BUTTE, Mont. and
SIOUX FALLS, S.D., Feb. 12, 2020 /PRNewswire/ -- NorthWestern
Corporation d/b/a NorthWestern Energy (NYSE: NWE) reported
financial results for the year ended December 31, 2019. Net income for the period
was $202.1 million, or $3.98 per diluted share, as compared with net
income of $197.0 million, or
$3.92 per diluted share, for the same
period in 2018. This $5.1
million increase in net income is primarily due to a
reduction in revenue in 2018 related to Tax Cuts and Jobs Act
regulatory settlements, higher volumes due to colder winter weather
and customer growth, and a larger income tax benefit recognized in
2019. These improvements were partly offset by a smaller benefit
related to an electric Qualifying Facilities (QF) adjustment and
higher operating expenses in 2019.
Non-GAAP Adjusted diluted earnings per share for the period were
$3.42; within the $3.38 - $3.48
guidance range communicated for the year. See "Significant Items
Not Contemplated in Guidance" and "Non-GAAP Financial
Measures" sections below for more information on these
measures.
"2019 is behind us but we have much to look forward to in
building on the great foundation laid during the year. We planned
for higher expenses in 2019 to focus on risk mitigation, system
maintenance and planning for the future. We accomplished this while
delivering another year of record customer satisfaction, solid
safety and reliability performance, and modest earnings
growth. Additionally, we took an important step in 2019 by
announcing our Carbon Vision for NorthWestern Energy in
Montana; a commitment to reducing
our carbon intensity in Montana by
90% by 2045," said Bob Rowe,
President and Chief Executive Officer.
"Looking ahead, construction will soon be underway on a
project to replace 60 megawatts of capacity with more reliable and
cost-effective natural gas units in South
Dakota. These newer and more efficient - and therefore lower
carbon - units will allow us to get more benefit for our customers
from participating in the Southwest Power Pool. In Montana we just kicked-off an all-resource
competitive solicitation process to add up to 280 megawatts of
much-needed capacity and have recently filed our request with the
Public Service Commission to approve acquisition of an incremental
185 megawatts of capacity at Colstrip for a one
dollar purchase price - without taking on additional closure
responsibility for the amount purchased and keeping customer rates
flat. These added capacity resources will be valuable in our
planning as we prepare to join the Western Energy Imbalance Market
just over a year from now. Much like the Southwest Power Pool has
done for our South Dakota
customers, this real-time energy market to the west is expected to
provide lower cost energy for our Montana customers, provide greater power grid
reliability and more efficient use of renewables."
Additional information regarding this release can be found in
the earnings presentation found at
www.northwesternenergy.com/our-company/investor-relations/presentations-and-webcasts.
|
Year Ended
December 31,
|
|
(in thousands,
except per share amounts)
|
2019
|
|
2018
|
|
Revenues
|
$
|
1,257,910
|
|
|
$
|
1,192,009
|
|
|
Cost of
sales
|
318,020
|
|
|
272,883
|
|
|
Gross Margin
(1)
|
939,890
|
|
|
919,126
|
|
|
|
|
|
|
|
Operating,
general and administrative expense
|
318,229
|
|
|
307,119
|
|
|
Property and
other taxes
|
171,888
|
|
|
171,259
|
|
|
Depreciation
and depletion
|
172,923
|
|
|
174,476
|
|
|
Total Operating
Expenses
|
663,040
|
|
|
652,854
|
|
|
Operating
income
|
276,850
|
|
|
266,272
|
|
|
Interest expense,
net
|
(95,068)
|
|
|
(91,988)
|
|
|
Other income,
net
|
413
|
|
|
3,966
|
|
|
Income before income
taxes
|
182,195
|
|
|
178,250
|
|
|
Income tax
benefit
|
19,925
|
|
|
18,710
|
|
|
Net
Income
|
202,120
|
|
|
196,960
|
|
|
Basic Shares
Outstanding
|
50,429
|
|
|
49,985
|
|
|
Earnings per Share -
Basic
|
$
|
4.01
|
|
|
$
|
3.94
|
|
|
Diluted Shares
Outstanding
|
50,752
|
|
|
50,237
|
|
|
Earnings per Share -
Diluted
|
$
|
3.98
|
|
|
$
|
3.92
|
|
|
|
|
|
|
|
Dividends Declared
per Common Share
|
$
|
2.30
|
|
|
$
|
2.20
|
|
|
|
(1) Gross Margin,
defined as Revenues less Cost of Sales, is a non-GAAP financial
measure.
See "Non-GAAP
Financial Measures" section below for more
information.
|
Significant Highlights and Regulation
Electric Resource Planning - Montana
In August 2019, we issued our final 2019 Electricity
Supply Resource Procurement Plan (Montana Resource Plan) that
included responses to public comments. The Montana Resource Plan
supports the goal of developing resources that will address the
changing energy landscape in Montana to meet our customers' electric energy
needs in a reliable and affordable manner.
We are currently 630 MW short of our peak needs, which we
procure in the market. We forecast that our energy portfolio will
be 725 MW short by 2025, considering expiring contracts and a
modest increase in customer demand. Based on our customers' future
energy resource needs as identified in the Montana Resource Plan,
we issued a competitive solicitation request in February 2020 for up to 280 megawatts of peaking
and flexible capacity to be available for commercial operation in
early 2023. An independent administrator and evaluator is being
used to administer the solicitation process, with the successful
project(s) selected by the first quarter of 2021. We expect the
process will be repeated in subsequent years to provide a
resource-adequate energy and capacity portfolio by 2025.
The solicitation process will allow us to consider a wide
variety of resource options. These options include power purchase
agreements and owned energy resources comprised of different
structures, terms and technologies that are cost-effective
resources. The staged approach is designed to allow for incremental
steps through time with opportunities for different resource type
of new technologies while also building a reliable portfolio to
meet local and regional conditions and minimizing customer
impacts.
Proposed Colstrip Unit 4 Capacity Acquisition - In
February 2020, we filed an
application for pre-approval with the Montana Public Service
Commission (MPSC) to acquire Puget Sound Energy's 25% interest, 185
megawatts of generation, in Colstrip Unit 4 for one dollar. In addition, we are seeking approval
to sell 90 megawatts to Puget Sound Energy for roughly 5 years at a
price indexed to hourly prices at the Mid-Columbia power hub, with
a price floor reflecting the recovery of fixed operating and
maintenance and variable generation costs. Our proposal includes
zero net effect on customer bills while setting aside the benefits
from the transaction - estimated to be $4
million annually - to address environmental compliance,
remediation and decommissioning costs associated with our existing
222 megawatts of ownership. Puget Sound Energy remains responsible
for its presale 25% ownership share of all costs for remediation of
existing environmental conditions and decommissioning regardless of
the proposed acquisition or when Colstrip Unit 4 is retired. We
expect the MPSC to establish a procedural schedule in this docket
in the first quarter of 2020. If this capacity acquisition is
approved, this will reduce our need for capacity identified above
in our resource plan by 170 MW, which is the accredited
capacity.
We also entered into an agreement with Puget Sound Energy to
acquire an additional 95 MW interest in the 500 kV Colstrip
Transmission System for net book value at the time of the sale, if
the generation transaction is approved. The net book value is
expected to range between $2.5
million to $3.8 million. After
expiration of the roughly 5-year purchase power agreement with
Puget Sound Energy, we will have the option to acquire another 90
MW interest in the 500 kV Colstrip Transmission System for net book
value at that time. These transmission acquisitions are conditioned
upon approval and closing of the Unit 4 acquisition.
Recovery of the additional rate base from these transactions, if
completed, will be subject to review in the next Montana general electric rate case.
Electric Resource Planning - South Dakota
In April 2019, we issued a request for proposals for
60 MW of flexible capacity resources to begin serving South Dakota customers by the end of 2021. As
a result of a competitive solicitation process, we expect to own
natural gas fired reciprocating internal combustion engines at
Huron, South Dakota. Dependent
upon selection of manufacturer, we anticipate 55 - 60 MW to be
online by late 2021 at a total investment of approximately
$80 million. The selected proposal is
subject to the execution of construction contracts and obtaining
the applicable environmental and construction related permits.
We anticipate financing this project with a combination of cash
flow from operations, first mortgage bonds and equity issuances.
Based on current expectations, any equity issuance would be late
2020 or early 2021 and would be sized to maintain and protect
current credit ratings.
Montana General Electric Rate Case
In
December 2019, the MPSC issued a
final order approving our electric rate case settlement for rates
effective April 1, 2019, resulting in
an annual increase to electric revenue of approximately
$6.5 million (based upon a 9.65%
return on equity (ROE) and rate base and capital structure as
filed) and an annual decrease in depreciation expense of
approximately $9.3 million. Various
parties have filed petitions for reconsideration of parts of that
December 2019 order, and we expect
the MPSC to issue an order on these requests during the first
quarter of 2020.
FERC Filing - In May
2019, we submitted a filing with the FERC for our
Montana transmission assets. The
revenue requirement associated with our Montana FERC assets is
reflected in our Montana MPSC-jurisdictional rates as a credit to
retail customers. We expect to submit a compliance filing with the
MPSC upon resolution of our Montana FERC case adjusting the
proposed credit in our Montana
retail rates.
Significant Earnings Drivers
Gross Margin
Consolidated gross margin for the
twelve months ended December 31, 2019
was $939.9 million compared with
$919.1 million for the same period in
2018. This $20.8 million
increase was a result of a $20.2
million increase to items that have an impact on net income
and $0.6 million increase to items
that are offset in operating expenses, property tax expense and
income tax expense with no impact to net income.
Consolidated gross margin for items impacting net income
increased $20.2 million, due to the
following:
- $22.1 million increase related to
revenue deferred in 2018 for Tax Cuts and Jobs Act customer
refunds;
- $17.3 million increase in
electric and gas retail volumes due primarily to colder winter
weather and customer growth;
- $4.4 million increase in
Montana electric retail revenue
recognized consistent with the order in our electric rate case,
effective April 1, 2019, as discussed
above;
- $3.9 million increase related to
the recovery of Montana electric
supply costs resulting from changes in the associated statute,
partly offset by higher supply costs in 2019 as compared with 2018;
and
- $0.5 million increase in other
miscellaneous margin items.
These increases were partly offset by the following items:
- $20.9 million decrease related to
the adjustment of our electric Qualifying Facility (QF) liability
as compared with 2018 due to the combination of:
-
- A lower periodic adjustment of approximately $14.2 million due to price escalation, which was
less than previously estimated; and
- A lower impact of the adjustment to actual output and pricing
for the contract year resulting in approximately $6.7 million in higher supply costs for these QF
contracts due primarily to outages at two facilities in 2018.
- $5.6 million reduction in demand
to transmit energy across our transmission lines due to market
conditions and pricing; and
- $1.5 million decrease in
Montana natural gas rates
associated with the annual step down for our Montana gas production assets.
The change in consolidated gross margin for items that had no
impact on net income represented a $0.6
million increase primarily due to the following:
- $3.0 million increase in revenues
for property taxes included in trackers, offset by increased
property tax expense;
- $1.7 million decrease in revenue
due to the increase in production tax credit benefits passed
through to customers in our tracker mechanisms, which are offset by
decreased income tax expense; and
- $0.7 million decrease in revenues
for operating costs included in trackers, offset by a decrease in
associated operating expense.
Operating, General and Administrative
Expenses
Consolidated operating, general and
administrative expenses for the twelve months ended December 31, 2019 were $318.2 million compared with $307.1 million for the same period in 2018. This
$11.1 million increase was a result
of a $17.3 million increase to items
that have an impact on net income and $6.2
million decrease to items that are offset in gross margin
and other income (expense) with no impact to net income.
Consolidated operating, general and administrative expenses for
items impacting net income increased $17.3
million, including:
- $4.2 million higher hazard tree
line clearance costs;
- $3.7 million higher maintenance
costs at our electric generation facilities;
- $2.2 million increased labor
costs due primarily to compensation increases;
- $1.7 million higher distribution
costs due to proactive system maintenance;
- $1.5 million higher natural gas
transmission maintenance due to compressor repairs and increased
compliance costs;
- $1.5 million higher general legal
costs;
- $1.2 million higher technology
costs associated with security measures and maintenance
agreements;
- $1.2 million higher employee
benefit costs due primarily to increased pension expense as a
result of higher funding of our Montana plan, partly offset by lower medical
costs; and
- $0.9 million higher costs
associated with preparation to enter the Western Energy Imbalance
market. This was partly offset by an
- $0.8 million decrease in other
miscellaneous expense items.
The change in consolidated operating, general and administrative
expenses for items that had no impact on net income decreased
$6.2 million primarily due to the
following:
- $7.8 million decrease due to the
regulatory treatment of the non-service cost components of pension
and postretirement benefit expense, which is offset in other
income;
- $0.7 million lower operating
expenses included in trackers recovered through revenue; and
- $2.3 million increase in the
value of non-employee directors deferred compensation due to
changes in our stock price, offset in other income.
Property and Other Taxes
Property and other
taxes were $171.9 million for the
twelve months ended December 31,
2019, as compared with $171.3
million in the same period of 2018. This increase was
primarily due to plant additions and higher estimated property
valuations in Montana. We estimate
property taxes throughout each year, and update based on valuation
reports received from the Montana Department of Revenue. Under
Montana law, we are allowed to
track the increases in the actual level of state and local taxes
and fees and adjust our rates to recover the increase between rate
cases less the amount allocated to FERC-jurisdictional customers
and net of the associated income tax benefit.
Depreciation and Depletion Expense
Depreciation
and depletion expense was $172.9
million for the twelve months ended December 31, 2019, as compared with $174.5 million in the same period of 2018.
This decrease was primarily due to the depreciation adjustment
consistent with the final order in our Montana electric rate case, as discussed
above, partly offset by plant additions.
Operating Income
Consolidated operating income
for the twelve months ended December 31,
2019 was $276.9 million as
compared with $266.3 million in the
same period of 2018. This increase was primarily due to higher
gross margin, as discussed above, offset in part by the overall
increase in operating, general, and administrative expenses.
Interest Expense
Consolidated interest expense
for the twelve months ended December 31,
2019 was $95.1 million, as
compared with $92.0 million in the
same period of 2018, due primarily to higher borrowings.
Other Income
Consolidated other income was
$0.4 million for the twelve months
ended December 31, 2019 as compared
to $4.0 million during the same
period of 2018. This decrease was primarily due to a $7.8 million increase in other pension expense
that was partly offset by a $2.3
million increase in the value of deferred shares held in
trust for non-employee directors deferred compensation, both of
which are offset in operating, general, and administrative expense
with no impact to net income. This decrease was also partly offset
by $1.6 million higher capitalization
of AFUDC (Allowance for Funds Used During Construction).
Income Tax
Consolidated income tax benefit for
the twelve months ended December 31,
2019 was $19.9 million as
compared with $18.7 million in the
same period of 2018. The income tax benefit for 2019 reflect
the release of approximately $22.8
million of unrecognized tax benefits, including
approximately $2.7 million of accrued
interest and penalties, due to the lapse of statues of limitations
in the second quarter of 2019. The income tax benefit in 2018
reflects a benefit of approximately $19.8
million associated with the final measurement of excess
deferred taxes associated with the Tax Cuts and Jobs Act.
Our effective tax rate for the twelve months ended December 31, 2019 was (10.9)% as compared with
(10.5)% for the same period of 2018. We currently estimate
effective tax rate will range between (2)% to 3% in 2020.
The following table summarizes the differences between our
effective tax rate and the federal statutory rate for the
periods:
(in
millions)
|
|
Year Ended
December 31,
|
|
|
|
2019
|
|
2018
|
|
Income Before
Income Taxes
|
|
$
|
182.2
|
|
|
|
$
|
178.3
|
|
|
|
|
|
|
|
|
|
|
|
Income tax calculated
at federal statutory rate
|
|
38.3
|
|
21.0
|
%
|
|
37.4
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
Permanent or
flow-through adjustments:
|
|
|
|
|
|
|
|
State income, net of
federal provisions
|
|
1.2
|
|
0.7
|
%
|
|
1.6
|
|
0.9
|
%
|
|
Release of
unrecognized tax benefit
|
|
(22.8)
|
|
(12.5)
|
%
|
|
—
|
|
—
|
%
|
|
Flow-through repairs
deductions
|
|
(19.7)
|
|
(10.8)
|
%
|
|
(19.3)
|
|
(10.8)
|
%
|
|
Production tax
credits
|
|
(11.5)
|
|
(6.3)
|
%
|
|
(10.9)
|
|
(6.1)
|
%
|
|
Plant and
depreciation of flow-through items
|
|
(4.0)
|
|
(2.2)
|
%
|
|
(2.2)
|
|
(1.2)
|
%
|
|
Amortization of
excess deferred income tax
|
|
(1.7)
|
|
(0.9)
|
%
|
|
(3.7)
|
|
(2.1)
|
%
|
|
Impact of Tax Cuts
and Jobs Act
|
|
(0.2)
|
|
(0.1)
|
%
|
|
(19.8)
|
|
(11.1)
|
%
|
|
Prior year permanent
return to accrual adjustment
|
|
0.6
|
|
0.3
|
%
|
|
(3.0)
|
|
(1.7)
|
%
|
|
Other, net
|
|
(0.1)
|
|
(0.1)
|
%
|
|
1.2
|
|
0.6
|
%
|
|
Subtotal
|
|
(58.2)
|
|
(31.9)
|
%
|
|
(56.1)
|
|
(31.5)
|
%
|
|
|
|
|
|
|
|
|
|
Income Tax
Expense
|
|
$
|
(19.9)
|
|
(10.9)
|
%
|
|
$
|
(18.7)
|
|
(10.5)
|
%
|
|
Net Income
Consolidated net income for the
twelve months ended December 31, 2019
was $202.1 million as compared with
$197.0 million for the same period in
2018.
Reconciliation of Primary Changes from 2018 to
2019
|
|
Year Ended
December 31,
|
|
|
($millions, except
EPS)
|
Pretax
Income
|
Net Income
(1)
|
Diluted
EPS
|
|
|
2018
reported
|
$178.3
|
$197.0
|
$3.92
|
|
Gross
Margin
|
|
|
|
|
|
Tax Cuts and Jobs Act
impact
|
22.1
|
|
16.5
|
|
0.33
|
|
|
|
Natural gas retail
volumes
|
10.9
|
|
8.1
|
|
0.16
|
|
|
|
Electric retail
volumes
|
6.4
|
|
4.8
|
|
0.10
|
|
|
|
Montana electric
rates
|
4.4
|
|
3.3
|
|
0.07
|
|
|
|
Montana electric
supply cost recovery
|
3.9
|
|
2.9
|
|
0.06
|
|
|
|
Electric QF
adjustment
|
(20.9)
|
|
(15.6)
|
|
(0.31)
|
|
|
|
Electric
transmission
|
(5.6)
|
|
(4.2)
|
|
(0.08)
|
|
|
|
Montana natural gas
rates
|
(1.5)
|
|
(1.1)
|
|
(0.02)
|
|
|
|
Other
|
0.5
|
|
0.4
|
|
0.01
|
|
|
|
Subtotal: Items
impacting net income
|
20.2
|
|
15.1
|
|
0.32
|
|
|
|
|
|
|
|
|
|
Property taxes
recovered in trackers
|
3.0
|
|
2.2
|
|
0.04
|
|
|
|
Production tax
credits flowed-through trackers
|
(1.7)
|
|
(1.3)
|
|
(0.03)
|
|
|
|
Operating expense
recovered in trackers
|
(0.7)
|
|
(0.5)
|
|
(0.01)
|
|
|
|
Subtotal: Items
not impacting net income
|
0.6
|
|
0.4
|
|
—
|
|
|
|
|
|
|
|
|
|
Total Gross
Margin
|
20.8
|
|
15.5
|
|
0.32
|
|
|
OG&A
Expense
|
|
|
|
|
|
Hazard
trees
|
(4.2)
|
|
(3.1)
|
|
(0.06)
|
|
|
|
Generation
maintenance
|
(3.7)
|
|
(2.8)
|
|
(0.06)
|
|
|
|
Labor
|
(2.2)
|
|
(1.6)
|
|
(0.03)
|
|
|
|
Distribution
maintenance
|
(1.7)
|
|
(1.3)
|
|
(0.03)
|
|
|
|
Gas transmission
maintenance
|
(1.5)
|
|
(1.1)
|
|
(0.02)
|
|
|
|
Legal
|
(1.5)
|
|
(1.1)
|
|
(0.02)
|
|
|
|
Technology
costs
|
(1.2)
|
|
(0.9)
|
|
(0.02)
|
|
|
|
Employee
benefits
|
(1.2)
|
|
(0.9)
|
|
(0.02)
|
|
|
|
Western Energy
Imbalance Market (EIM) costs
|
(0.9)
|
|
(0.7)
|
|
(0.01)
|
|
|
|
Other
|
0.8
|
|
0.6
|
|
0.01
|
|
|
|
Subtotal: Items
impacting net income
|
(17.3)
|
|
(12.9)
|
|
(0.26)
|
|
|
|
|
|
|
|
|
|
Pension and other
postretirement benefits
|
7.8
|
|
5.8
|
|
0.11
|
|
|
|
Operating expenses
recovered in trackers
|
0.7
|
|
0.5
|
|
0.01
|
|
|
|
Non-employee
directors deferred compensation
|
(2.3)
|
|
(1.7)
|
|
(0.03)
|
|
|
|
Subtotal: Items
not impacting net income
|
6.2
|
|
4.6
|
|
0.09
|
|
|
|
|
|
|
|
|
|
Total OG&A
Expense
|
(11.1)
|
|
(8.3)
|
|
(0.17)
|
|
|
Other
items
|
|
|
|
|
|
Depreciation and
depletion expense
|
1.6
|
|
1.2
|
|
0.02
|
|
|
|
Property and other
taxes
|
(0.6)
|
|
(0.4)
|
|
(0.01)
|
|
|
|
Interest
expense
|
(3.1)
|
|
(2.3)
|
|
(0.05)
|
|
|
|
Other income
(includes pension / comp. offset above)
|
(3.6)
|
|
(2.7)
|
|
(0.05)
|
|
|
|
Permanent and
flow-through adjustments to income tax
|
|
2.1
|
|
0.04
|
|
|
|
Impact of higher
share count
|
—
|
|
—
|
|
(0.04)
|
|
|
|
Total Other
items
|
(5.7)
|
|
(2.1)
|
|
(0.09)
|
|
|
|
|
|
|
|
|
|
Total impact of
above items
|
3.9
|
|
5.1
|
|
0.06
|
|
|
|
|
|
|
|
|
|
2019
reported
|
$182.2
|
$202.1
|
$3.98
|
|
|
|
|
|
|
|
|
(1) Income Tax
Benefit (Expense) calculation on reconciling items assumes blended
federal plus state effective tax rate of 25.3%.
|
Liquidity and Capital Resources
As of
December 31, 2019, our total net liquidity was approximately
$141.1 million, including
$5.1 million of cash and $136.0 million of revolving credit facility
availability. This compares to total net liquidity one year ago at
December 31, 2018 of $124.7
million.
Dividend Declared
NorthWestern's Board of
Directors declared a quarterly common stock dividend of
$0.60 per share - a 4.3% increase -
payable March 31, 2020 to common
shareholders of record as of March 13,
2020.
Significant Items Not Contemplated in
Guidance
A reconciliation of items not factored into our
adjusted non-GAAP diluted earnings per share guidance of
$3.38 - $3.48 for 2019 and $3.35 - $3.50 for
2018 are summarized below. The amount below represents a non-GAAP
measure that may provide users of this data with additional
meaningful information regarding the impact of certain items on our
expected earnings. More information on this measure can be found in
the "Non-GAAP Financial Measures" section below.
(in millions, except
EPS)
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
Nine Months
Ended
September 30,
2019
|
|
Q4
2019
|
|
Full Year
2019
|
|
Pre-tax
Income
|
Net(1)
Income
|
Diluted
EPS
|
|
Pre-tax
Income
|
Net(1)
Income
|
Diluted
EPS
|
|
Pre-tax
Income
|
Net(1)
Income
|
Diluted
EPS
|
2019 Reported
GAAP
|
$122.0
|
$142.1
|
$2.80
|
|
$60.1
|
$60.0
|
$1.18
|
|
$182.2
|
$202.1
|
$3.98
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
Remove impact of
(favorable) unfavorable weather
|
(8.0)
|
|
(6.0)
|
|
(0.12)
|
|
|
0.7
|
|
0.5
|
|
0.01
|
|
|
(7.3)
|
|
(5.5)
|
|
(0.11)
|
|
Remove impact of
unrecognized income tax benefit
|
—
|
|
(22.8)
|
|
(0.45)
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(22.8)
|
|
(0.45)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adj.
Non-GAAP
|
$114.0
|
$113.3
|
$2.23
|
|
$60.8
|
$60.5
|
$1.19
|
|
$174.9
|
$173.8
|
$3.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
Nine Months
Ended
September 30,
2018
|
|
Q4
2018
|
|
Full Year
2018
|
|
Pre-tax
Income
|
Net(1)
Income
|
Diluted
EPS
|
|
Pre-tax
Income
|
Net(1)
Income
|
Diluted
EPS
|
|
Pre-tax
Income
|
Net(1)
Income
|
Diluted
EPS
|
2018 Reported
GAAP
|
$135.1
|
$130.5
|
$
|
2.61
|
|
|
$43.2
|
$66.5
|
$1.31
|
|
$178.3
|
$197.0
|
$3.92
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
Remove impact of
unfavorable (favorable) weather
|
(2.3)
|
|
(1.7)
|
|
(0.03)
|
|
|
1.0
|
|
0.7
|
|
0.01
|
|
|
(1.3)
|
|
(1.0)
|
|
(0.02)
|
|
Gain on QF Liability
(2)
|
(17.5)
|
|
(13.1)
|
|
(0.26)
|
|
|
—
|
|
—
|
|
—
|
|
|
(17.5)
|
|
(13.1)
|
|
(0.26)
|
|
Impact of Tax Cuts
and Jobs Act Settlements
|
—
|
|
—
|
|
—
|
|
|
9.4
|
|
(12.8)
|
|
(0.25)
|
|
|
9.4
|
|
(12.8)
|
|
(0.25)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Adj.
Non-GAAP
|
$115.3
|
$115.7
|
$2.32
|
|
$53.6
|
$54.4
|
$1.07
|
|
$168.9
|
$170.1
|
$3.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Income Tax
Benefit (Expense) calculation on reconciling items assumes blended
federal plus state effective tax rate of 25.3%.
|
(2) Due to our
expectations regarding remeasurement of our Qualifying Facilities
(QF) liability, we no longer reflect this adjustment as a non-GAAP
measure. Absent a QF liability adjustment, our 2018 Adjusted
Non-GAAP Diluted EPS would have been $3.65 for the twelve months
ended December 31, 2018. The 2019 QF adjustment, as noted in
our gross margin discussion herein, was $6.3 million ($3.3 million
liability reduction plus $3.0 million lower actual output and
pricing).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 Earnings Guidance Affirmed
NorthWestern
affirms its 2020 earnings guidance range of $3.45 - $3.60 per
diluted share 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 of approximately (2%) to 3% of
pre-tax income; and
- Diluted shares outstanding of approximately 50.9 million.
Company Hosting Investor Conference
Call
NorthWestern will host an investor conference call
and webcast on Thursday, February 13,
2020, at 3:00 p.m. Eastern time to review its financial
results for the year ending December 31,
2019.
The conference call will be webcast live on the Internet at
www.northwesternenergy.com under the "Our Company / Investor
Relations / Presentations and Webcasts" heading or by visiting
https://www.webcaster4.com/Webcast/Page/1050/32737. To
participate, please go to the site at least 10 minutes in
advance of the webcast to register. An archived webcast will
be available shortly after the call and remain active for one
year.
About NorthWestern Energy
NorthWestern Corporation,
doing business as NorthWestern Energy, provides electricity and /
or natural gas to approximately 734,800 customers in Montana, South
Dakota and Nebraska. We
have generated and distributed electricity in South Dakota and distributed natural gas in
South Dakota and Nebraska since 1923 and have generated and
distributed electricity and distributed natural gas in Montana since 2002. More information on
NorthWestern Energy is available on the company's Web site at
www.northwesternenergy.com.
Non-GAAP Financial Measures
This press release
includes financial information prepared in accordance with GAAP, as
well as other financial measures, such as Gross Margin, Adjusted
Non-GAAP Pre-Tax Income, Adjusted Non-GAAP Net Income and Adjusted
Non-GAAP Diluted EPS, that are considered "non-GAAP financial
measures." Generally, a non-GAAP financial measure is a numerical
measure of a company's financial performance, financial position or
cash flows that exclude (or include) amounts that are included in
(or excluded from) the most directly comparable measure calculated
and presented in accordance with GAAP.
We define Gross Margin as Revenues less Cost of Sales as
presented in our Condensed Consolidated Statements of Income.
Management believes that Gross Margin (revenues less cost of sales)
provides a useful measure for investors and other financial
statement users to analyze our financial performance in that it
excludes the effect on total revenues caused by volatility in
energy costs and associated regulatory mechanisms. This information
is intended to enhance an investor's overall understanding of
results. Under our various state regulatory mechanisms, as detailed
below, our supply costs are generally collected from customers. In
addition, Gross Margin is used by us to determine whether we are
collecting the appropriate amount of energy costs from customers to
allow for recovery of operating costs, as well as to analyze how
changes in loads (due to weather, economic or other conditions),
rates and other factors impact our results of operations. Our Gross
Margin measure may not be comparable to that of other companies'
presentations or more useful than the GAAP information provided
elsewhere in this report.
Management also believes the presentation of Adjusted Non-GAAP
pre-tax income, net income and Diluted EPS is more representative
of normal earnings than GAAP pre-tax income, net income and EPS due
to the exclusion (or inclusion) of certain impacts that are not
reflective of ongoing earnings. The presentation of these non-GAAP
measures is intended to supplement investors' understanding of our
financial performance and not to replace other GAAP measures as an
indicator of actual operating performance. Our measures may
not be comparable to other companies' similarly titled
measures.
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 "Significant Items Not
Contemplated in Earnings". 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:
- adverse determinations by regulators, as well as potential
adverse federal, state, or local legislation or regulation,
including costs of compliance with existing and future
environmental requirements, could have a material effect on our
liquidity, results of operations and financial condition;
- changes in availability of trade credit, creditworthiness of
counterparties, 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 could 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 cost
of sales 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 2019 Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, 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.
View original
content:http://www.prnewswire.com/news-releases/northwestern-reports-2019-financial-results-301003978.html
SOURCE NorthWestern Energy