NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — Shareholder Meeting (April 2017)
32 slides from NorthWestern Energy's shareholder meeting presentation, Apr 27, 2017
Slide 1: NorthWestern Energy Annual Meeting April 27, 2017
NorthWestern Energy Annual Meeting April 27, 2017 Beethoven Wind Farm near Tripp, South Dakota
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: NWE - An Investment for the Long Term
NWE - An Investment for the Long Term 3 • 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 • A diverse electric supply portfolio that is approximately
Slide 4: About NorthWestern
About NorthWestern 4 Montana Operations Electric 363,800 customers 24,450 miles – transmission & distribution lines 809 MW nameplate owned power generation Natural Gas 194,100 customers 7,250 miles of transmission and distribution pipeline 18 Bcf of gas storage capacity Own 61 Bcf of proven natural
Slide 5: Highly Carbon-Free Supply Portfolio
5 Based upon 2016 MWH‟s of owned and long- term contracted resources. Approximately 54% of our total company owned and contracted supply is carbon-free. Highly Carbon-Free Supply Portfolio
Slide 6: Strong Utility Foundation
Strong Utility Foundation 6 Electric source: Edison Electric Institute Typical Bills and Average Rates Report, 1/1/16 Natural gas source: US EIA - Monthly residential supply and delivery rates as of 1/29/16 Solid and improving JD Power Overall Customer Satisfaction scores Residential electric an
Slide 7: Solid Economic Indicators
Solid Economic Indicators 7 • Unemployment rates in all three of our states are meaningfully below National Average. • Customer growth rates historically exceed National Averages. Source: NorthWestern customer growth - 2008-2016 Forms 10-K Unemployment Rate: US Department of Labor via SNL Database 2
Slide 8: Strong Corporate Governance
Strong Corporate Governance 8
Slide 9: Strong Corporate Governance
Strong Corporate Governance 9
Slide 10: 2017 Earnings Guidance
2017 Earnings Guidance 10 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 11: Track Record of Delivering Results
Track Record of Delivering Results 11 Notes: - ROE in 2011, 2012 , 2013, 2014, 2015 & 2016 on a Non-GAAP Adjusted basis, would be 10.5%, 9.8%, 9.6% ,9.4%, 9.9% and 9.8% respectively. - 2017 ROAE and 2017 Dividend payout ratio estimate based on midpoint of our guidance range of $3.30-$3.50. - Details
Slide 12: Investment for Our Customers' Benefit
Investment for Our Customers‟ Benefit 12 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 13: Strong Cash Flows
While maintenance capex and total dividend payments have continued to grow since 2011 (12.9% and 13.0% CAGR respectively), Cash Flow from Operations (CFO) has continued to outpace maintenance capex and averaged approximately $29 million of positive Free Cash Flow per year. 2016 CFO is less than 2015
Slide 14: Total Shareholder Return
Total Shareholder Return 14 • 13 member peer group: ALE (ALLETE), AVA (Avista), BKH (Black Hills Corp), EE (El Paso Electric), GXP (Great Plains Energy), IDA (IDACORP), MGEE (MGE Energy), OGE (OGE Energy), OTTR (Otter Tail Power), PNM (PNM Resources), POR (Portland General Electric), VVC (Vectren) a
Slide 15: Balance Sheet Strength and Liquidity
Balance Sheet Strength and Liquidity 15
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: Improvement in Coupon and Years To Maturity
Improvement in Coupon and Years To Maturity 17 NorthWestern‟s average interest rate on debt (coupon) and average years to maturity have improved significantly since emergence from bankruptcy in 2004. NWE‟s average cost of debt at December 2016 was 4.36% and average maturity was 18.1 years – both bet
Slide 18: Significant Achievements in 2016
Significant Achievements in 2016 18 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 Overall Customer Satisfaction scores in the JD Power re
Slide 19: What we are working on in 2017
What we are working on in 2017 19 Natural Gas Rate Case in Montana • Intervenor testimony received and rebuttal testimony filed April 7th • Hearing commences May 9th and final decision expected in mid 2017 Cost control efforts • Continue to monitor costs, especially labor and benefits • Monitor prop
Slide 20: Montana Natural Gas Rate Filing
Montana Natural Gas Rate Filing 20 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 21: Capital Spending Forecast
Capital Spending Forecast 21 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 22: Montana 2015 Electric Supply Resource Plan
Montana 2015 Electric Supply Resource Plan 22 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
Slide 23: Montana 2015 Electric Supply Resource Plan
Montana 2015 Electric Supply Resource Plan 23 On February 13, 2017 we issued a Request for Proposal (RFP) to partially address NorthWestern‟s negative reserve margin. Pacific Northwest planning bodies (PNUCC & NWPPC*) have reaffirmed the expected growing capacity need. NorthWestern is addressing thi
Slide 24: Natural Gas Reserves Opportunity
Owned Owned Target Total Annual Need Natural Gas Reserves Opportunity 24 Current gas prices are very attractive for buyers but it is difficult to find sellers willing to transact at these low rates. First ~6 Bcf annual production acquired for ~$100M Remaining 6-7 Bcf annual production needed to meet
Slide 25: Farewell and Thank You Dorothy Bradley
Farewell and Thank You Dorothy Bradley 25 "Dorothy has been a tremendous board member for NorthWestern, applying her experience and knowledge of our Montana service territory and offering unique engagement with our employees and customers. We all will miss her presence on our board, and I look forwa
Slide 26: New Board Member
New Board Member 26 Utility, Regulatory, and Public Policy experience as a senior advisor at Wilkinson Barker Knauer, LLP, and prior service as Commissioner (2012-16) of the Federal Energy Regulatory Commission, prior service as Commissioner (2001-12) of the North Dakota Public Utilities Commission
Slide 27: Board Member Nominee
Board Member Nominee 27 Utility, Legal, Engineering, and Executive experience through her current positions as president of Ide Energy & Strategy; and director and interim chief executive officer of the Big Sky Chamber of Commerce (Montana). Former progressive leadership roles include senior counsel
Slide 28: Board Member Nominee Linda G. Sullivan
Board Member Nominee 28 Linda G. Sullivan Nominated as Independent Director Utility, Finance, Executive, and Regulatory experience through her position as executive vice president and chief financial officer (CFO) of American Water, the largest publicly traded U.S. water and wastewater utility compa
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
Slide 30: Delivering a bright future
Upelivering a bright future Energy
Slide 31: NorthWestern Energy Profile Financial and Company Statistics
NorthWestern Energy Profile 31 Financial and Company Statistics
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures 32 The data presented in this presentation includes financial information prepared in accordance with GAAP, as well as other Non-GAAP financial measures such as Gross Margin (Revenues less Cost of Sales), Free Cash Flows (Cash flows from operations less maintenance capex