Alliant Energy(LNT) - 2020 Q2 - Quarterly Report

Forward-looking Statements This section outlines forward-looking statements subject to risks and uncertainties that could materially alter actual results - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially. Key risk factors include the ability to obtain timely rate relief, regulatory actions, the impact of the COVID-19 pandemic, customer-owned generation, and environmental compliance[14][15] - Specific risks highlighted include the ability to complete wind and solar projects within cost caps, qualify for tax credits, manage changes in commodity prices (natural gas, electricity, coal), and handle disruptions in supply and delivery[18] Part I. Financial Information This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Alliant Energy, IPL, and WPL Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Alliant Energy Corporation, IPL, and WPL for the period ended June 30, 2020 Alliant Energy Corporation Financial Statements For the six months ended June 30, 2020, Alliant Energy reported net income attributable to common shareowners of $304.4 million, or $1.23 per diluted share, a significant increase from $219.7 million, or $0.93 per diluted share, in the same period of 2019 Alliant Energy - Condensed Consolidated Statement of Income (Six Months Ended June 30) | Metric | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Total Revenues | $1,678.8 | $1,777.4 | | Operating Income | $356.4 | $326.6 | | Net Income | $309.5 | $224.8 | | Net Income Attributable to Common Shareowners | $304.4 | $219.7 | | Diluted EPS | $1.23 | $0.93 | Alliant Energy - Condensed Consolidated Balance Sheet | Metric | June 30, 2020 (in millions) | Dec 31, 2019 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $1,044.3 | $875.5 | | Property, Plant and Equipment, net | $13,936.4 | $13,527.1 | | Total Assets | $17,269.7 | $16,700.7 | | Total Current Liabilities | $1,220.9 | $2,054.1 | | Long-term Debt, net | $6,572.4 | $5,533.0 | | Total Equity | $5,748.3 | $5,405.1 | | Total Liabilities and Equity | $17,269.7 | $16,700.7 | Alliant Energy - Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Metric | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $319.7 | $276.9 | | Net Cash used for Investing Activities | ($392.3) | ($607.0) | | Net Cash from Financing Activities | $264.3 | $478.8 | | Net Increase in Cash | $191.7 | $148.7 | Interstate Power and Light Company (IPL) Financial Statements For the six months ended June 30, 2020, IPL's net income available for common stock was $142.4 million, up from $98.3 million in the prior-year period, with total assets increasing to $9.68 billion IPL - Condensed Consolidated Statement of Income (Six Months Ended June 30) | Metric | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Total Revenues | $950.8 | $996.3 | | Operating Income | $185.4 | $148.0 | | Net Income | $147.5 | $103.4 | | Net Income Available for Common Stock | $142.4 | $98.3 | IPL - Condensed Consolidated Balance Sheet | Metric | June 30, 2020 (in millions) | Dec 31, 2019 (in millions) | | :--- | :--- | :--- | | Total Assets | $9,679.6 | $9,277.5 | | Long-term Debt, net | $3,343.5 | $2,947.3 | | Total Equity | $3,671.1 | $3,471.8 | Wisconsin Power and Light Company (WPL) Financial Statements For the six months ended June 30, 2020, WPL reported net income of $147.2 million, a substantial increase from $107.7 million in the same period of 2019, with total assets growing to $6.65 billion WPL - Condensed Consolidated Statement of Income (Six Months Ended June 30) | Metric | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Total Revenues | $687.5 | $741.3 | | Operating Income | $165.5 | $165.1 | | Net Income | $147.2 | $107.7 | WPL - Condensed Consolidated Balance Sheet | Metric | June 30, 2020 (in millions) | Dec 31, 2019 (in millions) | | :--- | :--- | :--- | | Total Assets | $6,648.4 | $6,506.5 | | Long-term Debt, net | $2,129.4 | $1,782.7 | | Total Equity | $2,451.8 | $2,363.6 | Combined Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of accounting policies and financial items, including COVID-19 impacts, new accounting standards, regulatory matters, debt, revenues, and commitments - The COVID-19 pandemic has led to higher electric residential sales and lower commercial and industrial sales, with the total future impact remaining unknown[48] - On January 1, 2020, the company adopted a new credit loss accounting standard, resulting in a pre-tax $12 million cumulative effect adjustment to decrease retained earnings related to guarantees for an affiliate of Whiting Petroleum[52] - In Q2 2020, IPL issued $42 million in credits to retail electric customers through its transmission cost rider, reducing 'Electric transmission service' expense[55] - In Q1 2020, Alliant Energy settled $222 million under forward sale agreements by delivering 4,275,127 shares of common stock at a weighted average price of $51.98 per share[61] - Significant long-term debt activities in 2020 include WPL issuing $350 million of 3.65% debentures due 2050 and retiring $150 million of 4.6% debentures, and IPL issuing $400 million of 2.3% senior debentures due 2030 and retiring $200 million of 3.65% senior debentures[68][69] - Due to Whiting Petroleum's deteriorating creditworthiness, Alliant Energy recognized a $20 million credit loss liability as of June 30, 2020, related to partnership obligation guarantees, with an incremental pre-tax charge of $8 million recorded in H1 2020[94][95] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) The MD&A details the company's financial performance and condition, focusing on COVID-19 impacts, regulatory matters, operational results, liquidity, and capital resources 2020 Highlights Key highlights for 2020 include the company's response to the COVID-19 pandemic, advancements in clean energy strategy, significant financing activities, and various rate matters - COVID-19 Impacts: - Implemented business continuity plans, including work-from-home protocols and rescheduling of EGU outages - Experienced higher residential sales (+5%) and lower commercial/industrial sales (-9%) in Q2 2020 vs Q2 2019 - Enhanced liquidity by settling equity forward agreements and refinancing debt - WPL received authorization to defer certain incremental costs, including bad debt expenses[113][116][118][121] - Customer Investments & Strategy: - IPL's final retail electric rates became effective, allowing recovery for new wind generation - WPL filed to maintain current base rates through 2021, utilizing fuel savings and tax benefits to offset costs of new projects - WPL filed for approval of 675 MW of new solar generation to replace the retiring Edgewater coal plant - Alliant Energy announced a goal to eliminate all coal-fired generation by 2040 and achieve net-zero CO2 emissions by 2050[124][127] - Financing Activities: - Alliant Energy settled $222 million under equity forward sale agreements - WPL issued $350 million in debentures and retired $150 million - IPL issued $400 million in senior debentures and retired $200 million[126] Results of Operations For Q2 2020, Alliant Energy's consolidated EPS increased to $0.54 from $0.40 in Q2 2019, driven by higher utility earnings, increased rate base, favorable temperatures, and a lower effective tax rate Alliant Energy EPS by Segment (Q2) | Segment | 2020 EPS | 2019 EPS | | :--- | :--- | :--- | | Utilities and Corporate Services | $0.48 | $0.38 | | ATC Holdings | $0.04 | $0.03 | | Non-utility and Parent | $0.02 | ($0.01) | | Alliant Energy Consolidated | $0.54 | $0.40 | Utility Electric Margin Variance Drivers (Q2 2020 vs Q2 2019) | Driver | Alliant Energy (in millions) | IPL (in millions) | WPL (in millions) | | :--- | :--- | :--- | :--- | | IPL retail electric rate increases | $17 | $17 | $0 | | Estimated temperature impacts | $12 | $5 | $7 | | Higher revenues at IPL (PTC related) | $5 | $5 | $0 | | Other (incl. COVID-19 sales impact) | ($6) | ($1) | ($5) | | Total Change | $26 | $27 | ($1) | - The decrease in the effective income tax rate for Q2 2020 to (6.5)% from 10.3% in Q2 2019 was primarily due to increased production tax credits from new wind generation and increased amortization of excess deferred taxes at WPL[139] Liquidity and Capital Resources As of June 30, 2020, Alliant Energy maintained a strong liquidity position with $208 million in cash and $815 million available under its credit facility, with operating cash flow increasing to $319.7 million - At June 30, 2020, total available liquidity included $208 million of cash, $815 million of available capacity under the revolving credit facility, and $89 million of available capacity at IPL under its receivables sales program[142] Cash Flow Summary (Six Months Ended June 30) | Activity (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Operating Activities | $319.7 | $276.9 | | Investing Activities | ($392.3) | ($607.0) | | Financing Activities | $264.3 | $478.8 | - The increase in operating cash flow was primarily due to higher collections from IPL's rate increases, while the decrease in investing cash flow was largely due to lower expenditures for IPL's wind generation expansion and WPL's West Riverside Energy Center[144] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to the Quantitative and Qualitative Disclosures About Market Risk as reported in its 2019 Form 10-K - Disclosures regarding market risk have not changed materially from the 2019 Form 10-K[152] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2020[153] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[154] Part II. Other Information This part provides updates on risk factors, unregistered sales of equity securities, and a list of exhibits Risk Factors This section updates the company's risk factors, adding a detailed discussion of the potential adverse effects of the COVID-19 pandemic on business functions, financial condition, and operations - A new risk factor was added detailing the potential adverse effects of the COVID-19 pandemic[157] - Potential impacts include reduced commercial and industrial sales, increased customer arrears, negative effects on pension plan asset values, and potential disruptions to supply chains and construction projects, which could jeopardize qualification for renewable energy tax credits[158][159] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2020, Alliant Energy repurchased 6,879 shares of its common stock on the open market at an average price of $49.80 per share, held in a rabbi trust Common Stock Repurchases (Q2 2020) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2020 | 3,690 | $53.06 | | May 2020 | 3,120 | $46.00 | | June 2020 | 69 | $47.79 | | Total | 6,879 | $49.80 | - All repurchased shares were purchased on the open market and are held in a rabbi trust for the Alliant Energy Deferred Compensation Plan[161] Exhibits This section lists the exhibits filed with the Form 10-Q, including officers' certificates related to new debt issuances, the 2020 Omnibus Incentive Plan, and CEO/CFO certifications - Exhibits filed include documents creating WPL's 3.65% Debentures and IPL's 2.3% Senior Debentures, as well as details on the Alliant Energy 2020 Omnibus Incentive Plan[163]