NiSource Inc

Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 NYSource Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Nick Drew, Director of Investor Relations. Thank you. Please go ahead.

Thank you. Good morning and welcome to the NYSource First Quarter 2020 Investor Call. Joining me today are Joe Hamrock, our Chief Executive Officer, and Donald Brown, our Chief Financial Officer. The purpose of this presentation is to review NYSource's financial performance for the first quarter of 2020 as well as provide an update on our operations, growth drivers, and financing plans. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available on NYSource.com. Before turning the call over to Joe and Donald, just a quick reminder. Some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A and risk factor sections of our periodic SEC filings. Additionally, some of the statements made on this call relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and segment information, including our full financial schedules, available at NYSource.com. With all of that out of the way, I'd like to turn the call over to Joe.

Thanks, Nick. Good morning, everyone, and thank you for joining us. Before I summarize our performance in the first quarter, I want to take a moment to comment on the current global crisis and to thank our dedicated employees for the critical and tremendously important work they do every day to keep America running in our service areas. This pandemic has highlighted just how critical the NYSource team's work is to the communities we serve. Early on in the crisis, the states we serve designated us as essential service providers, recognizing that we provide an essential service to millions of end user customers across our service area. This also reflects the critical support we provide to the other essential service providers, hospitals, emergency responders, food providers, and key supply chain operators on the front lines of this crisis. Those essential service providers are depending on us and our peers across the utility industry to continue to deliver a safe and uninterrupted supply of gas and electric power so they can continue their critical work. We are deeply grateful for the dedication and selflessness of those on the front lines of this crisis and for the opportunity we have to support their important and life-saving work. We have activated our incident command structure to coordinate strategy, execution, and communication across our seven-state operating area. To protect our employees, we have encouraged all those who can work from home to do so. For those employees who must report to a work location, we have implemented social distancing protocols, temperature checks for people entering critical company buildings, more frequent cleaning of facilities and equipment, and allowing only one person at a time in vehicles while doing our work. Also, certain critical functions have activated sequestration plans to prevent any outbreak among employees in specialized functions necessary to continue providing safe, reliable service to our customers. NYSource's sequestration approach is consistent with others in the utility industry. Across NYSource, we are following health and safety protocols recommended by the Centers for Disease Control and Prevention and federal, state, and local governments. We have taken a number of actions to help customers through the COVID-19 pandemic, including suspending shutoffs for nonpayment until further notice and offering our most flexible payment plans to customers impacted by or facing hardship due to COVID-19. Additional measures the company has taken to protect customers include directing field employees to practice strict social distancing at any customer premise and minimizing nonessential field work that requires entering a customer's home. In March, the NYSource Charitable Foundation committed nearly $1.5 million in donations to provide relief support across our footprint. This included a $1 million donation to the American Red Cross and nearly $500,000 to support operating company initiatives at the local level. These donations are intended to support the delivery of care and comfort to communities in need across our footprint as a result of the COVID-19 public health crisis. While we can't see with perfect clarity how this crisis will play out, we remain confident that we will get through this and will emerge a stronger country and a stronger organization. We are resolute in our dual commitments to deliver essential gas and electric service to our customers and the equally important duty of protecting the health and safety of our 8,400 dedicated employees. Our business plan is resilient and will help us emerge from this event positioned to continue to deliver for all of our stakeholders. Now turning to slide three in our results and key takeaways for the first quarter. Our non-GAAP net operating earnings per share of 76 cents compared to 82 cents per share in the first quarter of 2019. The first quarter of 2020 largely played out prior to COVID reaching crisis proportions in the United States and therefore was minimal pandemic impact on our first quarter results. As we have all seen, the continued spread of COVID-19 has resulted in widespread impacts on the global economy and financial markets and could lead to a prolonged reduction in economic activity, extended disruptions to supply chains and capital markets, and reduced labor availability and productivity. We are continuing to evaluate the range of potential impacts of the pandemic on our business and on future operating results and liquidity. We currently expect to experience decreased sales volumes to commercial and industrial customers and increased bad debt expenses. We may also experience sustained customer attrition. We will continue to manage these impacts and will update you in future quarters as details become known. In order to help mitigate potential impacts on our cash flow, we have lowered our capital plan by $100 million and we now expect to make investments of $1.7 to $1.8 billion in 2020. We also recently took a pair of actions to reduce financing risk and increase liquidity. On April 1st, we refinanced our $850 million term loan with a new maturity date of March 31st, 2021. On April 13th, we issued $1 billion of 3.6% notes due May 1st, 2030. Additionally, the previously announced sale of Columbia Gas of Massachusetts assets to Eversource Energy remains on track to close in the third quarter of 2020 and will provide additional liquidity. We remain committed to maintaining our current investment grade credit ratings. You will recall that we withdrew our non-GAAP earnings guidance in February due to the pending CMA sales transactions. We continue to believe that the long-term growth opportunity for our remaining operating companies is unchanged. We expect to, following the completion of the CMA transaction, initiate 2021 net operating earnings per share guidance and restate a 5% to 7% long-term growth rate for both net operating earnings per share and dividends with 2021 as the base year. This new long-term guidance is expected to be extended beyond 2022 to include incremental investment opportunities related to our electric generation strategy, which continues to advance. While discussions with bidders in our latest RFP are ongoing, we're currently targeting ownership of approximately half the generation portfolio needed to replace our retiring coal plants. This presents incremental capital investment opportunities in 2022 and 2023. With respect to our safety management system implementation, it's important to know that even with our current pandemic response efforts, our broader safety enhancements remain a top priority. SMS continues to mature in our gas business, and in 2020, we have begun to implement SMS in our electric business as well. We are enhancing risk identification through our corrective action program, which is providing valuable analytical insights. We are also piloting the use of mobile gas leak detection technology, and we're enhancing our gas emergency preparedness and response capabilities, including the deployment of new state-of-the-art mobile command centers. Safety remains the foundation of our business. Our safety enhancements are delivering value in multiple ways, including the activation of our enhanced incident command structure to manage through the COVID-19 pandemic. Now I'd like to turn the call over to Donald, who will discuss our financial performance and outlook in more detail. Donald?