NI - Earnings call transcript Q2 2021

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Operator

Good morning. My name is RJ and I’ll be your conference operator today. At this time, I would like to welcome everyone to the NiSource Second Quarter 2021 Investor Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like of the Investor now Chris over Turnure, Director Relations. to would call turn to I Please go ahead.

Chris Turnure

Good morning, call. investor second quarter and welcome to the NiSource XXXX

of Joining of Chief presentation NiSource’s our Strategy Executive as Risk provide Officer; of growth our XXXX Chief Joe this Hulen, is Officer; and and me financial our Treasurer. an Randy drivers. the Brown, purpose VP Financial our review Donald second Relations as performance our Chief on Anderson, Shawn and today are Investor to quarter Officer; well for update Hamrock, and The operations

prepared are call to available our your call we’ll nisource.com. today’s for Following open on remarks, questions. the Slides

statements materially Joe, and results of included will Information and over such turning actual presentation a risks are made to cause be and could call Factors forward-looking. those Before MD&A These differ statements. the to the filings. Shawn, expressed that concerning periodic SEC during the Risk is in Donald uncertainties the uncertainties risks and from statements this quick to in our just sections subject of reminder, some

Additionally, statements some this on relate non-GAAP of measures. made to call the

out to measures, call GAAP the supplemental in the For the on most of directly of way, financial schedules to turn slides full our I’d to over With refer and additional that a nisource.com. reconciliation comparable these all and segment information included like please the measure Joe. information, at available

Joe Hamrock

earlier received made renewable with joining progress chance Hopefully, of read earnings renewable transition commission to replacement generation release, projects. we joint venture Chris. quarter all everyone, Thanks, current you today. approval significant Indiana the all you’ve our Good morning, We a now our had plan our thank issued for us. in and and second for which

have will received proposals in we XXX beyond strategy our more IRP XXXX. which generation inform XXXX process, Integrated in Plan Indiana Resource than or In replacement our addition,

will XXXX XXXX investments by to operating growth X% and gas that from infrastructure XX% greenhouse of XXXX diluted expect reducing our to drive continue to through compound X% while programs compared generation levels. share We net per XXXX emissions in annual earnings

Let’s delivered of second net take of results Columbia closer diluted key our a operating without X we they $X.XX the modernization profile quarter, Massachusetts. takeaways. and our reflect to now business In non-GAAP per investments, turn earnings look and Slide reflect safety COVID impacts, Gas of and the share at

commitments. are We financial earnings and reaffirming our guidance long-term

$X.XX earnings. share expect XXXX net XX.XX to diluted non-GAAP We earnings in per of operating

diluted X% of billion We plus continue operating X% through to per investments $X.X expect net grow to a XXXX. rate billion, renewables compound by XXXX X% associated to from and approximately to expects X% modernization $X through annual $X.X billion XXXX. through annual and in earnings investments share growth, safety NiSource to growth growth annual of its XXXX on near-term including basis transmission

vendor As safety the NiSource serves plans where two Regulatory we operating system, of quarter, Maryland is as XXXX to advanced deployment Safety states. guided during I industries in into model. in projects across our renewable electric core advanced the detection the Picarro management first of drawn business, we In during mentioned, include our case accelerated our quarter integration discussions. our which of more advancements safety by engagement and technology our filed strong capacity for filed of energy advancements Pennsylvania, NIPSCO’s continue settlement leak Commission Recent are contractors has of in approved the in implementation the XX currently other and cases IRP the and addition the has community. Indiana in RFP Utility proposed with the underway Ohio, that and from new Kentucky, associated energy rate XX parts

that say Our commitment. I’m vital we on another performance targets to pleased represent target. environmental remain

emissions NiSource gas mains by already that greenhouse XX% commitment, to levels. XX% to services XXXX On achieved pipeline from reduction and emissions from expect gas XXXX. includes reduce XXXX has reduction levels. in by XXXX emissions compared total a an methane That We XX% methane in estimated

driving customers improvements. in Our on X. with replacement note, quarter. cases, second X some one gas than let’s new rate are year, Ohio Also starting for our highlights three the last that programs in second Slide efficiency of million of rate participated look On cases utilities filed The more NiSource these infrastructure quarter, programs. our at energy our operations the

decision an requesting the net annual million increase trackers the pending revenue of rolled approximately from of We’re rates, $XXX a being PUCO. base into

a in effective we on be revenue annual million a trackers. increase. case we filed a of May XX, trackers filed net an In approximately net again, Kentucky, would Maryland, for about And requesting $X rates New request of once mid-XXXX. revenue annual increase $XX million in

an $XX into Pennsylvania, New In filed before first requesting year. rates to are in we proposed annual the revenue approximately in go the million. increase case of this of quarter, effect December of end a just

Now Slide plan. service let’s look XX. aimed TDSIC billion five-year in at for as reliability and The touch customers filed new on June. Electric previously electric NIPSCO’s plan projects. at on I’ll plan $X.X newly includes enhancing our identified as a projects operations well some We’ve identified

in expect from year. of We an this December receive IURC to order the

to our I’ll Shawn Anderson slide out The turn relate coal detail. other transition and of more this it give items over on to generation, to

Shawn Anderson

Joe. you, Thank

by from the We stemming to XXXX strong encouraged NIPSCO’s progress, be advancing our renewable projects IRP. continue generation

the retiring capacity with IRP approved and Indiana three of projects replace to informed XXXX important of eight advance the to Regulatory Over the from the an Generating of approval Station. Utility Commission. last the Schahfer milestone projects the the This XX renewables brings of NIPSCO pathway renewables months, XX received preferred verge course by

$X Crossroads approximately Wind, billion toward through generating new of awaiting Importantly, investments reliability joint venture a all projects facilities, power as purchase new the projects to leaves system of footprint. number and to agreement transmission II includes with approval. this a across project continues support Combining generation renewable these only NiSource XXXX. track the

clean, projects $X reliable We approximately while saving are excited, our communities, customers, NIPSCO over for produce power billion long-term. the these will

well While XXXX NIPSCO’s IRP processes the the support process XXXX continues and timeline. have regulatory IRP. track the advanced underway its is preferred to commercial and within from to pathway

our in proposal a XXXX. second similar the quarter, solicitation, deployed noted request to release, we in for As process in completed

stakeholders. proposals to terms community robust Furthermore, constructs. the range show response pleased We timing, the proposals, of quality constructs. resource a the IRP the are value of about that the more advance engagement RFP and to of and we market will of quantity with levels which technologies through. replacement technologies, customers and help than A in we in generation for ownership process notes across data continues drive vendor and for few high options technologies currently both NIPSCO, Michigan with a generation inform utilize stepping It broad point retirement to wide portfolio of analysis terms the of are our City timing, to in the the which continues the these from ownership XXX and covering transition. as our choices We’ll

directional way. will in third meetings stakeholder share findings feedback along advisory at with public the stakeholders We the incorporating quarter,

could may energy plan expect preferred assets the support and which highlighted approximately investments, projects to on billion we this negotiations which specific which will before transition, then XXXX develop addition and X. steps to within the plan or or earlier projects. activities already is the resource preferred our XX in and NIPSCO finalized NiSource IURC submitted the include would $X execution These path We part supported specific further preferred and are in of commercial commence, projects energy, November represent your communicated, are renewable Any the on be significant due IRP, Once has calling which to stakeholder beyond your incremental the were future. identified filed. within diligence

model, the to and reliability our sustainable stakeholders dependable, energy with work delivering trust. customers a we As affordable, create can

to in our quarter call who turn over to like I’d will Donald, more Now, performance detail. the financial second discuss

Donald Brown

Thanks, Shawn, and good morning, everyone.

net on results diluted Gas share due about XXXX earnings of in million sale results the about share X, of related quarter $X.XX XXXX. or Slide operating or operating in the net of non-GAAP second $XX Massachusetts, XXXX earnings would to I non-GAAP our of October second to at $X.XX compared diluted we million per quarter to exclude Columbia $XX note earnings per had that Looking of XXXX. closing

closely up tracked generation cost employee-related the earnings and lower quarter, to employee was Electric cost on higher Operating and million three the expenses, In by of Slide to million, expenses customer about also decline tracked last non-GAAP X, about Operating expenses by year. net energy $XX quarter million, infrastructure energy of the at a of the growth. net million about costs. to of were the were results revenues energy expenses due due million segment, infrastructure $XX Operating cost segment gas mostly earnings investments revenues, offset to which net revenues $XX second due offset increased by sale lower program than partially non-GAAP operating the representing net were and and the months usage. Operating million months energy CMA the expenses sale down for services $XX customer due million were and $X of about about Looking million, distribution expenses, and spending. more of $XX of costs rose and three of XXXX. about versus operating tracked cost of increased tracked related $XX CMA of our outside of approximately our $X and related nearly were maintenance and

like Now profile. turning debt I’d X, Slide to and briefly to on credit our touch

capacity on concluding $X.X agencies consisting the At as in XX interest all long-term reaffirmed debt. securitization ratings facility credit outlooks net weighted maturity Moody’s three average second $X.X program. Our was major years approximately we billion latest our rate debt with credit The stable and XX of With was have end about and accounts June billion, our of approximately the their investment receivable $X.X under quarter, weighted long-term XXXX. debt was rating cash about liquidity grade was of maintain of recently about level available available our X.X%. and the which credit our billion, review, average

infrastructure this to safety to financial a solid represents foundation Taken our continue long-term together, support and investments.

Slide a at financing our consistent to de-risked There equity had X, which quarter’s since Last look quarter’s issuance earnings changes significantly and commitments. with it’s plan. of last our highlights plan credit plans quick unit our Let’s all are and no our financing take issuance.

earnings NiSource. share for XXXX last should we I to and support Thank As our stating guidance diluted quarter’s interest earnings takeaways, everyone you reaffirming and Joe are for mentioned all ongoing our of remind equity commitments. financial and today and the long-term issuance. guidance that participating in due we’re key per your

to now questions. your ready take We’re

Operator

the [Operator Instructions] Your first line question from Kim comes of Goldman Insoo from Sachs.

is line open. Your

Insoo Kim

slides, these is talking that we months, I language past modernization no the asset there. My seems on, morning. like just been Good you. on think few first have potential the Thank that question of topic the about is on longer it

and funding the just that Just units potential there base get thoughts period further of wanting any your latest that and whether to in that’s that equity near-term, whether cash and color type other immediate given on raise for planning your in to planned CapEx, already no fee for the CapEx. is for it’s the

Joe Hamrock

for Good Yes. us. Thanks morning, Insoo. joining

read conditions an and our slide hasn’t shareholder We should that that that You on of we’re anything update. changed portfolio focused as long-term part value market not and ongoing process. into remain evaluating

plan over, long-term and our any need. of shareholder primarily financing horizon And to any than the financing, on way we’ve we still over that’s current a all it I And satisfy in planning as that’s the near-term view you underpinned inclusive long-term drives based is more so financing strategic though noted, X% any decision a assets related by really, without to it’s continue and mean, as to sales. growth asset that to value, stated X%

can would forward modest to continued will plan? So go clearly potential we shift enhance. needs equity exceptionally not it’s a converge It program. with go mean in not point CapEx on ATM as large that shouldn’t strategic strong to given just those said, investment because And need future slide, unfold already that any alternatives on surprising be opportunities the time. at that continuing not funding table. those options a That table, known along we’re taking our factors be with strategic a doesn’t our meaning cycle, it’s What’s or that off and the

appreciate I question. the So

Insoo Kim

My sense. demand of just lot like quarter year-to-date, the Indiana are head industrials. pretty on How this that and seems seen we versus you’ve your electric a robust a that’s guess makes That is, rebound, compare commercial that especially it. question and other growth into second you in the trend I continuing year. in the And expectations, earlier momentum does half. seeing Got the as

Donald Brown

good I’ll morning. take that,

of sales our impact is had that last second on the operations COVID the in I quarter. where think what in certainly you impact the biggest second C&I shutdown electric had and the largest second customers business seeing businesses That really year you’re on us shutdown in quarter. the quarter financial

what certainly, monitor to recovery it and Again, very to in feed outcome. plan seeing. that. we we continue and our And And So continue and expected expected good on that’s so part say for, I’d of a commercial, manage we’ll that’s the you’re as there. recovery we the plan what smaller

Insoo Kim

thinking forward, think And about – when Got level what’s rule just thumb we I it. guess growth a there. we going normal things low type good when should be overall, of of

Donald Brown

Yes.

the customer little side, the classes the maybe than seeing taking we’re is out largest pretty a less industrial, the for other which the range, On industrial, X%. electric in X% stable

Insoo Kim

Thank so you Understood. much.

Operator

Chopra ISI. Durgesh from comes next Your of line question Evercore from the

open. Your line is

Durgesh Chopra

question. Hey, my good for team. taking morning, Thanks

XXXX you of the IRP us CapEx that incremental am and current would spend coming that IRP, right thinking way. that any this above for I’m just beyond course, in thinking about, XXXX your be about confirm the sort of plan, of can out on capital Indiana Just I

Joe Hamrock

Yes, right. that’s

I IRP cycle the play predict and are our next roll would from would that to process up us emerges for CapEx our right, out, from Durgesh. But to Anything given year allow plan. said think forward we too IRP. we where that’ll that how you it’s in the early that planning set

Durgesh Chopra

mean, just CapEx. good if or a XXXX success I point opportunities IRP thinking the think obviously then I as I of handicap lot the the XXXX And we guess you that a great. That’s were CapEx upside about, $X to had billion make sort directionally, about the of IRP, in is Should in assessment. starting

Joe Hamrock

Yes.

about because say up itself is RFP I how IRP of evolving factors plan. the notably, IRP, and credits of we to think are picture here. evolution running There it’s that that, sets capacity the continuing early see we’re to that, MISO’s think little outside too the the that other through the

else an So when file I of through come as all an it IRP, equal, plan. bias see, our seek being investment think that envelope we that you’ll envelope of that to the And the being opportunities opportunity.

more IRP. the City, stages the we And also is of of So in into the part the get beyond we’ll know a the process. which lot of stages through which Michigan of then of the planning question coming final timing replacement as for that the IRP

Durgesh Chopra

long of of looking QX sort the call And just Understood, your what update be us of IRP. from timing, of for pretty nicely date the in to What perspective? up your going at that are Is for sort terms IRP thanks. with to be good an forward one in. this for kind to of last filing plans just a sets in sort to able one, accomplish you a the of look that IRP. us Is an might watch

Joe Hamrock

Yes.

the the would overall be will overlay filing the the it of they to of timing way the our close pretty IRP. be call Just timelines, QX

about out So plan, there’s forward the go a lot planning ultimate That’d early push range of half of because little roll we’ll there. our likely that be a guidance. there’ll next and other sometime rate the be be parts CapEx plan. plenty position to to first cycle, long a to into a business talk And before, to extend business year growth our CapEx in of that we’d

Durgesh Chopra

time. the so Appreciate you Thank [Indiscernible] much.

Joe Hamrock

you. Thank Sure.

Operator

comes question from next David Your of from Wolfe the Peters Research. line

line is Your open.

David Peters

questions guys. morning of Yes. Couple Hey, good for me.

just chain any nice all of – Have you project those, are to in you bottlenecks wondering, projects. the some developing the projects? of and your are that for any inflationary know first, the seen And they we’ve – JV currently obviously seen given pressures schedule third I Just have all CPCNs on guys see parties kind impact supply market. the budget just but

Shawn Anderson

question. take Yes. Yes Good on is your morning. Everything I’ll schedule This the that time, budget. on remains question. is Shawn. answer on to

project, to in including We’re we’re to our XXXX. expect constant track, confident continues quarter that be we concluding here developers even fourth schedule, in with in one everything of construction – and communication which

through to forward to look we much So that. as sequence

David Peters

guys Great. much ATM, have within other Thank how million, just your $XXX the $XXX million one, done you you. you And can target? share the on then year-to-date

Donald Brown

Good Yes. morning.

year’s this $XXX to $XXX equity satisfied need have of million We million.

know, to this XXXX, annually certainly you XXXX, million So outlined as of ATM. year, it’s then in we’re to through and million $XXX pretty we expect $XXX XXX we’ve good million up

David Peters

Okay, great. Thank you.

Operator

[Operator Instructions] line Your Morningstar. from next the question Miller comes of from Travis

Your line is open.

Travis Miller

through the coal spend and of you Good question. new here that morning, everyone. replacing back terms renewables the What you. the If – in Thinking of early needed, Thank XXXX as you’ve and about gone the about does be will of thinking like CapEx, out give of with renewables right? that target stages one trajectory my look questions more XXXX. some the your

learn what look plants and what out. You kind like of relative need is retiring coal that to trajectory investment going would the

Shawn Anderson

Yes, good morning. This is Shawn.

to So to pointing the Michigan XXXX by renewables. of as did that solution with time it City you back towards the the at get noted XXXX replacement retirement plan, have preferred

then current at you with step IRP. the so into where the And we’re time XXXX

fleet you affordability the other produce necessary integrated reliability the plan plan We’re into that’s blend that’s continues MISO’s as think that resource path of necessary, highlighted how you the the with or or if that and and portfolio. as into putting that components resource as factors factors and necessary entire in a measure changes, that any back all and in use to changes entire of that’s compliance there’s the adequacy some reevaluate would requirements, well assumptions ensure about those to those that all to Joe an

And that renewables. of in or And solutions plan could cetera. did actionable build would the retirement City the different to inform as back through the that know, helps reliability online come IRP and out. then still plan, RFP, source Michigan an the help factors of the within et be stepped come allows you just XXXX current itself the support which can we the all bids that process evaluate affordability, replacement technology and to well of compete, and portfolio which RFP as compliance, as those So all we we the context then and and technology other to then with that by is the

Travis Miller

Okay.

reclosing that’s nothing So through been at you’ve then about? with the new of since dollars, terms renewables. thinking last years looking whole that Is of that run three going two, in kind just material co-retirement you’ve learned rate what I’m that

Shawn Anderson

of existing of speaks more how reference be towards City That’s Michigan which understanding accurate. that. to and still you technology related stakeholder that the the Yes. the point the to meeting within I’d question existing September, or IRP would help of existing plan fleet plan itself will sequence maybe of as inform the to more the The the the it retirement replacement assets, to as support analysis, timing well could context

Travis Miller

Thanks great. much. it. so Okay, Appreciate

Operator

Ryan of line Citi. the from the from comes Levine question next Your

Your line is open.

Ryan Levine

This projects NiSource’s transparency it morning. might the level and third-party given good could given interest developments supply solar of have to projects. solar do the What Hey, some challenges, that the for be way you chain these – of a development nature the the be a Shawn. of and status encourage

Shawn Anderson

Appreciate Ryan. Thanks, it. Yes.

that dialogue we dialogue our said, through process. an part developers and I As developers we remain of with and discussion regularly we the have to with our the ensure speak ongoing

when amount as side course, of that projects those on team’s a operationalize, work Of well. our takes significant

one that communication to we’re pacing ensure another. And constant alongside so there’s

long combined counterparties these track the time with time the to that contracts and continue of the budget. path. lead confidence of us being projects This Our records on themselves, give have on

Ryan Levine

logistics and outcome projects could may you these that bottlenecks take there NiSource a or the net underwrite be that escalations extent were touch be push given decision? delivery, think encourage the delayed, that puts to conversation place or do about would that takes would result how it To in better the in price to

Shawn Anderson

and shareholders our we And event on build our Yes, and on maybe to incentivized feel contractual question. also it’s our time customers budget. beginning the developer because to point the protections We strongly a in you great are a of partners to delay. execute I’d the it hard process, for and of worked

shareholders we transparency, have in discussions, confident available to construction multiple level the well And delay. and from tools the any protect as So of we’re as the customers timelines.

Ryan Levine

And technologies in terms for Okay. could and change may Indiana? being the new weren’t the any are in through the anticipated that then be that last proposed the that direction RFP, outcome you there of being is me, think question

Shawn Anderson

Great question. Yes.

our actionable the receive have where entering two developments itself. window. be proposals actual fact to the surprising of and as actionable, hydrogen, evaluate were learn see we’ll more within to depth the bias we proposals to having those proposals to make that developments results that together. more all so on those two that’s all nascency that there stack the could technology and all against in those it’s we’re So what with, related actionable only the itself, but some that that technology of the necessarily see will as probably We interested and not bids results quality the RFP third-party to point that not give to be interested a are The other can needs two other but process, were the market there’s exciting of starts technology two to themselves might components familiar indication come did of – using IRP to an as there the really the are we’ll see you horizon in how And the imagine. up market the might

Ryan Levine

update. the for Thanks

Shawn Anderson

you. bet. You Thank

Operator

from Kim of line coming Sachs. [Operator question have Instructions] the a Goldman We follow-up from Insoo

Your line is open.

Insoo Kim

those layer the plans financially, reduce think – forward? system O&M, I a is have Yes, taking can latest and actions management on constant actions have what how your of cost, additional about program, it on the to maybe on continue ultimate as think safety it about some we just operations costs implementing contempt some that, continues it’s actually and do your of after and impact whether thoughts different those going add of help the of or – do the thanks on program to you the on just for just question. mature, the one

Joe Hamrock

Very framing question. Yes. Thanks, that for Insoo too. insightful

We’re our and portfolio business on at the pointed into a of risk now would our ultimately the a results full what framework making, financial of SMS that proceedings. that and we’re I basis, ways. different reflecting implementation across couple in translating regulatory it’s the out of investments broadening call that It’s are way in you the we’re

And asset about so in pipe, think non-jurisdictional measurement meter. case, beyond our even the regulation, transmission classes, different programs the pipe, distribution

that So more the than each those side, evaluate side case the all historically. investments we and model profile prioritize put class of asset risk been by much accordingly that’s sophisticated a has

shifting differentiated seen cases, And regulatory so it’s along investment to in tracker programs. for include example, support mix. expanding for the some And we’ve follow the programs, with those

net So driving the nature seen been sort we’re of you’ve And designed. here, because an then efficiencies in some of of plan. O&M investment of programs O&M ways, And down. the trajectory a standpoint, it’s a how from are actually broadening it’s the it’s the

we’ve increasing of the fully a level embedded And our in So think current important but associated associated programs point result implementing been that’s happening wouldn’t might continue that expect layer SMS the I generally of controls we’ve see reconfiguration and process are do run capacity in rate. high maybe process them. have both – then And or an that, incremental program implemented I is those the is areas that programs the those critical the risk those. with tasks in terms de-risking consequence asset versus program cost cost to cost in And risks associated We’ll itself. most business across where to actual model. finally, business the of the incremental with the as safety, O&M –

and a lot are in financial de-risking safety of So further feel we related about for of of opportunity profile where front a us good to very and business. SMS from the

Insoo Kim

That makes lot of a sense.

So much. thank you so

Joe Hamrock

you. Thank

Operator

I further over to at for closing Hamrock the turn There call back remarks. Sir? to this like are time. phone line the Joe Mr. would now no questions

Joe Hamrock

and RJ, you you, questions. your all for Thank thank

in the the plan. by a underpins generation giving billion go executed transition a of XX for the and XX that’s the that projects underway XXXX. We’ve our in noted XXX CPCN key of renewable confident plan. utilities key we’re are Add and Let includes or transmission regulatory the a us four reiterating with current renewable points. now that me related investments to close that of future. number then $X few Shawn approval, to growth growth stages gas the underscores opportunities now approval the XXXX One, cases. our that an with through projects Notably for the And RFP updated the and base IRP new in in as proposals picture rate just

our modernization investments aligned commitments. our in rate with And and growth we’ve our value. all finally, Now that and safety customers long-term guidance then reaffirmed XXXX

and stay opportunity appreciate interest story. So we share Please pleasure to to We have safe. today be that us, you with you NiSource. joining and an of appreciate your in support

Operator

We call. conference today’s you thank participating. for all concludes This

disconnect. now may You

NiSource (NI) 4 Aug 212021 Q2 Earnings call transcript