NorthWestern (US:NWE)2021-10-26 02:17Financial 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]