nisource fy 2012 earnings powerpoint presentation
DESCRIPTION
A presentation used during the Feb 19, 2013 earnings phone call to present relevant details about NiSource's 2012 results, and to forecast plans for 2013 and beyond.TRANSCRIPT
Supplemental Slides
2012 Earnings
February 19, 2013
This document contains forward-looking statements within the meaning of federal securities laws. These forward-looking
statements are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from
the projections, forecasts, estimates and expectations discussed herein include, among other things, weather; fluctuations in
supply and demand for energy commodities; growth opportunities for NiSource's businesses; increased competition in
deregulated energy markets; the success of regulatory and commercial initiatives; dealings with third parties over whom
NiSource has no control; actual operating experience of NiSource’s assets; the regulatory process; regulatory and legislative
changes; the impact of new environmental laws and regulations; the results of material litigation; changes in pension funding
requirements; changes in general economic, capital and commodity market conditions; counter-party credit risk; and the
matters set forth in the “Risk Factors” sections in NiSource’s most recent Form 10-K and subsequent Forms 10-Q, many of
which are beyond the control of NiSource. Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this presentation. NiSource expressly disclaims a duty to update any of the
forward-looking statements contained in this document.
With regard to Net Operating Earnings Guidance for 2013 – it should be noted that there will likely be differences between net
operating earnings and GAAP earnings for matters including, but not limited to, weather, and other factors. NiSource is not able
to estimate the impact of such items on GAAP earnings and, as such, is not providing earnings guidance on a GAAP basis.
2
Forward-Looking Statements
2
* Net Operating Earnings from Continuing Operations (non-GAAP); For a Reconciliation to GAAP, See Schedule 1 of the Company’s Feb. 19, 2013 Earnings Release
2012 Key Takeaways
• 2012 financial results squarely in line with earnings guidance
– 2012 EPS: $1.46 per share*
– 2012 total shareholder return: 8.5%
• Solid execution of infrastructure-focused capital investments
• Landmark pipeline modernization settlement achieved
• Deep infrastructure investment inventory identified
– $25B-$30B investment opportunity: $1.5B-$1.8B targeted annual capital spend
– 5-7% annual earnings growth
– 3-5% annual dividend growth
• Financial foundation, discipline to support enhanced growth plan
Building Long-Term, Sustainable Growth
3
Established Track Record of Execution & Performance
2012* 2011* Change*
Income from Continuing Operations $410.6 $294.8 $115.8
Earnings Per Share $1.41 $1.05 $0.36
Operating Income $1,042.7 $890.1 $152.6
GAAP
Non-GAAP
* All Results Listed In Millions, Except for EPS; For a Reconciliation to GAAP, See Schedule 1 of the Company’s Feb. 19, 2013 Earnings Release
2012* 2011* Change*
Net Operating Earnings
from Continuing Operations $427.2 $368.8 $58.4
Net Operating Earnings Per Share $1.46 $1.32 $0.14
Operating Earnings $1,071.4 $946.3 $125.1
2012 Financial Highlights
Total Shareholder Return Outperforms Utility Indices For Fourth Consecutive Year
4
Financial Results Squarely in Line with 2012 Earnings Guidance
• Operating earnings $398M in 2012 vs. $360M in 2011*
• Landmark customer modernization settlement achieved
• Several growth projects placed into service; many others advance
• Midstream’s ~$160M, 425 MMcf per day Big Pine Gathering System to be in service by April 2013
• 2013 capital investment projected at ~$700M – includes modernization investment
Project Key Components Status
Pipeline Modernization • 5-year initial settlement term
• $1.5B investment during initial settlement term
• $100M annual maintenance investment
• Part of $4B+ program
• Approved by FERC
• Projects initiated
Pennant Midstream, LLC
50/50 Joint Venture with Hilcorp
• Gathering and processing facilities serving Utica region
• 400 million cubic feet/day gathering; 200 million cubic feet/day
processing
• ~$300M initial joint venture investment (gross)
• Project on schedule and on budget
• Projected in-service 2H 2013
Hilcorp Utica Minerals Arrangement • ~100K combined acres
• Acreage dedicated to Pennant Midstream
• A working and overriding royalty interest in program
• Test wells drilled in 2012; liquids content
consistent with other area wells
Planned growth, modernization and
midstream investments
• Significant and growing inventory of projects outlined
• Primarily focused on capturing market- and supply-driven
growth opportunities
• Complete project update outlined in appendix
* Non-GAAP. For a Reconciliation to GAAP, See Schedule 2 of the Company’s Feb. 19, 2013 Earnings Release
Looking Ahead:
NiSource Gas Transmission & Storage – 2012
Highlights Continued Growth, Modernization, Midstream and Minerals Progress
5
Modernization Settlement Provides Long-Term Stakeholder Benefits
• Operating earnings $238M in 2012 vs. $202M in 2011*
• Environmental investments continue to advance
• Electric transmission projects approved and moving forward
• 2013 capital investment projected at ~$435M, focused primarily on environmental and reliability investments
Highlight Key Components Status
Electric Generating Plant
Environmental Investments
• $800M+ in total environmental investments
• Schahfer Flue Gas Desulfurization (FGD) investments: Units 14 & 15
• Michigan City FGD: Unit 12
• Enhanced mercury and particulate controls
• Schahfer construction on
schedule, on budget
• Michigan City FGD approved;
planning and engineering in
progress
Electric Transmission System
Enhancement – Reynolds to
Topeka Project
• 100-mile, 345-KV transmission project
• $250M-$300M investment
• Projected in-service latter part of decade
• First public outreach meetings
completed in early February 2013
Electric Transmission System
Enhancement – Reynolds to
Greentown (Joint Project)
• 66-mile, 765-KV transmission project
• $300M-$400M investment (NIPSCO portion $150M - $200M)
• Projected in-service latter part of decade
• Preliminary planning in progress
Long-term Infrastructure
Investments
• Environmental investments to upgrade generation fleet: $700M -
$1.4B opportunity
• Electric transmission system improvements: $500M - $1B opportunity
• Modernize electric infrastructure: $3B - $4B opportunity
• Complete program update
outlined in appendix
* Non-GAAP. For a Reconciliation to GAAP, See Schedule 2 of the Company’s Feb. 19, 2013 Earnings Release
Electric Operations – 2012 Highlights
A Deep Inventory of Long-Term Investment Opportunities
Continuing to Deliver on Core Customer, Reliability and Environmental Initiatives
Looking Ahead:
6
Highlight Key Components Status
Columbia Gas of Pennsylvania
Base Rate Case
• Filed Sept. 28, 2012
• Settlement in principle reached with parties on Feb. 8, 2013
• Filed case reflects a fully projected test year and
infrastructure investment recovery mechanism for
investments through mid-2014
• Filed case requested an annual revenue increase of $77
million
• Settlement to be submitted for
approval to the PUC on or before
March 18, 2013
• Rates projected to be in effect in July
2013
Columbia Gas of Pennsylvania
Base DISC Filing
• Distribution System Improvement Charge (DSIC) filing to
capture infrastructure investments from the later part of
2012
• Decision expected Q1 2013
Infrastructure
Modernization
• Expanded ~$10B long-term program across service territory • Complete program update outlined in
appendix
• Operating earnings $441M in 2012 vs. $425M in 2011*
• Revenues up $37M, reflecting regulatory and infrastructure programs**
• Columbia Gas of Massachusetts base rate case decision issued Nov. 30, 2012
• 2013 capital investment projected at ~$655M – includes ~$475M in growth and tracked investment
* Non-GAAP. For a Reconciliation to GAAP, See Schedule 2 of the Company’s Feb. 19, 2013 Earnings Release ** Revenues Exclude Trackers
NiSource Gas Distribution – 2012 Highlights
Long-Term Infrastructure Investments, Customer Programs & Regulatory Initiatives
A Growing Investment Inventory
Looking Ahead
7
* Net Operating Earnings Per Share from Continuing Operations (non-GAAP)
Key Takeaways for 2013
• Sustainable long-term growth
– 2013 EPS guidance: $1.50 to $1.60 per share*
– Mid-point represents 6% growth over 2012 EPS
• Enhanced $1.8B capital investment program
• Deep, balanced infrastructure investment inventory across all
business units
• Balanced, transparent approach to funding capital requirements
• Unwavering commitment to investment-grade credit, strong liquidity
NiSource: A Compelling Investment
8
Solid Long-Term Trajectory to Grow Earnings, Increase Shareholder Value
Appendix
2012 Earnings
February 19, 2013
2012 to 2013 Earnings Per Share (Non-GAAP)
$1.50-$1.60*
2013 EPS Guidance Range $1.50 - $1.60*
* Projected Net Operating Earnings from Continuing Operations (non-GAAP)
$1.46
$0.20
$0.15 ($0.11) ($0.08)
($0.05) ($0.02)
2012Actual
RegulatoryInitiatives
GrowthInitiatives
Interest/Taxes/Depreciation
2010 EquityForward
Administrative/Uncollectibles/
Other
Insurance 2013Guidance
10
Capital Expenditures ($M)
2012 Actual & 2013 Forecasted CapEx
2013 Growth & Tracker ~$1,325M (73%) and Age & Condition ~$490M (27%)
$649 $655
$423 $434
$490
$698
$23
$28
2012 2013
Gas Distribution Electric Gas Transmission and Storage Corporate
$1,815
$1,585
11
Capitalization ($M)
Debt Equity Total Debt Equity Total
Long-Term Debt $ 6,819.1 $ - $ 6,819.1 $ 6,267.1 $ - $ 6,267.1
Short-Term Debt 543.6 - 543.6 1,127.7 - 1,127.7
Sale of A/R 233.3 - 233.3 231.7 - 231.7
Current Maturities 507.2 - 507.2 327.3 - 327.3
Common Equity - 5,554.3 5,554.3 - 4,997.3 4,997.3
Total Capitalization
Per Balance Sheet $ 8,103.2 $ 5,554.3 $13,657.5 $ 7,953.8 $ 4,997.3 $12,951.1
% of Capitalization Per
Balance Sheet 59.3% 40.7% 100.0% 61.4% 38.6% 100.0%
Actual 12/31/2012 Actual 12/31/2011
Total Debt to Capitalization 59.3% as of 12/31/12
12
Current Liquidity ($M)
Actual 12/31/12 Maturity
Committed Credit Facility $ 1,500 May 2017
Less:
Drawn on Credit Facility (44)
Commercial Paper (500)
Letters of Credit (18)
Add:
Cash & Equivalents 36
Net Available Liquidity $ 974
13
2013 Sources & Uses ($M)*
$1,286
$1,815
$1,050
$488
$154 $304 $121
$69 $48 $17
2013 Sources 2013 Uses
FFO CapExLT Financing MaturitiesST Financing DividendsProceeds from Sale of Assets Working CapitalDRIP, 401(k) and ESPP Column3Restricted Cash
$2,676 $2,676
* Projected
14
Complete
In Execution
In Development
In Evaluation
Columbia Gas of
Massachusetts
Completed 2012 rate case in November. Order resulted in $8M annual
Revenue increase and enhancement of Infrastructure Program.
Columbia Gas of
Pennsylvania – Rate Case
Requested
Increase: $77M
Filed: 9/2012
Effective: 2Q/2013
First rate case filed under the new Act 11 legislation, case supports ongoing
infrastructure program in PA with forward test year ending 2Q/2014. Reached
a unanimous settlement in principle in Feb. 2013 – expected to be filed with
the PUC in March 2013.
Columbia Gas of
Pennsylvania – DSIC Filing
Requested
Tracker: ~$1M/Qtr
Filed: 1/2013
Effective: 1Q/2013
Distribution System Improvement Charge (DSIC) filing to capture
infrastructure investments from the later part of 2012
NGD Infrastructure Investment Update
Annual Investment
Columbia Gas of
Ohio $150M - $200M 20+ Years
Tracked: Execution of established Infrastructure Replacement Program (IRP);
annual tracker filings with 5-year program renewal (next renewal 2017)
Columbia Gas of
Pennsylvania $100M - $150M 20+ Years
Rate Case/Tracked: Execution of established Infrastructure Replacement
Program; current recovery utilizes forward test year rate case filings
supplemented by periodic DSIC filings under Act 11
Columbia Gas of
Massachusetts $25M - $50M 20+ Years
Tracked: Execution of established Infrastructure Replacement Program; annual
tracker filings, program approved in 2009 and expanded in 2012 rate case
Columbia Gas of
Virginia $20M - $35M 20+ Years
Tracked: Execution of established Infrastructure Replacement Program; annual
tracker filings with 5-year program renewal (next renewal 2017)
Columbia Gas of
Kentucky $10M - $15M 20+ Years
Tracked: Execution of established Infrastructure Replacement Program with
annual tracker filings
Columbia Gas of
Maryland $5M - $10M 20+ Years
Rate Case/Tracked: Execution of established Infrastructure Replacement
Program; rate case filings with make whole filings for up to three subsequent
years
NIPSCO - Gas TBD TBD
Relatively modern gas system, with some opportunity for replacement of aging
infrastructure to improve reliability and system integrity (currently working to
establish DSIC type legislation under SB 560)
Modernize Infrastructure ($10B+ Opportunity)
4
4
3
3
2
2 1
1
5
6
5
6
Current Regulatory Activity
10
9
7
7
8
8
9 10
15
NIPSCO Electric
Distribution Modernization TBD TBD
Systematic replacement of aging infrastructure to improve reliability
and system integrity (currently working to establish DSIC type
legislation under SB 560)
Reynolds-Topeka $250M - $300M Later part of Decade
MISO MVP: FERC approved 345Kv transmission project from Reynolds
Substation to Hiple Substation (100 miles) – final route not determined
Transmission
Project II $300M - 400M
(NI: $150M – $200M) Later part of Decade
MISO MVP – partnership: FERC approved 765Kv transmission project
from Reynolds Substation to Greentown Substation (66 miles) – final
route not determined
U14/15 FGDs ~$500M YE’13/YE‘14
Environmental: ECRM (Environmental Cost Recovery
Mechanism)Tracked FGD (Flue Gas Desulfurization) facilities at Schahfer
Generating Station
U12 FGD ~$240M YE’15
Environmental: ECRM Tracked FGD facilities at Michigan City Generating
Station
NOx Upgrades ~$50M YE’15
Environmental: ECRM Tracked NOx upgrades and monitoring
MATS $30M - $65M YE’13/YE’14/YE’15
Environmental: ECRM Tracked projects enhancing mercury and
particulate controls at all coal plants
Water Treatment $25M - $100M YE’17/YE’18
Environmental: S.B. 251 Tracked projects enhancing wastewater
treatment at all coal plants and water intake modifications at Bailly Station
Fly Ash
Improvements $100M - $300M TBD
Environmental: S.B. 251 Tracked projects upgrading ash handling and
disposal at all coal plants
Electric Operations Infrastructure Investment Update
4
2
1
3,4
3,4
5
Upgrade Generation Fleet ($700M - $1.4B Opportunity)
6
Enhance Transmission System ($500M - $1.0B Opportunity) Modernize Infrastructure
($3B - $4B Opportunity)
8
7
8
7
Complete
In Execution
In Development
In Evaluation
5,6
3
5,6
5,6
1
2
3,4
16
NGT&S Regulated Pipeline & Storage Growth Update
Line WB $14M 2Q ’12
Marcellus: Compression – between Loudon, VA & Leach, KY (175 MMcf/Day)
Smithfield $14M 2Q ’12
Marcellus: Pipeline and compression modifications – near Smithfield, WV &
Waynesburg, PA (150 MMcf/Day)
Rimersburg $8M 2Q ’12
Marcellus: Pipeline expansion – North Central PA (19 MMcf/Day)
Millennium ~$85M (NI: $40M) 2Q ’13
Marcellus: Deliver Marcellus supplies to multiple markets with expanded
compression at Minisink (150 MMcf/Day) and Hancock(150 MMcf/Day)
Warren County $35M 2Q ’14
Gas Generation: Expansion to serve Virginia Power’s new 1,300 MW plant (250
MMcf/Day)
West Side $200M 4Q ’14
Marcellus: Transport supply to growing Southeast Markets (~500 MMcf/Day)
East Side ~$210M 3Q ’15
Marcellus: Connect northern Marcellus supplies to Northeast and Mid-Atlantic
Markets (~300 MMcf/Day)
Quick Link ~$300M 2Q ’16
Utica: ~90 Miles of processed gas transportation in East Ohio (~500 MMcf/Day)
LNG Exports $200M - +$1B 2017+
Marcellus/Utica: Aggregate and deliver supplies to LNG export terminals on
Atlantic and Gulf Coasts (400 MMcf/Day to 1.6 Bcf/Day)
Columbia Gas Modernization $300M/Yr Starting ‘13
FERC approved (1/2013) - 5 Year settlement agreement (with
potential extension provisions) to begin a systematic infrastructure
replacement program
$3B-$4B Opportunity
$4B-$5B Opportunity
1
2
3
4
5
6
8
7
1
2
3
4
5
6
7
8
Complete
In Execution
In Development
In Evaluation
9
9
9 17
NGT&S Midstream & Minerals Growth Update
Majorsville $85M 3Q ’10
Marcellus: Gather wet Marcellus gas to processing facility
and provide downstream pipeline market access with
additional pipeline and compression assets
(325 MMcf/Day)
Big Pine
Gathering $160M 2Q ’13
Marcellus: ~70 Miles of Pipeline with multiple interstate
connections (425 MMcf/Day)
Pennant JV
Phase I $300M (NI = $150M) 2H ’13
Utica: ~50 Miles of Pipeline (400 MMcf/Day) and an NGL
processing facility (200 MMcf/Day)
Pennant JV
Phase II $300M (NI = $150M) TBD
Utica: Pipeline Extension and Additional Processing
Utica Minerals
Arrangement
Drilling Started
2H ‘12
Utica: Joint development with Hilcorp to extract value
of ~100k acres of mineral rights – acreage dedicated to
Pennant
Potential Minerals
Opportunities Under Evaluation
Utica: Optimize minerals position in shale region to
leverage downstream infrastructure opportunities
$1B-$1.5B Opportunity
Self-Funded Investment
Complete
In Execution
In Development
In Evaluation
10
11
12
14
14
10
11
12
18
13
13
Key Path Forward Markers
2012 Completed
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
Liq
uid
ity
Equity Issuance: $400M (Issued 24M Shares)
LT Debt Issuances: $500M & $250M(6/2012)
Maturities: $420M(3/2013) & $500M(7/2014)
DRIP: ~$45M/year
Ga
s
Dis
tribu
tion
Columbia Gas of MA – Rate Case
Columbia Gas of PA – Rate Case (Settlement / Effective)
Infrastructure Replacement Programs (~$350M/year)
Ele
ctric
NIPSCO – FGD’s: U14, U15, U12 (Construction/FGD U14 In-Service )
Infrastructure Replacement Program (IN - SB560) (Introduction / Legislative Session Ends)
MISO Transmission Improvement Project (Engineering / Planning / Construction)
GT
&S
Line WB Expansion (In-Service)
Rimersburg Expansion (In-Service)
Smithfield Project (In-Service)
Utica Minerals Arrangement (Agreement / Execution)
Pennant JV – Phase I (Agreement / In-Service)
Big Pine Gathering (In-Service)
VEPCO Power Plant Transportation Project (In-Service)
Millennium Pipeline – Minisink & Hancock Expanded Compression (In-Service)
Columbia Gas Modernization (FERC Approval / Execution)
West Side Expansion (In-Service)
East Side Expansion (In-Service 3Q 2015)