Q3 2024 Earnings Summary
- Alliant Energy has secured fully executed agreements for 1.1 gigawatts of data center loads in Phase I, which is expected to increase peak demand by nearly 20% over the next 5 years, indicating significant growth potential.
- Future economic development activities, including additional data centers, are considered upside to their current plan, potentially increasing capital expenditures and sales, and enhancing customer affordability.
- Management's conservative guidance suggests potential for earnings growth to exceed the current 5% to 7% target, especially as new loads come online in later years.
- Significant capital expenditure and equity needs: Alliant Energy anticipates a need for approximately $1 billion of equity to finance its increased capital expenditure plan, which could lead to dilution of existing shareholders or increased financial leverage. They are considering options like junior subordinated debt to meet some of this equity need.
- Limited near-term load growth: The company's major new loads from data centers are not expected to start contributing until 2027, and in the next year or two, they expect load growth to be only around 0.5% to 1%, which may limit earnings growth in the near term.
- Reduction in 2024 earnings guidance due to weather impacts: Alliant Energy has reduced its 2024 earnings guidance by approximately $0.03 from the midpoint due to negative impacts from milder temperatures, resulting in about $0.10 per share decrease in earnings from temperature impacts. This indicates potential vulnerability to weather fluctuations and possible challenges in fully offsetting such impacts.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
EPS | FY 2024 | $2.99–$3.13 | $2.99–$3.06 | lowered |
Long-Term Earnings Growth | Long-Term | 5% to 7% | 5% to 7% | no change |
EPS | FY 2025 | no prior guidance | midpoint of $3.03 | no prior guidance |
Dividend | FY 2025 | no prior guidance | $2.03 per share | no prior guidance |
Capital Expenditure Plans | 2028 | no prior guidance | additional $2B | no prior guidance |
Equity Needs | 2028 | no prior guidance | $1B new common equity, $300M–$350M (2026–2028) | no prior guidance |
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Long-Term EPS Growth and Load Impact
Q: Will higher load growth affect your 5-7% EPS guidance?
A: Management views higher load growth as upside potential to their 5-7% long-term EPS growth guidance. They anticipate that Phase II growth would likely occur in the later years, extending growth opportunities. -
Equity Issuance Plans Through 2028
Q: How should we think about equity needs from '26 onward?
A: The company expects to need about $1 billion of new common equity through 2028 to maintain a strong balance sheet and parent company equity ratio around 40%. This equity is likely to be raised ratably over 2026-2028, roughly $300 million to $350 million per year, potentially using ATMs. -
Impact of Weather on 2024 Guidance
Q: Was the 2024 guidance reduction due to weather headwinds?
A: The reduction is largely due to temperature impacts. The first nine months saw about a $0.10 negative impact from weather, with October adding more. They've offset about 75% of this through cost reductions and other efforts, resulting in a $0.03 decrease from the original midpoint guidance for the year. -
Conservative EPS Growth Outlook
Q: With potential growth, why guide to only 6% EPS growth?
A: Management is being conservative due to timing uncertainties of load growth coming online. They aim to provide accurate forecasts with a clear line of sight. Future updates will be provided as agreements are finalized. -
Potential Upside from Additional Data Centers
Q: Does CapEx include assumptions for other economic deals?
A: Future economic development activities, including data centers, are considered upside to the plan. Success in landing more data centers would increase CapEx and sales, benefiting customer affordability. -
Tax Credit Monetization in Financing Plan
Q: Insights on tax credits in your financing plan?
A: Over the next four years through 2028, the company targets about $1.6 billion to $1.7 billion in tax credit monetization, averaging $300 million to $400 million per year, supported by existing and new renewables and energy storage. -
Use of Junior Subordinated Debt
Q: Will you use junior subordinated debt for equity needs?
A: Management is considering it as a future option and will evaluate different financing opportunities. They don't anticipate needing equity content financing instruments in 2025 but may consider options in the latter half of next year. -
Near-Term Load Growth Expectations
Q: What are near-term load growth assumptions for '25-'26?
A: Near-term load growth is expected to be consistent with historical levels, around 0.5% to 1%, as larger data center loads are anticipated to ramp up starting in 2027. -
Future CapEx Updates Timing
Q: Should we expect CapEx revisions before next Q3?
A: Management is aligning updates with new data center loads and suggests a revision is possible in the first half of next year. -
Resetting Long-Term EPS Growth Base
Q: Is the EPS growth base now the 2024 guidance midpoint?
A: The company uses the current year's information, so the 2024 updated guidance midpoint of $3.03 is the base for long-term growth projections. They remain committed to a solid 6% growth rate. -
Clarification on Load Growth Scenarios
Q: You've reached 1.1 GW; does this rule out the low scenario?
A: Yes, having reached 1.1 GW, the low flat load growth scenario is ruled out. -
Wisconsin Regulatory Filing Plans
Q: Will you file in Wisconsin similar to Iowa's plan?
A: They'll evaluate what's best for each jurisdiction. The Iowa solution is unique, and in Wisconsin, they can file every two years, so a different approach may be appropriate. -
Impact of Weather on 2025 Growth
Q: Will weather impacts reverse in 2025 earnings?
A: They expect to return to normal weather in 2025 but acknowledge that 2024 offsets are non-sustainable. This normalization supports a 6% growth off the $3.03 base in 2025 guidance. -
Earnings Sharing Mechanisms
Q: When will earnings sharing mechanisms be triggered?
A: Higher load growth may trigger earnings sharing mechanisms in the back half of the plan, around 2028 and 2029, as data center loads ramp up.
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