NorthWestern Reports Third Quarter 2011 Financial Results

Reports EPS of $.41/ diluted share compared with $.40/diluted share in 3Q 2010

Modifies 2011 EPS guidance to range from $2.30 - $2.40/diluted share

Declares a $.36/share dividend for 4Q 2011

Oct 26, 2011, 06:00 ET from NorthWestern Corporation

SIOUX FALLS, S.D., Oct. 26, 2011 /PRNewswire/ -- NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) reported financial results for the quarter ended Sept. 30, 2011.

"Our third quarter 2011 earnings were in line with our expectations.  Although our operating, general and administrative expenses increased from the prior year, those expenses declined, as expected, from the second quarter of 2011.  In addition, we experienced lower income tax expense due to higher repairs and state tax bonus depreciation deductions," said Bob Rowe, President and CEO.  "Also, we have advanced several of our projects.  Recently, we broke ground on our Aberdeen, SD peaking plant and, over the past quarter, continued progress on our Distribution System Improvement Program in Montana,"

Financial Results

Consolidated net income was $14.9 million or $.41 per diluted share for the quarter ended Sept. 30, 2011, compared with consolidated net income of $14.4 million or $.40 per diluted share for the quarter ended Sept. 30, 2010.  

Consolidated net income for the nine months ended Sept. 30, 2011, was $58.4 million or $1.60 per diluted share, an increase of $3.6 million from $54.8 million or $1.51 per diluted share for the same period in 2010.  

The following tables reconcile the primary changes from 2010 to 2011:

Three Months Ended

Nine Months Ended

Pre-tax

Net

EPS

Pre-tax

Net

EPS

($millions, except EPS)

Income

Income(1)

Diluted

Income

Income(1)

Diluted

2010 reported

$19.1

$14.4

$0.40

$72.8

$54.8

$1.51

DGGS interim rates

6.8

4.2

0.12

20.8

12.8

0.35

Electric retail volumes

2.9

1.8

0.05

6.6

4.1

0.11

Expiration of a power sales agreement

1.5

0.9

0.02

4.5

2.8

0.08

Natural gas retail volumes

(0.3)

(0.2)

(0.01)

4.1

2.5

0.07

Montana electric rate increase

-

-

-

3.4

2.1

0.06

Gas production

0.2

0.1

-

1.7

1.0

0.03

Property and other taxes

(2.1)

(1.3)

(0.04)

-

-

-

South Dakota wholesale electric

-

-

-

(0.8)

(0.5)

(0.01)

Montana natural gas rate decrease

(0.2)

(0.1)

-

(0.7)

(0.4)

(0.01)

Settlement received during 2010

-

-

-

(1.0)

(0.6)

(0.02)

Pension

-

-

-

(1.0)

(0.6)

(0.02)

Interest expense

(0.4)

(0.2)

(0.01)

(1.3)

(0.8)

(0.02)

Transmission capacity

(1.0)

(0.6)

(0.02)

(2.6)

(1.6)

(0.04)

Plant operator costs

(0.9)

(0.6)

(0.02)

(2.4)

(1.5)

(0.04)

Other income

(2.0)

(1.2)

(0.03)

(2.7)

(1.6)

(0.04)

Montana property tax tracker

0.2

0.1

-

(3.3)

(2.0)

(0.05)

DGGS operating costs

(1.2)

(0.7)

(0.02)

(3.3)

(2.0)

(0.05)

Labor

0.6

0.4

0.01

(4.9)

(3.0)

(0.08)

Operating and maintenance

(0.4)

(0.2)

(0.01)

(5.7)

(3.5)

(0.10)

Depreciation

(2.4)

(1.4)

(0.04)

(6.9)

(4.2)

(0.12)

Self insurance reserves

(5.2)

(3.2)

(0.09)

(9.3)

(5.7)

(0.16)

Items related to income tax

Flow-through repairs deduction

0.9

0.02

1.8

0.05

Flow-through of state bonus

     depreciation deduction

1.2

0.03

4.5

0.12

Recognition of state NOL benefit /

      valuation allowance release

-

-

0.2

0.01

All other, net

0.2

0.6

$0.05

(0.3)

(0.2)

(0.03)

Subtotal

0.01

0.09

2011 reported

$15.5

$14.9

$0.41

$67.7

$58.4

$1.60

1.) Income Tax Benefit (Expense) calculation on reconciling items assumes normal effective tax rate of 38.5%.

For more information see www.northwesternenergy.com/documents/investor/Q311.pdf

Consolidated gross margin for the third quarter of 2011 was $146.0 million compared with $134.9 million for the third quarter of 2010.  The improvement in consolidated gross margin was substantially due to Dave Gates Generating Station ("DGGS") interim rates, an increase in electric retail volumes due primarily to warmer summer weather and to a lesser extent customer growth, the expiration in December 2010 of a power sales agreement related to Colstrip Unit 4,  an increase in Montana property taxes included in a tracker as compared to the same period in 2010, and gas production margin from the Battle Creek Field.  These increases were partly offset by lower transmission capacity revenues due to decreased demand and favorable hydro conditions, a decrease in natural gas retail volumes, and a decrease in Montana natural gas transmission and distribution rates implemented in January 2011.

Consolidated gross margin for the nine months ended Sept. 30, 2011, increased $35.1 million to $463.5 million compared with $428.4 million in the same period of 2010.  

Consolidated operating, general and administrative expenses increased to $66.3 million for the quarter ended Sept. 30, 2011, as compared with $58.5 million for the quarter ended Sept. 30, 2010.  The increase was due primarily to an increase in insurance reserves, which includes an increase of $2.3 million due to a dispute with a former employee and the inclusion in our third quarter 2010 results of a $2.0 million insurance recovery. We also experienced higher operating expenses primarily related to, higher plant operator costs at Colstrip Unit 4 and Big Stone for scheduled maintenance.

Consolidated operating, general and administrative expenses increased $29.4 million to $203.3 million for the nine months ended Sept. 30, 2011, as compared with $173.9 million in same period of 2010.  The increase is due primarily to the $2.3 million dispute mentioned above and the inclusion in our 2010 year-to-date results of insurance recoveries totaling $5.4 million; higher plant operator and partner costs; and higher operating and maintenance costs, including labor.

Property and other taxes were $22.6 million for the three months ended Sept. 30, 2011, as compared with $20.5 million in the third quarter of 2010.  The increase was primarily due to plant additions, including the addition of DGGS.  For the nine months ended Sept. 30, 2011, property and other taxes were $68.6 million compared with $68.5 million in the same period of 2010.

Depreciation expense was $25.2 million for the three months ended Sept. 30, 2011, as compared with $22.8 million in the third quarter of 2010.  For the nine months ended Sept. 30, 2011, depreciation expense was $75.6 million compared with $68.7 million in the same period of 2010.  The increases were primarily due to plant additions, including the addition of DGGS.

Interest expense for the three months ended Sept. 30, 2011, was $16.7 million, as compared with $16.3 million the third quarter of 2010.  Consolidated interest expense was $50.7 million for the nine months ended Sept. 30, 2011, an increase of $1.3 million for the same period in 2010.  The increases were primarily due to lower capitalization of AFUDC as DGGS began operating in January 2011, offset in part by lower rates on debt outstanding.

Consolidated other income for the three months ended September 30, 2011 was $0.3 million, as compared with $2.3 million in the third quarter of 2010.  Consolidated other income for the nine months ended September 30, 2011 was $2.3 million, as compared with $4.9 million in the same period of 2010.  The decreases were primarily due to lower capitalization of AFUDC as DGGS began operating in January 2011.

We had a consolidated income tax expense for the three months ended September 30, 2011 of $0.6 million as compared with $4.7 million in the same period of 2010.  We currently expect our effective tax rate for 2011 to range between 13% - 16%.

Our effective tax rate differs from the federal tax rate of 35% primarily due to the regulatory flow-through treatment of repairs and state tax depreciation deductions.

Consolidated income tax expense for the nine months ended September 30, 2011 was $9.3 million as compared with $18.0 million in the same period of 2010.  The effective tax rate in 2011 was 13.7% as compared with 24.8% for the same period of 2010.

The following table summarizes the significant differences from the Federal statutory rate, which result in reduced income tax expense:

Three Months Ended September 30,

Nine Months Ended September 30,

2011

2010

2011

2010

(in thousands)

Income Before Income Taxes

$

15,530

$

19,108

$

67,737

$

72,818

Income tax calculated at 35% Federal statutory rate

(5,435)

(6,687)

(23,707)

(25,485)

Permanent or flow through adjustments:

Flow-through repair deduction

3,243

2,341

8,745

6,902

Flow-through of state bonus depreciation deduction

1,170

4,452

Recognition of state NOL benefit/Valuation allowance release

2,402

2,178

State income tax & other, net

387

(383)

(1,189)

(1,625)

$

4,800

$

1,958

$

14,410

$

7,455

Income tax expense

$

(635)

$

(4,729)

$

(9,297)

$

(18,030)

Results from Operations

Electric gross margin for the quarter ended Sept. 30, 2011, was $121.4 million, compared with $110.9 million for the same period of 2010.  The improvement in margin is primarily due to DGGS interim rates, an increase in retail volumes due primarily to warmer summer weather and to a lesser extent customer growth, the expiration in December 2010 of a power sales agreement related to Colstrip Unit 4, and higher revenues for operating expenses recovered in supply trackers primarily related to customer efficiency programs. These increases were offset in part by a decline in transmission capacity demand and favorable hydro conditions.

Retail electric volumes for the quarter ended Sept. 30, 2011, totaled 2,602,000 megawatt hours compared with 2,522,000 megawatt hours for the quarter ended Sept. 30, 2010.  Wholesale electric volumes were 15,000 megawatt hours for the quarter ended Sept. 30, 2011, compared with 258,000 for the same period in 2010.  Retail volumes increased from warmer weather and customer growth.  Wholesale volumes decreased in South Dakota from lower plant utilization due to market conditions and scheduled maintenance.  We no longer have Montana wholesale volumes due to the expiration of a remaining wholesale supply contract associated with Colstrip. Beginning January 1, 2011 these volumes are used to supply our retail demand.

Electric gross margin for the nine months ended Sept. 30, 2011, was $355.4 million compared with $326.2 million for the same period of 2010.  

Retail electric volumes for the nine months ended Sept. 30, 2011 totaled 7,606,000 megawatt hours compared with 7,390,000 megawatt hours for the nine months ended Sept. 30, 2010.  Wholesale electric volumes were 88,000 megawatt hours for the nine months ended Sept. 30, 2011, as compared with 779,000 megawatt hours for the same period in 2010.  

Natural gas gross margin was $24.2 million for the quarter ended Sept. 30, 2011, compared with $23.7 million during the third quarter of 2010.  This increase in margin was primarily due to an increase in Montana property taxes included in a tracker as compared to the same period in 2010, higher revenues for operating expenses recovered in supply trackers primarily related to customer efficiency programs, and gas production margin from the Battle Creek Field. These increases were offset in part by a decrease in retail volumes and a Montana natural gas rate decrease.

Retail natural gas volumes were 2,100,000 dekatherms for the quarter ended Sept. 30, 2011 compared with 2,318,000 dekatherms for the same period in 2010.

Natural gas gross margin was $107.0 million for the nine months ended Sept. 30, 2011 compared with $101.3 million during the same period of 2010.  The increase in margin was primarily due to increased retail volumes from colder winter and spring weather, gas production margin from the Battle Creek Field, and higher revenues for operating expenses recovered in supply trackers primarily related to customer efficiency programs.  These increases were offset in part by a decrease in Montana natural gas rates and a decrease in Montana property taxes included in a tracker as compared to the same period in 2010.  

Retail natural gas volumes were 22,379,000 dekatherms for the nine months ended Sept. 30, 2011, compared with 21,405,000 dekatherms for the same period in 2010.  Retail residential and commercial volumes increased in Montana due to colder weather and customer growth, while industrial volumes declined in Montana due to a lower number of customers and lower usage per customer.  Retail residential volumes increased in South Dakota due to colder weather, while commercial volumes declined in South Dakota due primarily to lower usage for grain drying requirements during the first quarter of 2011 as compared with the same period of 2010.

Liquidity and Capital Resources

As of Sept. 30, 2011, our total net liquidity was approximately $192.8 million, including $6.0 million of cash and $186.8 million of revolving credit facility availability.  Revolver availability was $205.9 million as of Oct. 21, 2011.  

Cash provided by operating activities totaled $210.5 million for the nine months ended September 30, 2011 as compared with $188.3 million during the nine months ended September 30, 2010. This increase in operating cash flows is primarily due to improvements in the timing of collection of costs included in our supply and property tax trackers, as well as higher net income adjusted for higher non-cash depreciation.

Cash used in investing activities decreased by approximately $53.8 million as compared with the first nine months of 2010 due primarily to prior year additions related to the DGGS project.

Cash used in financing activities totaled approximately $86.4 million during the nine months ended September 30, 2011 as compared with approximately $8.0 million during the nine months ended September 30, 2010.  During the nine months ended September 30, 2011, net cash used in financing activities consisted of the net revolving credit facility repayments of $153.0 million, net issuance of commercial paper of $113.0 million, the repayment of long-term debt of $6.6 million and the payment of dividends of $38.9 million.  During the nine months ended September 30, 2010, we received proceeds from the issuance of debt of $225.0 million, made debt repayments of $188.1 million, paid deferred financing costs of $8.1 million and paid dividends on common stock of $36.8 million.

2011 Earnings Outlook

NorthWestern is modifying its earnings outlook for 2011 to be $2.30 - $2.40 per fully diluted share.  

"Our year-to-date earnings through September 30, 2011 are in line with our original expectations," said Brian Bird, Vice President–CFO and Treasurer.  "While our transmission revenues and wholesale volumes have lagged our original expectations, our income tax expense benefits have exceeded our projections.  As a result, we feel comfortable tightening our earnings range for the remainder of 2011."

The major assumptions include, but are not limited to, the following expectations:

  • Gross margin will be positively impacted by approximately $6.0 million for the remainder of 2011, as compared with the fourth quarter of 2010, due to the inclusion of DGGS in rates;
  • A fourth quarter 2011 increase in retail volumes due to modest customer growth, as compared with the fourth quarter of 2010;
  • We expect our effective tax rate for 2011 to range between 13% - 16%;
  • Normal weather in the Company's electric and natural gas service territories for the remainder of 2011; and
  • Fully diluted average shares of 36.5 million.

South Dakota Natural Gas Rate Case Update

In June 2011, the Company filed a request with the South Dakota Public Utilities Commission ("SDPUC") for a natural gas distribution revenue increase of $4.1 million.  This request was based on a return on equity of 10.9%, an equity ratio of 56.0% and rate base of $67.5 million. Approximately $1.4 million of the requested increase relates to the annual estimated manufactured gas plant remediation costs.  In the event remediation costs are lower than estimated during the time period, the difference would be subject to a refund to customers. Accordingly, while gross margin and operating expenses will fluctuate based on actual results, this portion of the rate request would have no impact on operating income.  We expect to complete this rate case and implement new rates by December 31, 2011.

Dividend

NorthWestern's Board of Directors declared a quarterly common stock dividend of 36 cents per share, payable on Dec. 31, 2011, to common shareholders of record as of Dec. 15, 2011.

Company Hosting Investor Conference Call

NorthWestern will host an investor conference call today at 3:00 p.m. Eastern Time to review its financial results for the quarter ended Sept. 30, 2011.

The conference call will be webcast live on the Internet at http://www.northwesternenergy.com under the "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 5:00 pm Eastern Time today through Nov. 26, 2011, at 800-475-6701, access code 219704.

About NorthWestern Energy

NorthWestern Energy is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 665,000 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 "2011 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 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 adverse effect on our liquidity, results of operations and financial condition;
  • we have capitalized approximately $19.5 million in preliminary survey and investigative costs related to our proposed MSTI transmission project. If our efforts to complete MSTI are not successful we may have to write-off all or a portion of these costs which could have a material adverse effect on our results of operations;
  • changes in availability of trade credit, 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 would adversely affect our liquidity;
  • 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 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.

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2011

2010

2011

2010

Revenues

Electric

$

206,613

$

203,585

$

602,024

$

592,262

Gas

37,067

36,963

230,971

225,882

Other

361

270

1,112

906

Total Revenues

244,041

240,818

834,107

819,050

Operating Expenses

Cost of sales

98,045

105,922

370,523

390,685

Operating, general and administrative

66,332

58,437

203,254

173,871

Property and other taxes

22,605

20,535

68,551

68,487

Depreciation

25,181

22,825

75,562

68,697

Total Operating Expenses

212,163

207,719

717,890

701,740

Operating Income

31,878

33,099

116,217

117,310

Interest Expense, net

(16,694)

(16,306)

(50,737)

(49,413)

Other Income

346

2,315

2,257

4,921

Income Before Income Taxes

15,530

19,108

67,737

72,818

Income Tax Expense

(635)

(4,729)

(9,297)

(18,030)

Net Income

$

14,895

$

14,379

$

58,440

$

54,788

Average Common Shares Outstanding

36,262

36,196

36,254

36,181

Basic Earnings per Average Common Share

$

0.41

$

0.40

$

1.61

$

1.51

Diluted Earnings per Average Common Share

$

0.41

$

0.40

$

1.60

$

1.51

Dividends Declared per Average Common Share

$

0.36

$

0.34

$

1.08

$

1.02

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (in thousands)

September 30,

2011

December 31, 2010

(unaudited)

ASSETS

Current Assets

$

269,014

$

303,054

Property, Plant, and Equipment, Net

2,170,928

2,117,977

Goodwill

355,128

355,128

Regulatory Assets

225,757

222,341

Other Noncurrent Assets

40,997

39,169

Total Assets

$

3,061,824

$

3,037,669

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Maturities of Long-term Debt and Capital Leases

$

5,140

$

7,854

Commercial Paper

112,993

Current Liabilities

308,380

296,115

Long-term Capital Leases

33,271

34,288

Long-term Debt

905,034

1,061,780

Noncurrent Regulatory Liabilities

262,890

251,133

Deferred Income Taxes

262,660

232,709

Other Noncurrent Liabilities

333,247

333,443

Total Liabilities

2,223,615

2,217,322

Total Shareholders' Equity

838,209

820,347

Total Liabilities and Shareholders' Equity

$

3,061,824

$

3,037,669

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(in thousands)

Nine Months Ended September 30,

2011

2010

Operating Activities

Net income

$

58,440

$

54,788

Non-cash items

109,325

98,721

Changes in operating assets and liabilities

42,740

34,801

Cash Provided by Operating Activities

210,505

188,310

Cash Used in Investing Activities

(124,275)

(178,078)

Cash Used In Financing Activities

(86,470)

(8,015)

Net (Decrease) Increase in Cash and Cash Equivalents

$

(240)

$

2,217

Cash and Cash Equivalents, beginning of period

$

6,234

$

4,344

Cash and Cash Equivalents, end of period

$

5,994

$

6,561

NORTHWESTERN CORPORATION

ELECTRIC SEGMENT

Three Months Ended Sept. 30, 2011

(Unaudited)

Results

2011

2010

Change

% Change

(dollars in millions)

Retail revenue

$

189.2

$

173.0

$

16.2

9.4%

Transmission

11.5

12.5

(1.0)

(8.0)

Wholesale

0.4

11.5

(11.1)

(96.5)

Regulatory amortization and other

5.5

6.6

(1.1)

(16.7)

Total Revenues

206.6

203.6

3.0

1.5

Total Cost of Sales

85.2

92.7

(7.5)

(8.1)

Gross Margin

$

121.4

$

110.9

$

10.5

9.5%

Revenues

Megawatt Hours (MWH)

Avg. Customer Counts

2011

2010

2011

2010

2011

2010

(in thousands)

Retail Electric

Montana

$

58,531

$

51,731

552

523

271,073

269,750

South Dakota

12,858

12,441

150

149

48,664

48,464

   Residential 

71,389

64,172

702

672

319,737

318,214

Montana

79,634

73,345

840

828

61,623

61,125

South Dakota

18,076

17,372

250

248

12,054

11,911

Commercial

97,710

90,717

1,090

1,076

73,677

73,036

Industrial

8,961

8,612

718

694

73

71

Other

11,179

9,462

92

80

7,627

7,607

Total Retail Electric

$

189,239

$

172,963

2,602

2,522

401,114

398,928

Wholesale Electric

Montana

$

$

10,524

205

N/A

N/A

South Dakota

378

1,040

15

53

N/A

N/A

Total Wholesale Electric

$

378

$

11,564

15

258

Degree Days

2011 as compared with:

Cooling Degree-Days

2011

2010

Historic Average

2010

Historic Average

Montana

308

195

260

58% warmer

18% warmer

South Dakota

753

748

639

1% warmer

18% warmer

ELECTRIC SEGMENT

Nine Months Ended Sept. 30, 2011

(Unaudited)

Results

2011

2010

Change

% Change

(dollars in millions)

Retail revenue

$

552.4

$

493.1

$

59.3

12.0%

Transmission

32.3

35.0

(2.7)

(7.7)

Wholesale

1.5

34.5

(33.0)

(95.7)

Regulatory amortization and other

15.8

29.7

(13.9)

(46.8)

Total Revenues

602.0

592.3

9.7

1.6

Total Cost of Sales

246.6

266.1

(19.5)

(7.3)

Gross Margin

$

355.4

$

326.2

$

29.2

9.0%

Revenues

Megawatt Hours (MWH)

Avg. Customer Counts

2011

2010

2011

2010

2011

2010

(in thousands)

Retail Electric

Montana

$

187,856

$

162,540

1,786

1,698

271,975

270,348

South Dakota

36,556

34,775

448

435

48,660

48,435

   Residential 

224,412

197,315

2,234

2,133

320,635

318,783

Montana

228,556

203,203

2,407

2,357

61,516

60,900

South Dakota

49,748

48,118

702

700

11,938

11,794

Commercial

278,304

251,321

3,109

3,057

73,454

72,694

Industrial

27,723

24,508

2,113

2,055

72

71

Other

21,936

20,002

150

145

5,953

6,011

Total Retail Electric

$

552,375

$

493,146

7,606

7,390

400,114

397,559

Wholesale Electric

Montana

$

$

30,689

597

N/A

N/A

South Dakota

1,507

3,796

88

182

N/A

N/A

Total Wholesale Electric

$

1,507

$

34,485

88

779

Degree Days

2011 as compared with:

Cooling Degree-Days

2011

2010

Historic Average

2010

Historic Average

Montana

324

219

301

48% warmer

8% warmer

South Dakota

814

823

707

1% colder

15% warmer

Degree Days

2011 as compared with:

Heating Degree-Days

2011

2010

Historic Average

2010

Historic Average

Montana

5,235

4,938

5,054

6% colder

4% colder

South Dakota

6,211

5,692

5,646

9% colder

10% colder

NORTHWESTERN CORPORATION

NATURAL GAS SEGMENT

Three Months Ended Sept. 30, 2011

(Unaudited)

Results

2011

2010

Change

% Change

(dollars in millions)

Retail revenue

$

23.7

$

25.4

$

(1.7)

(6.7)%

Wholesale and other

13.3

11.5

1.8

15.7

Total Revenues

37.0

36.9

0.1

0.3

Total Cost of Sales

12.8

13.2

(0.4)

(3.0)

Gross Margin

$

24.2

$

23.7

$

0.5

2.1%

Revenues

Dekatherms (Dkt)

Customer Counts

2011

2010

2011

2010

2011

2010

(in thousands)

Retail Gas

Montana

$

10,151

$

11,391

790

940

157,491

156,925

South Dakota

1,717

1,714

121

120

37,167

36,844

Nebraska

2,204

2,136

155

157

36,175

36,121

Residential

14,072

15,241

1,066

1,217

230,833

229,890

Montana

6,020

6,476

525

582

22,024

21,920

South Dakota

1,462

1,557

199

198

5,854

5,810

Nebraska

1,883

1,875

289

299

4,528

4,488

Commercial

9,365

9,908

1,013

1,079

32,406

32,218

Industrial

136

160

13

16

275

282

Other

82

61

8

6

147

146

Total Retail Gas

$

23,655

$

25,370

2,100

2,318

263,661

262,536

Degree Days

2011 as compared with:

Heating Degree-Days

2011

2010

Historic Average

2010

Historic Average

Montana

235

407

385

 42% warmer

 39% warmer

South Dakota

70

57

98

23% colder

29% warmer

Nebraska

49

26

49

 88% colder

remained flat

NATURAL GAS SEGMENT

Nine Months Ended Sept. 30, 2011

(Unaudited)

Results

2011

2010

Change

% Change

(dollars in millions)

Retail revenue

$

199.4

$

189.4

$

10.0

5.3%

Wholesale and other

31.5

36.5

(5.0)

(13.7)

Total Revenues

230.9

225.9

5.0

2.2

Total Cost of Sales

123.9

124.6

(0.7)

(0.6)

Gross Margin

$

107.0

$

101.3

$

5.7

5.6%

Revenues

Dekatherms (Dkt)

Customer Counts

2011

2010

2011

2010

2011

2010

(in thousands)

Retail Gas

Montana

$

85,553

$

75,852

8,883

8,198

158,457

157,694

South Dakota

20,589

20,778

2,333

2,141

37,388

37,167

Nebraska

18,571

19,248

2,038

2,045

36,525

36,457

Residential

124,713

115,878

13,254

12,384

232,370

231,318

Montana

44,543

38,545

4,667

4,188

22,188

22,029

South Dakota

14,742

18,474

2,107

2,438

5,899

5,880

Nebraska

13,591

14,617

2,143

2,175

4,577

4,542

Commercial

72,876

71,636

8,917

8,801

32,664

32,451

Industrial

1,055

1,239

115

140

279

287

Other

763

625

93

80

146

146

Total Retail Gas

$

199,407

$

189,378

22,379

21,405

265,459

264,202

Degree Days

2011 as compared with:

Heating Degree-Days

2011

2010

Historic Average

2010

Historic Average

Montana

5,235

4,938

5,054

6% colder

4% colder

South Dakota

6,211

5,692

5,646

9% colder

10% colder

Nebraska

4,847

4,767

4,643

2% colder

4% colder

NORTHWESTERN CORPORATION

SEGMENT INFORMATION

Three Months Ended Sept. 30, 2011

(Unaudited)

(in thousands)

Three Months Ended

September 30, 2011

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

206,613

$

37,067

$

361

$

$

244,041

Cost of sales

85,221

12,824

98,045

Gross margin

121,392

24,243

361

145,996

Operating, general and administrative

45,607

19,979

746

66,332

Property and other taxes

16,894

5,708

3

22,605

Depreciation

20,465

4,708

8

25,181

Operating income (loss)

38,426

(6,152)

(396)

31,878

Interest expense

(13,661)

(2,711)

(322)

(16,694)

Other income

86

232

28

346

Income tax (expense) benefit

(3,407)

3,016

(244)

(635)

Net income (loss)

$

21,444

$

(5,615)

$

(934)

$

$

14,895

Three Months Ended

September 30, 2010

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

203,585

$

36,963

$

270

$

$

240,818

Cost of sales

92,691

13,231

105,922

Gross margin

110,894

23,732

270

134,896

Operating, general and administrative

42,331

17,429

(1,323)

58,437

Property and other taxes

15,569

5,041

(75)

20,535

Depreciation

18,439

4,378

8

22,825

Operating income (loss)

34,555

(3,116)

1,660

33,099

Interest expense

(12,202)

(3,116)

(988)

(16,306)

Other income

2,109

179

27

2,315

Income tax (expense) benefit

(6,551)

3,543

(1,721)

(4,729)

Net income (loss)

$

17,911

$

(2,510)

$

(1,022)

$

14,379

NORTHWESTERN CORPORATION

SEGMENT RESULTS

Nine Months Ended Sept. 30, 2011

(Unaudited)

Nine Months Ended

September 30, 2011

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

602,024

$

230,971

$

1,112

$

$

834,107

Cost of sales

246,592

123,931

370,523

Gross margin

355,432

107,040

1,112

463,584

Operating, general and administrative

140,267

60,651

2,336

203,254

Property and other taxes

50,937

17,606

8

68,551

Depreciation

61,205

14,332

25

75,562

Operating income (loss)

103,023

14,451

(1,257)

116,217

Interest expense

(40,877)

(8,105)

(1,755)

(50,737)

Other income

1,425

751

81

2,257

Income tax (expense) benefit

(10,998)

(1,228)

2,929

(9,297)

Net income

$

52,573

$

5,869

$

(2)

$

$

58,440

Nine Months Ended

September 30, 2010

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

592,262

$

225,882

$

906

$

$

819,050

Cost of sales

266,052

124,633

390,685

Gross margin

326,210

101,249

906

428,365

Operating, general and administrative

124,220

52,455

(2,804)

173,871

Property and other taxes

50,625

17,853

9

68,487

Depreciation

55,562

13,110

25

68,697

Operating income

95,803

17,831

3,676

117,310

Interest expense

(37,309)

(9,717)

(2,387)

(49,413)

Other income

4,515

326

80

4,921

Income tax (expense) benefit

(17,490)

(1,041)

501

(18,030)

Net income

$

45,519

$

7,399

$

1,870

$

$

54,788

SOURCE NorthWestern Corporation



RELATED LINKS

http://www.northwesternenergy.com