Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Q2 2019 Earnings Presentation
34 slides from Northwestern Energy's earnings presentation, Jul 24, 2019
Slide 1: 2019 Second Quarter Earnings Webcast
2019 Second Quarter Earnings Webcast July 24, 2019
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: Second Quarter Highlights
Second Quarter Highlights • Net income for the quarter increased $3.9 million, or 8.9%, as Madison Dam compared to the same period in 2018. This increase was primarily due to an income tax benefit in 2019 and a reduction in revenue in 2018 due to impacts of the Tax Cuts and Jobs Act for customer ref
Slide 4: Summary Financial Results
Summary Financial Results (Second Quarter) (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 (Second Quarter) (dollars in millions) Three Months Ended June 30, 2019 2018 Variance Electric $ 177.0 $ 190.1 ($ 13.1) (6.9%) Natural Gas 38.0 39.5 (1.5) (3.8%) (1) Total Gross Margin $ 215.0 $ 229.6 ($ 14.6) (6.4%) Decrease in gross margin due to the following factors: ($20.9) Electri
Slide 6: Weather
Weather (Second Quarter) We estimate unfavorable weather in Q2 2019 resulted in a $0.3M pretax detriment as compared to normal and $1.1M pretax benefit as compared to Q2 2018. 6
Slide 7: Operating Expenses
Operating Expenses (Second Quarter) (dollars in millions) Three Months Ended June 30, 2019 2018 Variance Operating, general & admin. $ 80.8 $ 73.8 $ 7.0 9.5% Property and other taxes 44.3 43.0 1.3 3.0% Depreciation and depletion 41.0 43.5 (2.5) (5.7%) Operating Expenses $ 166.1 $ 160.3 $ 5.8 3.6% In
Slide 8: Operating to Net Income
Operating to Net Income (Second Quarter) (dollars in millions) Three Months Ended June 30, 2019 2018 Variance Operating Income $ 48.8 $ 69.2 $ (20.4) (29.5%) Interest Expense (23.5) (23.2) (0.3) (1.3%) Other Income 0.1 0.9 (0.8) (88.9%) Income Before Taxes 25.5 46.9 (21.4) (45.6%) Income Tax Benefit
Slide 9: Income Tax Reconciliation
Income Tax Reconciliation (Second Quarter) 9
Slide 10: Balance Sheet
10 (dollars in millions) Cash and cash equivalents Restricted cash Accounts receivable, net Inventories Other current assets Goodwill and other intangibles, net PP&E and other non-current assets Total Assets Payables Finance leases Other current liabilities Long-term debt & capital leases Other non-
Slide 11: Cash Flow
Cash Flow Cash from operating activities decreased by ~$103M primarily due to the under collection of supply costs from customers in 2019 as compared with an over collection in 2018 resulting in ~$39M in reduction of working capital, credits to Montana customers during the current period related to
Slide 12: Adjusted Non-GAAP Earnings
Adjusted Non-GAAP Earnings (Second Quarter) 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 c
Slide 13: Looking Forward
Looking Forward Regulatory • Reached settlement with major intervenors in our Montana electric rate case with increase to revenues of $6.5 million, based upon a 9.65% return on equity, and decrease of depreciation expense of $9.0 million. We expect a final order from the $3.30-$3.50 $3.30-$3.45 MPSC
Slide 14: NWE Energy Supply Resource Plans
NWE Energy Supply Resource Plans South Dakota Electricity Supply Resource Plan Ryan Dam Upgrade • 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 identif
Slide 15: Capital Investment Forecast
Capital Investment Forecast $1.6 billion of total capital investment over five years We anticipate funding the expenditures with a combination of cash flows (aided by NOLs available into 2020) and long-term debt issuances. Significant capital investments that are not in the above projections or furt
Slide 16: Conclusion
Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects 16
Slide 17: Appendix
Cr Appendix 17
Slide 18: 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 19: Segment Results
Appendix Segment Results (Second Quarter) (1) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure. 19
Slide 20: Electric Segment
Appendix Electric Segment (Second Quarter) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 20 See appendix for additional disclosure.
Slide 21: Natural Gas Segment
Appendix Natural Gas Segment (Second Quarter) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 21 See appendix for additional disclosure.
Slide 22: Summary Financial Results
Appendix Summary Financial Results (Six Months Ended June 30) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 22 See appendix for additional disclosure.
Slide 23: Gross Margin
Appendix Gross Margin (Six Months Ended June 30) (dollars in millions) Six Months Ended June 30, 2019 2018 Variance(1) Electric $ 373.0 $ 371.2 $ 1.8 0.5% Natural Gas 110.4 103.8 6.6 6.4% Total Gross Margin $ 483.4 $ 475.0 $ 8.4 1.8% Increase in gross margin due to the following factors: (1) Gross M
Slide 24: Weather
Appendix Weather (Six Months Ended June 30) We estimate favorable weather through the first 6 months of 2019 has contributed approximately $13.7M pretax benefit as compared to normal and $10.3M pretax 24 benefit as compared to the same period in 2018.
Slide 25: Operating Expenses
Appendix Operating Expenses (Six Months Ended June 30) (dollars in millions) Six Months Ended June 30, 2019 2018 Variance Operating, general & admin. $ 161.9 $ 148.2 $ 13.7 9.2% Property and other taxes 89.1 85.9 3.2 3.7% Depreciation and depletion 86.6 87.3 (0.7) (0.8%) Operating Expenses $ 337.6 $
Slide 26: Operating to Net Income
Appendix Operating to Net Income (Six Months Ended June 30) (dollars in millions) Six Months Ended June 30, 2019 2018 Variance Operating Income $ 145.8 $ 153.7 $ (7.9) (5.1%) Interest Expense (47.3) (46.2) (1.1) (2.4%) Other Income / (Expense) 1.3 (0.3) 1.6 533.3% Income Before Taxes 99.8 107.3 (7.5
Slide 27: Income Tax Reconciliation
Appendix Income Tax Reconciliation (Six Months Ended June 30) 27
Slide 28: Adjusted Non-GAAP Earnings
Appendix Adjusted Non-GAAP Earnings (Six Months Ended June 30) 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 and me
Slide 29: Segment Results
Appendix Segment Results (Six Months Ended June 30) (1) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 29 See appendix for additional disclosure.
Slide 30: Electric Segment
Appendix Electric Segment (Six Months Ended June 30) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 30 See appendix for additional disclosure.
Slide 31: Natural Gas Segment
Appendix Natural Gas Segment (Six Months Ended June 30) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 31 See appendix for additional disclosure.
Slide 32: 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 33: 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 34: Upetivering a bright future
Upetivering a bright future
NorthWestern Energy Group — Q2 2019 Earnings Presentation on 6ix