Attached files
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| 8-K - 8-K - NORTHWESTERN CORP | form8kearningsreleaseq22013.htm |
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 1
 | 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: Travis Meyer (605) 978-2967 travis.meyer@northwestern.com | |
NORTHWESTERN REPORTS SECOND QUARTER 2013 FINANCIAL RESULTS
Company reports diluted earnings per share of $0.37 for second quarter 2013
Updates and increases earnings guidance for 2013 to $2.45 - $2.60 per diluted share
Declares a quarterly dividend of $0.38 per share, payable September 30, 2013
SIOUX FALLS, S.D. - July 25, 2013 - NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) reported financial results for the quarter ended June 30, 2013. Net income was $14.3 million or $0.37 per diluted share, for the quarter ended June 30, 2013, compared with net income of $11.4 million, or $0.31 per diluted share, for the quarter ended June 30, 2012.
"We are very pleased to have made significant progress toward a large natural gas production acquisition, 'Bear Paw South,' in the Havre Montana area, that will provide long-term value to our customers; and, to have recently conducted the official ribbon cutting at both our Spion Kop Wind facility and our new gas peaker. We're also happy with our second quarter of full production on our Distribution System Infrastructure Plan,” said Bob Rowe, Chief Executive Officer. “We are releasing another quarter of earnings demonstrating strong operational and financial results. Weather that was more seasonal for our service territory and the earnings contribution from both Spion Kop wind and our Bear Paw gas reserves contributed to a $2.9 million improvement over the same quarter last year.”
Summary Financial Results
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Total Revenues | $ | 260,161 | $ | 244,603 | $ | 573,181 | $ | 553,703 | |||||||
Cost of Sales | 106,913 | 96,427 | 239,109 | 234,823 | |||||||||||
Gross Margin | 153,248 | 148,176 | 334,072 | 318,880 | |||||||||||
Operating Expenses | |||||||||||||||
Operating, general and administrative | 67,364 | 67,096 | 136,201 | 132,669 | |||||||||||
Property and other taxes | 25,810 | 25,934 | 51,569 | 49,599 | |||||||||||
Depreciation | 27,414 | 26,426 | 56,632 | 52,859 | |||||||||||
Total Operating Expenses | 120,588 | 119,456 | 244,402 | 235,127 | |||||||||||
Operating Income | 32,660 | 28,720 | 89,670 | 83,753 | |||||||||||
Interest Expense, net | (17,141 | ) | (15,893 | ) | (33,920 | ) | (31,855 | ) | |||||||
Other Income | 928 | 1,176 | 3,643 | 2,160 | |||||||||||
Income Before Income Taxes | 16,447 | 14,003 | 59,393 | 54,058 | |||||||||||
Income Tax Expense | (2,106 | ) | (2,565 | ) | (7,150 | ) | (10,577 | ) | |||||||
Net Income | $ | 14,341 | $ | 11,438 | $ | 52,243 | $ | 43,481 | |||||||
Average Common Shares Outstanding | 38,092 | 36,635 | 37,740 | 36,482 | |||||||||||
Basic Earnings per Average Common Share | $ | 0.37 | $ | 0.31 | $ | 1.38 | $ | 1.19 | |||||||
Diluted Earnings per Average Common Share | $ | 0.37 | $ | 0.31 | $ | 1.38 | $ | 1.19 | |||||||
Dividends Declared per Average Common Share | $ | 0.38 | $ | 0.37 | $ | 0.76 | $ | 0.74 | |||||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 2
Significant items during the second quarter
• | Entered into an agreement to purchase additional natural gas production interests in Montana for approximately $70 million; |
• | Placed into service the Aberdeen Generating Station, a 60 MW natural gas peaking facility, which was constructed for a total cost of approximately $54.3 million; |
• | Received net proceeds of approximately $26.1 million from the sale of 634,934 common shares under our Equity Distribution Agreement; and |
• | Improvement in net income of approximately $2.9 million as compared with the same period in 2012, due primarily to: |
◦ | $5.1 Million - Higher gross margin primarily due to: |
▪ | An increase in natural gas and electric retail volumes; |
▪ | The contribution from Bear Paw natural gas and Spion Kop wind projects; |
▪ | Improved electric transmission capacity revenues; |
▪ | Lower Qualified Facilities (QF) related supply costs; and |
▪ | Increased revenues as a result of Montana natural gas rate adjustment. |
▪ | These were partially offset by lower Demand Side Management (DSM) lost revenues and Dave Gates Generating Station (DGGS) revenues due to increased deferrals. |
◦ | $0.5 Million - Reduced income tax expense primarily a result of production tax credits generated by Spion Kop. |
◦ | $0.1 Million - decreased property and other taxes |
These improvements were partially offset by:
◦ | ($0.3 Million) - Increased operating, general & admin. expenses primarily due to: |
▪ | Increased operating, general, and administrative expense related to our Distribution System Infrastructure Project (DSIP); |
▪ | Increase labor costs; |
▪ | Higher plant operator cost related to the Spion Kop addition and planned maintenance at Colstrip Unit 4; and |
▪ | Higher natural gas production costs due to the Bear Paw acquisition. |
▪ | These were nearly fully offset by lower pension and other expenses. |
◦ | ($1.0 Million) - Increased depreciation expense |
◦ | ($1.2 Million) - Increased interest expense |
◦ | ($0.3 Million) - Decreased other income |
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 3
Summary Financial Results | |||||||||||||||||||||
The following table reconciles the primary changes from 2012 to 2013: | |||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
Pre-tax | Net | EPS | Pre-tax | Net | EPS | ||||||||||||||||
($millions, except EPS) | Income | Income(1) | Diluted | Income | Income(1) | Diluted | |||||||||||||||
2012 reported | $ | 14.0 | $ | 11.4 | $ | 0.31 | $ | 54.1 | $ | 43.5 | $ | 1.19 | |||||||||
Gross Margin | |||||||||||||||||||||
Natural Gas retail volumes | 1.4 | 0.9 | 0.02 | 3.2 | 2.0 | 0.05 | |||||||||||||||
Electric retail volumes | 2.3 | 1.4 | 0.04 | 3.2 | 2.0 | 0.05 | |||||||||||||||
Natural gas production | 2.1 | 1.3 | 0.03 | 5.8 | 3.6 | 0.10 | |||||||||||||||
Electric transmission capacity | 1.5 | 0.9 | 0.02 | 4.0 | 2.5 | 0.07 | |||||||||||||||
Spion Kop | 1.4 | 0.9 | 0.02 | 3.0 | 1.8 | 0.05 | |||||||||||||||
Electric QF supply costs | 1.0 | 0.6 | 0.02 | 1.0 | 0.6 | 0.02 | |||||||||||||||
Montana natural gas rate increase | 0.9 | 0.6 | 0.02 | 0.9 | 0.6 | 0.02 | |||||||||||||||
Montana property tax tracker | 0.5 | 0.3 | 0.01 | 1.0 | 0.6 | 0.02 | |||||||||||||||
Natural gas transportation capacity | — | — | — | 0.9 | 0.6 | 0.02 | |||||||||||||||
DSM lost revenues | (5.7 | ) | (3.5 | ) | (0.09 | ) | (4.9 | ) | (3.0 | ) | (0.08 | ) | |||||||||
DGGS | (0.8 | ) | (0.5 | ) | (0.01 | ) | (5.1 | ) | (3.1 | ) | (0.08 | ) | |||||||||
Operating expenses recovered in trackers | (0.7 | ) | (0.4 | ) | (0.01 | ) | (0.4 | ) | (0.2 | ) | (0.01 | ) | |||||||||
Other | 1.2 | 0.7 | 0.02 | 2.6 | 1.6 | 0.04 | |||||||||||||||
Subtotal - Gross Margin | 5.1 | 3.2 | 0.09 | 15.2 | 9.6 | 0.27 | |||||||||||||||
OG&A Expense | |||||||||||||||||||||
DSIP expenses | (2.9 | ) | (1.8 | ) | (0.05 | ) | (5.5 | ) | (3.4 | ) | (0.09 | ) | |||||||||
Labor | (1.2 | ) | (0.7 | ) | (0.02 | ) | (1.1 | ) | (0.7 | ) | (0.02 | ) | |||||||||
Plant operator costs | (0.9 | ) | (0.6 | ) | (0.02 | ) | (1.4 | ) | (0.9 | ) | (0.02 | ) | |||||||||
Natural gas production | (0.3 | ) | (0.2 | ) | (0.01 | ) | (1.6 | ) | (1.0 | ) | (0.03 | ) | |||||||||
Pension and employee benefits | 3.4 | 2.1 | 0.06 | 7.6 | 4.7 | 0.12 | |||||||||||||||
Operating expenses recovered in trackers | 0.7 | 0.4 | 0.01 | 0.7 | 0.4 | 0.01 | |||||||||||||||
Nonemployee directors deferred compensation | — | — | — | (1.1 | ) | (0.7 | ) | (0.02 | ) | ||||||||||||
Other | 0.9 | 0.6 | 0.02 | (1.1 | ) | (0.7 | ) | (0.02 | ) | ||||||||||||
Subtotal - OG&A Expense | (0.3 | ) | (0.2 | ) | (0.01 | ) | (3.5 | ) | (2.3 | ) | (0.07 | ) | |||||||||
Other | |||||||||||||||||||||
Depreciation expense | (1.0 | ) | (0.6 | ) | (0.02 | ) | (3.8 | ) | (2.3 | ) | (0.06 | ) | |||||||||
Property and other taxes | 0.1 | 0.1 | — | (2.0 | ) | (1.2 | ) | (0.03 | ) | ||||||||||||
Interest Expense | (1.2 | ) | (0.7 | ) | (0.02 | ) | (2.1 | ) | (1.3 | ) | (0.03 | ) | |||||||||
Other Income | (0.2 | ) | (0.1 | ) | — | 1.5 | 0.9 | 0.02 | |||||||||||||
Income tax and other items | |||||||||||||||||||||
Flow-through repairs deductions | (0.1 | ) | — | 2.1 | 0.06 | ||||||||||||||||
Flow-through of state bonus depreciation deduction | 0.3 | 0.01 | 0.6 | 0.02 | |||||||||||||||||
Production tax credits | 0.5 | 0.01 | 1.6 | 0.04 | |||||||||||||||||
Prior year permanent return to accrual adjustments | (0.5 | ) | (0.01 | ) | (0.5 | ) | (0.01 | ) | |||||||||||||
State income tax and other, net | 1.2 | 0.03 | 1.5 | 0.04 | |||||||||||||||||
Impact of higher share count | (0.01 | ) | (0.05 | ) | |||||||||||||||||
All other, net | (0.1 | ) | (0.2 | ) | (0.01 | ) | — | 0.1 | (0.01 | ) | |||||||||||
Total EPS impact of above items | 0.06 | 0.19 | |||||||||||||||||||
2013 reported | $ | 16.4 | $ | 14.3 | $ | 0.37 | $ | 59.4 | $ | 52.2 | $ | 1.38 | |||||||||
(1) Income Tax Benefit (Expense) calculation on reconciling items assumes effective tax rate of 38.5%. | |||||||||||||||||||||
For more information see www.northwesternenergy.com/documents/investor/Q213.pdf
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 4
Significant Drivers
Gross Margin
Consolidated gross margin for the quarter ended June 30, 2013 was $153.3 million compared with $148.2 million for the same period of 2012. Consolidated gross margin increased $5.1 million primarily due to the following:
• | An increase in natural gas and electric retail volumes due primarily to colder spring weather; |
• | An increase in natural gas production margin, primarily due to the acquisition of the Bear Paw assets in the third quarter of 2012; |
• | An increase in electric transmission capacity revenues due to market pricing and other conditions; |
• | The acquisition of the Spion Kop wind farm in the fourth quarter of 2012; |
• | Lower QF related supply costs based on actual QF pricing and output; |
• | An increase in Montana natural gas delivery rates implemented in April 2013; and |
• | An increase in Montana property taxes included in a tracker. |
These increases were partly offset by:
• | A decrease in DSM lost revenues recovered through our supply trackers related to efficiency measures implemented by customers. The quarter ending June 30, 2012 included recognition of approximately $6.6 million that we had deferred in prior periods pending approval of our tracker filings; |
• | Lower DGGS revenue primarily due to an increase in our FERC related deferral due to the initial FERC ALJ nonbinding decision; and |
• | Lower revenues for operating expenses recovered in trackers, primarily related to customer efficiency programs. |
Consolidated gross margin for the six months ended June 30, 2013 was $334.1 million compared with $318.9 million for the same period of 2012.
Operating, General and Administrative Expenses
Consolidated operating, general and administrative expenses were $67.4 million for the quarter ended June 30, 2013 as compared with $67.1 million during the same period of 2012. The increase in operating, general and administrative expenses of $0.3 million was primarily due to:
• | Incremental operating and maintenance costs related to DSIP; |
• | Increased labor costs due primarily to compensation increases and a larger number of employees; |
• | Higher plant operator costs due to the Spion Kop acquisition and planned maintenance at Colstrip Unit 4; and |
• | Higher natural gas production costs due to the Bear Paw acquisition. |
These increases were partly offset by:
• | Decreased pension expense, offset in part by increased medical expenses; and |
• | Lower operating expenses recovered in trackers, primarily related to customer efficiency programs. |
Consolidated operating, general and administrative expenses were $136.2 million for the six months ended June 30, 2013 as compared with $132.7 million during the same period of 2012.
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 5
Property and Other Taxes
Property and other taxes remained essentially flat with $25.8 million for the quarter ended June 30, 2013, as compared with $25.9 million in the same period of 2012.
Property and other taxes were $51.6 million for the six months ended June 30, 2013, as compared with $49.6 million in the same period of 2012.
Depreciation Expense
Depreciation expense was $27.4 million for the quarter ended June 30, 2013, as compared with $26.4 million in the same period of 2012. This reflects an increase in depreciation expense due to plant additions, offset in part by a reduction in depreciation rates of approximately $1.5 million as a result of new depreciation studies conducted by an independent consultant and implemented during the second quarter of 2013. These studies reflect longer asset lives on our electric and natural gas assets in Montana, and electric assets in South Dakota. We expect an additional reduction in depreciation expense due to the change in rates of approximately $3.0 million for the remainder of 2013.
Depreciation expense was $56.6 million for the six months ended June 30, 2013, as compared with $52.9 million in the same period of 2012.
Interest Expense
Consolidated interest expense was $17.1 million for the quarter ended June 30, 2013 as compared with $15.9 million during the same period of 2012. This increase was primarily due to higher debt outstanding partially offset by higher capitalization of AFUDC.
Consolidated interest expense was $33.9 million for the six months ended June 30, 2013 as compared with $31.9 million during the same period of 2012.
Income Tax Expense
Consolidated income tax expense for the quarter ended June 30, 2013 was $2.1 million as compared with $2.6 million in same period of 2012. The effective tax rate for the quarter ended June 30, 2013 was 12.8% as compared with 18.3% for the same period of 2012. The effective tax rate differs from the federal statutory tax rate of 35% primarily due to the regulatory impact of flowing through federal and state tax benefit of repairs deductions, state tax benefit of bonus depreciation deductions and production tax credits.
Consolidated income tax expense for the six months ended June 30, 2013 was $7.2 million as compared with $10.6 million in same period of 2012. The effective tax rate for the six months ended June 30, 2013 was 12.0% as compared with 19.6% for the same period of 2012.
The following table summarizes the significant differences from the Federal statutory rate, which result in reduced income tax expense:
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 6
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | (in millions) | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Income Before Income Taxes | $ | 16.4 | $ | 14.0 | $ | 59.4 | $ | 54.1 | |||||||
Income tax calculated at 35% Federal statutory rate | 5.8 | 4.9 | 20.8 | 18.9 | |||||||||||
Permanent or flow through adjustments: | |||||||||||||||
Flow-through repairs deductions | (2.1 | ) | (2.2 | ) | (9.8 | ) | (7.7 | ) | |||||||
Flow-through of state bonus depreciation deduction | (0.8 | ) | (0.5 | ) | (2.5 | ) | (1.9 | ) | |||||||
Production tax credits | (0.5 | ) | — | (1.6 | ) | — | |||||||||
Prior year permanent return to accrual adjustments | 0.5 | — | 0.5 | — | |||||||||||
State income tax & other, net | (0.8 | ) | 0.4 | (0.2 | ) | 1.3 | |||||||||
(3.7 | ) | (2.3 | ) | (13.6 | ) | (8.3 | ) | ||||||||
Income tax expense | $ | 2.1 | $ | 2.6 | $ | 7.2 | $ | 10.6 | |||||||
Liquidity and Capital Resources
As of June 30, 2013, cash and cash equivalents were $7.8 million compared with $8.1 million at June 30, 2012. The Company had $232.5 million available from its revolving credit facility at June 30, 2013, compared with $162.0 million at June 30, 2012.
Dividend Declared
NorthWestern's Board of Directors declared a quarterly common stock dividend of $0.38 per share, payable September 30, 2013, to common shareholders of record as of September 13, 2013.
2013 Earnings Guidance Increased
NorthWestern updates 2013 earnings range to $2.45 - $2.60 per diluted share from $2.40 - $2.55 as last provided.
Basic assumptions incorporate the following expectations:
• | A consolidated income tax rate of approximately 12% of pre-tax income; |
• | Normal weather in our electric and natural gas service territories for the remainder of 2013; |
• | Excludes any potential additional impact as a result of the FERC decision regarding revenue allocation at our Dave Gates Generating Station; |
• | Excludes any unanticipated costs due to Colstrip Unit 4 outage; and |
• | Diluted average shares outstanding of 38.1 million. |
Significant Items Not Contemplated in Guidance
A reconciliation of items not factored into our updated 2013 and final 2012 earnings guidance of $2.45 - $2.60 and $2.30 - $2.40 per diluted share, respectively, is as follows. The amount below represents an after-tax non-GAAP measure that may provide users of this financial information with additional meaningful information regarding the impact of certain items on the Company's expected earnings. The Company believes the following presentation is more representative of our ongoing earnings than the GAAP EPS, also represented below. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the reported operating results or cash flows from operations or any other measure of performance prepared in
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 7
accordance with GAAP. In addition, the presentation of these measures may not be comparable to similarly titled measures other companies use.
2013 | Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 | 1H 2013 | ||||||||||
Reported GAAP diluted EPS | $ | 1.01 | $ | 0.37 | $ | 1.38 | |||||||||
Non-GAAP Adjustments: | |||||||||||||||
Weather | (0.02 | ) | (0.02 | ) | |||||||||||
Adjusted diluted EPS | $ | 1.01 | $ | 0.35 | — | — | $ | 1.36 | |||||||
2012 | Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | FY 2012 | ||||||||||
Reported GAAP diluted EPS | $ | 0.88 | $ | 0.31 | $ | (0.10 | ) | $ | 1.57 | $ | 2.66 | ||||
Non-GAAP Adjustments: | |||||||||||||||
Weather | 0.09 | 0.05 | (0.06 | ) | 0.06 | 0.14 | |||||||||
Release of MPSC DGGS deferral | (0.05 | ) | (0.05 | ) | |||||||||||
DSM Lost revenue recovery related to 2010/2011 | (0.05 | ) | (0.05 | ) | |||||||||||
DGGS FERC ALJ initial decision - portion related to 2011 | 0.12 | 0.12 | |||||||||||||
MSTI Impairment | 0.40 | 0.40 | |||||||||||||
Favorable CELP arbitration decision | (0.79 | ) | (0.79 | ) | |||||||||||
Income tax adjustment - benefit from MT NOL | (0.06 | ) | (0.06 | ) | |||||||||||
Adjusted diluted EPS | $ | 0.92 | $ | 0.31 | $ | 0.36 | $ | 0.78 | $ | 2.37 | |||||
Company Hosting Investor Conference Call
As previously announced, NorthWestern will host an investor conference call today at 3:30 pm Eastern Time to review its financial results for the quarter ended June 30, 2013.
The conference call will be webcast live on the Internet at http://www.northwesternenergy.com under the “About Us / 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.
A telephonic replay of the call will be available beginning at 6:00 p.m. ET on July 25, 2013 through August 25, 2013, at (888) 203-1112 access code 1856638.
About NorthWestern Energy
NorthWestern Energy provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 673,200 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 “2013 Earnings 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
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 8
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 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 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.
Non-GAAP Financial Measure
This press release includes financial information prepared in accordance with GAAP, as well as other financial measures, such as Gross Margin, that is considered a “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. Gross Margin (Revenues less Cost of Sales) is a non-GAAP financial measure due to the exclusion of depreciation from the measure. The presentation of Gross Margin is intended to supplement investors' understanding of our operating performance. Gross Margin is used by us to determine whether we are collecting the appropriate amount of energy costs from customers to allow recovery of operating costs. Our Gross Margin measure may not be comparable to other companies' Gross Margin measure. Furthermore, this measure is not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 9
NORTHWESTERN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | ||||||||||||||||
Electric | $ | 200,472 | $ | 196,176 | $ | 410,564 | $ | 403,231 | ||||||||
Gas | 59,362 | 48,101 | 161,880 | 149,847 | ||||||||||||
Other | 327 | 326 | 737 | 625 | ||||||||||||
Total Revenues | 260,161 | 244,603 | 573,181 | 553,703 | ||||||||||||
Operating Expenses | ||||||||||||||||
Cost of Sales | 106,913 | 96,427 | 239,109 | 234,823 | ||||||||||||
Operating, general and administrative | 67,364 | 67,096 | 136,201 | 132,669 | ||||||||||||
Property and other taxes | 25,810 | 25,934 | 51,569 | 49,599 | ||||||||||||
Depreciation | 27,414 | 26,426 | 56,632 | 52,859 | ||||||||||||
Total Operating Expenses | 227,501 | 215,883 | 483,511 | 469,950 | ||||||||||||
Operating Income | 32,660 | 28,720 | 89,670 | 83,753 | ||||||||||||
Interest Expense, net | (17,141 | ) | (15,893 | ) | (33,920 | ) | (31,855 | ) | ||||||||
Other Income | 928 | 1,176 | 3,643 | 2,160 | ||||||||||||
Income Before Income Taxes | 16,447 | 14,003 | 59,393 | 54,058 | ||||||||||||
Income Tax Expense | (2,106 | ) | (2,565 | ) | (7,150 | ) | (10,577 | ) | ||||||||
Net Income | $ | 14,341 | $ | 11,438 | $ | 52,243 | $ | 43,481 | ||||||||
Average Common Shares Outstanding | 38,092 | 36,635 | 37,740 | 36,482 | ||||||||||||
Basic Earnings per Average Common Share | $ | 0.37 | $ | 0.31 | $ | 1.38 | $ | 1.19 | ||||||||
Diluted Earnings per Average Common Share | $ | 0.37 | $ | 0.31 | $ | 1.38 | $ | 1.19 | ||||||||
Dividends Declared per Average Common Share | $ | 0.38 | $ | 0.37 | $ | 0.76 | $ | 0.74 | ||||||||
Average shares used in computing the basic and diluted earnings per share are as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Basic computation | 38,092 | 36,635 | 37,740 | 36,482 | ||||||||
Dilutive effect of | ||||||||||||
Restricted stock and performance share awards | 129 | 144 | 125 | 143 | ||||||||
Diluted computation | 38,221 | 36,779 | 37,865 | 36,625 | ||||||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 10
NORTHWESTERN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
June 30, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Current Assets | $ | 246,081 | $ | 303,128 | |||
Property, Plant, and Equipment, Net | 2,532,359 | 2,435,590 | |||||
Goodwill | 355,128 | 355,128 | |||||
Regulatory Assets | 390,511 | 367,890 | |||||
Other Noncurrent Assets | 26,969 | 23,797 | |||||
Total Assets | $ | 3,551,048 | $ | 3,485,533 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Maturities of Long-term Debt and Capital Leases | $ | 1,656 | $ | 1,612 | |||
Short-term Borrowings | 64,994 | 122,934 | |||||
Other Current Liabilities | 285,833 | 324,719 | |||||
Long-term Capital Leases | 30,739 | 31,562 | |||||
Long-term Debt | 1,055,085 | 1,055,074 | |||||
Noncurrent Regulatory Liabilities | 339,304 | 276,618 | |||||
Deferred Income Taxes | 381,155 | 363,928 | |||||
Other Noncurrent Liabilities | 390,032 | 375,054 | |||||
Total Liabilities | 2,548,798 | 2,551,501 | |||||
Total Shareholders' Equity | 1,002,250 | 934,032 | |||||
Total Liabilities and Shareholders' Equity | $ | 3,551,048 | $ | 3,485,533 | |||
NORTHWESTERN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Operating Activities | ||||||||
Net income | $ | 52,243 | $ | 43,481 | ||||
Non-cash items | 87,568 | 79,791 | ||||||
Changes in operating assets and liabilities | (10,000 | ) | 21,795 | |||||
Cash Provided by Operating Activities | 129,811 | 145,067 | ||||||
Cash Used in Investing Activities | (87,802 | ) | (97,663 | ) | ||||
Cash Used in Financing Activities | (44,038 | ) | (45,227 | ) | ||||
(Decrease) Increase in Cash and Cash Equivalents | (2,029 | ) | 2,177 | |||||
Cash and Cash Equivalents, beginning of period | 9,822 | 5,928 | ||||||
Cash and Cash Equivalents, end of period | $ | 7,793 | $ | 8,105 | ||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 11
NORTHWESTERN CORPORATION
REGULATED ELECTRIC SEGMENT
Three Months Ended June 30,
(Unaudited)
Results | ||||||||||||||
2013 | 2012 | Change | % Change | |||||||||||
(dollars in millions) | ||||||||||||||
Retail revenue | $ | 179.9 | $ | 166.7 | $ | 13.2 | 7.9 | % | ||||||
Regulatory amortization | 5.9 | 17.2 | (11.3 | ) | (65.7 | ) | ||||||||
Total retail revenues | 185.8 | 183.9 | 1.9 | 1.0 | ||||||||||
Transmission | 12.5 | 11.0 | 1.5 | 13.6 | ||||||||||
Ancillary Services | 0.4 | 0.5 | (0.1 | ) | (20.0 | ) | ||||||||
Wholesale | 0.7 | 0.7 | — | — | ||||||||||
Other | 1.1 | 0.1 | 1.0 | 1,000.0 | ||||||||||
Total Revenues | $ | 200.5 | $ | 196.2 | $ | 4.3 | 2.2 | |||||||
Total Cost of Sales | 82.5 | 78.1 | 4.4 | 5.6 | ||||||||||
Gross Margin | $ | 118.0 | $ | 118.1 | $ | (0.1 | ) | (0.1 | )% | |||||
Revenues | Megawatt Hours (MWH) | Avg. Customer Counts | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
(in thousands) | |||||||||||||||||||
Retail Electric | |||||||||||||||||||
Montana | $ | 56,915 | $ | 52,681 | 495 | 491 | 276,304 | 273,840 | |||||||||||
South Dakota | 10,628 | 10,060 | 123 | 106 | 49,222 | 48,883 | |||||||||||||
Residential | 67,543 | 62,741 | 618 | 597 | 325,526 | 322,723 | |||||||||||||
Montana | 77,086 | 71,197 | 753 | 756 | 62,638 | 61,948 | |||||||||||||
South Dakota | 16,163 | 16,328 | 222 | 217 | 12,290 | 12,160 | |||||||||||||
Commercial | 93,249 | 87,525 | 975 | 973 | 74,928 | 74,108 | |||||||||||||
Industrial | 10,583 | 8,537 | 709 | 682 | 74 | 74 | |||||||||||||
Other | 8,561 | 7,871 | 54 | 51 | 6,065 | 5,977 | |||||||||||||
Total Retail Electric | $ | 179,936 | $ | 166,674 | 2,356 | 2,303 | 406,593 | 402,882 | |||||||||||
Total Wholesale Electric | $ | 670 | $ | 733 | 35 | 43 | — | — | |||||||||||
Degree Days | 2013 as compared with: | |||||||||||
Cooling Degree-Days | 2013 | 2012 | Historic Average | 2012 | Historic Average | |||||||
Montana | 45 | 55 | 41 | 18% cooler | 10% warmer | |||||||
South Dakota | 50 | 150 | 66 | 67% cooler | 24% cooler | |||||||
Degree Days | 2013 as compared with: | |||||||||||
Heating Degree-Days | 2013 | 2012 | Historic Average | 2012 | Historic Average | |||||||
Montana | 1,267 | 1,205 | 1,357 | 5% colder | 7% warmer | |||||||
South Dakota | 1,897 | 893 | 1,546 | 112% colder | 23% colder | |||||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 12
NORTHWESTERN CORPORATION
REGULATED ELECTRIC SEGMENT
Six Months Ended June 30,
(Unaudited)
Results | ||||||||||||||
2013 | 2012 | Change | % Change | |||||||||||
(dollars in millions) | ||||||||||||||
Retail revenue | $ | 379.9 | $ | 358.6 | $ | 21.3 | 5.9 | % | ||||||
Regulatory amortization | 0.1 | 16.7 | (16.6 | ) | (99.4 | ) | ||||||||
Total retail revenues | 380.0 | 375.3 | 4.7 | 1.3 | ||||||||||
Transmission | 26.1 | 22.1 | 4.0 | 18.1 | ||||||||||
Ancillary Services | 0.8 | 2.7 | (1.9 | ) | (70.4 | ) | ||||||||
Wholesale | 1.2 | 1.6 | (0.4 | ) | (25.0 | ) | ||||||||
Other | 2.5 | 1.5 | 1.0 | 66.7 | ||||||||||
Total Revenues | $ | 410.6 | $ | 403.2 | $ | 7.4 | 1.8 | |||||||
Total Cost of Sales | 165.6 | 161.1 | 4.5 | 2.8 | ||||||||||
Gross Margin | $ | 245.0 | $ | 242.1 | $ | 2.9 | 1.2 | % | ||||||
Revenues | Megawatt Hours (MWH) | Avg. Customer Counts | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
(in thousands) | |||||||||||||||||||
Retail Electric | |||||||||||||||||||
Montana | $ | 132,921 | $ | 124,818 | 1,177 | 1,162 | 276,452 | 274,003 | |||||||||||
South Dakota | 24,452 | 23,046 | 301 | 266 | 49,198 | 48,861 | |||||||||||||
Residential | 157,373 | 147,864 | 1,478 | 1,428 | 325,650 | 322,864 | |||||||||||||
Montana | 154,858 | 146,893 | 1,533 | 1,549 | 62,638 | 61,980 | |||||||||||||
South Dakota | 33,508 | 33,244 | 467 | 453 | 12,175 | 12,057 | |||||||||||||
Commercial | 188,366 | 180,137 | 2,000 | 2,002 | 74,813 | 74,037 | |||||||||||||
Industrial | 20,984 | 18,174 | 1,456 | 1,411 | 74 | 73 | |||||||||||||
Other | 13,221 | 12,452 | 77 | 75 | 5,288 | 5,243 | |||||||||||||
Total Retail Electric | $ | 379,944 | $ | 358,627 | 5,011 | 4,916 | 405,825 | 402,217 | |||||||||||
Total Wholesale Electric | $ | 1,177 | $ | 1,602 | 58 | 96 | — | — | |||||||||||
Degree Days | 2013 as compared with: | |||||||||||
Cooling Degree-Days | 2013 | 2012 | Historic Average | 2012 | Historic Average | |||||||
Montana | 45 | 55 | 41 | 18% cooler | 10% warmer | |||||||
South Dakota | 50 | 150 | 66 | 67% cooler | 24% cooler | |||||||
Degree Days | 2013 as compared with: | |||||||||||
Heating Degree-Days | 2013 | 2012 | Historic Average | 2012 | Historic Average | |||||||
Montana | 4,490 | 4,244 | 4,640 | 6% colder | 3% warmer | |||||||
South Dakota | 6,114 | 4,310 | 5,600 | 42% colder | 9% colder | |||||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 13
NORTHWESTERN CORPORATION
REGULATED NATURAL GAS SEGMENT
Three Months Ended June 30,
(Unaudited)
Results | ||||||||||||||
2013 | 2012 | Change | % Change | |||||||||||
(dollars in millions) | ||||||||||||||
Retail revenues | $ | 49.1 | $ | 34.5 | $ | 14.6 | 42.3 | % | ||||||
Regulatory amortization | 1.0 | 5.3 | (4.3 | ) | (81.1 | ) | ||||||||
Total retail revenues | 50.1 | 39.8 | 10.3 | 25.9 | ||||||||||
Wholesale and other | 9.3 | 8.3 | 1.0 | 12.0 | ||||||||||
Total Revenues | 59.4 | 48.1 | 11.3 | 23.5 | ||||||||||
Total Cost of Sales | 24.4 | 18.3 | 6.1 | 33.3 | ||||||||||
Gross Margin | $ | 35.0 | $ | 29.8 | $ | 5.2 | 17.4 | % | ||||||
Revenue | Dekatherms (Dkt) | Avg. Customer Counts | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
(in thousands) | |||||||||||||||||||
Retail Gas | |||||||||||||||||||
Montana | $ | 19,537 | $ | 16,415 | 2,046 | 1,915 | 160,722 | 159,539 | |||||||||||
South Dakota | 6,432 | 3,327 | 719 | 341 | 38,131 | 37,727 | |||||||||||||
Nebraska | 5,604 | 2,926 | 579 | 287 | 36,624 | 36,420 | |||||||||||||
Residential | 31,573 | 22,668 | 3,344 | 2,543 | 235,477 | 233,686 | |||||||||||||
Montana | 9,757 | 8,187 | 1,049 | 965 | 22,526 | 22,380 | |||||||||||||
South Dakota | 4,384 | 1,873 | 677 | 323 | 6,029 | 5,950 | |||||||||||||
Nebraska | 2,958 | 1,480 | 440 | 263 | 4,594 | 4,556 | |||||||||||||
Commercial | 17,099 | 11,540 | 2,166 | 1,551 | 33,149 | 32,886 | |||||||||||||
Industrial | 171 | 136 | 19 | 16 | 265 | 274 | |||||||||||||
Other | 209 | 178 | 29 | 24 | 158 | 150 | |||||||||||||
Total Retail Gas | $ | 49,052 | $ | 34,522 | 5,558 | 4,134 | 269,049 | 266,996 | |||||||||||
Degree Days | 2013 as compared with: | ||||||||
Heating Degree-Days | 2013 | 2012 | Historic Average | 2012 | Historic Average | ||||
Montana | 1,267 | 1,205 | 1,357 | 5% colder | 7% warmer | ||||
South Dakota | 1,897 | 893 | 1,546 | 112% colder | 23% colder | ||||
Nebraska | 1,365 | 635 | 1,273 | 115% colder | 7% colder | ||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 14
NORTHWESTERN CORPORATION
REGULATED NATURAL GAS SEGMENT
Six Months Ended June 30,
(Unaudited)
Results | ||||||||||||||
2013 | 2012 | Change | % Change | |||||||||||
(dollars in millions) | ||||||||||||||
Retail revenues | $ | 150.7 | $ | 130.1 | $ | 20.6 | 15.8 | % | ||||||
Regulatory amortization | (9.5 | ) | 2.1 | (11.6 | ) | (552.4 | ) | |||||||
Total retail revenues | 141.2 | 132.2 | 9.0 | 6.8 | ||||||||||
Wholesale and other | 20.7 | 17.7 | 3.0 | 16.9 | ||||||||||
Total Revenues | 161.9 | 149.9 | 12.0 | 8.0 | ||||||||||
Total Cost of Sales | 73.5 | 73.7 | (0.2 | ) | (0.3 | ) | ||||||||
Gross Margin | $ | 88.4 | $ | 76.2 | $ | 12.2 | 16.0 | % | ||||||
Revenue | Dekatherms (Dkt) | Avg. Customer Counts | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
(in thousands) | |||||||||||||||||||
Retail Gas | |||||||||||||||||||
Montana | $ | 62,401 | $ | 58,254 | 7,207 | 6,898 | 160,896 | 159,712 | |||||||||||
South Dakota | 18,310 | 13,690 | 2,230 | 1,597 | 38,296 | 37,913 | |||||||||||||
Nebraska | 16,517 | 12,347 | 1,855 | 1,429 | 36,826 | 36,669 | |||||||||||||
Residential | 97,228 | 84,291 | 11,292 | 9,924 | 236,018 | 234,294 | |||||||||||||
Montana | 31,296 | 29,238 | 3,671 | 3,489 | 22,530 | 22,403 | |||||||||||||
South Dakota | 12,202 | 8,526 | 1,948 | 1,373 | 6,056 | 5,976 | |||||||||||||
Nebraska | 8,735 | 6,894 | 1,311 | 1,092 | 4,624 | 4,598 | |||||||||||||
Commercial | 52,233 | 44,658 | 6,930 | 5,954 | 33,210 | 32,977 | |||||||||||||
Industrial | 631 | 579 | 76 | 70 | 266 | 276 | |||||||||||||
Other | 626 | 573 | 87 | 77 | 158 | 150 | |||||||||||||
Total Retail Gas | $ | 150,718 | $ | 130,101 | 18,385 | 16,025 | 269,652 | 267,697 | |||||||||||
Degree Days | 2013 as compared with: | ||||||||||
Heating Degree-Days | 2013 | 2012 | Historic Average | 2012 | Historic Average | ||||||
Montana | 4,490 | 4,244 | 4,640 | 6% colder | 3% warmer | ||||||
South Dakota | 6,114 | 4,310 | 5,600 | 42% colder | 9% colder | ||||||
Nebraska | 4,720 | 3,584 | 4,638 | 32% colder | 2% colder | ||||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 15
NORTHWESTERN CORPORATION
SECOND QUARTER SEGMENT RESULTS
(Unaudited)
(in thousands)
Three Months Ended | |||||||||||||||||||
June 30, 2013 | Electric | Gas | Other | Eliminations | Total | ||||||||||||||
Operating revenues | $ | 200,472 | $ | 59,362 | $ | 327 | $ | — | $ | 260,161 | |||||||||
Cost of sales | 82,520 | 24,393 | — | — | 106,913 | ||||||||||||||
Gross margin | 117,952 | 34,969 | 327 | — | 153,248 | ||||||||||||||
Operating, general and administrative | 47,721 | 18,483 | 1,160 | — | 67,364 | ||||||||||||||
Property and other taxes | 19,016 | 6,792 | 2 | — | 25,810 | ||||||||||||||
Depreciation | 21,693 | 5,712 | 9 | — | 27,414 | ||||||||||||||
Operating income (loss) | 29,522 | 3,982 | (844 | ) | — | 32,660 | |||||||||||||
Interest expense | (14,411 | ) | (2,567 | ) | (163 | ) | — | (17,141 | ) | ||||||||||
Other income | 702 | 198 | 28 | — | 928 | ||||||||||||||
Income tax expense | (76 | ) | (1,901 | ) | (129 | ) | — | (2,106 | ) | ||||||||||
Net income (loss) | $ | 15,737 | $ | (288 | ) | $ | (1,108 | ) | $ | — | $ | 14,341 | |||||||
Three Months Ended | |||||||||||||||||||
June 30, 2012 | Electric | Gas | Other | Eliminations | Total | ||||||||||||||
Operating revenues | $ | 196,176 | $ | 48,101 | $ | 326 | $ | — | $ | 244,603 | |||||||||
Cost of sales | 78,109 | 18,318 | — | — | 96,427 | ||||||||||||||
Gross margin | 118,067 | 29,783 | 326 | — | 148,176 | ||||||||||||||
Operating, general and administrative | 47,685 | 18,657 | 754 | — | 67,096 | ||||||||||||||
Property and other taxes | 19,469 | 6,463 | 2 | — | 25,934 | ||||||||||||||
Depreciation | 21,565 | 4,853 | 8 | — | 26,426 | ||||||||||||||
Operating income (loss) | 29,348 | (190 | ) | (438 | ) | — | 28,720 | ||||||||||||
Interest expense | (13,409 | ) | (2,230 | ) | (254 | ) | — | (15,893 | ) | ||||||||||
Other income | 801 | 349 | 26 | — | 1,176 | ||||||||||||||
Income tax (expense) benefit | (5,910 | ) | 1,010 | 2,335 | — | (2,565 | ) | ||||||||||||
Net income (loss) | $ | 10,830 | $ | (1,061 | ) | $ | 1,669 | $ | — | $ | 11,438 | ||||||||
NorthWestern Reports Second Quarter 2013 Financial Results
July 25, 2013
Page 16
Six Months Ended | |||||||||||||||||||
June 30, 2013 | Electric | Gas | Other | Eliminations | Total | ||||||||||||||
Operating revenues | $ | 410,564 | $ | 161,880 | $ | 737 | $ | — | $ | 573,181 | |||||||||
Cost of sales | 165,615 | 73,494 | — | — | 239,109 | ||||||||||||||
Gross margin | 244,949 | 88,386 | 737 | — | 334,072 | ||||||||||||||
Operating, general and administrative | 93,439 | 38,378 | 4,384 | — | 136,201 | ||||||||||||||
Property and other taxes | 38,168 | 13,396 | 5 | — | 51,569 | ||||||||||||||
Depreciation | 45,304 | 11,311 | 17 | — | 56,632 | ||||||||||||||
Operating income (loss) | 68,038 | 25,301 | (3,669 | ) | — | 89,670 | |||||||||||||
Interest expense | (28,538 | ) | (4,993 | ) | (389 | ) | — | (33,920 | ) | ||||||||||
Other income | 2,713 | 875 | 55 | — | 3,643 | ||||||||||||||
Income tax (expense) benefit | (4,380 | ) | (3,673 | ) | 903 | — | (7,150 | ) | |||||||||||
Net income (loss) | $ | 37,833 | $ | 17,510 | $ | (3,100 | ) | $ | — | $ | 52,243 | ||||||||
Six Months Ended | |||||||||||||||||||
June 30, 2012 | Electric | Gas | Other | Eliminations | Total | ||||||||||||||
Operating revenues | $ | 403,231 | $ | 149,847 | $ | 625 | $ | — | $ | 553,703 | |||||||||
Cost of sales | 161,088 | 73,735 | — | — | 234,823 | ||||||||||||||
Gross margin | 242,143 | 76,112 | 625 | — | 318,880 | ||||||||||||||
Operating, general and administrative | 93,042 | 37,945 | 1,682 | — | 132,669 | ||||||||||||||
Property and other taxes | 37,007 | 12,587 | 5 | — | 49,599 | ||||||||||||||
Depreciation | 43,134 | 9,709 | 16 | — | 52,859 | ||||||||||||||
Operating income (loss) | 68,960 | 15,871 | (1,078 | ) | — | 83,753 | |||||||||||||
Interest expense | (27,076 | ) | (4,297 | ) | (482 | ) | — | (31,855 | ) | ||||||||||
Other income | 1,413 | 694 | 53 | — | 2,160 | ||||||||||||||
Income tax (expense) benefit | (9,084 | ) | (2,580 | ) | 1,087 | — | (10,577 | ) | |||||||||||
Net income (loss) | $ | 34,213 | $ | 9,688 | $ | (420 | ) | $ | — | $ | 43,481 | ||||||||