Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — KeyBanc Capital Markets Utilities Conference 2010
22 slides from Northwestern Energy's conference presentation, Nov 15, 2010
Slide 1: KeyBanc Capital Markets Utilities Conference
KeyBanc Capital Markets Utilities Conference November 17, 2010 Grand Hyatt New York
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
Located in states with relatively stable economies with opportunity for system investment and grid expansion. who we are… Above data as of 9/30/10 (1) Book capitalization calculated as total debt, excluding capital leases, plus shareholders’ equity. ¾ 661,000 customers » 399,000 electric » 262,000 n
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… ¾ Solid operations » Cost competitive » Above-average reliability » Award-winning customer service ¾ Low single A secured credit ratings with a strong balance sheet and liquidity » April 15, 2010 Fitch upgraded secured and unsecured ratings to A- and BBB+ respectively ¾ Po
Slide 5: Improving credit ratings
improving credit ratings… A security rating is not a recommendation to buy, sell or hold securities. Such rating may be subject to revision or withdrawal at any time by the credit rating agency and each rating should be evaluated independently of any other rating.
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity… ¾ Total Debt / Total capitalization of 55.8% (1) ¾ May 2010 » We refinanced existing $225 million, 5.875% Senior Secured Notes due 2014 with 15-year First Mortgage Bonds due 2025. Bonds priced April 15th at 5.01%. ¾ Total liquidity approximately $147 million ¾ Nea
Slide 7: Reaffirming 2010 EPS guidance
reaffirming 2010 EPS guidance… ¾ The major assumptions include, but are not limited to, the following expectations: » Excludes approximately $.06/share for the 2010 estimated effect of the Montana rate increase proposed by the Stipulation, which is pending approval by the MPSC; » The release of the
Slide 8: Strong cash flows
Earnings trend and NOLs provide strong cash flows to fund future investment. strong cash flows… (1) Utility maintenance capex only, excludes investment project opportunities. (2) 2009 Cash Flow from Operations adjusted to include pension funding in excess of expense and Ammondson settlement paid.
Slide 9: Solid pension funding position
As a result of the significant contribution of $93 million to our pension plan and solid market returns in 2009, we are better positioned than our peers at December 31, 2009 solid pension funding position… Data source: SNL Financial
Slide 10: Competitive total shareholder return
Our 53% Total Shareholder Return (TSR) since emergence has exceeded our peer average as well as major indices (11/2/04 - 10/27/10) competitive total shareholder return… Data source: SNL Financial
Slide 11: And growing dividend
Goal for dividend payout ratio of 60% - 70%. Current dividend yield about 5% with year-over-year dividend growth . and growing dividend… (1) 2010 estimated payout range assumes midpoint of $1.95 - $2.10 guidance range
Slide 12: Constructive regulatory environment
constructive regulatory environment… ¾ Montana » Rate case filed October 2009 ♦ September 2010 - Stipulated settlement with Consumer Counsel for a $6.7 million rate increase, subject to MPSC approval ♦ Hearing ended September 24 th and we are awaiting a final decision from the MPSC during the fourth
Slide 13: Near-term potential earnings drivers
near-term potential earnings drivers… ¾ In 2010 we anticipate » Mill Creek AFUDC ♦ Approximately $9 million full year pre-tax contribution » Modest recovery in volumes and economic activity in 2010 ♦ High ratio of residential/commercial vs. industrial customers ● Electric: 69% Residential & Commerci
Slide 14: Longer term investment opportunities
longer term investment opportunities… ¾ Distribution system enhancements » Incremental rate based investment to enhance reliability and capacity, improve rural service, and prepare the system for potential smart grid applications (early stages) ¾ Energy supply » Mill Creek Generation Station » South
Slide 15: Our proposed transmission projects
our proposed transmission projects…
Slide 16: Potential project summary
Opportunity to increase and diversify earnings as compared with our existing $1.6 billion rate base. potential project summary…
Slide 17: In summary
in summary… ¾ Solid operations ¾ Low single A secured credit ratings with a strong balance sheet and liquidity ¾ Positive earnings and ROE trend ¾ Strong cash flows ¾ Competitive total shareholder return and dividend that has increased every year since 2005 ¾ Constructive regulatory environment ¾ Fo
Slide 18: Appendix
Appendix
Slide 19: 2009 to 2010 earnings bridge
2009 to 2010 earnings bridge… Appendix The major assumptions include, but are not limited to, the following expectations: » Excludes approximately $.06/share for the 2010 estimated effect of the Montana rate increase proposed by the Stipulation, which is pending approval by the MPSC; » The release o
Slide 20: Income statement, nine months ended September 30
(in thousands) Nine Months Ended September 30, 2010 2009 Variance’ Operating Revenues $819,050 $839,502 S (20,452) Cost of Sales 390,685 420,033 (29,348) Gross Margin 428,365 419,469 8,896 Operating Expenses ‘Operating, general & administrative 173,871 184,210 (10,339) Property and other taxes 68,48
Slide 21: Balance sheet and capitalization
(in thousands) September 30, December 31, 2010 2009 Cash 6,561 4,344 Restricted cash 11,367 13,608 Accounts receivable, net 98,642 143,759 Inventories 64,696 47,305 Other current assets 72,512 ‘55,811 Goodwill 355,128 355,128 PP&E and ther non-current assets 2,290,468 2,175,177 Total Assets $ (2,899
Slide 22: Cash flow, nine months ended September 30
Nine Months Ended September 30, (in thousands) 2010 2009 Net Income $ 54,788 $ ‘47,811 Depreciation 68,697 66,959 Amort. of debt issue costs, discount, deferred hedge gain and restricted sto 2,692 3,271 Equity portion of allowance for funds used during construction (4,597) (628) Loss (Gain) on sale
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