Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — EEI Financial Conference 2008
19 slides from Northwestern Energy's conference presentation, Nov 10, 2008
Slide 1: EEI Financial Conference
EEI Financial Conference November 10, 2008 JW Marriott Phoenix, Arizona
Slide 2: Forward-looking statement
forward-looking statement… 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 financial
Slide 3: Who we are
who we are… 650,000 customers 388,000 electric 262,000 natural gas Approximately 123,000 square miles of service territory in Montana, Nebraska and South Dakota Total generation (mostly base load coal) MT – 222 MW – unregulated SD – 312 MW – regulated Total assets: $2,593 MM (2) Total capitalization
Slide 4: Business segment contribution
business segment contribution… ELECTRIC GAS UNREGULATED OTHER / YE Dec 31, 2007 TOTAL UTILITY UTILITY ELECTRIC ELIMINATIONS Gross Margin 346,976 127,626 56,152 901 531,655 % of Total 65% 24% 11% 0% Operating Income 90,692 36,067 20,407 (7,073) 140,093 % of Total 65% 26% 15% -5% Net Income 33,730 14,
Slide 5: 2008 third quarter year-to-date results
2008 third quarter year-to-date results… Nine Months Ended September 30, Unaudited (dollars in 000's) 2008 2007 B(W) Operating Revenues 934,725 892,036 42,689 Cost of Sales 508,941 499,555 (9,386) Gross Margin 425,784 392,481 33,303 Operating Expenses Operating, general & administrative 177,348 173,
Slide 6: 2008 guidance
2008 guidance… $1.65 to $1.80/fully diluted share Increased guidance after third quarter results Increased from $1.60 to $1.75 per fully diluted share Includes an increase in pension expense Increase due to – Share buyback Lower legal costs (insurance recoveries) Better pricing at Colstrip Unit 4 (h
Slide 7: Free cash flow
free cash flow… (in millions) Projected 2008 Cash flow from operations 245,000 Maintenance cap ex (105,000) Growth cap ex (20,000) Dividends (50,000) Free cash flow 70,000 Free cash flow in 2008 was used to buy back company stock The 2009 increase in pension funding expense will be offset by reducin
Slide 8: Strong balance sheet
strong balance sheet… Unaudited (Dollars in 000's) September 30 2008 2007 Cash 8,575 12,773 Restricted Cash 16,166 14,482 Accounts Receivable, Net 108,540 143,482 Inventories 90,896 63,586 Other Current Assets 54,077 44,031 Goodwill 355,128 355,128 PP&E and Other Non-current Assets 1,960,432 1,913,8
Slide 9: Liquidity highlights
liquidity highlights… Liquidity position remains strong Total liquidity currently in the $145 million range Debt maturities in late 2009 Unsecured revolver matures on Nov. 1, 2009 Current balance is $50 million Letters of credit balance is approximately $17 million Current rate is LIBOR + .75% The $
Slide 10: Credit ratings
credit ratings… Fitch S&P Moody’s Senior Secured Rating BBB A- (MT) Baa2 BBB+ (SD) Senior Unsecured BBB- BBB Baa3 Corporate Rating BBB- BBB N/A Outlook Positive Stable Positive Either Colstrip Unit 4 outcome is expected to be ratings positive. 10
Slide 11: Colstrip Unit 4 update
Colstrip Unit 4 update… Rate base option before the MPSC MPSC held work session on Oct. 31 Passed motion to draft an order – To rate base CU4 at $407M Recognize that $161M NOL balance belongs to the company The draft order is due to be reviewed by the MPSC on Nov. 13 MPSC may revise its position unt
Slide 12: NorthWestern's future
NorthWestern’s future… Operationally strong Cost competitive Above-average reliability Award-winning customer service Financially strong Steady earnings growth and strong cash flow Sufficient liquidity with no significant maturities within next 12 months Secured credit ratings of A-(MT) BBB+(SD) / B
Slide 13: Generation growth highlights
generation growth highlights… Mill Creek Generating Unit in Montana What: 120-150 MW plant near Anaconda, Montana Built for regulation services to balance supply and load Estimated to cost around $200 million Why: Existing services are becoming more expensive and scarce South Dakota Peaking Generati
Slide 14: Transmission project developments
transmission project developments… Colstrip 500 kV Upgrade NorthWestern announced partnership with others on the project Avista, PacifiCorp, Portland General, Puget Sound Energy Needed to relieve congestion to the West Cost estimate of 500 kV upgrade = $50M - $75M Anticipate ownership interest of 25
Slide 15: Transmission project developments cont'd
transmission project developments cont’d… MSTI Developing a request for FERC declaratory order on incentive rate principles Beginning an updated Open Season for long term contracts to be completed by early 2009 Continuing the public outreach process Expect to complete the WECC path rating process Q1
Slide 16: Cap ex spending – next few years
cap ex spending – next few years… Includes more than $1 billion of potential generation and transmission growth projects. $700 $600 $500 $400 $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 Regulated Utilities Maintenance Capex Colstrip Upgrade 230 kV Collector Mill Creek Generator MSTI 16
Slide 17: Growth project potential
growth project potential… Annual Earnings (in millions) Opportunity * Cost of Project Timing Mill Creek Generator $ 10.0 to $ 11.3 $ 200 to $ 225 Jan 2011 Colstrip 500 kV transmission upgrade** $ 2.5 to $ 3.0 $ 50 to $ 60 Jan 2012 South Dakota Peaking generation $ 3.8 to $ 4.5 $ 75 to $ 90 Jan 2013
Slide 18: NorthWestern = value
NorthWestern = value… Value Dividend yield of approximately 6.7% Currently trading at approximately .95x book value Opportunity for growth Possibility of rate basing our 222 MW interest in CU4 Possibility of increasing rate base on growth projects with investment in excess of $1 billion Potential ad
Slide 19: Summary
summary… Objectives achieved Nearly all earnings from regulated business related to focus on Recent rate relief received in all jurisdictions core business Outstanding bankruptcy litigation nearly completed Strong balance sheet No equity required for existing core business Solid foundation Modest de