01—Abstract
Summary
Summary of the 10-K filed February 18, 2014. Cited figures are marked; the original filing is the authoritative source.
NiSource Inc. (NI) is an energy holding company whose subsidiaries provide natural gas, electricity and other products and services to approximately 3.8 million customers in a corridor running from the Gulf Coast through the Midwest to New England.
Its business is organized into three segments: Gas Distribution Operations, Columbia Pipeline Group Operations, and Electric Operations (NIPSCO). For 2013, the company reported income from continuing operations of $490.9 milliona, or $1.57 per basic share, compared with $408.8 million, or $1.40 per share in 2012, and net income of $532.1 million, or $1.70 per basic share. Total net revenues were $3,841.8 million, up $327.8 million, driven mainly by Columbia Pipeline Group Operations and Gas Distribution Operations, with colder weather and the Columbia Transmission customer settlement contributing.
Investors should note the company's capital program: capital expenditures were $2,046.0 millionb in 2013 and are projected at $2,150.0 million for 2014, with spending concentrated in pipeline modernization, Marcellus and Utica shale growth projects, and environmental and infrastructure replacement programs. Total consolidated indebtedness was $8,834.0 million at December 31, 2013, and the debt-to-capitalization ratio was 60.0%, below the 70% and 75% covenant levels. Moody's upgraded NiSource's senior unsecured rating to Baa2 on January 31, 2014, and all ratings remain investment grade, though a downgrade by Standard & Poor's or Fitch would move the rating below investment grade.
The company also recorded net cash from operating activities of $1,436.8 millionc, helped by a $255.9 million increase in working capital from an income tax receivable related to an IRS refund. Its common dividend was $0.98 per share for 2013, and the Board declared a quarterly dividend of $0.25 per share in January 2014.
02—Key points
Key Highlights
- Net income of $532.1 million ($1.70 per basic share) in 2013, up from $416.1 million ($1.43) in 2012; income from continuing operations rose to $490.9 million ($1.57 per basic share).
- Total net revenues rose to $3,841.8 million, a $327.8 million increase, led by Columbia Pipeline Group Operations (up $179.0 million) and Gas Distribution Operations (up $140.3 million).
- Capital expenditures were $2,046.0 million in 2013 and are projected at $2,150.0 million for 2014, focused on pipeline modernization, Marcellus and Utica shale growth projects, and infrastructure programs.
- Total consolidated indebtedness was $8,834.0 million at December 31, 2013, with a debt-to-capitalization ratio of 60.0% versus covenant maximums of 70% and 75%.
- Moody's upgraded NiSource's senior unsecured rating to Baa2 from Baa3 on January 31, 2014; all ratings remain investment grade, though a downgrade by S&P or Fitch would fall below investment grade.
- Operating cash flow was $1,436.8 million in 2013, boosted by a $255.9 million working capital increase from an IRS income tax refund.
- The Board declared a quarterly common dividend of $0.25 per share in January 2014, following 2013 dividends of $0.98 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, NiSource kept $0.12.
- Revenue$4.63B100.0%
- Cost of revenue−$1.96B42.4%
- Gross profit$2.66B57.6%
- Operating costs−$1.96B42.5%
- Operating income$698.1M15.1%
- Interest, other & tax−$166.0M3.6%
- Net income$532.1M11.5%
Where FY2013 revenue went
$4.63B- Operating costs: $1.96B, 42% of revenue
- Cost of revenue: $1.96B, 42% of revenue
- Net income: $532.1M, 12% of revenue
- Interest, other & tax: $166.0M, 3.6% of revenue
Kept 12% as net incomeNet income $532.1M · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 18, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $4.63B$5.03B | −8.1% |
| Cost of Revenue | $1.96B$1.52B | +29.4% |
| Gross Profit | $2.66B$3.51B | −24.2% |
| Operating Expenses | $1.96B$2.51B | −21.6% |
| Operating Income | $698.10M$1.04B | −32.9% |
| Interest Expense | $375.30M$418.30M | −10.3% |
| Net Income | $532.10M$416.10M | +27.9% |
| EPS (Basic) | $1.70$1.43 | +18.9% |
| EPS (Diluted) | $1.70$1.39 | +22.3% |
| Shares Outstanding (Basic) | 312.40M291.93M | +7.0% |
| Shares Outstanding (Diluted) | 313.65M300.40M | +4.4% |
05—Questions
Frequently Asked Questions
How did NiSource's earnings change in 2013?
Income from continuing operations was $490.9 million, or $1.57 per basic share, compared with $408.8 million, or $1.40 per basic share in 2012. Including discontinued operations, net income was $532.1 million, or $1.70 per basic share, versus $416.1 million, or $1.43 per share, in 2012. The gain on the sale of the Retail Services service plan and leasing business lines contributed to discontinued operations results.
What is driving NiSource's capital spending?
Capital expenditures were $2,046.0 million in 2013 and are projected at $2,150.0 million for 2014. The Columbia Pipeline Group Operations segment's spending is driven by the Columbia Transmission modernization program, which is expected to invest about $1.5 billion over five years, and by Marcellus and Utica shale growth projects. Electric Operations spending is tied to environmental compliance and anticipated TDSIC programs, and Gas Distribution spending to infrastructure replacement.
How leveraged is NiSource and is its credit rating at risk?
Total consolidated indebtedness was $8,834.0 million at December 31, 2013, and the debt-to-capitalization ratio was 60.0%, within covenant limits of 70% for the revolving credit facility and term loan and 75% for a 2005 private placement agreement. Moody's upgraded the senior unsecured rating to Baa2 in January 2014, and Fitch and S&P affirmed BBB- ratings with stable outlooks. The filing notes that ratings-trigger collateral requirements would total about $35.4 million if ratings fell below trigger levels.
What is the outlook for Columbia Transmission's modernization program?
Columbia Transmission expects to invest about $1.5 billion over five years to modernize its system. Under the FERC-approved settlement, a customer capital cost recovery mechanism (CCRM) allows recovery of revenue requirements on qualifying investments, with the first annual filing effective February 1, 2014 covering $299.2 million of 2013 spending. The settlement also includes a second base rate reduction beginning January 1, 2014, equal to about $25 million in annual revenues.
What dividend does NiSource pay and how is it set?
NiSource paid quarterly common dividends totaling $0.98 per share in 2013, $0.94 in 2012 and $0.92 in 2011. At its January 31, 2014 meeting, the Board declared a quarterly dividend of $0.25 per share, payable February 20, 2014. The filing states the Board intends to continue regular quarterly dividends, but the timing and amount depend on subsidiary earnings, financial condition, cash requirements, regulatory restrictions and financing agreement terms.
06—Continue