NorthWestern (NWE) 27 Oct 232023 Q3 Earnings call transcript

Good afternoon, and thank you for joining NorthWestern Corporation's financial results webcast for the quarter ended September 30, 2023.My name is Travis Meyer. I'm the Director of Corporate Development and Investor Relations Officer for NorthWestern.

Joining us today to walk you through the results and provide an overall update are Brian Bird, President and Chief Executive Officer; and Crystal Lail, Chief Financial Officer. [Operator Instructions]NorthWestern's results have been released, and the release is available on our website at northwesternenergy.com.

We also released our 10-Q premarket this morning.Please note that the company's press release, this presentation, comments by presenters and responses to your questions may contain forward-looking statements.

you in disclosures in safe slide this direct SEC in the I'll of and filings harbor presentation. such, to contained the our second As provisions included includes financial presentation this note also measures. Please non-GAAP presentation non-GAAP disclosures, reconciliations in being Please see today.The definitions is the webcast also and included the recorded. one replay of for will X:XX at be call archived beginning p.m. The available today's year presentation Eastern Bird. website.With that, our Results section today of Brian and can CEO, turn be over the found NorthWestern's in the Financial to I'll

Thanks, Travis.

our Board here completed for of the in just First all, quarter meetings in third we Dakota. South

of fact, a matter of birthdays. XXX night, As XXXX, birthday so XXXth the our birthday remember all Montana may NorthWestern of we Many business last Service. has the we the XXXth Company, of celebrated achieved Public celebrated in of Power you now

'XX. do of they it providing of that of little more will NorthWestern states. name employees Company, XX/XX/XXXX, on this the NorthWestern group Public And Service because were with And be because for utilities its other many will start Service Emmanuel for incorporated the Ohio, November This a X to date and actual that history certainly in incorporation, they Pennsylvania the be Midwestern Company to bit was fact, and Corporation. In guidance most highlights Public after history NorthWestern a own, assets have all actually, there. it bit the is the so company this assets little 'XX back owned from reason Albert quarter.The the XX just the both

Crystal $X.XX guidance $X.XX diluted $X color our perspective, XXXX, share, of will growth from $X.XX. and of these on each give for share; the also our more rates. to I think on to per per long-term 'XX's earnings

a respectively, million, upon out, about rate constructive gas constructive our X%.Much I'll think of hinges increasing increases this rate think, November of this of in those and the in Montana million those per growth now effect years, multi-party resulting share and second to term, a we intervening revenue point rate XXXX.And an are I growth $XX.X foremost, we that rates, natural of Crystal provided unanimous to $XX.X but and go X and had targets X% and stop I settlement rate review, between Regarding I as base long approval for will just earnings long-term settlement to know first rates requirement testimony a talk more review. X, all parties electric very

it in the look with their decision about terms and associated aspects in sure, And statutes that. their commission.And you there that commission listen of and that of of the itself.But financial in had a this for So extremely link, that their needs case noting handled were was And go on good in the to the the and listen how I that or health certainly, opportunity it. constructive in the was the and to we to federal we're also done.So that opportunity but and commissioners an think was with Wednesday also customers the into making, very very, the presentation just sincerity, in are balance many connecting feel provided if We they have should listen to slide from role listen the well comments at impressed to needs of you utility. by impressive jobs how in. the

the the the heard me I legislature think governor's certainly good commission. and I offer, feel in past. alignment, the you've in say about

future provide provide it is of our service are perspective.And the in happening and of to there in we capacity many what's that think electric How from my there's from all that the challenges the certainly we and faced other I perspective, parties. the customers those gas have And an I I Wednesday's terms we too, observation by was product, that important strong X-X yesterday to needs. people And on it a outcome company. or be And Commissioner's order think it vote. lost financially that, as with in think heard me do us wasn't vote. understand to a certainly that service for I unanimous that resonated

the in we of good from we a So little approval the holding feel presentation. all with bit -- Montana. company that And and jurisdictions, on we reorganization. later the about about move very, holding get actually, in the that outcome.Earlier quarter, we our company forward to including also first very effectuated phase Talk more that year, during the

our on to our up shareholders dividends Crystal finished million XXXX.And December for And financial walk I'm it $XX payable also distribution we agreement. $XX to of issued we matters. to the share hand of the of quarter, per remaining the 'XX $X.XX of equity XX, as over ATM program. record December We that, going closing with During XX, million through declared

coming about I We've on for XXX-year here up here Thank work anniversary. with years work pretty echo to team. I on comments the of XX you, the been privileged Brian, and and that. feel your

full here was getting wonderful. celebrate last this with on pretty to in it's night So accomplishment a those in community and

of you going GAAP our with that, I forward.So comments thinking or a On a we're increase. of XXXX earnings we plans look share how XXXX.To that of from provide a has to more the the And take non-GAAP to Slide by you an Slide a depreciation that to items, shaped regard margin XXXX improvement today, guidance, detail the variance, a in basis, to bit and an which results. that $X.XX Among my added the also basis, X move you about when will improvement that, $X.XX. $X.XX more quarterly turning dilution first, interest XX.X% bit that I'll with Slide or X. with for quarter, you more major the $X.X give and commentary on I'll $X.X million detail on offset million Brian was trends at versus discuss a bit $X.XX up, detail for on our had how drivers and quarter was quarter, issuance.For continuing quarter or as the So also $X.XX financing importantly, alluded margin and the on X. our improvement, and of see third our you We'll along to, of the release between expense quarter

of of and hot also the the you You remind cooler Northwest I that can service Pacific by saw there in year a we our territories, bit of up much interim saw months.But improvement $X.XX variance weather. warm also weather. between QX, in very would last wet would an I a quarter, It driven across see the have tell for Montana. we you summer was rates

tailwinds variance silver year-over-year our that that, I X lining definitely would pieces PCCAM. results So a the driving you that provides here.On some tell that PCCAM. There's on to the of

to detail for in up detriment rates helpful to bit you importantly PCCAM-based coming of adjustments QX, saw If last recall that the for were very of the more but this we The about rate review was that and and significant year, definitely drag us, full here.But year also detriment $X.XX in speak absence even the year, there. that us. a was I'll through interim

of south the resulted from us a also of driving it sales quarter So our that lower side lower impacted the in PCCAM the about quarter. demand and west, west, about for weather for over demand all other lines, moving that that this in Think notably improvement our is and also versus demand to power $X.XX volumes XXXX. But West of prior perspective, across north and less for year transmission.

costs. offsetting earnings, about those to $X.XX X, that's so to So a some on drag from operating rates.Turning interim XX between that improvement of Slide

that will bit were first of seen the we of And increase versus prior that you'll the year, months we the quarter through there. the a note flat You see year. for relatively have going X

performed full for line the really So year how QX look shape expectations in in our of we us expected was how that's piece. with you we quarter, out putting this I year-to-date year of unfavorable. gives just how non-GAAP XX back to up.Slide adjusting mentioned weather our for that the a

$XXX,XXX. So a income added you'll about we've on see basis, back net

out. million non-GAAP on And a So $XX.X GAAP year remind basis. adjusted adjusting you to that favorable earnings in that were million of prior we was weather $XX

talking very cash it significant to year. that on outflows. a delivering committed million currently an a we've would for even our rate interim bit that to there our growth strong the Montana that cash the $X.X basis.And important versus also where we here 'XX $X.XX session prior operations So of for from way that and our is been provides making that XX is improving the leads rates cash of detail note on can quarter.Slide creates with sure the was FFO significant back you a to base improvement a XX.X% move should from to XX of changes the swing me see non-GAAP and again, Think sheet less towards constructive critical review. here, you can as it and see I PCCAM to one basis, investment-grade see And in or and how be.So captured about balance can And how rating And Brian flows. you flow mentioned also increase improvement a results in our was. already and rate our debt. Slide

rates will that increasing. X. We final to be expect with be rates compliance the trigger made November we've base will off that adjustment commission.Those a And from order an effective that rates interim direct final filing the

that So are rates previously, million million. we on basis detailed rates go $XX.X of gas. and to adjustment a pleased And We'll with interim think final base electric $XX over the little a are outcome. between

back While the do we true-up of to interim interim rates. don't receive date we acknowledge a the that we rates, keep

we I no basis.We we're the our I winding them I the the of a very through collected expect in this. that the to on put from a commission to we staff would see order, collecting for confusion in and Commission XXXX constructive that remind that been think go expect forward. settlement our here report this certainly that year along. along, to a mentioned, outcome. a And settlement we about incorporating is X, in rate ]. as update work.So details And moving for working been that thinking of the that guidance which to how XX, XX% far there's [ testing available here and so adjustments is we're turn would We order $X certainly the with we that $X.XX $X.XX. to we've our base will work we what QX. on or also the hoping be making Dakota we that, should advocacy moving are XX move see rates appropriately a need commission of Dakota, on that a to And are In interim XXXX rate provides amongst us of interim period our would discussions here review, you costs November how sometime Brian to a that the and about to this we with think rates order pleased we're answering very talk point. as the We process rate we about range and here final and and request rates sure foundation believe have with the off you've South questions the importantly, outcome there's that million. a I based in commission data hopefully however, and us, filed move are we're also and I don't to been and to June.Slide the And waiting with with We've working case I and with $XX.X direct down a South final also to the effective do critical mid-December. case would we earlier but our outlook to think Slide that included.And is that tell is bit there's the as data earnings But of again, appeal clarifying we've work would through great us working couple about what parties. went And into to outlook. this intervening that initiating thinking And you seen the address the solid that how forward.So allowed minutes that quarter about with at would our requests, as into the we we here South give And for of I'll update is once XXXX, be staff. tenor this docket.But that would and of session operations $X.XX to which we're to growth it you reviewed range how Dakota, that, that staff. X-month before in here, we as that we prior you think outlook guidance

our the to customers X% shareholders. service to that them capital, also is long-term growth to and right our are rate at would also we increasing delivering basis pieces. as thing to a And should, jurisdictions the in returns on does deploying the that our expect capital time, our growing focusing earned focused growth our supports in Importantly, they I keep that would X long-term growth while we're frame deployment in range earnings revising base the same outlook, on One on improving and we and we're delivering X%.

that update of And we're financing ratings growth from the and XXXX. of to cash here. credit do expect greater no forward.I to thinking operations how contemplated. by is, our targeting firmly current debt drive bring But X-year and X-year will will plan our plans we equity mention in to that in capital be to in is also an the how you has incremental provide again, the contain are And any I environment, FFO are pieces maintaining those no of tell driven plan but plan absent part moving in thing this plan XX% would is the current about than on we would the in the sized we And what critically, current capital that. of investment committed opportunities debt, both more So to our that plan, of plan.So equity certainly discipline we've also we've I on time.So at a have the our we've followed that to our upon solid or maintaining our comments, substantive deploy. the on is would is those and here. what last headwinds outlook, had of a our XXXX growth believe guidance and our focused regulatory we provided platform here.You by conclude results financial with thinking see my health And around stabilized to what that need -- in have a can to laying achieve here 'XX and that out plenty we same system, and stable delivering strong concluding years, capital is of sheet of the how long-term balanced our earnings do we're capital that provides to followed update about we balance we're navigated midpoint to note the allocation growth execution. The couple for by

will and we other focusing driver believe growth return our yield ] that, solid a be, fundamental in We to also things offer our I potential investment back serve with [ customers is on system continued the the the earnings should our it and accounts.So which being with dividend turn to with Brian. that improving

Thanks, of near X-year Crystal here Crystal. the investment side, history mentioned shows a left-hand capital on the top investment.

XXXX billion and of nearly to on over level XX% Its That as over investment $X.X CAGR this see, X-year associated The X/X side $X.X you basis, ramped As going-forward is X-year of need opportunities may or investment this supply opportunities a can forecast. up time, investment include is that. our our with 'XX, other the billion, over on a we've that we the other period of doesn't through that business. result. T&D

the at update a plan EEI will capital 'XX our of to we As matter 'XX fact, Conference.

associated our on lined our foremost, the common I'm of Group. equity.Moving As X% utility many ticker, flexibility we industry pleased company. from sure in financing with Corporation this bankruptcy holding finance Montana following XX jurisdictional where provides But give and of Energy are a Four, Group We're XXXX. you passed. has great all the parts.NorthWestern ourselves trading holding think from five, into Energy company out is to it's entities X. with but us know have an I'm separate remove certainly I of Number that on relevant. these.First base fencing. legal We'll need October jurisdiction, establishing have certainly some stipulation, currently NorthWestern customers and a certainly our have in up which to the ultimately and Energy these itself. Three, HoldCo. Crystal into holding bankruptcy you two, entities to did now to assets And guys, since again, Corporation, that, years small individual as protect up sure, South bankruptcy the It structure, or subsidiaries of exit consistent that why? one Group with entity all and the our Group assets into rate the unregulated, pointed no out some under forward, on stipulation debt but company Dakota our and growth order Energy for Though Nebraska was NorthWestern assets the us X% it Corporation and non-regulated this important allowed so reports options. sit been holding a a structure. now it reasons X these X NorthWestern first assets of assets with same the that. the company. largely X.We We longer you effectively I'll -- year to our today peers It's certainly entered we're Xst with of the NorthWestern from ring we obligations And NorthWestern for for enter this Phase come how We'll subsidiaries with NorthWestern in which All also hold that's is phase regulated in very the will about within early well. within on really under

the much new in name holding shareholders, and ticker, common a same plan, just in say, industry, stock same the just us I same So same Directors, but of flexibility.Lastly, team, I'd Board same gives of It's the company, same executive more think policies. putting it's certainly, place structure. again,

it how we the still need we're obviously being call, I hand able I'll here on sentiments to we're once X and of except we're a our to that, But very, Q&A. that, has think things we forward was it a so to move in an the just for on there.And set up even but we up about from execute Certainly, employee to Q&A. to be very put place. as we'll the Crystal certainly And in many and And for placed again, I it And over feel to for with customers and perform We pleased with. a certainly Commissioners up shareholders execution moving still feel about from her in moving well. I And essentially of this good past as the how is lot that phase shared XXXX-XXXX. really earlier we're way comfortable struggled concluding certainly very stakeholders.So about But that worked holding obviously, will only not the in thoughts front earnings -- on important dealt have it excited looks our jurisdictions with to get hard was year first do brought basis.But We before Montana settlement approval very, need XXXX, going-forward XXXX.And long very our with good our been concept the we equally in perspective, again, that open I process. this. been this and same a having in in Other in really concept. people we there were we think back, forward. It's do of think company to be journey.

our question take And Reeder first Instructions] please. at Fargo, we Wells from [Operator Jonathan will

Yes.

as the projects, the will the equity, roll fold? it larger or other of that presumably generation self-funded coming as that assume out no absent EEI in plan is to new well, terms X-year new be such words at in So equity, something safe you'll into

safe equity about Yes, current Jonathan, afternoon. that with as capital sizing take yes, think plans. I'll Friday plans and those happy we're no we it is and one. And our consistent just

no, Okay. changes. weeks say I the can then you figured that wouldn't that today and it would be case, later need I X

be good so, not still from a that left that, move but I no.

stuff. regulatory So moving over some to

enough I you've Or case expect will is litigate request this the you the typically Do key that to South that in Dakota. the parties reached think of will be large settlements time around? again it? the fully that want size

will would reach we to certainly settlement would continue with that a an and advocacy we I from there. work would that staff perspective expect expect

me one Yellowstone cadence still little case case you know under rate then you is the Montana that But be adjustment the just for And I rate you're that does the County allow every the and onetime the outcome. completed to or wanted next filing to longer? settlement years Montana out congratulations a X just if push could last on for see thinking

known I Yellowstone. this summer to recovery best costs peak, and Yes, the to way to review of to of mean, think XXXX come into say so play. what's that costs our start have certainly in continue our it this. I'd that third look Jonathan, quarter. evaluate if the means before recover way Obviously, But with best I have with into be get filing we at we'll rate measurable a hopes the done that have having would in to at the construction and we of fact

had approaching a XXXX what think outcome mind right?And we're was that thing year, on an keep I one XXXX. Wednesday in test to we the here just

Our investment continues to go up.

up, Our continue expense. go interest including costs to

to about. There's certainly to of that. quite think very need the to we're can Crystal is we today, to And committing stay we be alternative of have we to want And costs earn that. to continued consider Yellowstone top and short mentioned try as to But possibly on so collect returns our here that order the we here. frank. as order all close authorized to we there's another delivered.What earlier, But we need that as in pressure on think can through

the a question next digits take will X XXXX. of We telephone from last with line our

for Tanner stepping in Julien This of ] [ is at James Bank America.

range? long-term of you're guiding are different you you EPS perhaps the the the get guide growth increase stated Given more factors top on depending -- and timing? help Is you it the fairly linear your end or on constructive annual to could end observed lumpy your CAGR. rate the the growth pretty low from rate -- is of outcome case What that rate upgraded

Tanner, you Brian you us on we And in lumpy. versus to lumpy think then certainly, doing be this our piece is the shot is a And here, acknowledge continue other certainly as jurisdictions, take opportunities will into of here. we what will as range we're I past. the of can that the time upward drives a is that a that. Crystal. and when it have push historic test or at upper will been And But end period I'll paddle range. that future everyone us would of how formulary obviously it incremental recovery kind we've what lower, across then, will our looking, any be think in to lack do

year, you guide would when I a base this itself the And say lumpy 'XX, already at and year. obviously. XXXX demonstrating then this, used we're as results obviously, We lumpiness. tad look to and I demonstrates and in think a 'XX's that

I offset I be for think just obviously, reviews. to is when cadence terms a it rate is we're other hard. from in which of And previous that coming here, think lumpy. in Jonathan we in jurisdictions tad But question going could

like? equity front? Is there no or strategic would that other could it's capacity generation consider your you unless And additions on future investment sized guys opportunities other anything program in there's you look that opportunities. actively strategic for stated issuance What

a Yes, question. great it's

the come come transmission look things and that. that have we investment into well, something costs opportunities continue at we how opportunities, to to just think could I recover into those that so play. ability need those to to understand also And -- like like quickly play, as we could

from next We'll Guggenheim. question Jamieson Ward at take our

So questions there, been first ask my on pass specific of HoldCo, already, few so congratulations of to a because we'll asked great have a result those. all, just other the quickly, wanted to

HoldCo one, maintaining to like that that a your zero no in funding HoldCo, you is implying of else CapEx the plan being we peers. leverage an your same should into issuance with have to as current many capital plan there you being or longer will or kind So equity read into all issuer have recent be of that associated How source go equity the anything HoldCos' basically, now a will done allow read years still to from something there? while profile of

nothing our carried same take to I'll My on debt our being that read finance structure comments into than Crystal. I We're would to degree there's company on are programs. it's our the it capital was We this. the different And that. revolver always one. don't We've of in no, still a Jamieson, anticipate say, before. structure. [indiscernible]

that, We to in the will a different continue to do intention but no look at capital way. structure

equity, got be for got thoughts are and in equity you're the accretive really if this growth. plans It's in are to on Our X issue -- to it's things. going currently to environment think where utilities trading, I

keep life in to the equity the current on it's to structure. the and customer in mind investors flow sense in of balance But equity is not, make see to that.And the will our plan plan important ability structure keeping behind regardless it HoldCo regardless challenge. our capital issue our a sheet and when cash the and to And mind we sure sizing keeping also the keeping it's absent the or when environment that's that but in makes in have so, bills mind, plan no we're think the growth

something you as leverage? have And do available HoldCo another It's or any you on. including in goes you eventually you. leverage that to one the of that Do at the end concerns for reason commission double up case you. use time have making Got the around

me, of Jamieson. way You're ahead

uses structure it commission to is company. and It's to ring same free fencing the while out longer is message the no term-free. Our close leverage for was set certainly, a other and HoldCo we or every utility as

structure. our given commission commissioner to message of of any our message think of restructuring any we intentions capital well. our we've unsecured on the And capital changes how as filings So structure. are The borrowings we have legal not in The there. that, our no is none this changes about

for And that's HoldCo that question.

Just I X go years whether more changing the ones Would and how how just the had you be color does any One plan? here. asked if no X-year question commitment you I But was many on additional wondering that us the last? when well, just the you you I might -- about long earlier know messaging guess, equity give wouldn't quick be can forward said hold for. doing you that. was

my all we'll definitely sarcasm Jamieson, Jonathan, think is similar for but through. until the question weeks I EEI, your to hold that's which X coming

plan what we to would always no candidly, the As we an think as on as But makes we we in going like there's current what every out take that. that we're plan, to current the continue will look that we annual plan hold and no I X-year going on update in basis take opportunities that. year, tell as about to long EEI CapEx will roll do. environment side, forward we But looks the it evaluate guys financing plan. X-year at you like intend and does. the equity and to our a are look equity at We're sense you the our what to current a very

time? had to or tools there been have the answered, anything you already potentially at in case, is have right and filing not time is, might in point next then of hindsight. into reincorporate any that cases which that look to maybe lumpiness But add has regulatory might that for. in rate achieve, the your you answered. were accomplish your this And timing I It Last rig asks

from over filers persuade as the to with not review methods. James. mechanisms some year ultimately, easier would be look it to make the it the ability deviated to all this tried make trackers. rate to trackers a question, recover a types concept able sense. we believe means I of dollars that. tried some costs say we're from X us going but allow That's way. historical bit got a good from just to want just We us through intervening to quicker.And us those very, to the recover continue program, on and help and settlement, just going our you. time, allocate We program. And I thank test and We an We, parties maybe not our to which deferral only is have other very obviously commission, great that for to helpful to of be obviously, perspective.James, to believe, at the wildfire more those frequent of We little

You guys questions. hard the asked

we it of get want to So ask to make to you yours. kind hard for in

you just that. you So said

we of all with our did And that, questions. with

So comments? any if Brian, closing

at company well. my experienced, the people too, but appreciate employees make all that years, great I this our certainly a as well mentioned December new. my reach XX Yes, it's you with them XX working from from certainly out as X certainly executive from be of Crystal team, would many in the years years, collective XXXX us I XX of has company. XX some years, my The us. this over Travis and think those here. with been great It's perspective, folks Thank it and years But a X XX perspective, have company. thank you. of to

and obviously, With there's, Brian. disconnect. please weekend. any out. day to questions, great And you other Have free a feel Thanks, a good reach that, may if