01—Abstract
Summary
Summary of the 10-K filed February 22, 2023. Cited figures are marked; the original filing is the authoritative source.
NiSource Inc. is an energy holding company whose primary subsidiaries are fully regulated natural gas and electric utilities serving approximately 3.7 million customers in six states.
Net income attributable to NiSource was $804.1 milliona in 2022, up from $584.9 million in 2021, and diluted EPS rose to $1.70 from $1.27. Operating revenues were $5,850.6 million versus $4,899.6 million, with the company citing higher revenues from gas base rate proceedings and regulatory capital programs, plus an insurance settlement related to the Greater Lawrence Incident, partly offset by higher income taxes. Capital expenditures were $2,298.0 million in 2022, and management expects roughly $15 billion of capital investments over 2023-2027.
The company's strategy centers on infrastructure modernization and an electric generation transition, with plans to retire remaining coal generation by the end of 2028, replacing it with primarily renewable resources. Execution risk is significant: the filing notes uncertainty around solar panel availability, the pending DOC Investigation, and delays to planned renewable projects. NiSource also announced intent to sell a minority interest in NIPSCO, with no assurance of timing or completion, and a Net Zero Goal of net zero Scope 1 and 2 greenhouse gas emissions by 2040.
Balance sheet items include total consolidated indebtedness of $11,315.5 millionb, a debt-to-capitalization ratio of 58.9% against a 70% covenant, and short-term borrowings of $1,761.9 million at year-end. Credit ratings were unchanged since February 2020 (S&P BBB+, Moody's Baa2, Fitch BBB at NiSource level), and the company declared a quarterly common dividend of $0.250 per share in January 2023.
02—Key points
Key Highlights
- Net income attributable to NiSource rose to $804.1 million in 2022 from $584.9 million in 2021; diluted EPS was $1.70 versus $1.27.
- Operating revenues increased to $5,850.6 million from $4,899.6 million, driven by new rates from base rate proceedings and regulatory capital programs and higher cost of energy billed to customers.
- Capital expenditures totaled $2,298.0 million in 2022; the company expects about $15 billion of capital investments during 2023-2027.
- Electric generation transition targets retirement of remaining coal-fired generation by the end of 2028, with replacement primarily from renewable resources, though solar project delays and supply chain issues create uncertainty.
- Company announced intent to pursue sale of a minority interest in NIPSCO; the filing states there can be no assurance of completion on the anticipated timeline or at all.
- Total consolidated indebtedness was $11,315.5 million with a debt-to-capitalization ratio of 58.9% versus a 70% covenant; credit ratings and outlooks were unchanged since February 2020.
- Greater Lawrence Incident remains a source of risk, with expenses exceeding liability insurance coverage and a DPA with the U.S. Attorney's Office set to end February 26, 2023.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 22, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $5.74B$4.73B | +21.3% |
| Operating Income | $1.27B$1.01B | +25.7% |
| Interest Expense | $361.60M$341.10M | +6.0% |
| Net Income | $804.10M$584.90M | +37.5% |
| EPS (Basic) | $1.84$1.35 | +36.3% |
| EPS (Diluted) | $1.70$1.27 | +33.9% |
| Shares Outstanding (Basic) | 407.10M393.60M | +3.4% |
| Shares Outstanding (Diluted) | 442.70M417.30M | +6.1% |
05—Questions
Frequently Asked Questions
How did NiSource's earnings change in 2022?
Net income attributable to NiSource was $804.1 million in 2022, compared with $584.9 million in 2021. Net income available to common shareholders was $749.0 million, versus $529.8 million, and diluted EPS was $1.70 compared with $1.27. The filing attributes the increase mainly to higher revenues from gas base rate proceedings and regulatory capital programs, and an insurance settlement related to the Greater Lawrence Incident, partly offset by higher income taxes.
What is the company's capital investment plan?
The filing states that NiSource expects to make capital investments totaling approximately $15 billion during 2023-2027, related to infrastructure modernization, generation transition and renewables, and customer growth. Estimated capital investments are $3.3-3.6 billion in 2023 and $2.6-2.9 billion in 2024, among other annual estimates.
What are the main risks to the electric generation transition?
The filing cites significant uncertainty around the availability of solar panels due to the pending DOC Investigation, Uyghur Forced Labor Protection Act issues, Section 201 tariffs and global supply chain constraints. Many U.S. solar projects have been delayed or canceled, and any additional delays could affect NIPSCO's capacity position and its ability to meet MISO resource adequacy obligations. The filing also notes that the incremental cost of solar may not be recoverable through customer rates.
What is the status of the planned NIPSCO minority interest sale?
On November 7, 2022, NiSource announced its intention to sell a minority interest in NIPSCO and stated it would evaluate transaction structures to maximize stakeholder value. The filing states that completion depends on regulatory approvals and negotiations with counterparties, and that there can be no assurances the sale will be completed on the anticipated timeline or at all.
How leveraged is NiSource and what liquidity sources does it have?
Total consolidated indebtedness was $11,315.5 million at December 31, 2022, and the debt-to-capitalization ratio was 58.9% against a covenant maximum of 70%. Net available liquidity was $1,565.6 million, including a $1.85 billion revolving credit facility, and short-term borrowings were $1,761.9 million. The company stated it believes these sources provide adequate capital to fund operations and capital expenditures in 2023 and beyond.
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