NiSource(NI) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Highlights and Outlook NiSource reported strong Q1 2024 financial results, reaffirmed its 2024 guidance and long-term outlook, and increased capital expenditure plans Q1 2024 Financial Performance (GAAP & Non-GAAP) NiSource reported increased net income and EPS for Q1 2024 on both a GAAP and non-GAAP adjusted basis compared to Q1 2023, demonstrating strong financial growth GAAP Financials (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | % Change | | :--------------------------------- | :------ | :------ | :----- | :------- | | Net Income Available to Common Shareholders (Millions) | $344.3 | $319.2 | +$25.1 | +7.86% | | Earnings Per Diluted Share | $0.77 | $0.71 | +$0.06 | +8.45% | Non-GAAP Adjusted Financials (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | % Change | | :--------------------------------- | :------ | :------ | :----- | :------- | | Adjusted Net Income Available to Common Shareholders (Millions) | $382.8 | $343.0 | +$39.8 | +11.60% | | Adjusted Earnings Per Share | $0.85 | $0.77 | +$0.08 | +10.39% | 2024 Guidance and Long-Term Outlook NiSource reaffirmed its 2024 adjusted EPS guidance and long-term growth targets, while increasing its base capital expenditure plan for 2024-2028, signaling continued investment and stable future performance - Reaffirmed 2024 non-GAAP adjusted EPS guidance of $1.70 - $1.74[3][5] - Reaffirmed 2023-2028 annual non-GAAP adjusted EPS growth of 6-8%[3][5] - Reaffirmed 2023-2028 annual core business rate base growth of 8-10%[3] - Increased 2024-2028 base capital expenditure plan to $16.4 billion, a $400 million increase from the prior $16 billion plan[3] CEO Commentary CEO Lloyd Yates highlighted the company's strong Q1 performance, regulatory progress, and the balance sheet's flexibility to support increased capital investments without additional equity issuance, reinforcing commitment to stakeholder value - Q1 2024 earnings and regulatory progress underscore the ability to deliver on stakeholder commitments[4] - The balance sheet's improving position and flexibility support the portfolio of organic investment opportunities, allowing for an increased base capital expenditure plan without incremental equity issuance[4] - Employee and contractor efforts drive improved value and reliability of service for nearly four million customers[4] Non-GAAP Financial Measures Disclosure This section details NiSource's updated non-GAAP metric terminology and explains the rationale behind using these measures for financial reporting and guidance Non-GAAP Disclosure Statement NiSource announced a name change for its non-GAAP metrics, transitioning from "net operating earnings" to "adjusted net income" and "net operating EPS" to "adjusted EPS" starting Q1 2024, with no alteration to the underlying calculation methodology - Beginning Q1 2024, NiSource changed the names of its non-GAAP metrics: From "net operating earnings available to common shareholders" to "adjusted net income available to common shareholders"; From "net operating EPS" to "adjusted EPS"[6] - The change reflects a name change only; the calculations of these non-GAAP metrics remain consistent with historical calculations[6] Rationale for Non-GAAP Measures Management utilizes non-GAAP measures to provide investors with a clearer perspective on the company's ongoing business performance, while refraining from providing GAAP equivalents for guidance due to the inherent unpredictability of certain factors - Management includes non-GAAP measures to allow investors to view the company's performance using the same tools as management and to better evaluate ongoing business performance[7] - NiSource does not provide a GAAP equivalent for its adjusted EPS guidance due to the unpredictable impact of factors such as weather, asset sales, impairments, and other unusual or infrequent items[7] - The company is unable to estimate the impact of such factors on comparable GAAP measures or provide a reconciliation of non-GAAP adjusted EPS guidance to GAAP equivalents without unreasonable efforts[7] Company Overview This section provides a concise overview of NiSource Inc., highlighting its status as a major regulated utility, customer base, mission, and industry recognitions About NiSource NiSource Inc. is a major fully-regulated utility in the U.S., serving millions of natural gas and electric customers across six states, dedicated to delivering safe, reliable energy and recognized for its leadership in sustainability and diversity - NiSource Inc. (NYSE: NI) is one of the largest fully-regulated utility companies in the United States[9] - Serves approximately 3.3 million natural gas customers and 500,000 electric customers across six states through its local Columbia Gas and NIPSCO brands[9] - Mission: To deliver safe, reliable energy that drives value to customers[9] - Recognitions: Member of the Dow Jones Sustainability - North America Index and on Forbes lists of America's Best Employers for Women and Diversity[9] Forward-Looking Statements This section defines forward-looking statements, outlines their scope, and details various risk factors that could cause actual results to differ materially from projections Definition and Scope This section defines forward-looking statements as per SEC regulations, emphasizing that actual results may significantly diverge from projections due to various influencing factors, and outlines the types of statements covered - Forward-looking statements are defined under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934[11] - Actual results may differ materially from projections due to numerous factors, and there is no assurance that forward-looking statements will be realized[11] - Statements covered include 2024 guidance on adjusted EPS, plans, strategies, objectives, expected performance, expenditures, and recovery of expenditures through rates[11] - Identified by expressions such as "may," "will," "should," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," "forecast," and "continue"[11] Risk Factors A comprehensive list of risk factors is presented, detailing potential challenges that could materially affect actual results, including operational, market, economic, financial, regulatory, and legal considerations - Operational and Strategic Risks: Ability to execute business plan, potential incidents, third-party investor relations, technology adaptation, aging infrastructure, insurance coverage, electric generation strategy, construction and supply risks, workforce management, cybersecurity attacks, and reputational damage[12] - Market and Environmental Risks: Fluctuations in demand and energy commodity prices, impacts of natural disasters, potential terrorist attacks, physical impacts of climate change, and risks related to achieving carbon emission reduction goals[12] - Financial and Regulatory Risks: Debt obligations, credit rating changes, adverse economic and capital market conditions (e.g., inflation, interest rates, recession), economic regulation, ability to obtain expected financial or regulatory outcomes, customer and supplier reliability, pension funding obligations, and potential impairments of goodwill[13] - Legal and Compliance Risks: Outcome of legal and regulatory proceedings, compliance with changes in laws, regulations, and tariffs, cost of environmental compliance, and changes in tax laws[13] Financial Reconciliation (Non-GAAP) This section provides a detailed reconciliation of GAAP net income to non-GAAP adjusted net income, outlining specific adjustments and their impact on reported figures Schedule 1: Reconciliation of Net Income to Adjusted Net Income Schedule 1 provides an unaudited, detailed reconciliation of GAAP Net Income to Adjusted Net Income for Q1 2024 and Q1 2023, itemizing specific adjustments for weather, income taxes, and preferred dividends redemption premium Reconciliation of Consolidated Net Income to Adjusted Net Income (Unaudited) | (in millions, except per share amounts) | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | GAAP Net Income Available to Common Shareholders | $344.3 | $319.2 | | Adjustments to Operating Income: | | | | Weather - compared to normal | 32.9 | 32.3 | | Total adjustments to operating income | 32.9 | 32.3 | | Income Taxes: | | | | (1) Tax effect of above items | (8.4) | (8.5) | | Preferred Dividends: | | | | (2) Preferred dividends redemption premium | 14.0 | — | | Total adjustments to net income | 38.5 | 23.8 | | Adjusted Net Income Available to Common Shareholders | $382.8 | $343.0 | | Diluted Average Common Shares (Millions) | 449.4 | 447.1 | | (3) GAAP Diluted Earnings Per Share | $0.77 | $0.71 | | Adjustments to diluted earnings per share | 0.08 | 0.06 | | Adjusted Earnings Per Share | $0.85 | $0.77 | - Notes on Adjustments: (1) Tax effect calculated using statutory tax rates; (2) Preferred dividends redemption premium represents the difference between the carrying value on the redemption date of Series B Preferred Stock and the total consideration paid, net of common shares issued; (3) GAAP Diluted Earnings Per Share includes effects of income allocated to participating securities and adds back the dilutive effect of Equity Units in the prior year[16]