NorthWestern Corp. Q1 2010 Earnings Call Transcript

NorthWestern Corp. Q1 2010 Earnings Call Transcript
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NorthWestern Corp. (NWE)

Q1 2010 Earnings Call

April 23, 2010 11:00 am ET

Executives

Dan Rausch - Investor Relations

Robert C. Rowe - President and Chief Executive Officer

Brian B. Bird - Vice President and Chief Financial Officer

David Gates – Vice President, Wholesale Operations

Kendall G. Kliewer - Vice President and Controller

Analysts

Ryan Rosenthal – Sidoti & Company

Chris Ellinghaus – Shields & Company

Brian Russo - Ladenburg Thalmann & Co.

James Bellessa – D.A. Davidson & Co.

Laurie [Dunstone] – Pacific Life

Jonathon Reeder – Wells Fargo

Timothy Yee - KeyBanc Capital Markets

John [Holly – Company Unknown]

Leon [Deball] – Capital Management

P

resentation

Operator

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Previous Statements by NWE
» NorthWestern Q1 2009 Earnings Call Transcript
» NorthWestern Corporation Q4 2008 Earnings Call Transcript
» NorthWestern Corporation Q3 2008 Earnings Call Transcript

Welcome to the NorthWestern Corporation's first quarter 2010 financial results conference call. (Operator Instructions) I would now like to turn the conference over to our host, Mr. Dan Rausch. Please go ahead sir.

Dan Rausch

Good morning and welcome to NorthWestern Corporation's March 31, 2010 quarter-end financial results conference call and webcast. NorthWestern's results have been released and that release is available on our website at

www.northwesternenergy.com

. We also filed our 10-Q after the market closed yesterday. Joining us today on the call are Bob Rowe, President and CEO; Brian Bird, Chief Financial Officer; David Gates, Vice President of Wholesale Operations and Kendall Kliewer, Controller.

This presentation contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of this date. Our actual results may differ materially and adversely from those expressed in our forward-looking statements as a result of various factors and uncertainties, including those listed in our annual report on Form 10-K, recent and forthcoming 10-Q, recent Form 8-Ks, and other filings with the SEC. We undertake no obligation to revise or publicly update our forward-looking statements for any reasons.

Following this presentation, those joining us by teleconference will be able to ask questions. A replay of today's call will be available beginning at Noon Eastern Time today through May 23, 2010. To access the relay, dial 1800-475-6701 and then access code 152578.

With that I'll turn it over to President and CEO, Bob Rowe.

Robert Rowe

Thank you as always Dan. As we end another quarter we are pleased with where we are and I think that puts us in a good position looking forward to the balance of the year.

Our net income improved to $28.7 million for the first quarter of 2010 as compared with $22.8 million in the first quarter of 2009. The improvement in net income was approximately $5.9 million or $0.16 per share. We announced our second quarter dividend of $0.34 per share payable on June 30 of this year for shareholders of record on June 15

th

. During 2009 our quarterly dividends were $0.335 per share each quarter.

Also, just two weeks ago we were added to the Standard and Poor’s small cap group of 600 stocks. The inclusion is a good signal of the market’s appreciation for our going forward prospects. Last week, Fitch upgraded both our secured and unsecured senior debt. As a result our senior secured is now rated low A by Moody’s, S&P as well as by Fitch. Our unsecured senior is rated at least BBB by the three ratings agencies I just mentioned.

Finally, and I will come back to this, Forbes.com has included us on their list of the 100 Most Trustworthy Companies which is a huge testament to the integrity of our employees and our board.

Brian is now going to discuss our 2010 financial results in more detail. I would suggest the theme is that the good actions we took in 2009 have put us in a strong position for 2010 even as the economy is only beginning to turn around. With that I will turn it over to Brian.

Brian Bird

Thanks Bob. We reported diluted earnings per share of $0.79 per share during the first quarter of 2010 compared to $0.63 per share in the first quarter of 2009. Our earnings increased $0.16 per diluted share on a year-over-year basis. Let me give you a quick overview of the largest drivers.

The carryover benefit of the repairs tax deduction increased net income by about $0.09 per share compared with the first quarter of 2009. Reduced labor and benefits including post-retirement benefits and pension costs contributed about $0.06 per diluted share compared with the first quarter of 2009. A decrease in insurance expenses primarily due to lower claims added about $0.05 per diluted share compared to the first quarter of 2009.

Offsetting those increases to the first quarter 2010 earnings was a decrease of about $0.05 per fully diluted share in our gross margins due primarily to a decrease in natural gas volumes due to mild weather in Montana and decreased electric volumes from lower industrial demand related to the weaker economic conditions. As you can tell from our press release and our 10-Q filing there were other increases and decreases to earnings year-over-year but these were the largest drivers.

Now let me talk about our 2010 earnings outlook. We are reaffirming our diluted earnings per share for 2010 in a range of $1.95 to $2.10 per fully diluted share. From that let’s move to the balance sheet. We have total liquidity of approximately $215 million with cash of $7 million and $208 million availability from our revolver. Total debt at March 31, 2010 was $954 million compared with $987 million at December 31, 2009. The company maintains a long-term debt to total capitalization ratio of approximately 54% at March 31, 2010 which is back within our stated rate range of 50-55%.

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