01—Abstract
Summary
Summary of the 10-Q filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.
NiSource Inc. reported third-quarter 2024 results in this Form 10-Q for the period ended September 30, 2024.
Net income available to common shareholders was $85.7 milliona, or $0.19 diluted EPS, for the three months, compared with $77.0 million, or $0.17 diluted EPS, a year earlier. For the nine months, net income available to common shareholders was $515.8 million, or $1.14 diluted EPS, versus $436.1 million, or $0.98, in 2023. Operating revenues were $1,076.3 million for the quarter and $3,867.3 million for the nine months, while operating income was $218.3 million for the quarter and $1,038.7 million for the nine months.
Management attributes the earnings increase to higher revenues net of cost of energy, increased AFUDC equity tied to the Cavalry and Dunns Bridge II projects, and the elimination of preferred dividends after the Series A and B preferred redemptions. Higher depreciation and interest expense partially offset these gains. The company's balance sheet and financing activity were shaped by the NIPSCO Minority Interest Transaction, which brought in a $2.16 billionb capital contribution at year-end 2023.
Proceeds were used to repay $1.0 billionc and $650.0 million term credit agreements in January 2024. During 2024 NiSource issued $650.0 million of 5.350% senior notes due 2034, $500.0 million of 6.950% junior subordinated notes due 2054, $600.0 million of 5.200% senior notes due 2029, and $500.0 million of 6.375% junior subordinated notes due 2055. It also redeemed its Series B and B-1 preferred stock for $500.0 million and sold common stock under its ATM program.
Total long-term debt including current portion was $13,357.5 milliond at September 30, 2024, and the debt-to-capitalization ratio was 52.7% against a 70.0% covenant. Management expects 2024 capital investments of $3.3 billion to $3.5 billion and about $19.3 billion during 2025-2029. The filing also reports a $164.6 million increase to asset retirement obligations for compliance with the EPA's legacy coal combustion residuals rule, costs management expects to be recoverable through depreciation rates.
NIPSCO's renewable generation transition continues, with Cavalry and Dunns Bridge II reaching milestones and remaining projects expected to enter service mainly between 2025 and 2027. Management also discussed a potential data center opportunity in northern Indiana that could require new generation and transmission capacity.
02—Key points
Key Highlights
- Net income available to common shareholders rose to $85.7 million ($0.19 diluted EPS) for Q3 2024, from $77.0 million ($0.17) in Q3 2023.
- Nine-month net income available to common shareholders was $515.8 million ($1.14 diluted EPS), up from $436.1 million ($0.98) a year earlier.
- Net income attributable to noncontrolling interest was $63.9 million for the nine months of 2024, versus $5.6 million in 2023, following the NIPSCO Minority Interest Transaction.
- NiSource issued about $2.23 billion of long-term debt in the first nine months of 2024, and redeemed $486.1 million of preferred stock plus $14.0 million of redemption premium.
- A $164.6 million increase to asset retirement obligations was recorded in Q3 2024 for estimated costs to comply with the EPA's legacy CCR rule.
- Cash and cash equivalents fell to $126.2 million at September 30, 2024, from $2,245.4 million at December 31, 2023, and net available liquidity was $1,934.8 million.
- Management reiterated 2024 capital investments of $3.3 billion to $3.5 billion and about $19.3 billion of investment planned for 2025-2029.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 30, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.08B$1.03B | +4.8% |
| Operating Income | $218.30M$233.00M | −6.3% |
| Net Income | $85.70M$85.10M | +0.7% |
| EPS (Basic) | $0.19$0.19 | 0.0% |
| EPS (Diluted) | $0.19$0.17 | +11.8% |
| Shares Outstanding (Basic) | 451.90M413.50M | +9.3% |
| Shares Outstanding (Diluted) | 454.50M448.30M | +1.4% |
05—Questions
Frequently Asked Questions
What drove the increase in earnings for the third quarter and first nine months of 2024?
Management attributed the higher net income available to common shareholders to higher revenues net of cost of energy, driven by continued investment in safety, reliability and low or zero emission generation, and to increased AFUDC equity primarily tied to the mechanical completion of the Cavalry and Dunns Bridge II projects. The elimination of preferred stock dividends after the Series A and B preferred redemptions also contributed. Higher depreciation expense and interest expense partially offset these gains.
How did the NIPSCO Minority Interest Transaction affect NiSource's finances?
The transaction closed on December 31, 2023, with a $2.16 billion cash capital contribution. Proceeds were used to repay the $1.0 billion and $650.0 million term credit agreements in January 2024. Noncontrolling interest income rose to $63.9 million for the nine months of 2024, compared with $5.6 million a year earlier, which reduces the portion of earnings attributable to common shareholders.
How much debt did NiSource issue and what is its leverage position?
In 2024 NiSource completed $650.0 million of 5.350% senior notes due 2034, $500.0 million of 6.950% junior subordinated notes due 2054, $600.0 million of 5.200% senior notes due 2029, and $500.0 million of 6.375% junior subordinated notes due 2055. Long-term debt including the current portion was $13,357.5 million at September 30, 2024. The debt-to-capitalization ratio was 52.7%, below the 70.0% maximum under the revolving credit facility covenant.
What is the impact of the EPA coal combustion residuals rule on NiSource?
In the third quarter of 2024 NiSource recorded an increase of $164.6 million to asset retirement obligations for estimated costs to comply with the EPA's revised CCR rule for certain sites. Additional costs will be recorded when they become probable and estimable. The company expects these costs to be recoverable through existing and future depreciation rates.
What is the outlook for NiSource's capital investment and generation transition?
NiSource stated it remains on track for capital investments of $3.3 billion to $3.5 billion in 2024 and expects to invest approximately $19.3 billion during 2025-2029, subject to ongoing review. The generation transition includes full ownership of the Cavalry, Dunns Bridge II, Gibson and Fairbanks projects, with most remaining build-transfer and power purchase agreement projects expected in service between 2025 and 2027. Management is also evaluating data center development in its northern Indiana service territory, which would require new generation and transmission capacity.
06—Continue