NorthWestern Reports 2023 Financial Results
- NorthWestern Energy Group, Inc. reports a solid GAAP diluted earnings per share of $3.22 for 2023.
- The company reaffirms its earnings guidance and capital plan for 2024, showcasing a 4% to 6% long-term growth rate.
- A 1.6% increase in the quarterly dividend to $0.65 per share was declared, payable on March 29, 2024.
- Net income for 2023 was $194.1 million, reflecting an $11.1 million increase from the previous year.
- The positive financial results were mainly due to new base rates from the Montana rate review, lower costs, and taxes.
- Despite challenges like lower retail volumes and higher expenses, the company exceeded its earnings expectations for the year.
- None.
Insights
The reported GAAP diluted earnings per share (EPS) of $3.22 by NorthWestern Energy for 2023, compared to $3.25 in 2022, shows a slight decline. However, this marginal decrease is nuanced by the underlying factors such as equity dilution and higher average shares outstanding. The affirmation of the 2024 earnings guidance and capital plan, coupled with the 1.6% increase in the quarterly dividend, signals confidence in the company's financial stability and commitment to shareholder returns. These factors are vital for investors as they reflect the company's operational performance and strategic financial management.
Furthermore, the successful rate reviews in Montana and South Dakota that led to increased net income are noteworthy. Rate reviews are critical for utility companies as they directly impact revenue and profitability. The increase in rates, which was a primary driver for the net income improvement, suggests effective regulatory engagement and an ability to navigate the complex rate-setting process. This is a positive indicator for investors, as it reflects the company's capability to secure favorable outcomes that support financial health.
NorthWestern Energy's strategic realignment into a holding company is a significant organizational change that aligns with industry practices and aims to manage risks and ensure long-term sustainability. This move can be seen as a proactive approach to address the evolving energy market dynamics and regulatory environments. For stakeholders, such strategic shifts are important to monitor as they can influence the company's competitive positioning and operational efficiency.
The company's '100 Powerful Years' milestone is a testament to its historical resilience and innovation. While this is not a direct financial indicator, it contributes to the company's brand equity and may influence investor perception. In the utility sector, a long-standing history can be associated with reliability and customer loyalty, which are critical components for sustained growth.
The utility sector is often seen as a defensive investment due to the essential nature of its services and typically stable cash flows. NorthWestern Energy's consistent dividend growth, as evidenced by the 1.6% increase to the quarterly dividend, is a reflection of this stability. Such incremental increases are indicative of a mature company with a predictable earnings stream. From an economic perspective, the company's performance and strategic decisions need to be evaluated in the context of broader economic conditions, including energy prices, regulatory changes and consumer demand.
Rate reviews and adjustments are essential for maintaining the balance between the need for infrastructure investment and consumer affordability. NorthWestern Energy's ability to navigate these reviews successfully and its commitment to long-term growth rates of 4% to 6% are critical for understanding the company's economic resilience and growth trajectory in a sector that is capital-intensive and highly regulated.
Company reports GAAP diluted earnings per share of
BUTTE, Mont. and SIOUX FALLS, S.D., Feb. 14, 2024 (GLOBE NEWSWIRE) -- NorthWestern Energy Group, Inc. d/b/a NorthWestern Energy (Nasdaq: NWE) reported financial results for the year ended December 31, 2023. Net income for the period was
Non-GAAP Adjusted diluted earnings per share for 2023 was
“We are pleased to deliver earnings that exceeded our recently communicated expectations for 2023 during what was otherwise an incredibly productive year," said Brian Bird, President & Chief Executive Officer. "We remain committed to providing our customers with reliable, affordable and sustainable energy while operating a financially sound utility. Doing so requires adjusting customer rates on occasion to reflect the cost of providing that service. During the year, we worked closely with commission staffs and intervening parties to reach constructive resolutions in our Montana and South Dakota rate reviews. Building upon the thousands of pages of pre-filed testimony, hundreds of data responses, public input and two very well-run and robust public hearings, the respective Commissioners unanimously supported the settlements. We view both outcomes as striking a fair balance between mitigating impacts on our customers' rates and ensuring our financial health as a provider of critical energy infrastructure services. The increase in rates resulting from our Montana rate review was a primary driver of our improvement in net income for 2023. The new rates in South Dakota went into effect January 10th, 2024.”
“In 2023 we also made a strategic realignment to effectuate a holding company with the final phase completed on January 1st, 2024. This proactive move is part of our commitment to effectively manage risks, ensure the long-term sustainability of our operations and more closely align our organizational structure with our industry peers. Additionally, in 2023, we marked '100 Powerful Years!' This significant milestone symbolized a century of resilience, innovation, and steadfast commitment to fulfilling the energy needs of our valued customers. As we look forward to 2024 and the next century, we believe we are well-positioned to provide growth to our shareholders and continue our tradition of unwavering dedication to the customers and the communities we proudly serve," said Bird.
Additional information regarding this release can be found in the earnings presentation found at www.northwesternenergy.com/about-us/investors/financials/earnings
FOURTH QUARTER FINANCIAL RESULTS
Net income for the three months ending December 31, 2023 was
Non-GAAP Adjusted diluted earnings per share for the quarter was
COMPANY UPDATES
Affirming 2024 Earnings Guidance, Capital Plan and Long-Term EPS Growth
We are affirming 2024 diluted earnings guidance of
- Normal weather in our service territories;
- An effective income tax rate of approximately
12% -14% ; and - Diluted average shares outstanding of approximately 61.3 million.
We are also affirming our long-term (5 year) diluted earnings per share growth guidance of
South Dakota Electric Rate Review
On June 15, 2023, we filed a South Dakota electric rate review filing (2022 test year) for an annual increase to electric rates totaling approximately
Dividend Declared
NorthWestern Energy Group's Board of Directors declared a quarterly common dividend of
CONSOLIDATED STATEMENT OF INCOME
| Year Ended December 31, | |||||||
| (in millions) | 2023 | 2022 | |||||
| Reconciliation of gross margin to utility margin: | |||||||
| Operating Revenues | $ | 1,422.1 | $ | 1,477.8 | |||
| Less: Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below) | 420.2 | 492.0 | |||||
| Less: Operating and maintenance | 220.5 | 221.4 | |||||
| Less: Property and other taxes | 154.6 | 192.5 | |||||
| Less: Depreciation and depletion | 210.5 | 195.0 | |||||
| Gross Margin | 416.3 | 376.9 | |||||
| Plus: Operating and maintenance | 220.5 | 221.4 | |||||
| Plus: Property and other taxes | 154.6 | 192.5 | |||||
| Plus: Depreciation and depletion | 210.5 | 195.0 | |||||
| Utility Margin(1) | $ | 1,001.9 | $ | 985.8 | |||
| Year Ended December 31, | |||||||
| (in millions, except per share amounts) | 2023 | 2022 | |||||
| Consolidated Statements of Income | |||||||
| Revenues | $ | 1,422.1 | $ | 1,477.8 | |||
| Fuel, purchased supply and direct transmission expense (2) | 420.2 | 492.0 | |||||
| Utility Margin (1) | 1,001.9 | 985.8 | |||||
| Operating and maintenance | 220.5 | 221.4 | |||||
| Administrative and general | 117.3 | 113.8 | |||||
| Property and other taxes (3) | 153.1 | 192.5 | |||||
| Depreciation and depletion | 210.5 | 195.0 | |||||
| Operating Expenses | 701.4 | 722.7 | |||||
| Operating income | 300.5 | 263.1 | |||||
| Interest expense, net | (114.6 | ) | (100.1 | ) | |||
| Other income, net | 15.8 | 19.4 | |||||
| Income before income taxes | 201.6 | 182.4 | |||||
| Income tax (expense) benefit | (7.5 | ) | 0.6 | ||||
| Net Income | 194.1 | 183.0 | |||||
| Basic Shares Outstanding | 60.3 | 55.8 | |||||
| Earnings per Share - Basic | $ | 3.22 | $ | 3.28 | |||
| Diluted Shares Outstanding | 60.4 | 56.3 | |||||
| Earnings per Share - Diluted | $ | 3.22 | $ | 3.25 | |||
| Dividends Declared per Common Share | $ | 2.56 | $ | 2.52 | |||
| (1) Utility Margin is a Non-GAAP financial measure. See Reconciliation of Gross Margin to Utility Margin and Non-GAAP Financial Measure sections that follow. | |||||||
| (2) Exclusive of depreciation and depletion. | |||||||
| (3) 2023 Property and other taxes of | |||||||
RECONCILIATION OF PRIMARY CHANGES
| Year Ended December 31, 2023 vs. 2022 | |||||||||||||||
| Pre-tax Income | Inc. Tax Benefit (Expense)(3) | Net Income | Diluted Earnings Per Share | ||||||||||||
| (in millions) | |||||||||||||||
| Year ended December 31, 2022 | $ | 182.4 | $ | 0.6 | $ | 183.0 | $ | 3.25 | |||||||
| Variance in revenue and fuel, purchased supply, and direct transmission expense(1) items impacting net income: | |||||||||||||||
| Montana rate review - new base rates | 32.6 | (8.3 | ) | 24.3 | 0.43 | ||||||||||
| Lower non-recoverable Montana electric supply costs | 14.2 | (3.6 | ) | 10.6 | 0.19 | ||||||||||
| Montana property tax tracker collections | 12.8 | (3.2 | ) | 9.6 | 0.17 | ||||||||||
| Higher Montana natural gas transportation | 2.2 | (0.6 | ) | 1.6 | 0.03 | ||||||||||
| Higher electric transmission revenue | 0.6 | (0.2 | ) | 0.4 | 0.01 | ||||||||||
| Lower natural gas retail volumes | (7.0 | ) | 1.8 | (5.2 | ) | (0.10 | ) | ||||||||
| Lower electric retail volumes | (1.8 | ) | 0.5 | (1.3 | ) | (0.02 | ) | ||||||||
| Higher revenue from lower production tax credits, offset within income tax benefit (expense) | 3.8 | (3.8 | ) | — | — | ||||||||||
| Other | (1.7 | ) | 0.4 | (1.3 | ) | (0.02 | ) | ||||||||
| — | |||||||||||||||
| Variance in expense items(2) impacting net income: | — | ||||||||||||||
| Higher depreciation expense | (15.5 | ) | 3.9 | (11.6 | ) | (0.21 | ) | ||||||||
| Higher interest expense | (14.5 | ) | 3.7 | (10.8 | ) | (0.19 | ) | ||||||||
| Higher operating, maintenance, and administrative expenses | (14.4 | ) | 3.6 | (10.8 | ) | (0.19 | ) | ||||||||
| Lower property and other taxes not recoverable within trackers | 3.0 | (0.8 | ) | 2.2 | 0.04 | ||||||||||
| Other | 4.9 | (1.5 | ) | 3.4 | 0.06 | ||||||||||
| Dilution from higher share count | $ | (0.23 | ) | ||||||||||||
| Year ended December 31, 2023 | $ | 201.6 | $ | (7.5 | ) | $ | 194.1 | $ | 3.22 | ||||||
| Change in Net Income | $ | 11.1 | $ | (0.03 | ) | ||||||||||
| (1) Exclusive of depreciation and depletion shown separately below | |||||||||||||||
| (2) Excluding fuel, purchased supply, and direct transmission expense | |||||||||||||||
| (3) Income Tax (Expense) Benefit calculation on reconciling items assumes blended federal plus state effective tax rate of | |||||||||||||||
SIGNIFICANT TRENDS AND REGULATION
Regulatory Update
Montana Rate Review Filing – On October 27, 2023, the Montana Public Service Commission (MPSC) issued a final order approving the settlement agreement related to the increase in electric and natural gas utility rates. Final rates, adjusting from interim to settled rates, were effective November 1, 2023. The details of our settlement agreement are set forth below:
| Returns, Capital Structure & Revenue Increase Resulting From Approved Settlement Agreement ($ in millions) | ||||||
| Electric | Natural Gas | |||||
| Return on Equity (ROE) | ||||||
| Equity Capital Structure | ||||||
| Base Rates | ||||||
| PCCAM(1) | n/a | |||||
| Property Tax (tracker base adjustment)(1) | ||||||
| Total Revenue Increase Through Approved Settlement Agreement | ||||||
| (1) These items are flow-through costs. Power Costs and Credits Adjustment Mechanism (PCCAM) reflects our fuel and purchased power costs. | ||||||
The approved settlement includes, among other things, agreement on electric and natural gas base revenue increases, allocated cost of service, rate design, updates to the base amount of revenues associated with property taxes and electric supply costs, and regulatory policy issues related to requested changes in regulatory mechanisms.
The approved settlement agreement provides for an update to the PCCAM by adjusting the base costs from
Holding Company Reorganization – On October 2, 2023, NorthWestern Corporation (NW Corp) and NorthWestern Energy Group completed a merger transaction pursuant to which NorthWestern Energy Group became the holding company parent of NW Corp. In this reorganization, shareholders of NW Corp (the predecessor publicly held parent company) became shareholders of NorthWestern Energy Group, maintaining the same number of shares and ownership percentage as held in NW Corp immediately prior to the reorganization. NW Corp became a wholly-owned subsidiary of NorthWestern Energy Group. On January 1, 2024, we completed the second and final phase of the holding company reorganization. NW Corp contributed the assets and liabilities of its South Dakota and Nebraska regulated utilities to NorthWestern Energy Public Service Corporation (NWE Public Service), and then distributed its equity interest in NWE Public Service and certain other subsidiaries to NorthWestern Energy Group, resulting in NW Corp owning and operating the Montana regulated utility and NWE Public Service owning and operating the Nebraska and South Dakota utilities, each as a direct subsidiary of NorthWestern Energy Group.
Electric Resource Planning - Montana
Yellowstone County Generating Station (YCGS) 175 MW plant - Construction of the new generation facility continues to progress and we expect the plant to be operational no later than the end of the third quarter 2024. The lawsuit challenging the YCGS air quality permit, which required us to suspend construction activities for a period of time, as well as additional related legal and construction challenges, delayed the project timing and have increased costs. As of December 31, 2023, total costs of approximately
EARNINGS DRIVERS
Gross Margin
Consolidated gross margin in 2023 was
| Year Ended December 31, | |||||||
| (in millions) | 2023 | 2022 | |||||
| Reconciliation of gross margin to utility margin: | |||||||
| Operating Revenues | $ | 1,422.1 | $ | 1,477.8 | |||
| Less: Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below) | 420.2 | 492.0 | |||||
| Less: Operating and maintenance | 220.5 | 221.4 | |||||
| Less: Property and other taxes | 154.6 | 192.5 | |||||
| Less: Depreciation and depletion | 210.5 | 195.0 | |||||
| Gross Margin | 416.3 | 376.9 | |||||
| Operating and maintenance | 220.5 | 221.4 | |||||
| Property and other taxes | 154.6 | 192.5 | |||||
| Depreciation and depletion | 210.5 | 195.0 | |||||
| Utility Margin(1) | $ | 1,001.9 | $ | 985.8 | |||
| (1) Utility Margin is a Non-GAAP financial measure. | |||||||
Utility Margin(1)
| Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||
| (in millions) | ||||||||||||||
| Utility Margin | ||||||||||||||
| Electric | $ | 806.1 | $ | 782.1 | $ | 24.0 | 3.1 | % | ||||||
| Natural Gas | 195.8 | 203.7 | (7.9 | ) | (3.9 | ) | ||||||||
| Total Utility Margin | $ | 1,001.9 | $ | 985.8 | $ | 16.1 | 1.6 | % | ||||||
Consolidated utility margin in 2023 was
Primary components of the change in utility margin include the following:
| (in millions) | Utility Margin 2023 vs. 2022 | ||
| Utility Margin Items Impacting Net Income | |||
| Montana rate review - new base rates | $ | 32.6 | |
| Lower non-recoverable Montana electric supply costs | 14.2 | ||
| Montana property tax tracker collections | 12.8 | ||
| Higher Montana natural gas transportation | 2.2 | ||
| Higher electric transmission revenue due to market conditions | 0.6 | ||
| Lower natural gas retail volumes | (7.0 | ) | |
| Lower electric retail volumes | (1.8 | ) | |
| Other | (1.7 | ) | |
| Change in Utility Margin Impacting Net Income | 51.9 | ||
| Utility Margin Items Offset Within Net Income | |||
| Lower property taxes recovered in revenue, offset in property tax expense | (35.8 | ) | |
| Lower operating expenses recovered in revenue, offset in operating and maintenance expense | (3.1 | ) | |
| Lower gas production taxes recovered in revenue, offset in property and other taxes | (0.7 | ) | |
| Higher revenue from lower production tax credits, offset in income tax expense | 3.8 | ||
| Change in Items Offset Within Net Income | (35.8 | ) | |
| Increase in Consolidated Utility Margin(1) | $ | 16.1 | |
| (1) Utility Margin is a Non-GAAP financial measure. | |||
Lower non-recoverable Montana electric supply costs were driven by higher electric supply revenues, lower electric supply costs, and a
Lower electric retail volumes were driven by unfavorable weather in Montana impacting residential demand and lower commercial demand as compared to the prior year, partly offset by customer growth. Lower natural gas retail volumes were driven by unfavorable weather in Montana, partly offset by favorable weather in Nebraska and customer growth.
Total Operating Expenses
| (in millions) | Year Ended December 31, | |||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||
| Operating Expenses (excluding fuel, purchased supply and direct transmission expense) | ||||||||||||||
| Operating and maintenance | $ | 220.5 | $ | 221.4 | $ | (0.9 | ) | (0.4 | )% | |||||
| Administrative and general | 117.3 | 113.8 | 3.5 | 3.1 | ||||||||||
| Property and other taxes | 153.1 | 192.5 | (39.4 | ) | (20.5 | ) | ||||||||
| Depreciation and depletion | 210.5 | 195.0 | 15.5 | 7.9 | ||||||||||
| Total Operating Expenses (excluding fuel, purchased supply and direct transmission expense) | $ | 701.4 | $ | 722.7 | $ | (21.3 | ) | (2.9 | )% | |||||
Consolidated operating expenses, excluding fuel, purchased supply and direct transmission expense, were
| (in millions) | Operating Expenses | ||
| 2023 vs. 2022 | |||
| Operating Expenses (excluding fuel, purchased supply and direct transmission expense) Impacting Net Income | |||
| Higher depreciation expense due to plant additions | $ | 15.5 | |
| Higher labor and benefits expense, partly offset by higher capitalization of labor and benefits costs(1) | 6.1 | ||
| Higher insurance expense | 2.1 | ||
| Increase in uncollectible accounts | 1.1 | ||
| Higher expenses at our electric generation facilities | 1.0 | ||
| Higher cost of materials | 0.8 | ||
| Lower property and other taxes not recoverable within trackers | (3.0 | ) | |
| Other | 3.3 | ||
| Change in Items Impacting Net Income | 26.9 | ||
| Operating Expenses Offset Within Net Income | |||
| Lower property and other taxes recovered in trackers, offset in revenue | (35.8 | ) | |
| Lower pension and other postretirement benefits, offset in other income(1) | (8.7 | ) | |
| Lower operating expenses recovered in trackers, offset in revenue | (3.1 | ) | |
| Lower natural gas production taxes recovered in trackers, offset in revenue | (0.7 | ) | |
| Higher deferred compensation, offset in other income | 0.1 | ||
| Change in Items Offset Within Net Income | (48.2 | ) | |
| Decrease in Operating Expenses (excluding fuel, purchased supply and direct transmission expense) | $ | (21.3 | ) |
| (1) In order to present the total change in labor and benefits, we have included the change in the non-service cost component of our pension and other postretirement benefits, which is recorded within other income on our Condensed Consolidated Statements of Income. This change is offset within this table as it does not affect our operating expenses. | |||
Operating Income
Consolidated operating income in 2023 was
Interest Expense
Consolidated interest expense in 2023 was
Other Income
Consolidated other income in 2023 was
Income Tax
Consolidated income tax expense in 2023 was
The following table summarizes the differences between our effective tax rate and the federal statutory rate:
| (in millions) | Year Ended December 31, | ||||||||||||
| 2023 | 2022 | ||||||||||||
| Income Before Income Taxes | $ | 201.6 | $ | 182.4 | |||||||||
| Income tax calculated at federal statutory rate | 42.4 | 21.0 | % | 38.3 | 21.0 | % | |||||||
| Permanent or flow through adjustments: | |||||||||||||
| State income taxes, net of federal provisions | 0.6 | 0.3 | 0.6 | 0.3 | |||||||||
| Flow-through repairs deductions | (25.9 | ) | (12.9 | ) | (22.7 | ) | (12.4 | ) | |||||
| Production tax credits | (10.3 | ) | (5.1 | ) | (13.2 | ) | (7.2 | ) | |||||
| Unregulated Tax Cuts and Jobs Act excess deferred income taxes | (3.4 | ) | (1.7 | ) | — | — | |||||||
| Release of unrecognized tax benefits | (3.2 | ) | (1.6 | ) | — | — | |||||||
| Amortization of excess deferred income taxes | (2.2 | ) | (1.1 | ) | (1.7 | ) | (0.9 | ) | |||||
| Plant and depreciation of flow through items | 6.6 | 3.3 | (0.2 | ) | (0.1 | ) | |||||||
| Reduction to previously claimed alternative minimum tax credit | 3.2 | 1.6 | — | — | |||||||||
| Prior year permanent return to accrual adjustments | 0.0 | 0.0 | (1.4 | ) | (0.8 | ) | |||||||
| Other, net | (0.3 | ) | (0.1 | ) | (0.3 | ) | (0.2 | ) | |||||
| (34.9 | ) | (17.3 | ) | (38.9 | ) | (21.3 | ) | ||||||
| Income Tax Expense (Benefit) | $ | 7.5 | 3.7 | % | $ | (0.6 | ) | (0.3 | )% | ||||
Our effective tax rate typically differs from the federal statutory tax rate primarily due to the regulatory impact of flowing through federal and state tax benefits of repairs deductions, state tax benefit of accelerated tax depreciation deductions (including bonus depreciation when applicable) and production tax credits.
Net Income
Consolidated net income in 2023 was
Liquidity and Capital Resources
As of December 31, 2023, our total consolidated net liquidity was approximately
Reconciliation of Non-GAAP Items
We reported GAAP earnings of
| (in millions, except per share amounts) | |||||||||||||||||||||||||||||
| Actual | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2023 | Q4 2023 | Full Year 2023 | |||||||||||||||||||||||||||
| Pre-tax Income | Net(1) Income | Diluted EPS(2) | Pre-tax Income | Net(1) Income | Diluted EPS(2) | Pre-tax Income | Net(1) Income | Diluted EPS(2) | |||||||||||||||||||||
| 2023 Reported GAAP | $ | 125.1 | $ | 111.0 | $ | 1.85 | $ | 76.6 | $ | 83.1 | $ | 1.37 | $ | 201.6 | $ | 194.1 | $ | 3.22 | |||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
| (Remove) / add impact of (favorable) / unfavorable weather | (0.9 | ) | (0.7 | ) | (0.01 | ) | 5.2 | 3.9 | 0.06 | 4.3 | 3.2 | 0.05 | |||||||||||||||||
| Add back reduction related to Previously Claimed AMT Credit | — | 3.2 | 0.05 | — | — | — | — | 3.2 | 0.05 | ||||||||||||||||||||
| Remove Release of Natural Gas Safe Harbor UTP Benefit | — | — | — | — | (3.2 | ) | (0.05 | ) | — | (3.2 | ) | (0.05 | ) | ||||||||||||||||
| 2023 Non-GAAP | $ | 124.2 | $ | 113.5 | $ | 1.89 | $ | 81.8 | $ | 83.8 | $ | 1.38 | $ | 205.9 | $ | 197.3 | $ | 3.27 | |||||||||||
| Nine Months Ended September 30, 2022 | Q4 2022 | Full Year 2022 | |||||||||||||||||||||||||||
| Pre-tax Income | Net(1) Income | Diluted EPS(2) | Pre-tax Income | Net(1) Income | Diluted EPS(2) | Pre-tax Income | Net(1) Income | Diluted EPS(2) | |||||||||||||||||||||
| 2022 Reported GAAP | $ | 118.6 | $ | 116.3 | $ | 2.09 | $ | 63.8 | $ | 66.7 | $ | 1.16 | $ | 182.4 | $ | 183.0 | $ | 3.25 | |||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
| Remove impact of favorable weather | (6.6 | ) | (4.9 | ) | (0.08 | ) | (2.3 | ) | (1.7 | ) | (0.03 | ) | (8.9 | ) | (6.6 | ) | (0.11 | ) | |||||||||||
| Remove impact of CREP penalty (non-tax deductible) | 2.5 | 2.5 | 0.04 | — | — | — | 2.5 | 2.5 | 0.04 | ||||||||||||||||||||
| 2022 Non-GAAP | $ | 114.5 | $ | 113.9 | $ | 2.05 | $ | 61.5 | $ | 65.0 | $ | 1.13 | $ | 176.0 | $ | 178.9 | $ | 3.18 | |||||||||||
| (1) Income tax benefit or expense calculation on reconciling items assumes blended federal plus state effective tax rate of | |||||||||||||||||||||||||||||
| (2) Due to changes in the quarterly diluted share count, full year EPS may be +/- | |||||||||||||||||||||||||||||
Company Hosting Investor Webinar
NorthWestern will host an investor webinar on Thursday, February 15, 2024, at 3:00 p.m. Eastern time to review its financial results for the year ending December 31, 2023.
To register for the webinar, please visit www.northwesternenergy.com/earnings-registration. Please go to the site at least 15 minutes in advance of the webinar to register. An archived webcast will be available shortly after the event and remain active for one year.
NorthWestern Energy - Delivering a Bright Future
NorthWestern Energy Group, Inc., doing business as NorthWestern Energy, provides essential energy infrastructure and valuable services that enrich lives and empower communities while serving as long-term partners to our customers and communities. We work to deliver safe, reliable, and innovative energy solutions that create value for customers, communities, employees, and investors. We do this by providing low-cost and reliable service performed by highly-adaptable and skilled employees. We provide electricity and / or natural gas to approximately 775,300 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. Our operations in Montana and Yellowstone National Park are conducted through our subsidiary, NW Corp, and our operations in South Dakota and Nebraska are conducted through our subsidiary, NWE Public Service. We have provided service in South Dakota and Nebraska since 1923 and in Montana since 2002.
Non-GAAP Financial Measures
This press release includes financial information prepared in accordance with GAAP, as well as other financial measures, such as Utility Margin, Adjusted Non-GAAP pretax 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 excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.
We define Utility Margin as Operating Revenues less fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion) as presented in our Consolidated Statements of Income. This measure differs from the GAAP definition of Gross Margin due to the exclusion of Operating and maintenance, Property and other taxes, and Depreciation and depletion expenses, which are presented separately in our Consolidated Statements of Income. A reconciliation of Utility Margin to Gross Margin, the most directly comparable GAAP measure, is included in the press release above.
Management believes that Utility Margin 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, Utility 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, 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 Utility 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, Adjusted Non-GAAP net income and Adjusted Non-GAAP 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 "Reconciliation of Non-GAAP Items." Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. We caution that while we make such statements in good faith and believe such statements are based on reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that we will achieve our projections. Factors that may cause such differences include, but are 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, and wildfire damages in excess of liability insurance coverage, could have a material effect on our liquidity, results of operations and financial condition;
- the impact of extraordinary external events and natural disasters, such as a wide-spread or global pandemic, geopolitical events, earthquake, flood, drought, lightning, weather, wind, and fire, could have a material effect on our liquidity, results of operations and financial condition;
- acts of terrorism, cybersecurity attacks, data security breaches, or other malicious acts that cause damage to our generation, transmission, or distribution facilities, information technology systems, or result in the release of confidential customer, employee, or Company information;
- supply chain constraints, recent high levels of inflation for product, services and labor costs, and their impact on capital expenditures, operating activities, and/or our ability to safely and reliably serve our customers;
- 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 operating costs 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 2023 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.
| Investor Relations Contact: | Media Contact: |
| Travis Meyer (605) 978-2967 | Jo Dee Black (866) 622-8081 |
| travis.meyer@northwestern.com | jodee.black@northwestern.com |
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