Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Q3 2024 Earnings Presentation
50 slides from Northwestern Energy's earnings presentation, Oct 30, 2024
Slide 1: 2024 Third Quarter Earnings Webcast
2024 Third Quarter Earnings Webcast October 30, 2024 18-K October 30, 2024
Slide 2: Forward Looking Statements
NorthWestern Energy 2 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 Litigation Reform Act of 1995. Forward-looking statements often address our expected future
Slide 3: Recent Highlights
Recent Highlights • Reported GAAP diluted EPS of $0.76 o Non-GAAP diluted EPS of $0.651 • Revising 2024 non-GAAP EPS guidance to $3.32 - $3.47 in light of delay in Montana interim rates • Reaffirming long-term (5 year) rate base and earnings per share growth rates targets of 4% - 6%2 • Dividend Decl
Slide 4: The NorthWestern Value Proposition
9%-11% Total Growth 11%+ Total Growth Incremental Opportunities: 6% + EPS Growth ~5% Dividend Yield Base Capital Plan: 4%-6% EPS Growth FERC Transmission Incremental generating capacity (subject to successful resource procurement bids) Qualifying Facility and / or Power Purchase Agreement buyo
Slide 5: Q3 Financial Results
Thank youQ3 Financial Results 5
Slide 6: Third Quarter Financial Results
Third Quarter Financial Results 6 1.) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. Note: Subtotal variances may exist due to rounding.
Slide 7: Third Quarter 2024 Financial Results
Third Quarter 2024 Financial Results 7 1.) See “Third Quarter 2024 Non-GAAP Earnings” below and “Non-GAAP Financial Measures” in appendix. Third Quarter Net Income vs Prior Period •GAAP: 17.5 million or 59.7% •Non-GAAP1: 9.7 million or 32.4% Third Quarter EPS vs Prior Period •GAAP: $0.28 or 58.3% •N
Slide 8: Year-to-Date 2024 Financial Results
Year-to-Date 2024 Financial Results 8 Year-to-Date Net Income vs Prior Period •GAAP: 32.6 million or 29.4% •Non-GAAP1: 25.6 million or 22.6% Year-to-Date EPS vs Prior Period •GAAP: $0.49 or 26.5% •Non-GAAP1: $0.38 or 20.1% 1.) See “Third Quarter 2024 Non-GAAP Earnings” below and “Non-GAAP Financial
Slide 9: Third Quarter Earnings Drivers
Third Quarter Earnings Drivers 9 2 Increase in diluted EPS primarily due to rate relief, transmission revenues, and a tax benefit, offset by higher operating and interest expense. 1.) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for add
Slide 10: Third Quarter Utility Margin Bridge
Third Quarter Utility Margin Bridge Pre-tax Millions vs. Prior Year $28.2 million or 12.1% increase in Utility Margin items that impact Net Income NOTE: Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 10
Slide 11: Third Quarter 2024 Non-GAAP Earnings
We estimate weather to be a $0.4 million pre-tax detriment as compared to normal and a $0.5 million benefit as compared to third quarter 2023. (1) As a result of the adoption of Accounting Standard Update 2017-07 in March 2018, pension and other employee benefit expense is now disaggregated on the G
Slide 12: Credit, Cash Flow, and Financing Plans
Credit, Cash Flow, and Financing Plans 12 Credit Ratings 2024 Financing Plan No equity expected to fund the current 5-year | $2.5 billion capital plan Financing plans (targeting a FFO to Debt ratio > 14%) are expected to maintain our current credit ratings. We expect to pay minimal cash taxes into 2
Slide 13: Strong Growth Outlook
Strong Growth Outlook Revised 2024 Non-GAAP EPS Guidance1 of $3.32 - $3.47 • Assumes normal weather, Montana interim rates starting in December, an effective tax rate of 9% to 11%, and diluted shares outstanding of 61.4 million. Affirming long-term (5 Year) expected growth rates • EPS growth of
Slide 14: Rate Reviews
Thank youRate Reviews 14
Slide 15: Rate Review Summary
15 Rate Review Summary Key Dates of Montana procedural Schedule • 12/20/24: Final day for data requests to NWE (with final responses due 1/10/25) • 1/17/25: Intervenor testimony due • 3/14/25: NWE rebuttal and cross- intervenor testimony due • 3/24/25: Final day to file settlements • 4/22/25: Hearin
Slide 16: Conclusion
Conclusion Pure Electric & Gas Utility Solid Utility Foundation Best Practices Corporate Governance Attractive Future Growth Prospects Strong Earnings & Cash Flows 16 NorthWestern Energy Group, Inc. dba: NorthWestern Energy Ticker: NWE (Nasdaq) www.northwesternenergy.com Corporate Support Office 301
Slide 17: Appendix
Thank youAppendix: 17
Slide 18: 2024 Earnings Bridge
2024 Earnings Bridge Revising 2024 Non-GAAP EPS guidance in light of delay in Montana interim rates This guidance range is based upon, but not limited to, the following major assumptions: • Normal weather in our service territories; • Interim rates in Montana in December 2024 • An effective income t
Slide 19: Regulated Utility Five-Year Capital Forecast
$2.5 billion of highly-executable and low-risk capital investment Regulated Utility Five-Year Capital Forecast 19 Appendix
Slide 20: (1) The revenue requirement associated with the FERC regulated portion of Montana electric transmission
(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 rate base or authorized returns. (2) The Montan
Slide 21: Third Quarter Appendix
Thank youThird Quarter Appendix 21
Slide 22: Utility Margin (Q3)
Utility Margin (Q3) (dollars in millions) Three Months Ended September 30, 2024 2023 Variance Electric $ 225.7 $ 202.0 $ 23.7 11.7% Natural Gas 31.6 30.2 1.4 4.6% Total Utility Margin1 $ 257.3 $ 232.2 $ 25.1 10.8% (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross
Slide 23: Operating Expenses (Q3)
Operating Expenses (Q3) Increase in operating expenses due to the following factors: $ 4.8 Depreciation expense due to plant additions and higher depreciation rates 3.4 Insurance expense, primarily due to increased wildfire risk premiums 3.0 Labor and benefits(1) 1.9 Electric generation maintenance
Slide 24: Operating to Net Income (Q3)
Operating to Net Income (Q3) (dollars in millions) Three Months Ended September 30, 2024 2023 Variance Operating Income $ 67.9 $ 55.6 $ 12.3 22.1% Interest expense (33.4) (28.7) (4.7) (16.4)% Other income, net 9.1 4.1 5.0 122.0% Income Before Taxes 43.7 31.0 12.7 41.0% Income tax benefit (expense) 3
Slide 25: Tax Reconciliation (Q3)
Tax Reconciliation (Q3) 25 Appendix (in millions) Variance Income Before Income Taxes $43.7 $31.0 12.7 Income tax calculated at federal statutory rate 9.2 21.0% 6.5 21.0% 2.7 Permanent or flow-through adjustments: State income tax, net of federal provisions 0.1 0.1% 0.1 0.4% - Gas repairs safe harbo
Slide 26: Segment Results (Q3)
Segment Results (Q3) (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 26 Appendix Three Months Ended September 30, 2024 Electric Gas Other Total Operating revenues 306,478$ 38,683$ -$ 345,161$ Fuel, purchased
Slide 27: 2024 2023 $ % 2024 2023 2024 2023 Montana 100,737$ 96,812$ ,925$ 4.1 %
2024 2023 $ % 2024 2023 2024 2023 Montana 100,737$ 96,812$ 3,925$ 4.1 % 685 664 328,962 322,832 South Dakota 19,062 17,951 1,111 6.2 % 145 151 51,393 51,236 Residential 119,799 114,763 5,036 4.4 % 830 815 380,355 374,068 Montana 109,655 110,100 (445) (0.4) % 830 825 75,857 74,385 South Dakota 30,053
Slide 28: 2024 2023 $ % 2024 2023 2024 2023 Montana 8,422$ 9,603$ (1,181)$ (12.3) %
2024 2023 $ % 2024 2023 2024 2023 Montana 8,422$ 9,603$ (1,181)$ (12.3) % 739 825 185,578 183,586 South Dakota 1,745 1,987 (242) (12.2) % 108 102 42,389 41,821 Nebraska 1,791 2,251 (460) (20.4) % 143 138 37,834 37,580 Residential 11,958 13,841 (1,883) (13.6) % 990 1,065 265,801 262,987 Montana 6,190
Slide 29: 2024 Year-to-Date Appendix
Thank you2024 Year-to-Date Appendix 29
Slide 30: Year-to-Date Financial Results
Year-to-Date Financial Results 30 1.) Utility Margin is a non- GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. Note: Subtotal variances may exist due to rounding. Appendix
Slide 31: Year-to-Date 2024 Non-GAAP Earnings
(1) As a result of the adoption of Accounting Standard Update 2017-07 in March 2018, pension and other employee benefit expense is now disaggregated on the GAAP income statement with portions now recorded in both OG&A expense and Other (Expense) Income lines. To facilitate better understanding of tr
Slide 32: Utility Margin (YTD)
Utility Margin (YTD) (dollars in millions) Nine Months Ended September 30, 2024 2023 Variance Electric $ 652.8 $ 606.1 $ 46.7 7.7% Natural Gas 148.5 138.0 10.5 7.6% Total Utility Margin(1) $ 801.3 $ 744.1 $ 57.2 7.7% Increase in utility margin due to the following factors: $ 53.4 Base rates 13.5 Tra
Slide 33: (dollars in millions) Nine Months Ended September 30, 2024 023 Variance Operating & maintenance
(dollars in millions) Nine Months Ended September 30, 2024 2023 Variance Operating & maintenance $ 167.4 $ 163.9 $ 3.5 2.1% Administrative & general 106.7 94.1 12.6 13.4% Property and other taxes 125.0 131.0 (6.0) (4.6)% Depreciation and depletion 170.6 157.8 12.8 8.1% Operating Expenses $ 569.7 $ 5
Slide 34: Operating to Net Income (YTD)
Operating to Net Income (YTD) (dollars in millions) Nine Months Ended September 30, 2024 2023 Variance Operating Income $ 231.6 $ 197.3 $ 34.3 17.4% Interest expense (96.3) (85.1) (11.2) (13.2)% Other income, net 19.6 12.9 6.7 51.9% Income Before Taxes 155.0 125.1 29.9 23.9% Income tax expense (11.4
Slide 35: Tax Reconciliation (YTD)
Tax Reconciliation (YTD) 35 Appendix Variance Income Before Income Taxes $155.0 $125.1 $29.9 Income tax calculated at federal statutory rate 32.5 21.0% 26.3 21.0% 6.2 Permanent or flow-through adjustments: State income taxes, net of federal provisions 0.7 0.5% 1.4 1.1% (0.7) Flow-through repairs ded
Slide 36: Segment Results (YTD)
Segment Results (YTD) (1) Utility Margin is a non-GAAP Measure. See appendix slide titled “Reconciling Gross Margin to Utility Margin” for additional disclosure. 36 Appendix Nine Months Ended September 30, 2024 Electric Gas Other Total Operating revenues 909,798$ 230,634$ -$ 1,140,432$ Fuel, purchas
Slide 37: 2024 2023 $ % 2024 2023 2024 2023 Montana 304,128$ 306,114$ (1,986)$ (0.6) %
2024 2023 $ % 2024 2023 2024 2023 Montana 304,128$ 306,114$ (1,986)$ (0.6) % 2,114 2,103 327,644 321,797 South Dakota 53,764 53,408 356 0.7 % 435 481 51,395 51,224 Residential 357,892 359,522 (1,630) (0.5) % 2,549 2,584 379,039 373,021 Montana 310,813 324,632 (13,819) (4.3) % 2,410 2,435 75,712 74,2
Slide 38: 2024 2023 $ % 2024 2023 2024 2023 Montana 75,933$ 94,074$ (18,141)$ (19.3) %
2024 2023 $ % 2024 2023 2024 2023 Montana 75,933$ 94,074$ (18,141)$ (19.3) % 9,220 9,206 185,412 183,584 South Dakota 21,244 30,297 (9,053) (29.9) % 2,113 2,557 42,477 41,962 Nebraska 16,106 30,221 (14,115) (46.7) % 1,812 2,053 37,924 37,752 Residential 113,283 154,592 (41,309) (26.7) % 13,145 13,81
Slide 39: Q1 Q2 Q3 Q4 Full Year '17/'18 Tracker $3.3 $3.3 '18/'19 Tracker ($5.1) $0.3
Q1 Q2 Q3 Q4 Full Year '17/'18 Tracker $3.3 $3.3 '18/'19 Tracker ($5.1) $0.3 (4.8) 2018 (Expense) Benefit $0.0 $0.0 ($1.8) $0.3 ($1.5) Full Year '18/'19 Tracker ($1.6) $4.6 $3.0 '19/'20 Tracker $0.1 ($0.7) (0.6) 2019 (Expense) Benefit ($1.6) $4.6 $0.1 ($0.7) $2.4 Full Year ($9.4) ($9.4) '19/'20 Track
Slide 40: (dollars in millions) As of September 30, As of December 31, 2024 2023 Cash
(dollars in millions) As of September 30, As of December 31, 2024 2023 Cash and cash equivalents 2.5$ 9.2$ Restricted cash 25.4 16.0 Accounts receivable, net 144.2 212.3 Inventories 121.6 114.5 Other current assets 74.8 55.0 Goodwill 357.6 357.6 PP&E and other non-current assets 7,128.1 6,836.1 Tota
Slide 41: (dollars in millions) 2024 2023 Operating Activities Net Income 143.6$ 111.0$ Non-Cash adjustments to
(dollars in millions) 2024 2023 Operating Activities Net Income 143.6$ 111.0$ Non-Cash adjustments to net income 175.3 141.1 Changes in working capital 35.9 194.5 Other noncurrent assets & liabilities (10.9) (19.6) Cash Provided by Operating Activities 343.9 427.0 Cash Used in Investing Activities (
Slide 42: Reconciling Gross Margin to Utility Margin
Reconciling Gross Margin to Utility Margin Management believes that Utility Margin provides a useful measure for investors and other financial statement users to analyze our financial performance in that it excludes the effect on total revenues caused by volatility in energy costs and associated reg
Slide 43: Non-GAAP Financial Measures
Non-GAAP Financial Measures 43 Appendix
Slide 44: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes financial information prepared in accordance with GAAP, as well as other financial measures, such as Utility Margin, Adjusted Non-GAAP pretax income, Adjusted Non-GAAP net income and Adjusted Non-GAAP Diluted EPS that are considered “non-GAAP fi
Slide 45: Rate Review Appendix
Thank youRate Review Appendix 45
Slide 46: Montana Electric Rate Review
Montana Electric Rate Review Montana Electric: • $69.4M Net Request • $874M Plant-in-Service additions (’23-’24F) • Operating Costs 1.1% CAGR (’21-’23) • Typical Residential Bill: 8.3% at full request 46 $156.5 Million Base Rate Increase Requested & $69.4 Million Total Request Typical 750 kWh Reside
Slide 47: Montana Gas Rate Review
Montana Gas Rate Review 47 $28.6 Million Base Rate Increase Requested Montana Natural Gas: • $28.6M Total Request • $174M Plant-in-Service additions (’23-’24F) • Operating Costs 3.3% CAGR (’21-’23) • Typical Residential Bill: 17.0% at full request Typical 65 Therm Residential Natural Gas Bill Append
Slide 48: South Dakota Natural Gas Rate Review
South Dakota Natural Gas Rate Review 48 South Dakota Natural Gas: • $6.0M Total Request • $80M Plant-in-Service additions (’10-’23) • Operating Costs 1.9% CAGR (’10-’23) • Typical Residential Bill: 7.9% at full request $6.0 Million Rate Increase Requested Typical 100 Therm Residential Natural Gas Bi
Slide 49: Nebraska Natural Gas Rate Review
Nebraska Natural Gas Rate Review 49 $3.6 Million Rate Increase Requested Typical 100 Therm Residential Natural Gas Bill Nebraska Natural Gas: • $3.6M Total Request • $42M Plant-in-Service additions (’07-’23) • Operating Costs 1.3% CAGR (’07-’23) • Typical Residential Bill: 5.8% at full request Appen
Slide 50: Thank you
Thank youDelivering a bright future 50
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