Group 1 - NiSource (NI) is currently outperforming its peers in the Utilities sector, with a year-to-date return of approximately 14%, compared to the sector average of 11.2% [4][5] - NiSource holds a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3][5] - The Zacks Consensus Estimate for NiSource's full-year earnings has increased by 0.1% over the past quarter, reflecting improving analyst sentiment [3] Group 2 - The Utilities sector consists of 108 individual stocks and currently has a Zacks Sector Rank of 1, indicating strong overall performance [2] - NiSource is part of the Utility - Electric Power industry, which includes 59 stocks and is ranked 74 in the Zacks Industry Rank, with stocks in this group gaining about 11.2% year-to-date [5] - Another outperforming stock in the Utilities sector is Telefonica (TEF), which has returned 34.3% year-to-date and also holds a Zacks Rank of 2 (Buy) [4][6]

Economic Overview - Consumer confidence index declined to 93 in June, a 5.4-point drop from May's 98.4, and significantly lower than the expected rise to 100 [4][10] - Concerns over job availability and uncertainty regarding President Trump's tariffs contributed to the decline in consumer confidence [5][10] - The labor market differential fell to 11.1 in June from 12.7 in May, marking its lowest point in four years [5] Investment Recommendations - It is advisable to invest in safe-haven defensive stocks from the utility and consumer staples sectors, including Atmos Energy Corporation (ATO), NiSource Inc. (NI), Fortis, Inc. (FTS), Ingredion Incorporated (INGR), and Altria Group, Inc. (MO) [2][10] - These stocks are categorized as low-beta (beta greater than 0 but less than 1) and are expected to provide high dividend yields along with favorable Zacks Ranks [3][10] Company Profiles Atmos Energy Corporation (ATO) - Engaged in regulated natural gas distribution and storage, serving approximately 3.3 million customers across eight states [9] - Expected earnings growth rate of 6% for the current year, with a Zacks Rank 2 and a current dividend yield of 2.22% [11] NiSource Inc. (NI) - Provides natural gas and electricity to around 3.7 million customers in six states, with one of the largest natural gas distribution networks in the U.S. [12] - Expected earnings growth rate of 7.4% for the current year, with a Zacks Rank 2 and a current dividend yield of 2.76% [13] Fortis, Inc. (FTS) - Operates in the electric and gas utility business, primarily in Canada, the U.S., and the Caribbean [14] - Expected earnings growth rate of 3.4% for the current year, with a Zacks Rank 2 and a current dividend yield of 3.76% [15] Ingredion Incorporated (INGR) - Specializes in nature-based sweeteners, starches, and nutrition ingredients, serving various sectors [16] - Expected earnings growth rate of 6.1% for the current year, with a Zacks Rank 2 and a current dividend yield of 2.33% [17] Altria Group, Inc. (MO) - Evolving beyond traditional cigarettes into the smokeless category due to rising health consciousness and regulatory pressures [18] - Expected earnings growth rate of 4.9% for the current year, with a Zacks Rank 2 and a current dividend yield of 6.81% [19]

Market Overview - Volatility has returned to Wall Street due to escalating tensions between Iran and Israel, with the U.S. gradually getting involved [2][5] - The Dow declined by 0.7%, while the S&P 500 and Nasdaq fell by 0.8% and 0.9%, respectively [5] - Recent geopolitical tensions have unsettled markets, which could remain volatile for an extended period [9] Investment Recommendations - It is advisable to invest in safe-haven defensive stocks from the utility sector, including Atmos Energy Corporation (ATO), Fortis, Inc. (FTS), MDU Resources Group, Inc. (MDU), and NiSource Inc. (NI) [3][11] - These stocks are characterized by low beta (greater than 0 but less than 1), high dividend yields, and favorable Zacks Ranks [4][11] Company Profiles Atmos Energy Corporation (ATO) - Engaged in regulated natural gas distribution and storage, serving approximately 3.3 million customers across eight states [10] - Expected earnings growth rate of 6% for the current year, with a Zacks Consensus Estimate improvement of 0.6% over the last 60 days [12] - Current dividend yield is 2.27% and beta is 0.71 [12] Fortis, Inc. (FTS) - Operates in the electric and gas utility business, primarily in Canada, the U.S., and the Caribbean [13] - Expected earnings growth rate of 3.4% for the current year, with a Zacks Consensus Estimate improvement of 3.3% over the last 60 days [14] - Current dividend yield is 3.70% and beta is 0.49 [14] MDU Resources Group, Inc. (MDU) - Provides value-added natural resource products and regulated energy delivery services [15] - Expected earnings growth rate of 5.6% for the current year, with a Zacks Consensus Estimate improvement of 1.1% over the last 60 days [15] - Current dividend yield is 3.18% and beta is 0.72 [15] NiSource Inc. (NI) - Delivers natural gas and electricity to approximately 3.7 million customers across six states [16] - Expected earnings growth rate of 7.4% for the current year, with a Zacks Consensus Estimate improvement of 0.5% over the last 60 days [17] - Current dividend yield is 2.83% and beta is 0.54 [17]

Financial Performance - The company reported adjusted EPS of $0.98 for Q1 2025, a 15% increase from $0.85 in the same quarter last year [7][21] - The company reaffirmed its 2025 adjusted EPS guidance of $1.85 to $1.89 and annual growth of 6% to 8% through 2029 [7][24] - The company achieved over 52% of its projected midpoint earnings for the year, an increase of 8% compared to the same period last year [21] Business Lines and Capital Investments - The company continues to advance its energy transition strategy, having installed 2,100 megawatts of renewable nameplate capacity [18] - The capital investment outlook projects over $19 billion over the next five years, with $2 billion identified for safety and reliability improvements [19] - The company is actively developing its base plan to include investments that meet its standards, focusing on electric generation, gas and electric customer growth, and system modernization [19][20] Market and Regulatory Environment - The company is engaged in collaborative regulatory processes to ensure resources for critical investments, such as the Ohio legislative proposal to modernize natural gas rate making [6][10] - The company has filed new rate cases in Pennsylvania and Virginia to recover significant anticipated investments necessary for reliable service [13][14] - The regulatory framework is seen as stable, which helps mitigate the impact of rising product costs on the business [23][24] Strategic Direction and Industry Competition - The company emphasizes operational excellence through initiatives like AI and Project Apollo, which aim to enhance efficiency and reduce waste [12][11] - The company is focused on maintaining a strong balance sheet and enhancing visibility into how investments convert into earnings [26] - The company is positioned to capitalize on economic development opportunities, particularly in data center development and onshoring manufacturing [28][102] Management Commentary on Future Outlook - Management expressed confidence in achieving 2025 guidance and sustaining long-term growth through a balanced and diversified business plan [24][26] - The company is assessing the impact of regulatory changes and executive orders on its operational plans, particularly regarding coal asset retirements [40][41] - Management highlighted the importance of flexibility in capital allocation decisions to adapt to changing market conditions [20][26] Other Important Information - The company is leveraging AI to optimize operations, resulting in significant productivity improvements across various regions [12] - The company has secured a significant portion of critical equipment to support its operations and capital plans for the five-year horizon [22] - The company is exploring opportunities for data center development across its service territories, including Ohio and Virginia [94][95] Q&A Session Summary Question: On the NIPSCO, Jenco filing, do you need to receive an outcome before announcing a signed agreement? - The company can proceed with a special contract and announce it without having the Genco completed [31] Question: How do you think about the pricing of PPAs relative to regulatory perspectives? - The Genco structure allows flexibility to respond to stakeholder needs, and NIPSCO will still be the resource adequacy provider [33] Question: Is there an opportunity to accelerate the $2.2 billion currently outside of the base plan? - The $2.2 billion upside does not include data center development; any data center capital would be incremental to the plan [35] Question: How are you assessing the impact of executive orders on your asset retirement plans? - The company is currently assessing the impact and will work with regulators to determine the best course of action [41] Question: What is the current engagement pace with large load prospective customers? - The company is making excellent progress but emphasizes the complexity of these transactions [55] Question: Can you discuss the regulatory cap structure for Genco? - The financing structure for Genco has not been disclosed yet, as the focus is on completing special contracts with customers [59] Question: What are the expectations for O&M costs moving forward? - The company expects O&M to remain flat year over year, driven by efficiency initiatives [116]

Financial Performance & Growth - NiSource reaffirmed its 2025 adjusted EPS guidance of $1.85-$1.89[12] - The company projects an annual adjusted EPS growth of 6%-8% from 2025-2029[9, 12] - NiSource anticipates an 8%-10% rate base growth from 2025-2029[9] - The company is targeting a 14%-16% annual FFO/Debt through 2029[9, 12] - NiSource reported Q1 2025 GAAP net income available to common shareholders of $474.8 million, compared to $344.3 million in Q1 2024, an increase of $130.5 million[26] - Adjusted net income available to common shareholders for Q1 2025 was $462.3 million, up from $382.8 million in Q1 2024, representing a $79.5 million increase[26] - Adjusted earnings per share for Q1 2025 was $0.98, compared to $0.85 in Q1 2024, a $0.13 increase[26] Capital Investments & Funding - NiSource plans a base plan capital investment of $19.4 billion from 2025-2029[9, 12] - The company has an upside 5-year capital opportunity of $2.2 billion from 2025-2029, which is not included in the base plan[29] - The capital investment funding sources are projected to be 50%-55% from cash from operations, 35%-40% from net new debt, 6%-8% from equity, and 3%-5% from minority interest contribution[31] Strategic Initiatives - NiSource aims to achieve Net Zero emissions by 2040[9, 58] - The company is focused on building a constructive regulatory foundation, including rate case filings and approvals in various states[12, 19] - NiSource is prioritizing operational excellence through AI utilization and continuous improvement initiatives[12, 16]

[PART I - FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2025, showing increased net income and diluted EPS year-over-year [Condensed Statements of Consolidated Income (unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements) | Indicator (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total Operating Revenues** | $2,183.2 | $1,706.3 | | **Operating Income** | $759.4 | $583.4 | | **Net Income** | $526.7 | $400.3 | | **Net Income Attributable to NiSource** | $474.8 | $365.0 | | **Net Income Available to Common Shareholders** | $474.8 | $344.3 | | **Diluted Earnings Per Share** | $1.00 | $0.77 | [Condensed Consolidated Balance Sheet Highlights (unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements) | Asset/Liability (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $33,105.1 | $31,788.1 | | Net Property, Plant and Equipment | $26,489.9 | $25,453.9 | | **Total Stockholders' Equity** | $10,946.0 | $10,668.3 | | **Total Liabilities** | $22,159.1 | $21,119.8 | | Long-term debt (including current portion) | $14,114.1 | $13,355.7 | [Condensed Statements of Consolidated Cash Flows (unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements) | Cash Flow Activity (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net Cash Flows from Operating Activities** | $686.4 | $456.2 | | **Net Cash Flows used for Investing Activities** | $(1,352.7) | $(723.0) | | **Net Cash Flows from (used for) Financing Activities** | $771.4 | $(1,873.8) | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Detailed notes disclose accounting policies, revenue, debt, and regulatory matters, including new segment reporting and a $750 million debt issuance - The company adopted ASU 2023-07 for segment reporting, enhancing disclosures about significant segment expenses and information about the Chief Operating Decision Maker (CODM)[33](index=33&type=chunk) [Revenue by Segment (Q1 2025 vs Q1 2024)](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) | Segment (in millions) | Q1 2025 Total Operating Revenues | Q1 2024 Total Operating Revenues | | :--- | :--- | :--- | | Columbia Operations | $1,240.6 | $953.7 | | NIPSCO Operations | $941.4 | $752.4 | | Corporate and Other | $1.2 | $0.2 | | **Total** | **$2,183.2** | **$1,706.3** | - In March 2025, NiSource issued **$750.0 million of 5.850% senior unsecured notes** due in 2055, with net proceeds of approximately **$739.6 million**[64](index=64&type=chunk) - NIPSCO made significant milestone payments for its renewable generation projects, including a **$336.6 million payment** for the Fairbanks project and a **$217.6 million payment** for the Dunns Bridge II project upon its substantial completion in January 2025[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, highlighting increased net income from new rates, liquidity, and strategic capital investments - Net income available to common shareholders increased by **$130.5 million** YoY, primarily due to higher revenues from capital investments, partially offset by increased operating and interest expenses[137](index=137&type=chunk)[138](index=138&type=chunk) - The company is advancing its energy transition, with **1,500 MW of owned renewable projects** and **600 MW of PPA projects** in service as of March 31, 2025. It remains on track to retire remaining coal units at R.M. Schahfer by the end of 2025[129](index=129&type=chunk) - NiSource is evaluating significant potential load growth from data center development in its northern Indiana service territory, which would require new generation resources[131](index=131&type=chunk) - The company plans to make capital investments of **$4.0 billion to $4.3 billion** in 2025 and approximately **$19.4 billion** during the 2025-2029 period[175](index=175&type=chunk) [Executive Summary](index=37&type=section&id=Executive%20Summary) NiSource's vision focuses on infrastructure investment, energy transition, operational excellence, and managing economic factors like data center growth - NiSource is advancing its energy transition by retiring coal-fired generation and replacing it with a balanced mix of low- or zero-emission sources. As of Q1 2025, **1,500 MW of owned renewable projects are in service**[129](index=129&type=chunk) - The company is evaluating potential data center development in its service territory, which could significantly increase power demand and require new generation resources[131](index=131&type=chunk) - An enterprise-wide transformation is underway, focusing on operational excellence and efficiency through investments in technology like the WAM program, which is expected to be fully implemented by the end of 2025[133](index=133&type=chunk) [Results and Discussion of Segment Operations](index=39&type=section&id=Results%20and%20Discussion%20of%20Segment%20Operations) Segment operations show increased operating income for both Columbia and NIPSCO, driven by new rates and favorable weather conditions [Columbia Operations Operating Income (in millions)](index=39&type=section&id=Results%20and%20Discussion%20of%20Segment%20Operations) | Period | Operating Income | Change (Favorable) | | :--- | :--- | :--- | | Q1 2025 | $445.8 | $83.8 | | Q1 2024 | $362.0 | | - Columbia Operations' revenue increase was primarily driven by new rates from base rate proceedings and regulatory capital programs (**$73.2M**) and the effects of colder weather (**$27.2M**)[147](index=147&type=chunk) [NIPSCO Operations Operating Income (in millions)](index=39&type=section&id=Results%20and%20Discussion%20of%20Segment%20Operations) | Period | Operating Income | Change (Favorable) | | :--- | :--- | :--- | | Q1 2025 | $311.9 | $95.5 | | Q1 2024 | $216.4 | | - NIPSCO Operations' revenue increase was primarily driven by new rates from base rate proceedings and regulatory programs (**$82.1M**) and the effects of weather (**$28.2M**)[157](index=157&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, issued $750 million in debt, and is on track with its 2025 capital expenditure plans [Net Available Liquidity (in millions)](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) | Date | Net Available Liquidity | | :--- | :--- | | March 31, 2025 | $1,712.9 | | December 31, 2024 | $1,567.6 | - On March 27, 2025, the company issued **$750.0 million of 5.850% senior unsecured notes** maturing in 2055[170](index=170&type=chunk) - The company is on track to invest **$4.0 to $4.3 billion** in capital projects during 2025 and forecasts **$19.4 billion** in investments from 2025-2029[175](index=175&type=chunk) - Credit ratings from S&P, Moody's, and Fitch remain stable and investment-grade for both NiSource and NIPSCO[183](index=183&type=chunk) [Regulatory, Environmental and Safety Matters](index=52&type=section&id=Regulatory,%20Environmental%20and%20Safety%20Matters) The company addresses regulatory engagement, environmental goals including Net Zero by 2040, and safety protocols, monitoring new rules - The company has a **Net Zero GHG emissions goal by 2040** for Scope 1 and 2 emissions and had reduced Scope 1 emissions by approximately **72% from 2005 levels** as of the end of 2024[205](index=205&type=chunk) [Pending Rate Cases](index=52&type=section&id=Regulatory,%20Environmental%20and%20Safety%20Matters) | Company | Requested Incremental Revenue (in millions) | Status | | :--- | :--- | :--- | | NIPSCO - Electric | $368.7 | Settlement filed for $257.0M increase | | Columbia of Virginia | $37.2 | Settlement filed for $28.2M increase | | Columbia of Pennsylvania | $110.5 | In process | - The company is monitoring proposed PHMSA rules for leak detection and repair (LDAR) and safety of gas distribution pipelines (SGDP), which could impact operations and costs[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) - The EPA's final GHG standards for power plants are not expected to impact NIPSCO's existing generation but may affect new generation and are estimated to add **$675 million in costs** to customers[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to Item 2 for market risk disclosures, focusing on commodity price, interest rate, and credit risks - The report directs readers to the Market Risk Disclosures section in Item 2 for detailed information[218](index=218&type=chunk) - A **100 basis point (1%) change** in short-term interest rates would impact interest expense by approximately **$2.5 million** for the three months ended March 31, 2025[212](index=212&type=chunk) - Commodity price risk is largely mitigated as prudently incurred costs, including gains or losses on derivatives, are recovered through regulatory mechanisms like GCA and FAC[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) CEO and CFO concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that as of the end of the reporting period, the company's disclosure controls and procedures were effective at a reasonable assurance level[218](index=218&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[219](index=219&type=chunk) [PART II - OTHER INFORMATION](index=58&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 14 for legal proceedings, with the company expecting no material impact from pending claims - For details on legal proceedings, the report refers to Note 14, 'Other Commitments and Contingencies - B. Legal Proceedings,' in the financial statements[222](index=222&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024[223](index=223&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - None reported for the period[224](index=224&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q1 2025 - During the quarter ended March 31, 2025, no directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement[226](index=226&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including new notes, CEO/CFO certifications, and XBRL data - The list of exhibits includes CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and the form of the 5.850% Notes due 2055[229](index=229&type=chunk)

[First Quarter 2025 Earnings Release](index=1&type=section&id=First%20Quarter%202025%20Earnings%20Release) NiSource reported robust first-quarter 2025 financial performance, reaffirming its full-year guidance and providing essential disclosures on non-GAAP measures and forward-looking statements [Financial Highlights and Outlook](index=1&type=section&id=Financial%20Highlights%20and%20Outlook) NiSource reported strong first-quarter 2025 results with significant year-over-year growth in both GAAP and non-GAAP earnings per share, reaffirming full-year 2025 EPS guidance and long-term growth targets Q1 2025 vs Q1 2024 Financial Performance | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **GAAP Net Income** | $474.8 million | $344.3 million | +37.9% | | **GAAP Diluted EPS** | $1.00 | $0.77 | +29.9% | | **Non-GAAP Adjusted Net Income** | $462.3 million | $382.8 million | +20.8% | | **Non-GAAP Adjusted EPS** | $0.98 | $0.85 | +15.3% | - NiSource reaffirmed its financial guidance, signaling confidence in its long-term strategy[3](index=3&type=chunk)[5](index=5&type=chunk) Company Guidance | Period | Metric | Guidance | | :--- | :--- | :--- | | **2025** | Non-GAAP Adjusted EPS | $1.85 - $1.89 | | **2025-2029** | Annual Rate Base Growth | 8% - 10% | | **2025-2029** | Annual Non-GAAP Adjusted EPS Growth | 6% - 8% | - CEO Lloyd Yates attributed the strong Q1 results to the team's execution on growth and sustainability plans, highlighting the enduring and resilient nature of the company's investments despite market conditions[4](index=4&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=5&type=section&id=Schedule%201%20-%20Reconciliation%20of%20Consolidated%20Net%20Income%20Available%20to%20Common%20Shareholders%20to%20Adjusted%20Net%20Income%20Available%20to%20Common%20Shareholders%20%28Non-GAAP%29%20%28unaudited%29) The company provided a detailed reconciliation of its GAAP net income to non-GAAP adjusted net income for the first quarter, with primary adjustments related to weather impacts and a preferred dividends redemption premium Reconciliation of GAAP to Non-GAAP Net Income (in millions) | Description | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **GAAP Net Income Available to Common Shareholders** | **$474.8** | **$344.3** | | Weather impact (compared to normal) | $(16.8) | $32.9 | | Tax effect of adjustments | $4.3 | $(8.4) | | Preferred dividends redemption premium | — | $14.0 | | Total adjustments | $(12.5) | $38.5 | | **Adjusted Net Income Available to Common Shareholders** | **$462.3** | **$382.8** | Reconciliation of GAAP to Non-GAAP Diluted EPS | Description | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **GAAP Diluted EPS** | **$1.00** | **$0.77** | | Adjustments to diluted EPS | $(0.02) | $0.08 | | **Adjusted EPS** | **$0.98** | **$0.85** | [Disclosures and Company Information](index=2&type=section&id=Disclosures%20and%20Company%20Information) This section contains important disclosures regarding the use of non-GAAP financial measures, a detailed safe harbor statement on forward-looking information and associated risks, and general information about NiSource's business operations and corporate profile [Non-GAAP Disclosure Statement](index=2&type=section&id=Non-GAAP%20Disclosure%20Statement) NiSource explains its use of non-GAAP measures to help investors evaluate ongoing business performance, noting the unpredictability of certain factors prevents GAAP reconciliation for guidance - Management uses non-GAAP financial measures because they believe it allows investors to evaluate the company's ongoing business performance with the same tools management uses[6](index=6&type=chunk) - NiSource does not provide a reconciliation of its non-GAAP adjusted EPS guidance to the comparable GAAP measure without unreasonable efforts due to the impact of unpredictable factors[6](index=6&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section cautions investors that the press release contains forward-looking statements subject to numerous risks and uncertainties, where actual results could differ materially from projections - Statements concerning guidance, plans, strategies, and expected performance are forward-looking and based on assumptions that may not be realized[10](index=10&type=chunk) - Material risks that could cause actual results to differ include the ability to execute on business plans like data center development, manage infrastructure and technology risks, regulatory changes, adverse economic conditions, and cybersecurity attacks[11](index=11&type=chunk) [About NiSource](index=2&type=section&id=About%20NiSource) NiSource is one of the largest fully-regulated utility companies in the U.S., serving approximately 3.3 million natural gas and 500,000 electric customers across six states - Serves approximately **3.3 million** natural gas customers and **500,000** electric customers across six states[8](index=8&type=chunk) - Employs approximately **7,700** people and is a member of the Dow Jones Sustainability - North America Index[8](index=8&type=chunk)

Core Viewpoint - The Zacks Utilities sector is expected to see a 13.2% increase in first-quarter 2025 earnings, driven by new electric, natural gas, and water rates, cost-saving initiatives, and customer growth [1] Group 1: Earnings Expectations - Four utilities, DTE Energy, American Electric Power, Exelon Corporation, and NiSource Inc., are identified as likely to exceed earnings expectations this reporting cycle due to positive Earnings ESP and favorable Zacks Ranks [2] - The Zacks Consensus Estimate for DTE Energy's first-quarter earnings is $1.91, reflecting a 14.4% increase year-over-year [9] - American Electric Power's first-quarter earnings estimate is $1.75, indicating a 37.8% increase from the previous year [11] - Exelon's first-quarter earnings per share estimate is 75 cents, representing an 8.7% year-over-year increase [13] - NiSource's first-quarter earnings estimate is 88 cents, showing a 3.5% increase from the year-ago figure [15] Group 2: Influencing Factors - Utility providers are benefiting from higher electricity rates, accretive acquisitions, cost reductions, and energy-efficiency programs [3] - The shift to renewable energy sources and improvements in electric infrastructure resilience are also contributing positively [3] - Economic improvements in service territories have increased demand for utility services, boosting revenues [5] - The rise of data centers, particularly those supporting AI, has significantly increased electricity consumption, benefiting utility revenues [5] - Lower capital servicing expenses due to a one percentage point reduction in the Fed's fund rate since September 2024 are expected to enhance margins and profitability for capital-intensive utilities [6] Group 3: Challenges - Severe storms in March 2025 caused power outages in some service regions, potentially leading to higher operating expenses for utilities [7] - DTE Energy's profitability may be impacted by severe storms in southeast Michigan, despite benefiting from rising demand from data centers [8] - American Electric Power also faced negative impacts on earnings due to power outages caused by severe storms in its service areas [10]

Core Viewpoint - The utility sector is viewed as a safe investment during economic turbulence, providing essential services that consumers prioritize even in difficult times [1][7][8]. Group 1: Definition and Characteristics of Utility Stocks - Utility stocks are companies primarily involved in distributing essential services such as electricity, gas, and water [5][6]. - The Global Industry Classification Standard (GICS) categorizes the utility sector to include electric, gas, and water utilities, as well as independent power producers and energy traders [6]. - Utility companies exhibit low economic sensitivity, generating stable revenues and profits, and are known for their substantial dividends [8][9]. Group 2: Investment Appeal - Investors are drawn to utility stocks due to their "stickiness" in revenues, similar to healthcare and consumer staples, making them defensive stocks [7][8]. - Utilities are often among the best-yielding market sectors, providing safety and potential upside during market downturns [9]. - The sector's stability allows for gradual rate increases, although growth is typically capped at low single-digit rates [11]. Group 3: Recent Trends and Opportunities - The rise of artificial intelligence (AI) is expected to significantly increase power usage over the next decade, presenting a unique growth opportunity for utility companies [12][13]. - This trend may enable utilities to enhance their business results in a way that has not been seen before [13]. Group 4: Criteria for Selecting Utility Stocks - A quality screen for selecting utility stocks includes companies within the S&P Composite 1500, with a long-term estimated earnings-per-share growth rate of at least 5% [15]. - Stocks should have a dividend yield of at least 2.5%, with a history of growing dividends by at least 5% over the past year [16][17]. - Companies should have at least five covering analysts and a consensus Buy rating of 2.5 or less on S&P Global Market Intelligence's ratings scale [18][19]. Group 5: Recommended Utility Stocks - Recommended utility stocks include: - IDACORP (IDA): 2.9% yield, 5.5% estimated annual dividend growth, 8.3% long-term EPS growth, consensus rating 1.75 [19]. - NiSource (NI): 2.8% yield, 6.8% estimated annual dividend growth, 8.0% long-term EPS growth, consensus rating 1.53 [19]. - DTE Energy (DTE): 3.1% yield, 6.9% estimated annual dividend growth, 8.0% long-term EPS growth, consensus rating 2.05 [19]. - New Jersey Resources (NJR): 3.6% yield, 5.4% estimated annual dividend growth, 7.6% long-term EPS growth, consensus rating 2.22 [19]. - CMS Energy (CMS): 2.9% yield, 5.8% estimated annual dividend growth, 7.3% long-term EPS growth, consensus rating 2.21 [19]. - Sempra (SRE): 3.7% yield, 5.6% estimated annual dividend growth, 7.0% long-term EPS growth, consensus rating 2.11 [19]. - Ameren (AEE): 2.6% yield, 6.3% estimated annual dividend growth, 6.9% long-term EPS growth, consensus rating 2.24 [19]. - Public Service Enterprise Group (PEG): 3.1% yield, 5.7% estimated annual dividend growth, 6.6% long-term EPS growth, consensus rating 2.35 [19]. - Essential Utilities (WTRG): 3.2% yield, 6.6% estimated annual dividend growth, 6.5% long-term EPS growth, consensus rating 1.46 [19]. - FirstEnergy (FE): 4.1% yield, 5.6% estimated annual dividend growth, 5.7% long-term EPS growth, consensus rating 2.39 [20].

Economic Overview - The University of Michigan's Consumer Sentiment Index for mid-March dropped to 57.9, significantly below the consensus estimate of 63.2 and the final reading of 64.7 in February, indicating a decline in consumer confidence [4] - The short-term inflation outlook increased to 4.9% in March from 4.3% in February, the highest since November 2022, while the long-term inflation outlook rose to 3.9% from 3.4%, marking the highest since February 1991 [5] Investment Strategy - Investment in low-beta high-yielding stocks is recommended as a strategy to safeguard portfolios during uncertain market conditions, with the potential for upside if markets recover [6][8] - The utility sector is highlighted for its stability and consistent demand, making it a favorable choice for income-oriented investors [7][8] Company Highlights Ameren Corp. (AEE) - Ameren plans to invest up to $26.3 billion from 2025 to 2029 to enhance customer reliability and transition to cleaner energy sources [11][12] - Expected revenue and earnings growth rates for the current year are 6% and 6.7%, respectively, with a current dividend yield of 2.90% [14] Atmos Energy Corp. (ATO) - Atmos Energy benefits from rising demand for natural gas and has a long-term investment plan to improve pipeline reliability [15] - Expected revenue and earnings growth rates for the current year are 18.2% and 5.1%, respectively, with a current dividend yield of 2.37% [17] American Water Works Co. Inc. (AWK) - American Water Works is expanding through acquisitions and new water rates, with pending acquisitions expected to add 24,200 customers [21] - Expected revenue and earnings growth rates for the current year are 1.1% and 5.9%, respectively, with a current dividend yield of 2.15% [22] Entergy Corp. (ETR) - Entergy plans to invest $37 billion from 2025 to 2028 to modernize its infrastructure and expand renewable capacity [23] - Expected revenue and earnings growth rates for the current year are 5.5% and 6.3%, respectively, with a current dividend yield of 2.90% [25] NiSource Inc. (NI) - NiSource expects to invest $19.4 billion from 2025 to 2029 to modernize infrastructure and aims to retire all coal-generating sources by 2028 [26][27] - Expected revenue and earnings growth rates for the current year are 11.1% and 9.1%, respectively, with a current dividend yield of 2.90% [28]