Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Q1 2021 Earnings Presentation
32 slides from Northwestern Energy's earnings presentation, Apr 22, 2021
Slide 1: 2021 First Quarter Earnings Webcast
CELEBRATING EARTH DAY 2021 2021 First Quarter Earnings Webcast April 22, 2021
Slide 2: Presenting Today / Forward Looking Statements
Presenting Today Bob Rowe, Forward Looking Statements During the course of this presentation, there will be CEO 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
Slide 3: Significant Events
Significant Events • Net income for the first quarter of 2021 increased $12.4 million, as compared to the same period in 2020. – Diluted earnings per share increased $0.24, or 24.0%, as compared to the same period in 2020. – After adjusting for weather differences, Non-GAAP* adjusted earnings per sh
Slide 4: NorthWestern Energy
NorthWestern Energy A pure electric and natural gas utility; serving as stewards of critical energy infrastructure; providing essential services - in times of trial and triumph; to our resilient customer base spanning a vast footprint over Montana, South Dakota, Nebraska & Yellowstone Nat’l Park. A
Slide 5: Summary Financial Results
Summary Financial Results (First Quarter) (1) 5 (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure.
Slide 6: Gross Margin
Gross Margin (First Quarter) (dollars in millions) Three Months Ended March 31, 2021 2020 Variance Electric $ 189.9 $ 180.8 $ 9.1 5.0% Natural Gas 66.4 63.2 3.2 5.1% Total Gross Margin (1) $ 256.3 $ 244.0 $ 12.3 5.0% Increase in gross margin due to the following factors: $ 4.1 Electric retail volume
Slide 7: Weather
Weather (First Quarter) Even with the February cold-snap, we experienced a warmer first quarter as compared to normal, which contributed approximately $1.3M pretax gross margin detriment but a $2.7M pretax benefit as compared to first quarter 2020. 7
Slide 8: Operating Expenses
Operating Expenses (First Quarter) (dollars in millions) Three Months Ended March 31, 2021 2020 Variance Operating, general & admin. $ 80.9 $ 79.0 $ 1.9 2.4% Property and other taxes 47.5 44.5 3.0 6.7% Depreciation and depletion 47.0 45.3 1.7 3.8% Operating Expenses $ 175.4 $ 168.8 $ 6.6 3.9% Increa
Slide 9: Operating to Net Income
Operating to Net Income (First Quarter) (dollars in millions) Three Months Ended March 31, 2021 2020 Variance Operating Income $ 80.9 $ 75.2 $ 5.7 7.6% Interest Expense (23.5) (24.3) 0.8 3.3% Other Income / (Expense) 5.6 (2.0) 7.6 380.0% Income Before Taxes 63.1 48.9 14.2 29.0% Income Tax Benefit 0.
Slide 10: Income Tax Reconciliation
Income Tax Reconciliation (First Quarter) We expect NOLs to be available into 2021 with alternative minimum tax credits and production tax credits to be available into 2023 to reduce cash taxes. Additionally, we anticipate our effective tax rate to reach approximately 10% by 2024. 10
Slide 11: Balance Sheet
Balance Sheet Targeted debt to capitalization ratio of 50%-55% 53.6% Debt to Capitalization at March 31, 2021 11
Slide 12: Cash Flow
Cash Flow Cash from operating activities decreased by over $92 million primarily due to an $80.9 million increase in market purchases of supply resulting in an under collection of supply costs from customers in the current period due to colder winter weather in February 2021 and a refund of approxim
Slide 13: Adjusted Non-GAAP Earnings
Adjusted Non-GAAP Earnings (First Quarter) The adjusted non-GAAP measures presented in the table above are being shown to reflect significant items that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined or
Slide 14: 2020 Non-GAAP to 2021 EPS Bridge
2020 Non-GAAP to 2021 EPS Bridge The 20 cent EPS guidance range slightly wider than normal primarily due to Covid-19 uncertainties. Guidance range may be narrowed in the 2nd or 3rd quarter when we have a better sense of its impact to our margins. Non-GAAP 2020 to 2021 midpoint EPS growth rate of 4.5
Slide 15: Earnings Per Share and Dividend History
Earnings Per Share and Dividend History Earnings Per Share vs Guidance Non-GAAP Adjusted EPS Growth Averaged 4.3% from 2013 - 2020 Dividend and Payout Ratio Annualized dividend growth rate of 6.7% from 2013 - 2020 Continued investment in our system to serve our customers and communities is expected
Slide 16: Maintaining Capital Investment Forecast
Maintaining Capital Investment Forecast • $2.1 billion of total capital investment over the five year period. • We expect to finance this capital with a combination of cash flows from operations, first mortgage bonds and equity issuances. We anticipate initiating a $200 million At-the-Market (ATM) o
Slide 17: Looking Forward (Regulatory)
Looking Forward (Regulatory) • We do not expect to make general rate case filings in any of our regulatory jurisdictions during 2021. We have made or anticipate making several other regulatory filings, primarily in our Montana jurisdiction, including: • An April 15, 2021 filing requesting to delay t
Slide 18: February Cold Weather Event
February Cold Weather Event • In February 2021, a prolonged cold spell resulted in record winter peak demand for electricity and natural gas. In our SD & NE service territories, natural gas costs for the month of February 2021 exceeded the total cost for all of 2020. • We recorded a regulatory asset
Slide 19: February Cold Weather Event (Montana)
February Cold Weather Event (Montana) Portfolio Resource Portfolio Resource Production (Megawatts) (Megawatt Hours) Resource Adequacy Requirement Wind (455MW) Purchase Price NWE Load Solar (17MW) Accredited Capacity of current portfolio Coal and Natural Gas (511MW) Hydro (484MW) The chart illustrate
Slide 20: Large Electricity Imports Were Critical (Montana)
Large Electricity Imports Were Critical (Montana) Net Electricity Imports into Montana – Feb. 10-15, 2021 (“-” Represents Energy Import) NorthWestern consistently imports significant volumes of power to serve Montana customers during peak usage periods. • Regional events helped avoid outages • Colde
Slide 21: Generation Portfolio Update
Generation Portfolio Update Montana • Initial bids for the January 2020 RFP were received in July 2020. Bid 60 MW of flexible capacity underway in Huron, SD submissions were evaluated by an independent party with the following portfolio of projects selected: • Laurel Generation Station - Constructio
Slide 22: ESG Advancements
ESG Advancements • NorthWestern has a new Environmental, Social and Governance landing page. The new page: • Consolidates existing ESG information; • Includes disclosures of 20 new and existing policies and standards necessary for a best-practices ESG program; and • Includes a new, easy reference, S
Slide 23: Conclusion
Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects 23
Slide 24: Appendix
Cr Appendix 24
Slide 25: Segment Results
Appendix Segment Results (First Quarter) (1) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure. 25
Slide 26: Electric Segment
Appendix Electric Segment (First Quarter) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 26 See appendix for additional disclosure.
Slide 27: Natural Gas Segment
Appendix Natural Gas Segment (First Quarter) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 27 See appendix for additional disclosure.
Slide 28: 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 29: Qualified Facility Earnings Adjustment
Appendix Qualified Facility Earnings Adjustment The gain in 2020 for our QF liability was $3.1 million in total, it was comprised of $2.2 million adjustment to the liability and $0.9 million lower actual costs over last 12 months (QF contract year). This $3.1 million benefit is $3.3 million less tha
Slide 30: NWE Rate Base and Earnings Profile
Appendix NWE Rate Base and Earnings Profile (1) The revenue requirement associated with the FERC regulated portion of Montana electric transmission and ancillary services are included as revenue credits to our MPSC jurisdictional customers. Therefore, we do not separately reflect FERC authorized rat
Slide 31: 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 nu
Slide 32: bright future
| a bright future
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