NiSource Inc

2020 NYSource Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to refer your question, press the pound key. Thank you. I would like to turn the conference over to Mr. Nick Drew, Director of Investor Relations and Corporate Finance, so you may begin.

Thank you, Cree. Good morning and welcome to the NightSource Second Quarter 2020 Investor Call. Joining me today are Joe Hamrock, our Chief Executive Officer, Donald Brown, our Chief Financial Officer, Sean Anderson, our Chief Strategy and Risk Officer, and Randy Hewlin, our Vice President of Investor Relations and Treasurer. The purpose of this presentation is to review NightSource's financial performance for the second quarter of 2020 and 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, Donald, Sean, and Randy, 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 factors 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 mysource.com. With all 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. Hopefully, you've all had a chance to read our second quarter earnings release, which was issued earlier this morning. As we did in the release, our plan for this call is to cover topics much broader than just our second quarter results. 2020 is a year of transition for NYSource as we mitigate the financial impacts of the COVID-19 pandemic and complete the sale of Columbia Gas of Massachusetts, and reposition NYSORS for enhanced execution in our key focus areas. While driving our well-established asset modernization and safety enhancement programs and advancing our transition to renewable generation, we have accelerated the initiative to realign our capabilities and cost structure. Together, these efforts are designed to ensure optimal performance as we execute on the significant opportunities in the NYSource business plan. It's an ambitious agenda, so let's turn now to slide three and discuss our key takeaways. As we have all seen, COVID-19 continues to spread and disrupt the global economy. Throughout NYSource, we remain focused on employee and customer safety and providing reliable utility service as we adapt to the pandemic. Our COVID-19 protections for customers and employees, as outlined in our first quarter 2020 earnings release, remain in place. In line with the base case scenario we outlined in late May, we continue to see modest commercial and industrial load impacts due to COVID-19, which are partially offset by increases in residential load. Cost savings and other measures have been implemented that are intended to mitigate these negative impacts on sales. We continue to manage these impacts and will update investors in future quarters. Despite challenges related to the pandemic, we continue to expect to make $1.7 to $1.8 billion in capital investments in 2020. Our planned sale of Columbia Gas of Massachusetts assets to Eversource remains on track for regulatory approval in the third quarter of 2020, with closing targeted shortly thereafter. Last month, NYSource and Eversource filed a joint petition with the Massachusetts Department of Public Utilities seeking approval of the transaction, as well as a proposed settlement with the Attorney General's Office and the Department of Energy Resources, which would resolve all remaining state investigations related to the 2018 Greater Lawrence event. including the DPU's investigations of pipeline safety and emergency response. NYSource has agreed to make a payment of $56 million in lieu of penalties into an energy relief fund for customers. With the Massachusetts transaction closure imminent, we have launched a multi-year strategic initiative intended to better leverage the company's current scale by improving our cost structure and capabilities across the organization. As part of this effort, today we launched a voluntary separation program for certain groups of employees that will be rolled out in waves over the coming months, with the first wave commencing immediately. This initiative, along with the repositioning of executive leadership roles and responsibilities we announced earlier this year, is intended to ensure that our organization is best positioned to drive enhanced focus on safety, renewable energy, operational excellence, and customer value. We are also today initiating non-GAAP net operating earnings per share guidance for 2021 in the range of $1.28 to $1.36. This guidance reflects our expectations about the initial savings we expect to achieve through the cost restructuring and includes the base case scenario impacts of COVID-19. It also establishes the starting point for a long-term plan that will extend through 2024 with an expected compound annual rate-based growth of 10% to 12%. This rate-based growth is expected to drive compound annual earnings per share growth in excess of our previous 5% to 7% annual growth commitment, driven by our renewable portfolio investments and our ongoing modernization programs. We plan to provide more detail around this new long-term growth strategy at our next investor day, which we're planning for September 29th. At Investor Day, which we expect will be a virtual event, we plan to discuss updates on our safety management initiatives, the next stage of our current $1.8 to $1.9 billion annual capital investment in safety and asset modernization programs. We'll also share details about our anticipated incremental capital investment opportunities in the range of $1.8 to $2 billion in across 2022 and 2023 related to our electric generation strategy. This investment represents ownership through joint venture partnerships of approximately half the renewable generation portfolio needed to replace our coal plants retiring by 2023. As we have previously indicated, we expect to retire nearly 80% of our remaining coal-fired generation by 2023 and 100% by 2028. Our replacement plan is designed to reduce our greenhouse gas emissions by an industry-leading 90% by 2030 from a 2005 baseline. And Investor Day will also share progress and additional details on the cost restructuring initiative we announced today. These strategic long-term cost reductions will support our growth strategy and as they are expected to create offsets in future customer bills to allow for our robust capital investments. We'll provide details of our balanced financing plan to fund our robust capital investment plans, and this financing plan will be focused on maintaining our current investment-grade credit ratings. And we'll put all this together to underpin our updated net operating earnings per share growth outlook. We're pleased to preview this outline with you today and we look forward to sharing all the details in September. Back to 2020, we continue to execute on our key priorities, asset modernization and safety enhancements, and our electric generation strategy. We have gas base rate cases pending in Pennsylvania and Maryland, and we received approval of an extension of our long-term gas modernization program in Indiana. In our electric business, We made regulatory filings in Indiana seeking approval of PPAs representing 300 megawatts of new solar generation and 30 megawatts of storage capacity. And commercial negotiations are advancing on build transfer agreements for a significant amount of additional solar capacity. Now I'd like to turn the call over to Donald, who will discuss our financial performance in more detail.