Earnings call transcript Q4 2022

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Operator

Good morning. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2022 NiSource Earnings Conference Call. [Operator Instructions] Thank you, Chris Turnure, Director of Investor Relations.

You may begin.

Chris Turnure

to Fourth welcome Call. XXXX and day, the Quarter NiSource Investor Good

Chief Anderson; me Officer, Relations Senior Donald and Executive are and Vice Officer, Yates; Strategy Joining Chief Officer, Treasurer, Lloyd Randy today of Vice and President Chief Hulen. Financial President, Risk Investor Shawn Brown,

financial operations as purpose provide well The NiSource's an this and fourth the update is presentation for of our growth as drivers. quarter review on to performance of XXXX

questions. we'll of made Following that today's the would open Slides our forward-looking. your the section for the during are to Relations like remarks, be will our in available statements prepared presentation some of you call call We this to Investor remind website.

results Information SEC materially the and to expressed in These the such included of concerning those our differ periodic filings. uncertainties are statements to actual risks from statements. subject and Factors sections MD&A and in uncertainties risks Risk is cause that could

relate statements financial non-GAAP Additionally, schedules the full reconciliation directly some on the Please for and refer comparable to measures. information of measures. and the made slides, information of a measure to most the supplemental segment GAAP on these call

to over to the now turn Lloyd. I'd like call

Lloyd Yates

everyone, confidence, end progress Good takeaways and focus. want our and for Chris. By business you and the our of morning, Thanks, leave you us. like I'd of reiterate to joining we call, X the thank to with our future.

delivering on Our confidence commitments. in in our our progress and strategic strong plan our

our electric potential on upside on progress including realizing a focus rate plan. NIPSCO our Our initiatives, our the existing beyond pursuing and settlement potential regulatory case, in the

today's presentation. incremental these of opportunities some in on later touch will We investment

review. measure our of our XXXX Investor will Day each team. progress by to the growth to our our premium significant achievable, the both success at quarter. business our performance, detailed Among year was relentless consistent and and execution utility was We goals our plan Turning our are we XXXX keys and in comprehensive believe a against

plan. XXXX were XXXX we and strong a above in in off to quarter start this results delivered great are are XXXX our that our and and guidance. Our We demonstrate earnings of our execution raising guidance the

dividend return. XX% also drive a to We for shareholder to total compelling X.X%. on our track X% shareholder We remain grew value

At Investor's and profile enhancing our committed efficiency. to optimizing we Day, cost operational

We XXXX our the are serving thank transforming doing process by technology our our behind for systems people, [a both and I and processes commitment deep it support], each work employees a to IT performance customers. of of throughout to their want our of and

a look Let's investment from key X% turn in and It delivered to take closer Slide That's up XXXX exceeded guidance safety, our reflects affordability at year, last our achievements. diluted and NiSource's our XXXX $X.XX sustainability. X than presentation earnings customer more We of the non-GAAP NOEPS. reliability, continued range.

This annual XX% $X.XX range execution. to our We're increased X% as rate XXXX well through our to our our as annual outperformance NOEPS we've to guidance Looking $X.XX XXXX, reaffirming X% growth. confidence growth expectation a XXXX and X% in reflects per share. to base in to XXXX of

to X% which X% through $XX A top-tier you through X high-level of are Slide growth annually on CapEx XXXX. investments XXXX of Slide regulated grow can our in commitment Driving and XXXX see XXXX. guidance from to X. summary illustrates this billion

continue we further, out invest to Looking from to XXXX. to $XX billion expect XXXX

a the be and and Maryland, by X, in rate filed earlier, execution alluded resolved I our gas team case. X strength. we In to cases XXXX, regulatory As continues to Indiana Pennsylvania,

supporting represent concluded all balanced In last month. stakeholders. outcomes addition, Ohio cases the These rate case

X. Page to Turning

key We for have the following XXXX. priorities

First, continue our on to operational enhance and focus excellence. safety

balance sheet. NIPSCO in of Second, sale the to successful our our interest minority strengthen

will to electric are with NIPSCO keep enhance drive our flat a we efficiencies These rates to cover line moments. Fourth, few balanced in case, spending achieve with that efforts inflation. increases expected will outcome total rate which annual the customer a O&M in Next, rate customer sustainable in affordability.

may near replacing our and to gas XXXX opportunities and are pursue gas long Slide commitment as see throughout the delivering the priorities X, the our mind finally, year. guidance. you And additional keep as include NiSource both term. opportunities investment that These will the investment regulation. transmission in with comply On on top pipes plastic we NiSource's of will replacements to reconfirmations well pre-XXXX PHMSA

NiSource In in credit advanced gas term. also opportunities attractive metering transferability addition, and tax the generation electric infrastructure represent near for

see enhance to transmission gas make our XXXX, long-range to participate projects, production marketplace renewable and and to to our in investment projects and need infrastructure in also add for the we drive transportation and greater value electric hydrogen long-term generation we large-scale customers. portfolio will elect hardening. electric the electric hubs Beyond enhance NiSource capacity grid up seek

case a Now includes of to Gas in Columbia received of fourth $XX.X Page review some let's from to gas Ohio million riders. and recent on order, The XX. turn rate revenue January highlights net XX distribution operations. order of except in settlement quarter the increase its an

case the Pennsylvania will pipe December. be of rates was in replacement The X. March New It aging effective and upgrades and system enables safety. service in rate to approved continued settlement ensure pipeline needed on our reliability investments in

rates XX. New effect into went December

case an system supports received infrastructure in upgrades. approving Finally, settlement company's Columbia November, Gas investments The in the rate of settlement. order continued and replacement Maryland its

our and it on turn I'd projects, electric renewables to updates for like Shawn Now to over operations Anderson.

Shawn Anderson

good and everyone. Lloyd, morning, you, Thank

rate toward NIPSCO You'll find settlement Slide working XX. its information since stakeholders actively on electric our XXXX. a in with it's about first is operations case, electric

XXXX. step New anticipated rates incremental September XXXX applied to are in in effect take rate an with

to of predominantly online. end the solar and wind to by remains generation all with XXXX generation coal-fired and facilities Meanwhile, reliable track the on coming retire support portfolio new assets, company a

The X of the project continues Crossroads All to first XXXX. wind facilities of end to Solar pace revised Bridge service with X underway construction, be projects operations commercial nearing previously in half of of completion, with in target renewable under remain the both projected to and generation Indiana Also start at Dunns Crossroads the by Solar the on XXXX. Indiana is in-service construction dates.

to We market have Bridge completion entered our contract Fairbanks pricing. pressures communicated our on and reflect address projects previously Cavalry for and project into amendments Dunns dates X,

Both have ramping and Dunns full this X into Cavalry with construction projects construction activities begun spring. Bridge initial

continue advancing We to remaining Act our the tax and the its Reduction provisions our enhanced Inflation the the We in projects to has the application believe projects. enabled portfolio, transferability, drive tax applicability of opportunities for potential to greater of in our the with shareholders while customers act. value evaluate the the to and generation credits both legislation provided including along

credits is commercial impacted by the a factors project-by-project asset. and note at with to targeted well and important expected all NIPSCO counterparties XXXX RFP is such is portfolio basis gas preferred on It in production that peaking RFP summer. as application to analyzed Project capital to Generating is announced expected agreements costs active potential negotiations various all-sources Station the its as resource Meanwhile, in integrated the of the are tax of the outlined be resulting as fulfill Schahfer plan. from this the

Act. the the Additional around most work nearly continues the Act opportunities and inflation Reduction legislation indirect generated of the billion funding Jobs notably $XXX capturing from Investment and Infrastructure from federal direct recently, passed and all

designated clean been which announcement Act. Infrastructure to received active territory, full hub in have each the as have the DOE Jobs from Investment hub encouragement the hydrogen across of a funding in application We and proposals opportunity several Bipartisan regional submit our hydrogen for

X is I'd like by reduction impact by our with and track targets, XXXX confirming This gas close our on industry-leading the X namely consistent to X XXXX. XX% by achieve X Scope which in needed Scope November. we levels achieve to greenhouse emissions we XXXX, are announced progress Scope a to net reductions environmental of from in goal emissions

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

Donald Brown

Shawn, everyone. and Thanks, good morning,

fourth million compared net earnings results Fourth quarter per on Slide our $XXX to to XXXX. quarter $X.XX or quarter share XX. share of or in Turning million fourth $XXX $X.XX XXXX were the operating non-GAAP per

XX. $XX Full last operating or look XXXX. year $XXX per distribution our quarter, to earnings the share a in were $XXX same quarter of million results an versus $X.XX on Slide $X.XX compared segment, Taking Gas per were year. in quarter million or the earnings $XXX fourth fourth increase closer non-GAAP at million million share

of base million expenses were to and again, and higher of net new net cases from cost tracked expenses Operating taxes. and to revenues, due and by mainly the million, rate due rates lower energy energy resulting by of Operating $XX cost $X tracked of expenses, lower regulatory O&M the other capital programs. were primarily

million, due for fourth tracked usage. energy Operating the lower the electric were the $XX expenses slightly $X customer weather-normalized million in mainly operating quarter last million, year. In same lower segment, and by cost of quarter to of revenues, than $XX net lower earnings were our non-GAAP

depreciation cost $XX and the primarily higher excluding amortization. and million, of to again due expenses, Operating expenses were once increased tracked by energy

I'd Now touch debt on our to briefly like credit and profile.

of was years a XXXX, Our $XX.X of December $X.X of weighted debt weighted XX, XX as billion, with was interest debt maturity average billion of long-term and average a X.X%. rate level which

We consisting current our we capacity committed our liquidity fourth programs. under and At investment-grade remain quarter, our cash of accounts maintained the available to securitization $X.X over end net ratings. of the of credit receivable billion. and credit available facility

and credit the the into Slide December equity a term the reduce gap fall. our our proceeds X-year We remarketing used our and in the XX bridges commitments. to financing billion issued balances and paper in loan highlights unit strategy $X loan commercial

plan XXXX November. growth financing of includes earnings Day in unchanged no XXXX is XXXX. in our or credit block consistent commitments Our and and remains issuances equity with ATM Investor from or all And through

roughly gas I'd reduces capital time year-end like natural to year versus gas to our debt XX prices basis deferred customers' the basis amounted to at XXXX, natural XX points drop financing points XXXX. reduces highlight working over on impact A in charges. fuel the FFO in directly and recent that of bills and

over years, year-end guidance debt. of only X X XXXX In basis to impact on impact summary, of fuel prices FFO $X.XX, $X.XX our had our the higher For gas some range. deferred last $X.XX EPS point to XXXX, reported a context the we exceeding of at

over an to our our prior We XXXX have $X.XX midpoint. raised guidance increase to versus $X.XX $X.XX, of

plan, to We're and on volatility, also commitment of X% safety, growth headwinds our reliability, focused and growth remain we affordability X-year annual through advancing X% NOEPS persistent we and reiterating Despite macroeconomic long-term elements sustainability. key XXXX. of are our

confidence, answer progress Before focus. we to our and reiterate like questions, line the to open up I'd your

confidence Our strong plan strategic commitments. our and progress delivering on in our in those

our initiatives, rate on NIPSCO the plan. realizing progress focus settlement in including beyond existing our our potential case, on upside regulatory and potential pursuing the electric a Our

NiSource. all questions. for for of now your to We're you in interest Thank ready support and participating ongoing today take and your

Operator

is with question Campanella Suisse. Credit from First Nicholas

Nicholas Campanella

of kind and NIPSCO hearings? time guess line move the that want do to prospectively you on to think would you done there, Or the time I settlement, March about the So just settlement? if can rate how potential just we XX have the case for before line

Lloyd Yates

Nick, Lloyd Yates here.

we So thinking filed February when you line XX, case, discussions think testimony parties March the we starting case, been the could -- rate the about of track with around should about we've is that think rate I settlement line If a on are But end to started so XX, around see I our things those complete. now. rate rebuttal time think optimistic NIPSCO settling right various case. about think February. I'm on already hearings history we you discussions to that that's has extend something progressing, the I If time to XX, the week started that and that we're or get expect February are

Nicholas Campanella

I guess And are demand really remarks, I Can then have here? are helpful. of of the seeing us any kind additional prepared interest from either What framing you an a expect type the That's for something sense, announcement you of in would And then give on by you're quarter? of kind you track. Or the on you know be sale. just just time minority helpful. kind color strategics? to how next you line financial or just Do said

Lloyd Yates

I'm leading is Shawn the that that. for initiative to let answer company. going So Shawn Anderson

Shawn Anderson

which We’ve and broad partners, are its to of goals. realize observed Thanks, a range Appreciate Yes. help qualified the Nick. NIPSCO strategic positioned NiSource question.

to audience the confident we’ve also as right out to And a successful We’re we’re we with year. this confident NiSource in a outcome November. this will lead the partnership evaluate is laid us launched process

Operator

with Guggenheim The next from Shahriar Pourreza question Partners. is

Shahriar Pourreza

up treat more assumptions? 'XX just CapEx time Look, as sort spending overall the of also with elaborate maybe moved the range this planning 'XX CapEx, 'XX reduction, you increased to just slightly the you CapEx starting looks of plan the from you shifted this whether incremental it overall sort -- the same on 'XX, and we a at than as your amount of of can when the on generation like fair to sort should

Lloyd Yates

to. still renewable not think progress payments spending That a our can our Those would in was CapEx projects, just the increase $X mean we projects. treat CapEx incremental. for feel really committed no is, for like there's billion really, really plan for We I is So year that what but is are I we're execute at well, progress as in that I all. shift as around payments

Shahriar Pourreza

the question you of Got the the it. And follow are sort a up GRC. for get then on how guess, thinking mechanism to recovery approved? on cost just potential plant coal Nick's I about

Lloyd Yates

mechanism. There's the customers. really we're We So in been that think middle that is conversations. good debate mechanism of for some about

good can cost immediately. that's that those that of customers, about back that to various are how integral the discussions immediately. As right down, goes for I We're I'm make that do conversations work, we we an parties But shut to back settlement those I that passing now. customers because in the coal part think with cost and plants optimistic think

Shahriar Pourreza

Got it.

real you the And also sort equity, equity, sale? mentioned there Donald, this know as reason then post of to believe block like so well, out the in to come word but threw post Perfect. you with there ATM, Okay. any mentioned minority just market I Is 'XX. especially but block lastly, quick, word block would not just you you

Donald Brown

correct. certainly say No. It And me block. let didn’t

XX%, into planned expect post XX% to no at to not blocks expected Our this has financing that’s are but us XXXX. It keep is range, plan debt to changed. And that still we in to really that enter point. ATM FFO

Operator

The next with Chopra from is Durgesh ISI. question Evercore

Durgesh Chopra

hear me good you Can okay? Team, morning.

Lloyd Yates

hear you We fine.

Durgesh Chopra

Okay. Perfect.

different discuss you Donald, see gas your your on through I implications? And different, flow customer fuel could can of about sharing details for lower can at talk know a impact high we but level, bill just the credit Sorry. and the you are bills? And thank states the it's sort deferred customer you But when to just very metrics. prices maybe that?

Donald Brown

Certainly, Yes. $X. today, below favorable around question. great or No, prices, including gas NYMEX price seeing March natural seeing we're $X

impact great for that's customers. So our

we look probably XX% customer As XX% versus at bills, a we're decrease to 'XX XXXX. it, expecting in

really good outcome. So

Durgesh Chopra

then if additional that? I'm gears you cetera. super you overall generation in Any CapEx. the we capital here opportunities to any AMI, see way overall want just give the we should That's just maybe is on switch X cetera, size on there, I on can color now. and you dollars could that ownership updated, about it's can CapEx helpful. Any are color talking plan. near-term assets, How Slide And terms of this share us about et increased think your whether the of the et

Lloyd Yates

have Durgesh, mean yet. we there. realize a are size opportunities I We don't opportunities those out those -- for

about as able let pre-XXXX it. we issue transmission But get as soon plastic know know it, MISO those then. we'll as can we'll guys think closer I or and pipe to more we in about opportunities new you be size opportunities, size it to

Durgesh Chopra

And real X it. maybe understand I quick. just quick X

might the some -- suggested timing Analyst announcement a sale, itself, still that NIPSCO some on at shift renewable of still were assets, seen sell is Or trying Day that guys Shawn, we've assets mid-year to on is you their have the line? your time year, last On track? peers on

Shawn Anderson

imagine, can line as in able Yes. Thanks The still this expect days in XXXX. And time has itself. early complete we’re you for question. be process We to the not to the changed. still

able appropriate we’ll so. to way be when So the it’s along do to provide updates

Operator

is with Miller The from next question Morningstar. Travis

Travis Miller

gating essentially sale. have that move? sale. up factor I idea that either the on before the there that correct? making -- case rate concluded the that, is or you on of financing to for the a following Is Is Just that timing settled get imagine

Shawn Anderson

both and proceed out X really separate believe are as These we've processes, laid we can today.

Travis Miller

Okay.

necessarily rate not before have So case conclusion a could on you the transaction done?

Shawn Anderson

correct. That's

Travis Miller

terms CapEx obviously, what's cases separately, side. gas cadence, the some in regulatory thought Okay. forward. cases terms have mechanisms on plan And going moves in timing rate on the of of at What's sense gas you in the rate your or that then the given base good general different businesses, of your

Donald Brown

Yes, great question.

typically at rate pretty X Virginia, in X every Maryland. our we're in Kentucky heavy look a history, where most were coming year in to cases, Indiana, Ohio, We're years If year in X off XXXX, rates new actually last jurisdictions. we and you

But our was pretty PA at look years. year, year last states So history, to and a X heavy almost you X if every every then year, year. almost other every Maryland's is typically

Travis Miller

to cadence Okay. roughly? continue, And that

Donald Brown

Yes.

to X on otherwise, We’re it’s the say . states. X evaluating every Pennsylvania, I’d years other but

Operator

The next Citi. is question Levine with from Ryan

Ryan Levine

projects. changes was the risks I renewable In your impact these see remarks, line mention time you revised of contracts if you what some materiality select Can correctly, execution there remaining a prepared from for heard and standpoint? of

Shawn Anderson

Appreciate Ryan. question. Thanks, the Yes.

still imagine, the As you can working we're through process.

I'd service. in these amendments with X is thing with talking we We're will apart XX% under forward consider X in in not seeing that the that that construction, from work are are cost move remaining So the those The we the filings XX% forward. market these confidential. But already the about in projects still range. contract partners substantively to commission increases say our to appropriate the

What recent off And consistent of able that. the XXXX. also to with benchmark we've RFP that in seen we've most of August been is

about these accordingly. that customers our projects Northwest to value So proposition proceed the still provide Indiana, in feel we and good we'll

Ryan Levine

future in further Or the cadence to changes you the it's could potential slow? amendments on in lines line? terms changes adjustments And those of of Are execution. of line see you Slide kind time around time potential time XX, if highlighted reflective

Shawn Anderson

question. great No,

lines time service in on remaining contract support lines slide. you 'XX were disclosed amendments 'XX. those and that that placed projects we are the time support the XXXX which Let to The clarify. that and in made me in that see

Ryan Levine

And NIPSCO be? follow-up rooms seen formed? you color any early any you betting process share the sale could have bids, And have on Okay. how initial may the in rounds process, been then of you X around

Shawn Anderson

Yes. time. I additional Unfortunately, can at offer color this there isn’t

focused on do the come have to back with topics it’s advancing to so. We’re process, around updates we’ll when and appropriate these just

Operator

from question Richard next The with is JPMorgan. Sunderland

Richard Sunderland

apologies missed I this joined if I so late, earlier.

Just curious, And fall any O&M outlook what trends Analyst initial. discussed curious versus to you of you pieces there if are the to relative seeing XQ moving relative this XXXX here out are at latest Day. on what coming

Lloyd Yates

Richard, this is Lloyd.

we like I'd year-over-year. First for of say O&M we're muscle. flat would our all, it, track on I really And characterize to developing O&M are

We called we we the working projects track outlined have teams and efficiently something company Project target various to those. lower achieve going to at better, have things for processes on Apollo we're more and on on cost, and that have safer, doing

Operator

question next of Dumoulin-Smith America. is The Bank from Instructions] [Operator with Julien

Julien Dumoulin-Smith

the not So you year savings. just settling with efforts a that this reduction Again, particular. that up ask sticking you've issue wider you for you that with seems How cost some on per how focus you here does the I'm se, these O&M narrative with and that here the Project line especially Apollo the line to holding how up trying about of with Richard's think the be talked about but question, do flat time in articulated line call in effectively that vis-a-vis to here here and case. to marries and settlement negotiate it time have with underway, NIPSCO in

couple trying potentially there hashed get in as need you're suppose earlier really as to out, sell there you're if then record point is sufficiently X following in it concerned? question anything next a And all at the is from is, the this context? far that of on I Or at out hearing out to but related looking weeks, Nick up the this you

Lloyd Yates

with So time O&M the Starting let line. the questions. me and handle both those

about try affordable. better O&M of out that we our -- system those is to customers customers. I align cases, keeping rates here but any we on keeping take our day the or can think I our out rate think any keeping can customer system of the our And -- that is we with our O&M strategy that is lean our given for

this think necessarily and we're not cases, if signed, It's going try that to if good too. with not out be line of up rate we're path So to not system. Ultimately, to coming up I we're be down we're the that to lines going continue for okay there. to trying cute and customers, it going

no and when renewable agreed investments, if testimony, what capital is the you argument NIPSCO primarily all the I renewable that's All -- case capital the intervenor the over you you look investments. been think the projects look in at rate at Titus, see there's to.

and to And O&M those come some really ROE, when think So can reasonable you -- X matters, those when limited we're on typically, debating that X you settlement is have subject typically I over which issues. positive.

pan case, So good involved real I weeks a I'm with the out think stakeholders. respect to we're are NIPSCO the to well O&M, the next respect and with going in rate spot optimistic for X all to

Julien Dumoulin-Smith

then that Got back asset up. just on related sale question And it. to brought Shawn minority equity the Excellent. and going the the

XX Again, asset can a address cumulative the it? The trying you're early to you the needs given do out about So question the longer-term equity today, here indications what do needs meaningfully think is sale. process this clearly, have I mean beyond I that you How the you to more is, of question in take the to extent period? in with relative suppose you sheet lot indications see that needs. capital those balance

Donald Brown

change going expected. the do process communicate Yes. point. the When financing we we hasn't to I'd Shawn on get this stated that as say plan can our that. that And is But details financing changed. transaction, no plan at the more we'll as sale

Julien Dumoulin-Smith

projects Excellent. you you And various, solar said storage believe, lines X the for project. I heard I time solar just lastly here, the that the reaffirmed

level see as just on you front. in of deliverability, the your to specifically on some on on I here, point that timely issues side of manner. interconnection on them broadly interconnect line, obviously, and given given some these Just track, think you're again, that the time a covenants curious paying have the of Do on

Shawn Anderson

Yes.

construction, Bridge stage XXXX, at the support and dates dates in to each X to basis work Solar regular year. we our remaining a advance partners specifically are projects our on good the accordingly. the with all continuing the all the in are shared, with remaining we’re Dunns panels we’re and And of on revised the we updated other in-service continuing of within receiving projects first in-service to As all developer Crossroad half this – faith schedule

Operator

questions to turn no for time. Yates, Executive it at further this over any Lloyd I'll are There Chief Officer, remarks. closing

Lloyd Yates

So focus. we questions. for want our Donald And have reiterate said thank and and confidence, as you close, progress your to I about what I

confidence our strong Our progress our strategic and in plan in delivering on our commitments.

on we a upside in our and beyond including electric plan NiSource regulatory in progress us our for had bright and this the you. Investor realizing of Our initiatives, on case, pursuing future believe rate potential at confident our I X-year NIPSCO settlement plan. focus potential the you of the is safe. hope Day. stay I Thank We you all execution joining the and unveiled appreciate morning, we’re the existing

Operator

gentlemen, today's participating. you call. concludes and Thank Ladies for conference this

disconnect. now may You

NiSource (NI) 22 Feb 232022 Q4 Earnings call transcript