NorthWestern Corporation (NASDAQ:NWE) Q4 2021 Earnings Conference Call February 14, 2022 3:00 PM ET Company Participants Travis Meyer - Director of Corporate Finance & Investor Relations Officer Robert Rowe - Chief Executive Officer Crystal Lail - Vice President and Chief Financial Officer Brian Bird - President and Chief Operating Officer Conference Call Participants Ryan Greenwald - Bank of America Sophie Karp - KeyBanc Travis Meyer Good afternoon, and thanks for joining NorthWestern Corporation's Financi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-10499 NORTHWESTERN CORP (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organi ...

Financial Data and Key Metrics Changes - Net income for Q3 2021 increased by $5.7 million compared to the same period last year, with diluted EPS rising by $0.10 to $0.68 [7][11] - Non-GAAP adjusted EPS increased by $0.06 compared to the same period last year, reaching $0.65 [21] - Gross margin improved to $227.3 million, a 6.9% increase from $212.6 million in the prior quarter [12] - Operating income rose to $55.7 million, reflecting a 12.1% improvement from $49.7 million in 2020 [18] Business Line Data and Key Metrics Changes - Transmission revenue increased by $10.1 million, driven by higher loads and rates due to warm and dry conditions [12] - Retail volumes improved by $8.4 million, attributed to favorable weather and customer growth [13] - Operating, general, and administrative expenses rose to $80.9 million, an increase of $7.6 million from the prior year [15] Market Data and Key Metrics Changes - Favorable weather in Q3 resulted in a $3.4 million pretax benefit compared to normal conditions [14] - The company experienced a $106.9 million increase in overall energy supply costs year-to-date, with a $20 million increase in the quarter [19][20] Company Strategy and Development Direction - The company has a $2.1 billion capital plan over the next five years, expecting to finance it through cash flows, first mortgage bonds, and equity issuances [30] - Plans for a 30- to 40-megawatt flexible generating plant near Aberdeen were discontinued due to rising construction costs and supply chain challenges [31] - The company anticipates an annualized rate base growth of 4% to 5% with the acceleration of the Laurel project [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the role of the company in supporting Montana's economy and infrastructure [6] - The company reaffirmed its guidance for 2021 at $3.43 to $3.58 per diluted share, with expectations for $450 million of capital investment [22] - Management acknowledged ongoing supply chain issues and inflationary pressures affecting project costs and timelines [67] Other Important Information - The Board declared a quarterly dividend of $0.62 per share, payable on December 31 [7] - The company is actively monitoring regulatory developments, including a recent lawsuit affecting the Laurel project [51][52] Q&A Session Summary Question: Can you talk about latest conversations with the rating agencies? - Management discussed the importance of moving forward with the Laurel project and the understanding from rating agencies regarding recovery in rates [42] Question: Can you help quantify the magnitude of inflationary pressures you saw with Aberdeen? - Management noted prices were upwards of 50% higher than originally anticipated, leading to the decision to pause the project [44] Question: Will 2022 EPS guidance come at the same time as the capital plans? - Management confirmed that both 2022 EPS guidance and capital plans will be discussed at the upcoming EEI [48] Question: How could the recent lawsuit affect the timing of the Laurel project? - Management indicated that the biggest time factor is the manufacturing of engines, while site preparation and permitting will continue during the legal process [52] Question: What is the significance of the natural gas acquisitions for winter supply? - Management highlighted the flexibility provided by owned supply and storage, which positions the company well for winter demand [87]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section covers the company's unaudited financial statements, MD&A, market risk disclosures, and internal controls [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents NorthWestern Corporation's unaudited condensed consolidated financial statements for Q3 2021 and 2020, including income, balance sheets, cash flows, and equity Condensed Consolidated Statements of Income Highlights | Indicator | Three Months Ended Sep 30, 2021 ($) | Three Months Ended Sep 30, 2020 ($) | Nine Months Ended Sep 30, 2021 ($) | Nine Months Ended Sep 30, 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $325,955 | $280,610 | $1,024,975 | $885,225 | | **Operating Income** | $55,664 | $49,655 | $195,692 | $169,708 | | **Net Income** | $35,196 | $29,466 | $135,504 | $101,664 | | **Diluted EPS** | $0.68 | $0.58 | $2.64 | $2.01 | Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 (thousands of $) | Dec 31, 2020 (thousands of $) | | :--- | :--- | :--- | | **Total Assets** | $6,666,630 | $6,389,449 | | **Total Liabilities** | $4,420,097 | $4,310,354 | | **Total Shareholders' Equity** | $2,246,533 | $2,079,095 | Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended, in thousands) | Activity | Sep 30, 2021 (thousands of $) | Sep 30, 2020 (thousands of $) | | :--- | :--- | :--- | | **Cash Provided by Operating Activities** | $221,610 | $322,515 | | **Cash Used in Investing Activities** | ($311,815) | ($283,029) | | **Cash Provided by (Used in) Financing Activities** | $97,328 | ($37,547) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies and specific financial items for the financial statements - The MPSC dismissed the company's application to increase the Power Costs and Credits Adjustment Mechanism (PCCAM) Base, which may result in delayed recovery of **90%** of excess supply costs and higher non-recoverable losses on the remaining **10%**[36](index=36&type=chunk)[37](index=37&type=chunk) - In April 2021, the company initiated an At-the-Market (ATM) offering program for up to **$200.0 million** of common stock. As of September 30, 2021, it had issued **1,919,394 shares** for net proceeds of **$121.1 million**[55](index=55&type=chunk) - The company's environmental reserve for remediation, primarily for former manufactured gas plant sites, is estimated to be between **$24.7 million** and **$30.4 million**, with a recorded reserve of approximately **$27.1 million** as of September 30, 2021[74](index=74&type=chunk) - The company is involved in litigation with Pacific Northwest Solar (PNWS), where a court ruled that four power purchase agreements are valid and NorthWestern breached them. A jury trial for damages, which could be up to approximately **$8.0 million**, is scheduled for December 13, 2021[98](index=98&type=chunk)[99](index=99&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on Q3 2021 financial condition and operations, including key drivers, trends, segment results, liquidity, and capital Q3 2021 vs Q3 2020 Net Income Change (in millions) | Description | Income Before Taxes (Millions of $) | Income Tax (Expense) Benefit (Millions of $) | Net Income (Millions of $) | | :--- | :--- | :--- | :--- | | **Third Quarter 2020** | **$26.8** | **$2.7** | **$29.5** | | Higher Montana electric transmission revenue | $10.1 | ($2.6) | $7.5 | | Higher electric retail volumes | $8.4 | ($2.1) | $6.3 | | Higher operating, general, and administrative expenses | ($5.0) | $1.3 | ($3.7) | | **Third Quarter 2021** | **$37.7** | **($2.5)** | **$35.2** | - The company is currently **630 MW** short of its peak needs in Montana and forecasts this shortfall to grow to **725 MW** by 2025. To address this, it plans to construct the **175 MW** Laurel Generating Station and enter a 20-year agreement for a **50 MW** battery storage facility[120](index=120&type=chunk)[121](index=121&type=chunk) - The February 2021 cold weather event led to extreme natural gas prices, resulting in the company recording regulatory assets of approximately **$26.0 million** in Nebraska and **$22.0 million** in South Dakota to be recovered from customers over one to two years[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - As of September 30, 2021, the company had total net liquidity of approximately **$163.6 million**, consisting of **$8.6 million** in cash and **$155.0 million** available under its revolving credit facility[205](index=205&type=chunk) [Results of Operations](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes the company's operating performance, including gross margin by segment and key revenue and expense drivers Gross Margin by Segment (Non-GAAP) | Segment | Q3 2021 (Millions of $) | Q3 2020 (Millions of $) | Change (%) | YTD 2021 (Millions of $) | YTD 2020 (Millions of $) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Electric** | $198.1 | $183.0 | 8.3% | $580.2 | $533.4 | 8.8% | | **Natural Gas** | $29.2 | $29.6 | (1.4)% | $133.6 | $131.4 | 1.7% | | **Total** | **$227.3** | **$212.6** | **6.9%** | **$713.8** | **$664.8** | **7.4%** | - The increase in Q3 electric gross margin was primarily driven by higher Montana transmission revenue (**$10.1M**) and higher electric retail volumes (**$8.4M**), partially offset by lower Montana electric supply cost recovery (**-$2.1M**)[145](index=145&type=chunk)[176](index=176&type=chunk) - The slight decrease in Q3 natural gas gross margin was mainly due to lower retail volumes (**-$0.6M**) resulting from warmer weather[189](index=189&type=chunk)[190](index=190&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Examines the company's cash flows, capital expenditures, financing activities, and contractual obligations for financial flexibility - Cash provided by operating activities decreased to **$221.6 million** for the nine months ended Sep 30, 2021, from **$322.5 million** in the prior year period, primarily due to a **$106.7 million** net increase in the under-collection of energy supply costs[215](index=215&type=chunk)[216](index=216&type=chunk) - The company is moving forward with the construction of the **175 MW** Laurel Generating Station, estimated to cost approximately **$275 million**, which was not previously included in capital expenditure estimates[221](index=221&type=chunk) Contractual Cash Obligations and Commitments as of Sep 30, 2021 (in thousands) | Obligation | Total (thousands of $) | 2022 (thousands of $) | 2023 (thousands of $) | 2024 (thousands of $) | Thereafter (thousands of $) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Long-term debt** | $2,474,660 | $0 | $439,660 | $100,000 | $1,935,000 | | **Supply and capacity contracts** | $2,639,374 | $241,819 | $264,729 | $221,282 | $1,831,244 | | **Contractual interest payments** | $1,501,841 | $87,352 | $85,386 | $79,760 | $1,227,505 | | **Total Commitments** | **$7,169,345** | **$425,306** | **$888,229** | **$491,678** | **$4,577,344** | [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's exposure to market risks, including interest rates, commodity price volatility, and counterparty credit, with no material changes since 2020 - The company is exposed to market risks including interest rates, energy commodity price volatility, and counterparty credit exposure[232](index=232&type=chunk) - There have been no material changes in the company's market risks as disclosed in its 2020 Annual Report on Form 10-K[232](index=232&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms management's evaluation of disclosure controls and procedures as effective, with no material changes to internal control over financial reporting - Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[235](index=235&type=chunk) - No changes occurred in the company's internal control over financial reporting during the third quarter of 2021 that have materially affected, or are reasonably likely to materially affect, these controls[236](index=236&type=chunk) [PART II. OTHER INFORMATION](index=54&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides information on legal proceedings, risk factors, and exhibits filed with the report [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 10 of the financial statements for detailed information on the company's ongoing legal proceedings - For information regarding legal proceedings, the report refers to Note 10, Commitments and Contingencies, in the Financial Statements[239](index=239&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) Details significant risks and uncertainties impacting the company's business, including COVID-19, regulatory, operational, and financial challenges - The COVID-19 pandemic continues to pose risks, including potential negative impacts from adverse economic conditions, operational disruptions due to workforce or supply chain issues, and challenges from vaccine mandates[242](index=242&type=chunk)[245](index=245&type=chunk)[249](index=249&type=chunk) - The company faces significant regulatory risk, including the potential for unfavorable outcomes in rate cases and cost recovery mechanisms, such as the MPSC's rejection of the request to reset the PCCAM Base revenue amount[252](index=252&type=chunk)[254](index=254&type=chunk) - Early closure of the Colstrip generating facility, driven by environmental regulations or differing views among joint owners, could materially impact operations. The company has initiated arbitration to clarify closure requirements and funding obligations among the owners[269](index=269&type=chunk)[270](index=270&type=chunk) - The company's significant reliance on market purchases to meet energy demand (approximately **46%** of peak electric requirements) exposes it to commodity price volatility and supply availability risks, particularly as regional generation facilities are retired[294](index=294&type=chunk)[295](index=295&type=chunk) [Exhibits](index=64&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act of 2002[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk) - The filing includes Inline XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase documents[313](index=313&type=chunk)[314](index=314&type=chunk)

O'Dell Creek - Montana 2021 Second Quarter Earnings Webcast July 28, 2021 NorthWester Delivering a Bright Fut Presenting Today Bob Rowe, CEO Brian Bird, President & COO Crystal Lail, Vice President & CFO Forward Looking Statements During the course of this presentation, there will be forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performa ...

Financial Data and Key Metrics Changes - Net income for Q2 2021 increased by $15.7 million compared to the same period last year, reaching $37.2 million, representing a 73% increase [8][13] - Diluted EPS increased by $0.29 year-over-year, with non-GAAP adjusted EPS rising by $0.14 [8][22] - Gross margin rose to $230.3 million, an increase of $22 million or 10.6% from the prior period [14][19] - Operating income increased by $14.3 million or 31.9%, totaling $59.1 million [20] Business Line Data and Key Metrics Changes - Electric transmission gross margin increased by $9.1 million, driven by higher loads and rates due to warm and dry weather [14][15] - Electric retail volumes showed a slight improvement, with residential usage remaining flat and commercial usage improving compared to the prior year [16][19] Market Data and Key Metrics Changes - The company experienced a peak load of over 1,909 megawatts, requiring over 1,000 megawatts of imports, highlighting dependence on regional capacity markets [7][10] - Weather conditions impacted performance, with June being particularly favorable, contributing $2 million to revenue compared to normal [18] Company Strategy and Development Direction - The company is focused on a robust capital investment plan, with over $2 billion projected over the next five years, including $450 million in 2021 [30][31] - The company aims to address capacity needs through new generation resources, including a $250 million investment in the Laurel generation station [33][34] Management's Comments on Operating Environment and Future Outlook - Management noted headwinds in the second half of the year due to lower commercial and industrial usage, despite improved residential usage [23][44] - The company is mindful of credit ratings and plans to issue the full $200 million of equity to support growth and maintain financial stability [24][52] Other Important Information - The company declared a quarterly dividend of $0.62 per share, payable on September 30 [9] - Regulatory filings include a request to delay implementing a fixed cost recovery mechanism pilot and an increase in forward costs for electric power recovery [27][28] Q&A Session Summary Question: How should the company think about the puts and takes through the rest of the year? - Management indicated that the first half of the year met expectations, but headwinds are anticipated in the second half due to lower commercial and industrial usage [43] Question: Was the transmission deferral expected? - Yes, it was anticipated [44] Question: How does the additional equity impact 2022? - The company is investing significantly in CapEx and is mindful of credit ratings while planning for growth [45] Question: Can you elaborate on the dynamics of the transmission margins? - Management noted that the short-term market conditions are driving transmission margins, and they expect continued good performance [58][60] Question: What are the expectations regarding inflation pressures? - Inflation is expected to impact costs in the out years, but current CapEx costs are already accounted for [101]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-10499 NORTHWESTERN CORP (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or orga ...

Mystic Hydroelectric Facility Credit Suisse Utilities, Power & Clean Tech Virtual Conference May 13, 2021 8-K'ed on May 13, 2021 NorthWester 2 Forward Looking Statements Madison River Valley - Montana Boulder River in Montana Securities Litigation Reform Act of 1995. Forward-looking statements often | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

NorthWestern Corporation (NASDAQ:NWE) Q1 2021 Earnings Conference Call April 22, 2021 3:00 PM ET Company Participants Travis Meyer - Director, Investor Relations & Corporate Finance Bob Rowe - Chief Executive Officer Crystal Lail - Vice President and Chief Financial Officer Brian Bird - President and Chief Operating Officer Conference Call Participants Brian Russo - Sidoti Jonathan Reeder - Wells Fargo Securities Shar Pourreza - Guggenheim partners Sophie Karp - KeyBanc Ryan Greenwald - Bank of America Mer ...

CELEBRATING EARTH DAY 2021 2021 First Quarter Earnings Webcast April 22, 2021 NorthWester Presenting Today Bob Rowe, CEO Brian Bird, President & COO Crystal Lail, Vice President & CFO Forward Looking Statements During the course of this presentation, there will be forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performance, and often conta ...