Travis Meyer - IR Robert Rowe - President & CEO Brian Bird - VP & CFO Chris Ellinghaus - William Capital

Daniel Eggers - Credit Suisse Paul Ridzon - KeyBanc Brian Russo - Ladenburg Thalmann Brian Shin - Merrill Lynch Chris Ellinghaus - William Capital

Thank you, Anna. Good afternoon and thank you for joining NorthWestern Corporation’s financial results conference call and webcast for the quarter ended March 31, 2015.

NorthWestern’s results have been released and the release is available on our website at www.northwesternenergy.com. We also released our 10-Q pre-market this morning.

Presenting today are Bob Rowe, our President and Chief Executive Officer; Brian Bird, Vice President and Chief Financial Officer and we also we have several different executives of management around the table with us today as well. Before I turn the call over for us to begin, 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 will remind you of our Safe Harbor language. During the course of this presentation, there will be forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

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. The information in this presentation is based upon our current expectations as of this date hereof unless otherwise noted.

Our actual future business and financial performance may differ materially and adversely from our expectations expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or this presentation for any reason.

Although our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. The factors that may affect our results are listed in certain of our press releases and disclosed in the Company’s Form 10-K and 10-Q along with other public filings with the SEC.

Following our presentation, those who are joining us by teleconference will be able to ask questions. The archived replay of today’s webcast will be available beginning at 6:00 PM Eastern Time today and can be found on our website at northwesternenergy.com under the Our Company, Investor Relations, Presentations and Webcasts link.

To access the audio replay of the call, please dial (888)-203-1112, then access code 3190257.. I’ll now turn it over to our President and CEO, Bob Rowe.

Good afternoon and thank you very much for joining us just by way of introduction a couple of comments of course, this was our board meeting and annual meeting and we’re meeting at our operation center in Huron, South Dakota which is the hub of our electric and natural gas operations in South Dakota and Nebraska. As we always do, we had a community event visit with civic leaders and customers a couple of nights ago, a memorable part of that was recognizing former NorthWestern Public Service CEO, [Hall Smith], who recently passed away.

Mr. Smith had been the CEO of a very strong successful regional utility, our predecessor for 25 years, had a lot get together to remember and his family members were with us.

Secondly, this is the meeting where our annual leadership NorthWestern Class spends time with the executives, with the board of directors, they attended the annual meeting today. This is a key program in developing the future leaders all across the company and in all different occupations within the company, it’s always great when they join us.

Third, we’re joining you for the middle of our South Dakota operations, several days ago we had a meeting of our regional economic development group that we sponsored again in South Dakota and I believe all those meetings really impressed with the vitality of the economy in our region and to the communities that we’ve served and the commitment of the business and civic leaders to really do the right thing in the region and we’re delighted to be able to work with them to build a stronger economy in communities. Turning to significant activities we did have a very successful first quarter owning and operating, the integrated hydro system really in Montana that is now dedicated to serve our Montana customers.

Second, improvement in net income of $5.8 million or 13% in the first quarter of 2015 as compared with the same period last year. Next GAAP diluted EPS of a $1.09 as compared to $1.17 for the same period in 2014.

And while net income did improve the decrease in EPS is primarily the result of the equity issuance in November of 2014 to fund hydro acquisition, of course. Next non-GAAP adjusted EPS of $1.18 as compared to $1.16 for the same period in 2014 and Brian will come back and spend more time on the reconciliations later in the presentation.

Next reaffirming our full year 2015 adjusted of 310 to 330 per diluted share and then finally the board of directors approved a $0.48 stock dividend payable on June 30 this year. Last comment before I turn it over to Brian, this was the annual meeting and our shareholders did resoundingly approve the election of directors of our outside auditor and say on pay.

We were particularly delighted today to be joined by our new director John Horsfall and John has already made a real contribution to governance of the company, we’re just could not be happier that he had joined us on the board and joined us here. And with that I’ll turn over to Brian.

Thanks Bob. Good afternoon folks.

On page 5, I’ll kick off the financial results discussions. Page 5 shows the summary results for the first quarter 2015 versus 2014 and hence I’ll get into more detail on various parts of the P&L, I’ll take you right down to income before taxes.

On a pre-tax basis we’ve $61.4 million for the three months ended March 31, 2015 that’s a $7.8 million increase year-over-year about 15%. Net income was $51.4 million, a $5.8 million increase that’s a 15% increase, but on a diluted earnings per share set on a GAAP basis we did finish the quarter a $1.09 versus a $1.17 from the prior year an $0.08 reduction or 7%.

I’ll get into more details in terms of what drove that differential and talk a little bit about on a going forward basis our expectations on EPS. Moving to page 6 on gross margin it’s a pretty simple story.

Electrics up $39.2 million nearly 30%, gas was down nearly $8 million or down 11% for a gross total gross margin increase of $31.3 million up nearly 16%. Really two things are driving the quarter obviously the introduction of hydro operations on a year-over-year basis improved gross margin $42.1 million, but the extremely mild weather conditions in our service territories had a huge impact retailable gas and electric retail volumes you see those listed there combined a $11.3 million impact on a negative basis versus our gross margin.

Of that $11.3 million we deemed $10.5 million of that attributed to weather and I’ll talk about that in a moment. Other thing I’d like to point out on this slide, even though gas today represents 20% of our business, electric side of our business is approximately 80%, you can see what a mild first quarter can do to the gas side of our business and certainly it was larger variance at a volume metric perspective that we had on the electric side.

Moving forward to page 7, we never showed this chart before which demonstrate the impact of weather to the quarter, the bottom left hand side of the page we show maximum temperature versus normal and normal being at 20-year lean if you will. And then on the right hand side we show minimum temperature from normal.

And again, in the bottom left in the maximum temperature from normal all of our service territory which certainly warmer than normal. In the minimum temperature Montana was definitely warmer during this time period, but South Dakota and Nebraska were actually at [indiscernible] what does that all mean, if you look at the top right hand side see versus historic average Montana hotter regardless of the means to measure that and that results in a 13% indication and South Dakota and Nebraska thus offsetting somewhat it was only about a 1% impact.

I think people know Montana is a significant portion of our business and as a result because of the weather impact it had an impact on our financials. Matter of fact versus normal we deem weather was about $7.1 million impact on our business or $0.09 and I’ll talk about that in a moment.

And little after we’ve ensured 2015 as compared to 2014 as you might remember first quarter 2014 actually was colder than normal and so you can see there 2015 is quite a bit warmer throughout our service territories on a year-over-year basis and again that was $10.5 million or about $0.14. And again about two-thirds of that $10.5 came from our gas business and the third of course from the electric side of the business.

On expenses on page 8, lot of moving parts here, I’ve drafted the full page operating general administrative expenses rough about 12%, property and other taxes up about 15%, depreciation depletion up about 18%. In total dollars $18.8 million, total operating expenses are 14% increase.

However, if you take just the hydro operations costs noted below of 10.7, the $3.7 million increase in property taxes attributed to the hydro transaction. A $4.1 million of hydro depreciation in the depreciation item those three items add up to $18.5 million, had we not, if you exclude hydro on a year-over-year base we kept all of our other expenses flat for the quarter throughout our operations in the company.

We certainly understood looking ahead what we thought the impacts the weather is going to have on our business and managed our business accordingly and thus kept expenses extremely flat on a year-over-year basis. I could move to page 9, from an operating to net income perspective at the top of the page you see operating income, the $83.9 million up $12.9 million or approximately 18%.

Below that you see an increase in interest expense of just over $3 million that’s primarily attributed to the hydro acquisition, the debt issuance we did late in 2014 associated with that transaction. On the other income side, those of you who follow the story closely understand the impact our share price can have either up or down on deferred shares held in trust for our non-employed directors deferred compensation, I’ll spend some time discussing that in previous quarters, but since share price was down our other income in 2015 was down on a year-over-year basis.

It gets us to a prefer income before taxes I discussed at earlier, the primary difference between pre-tax and net income we did have higher income tax expense primarily associated with higher pre-tax income. I could move you to page 10 very quickly on the balance sheet, not much has changed since the end of 2014 to the first quarter 2015.

You will notice at the bottom that the ratio of debt to total capitalization is closer to high end of our range of 50% to 55%. We do expect certainly as we move into 2015 and with the additional revenues associating cash flow with hydro that will be within our 50% to 55% range, but near the high end of that range in 2015.

Moving forward to the page 11 on the cash flow statement, cash flow from operations are $126.8 million we certainly list off to the right hand side and the reasons for that increase on a year-over-year basis primarily we would talk about obviously hydro having the impact issues in terms of collections of receivables and others that improvement has certainly helped cash flow on a year-over-year basis. Investing activities relatively the same quarter-over-quarter but I would point out on a financing side two primary changes on a year-over-basis first in 2014 we finished up our dribble program in 2014 that had an impact in the first quarter of 2014 and obviously we increased our dividend 20% at the start of 2015 that certainly has demonstrated itself with an increase in dividends and common stock here in 2015.

I could move you forward to page 12, on a non-GAAP adjusted EPS really only one item that impacted our financials moving from a GAAP to an adjusted diluted EPS from a $1.09 we did back, add back the $0.09 of unfavorable weather hitting us to $1.18 that’s comparative to a $1.16 from the first quarter of 2014. On page 13 we break that out in more detail, I would turn you forward to that.

We’ve shown this chart before in the past, we’ve got positive feedback that are helpful for our investors to understand the moving parts within the P&L. You kind of move from left to right you can see moving from GAAP to non-GAAP measure and then on the right hand side move from far right towards the middle you can compare on a non-GAAP basis throughout the P&L our results.

At the very bottom you can see the $1.18 versus the $1.16 I just previously talked about. But even on a pre-tax basis when you adjust for the various items that we adjust for in each of the quarters, pre-tax income was up nearly 30%, net income up approximately 23%, but diluted EPS $0.02 improvement on a year-over-year basis, it’s only 2%.

I think this has caused some concern and trying to understand with adding the hydro act of that increase these are small. One thing I would like to point out moving towards the next page we do anticipate to see improvements in the second and third quarters associated with the hydro transaction.

We used and illustrated example here on page 14 trying to demonstrate the impact of relatively consistent net income provided by these assets, the hydro assets that we added in late 2014. We expect to have net income relatively consistent throughout the quarter.

This is illustrated by the way but it does show when you take the addition of the net income the share for those quarters that are relatively small net incomes second and third quarter for instance that can have a significant impact from an accretive standpoint on EPS. And hopefully investors have had chance to understand this slide and see from an EPS accretion through this illustrative example that though has shown as zero EPS accretion from this perspective in the second and third quarters we do expect to see more accretion associated with hydro assets.

One thing I would point out if you wanted to go back and look at hydro-related, electric volumes in previous years and by quarter they typically come in around 25% consistently through each quarter you might see down in the second quarter little higher in the third quarter but they relatively track around 25% per quarter and so we think this illustrated example should be helpful to investors to understand why we are very comfortable keeping our guidance, reaffirming our guidance for 2015. And with that I turn you to page 15 and we do – we continue to reaffirm our 2015 earnings guidance of $3.10 for $3.30 we certainly list out those factors that down below in terms of assumptions that we use going forward one of which of course is normal weather as we move forward.

And again, the two primary reasons we are comfortable reaffirming 2015 earnings guidance is first and foremost we do expect a lift from the hydro particularly in the second and third quarter and secondly we do expect a lift from the South Dakota rate case in the second half of 2015. And with that I will turn it back to Bob.

Speaking of South Dakota rate case, as you know we did file in December this is the first requested adjustment in electric base rates in 34 years and that's really an extraordinary accomplishment for our customers and I would say that demonstrates the real value of owned generation assets and the iterated system. You see the couple of key parts of the story first in the upper left on that page the flat fixed charge in energy portion of the bill over decade and then the adjustments made for crack related portion of the bill such as fuel and transmission.

Lower left you will see that the story in both nominal and real numbers and our South Dakota customers have enjoyed really an impressive decrease in real cost over that time. As you know question of what is driving this filing at this time, 96% is associated with small number of really non-discretionary projects in particular the big stone and deal projects which were driven by compliance with federal environmental regulations as well as the South Dakota state implementation plan that’s over $15 million.

The [indiscernible] in service sometime were over $7 million almost $7.5 million and then the – that we are building right now and all other it is barely over a $1 million so that's pretty of the story of what is driving the rate increase request entailed in December we have the ability to issue to implement interim rates in July and the commission has one year to act on the filing. Other key activities going back to hydro, we now do own and operate for our customers the integrated Montana hydroelectric system with facilities in two basins we have seen the benefits of that this year the facilities are now in the center [indiscernible] the facilities are really operating as we hope they are very high quality it’s important to anything really the great people who have come over from Montana to join us at NorthWestern Energy.

Speaking about where we have come from on the Montana side, from real assets dedicated to serve customers is recently 2008 now very diversified set of assets that creates again real opportunities for us to serve our customers. We are doing – two studies I mentioned these before first is the study of the capabilities of the hydro system itself and what services that might be able to provide.

Second will be an evaluation of – in the integrated Montana generation fleet now including hydro as well the other assets. We look forward to seeing that results of all that good work over December.

As you know we are essentially [indiscernible] through next call when we expect that it will transfer to the [indiscernible] and we are obviously working with the tribes to get ready for that condense. I mentioned the Big Stone project in particular.

First it should I remind you that the Neal project is complete Big Stone is getting very, very near to finish line with over $82 million capitalized through March 31, total investment to $95 million to $105 million we do expect a net project operational prior to second half of the year. But obviously before our basic infrastructure investment and particularly the programmatic approach we are taking in the distribution system infrastructure plan which is gas and electric distribution in Montana only.

We are half way to that project. We are very happy with the results that we are seeing, good work our employees are doing and certainly good project management is there.

We are really taking that aim philosophy and expanding it to our entire system and transmission, substations, distribution, automation, gas and electric both but also Nebraska and South Dakota. It’s impossible to go a week without reading something in other state or international for us about the need for infrastructure investment.

Many states are quite actively compelling their utilities to pay attention to infrastructure, notably infrastructure was important part of the ideally overview before it was released several days ago. I am very proud of the way NorthWestern Energy has stepped up to do really is right in the system.

The plan is developed further refined will be talking to you more about that. Next is as you know we have made a number of natural gas reserve acquisitions dedicated to serve our Montana customers we currently own about 25% of our Montana National gas factory in both retail customers and power generation.

And that's been total about $100 million investment. We do have a target to own about 50% of this estimated need, but also we are looking for opportunities to provide that same kind of long term stability to our customers in south Dakota and Nebraska as well and I think to announced to bring up that question but we are very actively in the process of looking and we will be leader as you’ve been able to talk about something publicly.

Dave Gates Generating Station to pull that -- the plant continues to – we continue to wait for response to reconsideration request as you know that was in April 2014 for decision to allow essentially fractional recovery. Notably we have been – thanks to DDGS we have been in compliance with federal reliability requirements throughout that period.

We think that actually indicates the design of the plant. So nothing again I apologize for this nothing new to announce.

But we will keep you informed and we’re just as eager to hear something as are you. This all rolls up into the capital spending forecast which is the last slide that we will discuss before we open it up for questions.

And this shows you almost $1.5 billion in investment dedicated to serve our utility customers for 2015 through 2019 and we expect to be able to fund these identified projects through a combination of cash flows obviously aided by NOLs, and long term debts. And these projects include maintenance CapEx, transmission [indiscernible] will be essentially merged in an approach the ongoing Big Stone investments and then this specific hydro investments that were discussed with the Montana commission as far as it review of the hydro transaction doesn't include other projects such as any activity on natural gas reserves future peaking requirements in South Dakota and Montana or any other acquisitions that might require additional equity funding.

With that I think we can open up the line for questions and discussions.

Hi, good afternoon guys. Please start off maybe a little bit of South Dakota case and you filed in December, can you just give a little sense of what’s coming up so far in the case and where you are getting your potential push back or friction given the size of the rate increase?

Sure. No surprises yet.

What’s interesting is that South Dakota commission typically and first of all as we discussed in a lot of experience processing cases like this for all of the other utilities that serve South Dakota including the other based on our owners. Our past experience has been that the South Dakota commission has been able to very efficiently process cases.

In this case we are in the kind of queue behind several other significant rate cases as well and when we knew that at the time we filed. So at this time there has not been a procedural order issued.

There has been request for intervention from some of our larger customers that is absolutely what you would expect and there has been a petition which is the part in South Dakota part of the process you can gather petitions signature requesting a global hearing. That occurred in Yankton and actually we really appreciated that.

The commission has set a hearing down the road just actually just been few weeks what we did was go out and invite all the petitions signers plus other local citizens to our community meeting this last week in Yankton and later everything out talked to them about their questions and concerns we will be doing that voluntarily. We’ve let the South Dakota commission know what we were doing.

They think it’s a great idea. So we will be holding on our own community meetings around our service territory.

Meeting in Yankton really good, real concerned about in fact on low income customers folks on fixed incomes in particular and we shared that concern. So we had a good discussion there with some gentle customers, public sector and commercial like and again under the process we have the ability to implement an interim rate in July.

Certainly we expect before then – well before then we would hope there would be a procedural schedule when we get into discoveries and those are probably the next foremost steps.

If you got to procedural schedules in the next month or so is there enough time realistically to go into the process in South Dakota at this time by December or we are going to be you are tied on time depending on when the schedule comes?

Based on the South Dakota commission performance we are very comfortable that we will receive an order within the time line, we do have the ability in the 12 months to implement the rates as requested, but I cannot ask variance in South Dakota is that they will manage the process and get to a result within the time alone.

Okay and then on the gas reserve comments, are you suggesting that you are getting closer to you are finding a proposal but the commission is happy within the gas price environment or you are talking about in the sense of you identified some properties who would make sense to buy?

I’m not going to answer to the specific question. So that’s why no comment but what I will say two things previously we discussed how we work, how the curve was essential flat and under the situation that we had in place.

There are lot of – there was a clear win for customers with acquisitions of that low price, but because of the flat curve that would not have been in compliance with the stipulation. At this point the curve has more of a normalized [indiscernible] contago shape.

So, we are comfortable about these and as I said probably more times in the yield. Clearly we have been kicking tires and we are certainly furiously kicking.

Are you discovering the recent activity among the owners of the reserves to perceptively sell right now. And am I guess given the low commodity price environment that’s sort of thing.

Our indication was some other people were having harder time buying reserves in this price environment?

That’s a great observation I think we discussed that probably on the last call where it is certainly still some truths to that but I do believe there are opportunities out there.

Okay, very good. Thank you guys.

Thank you.

Good afternoon.

Hey Paul.

Can you kind of talk about the hydro condition you are seeing here in and we have heard something about snow pack pretty weak, I know you have got a fewer pass through in Montana but what are the implications for curve?

Actually John Hines has this figure on that Paul, he is our Supply Vice President he can speak specifically to curve. We are actively monitoring that over the year.

What I would say is some of the hydro conditions, first of all we are seeing the benefit of the diversity on the system being in two basins and snow pack is actually again we talked about we had much warmer temperatures in the most of you’ve enjoyed over the last few months, but it seems like perhaps most of the snow that fall in the western United States has fallen in South Western Montana.

Okay. Just a couple of points to augment Bob’s statements.

For Q1 our actual hydro output was around 20% higher than what we budgeted. We are expecting, assuming the average weather for Q2 it will be approximately equal to budget and Q3 given the volatility in weather it’s unsure where we will end up with that.

Regarding current we are expecting to see as Bob noted western Montana received better snow pack than normal and we expect to exceed the commissions cost benefit analysis by a substantial amount.

Great. Great.

Thank you for your update.

Good afternoon. You mentioned exploring the gas reserve opportunities in South Dakota and Nebraska could you quantify the amount in terms of the dollar amount or size of the potential opportunities?

First clarification would be not opportunities in South Dakota and Nebraska but opportunities to acquire gas dedicated to serve South Dakota and Nebraska but transfer will be a piece of that. This is we did in Montana we would likely start very small and spend time with the South Dakota and Nebraska commissioner explaining the strategy we have discussed particularly in south Dakota we have discussed it with the commission there previously and I think they are interested in the possibilities.

And on interim rates that you expect to file in July in South Dakota I mean would the interim rates be comparable to the revenue request or would it be a fraction of that?

Likely we would file interim rates consistent with the request.

Okay and any update on the Montana general rate case strategy?

No. as you know we evaluate that on an annual basis and we will be doing that again in anticipation of next year.

Okay and I am sorry if I missed this, what was the EPS impact from delusion in this first quarter?

$0.20 for the first quarter Brian. We show on our full year $0.61 to $0.63 is my recollection much like what I discussed earlier but how the quarters play out I would expect $0.20 in the first quarter, $0.20 in the fourth quarter and the remaining $0.20 to be split between the second the third quarters.

Got it. Thank you very much.

On numbers

Good afternoon.

Hi Brian.

Just on the reaffirmation of the 2015 guidance clearly you guys still see a lot of constructive developments in the remainder of the year just given how the abnormal weather for first quarter played out should we be thinking about all things being equal that we should look at the guidance sort of the bottom half of the 2015 guidance or is that not the right way to think about things.

That's right. That's a good question Brian but I we don't give guidance on our guidance if you will.

We are reaffirming our guidance at the range of 310 to 330.

Fair enough. That was worth a shot, thanks lot you guys.

Thanks Brian.

Hey guys how are you?

Hey Chris.

Brian you were talking at one point something about 10.5 million and $0.14 and I didn't catch what you were talking about there?

Yes, what I was talking about is one way to do it unfortunately the slide might not have been in front of your screen but if you looked at page 13 back to that adjusted earning slide, if you took a look at the revenue in the 2015 we had $7.1 million difference between unfavorable weather versus normal in 2015 and last year we had a $3.4 million favorable weather. You add those two numbers together you get $10.5 million and so on a year-over-year basis 2015 versus 2014 its $10.5 million and as I talked about on the slide that shows the weather patterns that $10.5 million equated to $0.14 is our calculation.

Okay. And in a normal I know you were giving the illustrative example about the hydro on one of the yes, on page 14 I guess given the weather does that have any impact at all on how hydro performed in any way?

It did. It did not necessarily how it performed I think John was talking about how snow pack would impact the flow that hydrology has more of an impact than the temperature if you will but we think, I would say the weather in general had impact on volume metrics and that has an impact of course on hydro performance.

Sure. Alright, thanks guys.

I appreciate that.

Thank you Chris.

No further questions, well again thank you for your interest and support over the quarter I know we’ll be seeing couple of you over the coming weeks and months and we will talk to hopefully all of you next quarter.

Thanks everybody.