Q2 2021 NorthWestern Corp Earnings Call
Again, a lot of credit to our leadership and the people doing the work and we look forward to realizing those benefits for our customers going forward with that I'll turn it over to crystal well.
Thank you Bob as Bob mentioned, it is rather nice to sit in a room with my colleagues again and do meetings in.
And then began to feel like we're resuming back to normal in some regards but that'll take you to slide 4 with the P&L as Bob mentioned net income of $37.2 million as compared with $21.5 million last year. In Q2 were $15.7 million dollar increase there was 73 per cent really a solid quarter in line with our expectations on a GAAP.
Per cent and driven by really improved gross margin offset by a bit of higher operating costs.
With regard to gross margin on slide 5.
Martin I will turn on a 33 million as compared with $208.3 million at prior period, an increase of $22 million or 10, 6%. When you look at the amount of that gross.
Based on the change that falls to the bottom line, that's approximately $20.2 million and I'll touch on multiple pieces of that here first with regard to the transmission piece of that there's really 2 parts in that $9.1 million increase that includes the release of a deferral of interim rates on our transmission rates related to the ultimate resolution.
Margin through a compliance filing with the M. PSC I'll remind you all that our wholesale rates ultimately become a credit in our Montana rates retail side. So that was the ultimate resolution of that released.
Here in the second quarter and certainly contain some prior period amounts to that the remainder of that increase of electric.
Lucian she was really driven by conditions in the market.
Second quarter here with both the combination of higher loads and rates.
With warm and dry weather, both the south and west of Us.
The second piece here is the electric QF liability adjustment. This is something we typically adjust every year in Q2 and can.
Transmit noisy I'll speak to this on a couple of parts to is we did pull a piece out of this is a non-GAAP adjustment the pieces that you're typically used to hearing about 1 we adjust for output and pricing that was a little bit favorable this year. They offset to that is there is a contract in which theres price escalation on an annual basis that was unfavorable then net net of those 2.
B a business is approximately $2.6 million of unfavorable.
Impact, which offset the non-GAAP portion that we pulled out of $8.7 million, which was.
A revision to an estimate based on clarification of contract terms and as we don't expect that to recur that's reflected as a non-GAAP item.
Pizza as usual, there's a page on the exhibit that will give you more information on that in a clearer breakout then I, probably just covered verbally for you, but again $6.1 million on a GAAP basis contribution margin for the quarter. The next peak off peak on as electric retail volumes.
And we did experience overall warmer spring weather and certainly.
Certainly a piece of that is driven by customer growth of the overall 5.6 with that our residential usage and impact was about flat and commercial was an improvement over prior year as we think about second quarter of last year certainly the the low if you said your most COVID-19 impact that we saw a comparatively low certainly a rebound.
From that and as we think about the ultimate trends there and the trends on a use per customer basis, we continue to see what would be higher residential loads than normal, but not quite as high as they were in Q2 of 2020. We also continue to see lower commercial and industrial usage, but again those are better than last year or so.
A bit of a move in the trend, but the trend continues to be there of a bit of a shift in use per customer.
And I'll speak to that a little bit more as we get into guidance for the rest of the year later with that I will turn to weather on slide 6.
Whether you'll see that April and May were a little bit cooler made up for with.
Warmer weather in June I will highlight a couple of things 1 second quarter is always a bit of a shoulder quarter for us secondly, you'll see some pretty big percentages on the cooling degree days of 153 per cent warmer and 66% warmer the thing I would point you to is that the relatively small.
The amount of ultimate cooling degree days there so the ultimate impact of that and mostly again June was a favorable weather impact of $2 million as we think about it compared to normal and $1.5 million as compared to the same period in Q2 of 2020, and again I'll address that a little bit more when we talk on our GAAP to non-GAAP adjustment.
Slide 7 gets into operating expenses.
Operating general administrative expenses were $77.1 million in the quarter as compared with $71.7 million in the prior period or an increase of $5.4 million or 7.5% with that again the amount that falls to the bottom line is approximately $3.2 million on.
Fans.
There's a couple of things driving that 1 an increase of about $2 million related to generating generation maintenance at our electric facilities are in addition to about $1 million related to employee benefits, that's primarily driven by an increase in medical costs.
And then also on <unk> 9.
Million dollar increase related to implementation of technology, and the associated maintenance costs with that as well.
The thing I would note of those increases a bit of an offset is our uncollectible accounts, we're certainly seeing the ultimate collections from our customers come back in that regard and that offset those increases by approximately $2.8 million.
The other thing that I would.
Note here that we do expect headwinds in the back half of the year driving toward a more sustainable than normal amount of costs on an ongoing basis.
From a property tax perspective, we're about flat to the prior year and <unk> $3 million increase and then depreciation of $2 million increase driven primarily on plants.
Additions.
With that slide 8 operating income of $59.1 million as compared with $44.8 million of prior period or a $14.3 million and 31, 9% increase again driven primarily at the gross margin line.
Interest expense on it other income are.
Immediately below that those both show a favorable net adjustment there was a decrease in interest expense and increase in other income both of those are driven by the debt and equity portions of a F. D C for a favorable impact on those quarter over quarter.
From an income tax perspective, I would highlight that we have income tax.
<unk> expense in the current period as compared to a benefit in the prior year or prior period, that's driven primarily by higher pretax income, partially offset by higher flow through deductions.
From a cash flow basis, you'll see on slide 9.
Our cash flows for the 6 months ended 2021compared.
Compared to 2020, you'll see a decrease of $114.7 million most of that decrease occurred in Q1, and we talked about that then but I'll reiterate a couple of things on $82.8 million increase in market purchases of supply again most of that was experienced in Q1, though we do continue to see higher overall.
Overall market prices of electricity are out there, but most of that was a Q1 impact and then in addition, as we've talked about we had a refund her first customer or FERC customers of approximately $20.5 million and that has impacted cash flows as well during the period.
Yes.
Slide 10.
And just remind you of what we just discussed from a non-GAAP adjustment perspective, 1 weather impact you'll see the $2 million we discussed.
As compared to normal within <unk> 5 million in the prior period. So net net over the periods $1.5 million. In addition, we talked about our QF liability.
Our water and that we pulled out the piece of that debt. We don't expect to recur, which is a clarification of contract turns of approximately $8.7 million.
Favorable adjustment there.
With that reducing GAAP net income to $29.2 million for the quarter or <unk> 56 cents as compared with 21.
John million in the prior quarter, our 42 cents on a non-GAAP basis.
Yeah.
Slide 11.
Provides our earnings guidance for the year and as I've mentioned the quarter for US was in line with our expectations..1 of the things that we had talked about before when we've announced 21 earnings guidance.
We had a bit wider range of 20 cents, which was $3.40 to $3.60 with the quarter here on our performance so far halfway through the year, we've narrowed that in a bit to a 15 cent range of $3.43 to $3.58, we've also updated a couple of assumptions.
And that I would mention is key to how we think about the back half of the year.
There's still a lot of your left to go but 1 of the things is we are continuing to see the pattern as I mentioned earlier from a usage perspective of a commercial industrial volumes being off from what we would consider normal and residential offsetting that a bit we do expect that to continue in the back half of the year.
The other thing debt.
I mentioned is again, while we've had a strong first half of the year, we do expect operating costs in the back part of the year to increase and those would reflect a more sustainable level. So we expect those pressures in the back part of the year as well.
The other thing I certainly would highlight is that we've updated the diluted shares outstanding of approximately 51.
$1.8 million to 52.
The increase that it was previously 51.5 to 51.8. The other thing that we've noted is that increased share counts are based on the reflection that we expect to issue the full $200 million.
On the equity that we had indicated a need for previously that does adjust that timing sooner than we.
We had initially indicated the thing I would comment on that is that in response to certainly the need to support the growth that we're experiencing from a of the companys basis, and also certainly to support and maintain our credit ratings I would also remind you that we are on track for the $450 million of Capex spend in 'twenty 2 that compares.
Parents to approximately $400 million in 'twenty.
Should say 'twenty, 1 I think I got me IRAK 450 million in 'twenty, 1 I'm getting your ahead already as compared to $400 million in 'twenty 'twenty and in 2020. We did expect to do equity and ended up not doing that and then that compares to more of a $300 million number from.
Before that though the thing I would indicate in the sense of the amount of equity we expect to do this year is again in support of our credit ratings, but also the amount of growth we have in front of us as a company.
And with that thank you Robert pointed out that debt here is the only number you've got wrong since you've been CFO, so crystal and Travis.
The finance Department.
Great Great work.
Touching on lately on some of the regulatory matters, we don't expect to file a general rate case in any of our 3 jurisdictions. This year, which is still a 2021.
But we have made several other important regulatory filings in our Montana.
On a jurisdiction.
April we filed a request to delay implementing or fixed cost recovery mechanism pilot, that's the month anniversary on decoupling.
For another year until at least July of 2022.
Due to the continued uncertainties created by Covid it on.
The Montana Commission did grant that delay we have not seen a written order we of course eager to to see that and we appreciate the workload at the commission. So that was very much a positive also in April we filed a request.
To prove an increase to the forward costs used.
June 'twenty development rates for the recovery of our electric power cost and Montana through the power cost and credit adjustment mechanism, where from the peak zone that would be approximately $17 million and this is really.
Intended to better align the base cost in the <unk>.
Used.
That our supply team is facing in the market and incurring on behalf of our customers on June 29th The Commission.
Did approve implementing interim rates, reflecting the $17 million increase net.
Because as an interim is of course subject to refund.
There again, a written order is pending.
Okay.
May we filed a request to approve acquiring electric capacity resources that are critically important to.
To address our customers' exposure at peak.
To the to the regional power market. This was based on the 2.
2020 are a few that we've been discussing with you.
<unk> quite some time.
Ryan will come back and discuss that in much more detail.
And then we finally been able to fully wrap up the FERC.
Rate case that was the parallel to follow on to our last Montana.
General electric rate case.
For at least a reached a settlement refunds there have implemented.
The new rate structure, which we think will be up a bit.
Benefits all around so.
Crystal is doing a great job on her new role. Meanwhile.
Ryan has transitioned.
Replace day.
We were <unk> with al and his title I'll set up the capital plan, just briefly and then turn it over to Brian to.
Go on to some of the details.
We always share this slide.
With you and we do have.
Our robust capital plan looking.
4 or 5 years into the future.
As Christal mentioned, we are on track.
2.
To meet our capital plans for this year.
It involves over $2 billion of total investment over the 5 year period financed with a combination of cash flows from operations.
Our mortgage bonds and equity issuances during the second quarter as you know.
Did initiate the $200 million ATM program, and we expect to issue the remainder of that this year in order to support our current capital program and protect our credit ratings capital investment in response.
<unk> response to the Montana.
RFP and the supply resource investments would be incremental to these amounts and then of course finance plans are subject to change depending on capex regulatory outcomes are internal cash generation and market conditions.
The.
Response Dakota.
Resource investment is well underway about $100 million and that is included in the 2021 through 2023 periods.
And we expect that this level of capital should result in annualized rate base growth.
<unk> to 5.
Percent, adding on the projects do not include.
On the investments necessary to support the <unk> generating station if approved by the commission.
That should be an additional $250 million, excluding a few D C spread.
Spread primarily over 2022 to 2023, so in his new.
So as CFO, Brian has been spending a lot of time in the field across all 3 states, making the.
The rest of his very jealous and doing a great job working.
With our executive team and management on the operations area to really enhance the already high level of.
Rowe operation.
There so as a result of that we are poised to continue.
Investing in and.
Delivering our customers the highest possible level of service so off to you. Thanks, Bob as Bob mentioned on the capital Slide we had a tremendous amount of investment.
All areas of the operation is extremely busy in terms of this higher level of capital spending we anticipate with Laurel coming on line ultimately enable to make that investment to continue these high levels of capital investment on slide 14 speaking to the generation portfolio in Montana, you remember back in May we made.
Playing associated with to acquire electric capacity.
Through resources identified on our January 2020, RFP and from that 2 of those entrants. If you will the loral generation station and the Es Volta energy storage contract. We included in that filing Laurel being 175.
On megawatt rice units located in Laurel, Montana, which we intend to invest $250 million and is expected to be in commercial operation in late 2023 early 2024.
And then the 50 megawatt battery facility from Es Volta to be located near billings.
And entering.
During that through a 20 year agreement to fill the 5 hour duration tier identified in the IR and the RFP non.
Not included in that filing but should be included in our PJM as the <unk> transaction of 5 year power purchase agreement for 100 megawatts of capacity and energy projects.
Originated predominantly from hydro resources.
Earlier this week the MPC concluded that the application met the minimum filing requirements and that starts to shot clock per 270 days of receipt of an adequate applications. So we hope so.
Certainly near the end of this year, we will have an outcome.
Hopefully, we can get going on the project at that point in time.
Moving over to South Dakota.
Our project in here on the BOP lands are generating station is going along extremely well and we expect to have it online by the end of this year. In addition, we plan to move forward with Aberdeen and as Bob mentioned, the South Dakota Capital's already included.
And in our capital plans.
But we expect to have the Aberdeen unit also online by the end of 2023, much like Laurel generating station.
Moving on to Slide 15, we really took the first half of this year.
2.
Go after those things from an ESG perspective that we haven't had.
Appropriate lead disclose and when.
Worked extremely hard to tie that to the release of a brand new webpage that we expect to have coming online within days and once that happens it would be much much easier for investors and those folks from an ESG who rate us to actually find information updated information.
<unk> total company effort.
To capture this information and recorded and as a result, we're going to be able to provide new reporting new reporting permit on SaaS.
SaaS fee perspective from a Tcf D will have an HCA ESG methane reporting template all of those are being new.
Updated our ESG.
We're reporting template and we're just going to have a plethora of sustainability statistics updated and expanded and we're really excited really for 2 reasons. The web pages and have a great and youre going to see a very very large focus on ESG and from our perspective, it's going to be very easy for.
On the folks that rate is from an ESG perspective.
To capture that information and from our perspective, better depict our scores on a going forward basis and with that I'll pass it back to Bob.
Great. Thank you Crystal Thank you Brian.
We are ready for questions.
Bob If you are joining us by computer today and would like to ask a question. Please signal your intent by using.
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Sure it depressed the icon that has all the fingers pointed up.
Thank you for the reminder, Bob.
Okay. We will take our first question from Ryan Greenwald on Bofa Securities Brian Your line should be open. Please proceed.
Good afternoon, everyone.
Appreciate you taking our questions.
So maybe first how should we think about the puts and takes through the rest of the year here relative to the prior work that you guys had previously included in the slide deck you have this additional equity, but can you talk a bit about any other moving pieces here.
And what.
Factors might be keeping the midpoint unchanged Christoph sure Ryan I think a couple of things 1 the first half of the year is in line with our expectations for where we expect it to be performing the other thing we updated a bit as we do expect a bit of headwinds on the back part of the year with continued low trends as I alluded to from a customer usage.
I guess I've seen a lower commercial and industrial usage, while admittedly better than the prior year still not back to what we would call normal offset in part by improved residential usage, but again not quite as good as it was last year. So that's certainly a piece of it the other headwinds I alluded to is on the operating side and I.
I think we provided that work out to where we expect operating expenses to be from.
From a full year basis and again.
20 wasn't normal 2021 we're moving back toward what I think is a more sustainable level of OE and G and I certainly expect that on increase in the back half of the year there.
While we don't give quarterly guidance.
They are certainly not a what I would call it even spread across borders there.
Got you and then it was the transmission deferral expect anticipated.
Yes.
Yeah.
And then maybe just lastly on the equity.
How should we think about this in terms.
Ongoing from here outside of the additional generation into 'twenty..2 does this kind of limit the equity needs in 'twenty 2.
I would say 2 things obviously, we're investing a lot of capex on that business and we have a we have a good problem to have there in the sense that amount of growth in front of us everything on it. They just as you think about 'twenty 2 you know we've updated.
<unk>, where we expect to be from a 21 basis as we get closer to 'twenty..2 obviously, we'll update you on our plans there but certainly.
Always expect to be mindful of our credit ratings, along with the growth in front of us.
Got it and maybe just 1 more if I may in terms of financing the generation any initial thoughts in terms of an ATM or equity.
Equity block or how you ultimately thinking about debt.
Youre ahead of us on technical execution. There I think our comment has been will be roughly 50, 50, and as we get closer to that and obviously pristine, but the approval docket, we'll have more to come on that.
Fair enough I appreciate the time.
Thanks, Brian.
We will take our next call from the.
The line of Jonathan Reeder at Wells Fargo, Jonathan Your line is open.
Hey, good afternoon can you guys hear me okay.
Sure Ken.
Right.
So maybe just piggybacking off of Brian a little bit regarding the decision to now issue all $200 million in 'twenty 1.
Was this decision at all influenced by some of the positive drivers in particular.
The transmission strength not the deferral portion, but just the strength in general.
Partly driven by.
The hot weather out west.
And maybe the thought that you could opportunistically.
Mystically strengthen.
Our credit metrics, a little more now without adversely impacting your ability to hit guidance.
I guess, Jonathan I would answer your question on a couple of parts.
1 day.
The additional equity as we had talked about coming out of Q1, we're on a net.
This outlook from Moody's perspective, so we're mindful of where we're going from a credit rating perspective. The other key factor certainly is the amount of Capex and investment in the system. At this point. So those are the bigger pieces of it and then obviously from a guidance perspective, I think we've talked to a bit of what we had for them we are performance.
Negative in the first half of the years in line with our expectation.
Okay, and then regarding that PJM.
Base requests do you have what your final base.
Base.
That youre going to be supporting I know the interim was based on like 150.
But the plan was to kind of.
Update a final request off of forward power prices as of the end of June I think.
Do you know what that updated number is.
Turning to the final.
Yeah, I think the final number is $165 million for me.
Okay.
609, okay, great. Thanks, so much for taking my questions I appreciate it.
Thanks, Jonathan.
We will take our next call from the line of Brian Russo at Genuity, Brian Your line should be open.
Yeah, Hi, good afternoon, Brian.
Brian.
Hey, so just a.
Could you elaborate on the dynamics of the transmission margins outside of the interim rate.
Mentioned.
Hot and dry weather.
In the south and west of view.
And that's continued into July.
Guidance capture.
The transmission.
Revenue potential.
Potential upside above normal in July.
I guess, a couple of things I would say about that is it's obviously the condition related that drive that there is long.
Long term firm transmission is on a short term market and that short term mark.
Or what's driven and day to day that can be different. So certainly we had we've moved into a formula rate environment and so we've captured that in our expectation for the remainder of the year, but the thing I would just highlight at a high level perspective, and we've continued to highlight where we have margin headwind there may be puts and takes on there but now.
It is my guidance perspective, and being on narrowing in that range.
We expect that the I guess the performance through the first half of the year on with respect to me in the back half of the year. Obviously transmission is good news if that continues.
Great.
And then in essence third parties are utilizing your transmission to wheel power to the west.
Demand as needed.
Yes.
Okay.
John.
Okay, and then and then Brian you mentioned earlier that you were hopeful to have a Montana preapproval decision by the end of the year, but I think the clock is 270 days plus another 90, which would be.
Our book.
On year I'm just curious.
Why the expectation for the end of the year why don't you see the commission, but would take the full amount of time.
Well in fairness Youre, absolutely right. If you did the math I'm focused on $2.70 at the extra 90 days of course puts us a full year.
Total internal optimist, Brian Theres always an opportunity that could be done by the end of the year, but you are right. If you actually do the shot clock from $2.70, or you're going to be around the end of the first quarter.
Got it and then on on the.
A second RFP that you alluded to in the press release during 2022, I would imagine you'd want to wait for.
And that was pre approval process to be over but in terms of the size.
Or components of the next RFP.
Would it be similar to the 1 that was just concluded.
Thank the best thing to say at this point in time, but like you said, you're absolutely right, let's get Laurel approved and move.
Dan I think we will assess at that point in time or needs in those size accordingly.
Okay, Great and then just lastly on the balance sheet, you have the 50% to 55% debt to cap.
And even with the equity issuance and the solid first half of 2021.
The debt to cap is still at 53.
For a percent or so I mean are you targeting just the midpoint through the end of the year and going forward or you are targeting the lower end or the higher end.
I think I'll stick to my 50% to 55% range in that regard, Brian but also just say that obviously we're focused on.
<unk> metrics that we would need to be at from a credit rating perspective.
Okay got it thank you.
Okay, We will take our next call from the line of Andrew Levy at Hite hedge capital Andy Your line is open.
Can you hear me.
Share count.
Can you hear us.
Andy.
Can you hear me now.
Yeah, Yeah, My phone's Mike.
Okay. So.
Hello, everybody.
Okay.
Hope all is well.
Good presentation.
Couple of questions so far.
The first 1 is just on load.
The commercial on them I guess to Leslie Green Dot Hill.
Again, we've only had a couple of samples with Florida.
Thanks.
On the earlier on side.
But we've seen quite a recovery.
Recovery in commercial loans in other parts of the country. So could you kind of just talk about that and why.
Why again I understand that you said you have recovered.
No gone slower than others. This summer.
And then Mike level.
And how much incremental low would it take to get to Mike.
And Dennis levels on the commodity basket.
Okay.
Yeah, I think the thing I would just highlight there Andy is a couple of things 1 we did see improvement in commercial loads certainly as you look at compared to the prior.
Period, but not back to what we would term normal. So I think if you look at the detail we have on either the appendix of the investor deck or in our materials you would see that we're continuing to trend under what would be if you think back to 2019 level what would be a more normal amount of commercial loads. There. So certainly some improvement and.
And.
Yeah, I guess I will give a little I started day I won't give commentary, but I don't think it's obviously the prior ear with shutdown related this year I think if I had to weigh on its more workforce issue related and other factors in the economy. So different drivers, but again, we're seeing some improvement there, but not back to what we would call normal.
On the residential side. So again, you haven't heard from probably many utilities, but we continue to see strong residential usage, but not as strong as prior years. So the thing that I think is indicative of that is that you kind of be flat residential revenues, even though we had a warmer quarter in certain ways, though I would think about it that way.
And we're continuing to monitor it as I mentioned from a guidance perspective with the back half of the year, there's still quite a bit of uncertainty there, it's where those rents will go.
And just for color I would add to that is just that the 3 economies. We serve are among the very strongest in the country and just as Crystal said.
We don't know everything that's going on but very clearly 1 of the challenges.
As a severe.
Workforce constraint and I know that's occurring in other parts of the country to we haven't but number of <unk>.
Communities, we serve where the employment rate because actually slightly unemployment rate rather was actually slightly.
Slightly negative so that is a constraint on our businesses getting back to full operation, but we certainly saw improved commercial units right and so it was not back to what we would call normal it's considerably better than it was last year.
So if you kind of have the.
Net it all out longer term.
We got back to a more.
Commercial.
Travis.
And more like the pandemic mode.
On residential.
You can always see a little bit stronger EBITDA.
Thanks Dennis.
Does that mean kind of like a neutral earnings outlook.
Relative to that.
I'd be looking at the base no upside.
But he got back to a more normal situation.
I guess I would answer it this way as you know, we will see where and I hate the term the new normal, but you won't see where the new normal is.
But you know ultimately.
The other thing I would remind you of is we have solid customer growth on our service territory and and just from a customer count perspective are seeing good indicators, they're solid economy. So all of those things are certainly something I would look to as favorable indicators.
Okay. So then kind of transitioning.
Customer growth.
I'm not sure what you mentioned on yard.
Uh huh.
A press release I guess.
You are saying boy I forget.
25, maybe a little bit longer.
700, plus megawatts if you.
Needed incremental capacity and I'm.
I'm, assuming the 200.
And 50.
$50 million of Capex.
That project not suggesting some of them 700 guidance.
I'm not in school Kid, but on.
On top of that that leads to the 500 plus.
Plus.
Yeah, Michael what's needed.
What type of customer growth.
On the tubing in.
That and I guess is there upside to about 700 million 700 megawatt shortly.
And at the same time you know.
Had the perfect World.
Because you know you've got to kind of address it's best for the customer what's best for us.
Uh huh.
You know your balance sheet, you know what.
How many megawatts are huge.
Okay, Great all right I'm, not saying he's actually I do want to do how many megawatts you since he's good.
Reasonably do yourself.
If you were to fulfill that deficit.
Yeah, Andy I'll take that I think I've just can I go back to what I said earlier from a longer term basis. You know, we're continuing to address on capacity needs and there's still a lot of moving parts that we see in Montana and around us from a resource perspective and so.
We'll give more clarity around that in our upcoming our RFP.
And then ultimately in our RFP that follows.
Okay, that's fair and when will that on 1 side listen we'll have people on our rfps and sometime in 'twenty 'twenty 2 it's Brian.
I mentioned earlier, our expectation that you went on.
They see it and I'll come on Laurel, that's probably at the earliest.
John would be mid 2022.
Okay got it and then my last question.
Equity.
H M versus I mean, it's not a lot of equity that you need to do I mean, I guess a lot relative to.
How many shares you have outstanding but as far as you know people like us.
Yeah.
Putting it on capital, it's really going on a lot of cash a lot of equity.
Sure on dedicated to Josh.
So the ATM you know you did about 56 million net in the second quarter.
Net debt you could kind of do you have to change them.
Third and fourth quarter, and ultimately catch up to $200 million.
But why not.
Come to us.
You know the stock's cheap.
And could you kind of get.
John you, even if it's at the end of the year, but kind of dribbling it out and Ive asked this question before but.
I'm under the belief, especially since there's there are a lot less hedge fund money around there's a plenty of long only money area.
Hum.
The volumes are much lower than they traditionally have been.
So I think that affects your equity a little bit more.
So again.
Has anything changed.
And that thought out on.
And obviously our basketball discretion.
Christopher will give you the CFO.
CFO answer what I will say is it sounds like you are.
Very enthusiastic about supporting northwestern energy stock and we appreciate that very much.
[laughter], what Bob's got there you know I would say the key piece here is we wanted to set your expectations for the amount of equity as to the rest of the year with regard to the technical execution I would worry about that as it goes out there.
Yep.
On the SKU on neither or whatever but okay. Thank you that's making it up on I guess.
Thank you Dan.
Good what it's about.
Okay.
Okay, We will take our next call from Matt Davis at cone capital that you're on.
On his opening.
Yeah.
At or Youre, not on mute you'll need on mute your line.
You guys can you hear me Barry I sure can.
Okay. Thanks, sorry about that good afternoon I'm just a quick question, maybe I'm missing something but I just wanted to go back to the load commentary before with the.
The improvement that you've seen in in margin when I look at slide 21.
It looks like the volumes megawatt hours were actually down period on period for the electric segment can you just reconcile that if I'm missing something.
And how that circles with your commentary on the $5.6 million of upside year on year.
Yeah.
Good.
So give me just a second here.
So I think from a commentary perspective, youll see that residential is roughly flat right. So that's a key piece of it there. The other piece that I would say is that commercial you see certainly an improvement from the prior period and then the offsetting headwinds.
When there is the industrial loads are off a little bit and again the key piece there between the megawatt hours and what you would see in our revenues is also a piece of what falls to the bottom line and the debt.
Trend wise I think we're highlighting the right pieces for you but from a margin.
Perspective, the ultimate impact there there certainly our retail volume improvement between those.
Okay. Thank you.
Thanks, Matt.
We will take our next question from the line that ends in zero to 3.1.
Your line should be open.
Remember star 6 to on mute your line.
That is a line zero Hello, Yes can you guys hear me, we can now yes.
Hi, This is don't take on Keybanc. Thank you Phil.
My question Tommy.
Hey, I'm just wondering on transmission.
There's a lot of conversations happening on the in the West right now about the transmission planning, especially in a you know as it relates to the California, low, but others as well is there as you think about your Iot next year or even beyond that.
Taken the head room for you to maybe add transmission into the thinking process thing Dan.
What I would say and then I'll hand, it off to Brian as we are and have always been very deeply involved in all of the western discussions around transmission. Most of those are relatively informal because this is not.
Unionized market.
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Many of the most structure discussions around transmission come in the context of.
Regional resource adequacy work being led by the northwest power pool.
As we look at how we're going to meet our Montana.
And on our retail customers' needs.
We're very aware of the constraints.
On our transmission system in terms of being able to import power, which is why it's 1 of the reasons. It's so important to have generation within our balancing authority more generally.
Hang.
Montana reactor.
Transmission investment program now for the last certainly for the last decade.
Within our service territory, that's transmission to serve our customers beyond that.
Yes.
Transmission projects.
Rise or fall in the west.
We want to stay close to and consistently have Brian Yeah, Bob I think.
You said spot on IL I would add is we're very concerned about both electric and gas transmission constraints and obviously there is an opportunity for us to invest in increasing transmission on gas.
In summary, we're more than happy to do that to actually access ourselves to markets outside of the Montana and we would gladly do that in the meantime, we're also going to be focusing on what we can do within Montana from both electric and gas perspective to make sure we have supply and able to meet our needs within Montana.
So I think thats, an opportunity now to protect our customers.
To deliver to them on a daily basis every day, particularly during peaks, but also for us for a great opportunity for investment as well.
Thank you.
Thanks Duffy.
And it looks like Jonathan Reeder.
Dan and borrower has a follow up question Jonathan Your line should be open again.
Hey, I just figured I'd ask.
Obligatory inflation question, what you guys are seeing on.
On that front any pressures on your ability to combat them.
I'll take my first crack at it.
Brian will have something to add on Navy, Bob too, but I think from a couple with regard to 1 as you think about our Capex plan here in 2021 theory. Thank Ahmed.
A lot of those costs are already baked in where I would expect you would consider inflation is more in the out years that 'twenty 2 'twenty 3 if the trends.
And then I know continue whether there are short term trend or a long term trend time will tell but if so then certainly or cost per day do the same work, we would certainly affect that debt ultimately impact us and the customer bill.
And I all I would add is that inflation is certainly a concern going forward, obviously app to increase operating cost potentially.
Trends and obviously capital investment I'd also tell you that we're running it as a supply some supply chain issues. We've done a really nice job on managing that thus far were having great success.
Our success this year and we wanted to actually expand our implementation of Ami in Montana, It was going so well, but due to supply chain concerns there we're going to have.
2 our original schedule so.
Things are going pretty well, but we are keeping our eyes out for concerns around inflation concerns around supply chain.
Gotcha and then the other 1 just.
Kind of a wildfire activity I know theres been some in Montana.
Anything that we should be aware of that's kind of impacting.
To kind of call. It a concern and maybe just remind us how I guess any incremental costs associated with either a wildfire mitigation or.
I guess baidu them or whatever how that recovery process works.
What I would say is we've been.
Very active.
In your planning for wildfires.
Other events for a number of years, we participate in a lot of good regional analysis, but have developed our own strategy in terms of its includes everything from hazard tree clearance those are those.
Danger trees outside at the right of way.
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A really sophisticated analytical program to identify the line segments.
That need particular investment because of the nature of the program that that's a that's a capital item not an expense item, we could talk to you about it.
Or.
For 2 hours in Dec. We did just a couple of weeks ago have a great 2 hour meeting with the Montana Commission, giving them a.
Good presentation of what our our fire team within asset management is doing we also spent a good time at the board of directors meeting talking about the program.
4 out of Commission did give us support specifically for hazard trees in the in the last general rate case.
And I think we're seeing the benefits of all that work during this very dry year.
There is always more that we can do just in.
The Montana to the system, but.
The.
Foresight of our distribution on transmission folks is really paying off Brian Yeah, I'd, just add I mean, Bob mentioned earlier today that we had a peak load as of yesterday and obviously there are fires in Montana Youre reading about this in the paper day impact.
Maintenance and we manage around it and we continue to provide that service with very little interruption to our customers and it just speaks to the quality of our operations at this company I think the other thing I'd say is we get reminded I get reminded at least by the T&D folks. This company, we've been dealing with forest fires for their over 100 years, we've been in operation.
Hey, thanks.
Thanks, Jonathan.
With that it looks like your Q is exhausted before I hand, it back to Bob, though I would invite everybody over to the pool Party on Andy's House.
So I would like to have on over there.
Bob with that.
You left me a facelift.
It's hard to do but it's a great visual image I wish we were all identities pool. So.
Enjoy.
On the rest of your summer very much look forward to seeing you in person.
Over the over the rest of the year take care everybody. Thank you.
Okay.