NiSource Inc

Lloyd Yates, Executive Vice President and Chief Financial Officer, Sean Anderson, Executive Vice President of Strategy and Risk and Chief Commercial Officer, Michael Luers, and Executive Vice President and Group President, NYSource Utilities, Melody Birmingham. The purpose of this presentation is to review NYSource's financial performance for the fourth quarter of 2024, as well as provide an update on our operations and growth drivers. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available in the investor relations section of our website. We would like to remind you that 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 risk factors and MD&A sections of our periodic SEC filings. Additionally, some of the statements made on this call relate to non-GAAP measures. Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures. I'd now like to turn the call over to Lloyd.

Thank you, Chris, and good morning, everyone. I'll begin on slide three. The NYSource investment thesis is simple. We serve our customers by delivering safe and reliable energy at an affordable value. Affordable energy requires efficient capital deployment, safe asset operations, and constructive regulatory recovery mechanisms. These fundamentals generate competitive returns while enhancing our balance sheet position. Importantly, these are the foundation of the NYSource business plan, which continues to offer compelling value to stakeholders. driven by regulated utility operations across six highly constructive jurisdictions, offering diversification across fuel type and regulatory location. Before we cover our standard business updates, I wanted to begin this call by recapping a tremendously successful year for the NYSource team. We often talk about the key principles to our success, namely building a constructive regulatory foundation operating with excellence across our six jurisdictions executing and delivering on the financial commitments we make and growing our investment proposition by investing in capital expenditures which enhance value for our communities as i look back across 2024 I'm proud to share that the NYSource team has delivered on its business plan with these principles top of mind as we focus on enhancing our value proposition for customers and shareholders alike. Being a trusted energy partner is a priority and we believe differentiates us from our peer regulated utilities. We remain engaged with stakeholders in our communities to recover costs associated with capital expenditures deployed to deliver safe, and reliable energy services to our region. We build credibility through rate case and tracker filings by utilizing a stakeholder-focused mindset as we approach these processes. Over the last 24 months, the NYSORS team has invested $6.9 billion in CapEx across the six-state region to support reliability of its systems and maintain alignment with the compliance expectations of our regulators. Our regulatory processes approve recovery of $340 million in revenue in 2024 to return the capital associated with these investments. But critically, the stakeholder outreach to match the recovery of these revenues with the investments being made were developed years prior as our teams are active with stakeholders to detail the changes to the energy landscape and underpin the investment thesis for these capital plans. Melody will touch on some key highlights to these plans from fourth quarter. However, for our team at NYSource, this never stops in our relentless pursuit of delivering safe, reliable energy to our customers. Speaking of reliability, throughout 2024, we advanced our operational excellence mission by intentionally focusing on risk reduction and value-enhancing activities across the organization. Our safety metrics continue to improve through our industry-recognized safety management system framework. A new initiative utilizing artificial intelligence launched by our data and analytics team is reducing early wins to drive efficiency and enhance the way we work to support our customers. Supporting our regulatory and stakeholder relationships and operating with excellence for our communities paves the way for the NYSource team to deliver on the financial results we have committed to our shareholders. I am proud to report our adjusted EPS result of $1.75 per share for 2024, exceeding the top end of both our original and updated guideline ranges. This results in a year-over-year increase in adjusted EPS for 2024 of 9.4% versus 2023. Further, the nature of our business plan enables these returns to flow through all subsequent years as we base each year off a 6% to 8% annual growth rate. This results in a raise of our 2025 adjusted EPS guidance to $1.85 to $1.89 per share consistent with the 6% to 8% growth outlook off of the actual results achieved. But as I said, these results are not sustainable if we are not focused on business development well into the future. Our teams are hard at work at developing new prospects for investment to deliver greater value to our customers for the energy they consume. Our 2025 to 2029 base capital plan is $19.4 billion, increasing nominally due to increased economic development across our gas businesses in Virginia and Indiana, which Melody will highlight in a moment. These investments drive 8% to 10% rate-based growth over the 2025 to 2029 period, which fuels our ability to continue to increase our adjusted earnings per share growth rate by six to eight percent annually our work does not stop with the base capital plan we are fortunate to have a robust portfolio of valuable customer investments which could be added to and extend far beyond our five-year plan horizon which sean will detail later our teams remain active in developing this portfolio of projects meet our standards necessary to be included in our base plan this includes our near-term visible investments in the upside plan which is now 2.2 billion dollars an increase of 400 million dollars since our third quarter call but none of these plans include the important development work our team is engaged in upon to support economic development efforts by the state of indiana to locate data center operations in the region I previously highlighted the compelling fundamentals of Northern Indiana, which are attractive to potential data center customers. Access to critical infrastructure, including a robust transmission system and proximity to critical fiber connections. Predictable climate and weather with low natural catastrophe risk and a constructive business climate, including favorable tax structures, available land, and a supportive state government are all favorable factors in advancing development of data centers in the region. Our team remains actively engaged in working with potential customers to develop data center solutions which is guided by four main principles. One, protect existing system customers. Two, serve new customers with speed and flexibility. maintain NIPSCO's financial integrity through thoughtful capital allocation and a reasonable return proposition. And four, preserve flexibility in our business. In January, NIPSCO filed a declination petition with the IURC related to the ownership and operation of energy facilities. This administrative filing will set up NIPSCO Genco as a regulated entity and as a step in NIPSCO's effort to set a framework to serve large load customers. The application requests the IURC to establish NIPSCO Genco as a regulated energy utility, but to decline to exercise some of the IURC's jurisdiction because NIPSCO Genco will not have retail customers and will instead enter into contracts to provide energy and capacity to NIPSCO who will then directly serve large low customers our teams are working to evaluate this build out which could provide benefits to our existing system customers enhance our communities and local tax base and provide compelling investment opportunities for our shareholders northern Indiana is the premier location for data centers to locate simply put there's potential for substantial value creation for all stakeholders and checking all these boxes is important to nicehorse slide 5 provides more detail on our operational excellence vision our data and analytics team began implementing early use cases in 2023 and have improved data transparency and democratized actionable insights throughout the organization Our work management intelligence process is one example. It is an ensemble of advanced AI models that include forecasting shift availability and work volume, a job duration predictive model, and schedule optimizer to automatically generate more accurate weekly schedules. Since implementing this process in the middle of the year in Ohio, work productivity has increased 16% versus the same period in 2023, measured through work hours achieved. Less idle time, less rework, and an overall better plan and schedule. The Apollo continuous improvement program closed out its second year with really strong results. The team exceeded internal expectations with $77 million in O&M savings, along with many efficiency initiatives to reduce waste and workforce constraints. For example, the locating risk model initiative originally implemented in 2023 safely reduced spend by $13 million through enhancing risk model marking and turn back processes. The job site scouting initiative and standardized scheduling process eliminated unnecessary truck roles in the field and improved efficiency, allowing for an additional $6 million of field work across both 2023 and 2024. in 2024 we once again significantly improved occupational safety performance with an eight percent year-over-year reduction in ocean recordable incident rate and a nearly ten percent year-over-year reduction in preventable vehicle collision rate our electric system was hardened through the replacement of over 50 miles of poor performing underground cable over 70 000 structure life extensions or replacements and 10 transmission distribution substation rebuilds our teams are continuously working to de-risk our operations through many factors outside our control impact our business state policy and regulation has been packed and has been impactful and stability and consistency here has been a key differentiator of nice source at the federal level We have thrived through many cycles and our five-year plan is insulated from evolving policy mandates. AGA and EEI leadership and NYSource have advocated for policies that allow retail customers to benefit from low cost and reliable energy at both our electric and gas businesses. Before I turn the call over, I want to thank all our employees and contractors for their dedication to the NYSource values doing things safer, better, more efficient, and for less cost. Our customers and shareholders alike rely on you every day. I'll now turn things over to Melody.

All right. Thank you, Lloyd. I'll begin on slide six. We remain active on the regulatory front with both general rate case and rider filings. The NIPSCO electric rate case is driven by nearly $2.5 billion of incremental investment, for our customers and communities in northern Indiana. Last week, we were pleased to file a settlement agreement in the case marking our seventh settlement in the last 10 years in the state across both electric and gas businesses. The case incorporates the plan 2025 retirements of units 17 and 18 at the Schaefer Generating Station, as well as the addition of four new solar and storage projects. Major investments such as these are examples of our continued partnership with state policymakers, regulators, and our customers. During the fourth quarter, we received rate case settlement approvals from the Pennsylvania Public Utility Commission and the Kentucky Public Service Commission, both in line with the original settlement terms. Together, these requests supported over $300 million in incremental investment in these states since our last rate cases. In Virginia, we reached a universal settlement with parties to our case in December and are awaiting a final order. During the trailing 12-month period ending December, our average residential gas customer bill declined 11% on a total bill basis. Affordability remains a key priority for both NIPSCO and the Columbia family of companies, And we continue to be thoughtful about this as we advance the critical safety, compliance, and reliability work that's necessary for us to deliver safe and reliable energy to our customers. Our existing communities continue to benefit from economic development efforts at the state level, helping spread fixed costs over a larger base. Early last quarter, a new food product cold storage facility was announced to be developed in Crown Point, Indiana, just outside of Chicago. NIPSCO will provide electric service to the 26-acre, 320,000 square foot site expected to be in service in 2026. NIPSCO will serve two other new projects with various in-service dates this year as well. A new concrete and aggregate producer will require NIPSCO investment in both electric and gas infrastructure. Additionally, a new EV battery plant in New Carlisle, Indiana will require additional NIPSCO gas investment. Also, on the gas side of our business, one of our largest industrial customers in Virginia is converting their remaining onsite boilers to natural gas from coal. This project will provide significant energy cost savings for the customers and reduce carbon emissions from the facility. These projects are examples of how we remain engaged and supportive to develop and prosper the communities we serve. Economic development enhances our local tax base, offers new job opportunities, as well as mitigate the cost of our existing customer base and remains a priority for all of our teams. Customer satisfaction remains a priority, and our nearly 4 million customers benefit from our operational excellence vision and capital investment plan. In December, both our Nipsco Electric and Columbia Gas of Virginia businesses were named number one in their regional customer service satisfaction surveys. Contributing to their scores were a combination of factors including price, safety and reliability, billing and payment, corporate citizenship, communications, and customer care. We are very, very proud of these results. Also in December, NYSource was named to the 2024 Dow Jones Sustainability Indice, marking the 11th consecutive year the company has earned this recognition. As a company, our business strategy extends beyond delivering energy. It also purposefully includes a sustainability framework that allows NYSource to help drive economic development and inclusion opportunities in the communities that we are very happy and privileged to serve. I'll now turn things over to Sean.