01—Abstract
Summary
Summary of the 10-K filed February 22, 2019. Cited figures are marked; the original filing is the authoritative source.
Alliant Energy Corporation (LNT) is a Midwest regulated investor-owned public utility holding company whose primary focus is regulated electric and natural gas service to approximately 965,000 electric and approximately 415,000 natural gas customers through its two public utility subsidiaries, Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL).
In 2018 Alliant reported net income attributable to common shareowners of $512.1 milliona, or $2.19 per share, up from $457.3 million, or $1.99 per share, in 2017. Revenues rose to $3,534.5 million from $3,382.2 million, and utility electric and gas margins both increased, driven by IPL and WPL rate base growth, temperature-driven sales and higher AFUDC, partly offset by higher depreciation and interest expense. The company's capital program is large and forward-looking.
Construction and acquisition expenditures were $1,633.9 millionb in 2018, and the company's table projects $1,610 million for 2019 alone, including renewable projects, the West Riverside natural gas-fired facility (WPL's estimated portion about $640 million) and electric and gas distribution systems. Alliant plans up to 1,200 MW of wind generation during 2018 through 2020 and says it has forecast capital expenditures of approximately $5 billion over the next four years. Management expects to fund this through external financings, including up to $400 million of common stock in 2019 and planned long-term debt issuances at IPL and WPL.
The 2019 annual dividend target was raised to $1.42c per share, a 6% increase. Key risks highlighted include regulatory outcomes on rate relief and cost recovery, environmental regulation of CO2 emissions and coal-fired generation, dependence on capital market access and credit ratings (Alliant Energy's ratings carry negative outlooks at S&P and Moody's), weather and cyber security exposure, and pension funding requirements. Alliant Energy expects to retire coal-fired EGUs from its energy mix by 2050 and set voluntary goals to reduce CO2 emissions from fossil-fueled generation 40% by 2030 and 80% by 2050 from 2005 levels.
02—Key points
Key Highlights
- Net income attributable to Alliant Energy common shareowners rose to $512.1 million ($2.19 per share) in 2018, from $457.3 million ($1.99 per share) in 2017.
- Total revenues increased to $3,534.5 million in 2018 from $3,382.2 million in 2017; utility electric margin rose to $1,649.6 million from $1,595.7 million.
- Construction and acquisition expenditures totaled $1,633.9 million in 2018, with $1,610 million projected for 2019 across generation, distribution and other projects.
- The 2019 targeted annual common dividend was increased to $1.42 per share, a 6% increase, and up to $400 million of common stock issuance is expected in 2019 under equity forward agreements and the Shareowner Direct Plan.
- WPL's 2019/2020 retail electric and gas rate settlement, approved by the PSCW in December 2018, keeps base rates flat through 2020 and maintains a 10.0% authorized return on common equity.
- Alliant Energy plans up to 1,200 MW of wind generation during 2018 through 2020 and has voluntary goals to reduce CO2 emissions from fossil-fueled generation 40% by 2030 and 80% by 2050 from 2005 levels.
- Credit ratings carry negative outlooks at Alliant Energy, IPL and WPL, with Alliant Energy rated A- by S&P and Baa1 by Moody's; the company reports compliance with its credit facility covenants at December 31, 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Alliant Energy kept $0.15.
- Revenue$3.53B100.0%
- Cost of revenue−$496.0M14.0%
- Gross profit$3.04B86.0%
- Operating costs−$2.34B66.3%
- Operating income$694.0M19.6%
- Interest, other & tax−$172.0M4.9%
- Net income$522.0M14.8%
Where FY2018 revenue went
$3.53B- Operating costs: $2.34B, 66% of revenue
- Net income: $522.0M, 15% of revenue
- Cost of revenue: $496.0M, 14% of revenue
- Interest, other & tax: $172.0M, 4.9% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 22, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $3.53B$3.38B | +4.5% |
| Cost of Revenue | $496.00M$480.90M | +3.1% |
| Gross Profit | $3.04B$2.90B | +4.7% |
| Operating Expenses | $2.84B$2.71B | +4.8% |
| Operating Income | $694.00M$671.20M | +3.4% |
| Interest Expense | $247.00M$215.60M | +14.6% |
| Net Income | $522.00M$467.50M | +11.7% |
| EPS (Basic) | $2.19$1.99 | +10.1% |
| EPS (Diluted) | $2.19$1.99 | +10.1% |
| Shares Outstanding (Basic) | 233.60M229.70M | +1.7% |
| Shares Outstanding (Diluted) | 233.60M229.70M | +1.7% |
05—Questions
Frequently Asked Questions
How did Alliant Energy's earnings and margins change in 2018?
Net income attributable to common shareowners increased to $512.1 million ($2.19 per share) from $457.3 million ($1.99 per share). The filing attributes the increase in Utilities and Corporate Services income of $69 million mainly to higher margins from increasing rate base, higher retail sales due to 2018 temperatures and higher AFUDC, partly offset by higher depreciation expense. Utility electric margin rose to $1,649.6 million and utility gas margin to $214.3 million.
What major capital projects is Alliant Energy investing in?
Key projects include IPL's expansion of wind generation (up to 1,000 MW in development, with IUB cost caps of $1,780/kilowatt and $1,830/kilowatt), WPL's West Riverside natural gas-fired combined-cycle unit (estimated WPL capital expenditures of about $640 million, expected completion by end of 2019), an SCR at IPL's Ottumwa Unit 1, advanced metering infrastructure for IPL customers, and distribution system upgrades.
How will Alliant Energy fund its capital plan and what financings are expected?
Alliant Energy expects to issue up to $400 million of common stock in 2019 through equity forward agreements and the Shareowner Direct Plan, while IPL and WPL expect to issue up to $600 million and $400 million of long-term debt in 2019, respectively. WPL also has $250 million of long-term debt maturing in July 2019. Alliant Energy has forecast capital expenditures of approximately $5 billion over the next four years.
What are the main risks to Alliant Energy's business?
The filing highlights regulatory risk on timely rate relief and cost recovery, environmental regulation of CO2 emissions and coal-fired generation, access to capital markets and credit ratings, weather and economic conditions affecting sales, cyber and physical security threats, and pension funding obligations. The company also notes that carryforward utilization of net operating losses depends on future taxable income after Federal Tax Reform.
What does the filing say about the dividend and payout policy?
Alliant Energy announced a targeted 2019 annual common dividend of $1.42 per share, equal to a quarterly rate of $0.355, beginning with the February 2019 payment. Dividends declared were $1.34 per share in 2018. Alliant's goal is a dividend payout ratio of approximately 60% to 70% of consolidated earnings from continuing operations, and its 2018 payout ratio was 61%.
06—Continue