5 1.54 6% 6% 6% 6% 1.37 1.47 1.60 8% 8% 8% 8% 2021A 2022A 2023E 2024E 2025E 2026E 2027E 2023 Guidance Annual 6-8% Growth Rate Visible and Sustainable Investments Drive Annual 6-8% NOEPS Growth Through 2027 * NOEPS: Diluted Net Operating Earnings Per Share (Non-GAAP) NiSource | NYSE: NI | nisource.com | 6%-8% Expected Annual NOEPS1 Growth Through 2027 8%-10% Expected Annual Utility Rate Base Growth ~$16.6B Regulated Electric and Gas Rate Base 14%-16% Long-term FFO/ Debt2 Target $30B Planned Long-Term Infrast ...

NiSource Inc. (NYSE:NI) Q1 2023 Earnings Conference Call May 3, 2023 11:00 AM ET Company Participants Chris Turnure - Director, Investor Relations Lloyd Yates - President and CEO Shawn Anderson - Executive Vice President and CFO Michael Luhrs - Executive Vice President, Strategy and Risk and Chief Commercial Officer Melody Birmingham - Executive Vice President and Group President, NiSource Utilities Randy Hulen - Vice President, Investor Relations and Treasurer Conference Call Participants Shahriar Pourreza ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-16189 NiSource Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 8 ...

Financial Data and Key Metrics Changes - Full year earnings for 2022 were $648 million or $1.47 per share, compared to $571 million or $1.37 per share in 2021, reflecting a growth of over 7% [22][38] - The company raised its 2023 guidance to a range of $1.54 to $1.60 per share, an increase of over $0.03 versus the prior midpoint [14][49] - Operating revenues, net of the cost of energy and tracked expenses, increased by $66 million, while operating expenses decreased by $6 million due to lower O&M and other taxes [6][47] Business Line Data and Key Metrics Changes - Gas distribution operating earnings for Q4 were $288 million, an increase of $72 million compared to the same quarter last year [22] - In the electric segment, non-GAAP operating earnings for Q4 were $68 million, a decrease of $14 million from the same quarter last year, primarily due to lower weather-normalized customer usage [23] Market Data and Key Metrics Changes - The company maintained net available liquidity of over $1.6 billion, consisting of cash and available capacity under credit facilities [24] - A favorable drop in natural gas prices is expected to lead to a 20% to 25% decrease in customer bills in 2023 compared to 2022 [66] Company Strategy and Development Direction - The company is committed to a 6% to 8% annual growth in NOEPS through 2027 and plans to invest $15 billion in regulated CapEx from 2023 to 2027 [2][14] - The strategic focus includes enhancing operational efficiency, optimizing cost profiles, and pursuing renewable energy projects [12][40] - The company aims to retire all coal-fired generation by the end of 2028, transitioning to new assets primarily in wind and solar [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of the five-year plan and the potential for a balanced outcome in the NIPSCO electric rate case [12][84] - The company remains focused on safety, reliability, affordability, and sustainability despite macroeconomic headwinds [50] Other Important Information - The company is actively pursuing a minority interest sale in NIPSCO to strengthen its balance sheet and has observed a broad range of qualified partners for this initiative [28][39] - The company is also engaged in several hydrogen hub proposals and is analyzing tax credits on a project-by-project basis [20][43] Q&A Session Summary Question: Timeline for NIPSCO rate case settlement - Management is optimistic about settling the NIPSCO rate case before the March 13 hearings, with discussions already underway [62] Question: Impact of coal plant cost recovery mechanism - Management believes the mechanism is beneficial for customers and is optimistic about its approval [64] Question: Timing of minority interest sale - The timeline for the minority interest sale remains on track for 2023, independent of the rate case conclusion [70] Question: Customer bill implications of lower gas prices - Management expects a 20% to 25% decrease in customer bills in 2023 due to favorable natural gas prices [66] Question: Updates on renewable projects and timelines - All renewable projects are on schedule with revised in-service dates, and management is working closely with developer partners [95]

Part I [Business](index=7&type=section&id=Item%201.%20Business) NiSource Inc. operates regulated gas distribution and electric utilities, prioritizing infrastructure, safety, and a net-zero emissions transition [Business Strategy](index=7&type=section&id=Business%20Strategy) The company's strategy focuses on rate-regulated utilities, prioritizing safe service, infrastructure investment, and emissions reduction - NiSource's business strategy is focused on its core, rate-regulated utilities, with an emphasis on long-term infrastructure investment, safety programs, and aligning tariff structures with costs to generate sustainable returns[23](index=23&type=chunk) - In 2022, NiSource achieved conformance certification to the American Petroleum Institute Recommended Practice 1173 for its Safety Management System (SMS), marking a key milestone in its journey towards operational excellence[24](index=24&type=chunk) [Gas Distribution Operations](index=7&type=section&id=Gas%20Distribution%20Operations) The Gas Distribution segment serves 3.3 million customers across six states, operating extensive pipelines with seasonal revenues and competition Gas Distribution Operations Overview | Metric | Value | | :--- | :--- | | **Customers Served** | ~3.3 million | | **States of Operation** | 6 | | **Distribution Main Pipeline** | ~54,800 miles | | **Transmission Main Pipeline** | ~1,000 miles | - As of December 31, 2022, **24.5% of residential customers** and **33.3% of commercial customers** participated in programs to purchase natural gas from third-party suppliers, using NiSource subsidiaries for transportation services[27](index=27&type=chunk) - Revenues from gas distribution operations are highly seasonal, with the most significant portion generated during the heating season from November through March[30](index=30&type=chunk) [Electric Operations](index=8&type=section&id=Electric%20Operations) NIPSCO's Electric Operations serve 486,000 customers, transitioning from coal to renewables by 2028 and participating in the MISO market Owned Electric Generation Capacity (as of Dec 31, 2022) | Fuel Type | Generating Capacity (MW) | | :--- | :--- | | Steam - Coal | 1,177 | | CCGT | 563 | | Natural Gas | 155 | | Hydro | 16 | | Wind | 404 | | **Total MW Capacity** | **2,315** | - NIPSCO plans to retire its remaining coal generating assets by **2028**, replacing them with a diverse portfolio including solar, energy storage, and new gas peaking resources[31](index=31&type=chunk) - In 2022, NIPSCO's generating units were dispatched by MISO to meet **41.65% of its load requirements**, with the remaining **58.35% purchased from the MISO market**[33](index=33&type=chunk) [Regulatory](index=9&type=section&id=Regulatory) NiSource's operations are extensively regulated, actively managing rate cases and using cost recovery mechanisms to align revenue with costs Selected Rate Case Actions (2022-2023) | Company | Status | Requested Incremental Revenue (in millions) | Approved Incremental Revenue (in millions) | | :--- | :--- | :--- | :--- | | Columbia of Pennsylvania | Approved Dec 2022 | $82.2 | $44.5 | | Columbia of Maryland | Approved Nov 2022 | $5.8 | $3.5 | | Columbia of Ohio | Approved Jan 2023 | $221.4 | $68.2 | | NIPSCO - Gas | Approved Jul 2022 | $109.7 | $71.8 | | NIPSCO - Electric | Order Expected Q3 2023 | $291.8 | In process | - The company's subsidiaries are subject to FERC jurisdiction for various activities, including NIPSCO's Market Based Rate authority and its role as a Transmission Owner within MISO[42](index=42&type=chunk) - To mitigate the impact of declining average use per customer, several gas subsidiaries have adopted alternative rate designs, such as straight fixed variable rates (Columbia of Ohio) and weather normalization adjustments (Columbia of Maryland, Virginia, Pennsylvania, Kentucky)[44](index=44&type=chunk) [Environmental and Safety Matters](index=11&type=section&id=Environmental%20and%20Safety%20Matters) The company addresses environmental and safety regulations, mitigating climate risks, and targeting net-zero Scope 1 and 2 GHG emissions by 2040 - The PIPES Act of 2020 requires PHMSA to update pipeline safety regulations, which may lead to increased costs for operators like NiSource[49](index=49&type=chunk) - On November 7, 2022, NiSource announced a goal of achieving **net-zero Scope 1 and Scope 2 greenhouse gas emissions by 2040**[58](index=58&type=chunk) - The company is on track to reduce Scope 1 GHG emissions by **90% from 2005 levels by 2030** and had already achieved an approximate **58% reduction by the end of 2021**[58](index=58&type=chunk) [Human Capital](index=12&type=section&id=Human%20Capital) NiSource employed 7,162 people as of 2022, focusing on DE&I, maintaining high retention, and implementing robust talent and safety programs Workforce Composition (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | **Total Employees** | 7,162 (7,117 full-time, 45 part-time) | | **Unionized Workforce** | 35% | | **2022 External Hires (Racially/Ethnically Diverse)** | 28% | | **2022 External Hires (Female)** | 44% | | **2022 Retention Rate** | > 91% | - The Board of Directors is comprised of **33% women** and **33% people of color**[63](index=63&type=chunk) - The company has implemented a hybrid working model, with **58% of the workforce onsite**, **35% hybrid**, and **7% remote**[70](index=70&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) NiSource faces significant operational, financial, and regulatory risks, including those from the Greater Lawrence Incident, supply chain, and economic conditions [Operational Risks](index=18&type=section&id=Operational%20Risks) Operational risks include failure to complete the NIPSCO minority sale, utility hazards, aging infrastructure, supply chain issues, and cybersecurity threats - The company announced its intention to sell a minority interest in NIPSCO, but there is no assurance it will be completed on the anticipated timeline or at all[84](index=84&type=chunk) - The electric generation transition is at risk due to supply chain issues, particularly the significant curtailment of imported solar panels and components, which could delay projects and impact reliability[97](index=97&type=chunk)[98](index=98&type=chunk) - The company faces evolving and increasingly complex cybersecurity risks, including ransomware and attacks on critical infrastructure, which could disrupt operations and compromise sensitive data[117](index=117&type=chunk)[120](index=120&type=chunk) [Financial, Economic and Market Risks](index=26&type=section&id=Financial%2C%20Economic%20and%20Market%20Risks) Financial risks stem from substantial indebtedness, potential credit rating downgrades, inflation, and rising interest rates impacting capital access and demand - As of December 31, 2022, the company had total consolidated indebtedness of **$11,315.5 million**, which could limit its financial flexibility and ability to borrow additional funds[132](index=132&type=chunk) - A downgrade of credit ratings below investment grade could trigger collateral requirements of approximately **$85.7 million** as of December 31, 2022[136](index=136&type=chunk) - Adverse economic conditions, including inflation and rising interest rates, could increase the cost of borrowing and make it more difficult to obtain financing for operations and capital investments[138](index=138&type=chunk)[139](index=139&type=chunk) [Litigation, Regulatory and Legislative Risks](index=31&type=section&id=Litigation%2C%20Regulatory%20and%20Legislative%20Risks) Litigation and regulatory risks include the Greater Lawrence Incident's financial impact and uncertain environmental regulations for GHG and CCRs - Total expenses related to the Greater Lawrence Incident have exceeded the company's liability insurance coverage, which has materially affected and may continue to affect financial results[166](index=166&type=chunk) - The company is operating under a Deferred Prosecution Agreement (DPA) with the U.S. Attorney's Office related to the Greater Lawrence Incident, which imposes compliance obligations through February 2023[167](index=167&type=chunk)[565](index=565&type=chunk) - The company faces significant uncertainty and risk from environmental regulations concerning Coal Combustion Residuals (CCRs) and greenhouse gas (GHG) emissions, which could lead to significant additional expenses and operating restrictions[173](index=173&type=chunk)[174](index=174&type=chunk) [Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[180](index=180&type=chunk) [Properties](index=34&type=section&id=Item%202.%20Properties) The company's principal properties include its Merrillville headquarters and various gas and electric operational facilities, owned free from major encumbrances - The company owns its **325,000 square foot headquarters building** in Merrillville, Indiana[184](index=184&type=chunk) [Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) Information on legal proceedings is incorporated by reference from Note 19 of the Notes to Consolidated Financial Statements - Information regarding legal proceedings is incorporated by reference from Note 19 of the Notes to Consolidated Financial Statements[186](index=186&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[187](index=187&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NiSource's common stock trades on the NYSE, with quarterly cash dividends declared and 412.5 million shares outstanding as of February 2023 - The company's common stock is listed on the NYSE under the symbol **"NI"**[189](index=189&type=chunk) - On January 26, 2023, the Board declared a quarterly common dividend of **$0.250 per share**[189](index=189&type=chunk) - As of February 15, 2023, NiSource had **412,507,944 shares of common stock outstanding**[191](index=191&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) NiSource's 2022 net income increased due to new gas rates and an insurance settlement, with significant capital investments planned for infrastructure and renewable transition [Executive Summary](index=38&type=section&id=Executive%20Summary) In 2022, NiSource advanced strategic goals, investing $1.6 billion in infrastructure and progressing coal-to-renewable transition despite supply chain challenges - In 2022, the company invested **$1.6 billion** in infrastructure, replacing **410 miles of distribution main and service lines**, **48 miles of underground cable**, and **1,352 electric poles**[203](index=203&type=chunk) - The plan to replace coal generation capacity by **2028** is underway, but the company is adjusting to the dynamic renewable energy landscape and broad market issues, including supply chain challenges[205](index=205&type=chunk)[206](index=206&type=chunk) [Summary of Consolidated Financial Results](index=41&type=section&id=Summary%20of%20Consolidated%20Financial%20Results) NiSource's 2022 net income available to common shareholders significantly increased to $749.0 million, driven by new gas rates and an insurance settlement Consolidated Financial Results Summary | Year Ended December 31, (in millions) | 2022 | 2021 | | :--- | :--- | :--- | | **Operating Revenues** | $5,850.6 | $4,899.6 | | **Operating Income** | $1,265.8 | $1,006.9 | | **Net Income attributable to NiSource** | $804.1 | $584.9 | | **Net Income Available to Common Shareholders** | $749.0 | $529.8 | | **Diluted Earnings Per Share** | $1.70 | $1.27 | - The increase in 2022 net income was primarily due to higher revenues from gas base rate proceedings, regulatory capital programs, and an insurance settlement related to the Greater Lawrence Incident[215](index=215&type=chunk) [Results and Discussion of Segment Operations](index=42&type=section&id=Results%20and%20Discussion%20of%20Segment%20Operations) Gas Distribution operating income increased due to new rates, while Electric Operations saw a decrease primarily from higher depreciation on renewable projects Segment Operating Income (in millions) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | **Gas Distribution Operations** | $915.8 | $617.5 | | **Electric Operations** | $362.4 | $387.8 | [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) NiSource maintains strong liquidity with $1.57 billion available, planning $15 billion in capital investments (2023-2027) for infrastructure and generation transition Net Available Liquidity (as of Dec 31, in millions) | | 2022 | 2021 | | :--- | :--- | :--- | | Revolving Credit Facility | $1,850.0 | $1,850.0 | | Less: Commercial Paper & Letters of Credit | ($425.2) | ($578.9) | | Accounts Receivable Programs (Net) | $100.0 | $251.2 | | Add: Cash and cash equivalents | $40.8 | $84.2 | | **Net Available Liquidity** | **$1,565.6** | **$1,606.5** | - The company expects to make capital investments totaling approximately **$15 billion** during the 2023-2027 period[257](index=257&type=chunk) Credit Ratings (as of Dec 31, 2022) | Entity | S&P | Moody's | Fitch | | :--- | :--- | :--- | :--- | | **NiSource** | BBB+ | Baa2 | BBB | | **NIPSCO** | BBB+ | Baa1 | BBB | [Market Risk Disclosures](index=54&type=section&id=Market%20Risk%20Disclosures) Principal market risks include commodity price, interest rate, and credit risk, with commodity risk largely mitigated by regulatory recovery mechanisms - Commodity price risk is limited for rate-regulated subsidiaries due to regulatory mechanisms (GCA and FAC) that allow for recovery of prudently incurred costs[274](index=274&type=chunk) - A **100 basis point (1%) increase** in short-term interest rates would have increased interest expense by **$8.7 million** for 2022[277](index=277&type=chunk) [Other Information](index=55&type=section&id=Other%20Information) This section outlines critical accounting estimates, including rate-regulated operations, pension benefits, goodwill valuation, and unbilled revenue Key Balances from Critical Accounting Estimates (Dec 31, 2022) | Account | Amount (in millions) | | :--- | :--- | | **Regulatory Assets** | $2,580.8 | | **Regulatory Liabilities** | $2,012.6 | | **Goodwill** | $1,486.0 | | **Unbilled Revenue** | $453.0 | - A **50 basis point decrease** in the discount rate would increase the Projected Benefit Obligation for pension and other postretirement benefits by **$56.7 million** and **$20.8 million**, respectively[296](index=296&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates by reference market risk disclosures from Item 7 of the report - Disclosures about market risk are reported in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Disclosures"[305](index=305&type=chunk) [Financial Statements and Supplementary Data](index=60&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, including the auditor's report and detailed notes [Report of Independent Registered Public Accounting Firm](index=61&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on NiSource's 2022 financial statements and internal controls, identifying rate regulation as a critical audit matter - The auditor, Deloitte & Touche LLP, expressed an **unqualified opinion** on the financial statements and the company's internal control over financial reporting[309](index=309&type=chunk)[310](index=310&type=chunk) - The accounting for rate-regulated subsidiaries was identified as a **critical audit matter** due to the significant management judgments required to assess the likelihood of recovering costs and refunding amounts to customers[317](index=317&type=chunk) [Consolidated Financial Statements](index=63&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show NiSource's 2022 operating revenues of $5.85 billion, net income of $804.1 million, and total assets of $26.74 billion Key Financial Statement Data (Year Ended Dec 31, 2022, in millions) | Metric | Value | | :--- | :--- | | **Operating Revenues** | $5,850.6 | | **Operating Income** | $1,265.8 | | **Net Income (Loss) attributable to NiSource** | $804.1 | | **Total Assets** | $26,736.6 | | **Total Stockholders' Equity** | $7,901.8 | | **Total Long-term debt** | $9,523.6 | | **Net Cash from Operating Activities** | $1,409.4 | [Notes to Consolidated Financial Statements](index=70&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial items, including revenue, regulatory assets/liabilities, debt, pensions, and contingencies like the Greater Lawrence Incident [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=126&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[596](index=596&type=chunk) [Controls and Procedures](index=126&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - The CEO and CFO concluded that as of the end of the period, disclosure controls and procedures were **effective** at a reasonable assurance level[597](index=597&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2022[598](index=598&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=129&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Stockholders to be held on May 23, 2023[613](index=613&type=chunk) [Executive Compensation](index=129&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Stockholders to be held on May 23, 2023[614](index=614&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=129&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Stockholders to be held on May 23, 2023[615](index=615&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=129&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Stockholders to be held on May 23, 2023[616](index=616&type=chunk) [Principal Accounting Fees and Services](index=129&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Stockholders to be held on May 23, 2023[617](index=617&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=130&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K - This section contains a list of all financial statements, schedules, and exhibits filed with the Form 10-K[620](index=620&type=chunk)[621](index=621&type=chunk) [Form 10-K Summary](index=139&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None[638](index=638&type=chunk)

Financial Data and Key Metrics Changes - NiSource reported non-GAAP diluted net operating earnings per share (NOEPS) of $0.12 for Q2 2022, a slight decrease from $0.13 in Q2 2021 [12][23] - The company reaffirmed its 2022 guidance of $1.42 to $1.48 diluted non-GAAP NOEPS and a compound annual growth rate of 7% to 9% from 2021 through 2024 [10][92] Business Line Data and Key Metrics Changes - Gas distribution operating earnings for Q2 2022 were approximately $81 million, an increase of about $15 million compared to the same quarter last year [24] - Electric segment non-GAAP operating earnings for Q2 were about $73 million, which is about $11 million lower than the same quarter last year [25] Market Data and Key Metrics Changes - The company experienced a revenue increase of $72 million annually from the NIPSCO gas rate case, effective September 2022 and March 2023 [14] - Columbia Gas of Ohio requested a revenue increase of $221 million, while Columbia Gas of Pennsylvania sought an additional $82.2 million for infrastructure upgrades [15] Company Strategy and Development Direction - NiSource is focused on safety and operational excellence while pursuing growth and sustainability [8] - The company plans to invest approximately $10 billion from 2021 to 2024, with about $2 billion allocated for renewable projects primarily between 2022 and 2024 [19] - A strategic review is ongoing to explore internal and external opportunities to maximize shareholder value, with results expected to be shared at an Investor Day in November [12][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the 2022 guidance despite challenges such as delays in solar projects and inflationary pressures [66][92] - The pause on solar panel tariffs has provided clarity on project timelines, although original timelines for renewable generation projects remain unchanged [9][10] Other Important Information - NiSource's debt level as of June 30, 2022, was about $10.1 billion, with a weighted average interest rate of approximately 3.7% [26] - The company successfully executed its first green bond issuance, a 30-year bond at 5%, intended for wind project purchases [29] Q&A Session Summary Question: Can you discuss the impact of the pause on tariffs and growth opportunities? - Management indicated that they are pulling forward capital investments to mitigate the impact of solar project delays and are confident in their growth plan [34][36] Question: How is the strategic review process progressing? - The review involves benchmarking against robust stand-alone plans and exploring operational efficiencies while assessing demand for local distribution companies (LDCs) [39][40] Question: What are the implications of the Inflation Reduction Act? - Management noted no near-term material impact from the act, but they will analyze long-term effects on renewables and energy efficiency [42][43] Question: How is the company managing industrial demand trends? - There has been some weakness in industrial sales, particularly in the steel industry, but overall electric revenues are supported by residential and commercial growth [64][65] Question: What is the status of the NIPSCO base rate filing? - The company anticipates filing a rate case before the end of the year to incorporate completed projects into the rate structure [69] Question: How are customers affected by higher commodity costs? - Customers are already seeing higher commodity prices reflected in their bills, with a year-over-year increase of about 19% to 20% [72] Question: What is the status of in-flight renewable projects? - The company is receiving solar panels for ongoing projects and is finalizing commercial negotiations for additional projects [75][76] Question: What is the state of settlement discussions in Pennsylvania? - Discussions have been constructive, focusing on customer value and support for modernization programs [83]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-16189 NiSource Inc. | | Trading | Name of Each Exchange on Which | | --- | --- | --- | | Title of Each Class | Symbol(s) | Registered | | Co ...

Financial Data and Key Metrics Changes - NiSource reported non-GAAP diluted net operating earnings per share (NOEPS) of $0.75 for Q1 2022, a decrease from $0.77 in Q1 2021, with total non-GAAP net operating earnings of approximately $329 million compared to $305 million last year [13][28] - The company reaffirmed its 2022 guidance of $1.42 to $1.48 diluted non-GAAP EPS and a compound annual growth rate (CAGR) of 7% to 9% from 2021 through 2024 [11][131] Business Line Data and Key Metrics Changes - Gas Distribution operating earnings were approximately $405 million for Q1 2022, an increase of about $31 million compared to the same quarter last year [29] - Electric segment non-GAAP operating earnings for Q1 were about $99 million, which was about $8 million higher than 2021 [31] Market Data and Key Metrics Changes - NiSource's debt level as of March 31 was approximately $9.8 billion, with $9.2 billion in long-term debt and a weighted average interest rate of approximately 3.7% [32] - The company maintained net available liquidity of about $1.9 billion, consisting of cash and available capacity under its credit facility [33] Company Strategy and Development Direction - NiSource is committed to completing its generation transition from coal by 2028, although delays in solar and storage projects are expected due to the Commerce Department investigation [10][22] - The company plans to adjust its modernization investments to account for the timing changes in renewable energy project investments, aiming for approximately $10 billion in capital investments during the 2021 to 2024 period [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming the 2022 guidance despite projected delays in solar projects, emphasizing the importance of flexibility in the business plan [11][12] - The company highlighted the potential unintended consequences of project delays on customer costs and the importance of accelerating savings through renewable transitions [24][116] Other Important Information - NiSource is actively pursuing regulatory excellence with several rate cases filed in Pennsylvania and Virginia, and a settlement in the NIPSCO gas rate case [15][131] - The company plans to host an Investor Day in the fall to provide a definitive long-term plan beyond 2024 [12][27] Q&A Session Summary Question: Details on renewable investments and project timelines - Management clarified that there is a projected delay of 6 to 18 months for solar projects due to the Commerce Department investigation, with some projects already under construction expected to be completed sooner [51][52] Question: Update on strategic business review - The CEO indicated that the strategic business review is ongoing, with more information expected to be revealed during the fall Investor Day [57][128] Question: Impact of solar project delays on financing plans - Management noted that delays would impact debt financing for projects, but no changes to the overall financing plan were anticipated at this time [125][126] Question: Cost overruns and recovery mechanisms - Cost overruns are primarily the responsibility of the developer, with the company needing to evaluate the impact of any tariffs on project costs [111][123] Question: Customer bill impacts from rate increases - Management is continuously considering customer bill impacts and is in discussions with regulators to mitigate potential increases [84][90]

NiSource | NYSE: NI | nisource.com | SUPPLEMENTAL SLIDES 1Q 2022 RESULTS May 4, 2022 FORWARD-LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be rea ...

PART I FINANCIAL INFORMATION [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The unaudited financial statements show a significant increase in net income driven by higher operating revenues and a slight rise in total assets [Condensed Statements of Consolidated Income](index=7&type=section&id=Condensed%20Statements%20of%20Consolidated%20Income) NiSource reported significantly increased operating revenues and net income for Q1 2022 compared to the prior year Consolidated Income Statement Highlights (Q1 2022 vs Q1 2021) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Total Operating Revenues** | $1,873.3 million | $1,545.6 million | | **Operating Income** | $600.3 million | $433.2 million | | **Net Income Attributable to NiSource** | $426.8 million | $295.5 million | | **Diluted Earnings Per Share (EPS)** | $0.94 | $0.72 | - The increase in operating income was primarily driven by higher customer revenues, which rose to **$1,840.3 million** from $1,506.5 million, partially offset by an increase in the cost of energy[20](index=20&type=chunk) [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and equity slightly increased as of March 31, 2022, while long-term debt remained stable Balance Sheet Summary | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | $24,365.5 million | $24,156.9 million | | **Net Property, Plant and Equipment** | $18,120.7 million | $17,881.8 million | | **Total Liabilities** | $16,834.1 million | $16,884.0 million | | **Total Equity** | $7,531.4 million | $7,272.9 million | | **Long-term debt (excluding current portion)** | $9,179.8 million | $9,183.4 million | [Condensed Statements of Consolidated Cash Flows](index=11&type=section&id=Condensed%20Statements%20of%20Consolidated%20Cash%20Flows) Net cash from operating activities increased, while investing activities were primarily driven by capital expenditures Cash Flow Summary (Three Months Ended March 31) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net Cash Flows from Operating Activities** | $579.8 million | $448.3 million | | **Net Cash Flows used for Investing Activities** | ($370.4 million) | ($401.8 million) | | **Net Cash Flows used for Financing Activities** | ($173.9 million) | ($75.4 million) | | **Change in cash, cash equivalents and restricted cash** | $35.5 million | ($28.9 million) | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment performance, regulatory matters, and financing activities - The company adopted ASU 2020-06 on January 1, 2022, which impacted the calculation of **diluted EPS for its Equity Units** by requiring the assumption of share settlement for the remaining purchase contract payment balance[39](index=39&type=chunk)[47](index=47&type=chunk) - The company has two primary reportable segments: Gas Distribution Operations and Electric Operations, with Q1 2022 operating revenues of **$1,439.8 million** and **$430.3 million** respectively[138](index=138&type=chunk)[139](index=139&type=chunk) - In April 2022, a milestone payment of **$71.9 million** was made to a developer for the Dunn's Bridge I renewable energy project[140](index=140&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses increased net income, segment performance, liquidity, and key risks including supply chain delays impacting its electric generation transition [Executive Summary](index=34&type=section&id=Executive%20Summary) The company focuses on long-term infrastructure investment and safety while navigating delays in its renewable energy transition and monitoring economic risks - The 'Your Energy, Your Future' plan to replace coal generation with renewables faces delays on solar projects, with the retirement of two R.M. Schahfer coal units now expected by the **end of 2025**[150](index=150&type=chunk) - The company is monitoring economic risks including **supply chain delays**, increased competition for labor, and a substantial increase in natural gas spot market prices[154](index=154&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) [Results and Discussion of Segment Operations](index=36&type=section&id=Results%20and%20Discussion%20of%20Segment%20Operations) Both Gas and Electric segments saw increased operating income, though the electric generation transition is challenged by solar project delays Segment Operating Income (Three Months Ended March 31) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | **Gas Distribution Operations** | $510.8 million | $346.9 million | | **Electric Operations** | $99.2 million | $87.9 million | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains adequate liquidity through credit facilities and financing programs to support its significant capital investment plans Net Available Liquidity | Date | Amount | | :--- | :--- | | **March 31, 2022** | $1,910.1 million | | **December 31, 2021** | $1,606.5 million | - The company plans to make capital investments totaling approximately **$8 billion** during the 2022-2024 period, with flexibility to adjust timing due to renewable project delays[198](index=198&type=chunk) - As of March 31, 2022, the company was in compliance with its debt covenant, with a debt-to-capitalization ratio of **56.4%** against a 70% limit[206](index=206&type=chunk) [Regulatory, Environmental and Safety Matters](index=48&type=section&id=Regulatory%2C%20Environmental%20and%20Safety%20Matters) The company is engaged in multiple rate cases and continues its strategy to reduce GHG emissions while exploring lower-carbon technologies - The company has active rate cases in several jurisdictions, including a request for a **$221.4 million** revenue increase for Columbia of Ohio and a **$109.7 million** increase for NIPSCO Gas[219](index=219&type=chunk) - NiSource continues to implement plans to reduce Scope 1 GHG emissions by **90% from 2005 levels by 2030**, having achieved an approximate 58% reduction by year-end 2021[227](index=227&type=chunk) - Columbia of Pennsylvania and Columbia of Virginia have filed petitions for a voluntary 'Green Path Rider' allowing customers to offset natural gas emissions through **RNG attributes and carbon offsets**[229](index=229&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's principal market risks are commodity prices, interest rates, and credit, which are managed through derivatives and regulatory mechanisms - The company's principal market risks are **commodity price risk, interest rate risk, and credit risk**[231](index=231&type=chunk) - A **100 basis point (1%)** change in short-term interest rates would have resulted in a **$1.5 million** change in interest expense for the three months ended March 31, 2022[236](index=236&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The chief executive officer and chief financial officer concluded that the company's **disclosure controls and procedures were effective** as of the end of the reporting period[243](index=243&type=chunk) - **No changes in internal control** over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[244](index=244&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to financial statement notes detailing legal matters, primarily related to the 2018 Greater Lawrence Incident - For a description of legal proceedings, the report refers to **Note 15, "Other Commitments and Contingencies,"** in the Notes to Condensed Consolidated Financial Statements[247](index=247&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) A new operational risk factor highlights expected delays in the electric generation strategy due to significant solar industry supply chain uncertainty - A new risk factor details expected delays in the electric generation strategy due to challenges in the **solar industry supply chain**, including federal policy actions and macro supply chain issues[249](index=249&type=chunk)[250](index=250&type=chunk) - The uncertainty around solar project completion creates risks for meeting capacity obligations, potentially extending the operation of two coal units at the Schahfer plant to the **end of 2025**[251](index=251&type=chunk)[252](index=252&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None reported[257](index=257&type=chunk)