01—Abstract
Summary
Summary of the 10-K filed February 23, 2022. Cited figures are marked; the original filing is the authoritative source.
NiSource Inc. is an energy holding company whose principal subsidiaries are fully regulated natural gas and electric utilities serving approximately 3.7 million customers in six states.
It has two reportable segments, Gas Distribution Operations and Electric Operations, and the filing states that it derives substantially all of its revenues and earnings from these rate-regulated businesses. For 2021, operating revenues were $4,899.6 milliona, operating income was $1,006.9 million, and net income available to common shareholders was $529.8 million, or $1.27 per diluted share, compared with a net loss available to common shareholders of $72.7 million in 2020. The 2020 results were affected by the October 9, 2020 sale of the Massachusetts Business to Eversource and a $412.4 million pre-tax loss on that sale.
The company reported that it invested $1.3 billionb in infrastructure modernization in 2021 and expects capital investments of approximately $10 billion over 2021-2024. Its electric generation transition, which plans to replace coal capacity by the end of 2028 with primarily renewable resources, is a central element of that plan. As of December 31, 2021, NiSource had total consolidated indebtedness of $9,801.5 million, and it reported a debt-to-capitalization ratio of 57.4% against a 70% covenant.
Its credit ratings were BBB+ (S&P), Baa2 (Moody's) and BBB (Fitch), all with stable outlooks. The filing also describes ongoing liabilities tied to the Greater Lawrence Incident, including a deferred prosecution agreement with the U.S. Attorney's Office.
02—Key points
Key Highlights
- Full-year 2021 operating revenues of $4,899.6 million and operating income of $1,006.9 million, versus $4,681.7 million and $550.8 million in 2020.
- Net income available to common shareholders of $529.8 million ($1.27 diluted EPS) in 2021, compared with a net loss of $72.7 million in 2020.
- Gas Distribution Operations operating income of $617.5 million and Electric Operations operating income of $387.8 million in 2021.
- Capital expenditures of $1,838.0 million in 2021 cash flow statement, with an expected capital investment program of approximately $10 billion for 2021-2024.
- Coal generation transition: R.M. Schahfer Units 14 and 15 retired October 1, 2021, with the Michigan City retirement expected between 2026 and 2028; Indiana Crossroads Wind (302 MW) began commercial operations in December 2021.
- Total consolidated indebtedness of $9,801.5 million, a debt-to-capitalization ratio of 57.4% against a 70% covenant, and investment-grade ratings (BBB+/Baa2/BBB) with stable outlooks.
- Continuing exposure to Greater Lawrence Incident liabilities, subject to a deferred prosecution agreement with the U.S. Attorney's Office and ongoing private litigation.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 23, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $4.73B$4.47B | +5.8% |
| Operating Income | $1.01B$550.80M | +82.8% |
| Interest Expense | $341.10M$370.70M | −8.0% |
| Net Income | $584.90M-$17.60M | +3423.3% |
| EPS (Basic) | $1.35$-0.19 | +810.5% |
| EPS (Diluted) | $1.27$-0.19 | +768.4% |
| Shares Outstanding (Basic) | 393.60M384.30M | +2.4% |
| Shares Outstanding (Diluted) | 417.30M384.30M | +8.6% |
05—Questions
Frequently Asked Questions
Why did net income swing from a loss in 2020 to a profit in 2021?
The filing attributes the increase primarily to higher operating income in 2021. Operating revenues were higher due to favorable rate case outcomes, and operating expenses were lower because the company did not have Massachusetts Business expenses in 2021 and the loss on the sale of that business was mostly incurred in 2020. Total other deductions also improved, partly offset by higher income tax expense.
What is NiSource's plan for its coal-fired generation?
NiSource plans to replace its coal generation capacity by the end of 2028 with primarily renewable resources. The filing states that the Preferred Energy Resource Plan refines the timeline to retire Michigan City between 2026 and 2028, and that the company expects capital investment requirements of approximately $2.0 billion, primarily in 2022 and 2023, to replace the R.M. Schahfer coal-fired units. Final retirement dates remain subject to MISO approval.
How much debt does NiSource carry and how well is it covered by its credit terms?
As of December 31, 2021, total consolidated indebtedness was $9,801.5 million. The revolving credit facility requires a debt-to-capitalization ratio not exceeding 70%, and the ratio was 57.4% at year-end. The filing states that a collateral requirement of approximately $56.2 million would apply if certain subsidiaries were downgraded below investment grade.
What ongoing risks remain from the Greater Lawrence Incident?
The filing states that expenses related to the incident exceeded available liability insurance, and that the company may incur additional costs, including from civil litigation and possible legislation. NiSource entered a deferred prosecution agreement with the U.S. Attorney's Office for a three-year period, and failure to comply could lead to further penalties and private litigation. Columbia of Massachusetts completed its probation under its plea agreement on June 23, 2021.
06—Continue