 | NorthWestern Corporation d/b/a NorthWestern Energy 3010 W. 69th Street Sioux Falls, SD 57108 www.northwesternenergy.com | |
NYSE: NWE News Release FOR IMMEDIATE RELEASE | Media Contact: Claudia Rapkoch (866) 622-8081 claudia.rapkoch@northwestern.com Investor Relations Contact: Dan Rausch (605) 978-2902 daniel.rausch@northwestern.com | |
NORTHWESTERN REPORTS THIRD QUARTER 2009 FINANCIAL RESULTS
Reports Increase in Net Income Due to Income Tax Benefit
Reductions in Income Tax and Operating Expenses Offset Gross Margin Declines
Increases 2009 GAAP Earnings Guidance
SIOUX FALLS, S.D. -- Oct. 28, 2009 -- NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) reported financial results for the quarter ended Sept. 30, 2009.
Highlights for the quarter include:
| ● | Net income increased to $18.9 million in the third quarter of 2009 compared with $13.4 million in the third quarter of 2008, led by a $12.4 million tax benefit from the repairs expense deduction; |
| o | Obtained Internal Revenue Service (IRS) approval of a tax accounting method to deduct repairs that would have previously been capitalized; |
| ● | Operating income for the third quarter of 2009 declined approximately $8.4 million from the same period in 2008; |
| o | Gross margin for the third quarter of 2009 declined approximately $14 million from the same period in 2008; |
| o | Third quarter 2009 operating, general, and administrative expenses were $5.5 million less than the third quarter of 2008; |
| ● | Received an upgrade of the Company's senior secured credit ratings by Moody's Investors Service from Baa1 to A3; |
| ● | Priced $55 million of 30-year maturity Montana First Mortgage Bonds at a fixed interest rate of 5.71%; |
| ● | Contributed approximately $76.4 million to qualified pension plans during the first nine months of 2009 and have achieved a year-to-date return of approximately 20%; and |
| ● | Quarterly dividend of 33.5 cents per share declared for shareholders of record on Dec. 15, 2009, payable on Dec. 31, 2009. |
"Net income improved in the third quarter 2009 primarily because we received an IRS approval to change a tax accounting method enabling us to immediately expense certain repairs that we had previously capitalized for tax purposes," said Bob Rowe, President and CEO. "Our gross margin and operating income declined in light of mild weather and a slowing economy but we have improved our cost management, which partially contributed to our reduction in the operating expenses for the quarter."
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 2
Financial Results
Consolidated net income was $18.9 million or $.52 per diluted share for the quarter ended Sept. 30, 2009, a 41% increase compared with consolidated net income of $13.4 million or $.35 per diluted share for the quarter ended Sept. 30, 2008. The increase in net income was primarily due to an income tax adjustment, a reduction in pension expense due to timing, the transfer of our interest in Colstrip Unit 4 (CU4) to rate base, and reductions in other operational expenses. These increases were partially offset by the absence of a mark-to-market gain from prior year, a net reduction in insurance recoveries and settlements received compared with 2008, a reduction in retail electric volumes caused by mild weather and the slower economy, and an increase in interest expense. For a reconciliation of the primary drivers for the quarter, see the table below.
Consolidated net income for the nine months ended Sept. 30, 2009 was $47.8 million, an increase of $1.5 million over $46.3 million in 2008. The increase in net income was primarily due to an income tax adjustment, the transfer of CU4 to rate base, and a reduction in the timing of pension expense. These increases were partially offset by a reduction in retail electric and natural gas volumes caused by mild weather, an increase in labor costs, the absence of a mark-to-market gain related to a forward contract in place in 2008, an increase in insurance reserves, a decrease in wholesale revenues related to a reduction in electric pricing in South Dakota, a decrease in transmission capacity revenues, a net reduction in insurance recoveries and settlements received compared with 2008 and an increase of post retirement health care costs.
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 3
The following tables reconcile the primary changes in 2009 results from 2008:
| Third Quarter | Year-to-Date Third Quarter | ||||||||||||
| Pretax | Net Income 1 | EPS | Pretax | Net Income 1 | EPS | ||||||||
| ($millions, except EPS) | |||||||||||||
| 2008 reported | $ 20.9 | $ 13.4 | $ 0.35 | $ 73.1 | $ 46.3 | $ 1.19 | |||||||
| Lower average share counts | - | - | 0.02 | - | - | 0.09 | |||||||
| Tax accounting change | - | 12.4 | 0.34 | - | 12.4 | 0.34 | |||||||
| Pension expense (timing) | 8.9 | 5.5 | 0.15 | 3.8 | 2.3 | 0.06 | |||||||
| Colstrip Unit 4 in rate base | 3.7 | 2.3 | 0.06 | 14.1 | 8.7 | 0.24 | |||||||
| Bad debt expense | 1.0 | 0.6 | 0.02 | 0.3 | 0.2 | 0.01 | |||||||
| Legal and professional fees | 0.8 | 0.5 | 0.01 | 2.5 | 1.5 | 0.04 | |||||||
| Stock based compensation and short-term incentive | 0.8 | 0.5 | 0.01 | 2.2 | 1.4 | 0.04 | |||||||
| Insurance reserves | - | - | - | (3.7) | (2.3) | (0.06) | |||||||
| QF supply costs | - | - | - | (1.1) | (0.7) | (0.02) | |||||||
| Loss on capacity contract | (0.3) | (0.2) | (0.01) | (1.5) | (0.9) | (0.03) | |||||||
| Colstrip Unit 4 operating expense (outage related) | (0.5) | (0.3) | (0.01) | (2.4) | (1.5) | (0.04) | |||||||
| Wholesale electric prices and volumes | (0.7) | (0.4) | (0.01) | (3.5) | (2.2) | (0.06) | |||||||
| Post retirement health care | (0.7) | (0.4) | (0.01) | (2.1) | (1.3) | (0.04) | |||||||
| MT property tax tracker | (0.8) | (0.5) | (0.01) | (2.9) | (1.8) | (0.05) | |||||||
| Labor increases | (1.0) | (0.6) | (0.02) | (4.2) | (2.6) | (0.07) | |||||||
| Regulated electric transmission | (1.7) | (1.0) | (0.03) | (3.3) | (2.0) | (0.06) | |||||||
| Retail electric and natural gas volumes | (2.6) | (1.6) | (0.04) | (4.8) | (3.0) | (0.08) | |||||||
| Insurance recoveries & settlements | (6.3) | (3.9) | (0.11) | (1.7) | (1.0) | (0.03) | |||||||
| 2008 unrealized gain on forward contract | (10.2) | (6.3) | (0.17) | (3.8) | (2.3) | (0.06) | |||||||
| All other, net | (1.2) | (1.0) | (0.02) | (5.3) | (3.5) | (0.09) | |||||||
| Subtotal | $ 0.17 | $ 0.13 | |||||||||||
| 2009 reported | $ 10.1 | $ 18.9 | $ 0.52 | $ 55.7 | $ 47.8 | $ 1.32 | |||||||
| (1) Net Income calculation on reconciling items assumes normal effective tax rate of 38.5%. | |||||||||||||
| For more information see northwesternenergy.com/documents/investor/Q309.pdf | |||||||||||||
Consolidated gross margin for the third quarter of 2009 was $127.7 million compared with $141.7 million for the third quarter of 2008. The decrease in gross margin was primarily due to the absence of a third quarter 2008 gain on forward contracts of approximately $10.2 million, mild weather affecting margins by approximately $2.6 million and reduced transmission revenues of approximately $1.7 million. Offsetting the decrease to gross margin was the effect of approximately $3.7 million in rates related to placing CU4 into rate base in 2009.
Consolidated gross margin for the nine months ended Sept. 30, 2009 was $419.5 million, a decrease of $6.3 million over the first nine months of 2008 due primarily to the absence of the mark-to-market gain on the forward contracts, reduced electric and natural gas volumes caused by mild weather, and reduced transmission capacity revenues due to less demand to transmit energy for others across our transmission lines, offset by placing CU4 into rate base in 2009.
Consolidated operating, general and administrative expenses were $57.9 million for the third quarter of 2009 compared with $63.4 million for the third quarter of 2008. The decrease was due primarily to a reduction in pension expenses of approximately $8.9 million compared with the third quarter of 2008. This was offset by a net decrease in insurance recoveries and settlements, increased labor costs due primarily to compensation increases, and higher postretirement health care costs due to changes in actuarial assumptions and plan asset losses.
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 4
Consolidated operating, general and administrative expenses were $184.2 million for the nine months ended Sept. 30, 2009 as compared with $177.3 million in same period of 2008. The increase was due primarily to an increase in labor costs, an increase for insurance reserves, a reduction in insurance recoveries and settlements, and higher postretirement health care costs, offset in part by a reduction in pension expenses.
Property and other taxes were $20.8 million in the third quarter of 2009 compared with $21.7 million in the same period of 2008. For the nine months ended Sept. 30, 2009, property and other taxes were $63.4 million compared with $65.9 million in the same period of 2008. The decreases were due to lower assessed property valuations.
Depreciation expense was $22.0 million in the third quarter of 2009 compared with $21.3 million in the same period of 2008. For the nine months ended Sept. 30, 2009, depreciation expense was $67.0 million compared with $63.6 million in the same period of 2008. The increases were due to plant additions.
Interest expense was $17.3 million for the third quarter of 2009 compared with $15.6 million for the third quarter of 2008, primarily related to the additional debt outstanding. For the nine months ended Sept. 30, 2009, interest expense was $50.4 million compared with $47.5 million in the same period of 2008.
Results from Operations
Electric gross margin for the third quarter of 2009 was $106.1 million, down $12.9 million for the same period in 2008, after considering the transfer of CU4 from the unregulated electric segment to the regulated electric segment. The decline in net electric gross margin is primarily due to the absence of a third quarter 2008 $10.2 million gain on forward contracts and by a decrease in South Dakota wholesale margin due to lower sales at lower average prices, decreased retail volumes due to cooler summer weather and lower usage per customer, lower transmission capacity revenues with less demand to transmit energy for others across our lines, and higher QF related supply costs based on actual QF pricing and output. This decline in electric margin was offset in part by the transfer of Colstrip Unit 4 to the regulated utility.
Regulated retail electric volumes for the third quarter of 2009 totaled 2,487,000 megawatt hours compared with 2,626,000 megawatt hours for the third quarter of 2008. The decrease was due primarily to cooler summer weather than the same period in 2008. Wholesale electric volumes were 190,000 megawatt hours for the third quarter 2009, an increase from 71,000 megawatt hours for the same period of 2008, due to transferring CU4 to the regulated utility.
Regulated electric gross margin for the nine months ended Sept. 30, 2009 decreased $1.5 million as compared with the same period in 2008, after considering the transfer of CU4 from unregulated electric segment to the regulated electric segment. The decrease is due primarily to the same reasons discussed above for the quarter ended Sept. 30, 2009.
Regulated retail electric volumes for the nine months ended Sept. 30, 2009 totaled 7,448,000 megawatt hours, a decrease of 2.4% as compared with the same period in 2008. Regulated wholesale electric volumes for the first nine months in 2009 were 587,000 megawatt hours, an increase from 202,000 megawatt hours in the same period in 2008, due primarily to
transferring CU4 to the regulated utility.
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 5
transferring CU4 to the regulated utility.
Regulated natural gas gross margin was $21.9 million for the third quarter of 2009 compared with $22.8 million for the third quarter in 2008. The decrease was primarily due to lower average usage per customer.
Regulated retail natural gas volumes were 2,163,000 dekatherms for the third quarter of 2009, compared with 2,344,000 dekatherms for the same period in 2008. The decrease in volumes was primarily due to milder weather in the Montana service territory, the weaker economy and efficiency measures.
Regulated natural gas gross margin for the first nine months of 2009 was $100.2 million compared with $103.8 million for the same period in 2008. The decrease was primarily due to decreased volumes due to milder weather in Montana and Nebraska.
Regulated retail natural gas volumes were 21,450,000 dekatherms for the first nine months of 2009 compared with 22,571,000 dekatherms for the same period in 2008.
Liquidity and Capital Resources
As of Sept. 30, 2009, our total net liquidity was approximately $226.9 million, including $6.0 million of cash and 220.9 million of revolving credit facility availability. In addition, Moody's upgraded our senior secured credit rating on August 3, 2009, from Baa1 to A3.
Cash provided by operating activities totaled $129.3 million during the first nine months of 2009, compared with $176.7 million during the nine months ended Sept. 30, 2008. This decrease in operating cash flows is primarily related to pension funding of $76.4 million, which was an increase of approximately $54.5 million as compared with the nine months ended Sept. 30, 2008, and a $10.8 million prepayment of a power purchase agreement, offset by lower commodity prices reflected in the change in accounts receivable and accounts payable, as well as decreased cash outflows for natural gas storage injections.
The Company used $115.5 million for investment activities during the nine months ended Sept. 30, 2009 compared with $80.9 million for the nine months ended Sept. 30, 2008. The increase was due to increased property, plant and equipment additions.
Cash used in financing activities totaled approximately $19.1 million during the nine months ended Sept. 30, 2009 as compared with $100.0 million during the nine months ended Sept. 30, 2008. During the nine months ended Sept. 30, 2009, the Company received net proceeds from the issuance of debt of $249.8 million, made net debt repayments of $221.8 million, paid deferred financing costs of $10.4 million and paid dividends on common stock of $36.1 million. During the nine months ended Sept. 30, 2008, the Company had net borrowings of $18.0 million, paid dividends on common stock of $38.0 million and used cash to repurchase shares under a previously approved plan of approximately $77.7 million.
Growth Projects Update
Mill Creek Generation Station:
| ● | Construction began in June 2009; |
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 6
| ● | An official ground breaking event occurred on August 27, 2009; |
| ● | The Company has capitalized approximately $40.5 million in construction work in process related to this project; |
| ● | The total capital cost of the project is expected to be approximately $202 million, upon completion; and |
| ● | The plant is scheduled to be operational by December 31, 2010. |
Colstrip Transmission System Upgrade:
| ● | The Company and the Colstrip Transmission System owners are conducting a technical study to determine the range of improvements and expect it to be completed by the end of 2009; |
| ● | The Company anticipates the Partner Participation Agreement to be completed in early 2010; |
| ● | The Company's capital cost of the project is estimated to be approximately $41 million, if all partners to the Colstrip Transmission System participate in the upgrade; |
| ● | The commencement of the construction is expected in the Summer of 2011; and |
| ● | The upgrades to the system are expected to be completed by the end of the third quarter of 2012. |
Renewable Collector System in Montana:
| ● | The Company is planning to conduct a second open season process in the first half of 2010; |
| ● | The Joint System Impact/Facility Study is expected to be completed by the end of the first half of 2010; |
| ● | The Company's assumed capital on the project is approximately $220 million; and |
| ● | The lines are scheduled to be operational by the second quarter of 2014. |
Mountain States Transmission Intertie (MSTI):
| ● | Public meetings educating communities and land owners are planned throughout the fourth quarter of 2009 and will continue into 2010; |
| ● | The Company is planning to conduct a second open season process by the end of the first half of 2010; |
| ● | The draft Environmental Impact Study, which will include the Rate Impact Study, is planned to be released by the agencies by the end of the first quarter of 2010; |
| ● | The Company has submitted Part I of the Department of Energy loan application for consideration under the Federal Loan Guarantees for Electric Power Transmission Infrastructure Investment Projects; |
| ● | As of Sept. 30, 2009, the Company has capitalized approximately $9.6 million for preliminary survey, siting, permitting, environmental and engineering costs; |
| ● | The Company estimates capitalizing approximately $2 million more in costs by the end of 2009; and expects the total cost of the project will be approximately $1 billion; |
| ● | MSTI is expected to be placed in service by the first quarter of 2015. |
Dividend
NorthWestern's Board of Directors declared a quarterly common stock dividend of 33.5 cents per share, payable on Dec. 31, 2009, to common shareholders of record as of Dec. 15, 2009.
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 7
2009 Earnings Revised and Fourth Quarter Outlook
The current weak economic conditions have resulted, and we believe will likely continue to result in weaker customer demand. While customer counts increased, retail residential and commercial electric volumes were down 3% and industrial volumes were down 9% for the third quarter of 2009 as compared with the same quarter of 2008. This volume reduction, while due in part to energy efficiency measures and milder weather, is also largely due to weak economic conditions, particularly for commercial and industrial customers. Our margins are minimally impacted by changes in industrial demand due to our rate structure.
We expect to continue to experience relatively flat residential demand as well as reduced commercial and industrial demand during the remainder of 2009. The weak economy also contributed to a 13% decrease in transmission capacity revenues, which we expect to continue through the end of 2009. In addition, we expect the effective tax rate for the year ended Dec. 31, 2009 to be approximately 20.0%, primarily due to the repair expense deduction, discussed above.
NorthWestern's estimate for earnings per share in 2009 had been in the range of
$1.75 - $1.85 per fully diluted share. Due primarily to the IRS approval of a tax accounting method change to deduct repairs that would have previously been capitalized, we are revising the estimate for earnings per share in 2009 to be in the range of $1.95 - $2.05. The guidance assumptions for 2009 include:
| ● | Our year to date results through September 30, 2009; |
| ● | An effective tax rate for the full year 2009 to be approximately 20% and about 30% for the fourth quarter of 2009; |
| ● | Wholesale electric pricing in South Dakota continues at the current levels; |
| ● | The lower transmission capacity demand continues; |
| ● | We expect to continue to experience relatively flat residential demand as well as reduced commercial and industrial demand during the remainder of 2009; |
| ● | No further insurance recoveries for 2009; |
| ● | Fully diluted average shares outstanding of 36.3 million; and |
| ● | Normal weather in the Company's electric and natural gas service territories for the fourth quarter of 2009. |
Company Hosting Investor Conference Call
NorthWestern will host an investor conference call tomorrow (Oct. 29) at 11:00 am Eastern Time (10:00 a.m. Central Time) to review its financial results for the quarter ended Sept. 30, 2009.
The conference call will be webcast live on the Internet at http://www.northwesternenergy.com under the "Investor Information" heading. To listen, please go to the site at least 10 minutes in advance of the call to register. An archived webcast will be available shortly after the call.
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 8
A telephonic replay of the call will be available beginning at noon ET on Oct. 29, 2009, through Nov. 29, 2009, at 800-475-6701, access code 118865.
About NorthWestern Energy
NorthWestern Energy is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 656,000 customers in Montana, South Dakota and Nebraska. More information on NorthWestern Energy is available on the Company's Web site at www.northwesternenergy.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, the information under "2009 Earnings Revised and Fourth Quarter Outlook". Forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." These statements are based upon our current expectations and speak only as of the date hereof. Our actual future business and financial performance may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including, but not limited to:
| ● | potential adverse federal, state, or local legislation or regulation or adverse determinations by regulators could have a material adverse effect on our liquidity, results of operations and financial condition; |
| ● | changes in availability of trade credit, usage, commodity prices, fuel supply costs or availability due to higher demand, shortages, weather conditions, transportation problems or other developments, may reduce revenues or may increase operating costs, each of which would adversely affect our liquidity and results of operations; |
| ● | unscheduled generation outages or forced reductions in output, maintenance or repairs, which may reduce revenues and increase operating costs or may require additional capital expenditures or other increased operating costs; and |
| ● | adverse changes in general economic and competitive conditions in the U.S. financial markets and in our service territories. |
Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
# # #
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 9
NORTHWESTERN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 2009 | December 31, 2008 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
Current Assets | $ | 237,412 | $ | 313,417 | |||
Property, Plant, and Equipment, Net | 1,899,525 | 1,839,699 | |||||
Goodwill | 355,128 | 355,128 | |||||
Regulatory Assets | 233,525 | 233,102 | |||||
Other Noncurrent Assets | 28,888 | 20,691 | |||||
Total Assets | $ | 2,754,478 | $ | 2,762,037 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Maturities of Long-term Debt and Capital Leases | $ | 7,310 | $ | 229,238 | |||
Current Liabilities | 319,749 | 359,339 | |||||
Long-term Capital Leases | 35,882 | 36,798 | |||||
Long-term Debt | 884,280 | 634,011 | |||||
Noncurrent Regulatory Liabilities | 235,881 | 222,969 | |||||
Deferred Income Taxes | 149,072 | 114,707 | |||||
Other Noncurrent Liabilities | 346,670 | 401,442 | |||||
Total Liabilities | 1,978,844 | 1,998,504 | |||||
Total Shareholders' Equity | 775,634 | 763,533 | |||||
Total Liabilities and Shareholders' Equity | $ | 2,754,478 | $ | 2,762,037 |
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 10
NORTHWESTERN CORPORATION
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||
| Revenues | |||||||||||||
| Electric | $ | 198,416 | $ | 207,687 | $ | 579,277 | $ | 582,687 | |||||
Gas | 34,179 | 45,603 | 253,976 | 297,357 | |||||||||
Other | 291 | 18,954 | 6,249 | 54,681 | |||||||||
Total Revenues | 232,886 | 272,244 | 839,502 | 934,725 | |||||||||
| Operating Expenses | |||||||||||||
Cost of sales | 105,183 | 130,503 | 420,033 | 508,941 | |||||||||
Operating, general and administrative | 57,893 | 63,411 | 184,210 | 177,348 | |||||||||
Property and other taxes | 20,866 | 21,718 | 63,401 | 65,898 | |||||||||
Depreciation | 21,977 | 21,292 | 66,959 | 63,608 | |||||||||
Total Operating Expenses | 205,919 | 236,924 | 734,603 | 815,795 | |||||||||
Operating Income | 26,967 | 35,320 | 104,899 | 118,930 | |||||||||
Interest Expense | (17,267 | ) | (15,629 | ) | (50,403 | ) | (47,478 | ) | |||||
Other Income | 403 | 1,218 | 1,192 | 1,640 | |||||||||
Income Before Income Taxes | 10,103 | 20,909 | 55,688 | 73,092 | |||||||||
Income Tax Benefit (Expense) | 8,797 | (7,530 | ) | (7,877 | ) | (26,759 | ) | ||||||
Net Income | $ | 18,900 | $ | 13,379 | $ | 47,811 | $ | 46,333 | |||||
Average Common Shares Outstanding | 35,968 | 38,057 | 35,947 | 38,665 | |||||||||
Basic Earnings per Average Common Share | $ | 0.53 | $ | 0.35 | $ | 1.33 | $ | 1.20 | |||||
Diluted Earnings per Average Common Share | $ | 0.52 | $ | 0.35 | $ | 1.32 | $ | 1.19 | |||||
Dividends Declared per Average Common Share | $ | 0.335 | $ | 0.33 | $ | 1.01 | $ | 0.99 | |||||
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 11
NORTHWESTERN CORPORATION
(Unaudited)
(in thousands)
| Nine Months Ended September 30, | |||||||
| 2009 | 2008 | ||||||
| Operating Activities | |||||||
Net income | $ | 47,811 | $ | 46,333 | |||
Non-cash items | 95,416 | 92,607 | |||||
Changes in operating assets and liabilities | (13,916 | ) | 37,809 | ||||
Cash Provided by Operating Activities | 129,311 | 176,749 | |||||
Cash Used in Investing Activities | (115,529 | ) | (80,930 | ) | |||
Cash Used In Financing Activities | (19,031 | ) | (100,017 | ) | |||
| Net Decrease in Cash and Cash Equivalents | $ | (5,249 | ) | $ | (4,198 | ) | |
Cash and Cash Equivalents, beginning of period | $ | 11,292 | $ | 12,773 | |||
| Cash and Cash Equivalents, end of period | $ | 6,043 | $ | 8,575 | |||
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 12
NORTHWESTERN CORPORATION
REGULATED ELECTRIC SEGMENT
Three months ended Sept. 30, 2009
(Unaudited)
| Results | ||||||||||||||
| 2009 | 2008 | Change | % Change | |||||||||||
| (in millions) | ||||||||||||||
Retail revenue | $ | 163.3 | $ | 191.2 | $ | (27.9 | ) | (14.6 | )% | |||||
Transmission | 11.2 | 12.9 | (1.7 | ) | (13.2 | ) | ||||||||
Wholesale | 11.1 | 2.3 | 8.8 | 382.6 | ||||||||||
Regulatory Amortization and Other | 13.1 | 1.6 | 11.5 | 718.8 | ||||||||||
Total Revenues | 198.7 | 208.0 | (9.3 | ) | (4.5 | ) | ||||||||
Total Cost of Sales | 92.6 | 113.3 | (20.7 | ) | (18.3 | ) | ||||||||
Gross Margin | $ | 106.1 | $ | 94.7 | $ | 11.4 | 12.0 | % | ||||||
| Revenues | Megawatt Hours (MWH) | Avg. Customer Counts | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| (in thousands) | |||||||||||||||||
| Retail Electric | |||||||||||||||||
Montana | $ | 49,248 | $ | 58,008 | 515 | 532 | 267,382 | 265,258 | |||||||||
South Dakota | 10,776 | 11,984 | 122 | 130 | 48,256 | 47,947 | |||||||||||
Residential | 60,024 | 69,992 | 637 | 662 | 315,638 | 313,205 | |||||||||||
Montana | 70,030 | 80,770 | 828 | 853 | 60,602 | 59,817 | |||||||||||
South Dakota | 16,539 | 18,148 | 230 | 237 | 11,792 | 11,605 | |||||||||||
Commercial | 86,569 | 98,918 | 1,058 | 1,090 | 72,394 | 71,422 | |||||||||||
Industrial | 8,079 | 11,914 | 717 | 786 | 71 | 71 | |||||||||||
Other | 8,592 | 10,411 | 75 | 88 | 7,728 | 7,640 | |||||||||||
Total Retail Electric | $ | 163,264 | $ | 191,235 | 2,487 | 2,626 | 395,831 | 392,338 | |||||||||
| Wholesale Electric | |||||||||||||||||
Montana | $ | 9,464 | $ | � | 126 | � | N/A | N/A | |||||||||
South Dakota | 1,636 | 2,268 | 64 | 71 | N/A | N/A | |||||||||||
Total Wholesale Electric | $ | 11,100 | $ | 2,268 | 190 | 71 | N/A | N/A | |||||||||
| 2009 as compared to: | |||||
| Cooling Degree-Days | 2008 | Historic Average | |||
| Montana | 5% colder | 10% warmer | |||
| South Dakota | 30% colder | 37% colder | |||
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 13
NORTHWESTERN CORPORATION
REGULATED ELECTRIC SEGMENT
Nine months ended Sept. 30, 2009
(Unaudited)
| Results | ||||||||||||||
| 2009 | 2008 | Change | % Change | |||||||||||
| (in millions) | ||||||||||||||
Retail revenue | $ | 494.8 | $ | 538.6 | $ | (43.8 | ) | (8.1 | )% | |||||
Transmission | 33.5 | 36.8 | (3.3 | ) | (9.0 | ) | ||||||||
Wholesale | 32.8 | 8.1 | 24.7 | 304.9 | ||||||||||
Regulatory Amortization and Other | 19.0 | 0.1 | 18.9 | 18900.0 | ||||||||||
Total Revenues | 580.1 | 583.6 | (3.5 | ) | (0.6 | ) | ||||||||
Total Cost of Sales | 258.9 | 303.5 | (44.6 | ) | (14.7 | ) | ||||||||
Gross Margin | $ | 321.2 | $ | 280.1 | $ | 41.1 | 14.7 | % | ||||||
| Revenues | MWHs | Avg. Customer Counts | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| (in thousands) | |||||||||||||||||
| Retail Electric | |||||||||||||||||
Montana | $ | 162,708 | $ | 178,571 | 1,682 | 1,699 | 268,337 | 265,727 | |||||||||
South Dakota | 33,818 | 34,417 | 402 | 394 | 48,211 | 47,912 | |||||||||||
Residential | 196,526 | 212,988 | 2,084 | 2,093 | 316,548 | 313,639 | |||||||||||
Montana | 203,324 | 220,209 | 2,373 | 2,408 | 60,374 | 59,471 | |||||||||||
South Dakota | 47,960 | 49,208 | 660 | 658 | 11,656 | 11,486 | |||||||||||
Commercial | 251,284 | 269,417 | 3,033 | 3,066 | 72,030 | 70,957 | |||||||||||
Industrial | 27,292 | 35,026 | 2,183 | 2,320 | 72 | 71 | |||||||||||
Other | 19,743 | 21,129 | 148 | 151 | 6,070 | 5,951 | |||||||||||
Total Retail Electric | $ | 494,845 | $ | 538,560 | 7,448 | 7,630 | 394,720 | 390,618 | |||||||||
| Wholesale Electric | |||||||||||||||||
Montana | $ | 28,355 | $ | – | 426 | – | N/A | N/A | |||||||||
South Dakota | 4,429 | 8,115 | 161 | 202 | N/A | N/A | |||||||||||
Wholesale Electric | $ | 32,784 | $ | 8,115 | 587 | 202 | N/A | N/A | |||||||||
| 2009 as compared to: | |||||
| Cooling Degree-Days | 2008 | Historic Average | |||
| Montana | 6% colder | 5% colder | |||
| South Dakota | 24% colder | 37% colder | |||
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 14
NORTHWESTERN CORPORATION
REGULATED NATURAL GAS SEGMENT
Three months ended Sept. 30, 2009
(Unaudited)
| Results | ||||||||||||||
| 2009 | 2008 | Change | % Change | |||||||||||
| (in millions) | ||||||||||||||
Retail revenue | $ | 23.0 | $ | 37.5 | $ | (14.5 | ) | (38.7 | )% | |||||
Wholesale and other | 11.2 | 8.1 | 3.1 | 38.3 | ||||||||||
Total Revenues | 34.2 | 45.6 | (11.4 | ) | (25.0 | ) | ||||||||
Total Cost of Sales | 12.3 | 22.8 | (10.5 | ) | (46.1 | ) | ||||||||
Gross Margin | $ | 21.9 | $ | 22.8 | $ | (0.9 | ) | (3.9 | )% | |||||
| Revenues | Dekatherms (Dkt) | Customer Counts | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||
| (in thousands) | |||||||||||||||
| Retail Gas | |||||||||||||||
Montana | $ | 10,259 | $ | 16,189 | 822 | 941 | 155,546 | 154,403 | |||||||
South Dakota | 1,698 | 2,496 | 124 | 126 | 36,353 | 36,169 | |||||||||
Nebraska | 1,973 | 2,922 | 164 | 160 | 36,008 | 35,960 | |||||||||
Residential | 13,930 | 21,607 | 1,110 | 1,227 | 227,907 | 226,532 | |||||||||
Montana | 5,987 | 9,266 | 527 | 571 | 21,780 | 21,601 | |||||||||
South Dakota | 1,357 | 3,156 | 212 | 246 | 5,749 | 5,684 | |||||||||
Nebraska | 1,560 | 3,127 | 297 | 278 | 4,408 | 4,461 | |||||||||
Commercial | 8,904 | 15,549 | 1,036 | 1,095 | 31,937 | 31,746 | |||||||||
Industrial | 134 | 228 | 12 | 15 | 293 | 301 | |||||||||
Other | 58 | 107 | 5 | 7 | 142 | 140 | |||||||||
Total Retail Gas | $ | 23,026 | $ | 37,491 | 2,163 | 2,344 | 260,279 | 258,719 | |||||||
| 2009 as compared with: | |||||
| Heating Degree-Days | 2008 | Historic Average | |||
Montana | 34% warmer | 35% warmer | |||
South Dakota | 10% colder | 4% colder | |||
Nebraska | 2% colder | 6% colder | |||
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 15
NORTHWESTERN CORPORATION
REGULATED NATURAL GAS SEGMENT
Nine months ended Sept. 30, 2009
(Unaudited)
| Results | ||||||||||||||
| 2009 | 2008 | Change | % Change | |||||||||||
| (in millions) | ||||||||||||||
Retail revenue | $ | 217.9 | $ | 267.9 | $ | (50.0 | ) | (18.7 | )% | |||||
Wholesale and other | 36.4 | 29.9 | 6.5 | 21.7 | ||||||||||
Total Revenues | 254.3 | 297.8 | (43.5 | ) | (14.6 | ) | ||||||||
Total Cost of Sales | 154.1 | 194.0 | (39.9 | ) | (20.6 | ) | ||||||||
Gross Margin | $ | 100.2 | $ | 103.8 | $ | (3.6 | ) | (3.5 | )% | |||||
| Revenues | Dkt | Customer Counts | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||
| (in thousands) | |||||||||||||||
| Retail Gas | |||||||||||||||
Montana | $ | 86.934 | $ | 110,886 | 8,338 | 9,033 | 156,662 | 155,236 | |||||||
South Dakota | 26,132 | 29,284 | 2,251 | 2,322 | 36,676 | 36,527 | |||||||||
Nebraska | 22,432 | 25,068 | 1,981 | 2,091 | 36,360 | 36,397 | |||||||||
Residential | 135,498 | 165,238 | 12,570 | 13,446 | 229,698 | 228,160 | |||||||||
Montana | 44,401 | 56,202 | 4,311 | 4,563 | 21,945 | 21,685 | |||||||||
South Dakota | 19,984 | 23,333 | 2,282 | 2,166 | 5,810 | 5,761 | |||||||||
Nebraska | 16,152 | 20,384 | 2,094 | 2,157 | 4,496 | 4,524 | |||||||||
Commercial | 80,537 | 99,919 | 8,687 | 8,886 | 32,251 | 31,970 | |||||||||
Industrial | 1,149 | 1,765 | 114 | 150 | 296 | 304 | |||||||||
Other | 727 | 950 | 79 | 89 | 142 | 140 | |||||||||
Total Retail Gas | $ | 217,911 | $ | 267,872 | 21,450 | 22,571 | 262,387 | 260,574 | |||||||
| 2009 as compared with: | |||||
| Heating Degree-Days | 2008 | Historic Average | |||
Montana | 8% warmer | 5% warmer | |||
South Dakota | Remained flat | 5% colder | |||
Nebraska | 7% warmer | 2% warmer | |||
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 16
NORTHWESTERN CORPORATION
SEGMENT INFORMATION
Three Months Ended September 30, 2009
(Unaudited)
(in thousands)
| Three Months Ended | Regulated | |||||||||||||||
| September 30, 2009 | Electric | Gas | Other | Eliminations | Total | |||||||||||
Operating revenues | $ | 198,689 | $ | 34,205 | $ | 291 | $ | (299 | ) | $ | 232,886 | |||||
Cost of sales | 92,592 | 12,326 | 265 | – | 105,183 | |||||||||||
Gross margin | 106,097 | 21,879 | 26 | (299 | ) | 127,703 | ||||||||||
Operating, general and administrative | 40,834 | 17,701 | (343 | ) | (299 | ) | 57,893 | |||||||||
Property and other taxes | 15,351 | 5,479 | 36 | – | 20,866 | |||||||||||
Depreciation | 17,772 | 4,197 | 8 | – | 21,977 | |||||||||||
| Operating income (loss) | 32,140 | (5,498 | ) | 325 | – | 26,967 | ||||||||||
Interest expense | (13,056 | ) | (3,243 | ) | (968 | ) | – | (17,267 | ) | |||||||
Other income | 310 | 67 | 26 | – | 403 | |||||||||||
Income tax benefit | 789 | 5,694 | 2,314 | – | 8,797 | |||||||||||
Net income (loss) | $ | 20,183 | $ | (2,980 | ) | $ | 1,697 | $ | – | $ | 18,900 | |||||
| Three Months Ended | Regulated | Unregulated | |||||||||||||||||
| September 30, 2008 | Electric | Gas | Electric | Other | Eliminations | Total | |||||||||||||
Operating revenues | $ | 208,020 | $ | 45,651 | $ | 20,091 | $ | 7,889 | (9,407 | ) | $ | 272,244 | |||||||
Cost of sales | 113,299 | 22,803 | (4,184 | ) | 7,611 | (9,026 | ) | 130,503 | |||||||||||
Gross margin | 94,721 | 22,848 | 24,275 | 278 | (381 | ) | 141,741 | ||||||||||||
Operating, general and administrative | 45,882 | 20,058 | 3,563 | (5,711 | ) | (381 | ) | 63,411 | |||||||||||
Property and other taxes | 15,380 | 5,543 | 792 | 3 | – | 21,718 | |||||||||||||
Depreciation | 15,416 | 4,041 | 1,827 | 8 | – | 21,292 | |||||||||||||
Operating income (loss) | 18,043 | (6,794 | ) | 18,093 | 5,978 | – | 35,320 | ||||||||||||
Interest expense | (9,679 | ) | (3,389 | ) | (2,189 | ) | (372 | ) | – | (15,629 | ) | ||||||||
Other income | 306 | 298 | 1 | 613 | – | 1,218 | |||||||||||||
Income tax (expense) benefit | (3,477 | ) | 3,750 | (6,303 | ) | (1,500 | ) | – | (7,530 | ) | |||||||||
Net income (loss) | $ | 5,193 | $ | (6,135 | ) | $ | 9,602 | $ | 4,719 | $ | – | $ | 13,379 | ||||||
NorthWestern Reports Third Quarter 2009 Financial Results
Oct. 28, 2009
Page 17
NORTHWESTERN CORPORATION
SEGMENT INFORMATION
Nine Months Ended September 30, 2009
(Unaudited)
(in thousands)
| Nine Months Ended | Regulated | |||||||||||||||
| September 30, 2009 | Electric | Gas | Other | Eliminations | Total | |||||||||||
Operating revenues | $ | 580,139 | $ | 254,338 | $ | 6,248 | $ | (1,223 | ) | $ | 839,502 | |||||
Cost of sales | 258,964 | 154,105 | 6,964 | – | 420,033 | |||||||||||
Gross margin | 321,175 | 100,233 | (716 | ) | (1,223 | ) | 419,469 | |||||||||
Operating, general and administrative | 128,575 | 58,806 | (1,948 | ) | (1,223 | ) | 184,210 | |||||||||
Property and other taxes | 46,433 | 16,857 | 111 | – | 63,401 | |||||||||||
Depreciation | 54,113 | 12,821 | 25 | – | 66,959 | |||||||||||
| Operating income | 92,054 | 11,749 | 1,096 | – | 104,899 | |||||||||||
Interest expense | (37,963 | ) | (9,629 | ) | (2,811 | ) | – | (50,403 | ) | |||||||
Other income | 783 | 322 | 87 | – | 1,192 | |||||||||||
Income tax (expense) benefit | (12,066 | ) | 1,571 | 2,618 | – | (7,877 | ) | |||||||||
Net income | $ | 42,808 | $ | 4,013 | $ | 990 | $ | – | 47,811 | |||||||
| Nine Months Ended | Regulated | Unregulated | |||||||||||||||||
| September 30, 2008 | Electric | Gas | Electric | Other | Eliminations | Total | |||||||||||||
| Operating revenues | $ | 583,606 | $ | 297,825 | $ | 57,064 | $ | 24,464 | $ | (28,234 | ) | $ | 934,725 | ||||||
Cost of sales | 303,550 | 193,996 | 14,472 | 23,770 | (26,847 | ) | 508,941 | ||||||||||||
Gross margin | 280,056 | 103,829 | 42,592 | 694 | (1,387 | ) | 425,784 | ||||||||||||
| Operating, general and administrative | 115,755 | 53,717 | 10,459 | (1,196 | ) | (1,387 | ) | 177,348 | |||||||||||
| Property and other taxes | 46,147 | 17,355 | 2,386 | 10 | – | 65,898 | |||||||||||||
Depreciation | 46,203 | 11,925 | 5,455 | 25 | – | 63,608 | |||||||||||||
Operating income | 71,951 | 20,832 | 24,292 | 1,855 | – | 118,930 | |||||||||||||
Interest expense | (28,138 | ) | (9,874 | ) | (8,358 | ) | (1,108 | ) | – | (47,478 | ) | ||||||||
| Other income (expense) | 891 | 857 | 133 | (241 | ) | – | 1,640 | ||||||||||||
| Income tax expense | (15,810 | ) | (4,413 | ) | (6,457 | ) | (79 | ) | – | (26,759 | ) | ||||||||
Net income | $ | 28,894 | $ | 7,402 | $ | 9,610 | $ | 427 | $ | – | $ | 46,333 | |||||||