NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — Q1 2017 Earnings Presentation
27 slides from NorthWestern Energy's earnings presentation, Apr 27, 2017
Slide 1: 2017 First Quarter Earnings Webcast
2017 First Quarter Earnings Webcast April 27, 2017 Beethoven Wind Farm near Tripp, South Dakota
Slide 2: Presenting Today
Presenting Today 2 Bob Rowe, President & CEO Brian Bird, Vice President & CFO
Slide 3: Forward Looking Statements
3 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 financia
Slide 4: Recent Significant Activities
• Net income for the quarter was $56.6 million, or $1.17 per diluted share, as compared with net income of $39.9 million, or $0.82 per diluted share, for the same period in 2016. • Non-GAAP adjusted diluted earnings per share was $1.13 as compared with $1.04 for the same period in 2016. • In March 2
Slide 5: Summary Financial Results (First Quarter)
Summary Financial Results (First Quarter) 5 Note: During the fourth quarter of 2016, we early adopted the provisions of Accounting Standards Update No. 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting, revising certain elements of the accounting for share-based payments
Slide 6: Gross Margin (First Quarter)
6 Gross Margin (First Quarter) (dollars in millions) Three Months Ended March 31, 2017 2016 Variance Electric $ 180.8 $ 157.7 $ 23.1 14.6% Natural Gas 66.7 59.4 7.3 12.3% Gross Margin $ 247.5 $ 217.1 $ 30.4 14.0% Increase in gross margin due to the following factors: $ 10.3 MPSC disallowance (2016)
Slide 7: Weather (First Quarter)
Weather (First Quarter) 7 Mean Temperature from Normal Our Montana service territory benefited from a colder than normal January offset partially by warmer than normal February and March in all three states we serve. Our service territory also experienced colder winter weather than the prior year.
Slide 8: Operating Expenses (First Quarter)
Operating Expenses (First Quarter) 8 Increase in operating expenses due mainly to the following factors: $1.1 million increase in OG&A $ 1.5 Maintenance costs $ 1.3 Bad debt expense $ 0.5 Labor $ (1.7) Non-employee directors deferred compensation $ (1.0) Insurance reserves $ 0.5 Other $4.5 million i
Slide 9: Operating to Net Income (First Quarter)
Operating to Net Income (First Quarter) 9 $1.1 million decrease in interest expenses was primarily due to debt refinancing at a lower interest rate of the Pollution Control Revenue Refunding Bonds during the third quarter of 2016. $1.6 million decrease in other income due primarily to a $1.7 million
Slide 10: Balance Sheet
Balance Sheet (dottars in millions) Cash Restricted cash econts receivable, net PP&E and other non-current assets Total Assets Payables ql Short-term borrowings Other current liabilities Long-term debt & capital leases Other non-current liabilities Shareholders’ equit Total Liabilities and Equity Ca
Slide 11: Cash Flow Statement
(dollars in millions) Operating Activities Net Income Non-Cash adjustments to net income Changes in working capital Other non-current assets & liabilities Cash provided by Operating Activities Investing Activities PP&E additions roceeds from sale of assets Cash used in Investing Activities Financing
Slide 12: Income Tax Reconciliation
Income Tax Reconciliation 12
Slide 13: Adjusted Earnings (First Quarter '17 vs '16)
Adjusted Earnings (First Quarter ‘17 vs ’16) 13 The non-GAAP measures presented in the table above are being shown to reflect significant items that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined or cal
Slide 14: Non-GAAP Adjusted EPS
Non-GAAP Adjusted EPS 14 The non-GAAP measures presented in the table above are being shown to reflect significant items that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined or calculated in accordance w
Slide 15: 2017 Earnings Guidance
2017 Earnings Guidance 15 NorthWestern reaffirms 2017 earnings guidance range of $3.30 - $3.50 per diluted share is based upon, but not limited to, the following major assumptions and expectations: • Normal weather in our electric and natural gas service territories; • A consolidated income tax rate
Slide 16: Credit Ratings
Credit Ratings 16 Moody’s: A2 Fitch: A S&P: A- On March 10, 2017 Moody’s downgraded our senior secured and unsecured credit rating and maintained its Negative Outlook on NWE. However, even after the downgrade, Moody’s rating is in line with Fitch and above S&P on a secured basis (and between them on
Slide 17: Regulatory Update
17 Regulatory Update Regulatory Item Current / Anticipated Action FERC / DGGS: April 2014 order regarding cost allocation at DGGS between retail and wholesale customers. • FERC denied our request for rehearing and required us to make refunds in June 2016. • We filed a petition for review with the US
Slide 18: Montana Natural Gas Rate Filing and House Bill 193
18 Montana Natural Gas Rate Filing: • On April 7, 2017, we filed rebuttal testimony requesting approximately $9.4 million annual increase to revenue based upon a 7.33% rate of return and $431.9 million of rate base. • A final decision is expected mid-2017. Montana House Bill 193: Passed by Montana l
Slide 19: Montana Natural Gas Rate Filing
Montana Natural Gas Rate Filing 19 Montana PSC Docket D2016.9.68 In our April 2017 Rebuttal testimony, we lowered our initial $10.9 million revenue request to $9.4 million primarily due to updated property tax expense information and other smaller miscellaneous adjustments. Our request for rate reli
Slide 20: Capital Spending Forecast
Capital Spending Forecast 20 The updated current estimated cumulative capital spending for 2017 through 2021 is $1.58 billion. Capital spending has been reduced, from the prior $1.66 billion plan, primarily as a result of reduced and delayed spending on necessary generation assets in both Montana an
Slide 21: Conclusion
Conclusion 21 Pure Electric and Gas Utility Solid Utility Foundation Strong Earnings and Cash Flows Attractive Future Growth Prospects Best Practices Corporate Governance
Slide 22: Appendix
22 Appendix
Slide 23: Segment Results (First Quarter)
23 Segment Results (First Quarter) Net Income from our electric segment in the first quarter of 2017 is approximately $14M better than 2016. This was primarily a result of the MPSC disallowance of previously incurred cost reported in 2016 as well as increased electric volumes in 2017. Appendix
Slide 24: Electric Segment (First Quarter)
24 Electric Segment (First Quarter) Appendix
Slide 25: Natural Gas Segment (First Quarter)
25 Natural Gas Segment (First Quarter) Appendix
Slide 26: 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 measure of a company's financ
Slide 27: Delivering a bright future
Upelivering a bright future Energy