Nisource Inc · NYSE:NI
Nisource — Investor Day (November 2022)
61 slides from Nisource's investor day presentation, Nov 7, 2022
Slide 1: NiSource – A Premium Utility Company
NiSource – A Premium Utility Company November 7, 2022 NiSource | NYSE: NI | nisource.com |
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective in
Slide 3: Agenda
AGENDA Presenter Chris Turnure Welcoming Remarks Director, Investor Relations Lloyd Yates Strategic Overview & Plan Extension President and Chief Executive Officer Shawn Anderson Business Review & Sustainability SVP Strategy and Chief Risk Officer Donald Brown Financial Overview Executive Vice Presi
Slide 4: NiSource Is Mission Ready
NISOURCE IS MISSION READY Mission Vision We exist to deliver safe, reliable energy that drives To be an innovative and value for our customers trusted energy partner Values Be Safe | Look For a Better Way | Act with Care | Take Accountability NiSource | NYSE: NI | nisource.com | 4
Slide 5: NiSource is a 100% regulated gas and electric utility
NiSource is a 100% regulated gas and electric utility serving customers across six Midwestern centric states with a focus on safety and reliability, and a commitment to maximize long-term Shareholder Value. NiSource’s long and well-established history in strong regulatory environments provides consi
Slide 6: Company Profile
COMPANY PROFILE Constructive Regulatory Significant Scale Jurisdictions across Six States NI LISTED COLUMBIA GAS OF KENTUCKY NYSE COLUMBIA GAS OF MARYLAND ~3.2M 9-11% COLUMBIA GAS OF OHIO NATURAL GAS COLUMBIA GAS OF PENNSYLVANIA Gas Customers Compelling ~500K COLUMBIA GAS OF VIRGINIA expected annual
Slide 7: A Premium Regulated Utility
A PREMIUM REGULATED UTILITY NiSource Fundamentals Delivering Identifiable Commitment to Consistent Returns Investment Inventory Stakeholder Value • Regulatory prowess • Option to allocate capital between Gas • 100% regulated revenue expected and Electric systems to deliver consistent and predicable
Slide 8: Environmental, Social & Governance (ESG)
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) Environmental Social Governance • Transformation focused on customer • Leadership enhancements support • Approximately $3B of generation safety, reliability and affordability commitment to customer service and transition investments through 2028 safety • Expe
Slide 9: Strategic Overview & Plan Extension
Strategic Overview & Plan Extension Lloyd Yates Chief Executive Officer NiSource | NYSE: NI | nisource.com | 9
Slide 10: What You'll Hear Today
WHAT YOU’LL HEAR TODAY Strategic Overview & Business Review & Financial Closing Remarks Plan Extension Sustainability Overview Followed by Q&A Lloyd Yates Shawn Anderson Donald Brown Lloyd Yates Chief Executive Officer SVP Strategy & Chief Risk Officer Chief Financial Officer Chief Executive Officer
Slide 11: Business Review - Overview
BUSINESS REVIEW - OVERVIEW Ensuring NiSource is well-positioned to drive long-term value for all stakeholders Process led by executive leaders and Board members with deep finance, operations and strategy experience Board of Directors Leadership Team Michael Jesanis Theodore Bunting Jr. Bill Johnson
Slide 12: CEO Observations Brought to the Business Review
CEO OBSERVATIONS BROUGHT TO THE BUSINESS REVIEW Strengths Opportunities • Superior regulatory execution & • Creating efficiencies in our operations legislative environment • Leveraging our operational scale and diversified • Investment & growth visibility portfolio • Reaching industry-leading enviro
Slide 13: CEO Observations: 5-Year Performance
CEO OBSERVATIONS BROUGHT TO THE BUSINESS REVIEW NiSource 5-Year Performance (Since Columbia Pipeline Group Separation: 2016-2021) Rate Base Growth = ~70% Strong Operational CAGR = ~11% and Regulatory Track Record of Net Operating Earnings Growth = ~60% Execution CAGR = ~10% Burdened by a Net Operati
Slide 14: Strategic Business Review - Scope
STRATEGIC BUSINESS REVIEW - SCOPE Commitment to deliver maximum value to our stakeholders & exploring all avenues that enable it Areas Reviewed: Ways to optimize base case best-in-class high growth proposition Legislative and regulatory environments Financing solutions that enhance balance sheet hea
Slide 15: Strategic Business Review – Conclusions and Actions
STRATEGIC BUSINESS REVIEW – CONCLUSIONS AND ACTIONS Scale and Portfolio Diversity Offers the Best Opportunity to Drive Long-Term Shareholder Value Conclusions Scale and portfolio diversity add value Industry leading recovery programs drive strong top line growth Identified opportunities to str
Slide 16: Operational Excellence
OPERATIONAL EXCELLENCE Disciplined approach on operational excellence ensures the sustainability of our plan Key to continued execution of our significant investment plan Operational Driving efficiency in the way we operate to achieve flat O&M Excellence Continuation of enhanced focus on safety Esse
Slide 17: Culture of Safety & Resiliency Embedded in Sustainability Strategy
CULTURE OF SAFETY & RESILIENCY EMBEDDED IN OUR SUSTAINABILITY STRATEGY Advancing our Safety Initiatives1 ~286 Zero ~97% 1.92 miles Significant Safety Events Enhanced Emergency Response in 45min Damages Per 1,000 Locates Priority Pipe Retired Recognition • Modernizing infrastructure & incorporating t
Slide 18: Long-Term Identified Investment Opportunities
LONG-TERM IDENTIFIED INVESTMENT OPPORTUNITIES ~$15B of Identified Investment 2023 - 2027 ~11% Customer Growth Identified ~$30B of ~17% Generation investment opportunities Transition & Renewables ~52% Gas Infrastructure over the next 10 years ~20% Modernization (2023-2032) Electric Infrastructure Mod
Slide 19: Enhanced NiSource Value Proposition Driving Sustainable Growth
ENHANCED NISOURCE VALUE PROPOSITION DRIVING SUSTAINABLE GROWTH 6%-8% 8%-10% Expected Annual Expected Annual NOEPS1 Growth Utility Rate Base 2021-2027 Growth 2021-2027 14%-16% 60%-70% Long-term FFO/ Targeted Annual Dividend Debt2 Target Payout Ratio $30B Planned Long-Term ~$15B Infrastructure Investm
Slide 20: Business Review – Strategic Evaluation & Direction
Business Review – Strategic Evaluation & Direction Shawn Anderson SVP Strategy and Chief Risk Officer NiSource | NYSE: NI | nisource.com | 20
Slide 21: Strategic Business Review
STRATEGIC BUSINESS REVIEW How we approached exploring potential pathways for value creation Organic Plan Enhancements • Evaluated broad categories of O&M, capital investment, customer demand, cost profile, regulatory, financing, etc. • Explored alternatives to accelerate balance sheet strengthening
Slide 22: Regulatory / Legislative Environment
REGULATORY / LEGISLATIVE ENVIRONMENT NiSource’s six constructive jurisdictions recognize the value of gas and electric service to customers IN OH PA VA KY MD Legislation protecting customers from gas bans Commodity cost pass through Revenue/bill stabilization Bad debt/low-income assistance Customer
Slide 23: Minority Interest Sale of NIPSCO Enhances the Balance Sheet
MINORITY INTEREST SALE OF NIPSCO ENABLES NISOURCE TO LEVERAGE ITS PORTFOLIO TO ENHANCE THE BALANCE SHEET Highly executable alternative to capital raising that accelerates strengthening of balance sheet Prior Minority Interest Sale of NIPSCO Go-Forward • Diversifies capital raising while minimizing t
Slide 24: Business Review – NiSource Strategic Execution
BUSINESS REVIEW – NISOURCE STRATEGIC EXECUTION Premium Utility Benchmark Comparisons NiSource NiSource Premium Utility Metric Proforma vs. Proforma Peers (Avg.) Premium Peers Business Mix (% Regulated) 100 >90% Favorable Jurisdiction Diversity 6 3 Favorable (# of Jurisdictions) Rate Base Growth 8-10
Slide 25: Long-Term Sustainability of Our Business
Long-Term Sustainability of Our Business Shawn Anderson SVP Strategy and Chief Risk Officer NiSource | NYSE: NI | nisource.com | 25
Slide 26: Balanced and Sustainable Growth Strategy
BALANCED AND SUSTAINABLE GROWTH STRATEGY Supportive Approach with Key Stakeholders • Reinvesting in the communities Sustainable we serve Customers / Community • Enhanced safety and reliability NiSource and its Regulators and Operating Legislators Impact • Focus on customer affordability Companies De
Slide 27: Commitment to Customer Affordability
COMMITMENT TO CUSTOMER AFFORDABILITY NiSource plan supports customer affordability over the plan horizon Estimated Annual Customer Bill Mitigating Rate Impacts Increases (2023-2027) • Geographic Advantage – competitive natural gas supplies <5.0% • O&M Discipline – decreases inflationary rate pressur
Slide 28: Driving Sustainability in the Natural Gas Sector
DRIVING SUSTAINABILITY IN THE NATURAL GAS SECTOR Natural Gas Remains Critical to Energy Systems Pilot Programs and Gas Future Advanced Leak RNG Production Most in-demand and Accelerates economy-wide Detection and Repair affordable heating source decarbonization while Utilizing Picarro vehicles to id
Slide 29: Driving Sustainability in Electric Sector
DRIVING SUSTAINABILITY IN ELECTRIC SECTOR Over $3B of Cumulative Capex in Generation Transition Investments Generation Portfolio Mix* 1% ~$2.2B of Contracted Projects 25% ~$1B of Investments through 2028 2018 Gas & Gas Peaking 74% 2018 2020 2021 2022 2023 2024 2025 2026 2027 2028 Coal Portfolio Addi
Slide 30: Continue to Execute on Generation Transition Commitments
CONTINUE TO EXECUTE ON GENERATION TRANSITION COMMITMENTS - KEY TAKEAWAYS Coal and Gas Unit Retirements Portfolio Additions • The remaining coal units at Schahfer are still on track to • 2021 IRP preferred plan to include energy storage, new gas retire in the fall of 2025 peaking and small amounts of
Slide 31: Generation Transition and Gas Investments Driving 90% GHG Reduction
GENERATION TRANSITION AND GAS INFRASTRUCTURE INVESTMENTS DRIVING 90% REDUCTION IN GREENHOUSE GAS EMISSIONS BY 2030 We continue to actively implement our plans to reduce Scope 1 GHG emissions by 90% from 2005 levels by 2030 Decarbonization is Supported by Key Drivers Scope 1 Scope 1 • Customers, Empl
Slide 32: Extending Decarbonization Goals to Net Zero by 2040
WE ARE EXTENDING DECARBONIZATION GOALS TO NET ZERO BY 2040 Decarbonization Goals Scope 1 & 2 …with key stakeholder Net Zero engagement, policy, and by 2040 XEL regulatory support WEC Generation Pathways D Continued deployment of low and zero carbon technologies and fuels for electric generation DT
Slide 33: NiSource Is Supporting the Energy Transition
NISOURCE IS SUPPORTING THE ENERGY TRANSITION FOR ITS STAKEHOLDERS Core Clean Energy Infrastructure Transportation Cleaner Customers and Innovation Investment Electrification Molecules Communities Investments Pipeline EV Charging Regional Hydrogen Customer Assistance Low-Carbon Resources Modernizatio
Slide 34: Leading in the Transition to a Cleaner Energy Future
NISOURCE: LEADING IN THE TRANSITION TO A CLEANER ENERGY FUTURE FASTEST COAL UP TO ~$2.2B ENERGY TRANSITION IN PROJECTED RENEWABLE GENERATION CAPITAL TRANSITION EXPENDITURES THROUGH 20252 CREATES NEW IN THE SECTOR1 INVESTMENT OPPORTUNITIES FOR NISOURCE ON ADDITIONAL ~$1B CONTINUE ON TRACK WITH GAS AN
Slide 35: Financial Overview
Financial Overview Donald Brown Executive Vice President and Chief Financial Officer NiSource | NYSE: NI | nisource.com | 35
Slide 36: Third Quarter Key Takeaways
THIRD QUARTER KEY TAKEAWAYS • 2022 guidance • 2022 non-GAAP diluted NOEPS guidance range narrowed to $1.44 to $1.46 • Continue to expect 2022 capital expenditures of $2.4 to $2.7B • Initiating 2023 guidance • Initiated 2023 non-GAAP diluted NOEPS guidance of $1.50 to $1.57 (consistent with 5-7% annu
Slide 37: Enhanced NiSource Value Proposition Driving Sustainable Growth
ENHANCED NISOURCE VALUE PROPOSITION DRIVING SUSTAINABLE GROWTH 6%-8% 8%-10% Expected Annual Expected Annual NOEPS1 Growth Utility Rate Base 2021-2027 Growth 2021-2027 14%-16% 60%-70% Long-term FFO/ Targeted Annual Dividend Debt2 Target Payout Ratio $30B Planned Long-Term ~$15B Infrastructure Investm
Slide 38: Diversified Business Mix
DIVERSIFIED BUSINESS MIX Financial strength driven by diverse constructive regulatory jurisdictions and balanced portfolio mix Operating Earnings1 Balanced Business Mix with Regulatory Diversity Maryland 1% Diversified Revenue2 Mix Stable Revenue Profile Kentucky 2% 13% Virginia 7% Indiana 37% Penns
Slide 39: Operational Excellence Driving Efficiency
OPERATIONAL EXCELLENCE DRIVING EFFICIENCY Transformation efforts drive increased safety and process rigor, enhanced customer and employee experiences and cost savings Major Business Initiatives Flat Annual O&M 2022-2027 Initiatives underway and New organizational structure driving executed increased
Slide 40: Investing $15B from 2023-2027
INVESTING $15B FROM 2023-2027 TO DRIVE SAFETY, RELIABILITY AND SUSTAINABILITY Regulatory Programs and New Customer Demand Support Timely Recovery $3.0- $3.1- $3.3B $3.4B $2.8- $2.7- $2.7- $3.1B $3.0B $3.0B $2.4- $2.7B 2022 2023 2024 2025 2026 2027 Growth (Within 0-3 Months) Tracker (Within 0-18 Mont
Slide 41: Capital Investment Driving Robust Rate Base Growth
CAPITAL INVESTMENT DRIVING ROBUST RATE BASE GROWTH Cost management/efficiencies create headroom to drive sustainable investments to grow rate base from 2021 - 2027 NiSource Projected YE Rate Base ($ in Billions) $14.9 $13.7 $12.9 $11.5 $9.8 $8.6 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E 2025E
Slide 42: Extending Guidance Through 2027
EXTENDING GUIDANCE THROUGH 2027 – MAINTAINING OUR 2021 BASE YEAR Visible & sustainable investments drive annual 6-8% diluted NOEPS growth $1.50- $1.57 $1.44- $1.46 $1.37 2021 2022 2023 2024 2025 2026 2027 Top tier growth extension of plan through 2027 NiSource | NYSE: NI | nisource.com | 42
Slide 43: Strengthened Financing Plan Provides Flexibility to Invest in Growth
STRENGTHENED FINANCING PLAN PROVIDES FLEXIBILITY TO INVEST IN GROWTH Dividends and capital Sources / Uses (2023 – 2027)2 investments primarily funded through cash from operations ATM (2025+) Incremental Financing New Debt Minority interest Needed ~$4.5- Equity = ~15% sale adds flexibility Debt = ~85
Slide 44: Closing Remarks
Closing Remarks Lloyd Yates Chief Executive Officer NiSource | NYSE: NI | nisource.com | 44
Slide 45: Enhanced NiSource Value Proposition Driving Sustainable Growth
ENHANCED NISOURCE VALUE PROPOSITION DRIVING SUSTAINABLE GROWTH 6%-8% 8%-10% Expected Annual Expected Annual NOEPS1 Growth Utility Rate Base 2021-2027 Growth 2021-2027 14%-16% 60%-70% Long-term FFO/ Targeted Annual Dividend Debt2 Target Payout Ratio $30B Planned Long-Term ~$15B Infrastructure Investm
Slide 46: Appendix
Appendix NiSource | NYSE: NI | nisource.com | 46
Slide 47: NiSource Board of Directors
NISOURCE BOARD OF DIRECTORS Peter A. Altabef Theodore H. Bunting, Jr. Eric L. Butler Aristides S. Candris Age: 62 Age: 63 Age: 61 Age: 70 Elected: 2017 Elected: 2018 Elected: 2017 Elected: 2012 Occupation: Chairman. & Occupation: Retired Group Occupation: Pres. & CEO, Occupation: Retired Pres. CEO,
Slide 48: Management Overview
MANAGEMENT OVERVIEW Skills and Experience to Lead Commitment to Safety, Customer Experience and Stakeholder Value Lloyd Yates Donald Brown Melody Birmingham William (Bill) Jefferson • President and CEO since Feb. 14, 2022 • EVP and CFO since June 1, 2020 • EVP & Chief Innovation Officer since July 1
Slide 49: Northern Indiana Public Service Company (NIPSCO Electric)
NORTHERN INDIANA PUBLIC SERVICE COMPANY (NIPSCO ELECTRIC) Regulatory Landscape Business Profile • TDSIC recovers new or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development • 490K Customers • 13,000 Miles of • Design of rate 831 insulat
Slide 50: Columbia Gas of Ohio (COH)
COLUMBIA GAS OF OHIO (COH) Regulatory Landscape Business Profile • Fully tracked annual Infrastructure Replacement Program (IRP) and Capital Expenditure Program (CEP) • 1.5M Customers • 0.5% Annual Customer • Public policy provides tools supporting investment for economic development and deferral of
Slide 51: Columbia Gas of Pennsylvania (CPA)
COLUMBIA GAS OF PENNSYLVANIA (CPA) Business Profile Regulatory Landscape • Fully projected Future Test year allows for capital and expense recovery with zero lag • Authorized Weather Normalized Adjustment of residential bills during winter period stabilizes • 443K Customers • 0.6% Annual Customer re
Slide 52: Northern Indiana Public Service Company (NIPSCO Gas)
NORTHERN INDIANA PUBLIC SERVICE COMPANY (NIPSCO GAS) Regulatory Landscape Business Profile • TDSIC recovers new or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development • 853K Customers • 0.8% Annual Customer • FMCA offers capital recove
Slide 53: Columbia Gas of Virginia (CVA)
COLUMBIA GAS OF VIRGINIA (CVA) Regulatory Landscape • Forward-looking annual modernization/safety infrastructure investment tracker filings Business Profile • Tracker filings supplemented by rate case filings with forward test year • 288K Customers • ~500 Employees Constructive Legislation • DIMP Ac
Slide 54: Columbia Gas of Kentucky (CKY)
COLUMBIA GAS OF KENTUCKY (CKY) Regulatory Landscape • SMRP allows for full cost recovery of eligible pipeline replacement/safety related initiatives via Business Profile forward looking test year • Commission has authorized economic development extension tariff for high potential sites • 138K Custom
Slide 55: Columbia Gas of Maryland (CMD)
COLUMBIA GAS OF MARYLAND (CMD) Regulatory Landscape Business Profile • Forward-looking annual infrastructure replacement and improvement surcharge (IRIS) recovers age and condition investment • 35K Customers • IRIS filings supplemented by periodic rate cases • ~70 Employees Constructive Legislation
Slide 56: Regulatory / Legislative Environment
REGULATORY / LEGISLATIVE ENVIRONMENT Supportive environment drives balanced returns and growth across ALL jurisdictions 5-Year Allowed Rate Base Growth Average ROE ROE (CAGR 2021-2027) Indiana – Electric 10.1%1 9.8% 12.4% Indiana – Gas 10.1%1 9.9% 13.8% Ohio 9.2% 9.6%2 7.9% Pennsylvania 10.4% BB3 9.
Slide 57: Active Engagement at the Federal and State Levels
ACTIVE ENGAGEMENT AT THE FEDERAL AND STATE LEVELS Federal Policy Playbook State Policy Playbook • Active partnerships through the policy making Building consensus and coalitions through our process OpCos to enact legislative and regulatory Public / changes Private • Developing state level policy str
Slide 58: Potential for NIPSCO to Invest in MISO Future 1 Transmission Projects
Potential for NIPSCO to Invest $400M - $950M in MISO Future 1 Transmission Projects Estimated Opportunities* ~$400M Investment in MISO Tranche 1 Estimated In Service: 2030 ~$250M to ~$550M Investment in MISO Tranche 2 Estimated In Service: 2031 - 2035 *Tranche 1 portfolio of projects has been approv
Slide 59: NiSource Existing Infrastructure Supports Decarbonization
NISOURCE EXISTING INFRASTRUCTURE SUPPORTS DECARBONIZATION Completed analysis that demonstrates a portfolio of initiatives leveraging existing gas infrastructure in our jurisdictions provides optimal pathway to long term decarbonization *Total Emissions (Million tCO2) Approach 50 • Robust analysis of
Slide 60: Strengthening Balance Sheet
STRENGTHENING BALANCE SHEET Long-Term Debt $ in millions Maturity Profile $1,500 • Weighted Average Rate – 3.72% • Weighted Average Maturity – 14.1 Years $1,250 $1,000 Targeted FFO/Debt of 14-16% • Minority Interest Sale expected to $750 accelerate NiSource into targeted range $500 Credit Ratings $2
Slide 61: Reconciliation of Consolidated Net Income to Net Operating Earnings
NiSource Inc. Schedule 1 - Reconciliation of Consolidated Net Income Available to Common Shareholders to Net Operating Earnings Available to Common Shareholders (Non-GAAP) (unaudited) NiSource | NYSE: NI | nisource.com | NYSE: | NI | nisource.com Privileged and Confidential 61