NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — FY2016 Earnings Presentation
36 slides from NorthWestern Energy's earnings presentation, Feb 17, 2017
Slide 1: 2016 Earnings Webcast
Black Eagle Dam 2016 Earnings Webcast February 17, 2017
Slide 2: Presenting Today
Presenting Today Bob Rowe, President & CEO Brian Bird, Vice President & CFO 2
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: Recent Significant Activities
Recent Significant Activities • 2016 net income improved by 8.6%, or $13.0 million, as compared to 2015. • This improvement was primarily due to a tax benefit related to costs to repair generation property along with improved gross margin driven by an increase in South Dakota electric rates. These b
Slide 5: Summary Financial Results (Full Year)
Summary Financial Results (Full Year) 5
Slide 6: Gross Margin (Full Year)
Gross Margin (Full Year) (dollars in millions) Twelve Months Ended December 31, 2016 2015 Variance Electric $ 678.8 $ 663.1 $ 15.7 2.4% Natural Gas 177.5 178.3 (0.8) (0.4%) Gross Margin $ 856.3 $ 841.4 $ 14.9 1.8% Increase in gross margin due to the following factors: $ 33.5 South Dakota electric ra
Slide 7: Weather (Full Year)
Weather (Full Year) 2016 has been one of the warmest years, on record, for our service territory and significantly reduced our retail natural gas sales compared to normal. Montana (3rd warmest) South Dakota (4th warmest) Nebraska (3rd warmest) (Source: National Centers for Environmental Information
Slide 8: Weather - 2016 versus Normal (Full Year)
Weather- 2016 versus Normal (Full Year) Heating Degree Day Months Cooling Degree Day Months Mean Temperature Departures from Average During our cooling season we During our heating periods, with the exception of December in experienced near normal Montana, our heating season was typically warmer tha
Slide 9: Operating Expenses (Full Year)
Operating Expenses (Full Year) (dollars in millions) Twelve Months Ended December 31, 2016 2015 Variance Operating, general & admin. $ 302.9 $ 297.5 $ 5.4 1.8% Property and other taxes 148.1 133.4 14.7 11.0% Depreciation and depletion 159.3 144.7 14.6 10.1% Operating Expenses $ 610.3 $ 575.6 $ 34.7
Slide 10: Operating to Net Income (Full Year)
Operating to Net Income (Full Year) (dollars in millions) Twelve Months Ended December 31, 2016 2015 Variance Operating Income $ 246.0 $ 265.8 $ (19.8) (7.4%) Interest Expense (95.5) (92.2) (2.8) (3.0%) Other Income 5.5 7.6 (2.1) (27.6%) Income Before Taxes 156.5 181.2 (24.7) (13.6%) Income Tax Bene
Slide 11: Balance Sheet
11 (dollars in millions) Cash Restricted cash Accounts receivable, net Inventories Other current assets Goodwill PP&E and other non-current assets Total Assets Payables Current maturities of long-term debt & capital leases Short-term borrowings Other current liabilities Long-term debt & capital leas
Slide 12: Cash Flow
Cash Flow Changes in working capital is largely attributed to the $30.8 million* refund to customers associated with the DGGS/FERC ruling and $7.2 million refund to SD electric customers for the difference between interim and final rates of our SD rate case. * $27.3 million of deferred revenues plus
Slide 13: Adjusted Earnings (Full Year '16 vs '15)
Adjusted Earnings (Full Year ‘16 vs ’15) The non-GAAP measures presented in the table above are being shown to reflect significant items 13 that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined or calcula
Slide 14: 2017 Earnings Guidance
2017 Earnings Guidance $3.30-$3.50 $3.10 - $3.30 $2.60$3.20-$3.40 - $2.75 NorthWestern affirms 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
Slide 15: 2016 to 2017 EPS & Dividend Bridge
2016 to 2017 EPS & Dividend Bridge 2016 Non-GAAP EPS to 2017 Midpoint $3.30 → $3.40 = 3.0% increase 2016 to 2017 Dividend Growth $2.00 → $2.10 = 5.0% increase Slower near-term EPS growth along with slightly lower capital investment projections than previously provided, led us to a 5% (or 10 cents an
Slide 16: Other Significant Achievements in 2016
Other Significant Achievements in 2016 Strong year for safety at NorthWestern • Fewest OSHA recordable events of any year. • Best year for lost time incidents. Record best customer satisfaction scores with JD Power & Associates • Received our best JD Powers overall satisfaction survey score in 2016.
Slide 17: Montana Natural Gas Rate Filing
Montana Natural Gas Rate Filing Montana PSC Docket D2016.9.68 In September 2016, we filed a request with MPSC for an annual revenue increase of $10.9 million. This increase is primarily due to investments made to our gas infrastructure and natural gas reserves since 2012. NWE 100 Therm bill with pro
Slide 18: Capital Spending Forecast
Capital Spending Forecast * 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 and
Slide 19: Montana 2015 Electric Supply Resource Plan
Montana 2015 Electric Supply Resource Plan The resource initiatives and actions developed in 2015 Electricity Supply Resource Procurement Plan identify the critical future needs of our portfolio, including solutions to resolve our current negative planning reserve margin. The plan identifies how to
Slide 20: Montana 2015 Electric Supply Resource Plan
Montana 2015 Electric Supply Resource Plan Current Capacity Economically Optimal Portfolio (Current capacity plus identified generation additions) On February 13, 2017 we issued a Request for Proposal (RFP) to partially address NorthWestern’s negative reserve margin. Pacific Northwest planning bodie
Slide 21: Conclusion
Conclusion Pure Electric and Gas Utility Best Practices Solid Utility Corporate Foundation Governance Attractive Strong Future Earnings and Growth Cash Flows Prospects 21
Slide 22: Appendix
Cr Appendix 22
Slide 23: Electric Segment (Full Year)
Electric Segment (Full Year) 23
Slide 24: Natural Gas Segment (Full Year)
Natural Gas Segment (Full Year) 24
Slide 25: Segment Results (Full Year)
Segment Results (Full Year) 25
Slide 26: Income Tax Reconciliation (Full Year)
Income Tax Reconciliation (Full Year) 26
Slide 27: Summary Financial Results (Fourth Quarter)
Summary Financial Results (Fourth Quarter) 27
Slide 28: Gross Margin (Fourth Quarter)
Gross Margin (Fourth Quarter) (dollars in millions) Three Months Ended December 31, 2016 2015 Variance Electric $ 167.9 $ 163.3 $ 4.6 2.8% Natural Gas 55.0 54.3 0.7 1.3% Gross Margin $ 222.9 $ 217.6 $ 5.3 2.4% Increase in gross margin due to the following factors: $ 5.7 South Dakota electric rate in
Slide 29: Weather (Fourth Quarter)
Weather (Fourth Quarter) While December 2016 was colder than normal (increasing our loads), the months of 29 October and November were either at normal or warmer than normal temperatures.
Slide 30: Operating Expenses (Fourth Quarter)
Operating Expenses (Fourth Quarter) (dollars in millions) Three Months Ended December 31, 2016 2015 Variance Operating, general & admin. $ 82.2 $ 75.3 $ 6.9 9.2% Property and other taxes 36.8 32.5 4.3 13.2% Depreciation and depletion 39.7 37.5 2.2 5.9% Operating Expenses $ 158.7 $ 145.3 $ 13.4 9.2%
Slide 31: Operating to Net Income (Fourth Quarter)
Operating to Net Income (Fourth Quarter) (dollars in millions) Three Months Ended December 31, 2016 2015 Variance Operating Income $ 64.2 $ 72.3 $ (8.1) (11.2%) Interest Expense (23.0) (24.1) 1.1 4.6% Other Income 1.3 2.2 (0.9) (40.9%) Income Before Taxes 42.5 50.4 (7.9) (15.7%) Income Tax Benefit (
Slide 32: Segment Results (Fourth Quarter)
Segment Results (Fourth Quarter) 32
Slide 33: Adjusted Earnings (Fourth Quarter '16 vs '15)
Adjusted Earnings (Fourth Quarter ‘16 vs ’15) The non-GAAP measures presented in the table above are being shown to reflect significant items 33 that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined or ca
Slide 34: NorthWestern Energy Profile
NorthWestern Energy Profile 34
Slide 35: Non-GAAP Financial Measures
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 m
Slide 36: Upetivering a
Upetivering a bright future NorthWestern Energy