MERRILLVILLE, Ind.,
Aug. 5, 2020 /PRNewswire/ -- NiSource
Inc. (NYSE: NI) today announced, on a GAAP basis, a net loss
available to common shareholders for the three months ended
June 30, 2020, of $18.5 million,
or $0.05 per share, compared to net
income available to common shareholders of $283.1 million, or $0.76 per share, for the same period of 2019. For
the six months ended June 30, 2020,
NiSource's net income available to common shareholders was
$43.3 million, or $0.11 per share, compared to $488.2 million, or $1.31 per share, for the same period of 2019.
NiSource also reported net operating earnings available to
common shareholders (non-GAAP) of $50.2
million, or $0.13 per share,
for the three months ended June 30, 2020, compared to net
operating earnings available to common shareholders (non-GAAP) of
$19.1 million, or $0.05 per share, for the same period of 2019. For
the six months ended June 30, 2020,
NiSource's net operating earnings available to common shareholders
was $341.1 million, or $0.89 per share, compared with $326.8 million, or $0.87 per share, for the same period of
2019. Schedule 1 of this press release contains a complete
reconciliation of GAAP measures to non-GAAP measures.
NiSource's GAAP results for the six months ended June 30, 2020, include a $364.6 million loss due to the re-classification
of Columbia Gas of Massachusetts'
assets as held for sale resulting from the previously announced
asset purchase agreement with Eversource Energy (NYSE: ES)
regarding the sale of these assets. This pending transaction
remains on track for regulatory approval by the end of the third
quarter of 2020, with closing targeted shortly thereafter.
"2020 is a transitional year for NiSource," said NiSource
President and CEO Joe
Hamrock. "As we mitigate the impacts of the COVID-19
pandemic, and complete the sale of Columbia Gas of Massachusetts, we continue to execute on our
strong core growth plan while repositioning for enhanced execution
in our key focus areas. We continue to invest in our asset
modernization and safety enhancement programs while advancing our
transition to renewable generation. To build on these
transformational efforts, we have accelerated the initiative to
realign our capabilities and cost structure designed to ensure
optimal performance as we execute on the significant opportunities
in the NiSource business plan."
Ongoing COVID-19 Response
NiSource and its Columbia Gas and NIPSCO operating companies
remain focused on employee and customer safety and providing
reliable utility service through the COVID-19 pandemic. Our
COVID-19 protections for customers and employees, as outlined in
the first quarter 2020 earnings release dated May 6, 2020, remain in place.
In line with the company's base case scenario, NiSource
continues to see modest commercial and industrial load impacts due
to COVID-19, which are partially offset by increases in residential
load. Cost savings and other measures have been implemented
to mitigate these negative impacts on revenues. The company expects
to continue to manage these impacts and update investors in future
quarters. Despite challenges related to the pandemic, NiSource
continues to expect to make $1.7 to
$1.8 billion in capital investments
in 2020.
Update on CMA
Advancing the pending sale of the CMA assets, on July 2, 2020, NiSource and Eversource filed a
joint petition with the Massachusetts Department of Public
Utilities (DPU) seeking approval of the transaction, as well as a
proposed settlement with the Attorney General's Office and the
Department of Energy Resources of all remaining state
investigations related to the 2018 Greater Lawrence event,
including the DPU's investigations on pipeline safety and emergency
response. NiSource has agreed to make a payment of $56 million, in lieu of penalties, into an Energy
Relief Fund to settle and resolve these pending matters subject to
regulatory approval of the transaction and the proposed
settlement.
Strategic Initiative Launched to Improve Cost Structure,
Support Continued Safety and Generation Investments
NiSource has launched a multi-year enterprise-wide strategic
initiative to better leverage the company's current scale, improve
its cost structure and drive efficiencies across the
organization. This initiative is expected to support
continued substantial capital investments in the company's
long-term safety and modernization programs, as well as its
electric generation strategy, providing value to both customers and
investors.
The repositioning of executive leadership roles and
responsibilities, announced in May, the strategic initiative
and a voluntary separation program for certain employees which
commenced today are the first steps in a process designed to ensure
that the NiSource organization is best positioned to support the
company's enhanced focus on safety, operational excellence and
customer value.
2021 EPS Guidance Initiated; Investor Day Previewed
NiSource today is initiating 2021 non-GAAP net operating
earnings guidance in the range of $1.28 to $1.36
per share. The company's 2021 guidance reflects management's
expectations about initial cost savings to be achieved through the
strategic initiative and includes the base case scenario impacts of
COVID-19. This guidance establishes the starting point for the
long-term plan that will extend through 2024 with an expected rate
base compound annual growth rate (CAGR) of 10% to 12%. This rate
base growth is expected to drive earnings per share growth in
excess of the previous 5 to 7% annual growth commitment, with a
shift to a CAGR due to the timing of investments in our renewable
generation portfolio.
NiSource is also announcing that it plans to host a virtual
Investor Day on September 29, 2020, at which it intends to
discuss details of this long-term growth strategy, including:
- Continuation of the approximately $1.8 to $1.9
billion annual capital investment into ongoing utility
safety and infrastructure programs.
- Anticipated incremental capital investment opportunities
related to its electric generation strategy of approximately
$1.8 to $2.0
billion, primarily in 2022 and 2023.
-
- This investment is currently expected to represent ownership of
at least 50% of the replacement capacity, in the form of joint
ventures that will include NIPSCO and tax-equity partners as the
members.
- Driving a renewable portfolio that retires 80% of coal-fired
generation by 2023, and retires all coal-fired generation by
2028.
- The replacement plan is expected to provide an industry leading
90% reduction in greenhouse gas emissions by 2030 compared to 2005
levels.
- Additional aspects and progress on the corporate strategic
initiative highlighted above.
- Full details of its balanced financing plan. The plan will be
focused on maintaining current investment-grade credit
ratings.
"We look forward to discussing in further detail at our Investor
Day in late September how these initiatives are designed to drive
value creation over the next several years," Hamrock said.
"Building on the strength and momentum of the core growth drivers
in the NiSource business, the plan we will outline is focused on
enhanced execution and growth to deliver long-term value for all
stakeholders. As we move through the balance of 2020, completing
the CMA asset sale, accelerating restructuring of our capabilities
and cost structure, and finalizing our financing plan, we are
well-positioned for the significant opportunities in our long-range
business plan."
Continued Focus on Safety Enhancements across
Enterprise
NiSource will continue to prioritize its safety initiatives
across its gas and electric businesses, including its accelerated
Safety Management System (SMS) implementation. SMS is a
comprehensive approach to managing safety, emphasizing continual
assessment and improvement as well as pro-actively identifying and
mitigating potential risks.
The company has seen strong results thus far in 2020,
including:
- Utilizing advanced analytics to drive the development of
targeted strategies to reduce pipeline damages, which are down by
5% through June compared to the same period in 2019.
- Initiating deployment of advanced leak survey technology to
perform quality assurance. Continued use of this platform will
enhance decision making with respect to repair or replacement of
gas infrastructure.
- Continued progress on improving maps and records.
- Leveraging and maturing our Corrective Action Program, or CAP,
to mitigate risks across the enterprise. Examples include
procedural changes in our meter and regulatory processes as well as
equipment changes to address specific concerns at customer
premises.
- Continued installation of automatic shutoff devices on its gas
distribution system.
Second Quarter 2020 and Recent Business Highlights
Gas Distribution Operations
- Columbia Gas of Pennsylvania's base rate case remains
pending before the Pennsylvania Public Utility Commission. The
request, filed April 24, 2020, seeks
an annual revenue increase of $100.4
million to invest in, modernize and upgrade the company's
existing natural gas distribution system as well as maintain the
continued safety of the system. New rates are expected to become
effective in February 2021.
- On May 15, 2020 Columbia Gas
of Maryland filed a base rate
case request with the Maryland Public Service Commission (PSC). The
request supports further upgrading and replacement of the company's
underground natural gas pipelines. The company filed a supplemental
update request on July 1, 2020. The
updated proposal would result in an annual revenue increase of
$6.3 million, including $1.3 million of current tracker revenue, if
approved as filed. A PSC order is expected in the fourth quarter of
2020, with rates effective in December
2020.
- The Indiana Utility Regulatory Commission (IURC) on
July 22, 2020, approved Northern
Indiana Public Service Company's (NIPSCO) application for a
six-year extension of its long-term gas infrastructure
modernization program. The plan includes nearly $950 million in capital investments through 2025,
to be recovered through semi-annual adjustments to the existing gas
Transmission, Distribution and Storage Improvement Charge
(TDSIC) tracker. The existing gas TDSIC program has been in
place since 2014.
- New rates went into effect in May
2020 for Columbia Gas of Ohio's (COH) Infrastructure Replacement
Program (IRP) following Public Utilities Commission of
Ohio (PUCO) approval of the
company's annual tracker adjustment. This allows COH to begin
recovery of approximately $234
million in safety and infrastructure investments made in
2019. This well-established pipeline replacement program,
authorized through 2022, covers replacement of priority mainline
pipe and targeted customer service lines. Also in Ohio, the company's annual application for
adjustment to its Capital Expenditure Program (CEP) rider
remains pending before the PUCO. The CEP rider allows the company
to recover capital investments and related deferred expenses that
are not recovered through its IRP. The adjustment application seeks
to begin recovery of approximately $185
million in capital invested in 2019. A PUCO order is
expected in August 2020, with new
rates effective in September
2020.
Electric Operations
- NIPSCO on July 17, 2020 submitted
applications with the IURC for approval of two purchase power
agreements (PPAs) with NextEra Energy, which will build
projects with a combined nameplate solar capacity of 300 megawatts
and 30 megawatts of storage. Commercial negotiations are advancing
on build-transfer agreements (BTAs) representing a
significant amount of additional solar capacity. Regulatory
filings related to these BTAs are expected shortly after commercial
agreements are executed. These new renewable projects are
consistent with NIPSCO's 2018 Integrated Resource Plan,
which outlines plans to retire nearly 80% of its remaining
coal-fired generation by 2023, and retire all coal generation by
2028, to be replaced by lower-cost, reliable and cleaner options.
The plan is expected to drive a 90% reduction in NiSource's
greenhouse gas emissions by 2030 compared with 2005 levels, and is
expected to save NIPSCO electric customers more than $4 billion over 30 years. The planned replacement
in 2023 of approximately 1,400 megawatts of retiring coal-fired
generation could provide NiSource with incremental capital
investment opportunities in the range of $1.8 to $2 billion,
primarily in 2022 and 2023. Currently, half of the capacity in the
replacement plan is targeted to be owned by joint ventures that
will include NIPSCO and tax-equity partners as the members. The
remaining new capacity is expected to be primarily in the form of
PPAs. During the second quarter, the Midwest Independent System
Operator (MISO) approved the planned retirement of the R.M.
Schahfer Generating Station by 2023.
- Construction continues on both the Rosewater and
Jordan Creek wind projects,
which are expected to be in service by the end of this year.
NiSource closed on a tax equity financing agreement with Wells
Fargo on the Rosewater project in July.
Additional information for the quarter ended June 30,
2020, is available on the Investors section of www.nisource.com,
including segment and financial information and our presentation to
be discussed at the company's second quarter 2020 earnings
conference call scheduled for August 5,
2020 at 9:00 a.m. ET.
About NiSource
NiSource Inc. (NYSE: NI) is one of the
largest fully-regulated utility companies in the United States, serving approximately 3.5
million natural gas customers and 500,000 electric customers across
seven states through its local Columbia Gas and NIPSCO brands.
Based in Merrillville, Indiana,
NiSource's approximately 8,400 employees are focused on safely
delivering reliable and affordable energy to our customers and
communities we serve. NiSource is a member of the Dow Jones
Sustainability - North America Index and the Bloomberg Gender
Equality Index and has been named by Forbes magazine among
America's Best Large Employers since 2016. Additional information
about NiSource, its investments in modern infrastructure and
systems, its commitments and its local brands can be found at
www.nisource.com. Follow us at www.facebook.com/nisource,
www.linkedin.com/company/nisource or
www.twitter.com/nisourceinc. NI-F
Forward-Looking Statements
This press release contains
"forward-looking statements" within the meaning of federal
securities laws. Investors and prospective investors should
understand that many factors govern whether any forward-looking
statement contained herein will be or can be realized. Any one of
those factors could cause actual results to differ materially from
those projected. These forward-looking statements include, but are
not limited to, statements concerning our plans, strategies,
objectives, expected performance, expenditures, recovery of
expenditures through rates, stated on either a consolidated or
segment basis, and any and all underlying assumptions and other
statements that are other than statements of historical fact. All
forward-looking statements are based on assumptions that management
believes to be reasonable; however, there can be no assurance that
actual results will not differ materially. Factors that could cause
actual results to differ materially from the projections,
forecasts, estimates and expectations discussed in this press
release include among other things, our debt obligations; any
changes to our credit rating or the credit rating of certain of our
subsidiaries; our ability to execute our growth strategy; changes
in general economic, capital and commodity market conditions;
pension funding obligations; economic regulation and the impact of
regulatory rate reviews; our ability to obtain expected financial
or regulatory outcomes; our ability to adapt to, and manage costs
related to, advances in technology; any changes in our assumptions
regarding the financial implications of the Greater Lawrence
Incident; compliance with the agreements entered into with the U.S.
Attorney's Office to settle the U.S. Attorney's Office's
investigation relating to the Greater Lawrence Incident; the
pending sale of the Columbia Gas of Massachusetts business, including the terms
and closing conditions under the Asset Purchase Agreement;
potential incidents and other operating risks associated with our
business; continuing and potential future impacts of from the
COVID-19 pandemic ; our ability to obtain sufficient insurance
coverage and whether such coverage will protect us against
significant losses; the outcome of legal and regulatory
proceedings, investigations, incidents, claims and litigation; any
damage to our reputation, including in connection with the Greater
Lawrence Incident; compliance with applicable laws, regulations and
tariffs; compliance with environmental laws and the costs of
associated liabilities; fluctuations in demand from residential and
commercial customers; economic conditions of certain industries;
the success of NIPSCO's electric generation strategy; the price of
energy commodities and related transportation costs; the
reliability of customers and suppliers to fulfill their payment and
contractual obligations; potential impairments of goodwill or
definite-lived intangible assets; changes in taxation and
accounting principles; the impact of an aging infrastructure; the
impact of climate change; potential cyber-attacks; construction
risks and natural gas costs and supply risks; extreme weather
conditions; the attraction and retention of a qualified workforce;
the ability of our subsidiaries to generate cash; our ability to
manage new initiatives and organizational changes; the performance
of third-party suppliers and service providers; changes in the
method for determining LIBOR and the potential replacement of the
LIBOR benchmark interest rate; and other matters in the "Risk
Factors" section of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2019, as
updated in our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020 and our subsequent SEC
filings. In addition, the relative contributions to profitability
by each business segment, and the assumptions underlying the
forward-looking statements relating thereto, may change over time.
A credit rating is not a recommendation to buy, sell or hold
securities, and may be subject to revision or withdrawal at any
time by the assigning rating organization. In addition, dividends
are subject to board approval. All forward-looking statements are
expressly qualified in their entirety by the foregoing cautionary
statements. We undertake no obligation to, and expressly disclaim
any such obligation to, update or revise any forward-looking
statements to reflect changed assumptions, the occurrence of
anticipated or unanticipated events or changes to the future
results over time or otherwise, except as required by law.
Regulation G Disclosure Statement
This press release
includes financial results and guidance for NiSource with respect
to net operating earnings available to common shareholders, which
is a non-GAAP financial measure as defined by the SEC's Regulation
G. The company includes this measure because management believes it
permits investors to view the company's performance using the same
tools that management uses and to better evaluate the company's
ongoing business performance. With respect to such guidance, it
should be noted that there will likely be a difference between this
measure and its GAAP equivalent due to various factors, including,
but not limited to, fluctuations in weather, the impact of asset
sales and impairments, and other items included in GAAP results.
The company is not able to estimate the impact of such factors on
GAAP earnings and, as such, is not providing earnings guidance on a
GAAP basis.
Schedule 1 -
Reconciliation of Consolidated Net Income (Loss) Available to
Common Shareholders to Net
|
Operating Earnings
Available to Common Shareholders (Non-GAAP)
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
(in millions,
except per share amounts)
|
2020
|
2019
|
2020
|
2019
|
GAAP Net Income
(Loss) Available to Common Shareholders
|
$
(18.5)
|
$ 283.1
|
$
43.3
|
$ 488.2
|
Adjustments to
Operating Income:
|
|
|
|
|
|
Operating
Revenues:
|
|
|
|
|
|
|
Weather - compared to
normal
|
(5.1)
|
1.5
|
21.2
|
(9.4)
|
|
Operating
Expenses:
|
|
|
|
|
|
|
Greater Lawrence
Incident(1)
|
5.0
|
(333.5)
|
13.1
|
(199.9)
|
|
|
Loss on
classification as held for sale(2)
|
84.4
|
-
|
364.6
|
-
|
|
|
Plant retirement
costs(3)
|
4.6
|
-
|
4.6
|
-
|
|
|
Massachusetts
Business separation costs(4)
|
5.2
|
-
|
5.2
|
-
|
|
|
Massachusetts
Business depreciation and amortization(5)
|
(19.9)
|
-
|
(19.9)
|
-
|
|
|
Loss (gain) on sale
of fixed assets and impairments, net
|
(0.6)
|
(0.1)
|
(0.7)
|
0.1
|
Total adjustments to
operating income
|
73.6
|
(332.1)
|
388.1
|
(209.2)
|
|
Income
Taxes:
|
|
|
|
|
|
|
Tax effect of above
items(6)
|
(4.9)
|
68.1
|
(90.3)
|
47.8
|
Total adjustments to
net income
|
68.7
|
(264.0)
|
297.8
|
(161.4)
|
Net Operating
Earnings Available to Common Shareholders (Non-GAAP)
|
$
50.2
|
$
19.1
|
$
341.1
|
$ 326.8
|
Basic Average
Common Shares Outstanding
|
383.5
|
373.9
|
383.3
|
373.6
|
GAAP Basic
Earnings (Loss) Per Share
|
$
(0.05)
|
$
0.76
|
$
0.11
|
$
1.31
|
Adjustments to basic
earnings per share
|
0.18
|
(0.71)
|
0.78
|
(0.44)
|
Non-GAAP Basic Net
Operating Earnings Per Share
|
$
0.13
|
$
0.05
|
$
0.89
|
$
0.87
|
|
(1)
Represents costs incurred for estimated third-party claims and
related other expenses as a result of the Greater Lawrence
Incident, net of insurance recoveries recorded.
|
(2)
Represents loss recorded as a result of measuring the assets and
liabilities of the Massachusetts Business at fair value, less costs
to sell. Second quarter increase primarily includes the $56 million
payment in lieu of penalties and approximately $28 million of
capital expenditures that will not be recouped through the Asset
Purchase Agreement.
|
(3)
Represents costs incurred associated with the planned retirement of
Units 14, 15, 17 and 18 at the Schahfer Generating Station.
Includes costs for write downs of certain capital projects and
materials and supplies inventory balances.
|
(4)
Represents third-party consulting costs incurred for the separation
and transition of the Massachusetts Business to Eversource that
will occur at the consummation of the Asset Purchase
Agreement.
|
(5)
Represents depreciation and amortization expense that was ceased
for GAAP purposes as a result of classifying the Massachusetts
Business as held for sale.
|
(6)
Represents the tax effect of the adjustments to operating income,
adjusted for the CMA non-deductible payment in lieu of penalties,
tax effected at statutory tax rates.
|
Schedule 2 - Total
Current Estimated Amounts of Costs and Expenses Related to the
Greater
|
Lawrence
Incident
|
|
|
Cost or
Expense
|
Total Current
Estimated Amount(1)
($ in millions)
|
Capital
Cost(2)
|
$258
|
Incident Related
Expenses
|
|
|
Third-party claims
and government fines, penalties and
settlements(3)
|
$1,039 -
$1,055
|
|
Other
incident-related costs(4)
|
$445 -
$455
|
Insurance
Recoveries(5)
|
$800
|
|
(1) Total
estimated amount includes costs or expenses from the incident
through June 30, 2020 and estimated expected expenses in future
periods in the aggregate. Amounts shown are estimates made by
management based on currently available information. See the
footnotes below for additional information. Actual results may
differ materially from these estimates as more information becomes
available.
|
(2) We
have invested approximately $258 million of capital spend for the
pipeline replacement. This work was completed in 2019. We maintain
property insurance for gas pipelines and other applicable property.
Columbia Gas of Massachusetts has filed a proof of loss with its
property insurer for the full cost of the pipeline replacement. In
January 2020, we filed a lawsuit against the property insurer,
seeking payment of our property claim. We are currently unable to
predict the timing or amount of any insurance recovery under the
property policy. This pipeline replacement cost is part of the
Massachusetts Business that is classified as held for sale at June
30, 2020. The assets and liabilities of the Massachusetts Business
have been recorded at fair value, less costs to sell, which
resulted in the loss on classification as held for sale that was
recorded as of June 30, 2020.
|
(3) Amount
includes approximately $1,039 million of expenses recorded since
the Greater Lawrence Incident for estimated third-party claims and
fines, penalties and settlements associated with government
investigations. With regards to third-party claims, these costs
include, but are not limited to, personal injury and property
damage claims, damage to infrastructure, business interruption
claims, and mutual aid payments to other utilities assisting with
the restoration effort. These costs do not include costs of certain
third-party claims and fines, penalties or settlements with
government investigations that we are not able to estimate. The
process for estimating costs associated with third-party claims and
fines, penalties and settlements associated with government
investigations relating to the Greater Lawrence Incident requires
management to exercise significant judgment based on a number of
assumptions and subjective factors. As more information becomes
known, including additional information regarding ongoing
investigations, management's estimates and assumptions regarding
the financial impact of the Greater Lawrence Incident may
change.
|
(4) Amount
shown includes other incident related expenses of approximately
$436 million recorded since the Greater Lawrence Incident. Amount
represents certain consulting costs, legal costs, vendor costs,
claims center costs, labor and related expenses incurred in
connection with the incident, and insurance-related loss
surcharges.
|
(5) The
aggregate amount of third-party liability insurance coverage
available for losses arising from the Greater Lawrence Incident is
$800 million. We have collected the entire $800 million. Expenses
related to the incident have exceeded the total amount of insurance
available under our policies.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/nisource-reports-second-quarter-2020-results-301106216.html
SOURCE NiSource Inc.