Q4 2024 Earnings Summary
- Positive Progress in Data Center Opportunities: NiSource executives report that discussions and negotiations with potential data center customers have been extremely positive and beneficial, indicating a growing demand that could be accretive to the company's objectives. The reference case in their Integrated Resource Plan (IRP) includes 2,600 megawatts, with an upside case of 8,000 megawatts, showing significant potential for load growth.
- Establishment of NIPSCO GENCO for Higher Returns: The creation of NIPSCO GENCO allows NiSource to operate in areas where they can negotiate with counterparties to obtain returns above and beyond traditional regulated returns. This entity is expected to benefit large load customers, NIPSCO, existing customer base, and developers of projects, while facilitating timely project development. , ,
- Strong Financial Position to Fund Growth Without Equity Dilution: NiSource expresses confidence in financing incremental capital expenditures through outperformance on cash from operations, use of junior subordinated notes, and thoughtful capital allocation, without the need to issue new equity. This financial flexibility supports growth opportunities while maintaining shareholder value. ,
- Delays and uncertainties in starting key projects like the LaPorte facility, as negotiations are still ongoing and no construction has begun. ,
- Dependence on regulatory approvals, such as the GENCO declination application with the Indiana Utility Regulatory Commission, which may face interventions or delays and is not expected to be ruled on until Q3 2025. ,
- Uncertain timing of earnings contributions from new ventures like data center developments and the GENCO entity, with financial benefits potentially not materializing until 2025 or later. ,
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EPS Guidance | FY 2025 | $1.84 to $1.88 | $1.85 to $1.89 per share | raised |
Rate Base Growth | FY 2025 | 8% to 10% rate base growth | Projected at 8% to 10% annually | no change |
FFO to Debt Ratio | FY 2025 | 14% to 16% FFO to debt ratio | Targeted at 14% to 16% | no change |
Capital Expenditure Plan | FY 2025 | Base capital plan of $19.3 billion | $19.4 billion for the 2025-2029 period | raised |
Annual Adjusted EPS Growth Rate | FY 2025 | no prior guidance | 6% to 8% annually | no prior guidance |
Dividend Growth | FY 2025 | no prior guidance | $1.12 per share | no prior guidance |
Customer Bill Impact | FY 2025 | no prior guidance | less than 5% | no prior guidance |
Incremental Investment Opportunities | FY 2025 | no prior guidance | Data center investments and other upside CapEx opportunities are not yet included in the base or upside CapEx plans but are being actively developed | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Adjusted EPS | FY 2024 | $1.70 to $1.74 | 1.61 (sum of Q1 2024 Diluted EPS 0.77, Q2 2024 Diluted EPS 0.18, Q3 2024 Diluted EPS 0.19, Q4 2024 Diluted EPS 0.47) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Data center expansions and load growth | In Q1 and Q2 2024, data center growth was described as a significant opportunity. NiSource cited 2.6 GW (Q2) vs. additional upside constraints, with strong policy support in Indiana. Load forecasts projected up to a 100% increase by 2035. | Reference case of 2,600 MW and upside of 8,000 MW in IRP; positive discussions with potential customers; 2025 focus for deal announcements. | Consistent mentions across periods; continued emphasis on large future growth potential. |
Regulatory approvals and processes | Q1 highlighted NIPSCO Gas rate case settlement and the Pennsylvania rate case filing. Q2 described progress in multiple states (Indiana, Kentucky, Pennsylvania, Virginia) and capital trackers. | Multiple rate case settlements (e.g., Pennsylvania, Kentucky) and universal settlement in Virginia; constructive environment in Indiana. | Ongoing positive developments in multiple jurisdictions, with steady progress. |
Capital investment and potential financial constraints | Q1 referenced a $16.4B base plan, plus $1.6B in upside. Q2 reaffirmed $16.4B for 2023–2028 with potential upside from data centers. | $19.4B base 5-year CapEx fueling 8%-10% rate base growth; $2.2B upside identified. | Growing capital plans, reflecting new opportunities and expanding scope. |
Equity financing needs and shareholder dilution | In Q1, NiSource planned ATM usage for incremental equity. Q2 included $200M–$300M annual equity plus up to $600M in 2024; also issued $500M hybrid notes. | No new equity needed; CFO emphasized cash from operations and multiple financing options to avoid dilution. | Shift from planned issuances to reliance on internal funds, reducing shareholder dilution. |
Economic development | Q1 highlighted Intel in Columbus and manufacturing gains , plus data center potential. Q2 stressed data center projects, job creation, and economic benefits. | Food storage, new industrial customers, and continued data center interest in Northern Indiana, creating job opportunities and system benefits. | Consistent focus; NiSource continues to leverage development for load and community growth. |
NIPSCO GENCO and alternative returns structure | Not mentioned in Q1 or Q2. | Aims for returns above regulated levels, benefiting from direct negotiations with large customers. | New item introduced in Q4, indicating potential higher-return ventures. |
LaPorte facility project | No prior references in Q1 or Q2. | Still under negotiation; no construction yet; framework being finalized. | New topic under development with potential future updates. |
Intel’s investment in Columbus | Mentioned only in Q1 as part of broader Ohio economic development. | Not mentioned in Q4. | No longer mentioned after Q1. |
Pennsylvania rate case | Q1 filing in March 2024, stakeholder engagement. Q2 continued settlement discussions. | Settlement approvals confirm over $300M in incremental investments. | Resolution achieved in Q4, concluding earlier negotiations. |
MISO long-range transmission project costs | Q1 noted potential upside from tranche 1 and 2 but limited detail. Q2 mentioned higher costs than MISO’s initial estimates, not in base plan. | Tranche 2 projects awarded; still scoping final costs and timeline. | Continuing expansions; some cost uncertainty remains. |
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GENCO Returns
Q: Will GENCO deliver higher-than-regulated returns?
A: Management expects the GENCO entity to achieve returns above and beyond traditional regulated returns by negotiating with counterparties, providing additional value to shareholders. -
GENCO Earnings Timing
Q: When will GENCO start contributing to earnings?
A: The GENCO initiative is anticipated to be a 2025 event, with earnings contributions beginning within the 2025–2029 period as contracts are signed and executed. -
Financing CapEx
Q: How will you fund incremental CapEx without new equity?
A: The company plans to finance incremental capital expenditures through operational cash flow outperformance and potentially junior subordinated notes, avoiding the need for additional equity issuance. -
Data Center Deals Timing
Q: When can data center deals be signed?
A: Discussions with data center customers are progressing well, and while management remains optimistic, they maintain that it's a 2025 opportunity, and will announce deals once contracts are signed. -
Customer Demand Post-DeepSeek
Q: Any change in data center demand after DeepSeek event?
A: Management reports no change in customer interest following recent events; in fact, they continue to see increased demand and opportunities for data center projects. -
IURC Approval for Deals
Q: Do you need IURC approval before announcing deals?
A: The company does not need Indiana Utility Regulatory Commission approval to announce deals but requires it to establish the GENCO entity, expecting a ruling by Q3 2025; this does not impede contract negotiations or signing. -
Data Center Load Forecast
Q: Any updates on data center load forecasts?
A: No updates beyond the Integrated Resource Plan, which includes a reference case of 2,600 MW and an upside of 8,000 MW; discussions with potential customers remain very positive. -
Supplying Gas to Data Centers
Q: Are there opportunities in supplying gas to data centers?
A: Management sees benefits in serving data centers through their gas system, noting increased demand that benefits their Columbia companies, particularly in Virginia and possibly Ohio. -
LaPorte Facility Status
Q: What's the status of the LaPorte project?
A: The LaPorte facility does not have construction underway; negotiations with multiple parties continue, and the company is finalizing the framework for progression. -
CapEx Allocation Shifts
Q: Have there been shifts in CapEx allocations?
A: Management states there have been no material shifts in NIPSCO and Columbia spending allocations within the base plan compared to previous disclosures.