Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — 46th EEI Financial Conference (November 2011)
45 slides from Northwestern Energy's conference presentation, Nov 7, 2011
Slide 1: 46th EEI Financial Conference
46th EEI Financial Conference November 8, 2011 Presented by: Bob Rowe, President & CEO Brian Bird, Vice President, CFO & Treasurer
Slide 2: Outline
Outline Who we are Financial update Investment opportunity outlook Conclusion Appendix - Financial statements - Regulatory update - Additional investment opportunity detail
Slide 3: 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 future business and financial
Slide 4: Who we are
Who we are ð Our Vision: Enriching lives through a safe, sustainable energy future ð Our Mission: Working together to deliver safe, reliable and innovative energy solutions ð Our Values: S afety E xcellence R espect V alue I ntegrity C ommunity E nvironment
Slide 5: Geographically positioned for success
Geographically positioned for success ð Our service territory covers some of the best wind regimes in the nation ð We have the opportunity to provide transmission services into two different markets (West and Midwest) Low unemployment rates ð A fully-regulated utility located in states with relative
Slide 6: Nebraska is a natural gas only jurisdiction
(1) Nebraska is a natural gas only jurisdiction
Slide 7: The 80/20 rules of NorthWestern
The “80 / 20” rules of NorthWestern. We are approximately 80% electric / 20% natural gas A multi-state electric & natural gas utility Note: Data above reflects full year 2010 results .
Slide 8: A diverse distribution customer base
A diverse distribution customer base
Slide 9: Typical Customer bills
Typical Customer bills With competitive customer rates
Slide 10: Outline
Outline Who we are Financial update Investment opportunity outlook Conclusion Appendix - Financial statements - Regulatory update - Additional investment opportunity detail
Slide 11: Cash from operations and dividend growth
8.3% Cash From Operations 6.6% Dividend Growth Compounded Annual Growth Rate (CAGR)
Slide 12: Solid pension funding
Solid pension funding NorthWestern Energy’s Pension Assumptions ð Target allocation 50% equity and 50% fixed income ð Expected long-term rate of return of 7.25% ð Discount rate of 5.00 - 5.25%
Slide 13: Debt to capitalization and liquidity
ð Long-term targeted total debt to capitalization of 50-55% with a current capitalization of 54.9% (1) ð Total liquidity of $210 million as of Oct 21, ’11 ð Refinanced nearly all debt in the last 2 years – Lowered average coupon on long-term debt by 1.2% and extended maturities – Amended and restate
Slide 14: A history of earnings and dividend growth
A history of earnings and dividend growth
Slide 15: Reaffirming 2011 earning guidance
Reaffirming 2011 earning guidance Reaffirming 2011 guidance range of $2.30-$2.40, which would result in 7-12% growth over 2010, based upon, but not limited to, the following major assumptions and expectations: • Gross margin will be positively impacted by approximately $6.0 million in the fourth qua
Slide 16: Near-term earnings drivers
Near-term earnings drivers 2012 expectations/assumptions: ð Additional gross margin adding between $.20/share to $.25/share from 2011 – Relates primarily to property tax tracker timing differences, SD rate increase, and non-weather customer growth – Also, assumes some increase in wholesale transmiss
Slide 17: Well-positioned for future investment
Well-positioned for future investment Continued investment in our system to serve our customers and communities is expected to provide average earnings per share growth and dividend growth of 4-6% annually. That, coupled with dividend yield of 4-5%, should provide great results for investors over th
Slide 18: Outline
Outline Who we are Financial update Investment opportunity outlook Conclusion Appendix - Financial statements - Regulatory update - Additional investment opportunity detail
Slide 19: Investment opportunity outlook
Investment opportunity outlook ð Energy Supply – Big Stone/Neal pollution control – South Dakota natural gas peaking generation – Montana Spion Kop Wind facility – South Dakota Titan Wind facility buyout – Other vertical integration opportunities in Montana ð Transmission – Network upgrades and larg
Slide 20: Montana base load opportunity
Montana base load opportunity Our post PPL supply opportunity is approximately 200 GWh / month or about 280 MWs of capacity
Slide 21: 2005-07 valuation affected by terminated acquisition
2005-07 valuation affected by pending and ultimately terminated acquisition
Slide 22: Growing investment in our existing system
Growing investment in our existing system
Slide 23: Great investment growth opportunities
Great investment growth opportunities
Slide 24: Investment project summary
Several opportunities exist to further increase and diversify earnings as compared to our approximately $1.8 billion of rate base today. Additional Montana base load opportunities are currently being evaluated and may be incorporated at the appropriate time. Investment project summary Note: Color /
Slide 25: Another way to slice the pie
Another way to slice the pie (at midpoint of range)
Slide 26: Outline
Outline Who we are Financial update Investment opportunity outlook Conclusion Appendix - Financial statements - Regulatory update - Additional investment opportunity detail
Slide 27: Conclusion
Datvaring 6 Bright ture Conclusion Realistic investment opportunities to invest Free Cash Flow Fully- regulated utility Financially Strong cash Attractive sound dividend
Slide 28: NorthWestern, the 2nd happiest place on Earth
NorthWestern, the 2nd happiest place on Earth
Slide 29: Questions / Thank You
QUESTIONS Thank You
Slide 30: Outline
Outline Who we are Financial update Investment opportunity outlook Conclusion Appendix - Financial statements - Regulatory update - Additional investment opportunity detail
Slide 31: Consolidated statement of income
Consolidated statement of income
Slide 32: Consolidated statement of cash flows
Consolidated statement of cash flows
Slide 33: Consolidated balance sheet
NortiWite {in thousands) cosh Restricted cosh Accounts receivable, net Inventories Othercurrent assets Goodwill P&E ond ther non-current assets Total Assets Poyables Current maturities of long-term debt & capital leases Short-term borrowings Other current liabilities Long-term debt & capital leases
Slide 34: Earnings per share variance by driver
‘Three Months End Pretax Net EPS Pro-tax Net PS (Smilions, except EPS) Income Income’ Diluted | Income Income’ Diluted 2010 reported St91 S144 $0.40 S28 $548 S48 (0668 interim ates 68 42 042 8 2838 Becte retal volumes 29 18 005 66 41 ont Expiation ofa pow er sales agreement 15 09 002 45 28008 ‘Natur
Slide 35: Other miscellaneous earnings items
Other miscellaneous earnings items
Slide 36: Energy supply regulatory update
Energy supply regulatory update Please refer to our recent and forthcoming public filings with the SEC and press releases for additional detail regarding our regulatory activities.
Slide 37: Energy supply regulatory update (cont.)
Energy supply regulatory update (cont.) Please refer to our recent and forthcoming public filings with the SEC and press releases for additional detail regarding our regulatory activities.
Slide 38: Transmission regulatory update
Transmission regulatory update
Slide 39: Delivery services regulatory update
NorthiWestern Delivery services regulatory update Energy Dennen Bright Fire ‘Montana electric and natural gas general rate filing (MPSC 02009.9.129) - June 2011 received approval through settlement for: Revenue: $60milion annual net increase. ($7.0 milion electric increase less $1.0 million natural
Slide 40: Montana and South Dakota regulatory commissions
Montana Public Service Commission ‘Commissioners are elected in statewide elections from each of {five districts. Chairperson is elected by fellow Commissioners. Commissioner term is 4 years, Chairperson term is 2 years. Began Term ‘Name ‘Party ‘Serving Ends Bill Gallagher R Jan-11 Jan-15 Gail Gutsc
Slide 41: South Dakota pollution control equipment
South Dakota pollution control equipment • Big Stone: 23.4% joint owner in an estimated $500 million project to install SOx (scrubbers), NOx (SCR) and particulate matter (bag house) emission control technology on a jointly owned 454 MW power plant. We have 5 years from the Environmental Protection A
Slide 42: Environmental compliance impact
NorthWestern Energy Datvaring Bright Future C+) Environmental compliance impact pon ‘Ownership Plant / Unit Fuct_| (ows) |share(mw)]PM2.5| ozone | soz_| Nox int Owned Facies” Colstrip 3&4 ‘Coal 1480) ao To To | Bigstone Coal a5 anor | o | Neal Coal 640) seo" | oF Coyote Coal a] eo | o | oO [Wholly O
Slide 43: Colstrip 500kV Upgrade and MSTI
Colstrip 500kV Upgrade • A proposed $125 million project to add 500-700 MW’s of capacity to our existing 500 kV lines running from Colstrip generation facility to Mid-Columbia area in Oregon by adding series compensation and a new substation near Townsend, Montana. It is currently estimated that our
Slide 44: Network Upgrades and Large Generation Interconnections
Network Upgrades and Large Generation Interconnections the cost of joining MISO as compared to the opportunities and other benefits that membership may provide. Investment opportunities are currently estimated to be between $300-500 million . The map below is from a September 2011 MVP Business Case
Slide 45: Distribution System Integrity Program (DSIP)
Distribution System Integrity Program (DSIP) The Project will address the emerging issue of our aging infrastructure and prepare our natural gas and electric distribution systems for the next generation of technology. For the electric distribution system , the Program’s goals are: • Arrest and rever
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