemplary Board of Directors
Exemplary Board of Directors (left to right) Stephan Adik – Chairman of the Board - Independent Director since November 1, 2004 Anthony Clark – Independent Director since December 6, 2016 – Governance & Innovation and Human Resources Committees Dana Dykhouse – Independent Director since January 30,
Slide 21: Experienced Executive Team
Experienced Executive Team (left to right) Robert Rowe - President & CEO – current position since 2008 Brian Bird – CFO – current position since 2003 Michael Cashell – VP Transmission – current position since 2011 Heather Grahame – General Counsel and VP Regulatory and Federal Government Affairs – c
Slide 22: Strong Corporate Governance
Strong Corporate Governance Environmental, Social & Governance Report Published EEI’s ESG / Sustainability reporting template in December 2018. This quantitative information supplements our biennial Stewardship Report that highlights our commitment of the stewardship of natural resources and our sus
Slide 23: Strong Corporate Governance
Strong Corporate Governance Forbes America’s Most Trustworthy Companies “America’s Most Trustworthy Companies,” which identifies the most transparent and trustworthy businesses that trade on the American exchanges. The quantitative and qualitative data analysis looks beyond the raw data on companies
Slide 24: Conclusion
Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects 24
Slide 25: Delivering a bright future
Upetivering a bright future
Slide 26: NorthWestern Energy Profile
NorthWestern Energy Profile (1) Rate base reflects amounts on which we are authorized to earn a return. (2) Rate base amounts are estimates as of December 31, 2018 (3) The revenue requirement associated with the FERC regulated portion of Montana electric transmission and DGGS are included as revenue
Slide 27: Non-GAAP Financial Measures
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 numerical me
Slide 28: Non-GAAP Financial Measures Disclaimer on Net Operating Losses
Non-GAAP Financial Measures Disclaimer on Net Operating Net Operating Losses (NOL’s): The expected tax rate and the expected availability of NOLs are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Com
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures The data presented in this presentation includes financial information prepared in accordance with GAAP, as well as other Non-GAAP financial measures such as Gross Margin (Revenues less Cost of Sales), Free Cash Flows (Cash flows from operations less maintenance capex and