- Trailing 12-month Earned ROE: 10.3%
- Second-quarter 2024 Adjusted EPS: $0.21
- 2024 Adjusted EPS Guidance: $1.70 to $1.74 (expecting upper half of this range)
- Annual 2023-2028 Adjusted EPS Growth Guidance: 6% to 8%
- Rate Base Growth Guidance: 8% to 10%
- FFO to Debt Target: 14% to 16%
- Second-quarter Net Revenue Increase: 15% year over year
- Incremental Normalized Customer Usage: $8 million
- Weather Normalization Mechanisms Impact: $6 million revenue impact versus normal weather
- Virginia and Ohio Residential Throughput Growth: 7.1%
- Virginia and Ohio Commercial Throughput Growth: 5.7%
- Normalized Electric Load Growth: 5% in the second quarter
- Existing Data Center Customer Usage Growth: Five times year-to-date versus the same period last year
- 2024 Rate Recovery Finalized: 97%
- Second-quarter Adjusted EPS Increase: $0.10 per share (from $0.11 to $0.21)
- 2024 Adjusted EPS Growth Rate: 6% to 8% annually off of 2024 results
- 2024 Financing Activity: $500 million of 30-year junior subordinated notes at 6.95% coupon, $600 million of five-year senior unsecured notes at 5.2% coupon
- 2024 Equity Financing: $500 million priced out of up to $600 million guided amount
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NiSource Inc (NI, Financial) reported second-quarter 2024 adjusted EPS of $0.21, reaffirming 2024 adjusted EPS guidance of $1.70 to $1.74 and expecting to achieve the upper half of this range.
- The company continues to target an annual adjusted EPS growth of 6% to 8% from 2023 to 2028, with a rate base growth of 8% to 10%.
- NiSource Inc (NI) has a strong regulatory and stakeholder foundation, with a history of collaborative efforts to deliver value across diverse constituencies.
- The company successfully launched new IT applications at NIPSCO electric operations, enhancing operational efficiency and safety.
- NiSource Inc (NI) achieved a top AAA ESG rating for the third consecutive year by MSCI ESG ratings, indicating strong performance in corporate governance, human capital development, and environmental initiatives.
Negative Points
- The company faces potential regulatory and financing uncertainties, which could impact future growth and financial performance.
- NiSource Inc (NI) has significant capital expenditure plans, including $16.4 billion over the next five years, which may require additional equity financing and could affect shareholder returns.
- The company is exposed to risks associated with weather normalization mechanisms, which can impact revenue and financial results.
- There are ongoing challenges in achieving constructive outcomes in regulatory proceedings, such as the Pennsylvania rate case, which could affect future earnings.
- NiSource Inc (NI) must carefully manage the integration of new data center developments to ensure they do not compromise reliability or impose excessive costs on existing customers.
Q & A Highlights
Q: Can you provide more details on the MISO tranche opportunities and the expected spend?
A: (Shawn Anderson, CFO) For tranche one, MISO's original estimate was around $300 million, but we expect it will take more to execute these projects safely and reliably. We will provide more updates in our November capital plan refresh. For tranche two, it's still early, and we expect to see estimates by the end of this year, with most of the spend occurring beyond our current plan horizon.
Q: When can we expect more concrete details on the data center opportunities and their impact on growth and CapEx?
A: (Lloyd Yates, CEO) We are excited about the data center opportunities and are in discussions with various stakeholders. We aim to ensure that these projects work for our current customer base, maintain reliability, and provide appropriate returns for shareholders. We expect to provide more clarity by EEI or later this year.
Q: What are the main offsets keeping you at a 6% to 8% growth rate despite strong load growth and additional capital?
A: (Shawn Anderson, CFO) The main headwinds include volatile capital markets, regulatory outcomes, and financing costs. While we are experiencing tailwinds from customer growth, we do not project this growth to always continue. We are also financing significant CapEx, especially for NIPSCO projects, which will occur in 2025.
Q: How do you plan to manage bill growth while incorporating new load projections and capital plan refreshes?
A: (Shawn Anderson, CFO) We haven't run specific analyses yet, but we aim to keep residential customer bill growth at or below 4%. Data centers can provide upside by sharing system costs, but we haven't quantified this yet.
Q: How do you plan to ensure that new industrial customers pay their fair share while preserving bill integrity for core customers?
A: (Michael Luhrs, EVP - Strategy and Risk, Chief Commercial Officer) We are working on mechanisms such as tariffs and regulatory components to ensure appropriate cost allocation and reliability. We are exploring innovative ways to achieve this in both current and future regulatory filings.
Q: Can you provide more details on the Pennsylvania rate case and the potential for a settlement?
A: (Melody Birmingham-Byrd, EVP, President - NiSource Utilities) We are in ongoing discussions with stakeholders and intervenors. While we aim for a win-win outcome, it is still uncertain if a settlement will be reached.
Q: What type of load growth could you see through the Blackstone partnership at NIPSCO?
A: (Michael Luhrs, EVP - Strategy and Risk, Chief Commercial Officer) We are looking at economic development opportunities and have shown a potential incremental need of 2,600 megawatts in our reference case, with an additional 6,000 megawatts in other scenarios.
Q: How do you see the state of Indiana ensuring supply to meet new data center loads?
A: (Lloyd Yates, CEO) We see opportunities for efficiency through partnerships with peer utilities and MISO, which would also ease interconnection agreements on transmission.
Q: Can you provide more details on the agreement to supply gas to a data center?
A: (Melody Birmingham-Byrd, EVP, President - NiSource Utilities) The agreement is to provide power directly to the data center, and we see more opportunities for building gas infrastructure to support data centers, especially in Ohio and Virginia.
Q: How should we think about the $500 million junior subordinated debt issued in May in relation to the $600 million ATM equity?
A: (Shawn Anderson, CFO) The junior subordinated debt is incremental to the $600 million ATM equity. It helps enhance our credit quality and manage our long-term debt profile.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
