01—Abstract
Summary
Summary of the 10-K filed February 18, 2016. Cited figures are marked; the original filing is the authoritative source.
NiSource Inc. (NI) reported 2015 income from continuing operations of $198.6 milliona, or $0.63 per basic share, down from $256.2 million, or $0.81 per basic share, in 2014.
The decline was due primarily to a $97.2 millionb loss on early extinguishment of long-term debt recorded as part of the debt restructuring tied to the July 1, 2015 Separation of Columbia Pipeline Group (CPG). Operating income rose slightly to $799.9 million from $789.1 million, driven by higher net revenues from gas distribution regulatory and service programs and increased return on environmental capital investment at NIPSCO, partly offset by warmer weather and lower industrial usage. Total consolidated net revenues were $3,008.1 million, up $108.6 million.
Total net income attributable to NiSource was $286.5 millionc, or $0.90 per basic share, including $87.9 million from discontinued operations. NiSource describes itself as an energy holding company whose subsidiaries are fully regulated natural gas and electric utilities serving approximately 3.9 million customers in seven states, with substantially all revenues and earnings derived from rate-regulated businesses. The company invested $1,367.5 million in capital during 2015 and expects to invest $1,391.6 million in 2016.
Total consolidated indebtedness was $6,949.6 milliond at December 31, 2015, and the reported debt-to-capitalization ratio was 64%, against covenant maximums of 70% and 75%. Liquidity available at year-end totaled approximately $1,179.4 million. For investors, the key considerations are the post-Separation balance sheet, which shows total assets of $17,492.5 million (down from $24,589.8 million), the company's reduced scale without CPG, and its pending multi-year regulated infrastructure program.
Regulatory outcomes at NIPSCO, including the pending electric base rate case seeking about $148.0 million and the seven-year electric TDSIC plan of about $1.3 billion, are important near-term items. The filing also notes that Standard & Poor's raised NiSource's senior unsecured rating to BBB+ in 2015, while Fitch revised its outlook to positive.
02—Key points
Key Highlights
- Income from continuing operations fell to $198.6 million ($0.63 per basic share) from $256.2 million ($0.81) in 2014, mainly due to a $97.2 million loss on early extinguishment of long-term debt.
- Operating income increased to $799.9 million from $789.1 million, supported by higher gas distribution and NIPSCO environmental capital recovery, partly offset by warmer weather and lower industrial usage.
- Net income attributable to NiSource was $286.5 million ($0.90 per basic share), which includes $87.9 million from discontinued operations tied to the July 1, 2015 Separation of CPG.
- Total consolidated indebtedness was $6,949.6 million at December 31, 2015; the debt-to-capitalization ratio was 64%, below the 70% revolving credit facility covenant and 75% private placement covenant.
- Capital expenditures were $1,367.5 million in 2015, with $1,391.6 million planned for 2016; the company has executed about $2.0 billion of an estimated $30 billion in long-term regulated infrastructure investments.
- Standard & Poor's raised NiSource's senior unsecured rating to BBB+ in 2015, Moody's affirmed Baa2, and Fitch affirmed BBB- and revised its outlook to positive.
- Pending regulatory items include a NIPSCO electric base rate case seeking approximately $148.0 million, a $1.3 billion seven-year electric TDSIC plan, and a gas TDSIC-3 plan of approximately $817 million, with orders expected in 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, NiSource kept $0.06.
- Revenue$4.65B100.0%
- Cost of revenue$-00.0%
- Gross profit$4.65B100.0%
- Operating costs−$3.85B82.8%
- Operating income$799.9M17.2%
- Interest, other & tax−$513.4M11.0%
- Net income$286.5M6.2%
Where FY2015 revenue went
$4.65B- Operating costs: $2.21B, 47% of revenue
- Cost of revenue: $1.64B, 35% of revenue
- Net income: $286.5M, 6.2% of revenue
- Interest, other & tax: $513.4M, 11% of revenue
Kept 6.2% as net incomeNet income $286.5M · 6.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 18, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $4.65B$5.27B | −11.8% |
| Cost of Revenue | $1.64B$2.37B | −30.7% |
| Gross Profit | $4.65B$2.90B | +60.4% |
| Operating Expenses | $3.85B$2.11B | +82.5% |
| Operating Income | $799.90M$789.10M | +1.4% |
| Interest Expense | $380.20M$379.50M | +0.2% |
| Net Income | $286.50M$530.00M | −45.9% |
| EPS (Basic) | $0.90$1.68 | −46.4% |
| EPS (Diluted) | $0.90$1.67 | −46.1% |
| Shares Outstanding (Basic) | 317.75M315.12M | +0.8% |
| Shares Outstanding (Diluted) | 319.84M316.64M | +1.0% |
05—Questions
Frequently Asked Questions
Why did NiSource's income from continuing operations decline in 2015?
The filing attributes the decline to a $97.2 million loss on early extinguishment of long-term debt, recorded as a result of the 2015 debt restructuring that occurred as part of the Separation of Columbia Pipeline Group. Income from continuing operations was $198.6 million, compared with $256.2 million in 2014.
What is the Separation of CPG and how did it affect NiSource's financial results?
On July 1, 2015, NiSource completed the Separation of Columbia Pipeline Group, distributing one share of CPG common stock for each NiSource share. NiSource retained no ownership interest in CPG. CPG's results are reported as discontinued operations for all periods, and discontinued operations contributed $103.5 million in income before the $15.6 million noncontrolling interest allocation and related items, so net income attributable to NiSource was $286.5 million.
How leveraged is NiSource and does it face covenant risk?
Total consolidated indebtedness was $6,949.6 million at December 31, 2015. The debt-to-capitalization ratio was 64%, below the maximum of 70% under the revolving credit facility and 75% under a 2005 private placement note purchase agreement. The filing also notes ratings triggers that could require about $26.9 million in additional collateral if credit ratings fell below investment grade.
What are NiSource's capital investment plans?
NiSource invested $1,367.5 million in capital expenditures in 2015 and expects to invest $1,391.6 million in 2016, with Gas Distribution Operations projected at $966.9 million and Electric Operations at $418.6 million. The company has executed against approximately $2.0 billion of an estimated $30 billion in total projected long-term regulated utility infrastructure investments.
What regulatory proceedings could affect NiSource's earnings in 2016?
Key proceedings include NIPSCO's electric base rate case filed October 1, 2015, seeking about $148.0 million, with a decision expected in the third quarter of 2016; NIPSCO's $1.3 billion seven-year electric TDSIC plan filed December 31, 2015, with an order expected in the third quarter of 2016; and NIPSCO's gas TDSIC-3 filing of about $817 million, with an order expected in the first quarter of 2016. The Michigan City Unit 12 FGD project, about $255 million, was placed in service on December 15, 2015.
06—Continue