NiSource Inc. (NI) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance, with robust EPS growth projections and significant capital investments, particularly in data center projects. The Q&A highlights strategic progress in GenCo negotiations and regulatory support, despite some uncertainty in timelines and details. Dividend growth and a focus on grid modernization further bolster the positive outlook. While management's lack of specificity on certain issues could be seen as a concern, the overall sentiment remains positive, especially with optimistic EPS guidance and strategic partnerships.
Key Financial Performance
Adjusted EPS for Q4 2025 $0.51, a 4.1% increase year-over-year from $0.49 in Q4 2024. The increase was driven by regulatory execution in Indiana, Pennsylvania, and Ohio, partially offset by increased operating and interest expenses.
Full Year Adjusted EPS for 2025 $1.90, an 8.6% increase year-over-year from $1.75 in 2024. This was due to strong financial management, better-than-expected financing costs, outperformance from retail sales, and sound cost management.
FFO to Debt for 2025 16.1%, an increase of 150 basis points year-over-year. This was aided by strong cash flows from capital execution, equity issuances, junior subordinated note issuances, and higher-than-typical cash flow receipts from above-normal weather conditions.
Capital Investment Plan $21 billion over the next 5 years for base utility investment, with an additional $6 billion to $7 billion for the Amazon project at GenCo through 2032. The investments focus on grid modernization, gas infrastructure replacement, safety, and reliability.
Dividend Growth for 2026 7.1% increase compared to 2025, reflecting alignment with earnings growth and maintaining a target payout ratio of 55% to 65%.
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Operating Highlights
Amazon Agreement: NiSource executed an agreement with Amazon, anticipating $1 billion to flow back to NIPSCO customers, equating to an estimated $7 to $9 per customer per month upon Amazon's full ramp.
Smart Meters and Leak Detection: Installed over 545,000 smart meters and surveyed more than 41,000 miles of pipelines with advanced mobile leak detection technology, exceeding targets and enhancing system reliability.
Data Center Expansion: Engaged in approximately 2 dozen active data center projects in Virginia and advancing gas infrastructure opportunities to support customer needs.
Economic Development in Indiana: Supported over 140 active projects across the service territory, including the Amazon project, with zoning application approvals and ongoing regulatory engagements.
Safety and Reliability: Maintained ISO 55001 and API 1173 certifications, installed smart meters, and leveraged AI and analytics to improve productivity and system reliability.
Cost Management: Flat O&M objective across the platform, targeting annual bill increases below 5% while investing $28 billion over the next 5 years.
Regulatory Advancements: Secured approvals in Pennsylvania and Ohio to improve ratemaking and reduce regulatory lag, and engaged with IURC for generation transition and economic development initiatives.
Capital Strategy: Planned $21 billion of base utility investment over the next 5 years, with an additional $6 billion to $7 billion for the Amazon project through 2032.
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Risk or Challenges
Regulatory Risks: Potential delays or unfavorable outcomes in regulatory approvals, such as the pending IURC decision on the Amazon contract and compliance with federal orders to extend coal plant operations, could impact financial and operational plans.
Economic and Market Risks: Economic uncertainties, including modest customer growth of less than 1% and reliance on conservative financing assumptions, could affect revenue and financial stability.
Operational Risks: Challenges in maintaining flat O&M costs while funding cybersecurity improvements, leak detection, and other safety initiatives could strain resources. Additionally, weather-related impacts, such as severe storms, could disrupt operations and financial performance.
Strategic Execution Risks: Execution risks associated with large-scale projects like the Amazon data center initiative and grid modernization efforts could lead to cost overruns or delays, impacting financial outcomes.
Supply Chain and Resource Risks: Dependence on low-cost gas storage and advanced metering infrastructure may face disruptions or cost increases, affecting customer affordability and operational reliability.
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Guidance & Outlook
Revenue Expectations: NiSource reaffirmed its 2026 consolidated adjusted EPS guidance of $2.02 to $2.07, representing approximately 8% year-over-year growth compared to 2025. The company expects a compound annual growth rate of 8% to 9% through 2033.
Capital Expenditures: The company plans to invest approximately $28 billion over the next 5 years to modernize and maintain infrastructure, with an additional $6 billion to $7 billion allocated to the Amazon project through 2032. There is also $2 billion of upside capital investments for utility operations.
Market Trends and Business Segment Performance: NiSource is advancing its data center initiative, including the Amazon project, with a robust pipeline of 1 to 3 gigawatts of new capacity under negotiation and up to 3 gigawatts of further development opportunities. The company is also focusing on economic development projects in Indiana and Virginia, including data center growth and onshoring of manufacturing.
Operational Changes: The company is targeting annual bill increases below 5% across its territories while maintaining flat O&M costs over the plan horizon. It is also leveraging AI and analytics to improve productivity and expanding its work management intelligence system into supply chain and reliability functions.
Regulatory Developments: NiSource expects improved regulatory support in Ohio and is awaiting a decision on its contract with Amazon from the IURC in the first half of 2026. The company is also monitoring developments related to EPA reliability regulations and MISO accreditation changes.
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Shareholder Return Plan
Dividend Growth: In January, the Board approved a 7.1% increase in the dividend for 2026 compared to 2025, reflecting a commitment to aligning dividend growth with earnings growth and maintaining a target payout ratio of 55% to 65%.
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Key Q&A
Q:What progress has been made on the 3 gigawatts of strategic negotiations for GenCo, and what should investors look for?
A:The GenCo order received last September positions NiSource to grow its data center load business. A dedicated team under Michael Luhrs is focused on executing this opportunity. Discussions with counterparties are progressing well, and investments in long lead time equipment are being made to ensure timely delivery. Future transactions are expected to be faster due to better focus and processes.
Q:What is the strategy for Pennsylvania rate cases?
A:NiSource is not planning a new rate case in Pennsylvania currently, as the last rate case concluded in December with a $55 million revenue increase at a 10% ROE. The company is working on a regulatory solution to address the frequency of rate cases but has no new updates.
Q:Is the next GenCo deal contingent on receiving IURC approval for the Amazon contract?
A:No, the next GenCo deal is not dependent on IURC approval of the Amazon contract. The company is working on a portfolio of customers, but no specific timeline for announcements has been provided.
Q:What is the timing for the NIPSCO gas rate case filing?
A:No determination has been made to file a NIPSCO gas rate case this year. The company is still considering its options.
Q:What is the scale of opportunities for GenCo contracts, and has the pace of discussions increased?
A:The scale of opportunities ranges from 1 to 3 gigawatts, involving a portfolio of customers with varying sizes and shapes. The pace of discussions and organizational speed has increased, and the company is confident in its ability to execute its strategy.
Q:What is the significance of Senate Bill 103 for large load customer opportunities in Ohio?
A:Senate Bill 103 could optimize regulatory strategy, minimize regulatory lag, and provide tighter capital recovery timelines. However, no upside from this has been incorporated into the Columbia Gas of Ohio forecast yet, but it could be added later this year.
Q:What is the status of House Bill 1002 in Indiana, and its potential impact?
A:House Bill 1002 is currently in Senate Appropriations and may not pass before the session ends on March 15. The bill includes multiyear rate plans, performance-based components, mandatory budget billing with an opt-out, and funding for a low-income plan. NiSource supports the bill and believes it will be beneficial.
Q:Does the high end of the GenCo range reflect Amazon's full ramp, and what factors influence this range?
A:The high end of the GenCo range reflects various scenarios, including financing costs and construction timelines. Faster construction reduces financing costs and positions the company higher in the range, while slower timelines increase costs and lower the position. Incremental customers or timeline changes could represent upsides.
Q:What are the plans for the Schahfer plant?
A:The Schahfer plant received a 202 order in December and was initially planned for retirement. It will now operate based on MISO demand and availability. Environmental constraints may limit long-term operation, but the company is prepared to comply with orders and operate the plant reliably.
Q:What is the status of gas and electric coordination across NiSource's jurisdictions?
A:Coordination between gas and electric is improving across the U.S., with tighter processes being developed for reliability and resilience. NiSource is actively involved in these efforts through the GEAR task force.
Q:How will NiSource report GenCo's financials in the future?
A:GenCo will be reported as a separate segment when it becomes more material to NiSource's operations, likely starting with 2026 fiscal results. The exact timing and level of detail in the financial reporting have not been disclosed.
Q:Review of Unclear Management Responses
A:Management avoided providing specific timelines for the next GenCo deal and the NIPSCO gas rate case filing. They also did not disclose the size and scale of future GenCo contracts or the exact financial reporting details for GenCo. Additionally, they provided limited details on the impact of Senate Bill 103 and House Bill 1002, as well as the long-term plans for the Schahfer plant.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
API certification
Amazon IURC
Amazon commitment
Amazon contract
Amazon project
Amazon ramp
Durgesh
Lloyd
Officer Executive
President Investor
Slide NiSource
Today NiSource
agenda
agreement Amazon
approval
bill impact
bill increase
coal plant
cost recovery
customer affordability
customer bill
footprint
framework
investment system
lag
legislation
milestone
month
pipeline
platform
rate design
recovery investment
reliability bill
safety reliability
scale
state level
support
territory
winter storm
NI Transcript
NiSource Inc. (NI) Q4 2025 Earnings Call Transcript
Positive2-11
The earnings call reveals strong financial performance, with robust EPS growth projections and significant capital investments, particularly in data center projects. The Q&A highlights strategic progress in GenCo negotiations and regulatory support, despite some uncertainty in timelines and details. Dividend growth and a focus on grid modernization further bolster the positive outlook. While management's lack of specificity on certain issues could be seen as a concern, the overall sentiment remains positive, especially with optimistic EPS guidance and strategic partnerships.
NiSource Inc. (NI) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call highlights a narrowed EPS guidance within the upper range, indicating strong financial performance. The $19.4 billion capital plan and $2 billion in incremental projects suggest robust growth potential. Positive customer growth and economic trends in service territories, along with a strong credit profile, bolster financial health. While the Q&A revealed some management evasiveness on specifics, overall confidence in strategic execution and supportive partnerships like Blackstone's contribute to a positive outlook. These factors collectively suggest a positive stock price movement in the short term.
NiSource Inc. (NI) Q2 2025 Earnings Call Transcript
Positive8-6
The earnings call summary indicates strong financial performance, with significant capital investments and a clear growth strategy. The Q&A section shows management's confidence in achieving its goals and handling challenges, although some responses lacked specificity. The reaffirmation of EPS guidance, customer growth, and strategic initiatives like AI integration and data center development are positive indicators. Despite some uncertainties, the overall sentiment is positive, suggesting a likely stock price increase in the short term.
NiSource Inc. (NI) Q1 2025 Earnings Call Transcript
Positive5-7
NiSource's earnings call reflects a positive sentiment due to several factors: a 15% increase in adjusted EPS, a raised 2025 EPS guidance, and a dividend increase. The company is also pursuing data center opportunities and has a strategic plan for capital investments. While there are concerns about inflationary risks and competitive pressures, the overall outlook remains optimistic. The Q&A session did not reveal significant negative trends, and the company's commitment to shareholder returns and financial health supports a positive stock price reaction.
NI Slides
NI Report
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