Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2020)
37 slides from Northwestern Energy's shareholder meeting presentation, Apr 23, 2020
Slide 1: Annual Meeting of Stockholders - April 23, 2020
Holter Dam NorthWestern Energy Annual Meeting of Stockholders - April 23, 2020
Slide 2: Forward Looking Statements
2 Forward Looking Statements 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 f
Slide 3: NorthWestern Energy
3 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.
Slide 4: COVID-19…Our Response
4 COVID-19…Our Response COVID-19 has consumed our everyday life. This rapidly evolving pandemic has affected all aspects of our operations. We implemented a comprehensive set of actions to help our customers, communities and employees, all while maintaining our commitment to provide safe and reliabl
Slide 5: About NorthWestern
5 About NorthWestern South Dakota Operations Electric 63,800 customers 3,529 miles – transmission & distribution lines 404 MW nameplate owned power generation Natural Gas 47,500 customers 1,713 miles of transmission and distribution pipeline Montana Operations Electric 379,400 customers 24,781miles
Slide 6: NWE - An Investment for the Long Term
6 NWE - An Investment for the Long Term • 100% pure electric & natural gas utility business O’Dell Creek - Pure Electric & with over 100 years of operating history Madison River Valley - Montana Gas Utility • Solid economic indicators in service territory • Diverse electric supply portfolio ~58% hyd
Slide 7: A Diversified Electric and Gas Utility
7 A Diversified Electric and Gas Utility (1) (1) NorthWestern’s ‘80/20’ rules: Approximately 80% Electric, 80% Residential and 80% Montana. Nearly $3.9 billion of rate base investment to serve our customers Data as of 12/31/2019 (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP
Slide 8: Highly Carbon-Free Supply Portfolio
8 Highly Carbon-Free Supply Portfolio MT NWE Contracted energy from Colstrip Energy Limited Partners (CELP), Yellowstone Energy Limited Partners (YELP) as well as a majority of the contracted wind, hydro and solar are federally mandated Qualifying Facilities, as defined under the Public Utility Regu
Slide 9: Strong Utility Foundation
9 Strong Utility Foundation Solid and improving JD Power Overall Customer Satisfaction Scores Residential electric and natural gas rates below national average Solid electric system reliability Low gas leaks per mile – just outside 1st quartile
Slide 10: Solid Economic Indicators
10 Solid Economic Indicators Source: NorthWestern customer growth - 2008-2016 Forms 10-K Unemployment Rate: US Department of Labor via SNL Database 2/21/17 Electric: EEI Statistical Yearbook (published December 2015, table 7.2) Natural Gas: EIA.gov (Data table "Number of Natural Gas Consumers") Sour
Slide 11: A History of Growth
11 A History of Growth $3.30-$3.50 $3.10 - $3.30 $2.60$3.20-$3.40 - $2.75 2010-2019 CAGR’s: GAAP EPS: 7.1% - Non-GAAP EPS: 5.7% - Dividend: 6.0% See appendix for “Non-GAAP Financial Measures”
Slide 12: Track Record of Delivering Results
12 Track Record of Delivering Results * Peer Group: ALE, AVA, BKH, EE, IDA, MGEE, NWN, OGE, OTTR, PNM, POR & SR Return on Equity on GAAP Earnings within 9.5% - 11.0% band over the last 10 years with average of 10.2%. Total Shareholder Return is better than our 12 peer average for the 1 & 10 year per
Slide 13: Recent Total Shareholder Return (TSR)
13 Recent Total Shareholder Return (TSR) 2019 TSR: NWE TSR: 24.51% Peer TSR: 21.87% Rank: 7th of 12 peers 1st Quarter: NWE TSR: -15.71% Peer TSR: -17.01% Rank: 6th of 12 peers We reached an all- time high closing stock price of $80.22 on February 19, 2020. • 12 member peer group: ALE (ALLETE), AVA (
Slide 14: Investment for Our Customers' Benefit
14 Investment for Our Customers’ Benefit Over the past 8 years we have been reintegrating our Montana energy supply portfolio and making additional investments across our entire service territory to enhance system safety, reliability and capacity. We have made these enhancements with minimal impact
Slide 15: Balance Sheet Strength and Liquidity
15 Balance Sheet Strength and Liquidity Investment grade credit ratings, liquidity generally in excess of $100 million target, and debt to cap moving lower within our targeted 50%-55% range.
Slide 16: Credit Ratings
16 Credit Ratings While great strides have been made since emergence from bankruptcy in 2004, regulatory concerns in Montana have put pressure on credit ratings over the last few years. On February 5, 2018, Fitch placed us on Negative Outlook. On May 18, 2018, Moody’s downgraded our senior secured a
Slide 17: Strong Cash Flows
17 Strong Cash Flows While maintenance capex and total dividend payments have continued to grow since 2010 (11.3% and 10.0% CAGR respectively), maintenance capex and dividend payments have slightly exceeded Cash From Operations (CFO), on average, by approximately $10 million per year. Note: 2016 CFO
Slide 18: Capital Spending Forecast
18 Capital Spending Forecast $1.8 billion of total capital investment over five years We anticipate financing this capital with a combination of cash flow from operations (aided by NOLs available into 2021), first mortgage bonds and equity issuances. Based on current expectations, any equity issuanc
Slide 19: Earnings Growth
19 Earnings Growth $3.30-$3.50 Updated $3.30-$3.45 $3.10 - $3.30 2020 $2.60$3.20-$3.40 - $2.75 Guidance Range Non-GAAP Adjusted EPS Growth Averaged 5.4% from 2013 - 2019 NorthWestern is lowering its 2020 earnings guidance range to $3.30 - $3.45 (from $3.45 - $3.60) per diluted share based upon, but
Slide 20: Recent Significant Achievements
20 Recent Significant Achievements Strong year for safety at NorthWestern • Industry Leader Accident Prevention Award from American Gas Association in 2019 • Continue to be a top performer among Edison Electric Institute member companies. Record best customer satisfaction scores with JD Power & Asso
Slide 21: Looking Forward
21 Looking Forward Regulatory • In December 2019, the MPSC issued a final order approving our Montana electric rate case settlement, effective April 1, 2019, that results in an annual increase to electric revenue of approximately $6.5 million (based upon a 9.65% return on equity) and a $9.3 million
Slide 22: NWE Welcomes New Board Members
22 NWE Welcomes New Board Members Jeff Yingling has more than 35 years of investment banking experience, serving as an advisor to companies in the power and utilities sector and is currently a Partner of Energy Capital Ventures, a strategic venture fund formed to invest in early stage energy compani
Slide 23: Exemplary Board of Directors
23 Exemplary Board of Directors Stephen P. Adik Anthony T. Clark Dana J. Dykhouse Jan R. Horsfall Britt E. Ide • Chairman of the • Committees: Governance, • Committees: Human • Committees: Audit, • Committees: Board Human Resources Resources (chair), Audit Operations (chair) Governance, Operations •
Slide 24: Experienced Executive Team
24 Experienced Executive Team Robert C. Rowe Heather H. Grahame Curtis T. Pohl • President and • General Counsel and Vice • Vice President - Chief Executive Officer President of Regulatory Distribution • Current position since and Federal Government • Current position since 2008 Affairs 2003 • Curre
Slide 25: Strong Corporate Governance
25 Strong Corporate Governance Environmental, Social & Governance Report Published EEI’s ESG / Sustainability reporting template in December 2018. This quantitative information supplements our biennial Stewardship Report that highlights our commitment of the stewardship of natural resources and our
Slide 26: Strong Corporate Governance
26 Strong Corporate Governance Forbes America’s Most Trustworthy Companies “America’s Most Trustworthy Companies,” which identifies the most transparent and trustworthy businesses that trade on the American exchanges. The quantitative and qualitative data analysis looks beyond the raw data on compan
Slide 27: Environmental – Social – Governance (ESG)
27 Environmental – Social – Governance (ESG) Environmental Social Governance Environmental Report Community Works Report Annual Report http://www.northwesternenergy.com/ http://www.northwesternenergy.com/ http://www.northwesternenergy.com/our- environment/our-environment community-works/community-wo
Slide 28: ESG - Environmental
28 ESG - Environmental NWE Montana & South Dakota combined Based upon 2019 MWH’s of owned and long-term contracted resources. 58% of NorthWestern Energy’s 2019 Electric Generation Portfolio Delivered was Carbon-Free (megawatt hours) Mystic Dam Beethoven Wind Farm 57% Carbon Free Nameplate Portfolio
Slide 29: ESG - Environmental
29 ESG - Environmental Environmental Stewardship Highlights of our Environmental Report LED Streetlights – plan to replace 43,000 company-owned streetlights in Montana with LED lights by 2022, with SD in planning stage. • Energy Conservation Solar Projects - Our Solar projects are focused Missoula S
Slide 30: ESG - Social
30 ESG - Social Community Customers Employees Typical Residential Bills Lower than National $2.1 Billion Economic Output in Average Safety Culture Transformation 2018 ($1.88B in Montana & $266M in SD/NE) $1.75 million Donations, Sponsorships & Economic Development in 2018 184 Number of nonprofits th
Slide 31: ESG - Governance
31 ESG - Governance 5th Best Score Among 50 Publicly Traded North American Utility and Power Companies by Diverse Leadership Board of Directors Executive Team Moody’s Investment Services on Best Governance Practices Corporate Governance What We Do: • Annual election of all directors. • Majority vote
Slide 32: Our Carbon Reduction Vision for NorthWestern Energy in Montana
32 Our Carbon Reduction Vision for NorthWestern Energy in Montana 90% carbon reduction by 2045 NorthWestern Energy commits to reduce the carbon intensity of our electric energy portfolio for Montana 90% by 2045.* * As compared with our 2010 carbon intensity as a baseline Already over 60% carbon free
Slide 33: 25% of Colstrip Unit 4 Acquisition
33 25% of Colstrip Unit 4 Acquisition On December 9, 2019 NorthWestern (NWE) executed a Purchase and Sale Agreement for the acquisition of Puget Sound Energy’s (PSE) 25% ownership interests in Colstrip Unit 4 (CU4). • Generating Capacity: 185 MW (bringing our total ownership to 407 MW, or 55% of CU4
Slide 34: Non-GAAP Financial Measures
34 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 numerical
Slide 35: Non-GAAP Financial Measures
35 Non-GAAP Financial Measures Disclaimer on Net Operating Net Operating Losses (NOL’s): The expected tax rate and the expected availability of NOLs are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the
Slide 36: Conclusion
36 Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects
Slide 37: Thank you for attending today's Annual Meeting
37 Thank you for attending today’s Annual Meeting
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