Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2015)
32 slides from Northwestern Energy's shareholder meeting presentation, Apr 23, 2015
Slide 1: NorthWestern Energy Annual Meeting April 23, 2015
NorthWestern Energy Annual Meeting April 23, 2015 Big Stone Power Plant
Slide 2: Company Information & Forward Looking Statements
2 Company Information & 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
Slide 3: About NorthWestern
About NorthWestern 3 Montana Operations Electric 353,600 customers 24,300 miles – transmission & distribution lines 895 MW of baseload power generation 105 MW of regulating services generation Natural Gas 189,000 customers 7,200 miles of transmission and distribution pipeline 18 Bcf of gas storage c
Slide 4: NWE: An Investment for the Long Term
NWE: An Investment for the Long Term 4 • 100% Regulated electric & natural gas utility business • 100 year history of competitive customer rates, system reliability and customer satisfaction • Solid economic indicators in service territory • Constructive regulatory relationship • Customer service sa
Slide 5: Awards and Recognition
Cogent Reports NorthWestern Energy was among 53 companies nationwide to earn the honor bestowed by Cogent Reports at Market Strategies International, which surveyed utility customers to develop brand-trust scores. NorthWestern earned the top regional score for combined electric and natural gas utili
Slide 6: Strong Corporate Governance
Strong Corporate Governance 6
Slide 7: Experienced & Engaged Board of Directors
Experienced & Engaged Board of Directors 7 Members of the Board of Directors tour the Madison Dam power house in Ennis, Montana. From the left are Dana J. Dykhouse, Dorothy M. Bradley, Philip L. Maslowe, E. Linn Draper Jr., Julia L. Johnson, Robert C. Rowe, Denton Louis Peoples, and Stephan P. Adik.
Slide 8: Strong Executive Team
Strong Executive Team 8 NorthWestern Energy’s executive officers at the Madison Dam in Ennis, Montana
Slide 9: 2015 Earnings Guidance
2015 Earnings Guidance 9 Our 2015 guidance range of $3.10-$3.30 based upon, but not limited to, the following major assumptions and expectations: • Normal weather in our electric and natural gas service territories; • Successful integration and a full year earnings contribution from the recently acq
Slide 10: Track Record of Delivering Results
Track Record of Delivering Results 10 Notes: - ROE in 2010, 2011, 2012 , 2013 & 2014, on a Non-GAAP Adjusted basis, would be 9.2%, 10.5%, 9.8%, 9.6% & 9.4% respectively. - 2015 ROAE and 2015 Dividend payout ratio estimate based on midpoint of guidance range of $3.10-$3.30. - Details regarding Non-GA
Slide 11: Total Shareholder Return
Total Shareholder Return 11 * Peer Group: ALE, AVA, BKH, CNL, EDE, EE, GXP, IDA, MGEE, PNM, POR, UIL, VVC, WR
Slide 12: Strong Utility Foundation
Strong Utility Foundation 12 Electric source: Edison Electric Institute Typical Bills and Average Rates Report, 1/1/14 Natural gas source: US Dept of Energy Monthly residential supply and delivery rates as of 1/1/14 Customer service satisfaction scores in line or better than survey average (JD Pow
Slide 13: Strong Cash Flows
While maintenance capex and total dividend payments have continued to grow since 2010 (8.2% and 7.3% CAGR respectively), Cash Flow from Operations has continued to outpace maintenance capex and averaged approximately $42 million of positive Free Cash Flow per year. Even with the additional income ge
Slide 14: Investment for Our Customers' Benefit
Investment for Our Customers’ Benefit Over the past 6 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. 2014 includes hydro assets in rate base but only 1.5 mo
Slide 15: Credit Ratings
Credit Ratings 15 In January and November 2014, NorthWestern’s secured and unsecured credit rating was upgraded by Moody’s and Fitch, respectively. Moodys: A1 Fitch: A S&P: A-
Slide 16: Balance Sheet Strength and Liquidity
Balance Sheet Strength and Liquidity 16 Annual ratio is average of each quarter end debt/cap ratio Excludes Basin Creek capital leases Goal: 50% - 55% Senior Secured Rating Senior Unsecured Rating Commercial Paper Outlook Fitch A A- F2 Stable Moody's A1 A3 Prime-2 Stable S&P A- BBB A-2 Stable A secu
Slide 17: Solid Economic Indicators
Solid Economic Indicators 17 • Unemployment rates in all three of our states are meaningfully below National Average. • Customer growth rates historically exceed National Average by a good margin. Source: NorthWestern 2008-2014 Forms 10-K and Unemployment Rate: US Department of Labor via SNL Databas
Slide 18: Montana Hydro Acquisition - Update
Montana Hydro Acquisition - Update 18 • On September 26, 2014, after a yearlong process, the Montana Public Service Commission issued a final order approving our application to purchase eleven hydroelectric generating facilities (633 MW) from PPL Montana, subject to certain conditions, including the
Slide 19: The Hydro Facilities
The Hydro Facilities 19 (1) Hebgen facility (0 MW net capacity) excluded from figures. All facilities are “run-of-river” dams except for Kerr and Mystic, which are “storage generation”. (2) As of June 2013. (3) The Confederated Salish and Kootenai Tribes have an option to purchase the Kerr facility
Slide 20: Meeting Montana Customer Demands
Meeting Montana Customer Demands 20 We expect to be able to provide nearly all the power during the light load periods with some flexibility to use market purchases or other resources to meet demand during heavy load periods. The addition of the hydro generation assets into our Montana electric port
Slide 21: Hydro – Owned and Contracted Resources
21 Hydro – Owned and Contracted Resources MONTANA Yellowstone River ll t i r Yellowstone River ll t i r ll t i r Ye lowstone River l t i r Ye lowstone River ll t i r Yellowstone ll t Yellowstone ll t ll t Ye lowstone l t Ye lowstone ll t River i r River i r i r River i r River i r Missouri River i r
Slide 22: Big Stone and Neal Air Quality Projects
Big Stone and Neal Air Quality Projects 22 Big Stone Power Plant Neal Power Plant Big Stone Neal Location Northeast South Dakota Northwest Iowa Ownership 23.4% of 475 MW coal plant 8.7% of 644 MW coal plant Project Subject to Best Available Retrofit Technology (BART) requirements of the Regional Haz
Slide 23: South Dakota Rate Filing
South Dakota Rate Filing 23 34 Years of Declining ‘Real’ Rates Docket EL14-106 The requested $26.5 million revenue increase is primarily due to investments made to meet federal environmental mandates and to maintain our high-level of system reliability in South Dakota. We anticipate implementing int
Slide 24: Natural Gas Reserves Opportunity
Owned Owned Target Total Annual Need Natural Gas Reserves Opportunity 24 As we continue to add to our natural gas reserves portfolio, we anticipate a reduction in supply cost volatility for our customers. First ~6 Bcf annual production acquired for ~$100M Remaining 6-7 Bcf annual production needed t
Slide 25: Infrastructure Projects
Infrastructure Projects 25 • In Montana, our Distribution System Infrastructure Project (DSIP) and Transmission System Infrastructure Project (TSIP), both of which are currently in process, are to maintain a safe and reliable electric and natural gas distribution and transmission system. – The prima
Slide 26: Capital Spending Forecast
Capital Spending Forecast 26 Current estimated cumulative capital spending for 2015 through 2019 is $1.45 billion. We anticipate funding the capital projects with a combination of cash flows (aided by NOLs) and long-term debt. If other opportunities arise that are not in the above projections (natur
Slide 27: DGGS Update – Still waiting on FERC
DGGS Update – Still waiting on FERC 27 See slide 43 in appendix for additional background information
Slide 28: Significant Achievements
Significant Achievements 28 • 2014 was a record best year for both safety and customer satisfaction • Fewest lost time incidents and OSHA recordable events of any year on record • All-time high customer satisfaction scores from JD Powers • Successfully closed, integrated and operating Montana hydro
Slide 29: Conclusion
Conclusion 29 Pure Electric and Gas Utility Solid Utility Foundation Strong Earnings and Cash Flows Attractive Future Growth Prospects Best Practices Corporate Governance Hydro Transaction Announced 9/26/2013 Transaction Closed 11/18/2014 Thompson Falls Hauser Rainbow Ryan Morony Kerr Madison Holter
Slide 30: Delivering a bright future
Upelivering a bright future
Slide 31: NorthWestern Energy Profile Financial and Company Statistics
NorthWestern Energy Profile 31 Financial and Company Statistics See “Non-GAAP Financial Measure” slide in appendix for Net Debt and EBITDA reconciliation (1) The FERC regulated portion of Montana electric transmission and DGGS are included as revenue credits to our MPSC jurisdiction customers. There
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures 32 The data presented above includes financial information prepared in accordance with GAAP, as well as another financial measure, Gross Margin, Free Cash Flows, Net Debt and EBITDA, but is considered a “Non-GAAP financial measure.” Generally, a Non-GAAP financial measure