NorthWestern Reports Third Quarter 2022 Financial Results – QNT Press Release


BUTTE, Mont. and SIOUX FALLS, SD, Oct. 24, 2022 (GLOBE NEWSWIRE) — NorthWestern Corporation d/b/a NorthWestern Energy (NASDAQ:NWE) reported financial results for the three months ended September 30, 2022. Net income for the period was $27.4 million, or $0.47 per diluted share, as compared with net income of $35.2 million, or $0.68 per diluted share, for the same period in 2021 . This decrease was primarily due to lower utility margin, higher interest expense, higher administrative and general costs and higher depreciation and depletion. Earnings per share was additionally impacted by higher outstanding share count in the current period.

After adjusting for non-GAAP items, non-GAAP net income for the three months ended September 30, 2022 was $24.3 million, or $0.42 per diluted share, as compared with non-GAAP net income of $33.6 million, or $0.65 per diluted share, for the same period in 2021.

“While customer growth and the economy remain strong in our service territories, we experienced some softening in our commercial customer loads during the quarter. This, in combination with pressure from unrecoverable Montana electric supply costs (PCCAM sharing) and higher interest rates, resulted in earnings below our expectations and a slight downward revision to the high end of the range of our full year expectations,” said Bob Rowe, Chief Executive Officer. “While we all may have some near-term uncertainty regarding the broader economy, I am excited and optimistic about NorthWestern Energy’s bright future. It has been a privilege to work with the dedicated people at NorthWestern for over fourteen years; together, we’ve got a lot done, from focusing on critical infrastructure to building a diverse supply portfolio, to working with our customers and communities. My close friend and partner, incoming CEO Brian Bird, and our other great leaders will be focused on providing a great customer experience , addressing key capacity needs, deploying technology, and ongoing infrastructure modernization. All of that will depend on the support of our equity owners and debt holders, and providing them appropriate returns and confidence.”

Additional information regarding this release can be found in the earnings presentation found at
https://www.northwesternenergy.com/about-us/investors/financials/earnings

Consolidated Statement of Income

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2022 2021 2022 2021
Revenues $ 335.1 $ 326.0 $ 1,052.6 $ 1,025.0
Fuel, purchased supply and direct transmission expense(1) 109.0 98.7 339.0 311.1
Utility Margin (2) 226.1 227.3 713.6 713.9
Operating and maintenance 54.7 56.0 160.8 159.3
Administrative and general 28.1 24.9 87.0 79.6
Property and other taxes 46.5 43.6 140.2 138.3
Depreciation and depletion 48.6 47.1 145.7 140.9
Total Operating Expenses (3) 177.9 171.6 533.7 518.1
Operating income 48.3 55.7 179.9 195.8
interest expense, net (25.3 ) (23.3 ) (73.1 ) (70.3 )
other income, net 4.2 5.3 11.8 13.9
Income before income taxes 27.1 37.7 118.6 139.4
Income tax benefit (expense) 0.3 (2.5 ) (2.3 ) (3.9 )
Net Income 27.4 35.2 116.3 135.5
Basic Shares Outstanding 56.311 51.892 54,901 51,175
Earnings per Share – Basic $ 0.48 $ 0.68 $ 2.12 $ 2.65
Diluted Shares Outstanding 56.637 52.028 55,541 51,312
Earnings per Share – Diluted $ 0.47 $ 0.68 $ 2.09 $ 2.64
Dividends Declared per Common Share $ 0.63 $ 0.62 $ 1.89 $ 1.86
(1) Exclusive of depreciation and depletion expense.
(2) Utility Margin is a Non-GAAP financial measure.
See “Non-GAAP Financial Measure” and “Reconciliation of gross margin to utility margin” sections below.
(3) Excluding fuel, purchased supply and direct transmission expense.

Three Months Ended September 30, Nine Months Ended September 30,
Reconciliation of gross margin to utility margin: 2022 2021 2022 2021
Operating Revenues $ 335.1 $ 326.0 $ 1,052.6 $ 1,025.0
Less: Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below) 109.0 98.7 339.0 311.1
Less: Operating and maintenance 54.7 56.0 160.8 159.3
Less: Property and other taxes 46.5 43.6 140.2 138.3
Less: Depreciation and depletion 48.6 47.1 145.7 140.9
Gross Margin 76.3 80.6 266.9 275.4
Operating and maintenance 54.7 56.0 160.8 159.3
Property and other taxes 46.5 43.6 140.2 138.3
Depreciation and depletion 48.6 47.1 145.7 140.9
Utility Margin(1) $ 226.1 $ 227.3 $ 713.6 $ 713.9
(1) Utility Margin is a Non-GAAP financial measure. See “Non-GAAP Financial Measure” section below.

2022 Earnings Guidance Update and Capital Plan Affirmation

NorthWestern narrows its 2022 Non-GAAP earnings guidance range to $3.20-$3.35 per diluted share (previously of $3.20 – $3.40) based upon, but not limited to, the following major assumptions and expectations:

  • Normal weather in our electric and natural gas service territories;
  • Inclusion of electric and natural gas interim rates effective October 1, 2022 as granted by the MPSC on September 28, 2022 (subject to refund);
  • A consolidated income tax rate of approximately 0% to 3% of pre-tax income; and
  • Diluted shares outstanding of approximately 55.8 million to 56.4 million (previously 55.6 million to 56.2 million).

NorthWestern also remains on track with its $582 million capital plan for 2022. Continued investment to serve our customers and communities is expected to provide annualized 4% – 5% growth in rate base and a targeted long-term earnings per share growth rate of 3% – 6% based off 2020 Non-GAAP Diluted EPS.

See the chart below and sections 2022 Earnings Guidance and Capital Plan, Significant Items Not Contemplated in Guidance, and Non-GAAP Financial Measures for additional details and disclosures.

Overview

NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and/or natural gas to approximately 753,600 customers in Montana, South Dakota, Nebraska and Yellowstone National Park.

We are working to deliver safe, reliable and innovative energy solutions that create value for customers, communities, employees and investors. This includes bridging our history as a regulated utility safely providing low-cost and reliable service with our future as a globally-aware company offering a broader array of services performed by highly-adaptable and skilled employees. We seek to deliver value to our customers by providing high reliability and customer service, and an environmentally sustainable generation mix at an affordable price. The energy landscape is changing and we are committed to meeting the changing demands of our customers through continued investment to enhance reliability, security and safety, grid modernization, and integration of even more renewables and energy storage, while meeting our growing demand for capacity. We are focused on delivering long-term shareholder value through:

  • Infrastructure investment focused on a stronger and smarter grid to improve the customer experience, while enhancing grid reliability and safety. This includes automation in customer meters, distribution and substations that enables the use of proven new technologies.
  • Investing in and integrating supply resources that balance reliability, cost, capacity, and sustainability considerations with more predictable long-term commodity prices.
  • Continually improving our operating efficiency. Financial discipline is essential to earning our authorized return on invested capital and maintaining a strong balance sheet, stable cash flows, and quality credit ratings to continue to attract cost-effective capital for future investment.

We expect to pursue these investment opportunities and manage our business in a manner that allows us to be flexible in adjusting to changing economic conditions by adjusting the timing and scale of the projects.

We are committed to providing customers with reliable and affordable electric and natural gas service while also being good stewards of the environment. Towards this end, we recently expanded and outlined our efforts towards a carbon-free future through our goal to achieve net zero carbon emissions by 2050.

Significant Trends and Regulation

Regulatory Update

Rate Review Filings – Rate reviews are necessary to recover the cost of providing safe, reliable service, while contributing to earnings growth and achieving our financial objectives. We regularly review the need for electric and natural gas rate relief in each state in which we provide service. On August 8, 2022, we filed a Montana electric and natural gas rate review filing (2021 test year) under Docket 2022.07.078. A summary of our requests within this rate review is below:

Montana Rate Review ($ in millions)
Electric Natural Gas
Current ROE 9.65% 9.55%
Current Equity Ratio 49.38% 46.79%
Proposed ROE 10.60% 10.60%
Proposed Equity Ratio 48.02% 48.02%
Forecasted 2022 Rate Base $2,790 $575
Net Rate Base Increase $453 $143
Requested Revenue Increase (in millions)
Electric Natural Gas
Base Rates

Full story available on Benzinga.com



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