Good afternoon, and thanks for joining NorthWestern Corporation's Financial Results Webcast for the year ending December 31, 2021. My name is Travis Meyer. I'm the Director of Corporate Finance and Investor Relations Officer for NorthWestern. Joining us today to walk you through the results and provide an overall update are Bob Rowe, Chief Executive Officer; Brian Bird, President; Chief Operating Officer; and Crystal Lail, Vice President and Chief Financial Officer. We do have other members of the management team joining us today on the call today to address your questions as appropriate. [Operator Instructions] NorthWestern's results have been released and the release is available on our website at northwesternenergy.com. We've also released our 10-K premarket last Friday 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 will direct you to the disclosures contained in our SEC filings and safe harbor provisions included in the second slide of 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. This webcast is being recorded. The archived replay of today's webcast will be available for one year, beginning at 6:00 PM Eastern today, and can be found in the financial results section of our website. With that, I'll hand the presentation over to NorthWestern CEO, Bob Rowe.

Good afternoon. Thank you all for joining us. Travis, why don't you click back to the cover slide for just a second? Just a bit of history tying into our modern service territory. This is readers' alley in Helena. This was built in 1870 -- in 1870s, originally it was housing for minors for immigrants from as far away as Georgia and from across the Pacific Ocean. Today, they're non-profits located here. There's a great little Vietnamese restaurant, just out of the picture to the left and up the hill and a wonderful little bakery to the right, just out of the picture. Helena doesn’t get quite the attention or focus that the Bozeman big sky area does, but this is also very much a growing and dynamic community in our service territory, right below the continental divide and then on the shores of the Missouri River, two of our dams, Holter and Hauser, which has seen a lot of work and investment over the years -- over the recent years are just north of here downstream on the Missouri. So, there's a little infomercial on one of the wonderful communities we serve. And going back to what you really want to hear about are the 2021 highlights. Starting with the financial results, net income of $186.8 million -- can I call that $187 million or $3.60 diluted EPS. Non-GAAP EPS to $3.51 is what very much within our guidance range and 4.8% increase over non-GAAP results the previous year. We expect long-term EPS growth rate of between 3% and 6%. 2021 was a record year for our capital investment. This is exciting, because it's us living up to our commitments to our customers and the communities that we serve. We've had a 12% CAGR in capital investment over the last five years, 2017 to 2021. This really is an all aspect of our business. We anticipate making a Montana electric rate filing later this year to recover the significant investment since our last test year of 2017. And we expect long-term rate-based growth between 4% and 5%. In terms of balance sheet, we're committed to maintaining investment grade ratings. And as you know, in November of last year, we under took a forward, which should address our equity needs into 2023. And we've maintained our commitment to a sustainable long-term dividend that we've -- the Board has approved a quarterly dividend increase of 1.6% to $0.63 per share. This marks the 17th consecutive year of increases and the CAGR would be 5.6% since 2004. So, moving from the highlights into the details, I'll turn it over to our Chief Financial Officer, Crystal Lail.

Thank you, Bob and good afternoon, everyone. And for those of you who know Bob, if you need a small baker reference, pretty much anywhere in the U.S. or outside of it, hit him up, he can help you with that.

I'm here to serve.

With that, I'll hit the highlights of our 2021 solid full year financial results, and then comment on a bit going forward. As Bob noted, for 2021 net income of $168.8 million as compared with $155.2 million in 2020, that's an improvement of $31.6 million or 20.4%. On a diluted earnings per share basis, $3.60 as compared with $3.06. That performance improvement really driven by improvement at the margin line, with both transmission revenues and volumes that I'll get into in a little bit more detail here. Meanwhile, setting the base on operating costs at a sustainable level, going forward, offsetting that a little bit. And then as Bob alluded to, importantly, in closing out 2021 financial performance was also executing on the financing plan that we had announced late in 2021, as far as supporting our ongoing growth and ongoing capital and investment in the system by executing on the equity issuance and Q4. with that a forward transaction involved in that allows us flexibility to support our CapEx spend in 2022, which we'll get into in a bit here. As far as record levels there on top of closing out 2021 record levels and with that allowing us flexibility and not needing equity again into 2023. With that, I'll transition you to slide five and speak a bit to our margin results. Margin up $54.3 million or 6.1%. Of that you'll see at the top line is increase -- increased transmission, so driven by a couple things. One our formula rate in Montana, overall higher rates and demand, and recognition of some deferred revenue in there. We saw that trend continue throughout 2021 with higher volatility, driving needs to transport across our lines favorable to our results. Also, $17.1 million of improvement in electric retail volumes. This is…

Thank you, Crystal. I'll say just a little bit about the capital budget at a high level, and then turn it over to Brian. First of all, we're coming off of our largest base capital budget ever, and Brian in his role as COO working with the operational vice president successfully, manage that despite all the challenges of supply chain and everything else, so we feel very good about where we are. What see here is a five-year look ahead that contemplates $2.4 billion of low risk capital investment. As we tell you virtually every quarter, the -- those stairsteps down do fill in with important investment projects. And we certainly expect that to continue. But nonetheless here, what we have is, base investment across transmission distribution, generation, gas and electric. We expect to finance this with a combination of cash from operations, first mortgage bonds and the equity issuances under existing forward contracts, of course, financing plans are subject to change. So this is an important commitment to invest in our service territory. Brain, could you provide some more detail and then also provide us an update on progress in taking some of the risk out of the Montana capacity deficit?

Yeah. Thanks Bob. A couple things. First of all, the $2.4 billion is substantial amount of capital over the next five years. Bob just talked about our busiest capital years ever last year. So we continue that tradition here. On the right hand chart there, that 2.4, nearly 75% of that spend is in the T&D space and less controversial acknowledge. I'd also tell you the remainder, a good portion of that generation investment is maintaining our existing generation. Also some BGS [ph] spend is in there this year and then hydro upgrades, as we continue to increase the capacity of our hydro facilities. The only new construction in here is the 175 megawatt Montana gas plant. And so as Bob pointed out, low risk from that perspective. He did also point out, it's declining slope that you see over that five-year period. As you've followed NorthWestern over time, that's typically what our five-year look is. But if you look at historically how things actually build out, as we learn more and more about our system, and we go through different layers of the engineering on projects, those back years are apt to fill in. And, of course, there's no additional general in there at this point in time. And there could be as soon as 2026 or sooner potentially for South Dakota. And with that, I'll turn you to the next page. Bob mentioned, kind of derisk in our Montana business. We've demonstrated for years, having 725 megawatt deficit from a capacity standpoint, our electric side of our business. And that's -- as you know, it's a significant risk to this company. The RFP that we did some time ago, allowed us to take out 300 megawatts on a capacity basis off the table. Obviously, we need to build…

Thank you, Brian. And with that, we are eager for your questions and discussion.

Thank you, Bob. Thank you, Brian and Crystal. [Operator Instructions] All right. It looks like we have our first question in the queue from Ryan Greenwald from Bank of America. Ryan, your line should be open.

Good afternoon. Can you hear me?

Hey, Ryan. Yeah, we can.

We can.

Awesome. Appreciate the time. Maybe starting with the investment plan. So, you guys firmed it up adding $300 million late last year, a lot of moving pieces, obviously with the discontinuation of Aberdeen, some additional spend elsewhere. Looks like you guys came in a little light on 2021. Can you just talk a bit about overall confidence in executing on the five-year plan, which spend might be most at risk and ability to backfill projects and maintain cost discipline, given the inflationary backup?

I speak to that, and then I'm sure that Brian and possibly Crystal will as well. Given the size of the budget, and as you indicated the number of moving pieces, I think, 2021 was huge success. So, I feel good about -- that I also feel very, very good about what Brian and the operations people have done in terms of continuing to build a lot of discipline and good productive process around our operational capital investments. Going forward, I expect that you will hear -- we will share more about capital initiative as they become much more concrete. There's a lot of work that any electric or gas company serving a growing area needs to undertake. I think to keep current with needs for capacity, older infrastructure and meeting what are continually evolving customer and public policy expectations. I feel very good about where we are going forward. Also, I think, our operations folks have done a very nice job managing supply chain and particularly dealing with inflation. Brian?

Yeah. Thanks Bob. I can think couple things too. First of all, you might be -- Ryan, you might be looking at cash. So think $430 million of capital spend and on accrual basis, we actually -- our budget, we came in around $450 million, which was very close to budget. And then on top of that, the Montana gas plant, in terms of the timing around full notice to proceed and the capital spend associated that we were a little bit behind on that at, in 2021. So that -- those are the big differences from our perspective. We pretty much finished everything in our budget, other than that.

Great. Appreciate that. And maybe just hitting on Laurel specifically. Obviously, a number of obstacles that have came up that you guys kind of alluded to. But just in terms of the process and milestones to watch from here and overall confidence in keeping that project on time and on budget.

Brian, do you want to take that?

Sure. I think, two things. Right now, we're working on a gas line. And there are some challenges there from permitting perspective, but we expect to work through those. And we expect to be -- obviously working on the site here in the spring. So, I think the April timetable to be starting in the site and the gas doesn't need to be there for some time. We'll continue to work through that, but we'll be turning dirt possibly as soon as April.

Awesome. I'll leave it there. Thank you, guys.

Thank you.

Thanks Ryan.

We'll take our next question from the line ending in -- sorry -- 5990.

A mystery caller.

If you can please identify yourself once you unmute your line. We have you unmuted here.

Hi. Good afternoon. This is Sophie Karp with KeyBanc. How are you guys?

Good, Sophie.

Doing great.

Great. Thank you for taking my question. Just a quick one, if I may, on Colstrip. Is there any update you can share on how those conversations are progressing?

I can start it and probably Brian will want to weigh in as well. The interesting thing is that at one point or another during 2021, virtually every party requested arbitration. We initiated an arbitration request underneath the agreement. The other utility owners issued a separate arbitration request State Court in Washington, and then Talen also requested arbitration in Montana. Ultimately, all the pieces of litigation were consolidated in Federal Court in Montana. The most recent action was, we renewed our request for arbitration with the court, and have requested oral argument. So it seems that there's a strong agreement. There ought to be the basis for a strong agreement that arbitration is appropriate and it will allow all of us to define the rules of the game really. We'll know what our obligations are and can proceed from there. Meanwhile, the asset continues to be extremely important to us to meet our responsibilities to our customers, as other assets continue to -- as other technologies continue to be developed. Brian?

Bob, I wish I could weigh in some more, but I think you covered it.

One footnote, and this is highlighted later in the deck. But in terms of our actual estimated rate base Col overall has declined to about 10% in terms of last authorized rate base about 14%. So it's a small, but in terms of serving our customers, continues to be a very important set of assets.

Got it. Understood. Thank you for this comment. And if I may, another question, when you thinking about the derisk in the Montana capacity deficit, are there transmission solutions to that? Or are we looking strictly at procuring more generations potentially or capacity on that front? Or is there a potential for solution that involve just supplier in the region?

At a -- well, first of all, we are very interested in the efficient operation of the overall western transmission system. We do participate in western initiative, obviously the imbalance market, and then even more importantly, the resource adequacy work of the power pool. Transmission in the west tends to be very long lines. It's not a dense system, such as on the eastern interconnect tends to be increasingly congested. So, yes, we do look to transmission solutions, but those are limited, and constrained. And, of course, a transmission solution depends on generation existing somewhere. And what we've seen is that in terms of meeting peak, that generation is really problematic region-wide. Brian?

Yeah. Sophie, I think I'd add is from an IRA perspective, resource adequacy, I think, there's an expectation -- I'll go about the opposite way. I don't think people are going to be too crazy about us leaning on their capacity. There's an expectation that we're going to be providing our own capacity to participate. And so, we do believe that collectively that group will help us certainly from a transmission perspective, but we're going to need to continue to contribute capacity in the generation side as part of it.

All right. understood. Thank you so much.

Thank you, Sophie. With that, we do not have more queue or questions in the queue. Apparently everybody's making Valentine's Day reservations for dinner tonight. So, with that, I'll hand it back to Bob.

I cannot recall a quarterly call so short. As always, we appreciate the discussion. We appreciate the support for the company and we'll be seeing a number of you in-person over the coming months. So, Travis, I guess the only thing left to say is happy Valentine's Day.

Great. Thank you very -- thanks for joining. That concludes the call.