01—Abstract
Summary
Summary of the 10-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.
NiSource Inc. reported 2023 operating revenues of $5,505.4 milliona, down from $5,850.6 million in 2022, while operating income rose to $1,295.5 million from $1,265.8 million.
Net income attributable to NiSource was $714.3 millionb, and net income available to common shareholders was $661.7 million, or $1.59 basic and $1.48 diluted EPS, compared with $1.84 and $1.70 in 2022. The decline in common earnings was attributed mainly to lower revenue from weather, the 2022 insurance settlement related to the Greater Lawrence Incident not recurring, and higher interest expense. Gas Distribution Operations and Electric Operations contributed operating income of $901.9 million and $378.7 million, respectively.
The defining event of the year was the December 31, 2023 closing of the NIPSCO Minority Interest Transaction, in which Blackstone's affiliate contributed $2.16 billionc in cash for a 19.9% interest in NIPSCO Holdings II. Operating cash flow rose to $1,935.1 million, and cash and cash equivalents ended the year at $2,245.4 million. Management expects capital investments of approximately $16.0 billion over 2024-2028, and total consolidated indebtedness was $14,127.9 million at year end.
Key risks highlighted include the pace of the electric generation transition, including coal retirements by 2025 and 2028 and renewable project delays tied to solar supply chain issues, along with regulatory outcomes, cybersecurity, and rising borrowing costs. The company reported a debt-to-capitalization ratio of 58.2%d against a 70% revolving credit facility covenant, and its credit ratings were BBB+ (S&P), Baa2 (Moody's), and BBB (Fitch), all stable.
02—Key points
Key Highlights
- Operating revenues were $5,505.4 million in 2023, down from $5,850.6 million in 2022, while operating income increased to $1,295.5 million from $1,265.8 million.
- Diluted EPS was $1.48 in 2023 versus $1.70 in 2022; net income available to common shareholders fell to $661.7 million from $749.0 million.
- On December 31, 2023, Blackstone affiliate BIP contributed $2.16 billion in cash for a 19.9% equity interest in NIPSCO Holdings II (NIPSCO Minority Interest Transaction).
- Net cash from operating activities was $1,935.1 million, up $525.7 million from 2022; capital expenditures were $2,690.7 million.
- Management expects capital investments of approximately $16.0 billion over 2024-2028, including about $1.7 billion for additional renewable generation.
- Total consolidated indebtedness was $14,127.9 million at December 31, 2023, with a debt-to-capitalization ratio of 58.2% versus a 70% covenant limit.
- NIPSCO plans to retire its remaining two R.M. Schahfer coal units by the end of 2025 and remaining coal-fired generation by the end of 2028; the company also has a Net Zero Goal of net zero Scope 1 and 2 emissions by 2040.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 21, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $5.35B$5.74B | −6.8% |
| Operating Income | $1.30B$1.27B | +2.3% |
| Interest Expense | $489.60M$361.60M | +35.4% |
| Net Income | $714.30M$804.10M | −11.2% |
| EPS (Basic) | $1.59$1.84 | −13.6% |
| EPS (Diluted) | $1.48$1.70 | −12.9% |
| Shares Outstanding (Basic) | 416.10M407.10M | +2.2% |
| Shares Outstanding (Diluted) | 447.90M442.70M | +1.2% |
05—Questions
Frequently Asked Questions
Why did earnings per share decline in 2023 despite higher operating income?
Operating income rose $29.7 million, but net income available to common shareholders fell to $661.7 million from $749.0 million. The filing attributes the decline mainly to lower revenue from weather, the 2022 Greater Lawrence Incident insurance settlement not recurring, and higher interest expense, which rose to $489.6 million from $361.6 million. Diluted EPS fell to $1.48 from $1.70.
What did the NIPSCO Minority Interest Transaction involve?
On December 31, 2023, BIP Blue Buyer L.L.C., an affiliate of Blackstone Infrastructure Partners, contributed $2.16 billion in cash for a 19.9% equity interest in NIPSCO Holdings II LLC, which owns NIPSCO. NiSource retains an 80.1% controlling interest. The proceeds were used to repay short-term debt, including credit agreements.
How is NiSource planning to fund its capital program?
The filing states that financing comes from cash flow from operations and debt or equity issuance, including long-term debt, accounts receivable securitization, and a $1.85 billion commercial paper program backstopped by a $1.85 billion revolving credit facility. Net available liquidity was $3,070.8 million at December 31, 2023, and management believes these sources are adequate for 2024 and beyond.
What are the main risks to the electric generation transition?
The filing notes that renewable projects have faced delays and cost pressures tied to solar panel supply constraints, U.S. Department of Commerce duty investigations, and Section 201 tariffs. Regulatory approval of its generation plans, final retirement dates subject to MISO approval, and a pending EPA application for continued CCR impoundment operation at R.M. Schahfer add further uncertainty.
What are the company's credit ratings and outlook?
As of December 31, 2023, NiSource was rated BBB+ by S&P, Baa2 by Moody's, and BBB by Fitch, all with stable outlooks. NIPSCO was rated BBB+, Baa1, and BBB with stable outlooks. The filing states there have been no changes to these ratings or outlooks since February 2020.
06—Continue