Good Friday afternoon, and thank you for joining NorthWestern Corporation's financial results and webcast for the year ending December 31, 2022. My name is Travis Meyer. I'm the Director of Corporate Finance and Investor Relations Officer for NorthWestern. Joining us on the call today to walk you through the results are Brian Bird, President and Chief Executive Officer; and Crystal Lail, Vice President and Chief Financial Officer. [Operator Instructions] NorthWestern's results have been released and the release is available on our website at northwesternenergy.com. We also released our 10-K premarket this morning. Please note that the company's press release, this presentation, comments by presenters and responses to your questions may contain forward-looking statements. As such, I'll direct you to the disclosures contained in our SEC filings and the safe harbor provisions included on the second slide in this presentation. Please also note this presentation includes non-GAAP financial measures. Please see the non-GAAP disclosures, definitions and reconciliations also included in the presentation today. The webcast is being recorded. The archived replay of today's webcast will be available for one year beginning at 6:00 p.m. Eastern today and can be found in the financial results section of our website. With that, I'll hand the microphone over to NorthWestern's President and CEO, Brian Bird.

Thanks, Travis. I think many of us would agree, 2022 was a challenging year in many fronts, but we also had some very good outcomes in '22. From an operational performance standpoint, we maintained a safe and reliable service while reaching new all-time system peaks for both our electric and gas businesses in 2022. We also had significant storm response, both in South Dakota with two that occurred during May and with substantial flooding in both Montana and Yellowstone National Park. Our employees did such a great job responding to that. We were acknowledged by EEI for our response there. We are also one of the very few utilities with improved JD Power Customer Satisfaction scores in 2022 and most improved for both electric and gas among the West Midsized peers. We were recognized by Newsweek as one of America's most responsible companies, one of the 13 of the EEI companies acknowledged by Newsweek there. We also had very good regulatory execution. The rate case continues to progress well in Montana, and we received interim rates in October. We also had our largest capital investment year ever at $580 million invested in 2022, and most importantly, we did that safely. We announced our Net Zero by 2050 at the beginning of 2022 and have since published our TCFD and SASB aligned Sustainability Report. And lastly, from a reliability and affordability standpoint, and I'd argue sustainability standpoint, we negotiated an agreement with Avista to transfer our Colstrip ownership to us of 222 megawatts effective December 31, 2025, for a zero purchase price. And regarding Colstrip, why Colstrip? When I think about that, again, I would say reliability, affordability and sustainability was an extremely important acquisition, or I'd say, transfer of ownership. Reliable, it's a known asset to us. We've been in…

Thanks, Brian. And before I walk you through the '22 financial results, we acknowledge it is a Friday afternoon before a holiday weekend. So we appreciate your interest in joining us this afternoon, and we'll keep our comments not too lengthy. The other thing I will mention is Brian just covered the key things that we executed upon in '22 is how important that '22 was from a base and foundation for us of laying the groundwork for a strong rate case that we're working with staff and the commission and interveners on and continue on regulatory execution, but also importantly, from a credit metrics perspective, resolving our negative outlook with Moody's and continuing to enable a strong foundation for growth as we go forward. So with that, I'll speak to our results for '22 on Slide 6, beginning with our fourth quarter results, which we closed out the Q4 of '22 at $1.16 on a GAAP basis and on a non-GAAP basis, that's $1.13. In comparison to 2021 on a GAAP basis, that's a $0.20 increase and on a non-GAAP basis, $0.09. From a full year perspective, however, we did come in just slightly to the low end or outside of our guidance range. Our guidance range was $3.20 to $3.40 initially. We did lower that as we went into closing out the year, but concluded on a GAAP basis at $3.25 as compared -- on a GAAP basis and $3.18 on a non-GAAP basis. So with that, on Slide 7, I'll give you a bit of how we think about the significant drivers for the year and what we expected and what we didn't expect, you'll see our guidance range on the left-hand side of this. And to the right, the things that significantly impacted us for the…

From a capital investment perspective, I think from the last five years, we invested about $2.1 billion over those five years and obviously, heavily weighted in the back years as we embarked on building Yellowstone County plant. We're still going up about another 15%, approximately 15% going now to $2.4 billion in the next five years from a forecast perspective. Obviously, that investment is going to address a generation and transmission capacity constraints. We have transmission constraints on both the electric and gas side and particularly in Montana as Montana continues to grow. On the distribution side, certainly grid modernization is important. And from a generation standpoint, renewable energy integration and just continue to deal with the capacity constraints that we have as a company. This $2.4 billion, it does include the Yellowstone County Generating Station, and it does include some hydro upgrades that we plan to do and some maintenance of our generation, but it does not include any new plants. And with that, I take you to the next slide from a looking forward perspective. Yellowstone County certainly in those numbers we just spoke about, but I'll talk about in a minute some plans for South Dakota. Speaking Yellowstone County, we began construction early in '22, we're already in great progress there over from a spend perspective over halfway. And the current schedule anticipates a commercial operation during the first half of 2024. And so we're excited about the continued progress on the Yellowstone County plant. We actually take the Board for a tour of the construction at our April meeting in billings. From an electric supply resource plan, we did file our South Dakota plant in late '22 in September, and we're already talking about -- to the commission about a retire and replace candidate up in Aberdeen, somewhere in that 30 to 40-ish megawatts, continue to have a dialogue in terms of appropriate size there. So the thoughts about moving forward building the plant there is exciting for us. And again, those numbers are not in the capital we just shared. Lastly, as a result of certain changes participating in wrap, thinking about IIJA and IRA, we decided to hold of filing our integrated resource plan in Montana until the end of March. We're still on track to do that at the end of the March. And we've also, of course, incorporated our news regarding Colstrip into that plan. So we feel good about progress we're making there, and we'll look forward to sharing that with you and speaking with you during the April earnings call. And with that, we'll conclude, and I'll hand it back over To Mr. Meyer.

Thank you, Brian and Crystal. [Operator Instructions] With that we will take our first call from Jamieson Ward from Guggenheim. Jamieson, your line should be unmuted.

Perfect. Yes, it is. You got a little pop up there now that actually says stay muted or unmute. That's quite helpful. I think that should make the call go smooth. Thank you for taking our question here. Appreciate it. Just got a couple for you. Understanding that, of course, you're not going to be issuing '23 guidance until after the rate case standard procedures you've done in prior years. You did, though, go to or opt to put out not just '23 but a full five-year capital plan, which was great. It's helpful for modeling. Some questions around both of those and then just some differences in the slides. So you reiterated the 3% to 6% long-term EPS growth today. But looking back at the third quarter deck and last year's 4Q deck, the base year of 2020 is missing. So I'm just wondering, is that sort of soft signaling that you're kind of reevaluating what an appropriate base would be, and that might be one of the things that gets unveiled after the rate case when you roll forward and put out your official guidance. Or was it just missing in the slide deck in 2020 stands?

Jamieson, you have great attention to detail. That's my first comment. An excellent job of figuring out how to unmute yourself. I know we make that challenging for a Friday afternoon. But your comment is a good catch and correct. We will evaluate what is our base year. Obviously, 2020 is pretty dated at this point. And so when we do come out with updated guidance, I would expect to see a new base from us.

Got you. Totally makes sense. Just want to check and run it by you. The second one is on rate base. And the first part of it, you've answered there. It just had to do with the $4 billion in 2020 as a base. The second part of it, though, so I think that's dealt with. The second part was when I looked at CapEx year-by-year, summed them up and pulled out the Yellowstone component from last year's '22 to '26 plan and then this year's '23 to '27 plan, it still kind of looked pretty comparable from a dollar standpoint. So I'm just wondering if maybe I should be looking at it differently. But essentially, 2.2 times Yellowstone for the '22 to '26 plan and 2.240 times Yellowstone in the current plan, how do you get rate base growth of 4% to 5% if the dollars amount -- the dollar amount being invested stays the same, but of course, have depreciation and so on? Or is it more that it's a CAGR rather than an annual growth rate and it's sort of more back-end loaded, weighted towards more transmission opportunities? Just trying to get some color on how to best sort of understand the path you guys might see going forward since you've opted to give CapEx guidance and roll the five-year plan today?

Great questions, Jamieson. We did opt to give CapEx guidance because we knew if we didn't, you would all have the questions. So we might as well, right. And how we think about that? And as the CFO sitting here, managing our credit metrics versus the CEO over there saying, we need to get after capacity, there's plenty of capital to be done. So what I would say this roll forward represents is, one, you are rolling off Yellowstone. There are some slides in the exhibit. It sounds like you've already been there that really give you that exact math of Yellowstone is incremental to what we would say as a normal run of the mill capital spend. And then secondly, the key piece here is we're focused on our FFO metrics. So plenty of capital will be done. But how can we do that and maintain our ethical metrics and importantly, drive affordability? Again, there's -- I would call it almost an unlimited amount of capital, if you can get the folks to get the work done. The question is, what can we do and maintain affordability to customers? How do we think about that? And then how do we think about our FFO metric? So the capital roll-forward you would see here as steady as she goes. It is indeed a CAGR. And so I would think about it in that regard as well.

One thing I'd add to that, that I think the issue with Colstrip, I think people have been concerned about our capital needs as a result of procuring something for zero and an opportunity you may miss, if you will, from a generation investment perspective. One of the reasons we're certainly comfortable, obviously, we address that issue because we're concerned for our customers. We're going to do this in essence to reduce risk for us on our end in terms of owning Colstrip also for our customers and keep sufficient bill headroom so we can have this high level of capital and notice that this slope is not the upward hockey-stick type slope that we've seen historically for our capital plans. It's pretty relatively flat across the time period. It just demonstrates the amount of capacity investment we need to make as an organization for our growing communities.

Got you. That's very helpful color. And it makes a lot of sense why you opted to go to the road that you did there. It definitely seems like that was the right approach to take. Last question for me, and then I'll pass it off to others in the queue. On FFO, prior metric target had been 14% to 15%. Now it's greater than 14%. Just wanted to get a sense of, a, is that for a certain period of time, and then it's back to the 14% to 15%? Is 14% just the new normal going forward? Is it dependent on whether you get things like the capital, right? Like how should we think about what moved you from the 14% to 15% down to the 14% and decided to keep it there as the new standard single level there in guidance?

Again, great attention to detail. I don't know that I overbought changing it from 14% to 15% to just being over 14%. I would tell you that's where we're targeting as being -- and to your point, it's unlikely that we would target to be well above that number. So 14% to 15% is probably fair to think about that, but we continue to be focused on making sure that we're maintaining. Moving our credit metric expect for that, we'll acknowledge that this year pulls out a little lower FFO than we were anticipating because of the pressures we saw at year-end, again, supply costs and how that affects our debt level. But no intent of change in tone or where we're headed between saying above 14% versus saying 14% to 15%.

Got it. Thank you. Very helpful.

Thanks, Jamieson.

Okay. We'll take our next call from the line of Anthony Crowdell at Mizuho. Anthony?

Hi. Good afternoon. Can you hear me?

We can hear you, Anthony.

Hi, Anthony, we could.

I don't know what's -- a box keeps popping up. A box keeps popping up to unmute multiple times, but unlike Jamieson, I'll try to keep it brief. Just quickly, thoughts you're acquiring Colstrip for zero, I'm just curious, does that flow into rates or [technical difficulty]?

Well, the issue is we're acquiring Colstrip for zero, obviously, there's no upfront capital cost. So that is effective in 01/01/26. It's our intent. Of course, by the time we get to 01/01/26, we want to make sure that we get recovery of our operating costs that will start on 01/01/26. And if there's any incremental capital from a maintenance perspective, we want to have certainty of that on a going-forward basis. I think the feedback we've seen in Montana from the governor, the U.S. -- our U.S. representatives and total delegation, the state legislature and even a former commissioner, at least, a tremendous support for Colstrip. And so we feel good about where we sit on this particular issue. And then ultimately, whatever cost we associate with Colstrip on a going-forward basis, high chance of recovery.

Do you have the option of using Colstrip as a merchant facility to help offset some of the volatility that you're seeing in the PCCAM, as like a natural hedge that is...

Well, Anthony, I'd say this. We don't have to operate as a merchant to offset the volatility in PCCAM. We can operate it as a regulated resource to do that, right? Because we can use that. We sort of calling on the marketplace, we can operate our existing asset. And my biggest complaint about this Colstrip acquisition is we have to wait till 01/01/26 to get. I think another thing I'd just say on PCCAM, I think what Crystal's done in terms of trying to adjust what's a proper way to treat the PCCAM and how we should get proper recovery and hopefully, that gets captured in this rate case, that's going to certainly help us, too.

Great. And the last one, on the FFO to debt, when do you get to 14%?

That's a great question. And as I said, we're not giving long-term guidance, but we definitely -- the key determinant of driving our FFO improvement is this rate case outcome.

If the rate case outcome is within expectations, do we hit 14% by year-end?

Yes.

Okay. Thanks so much. I'll leave it there.

All right. Thanks, Anthony.

Thanks, Anthony. We'll take our next call from the line of Sophie Karp at KeyBanc.

Hi.

Hi, Sophie. We can hear you.

Hi. Good afternoon. Thanks for taking my questions. So my first question is on the IRP, which you, I guess, slightly delayed the filing of it, and you alluded in your prepared remarks that you're evaluating options given the IRA and the Colstrip. Just was curious to kind of maybe if you could discuss what those new options are that you're seeing given the new reality under the IRA framework and your acquisition or transfer of ownership of Colstrip?

I think really, the three things that come to mind on there is, there's new capacity accreditation associated with RAP we have to take into consideration. Obviously, having Colstrip in the mix impacts the amount of capacity that we need and the type of resources potentially. And then lastly, just thinking about what the cost resources would be, IRA is one factor, but obviously, we've seen increased inflation and other things, supply chain issues impact costs in other way. So just trying to consider those things into the mix. And it's requiring us to do quite a bit of work to change and update this. And Sophie, it's too soon for us to tell you what we expect to see from a change perspective, the resource plan will be out here in about a month and half.

Okay. All right. We'll wait. And then my other question was, would you care to comment about the broadview decision? And I guess, the broader question I have is what kind of an impact would interconnect and such facilities have on your already challenged, I guess, power supply costs and I guess the calculation of the avoided cost, is that going to change in your favor, maybe with the addition of Colstrip, other resources? How should we think about this moving forward?

I think Colstrip certainly helps as we closed that gap and have reduced capacity requirements. Obviously, the broadview decision we're disappointed in. From our perspective, at the end of the day, this -- from an energy perspective with some of these resources, we believe, is customers -- it's energy, our customers don't necessarily need and certainly at the prices that they ultimately have to pay over the life of these contracts. And it certainly gives us less flexibility as a company to operate our portfolio of resources when more and more of these contracts are part of the mix.

All right. Thank you. That's all from me.

Thanks, Sophie.

Thanks, Sophie. And I think with that, we've exhausted our queue of questions. I hand it back to Brian for any closing remarks you might have.

It's my first time of closing remarks. I should have been prepared to say something. Actually, I would just say this. I think we're very excited about kind of from a tailwind perspective. I know as an industry we've got tremendous amount of headwinds in front of us, higher inflation, higher interest costs, higher commodity costs. But as an individual company, I think from the rate case, from how we're handling our capacity issue with Yellowstone County and Colstrip, and I think the reception we've received from the state in terms of some of these decisions we made, I feel as an individual company, we've got a lot of tailwinds as well. So extremely excited about 2023 and where this company can go.

Thanks, again, for joining us on a Friday afternoon before holiday call. Please feel free to reach out to me personally if you have any questions following the call. And with that, you may now disconnect.