NiSource Inc

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Q2-225-9 Source Earnings conference call. All lines have in place a 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. To withdraw your question, press star one again. I would now like to turn the conference over to Mr. Dhirgir Chopra, Head of Investor Relations. You may begin.

Thank you, Bella. Good morning and welcome to Nice Horses' second quarter 2025 investor call. Joining me today are President and Chief Executive Officer Lloyd Yates, Executive Vice President and Chief Financial Officer Sean Anderson, Executive Vice President of Technology, Customers, and Chief Commercial Officer Michael Lewers, and Executive Vice President and Group President of Nicehorse Utilities, Mallory Birmingham. Today, we'll review Nicehorse's financial performance for the second quarter and share updates on operations, strategy, and road drivers. We'll open the call for your questions after our prepared remarks. Slides for today's call are available in the Investor Relations section of our website. Some 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 MDA sections of our periodic SEC files. Additionally, some statements made on this call relate to non-GAAP earnings measures. Please refer to supplemental slides segment information and full financial schedules for information on the most directly comparable gap measure and a reconciliation of these measures. With that, I'll turn the call over to Lloyd.

Good morning, everyone. Let's begin on slide three. At NYSource, our mission remains clear and consistent, deliver safe, reliable energy that drives value to our customers. We do this through discipline capital deployment, operational excellence, and fostering constructive regulatory relationships. We believe these fundamentals will continue to drive strong results, balance sheet strength, and a dependable dividend. These principles form the cornerstone of NYSource's business strategy, consistently providing excellent valued shareholders. By focusing on regulated utility operations in high-quality regions, maintaining diversity across areas and energy types, and disciplined capital investment, NYSource continues to excel. Turning to our key priorities on slide four, our constructive regulatory foundation is further evidenced, having received final orders in Virginia and Indiana this quarter. Our ongoing focus to refine our operations through AI efficiency and continuous improvement initiatives is transforming the way we work. We're pleased to report second quarter adjusted EPS of 22 cents, bringing our year to date total to $1.19. This performance keeps us firmly on track to deliver on our full year commitment. As a result, we are narrowing our 2025 adjusted EPS guidance to the upper half of the previously stated range of $1.85 to $1.89. Let's move to slide five. Our operational excellence differentiates us. We are rapidly advancing our internal AI capabilities to transform how we operate and create a sustainable competitive edge at NYSource. Our work management intelligence solution is now fully deployed across all NIPSCO and Columbia operating companies, delivering up to 24% improvement in field productivity, equivalent to more than 83,000 incremental work hours. through smarter analytics-driven scheduling and greater efficiency and dispatch time. Building on this success, we are expanding AI into other critical areas of the business. In supply chain, we have launched a generative AI-powered analyst initiative to transform procurement processes, unlocking greater efficiency and deeper insights by leveraging the full scale of the NYSource platform. We are also exploring how AI can support system reliability and improve storm response during severe weather events. AI and analytics are becoming foundational to how we deliver value. We remain committed to scaling these capabilities to optimize performance, elevate service, and support our long-term strategic goals. Using our advanced mobile leak detection capabilities to address large volume leaks across our territory, We completed 9,966 miles of leak survey in the second quarter, bringing our total miles driven to 18,665 year-to-date, exceeding our goal. We also launched the final phase of our Work and Asset Management, or WAM. This marks a major milestone in our digital transformation. The WAM program delivers enterprise impact reaching nearly 5,000 end users. It has converted over 500 million records and integrated data from 23 host systems, thus underscoring the scale and complexity of this initiative. We have now successfully standardized how we manage field work and assets across the enterprise, improving asset visibility, streamlining scheduling, and enabling real-time decision making. On slide six, we continue to make strong progress on our regulatory agenda. Since our last call, our Virginia rate case was approved. The final order authorized a $40.7 million revenue increase and a 9.75 ROE with rates already in effect. This outcome supports $442 million in investments from 2023 through 2025, including critical safety, compliance, and reliability capital additions. It also reflects our continued ability to work constructively with stakeholders to deliver timely and balanced outcomes. In Indiana, our NIPSCO electric rate case was approved in June, providing $257 million in revenue uplift. This marks our seventh settlement in the last 10 years across both electric and gas businesses in the state. These outcomes reinforce the strength of our stakeholder relationships and the predictability of our regulatory environment. Our work in Pennsylvania continues to demonstrate the value of our risk reduction strategy in alignment with stakeholders. We continue our track record of constructive regulation working through our rate case, expecting a final order in the fourth quarter. Building on our regulatory momentum, we are also advancing initiatives that support broader economic development. These efforts strengthen our existing communities by expanding the customer base and helping to distribute fixed costs more efficiently. For example, our team strategically revitalized a dormant point of delivery station in Skippers, Virginia, unlocking the capacity to support two new industrial customers. Both companies are leaders in sustainable innovation. One, transforming municipal waste into renewable energy. and the other repurposing coal ash through advanced recycling processes this initiative not only reactivates critical infrastructure but also drives forward environmentally responsible industrial growth NIPSCO continues to drive strategic growth across the service territory supporting a diverse range of new developments in advanced manufacturing logistics and technology notable projects include GI Tech's first U.S. manufacturing facility in Merrillville, Slate's automotive 1.4 million square foot electric truck plant in Warsaw, and FedEx's $60 million investment in new distribution center in Gary, collectively projected to generate over 2,600 jobs. These investments underscore the state's emergence as a hub for innovation, sustainability, and workforce development. Now, Before I hand it off to Sean, I want to give you an update on our strategy to support data center development in northern Indiana. Our application to the IURC to support the GENCO operating model remains under review, and the settlement modification on July 18 was further evidence of our ongoing efforts to address stakeholder concerns. We continue to believe Genco offers a compelling option to meet data center needs while also driving differentiated value to the region, including our existing customers. We still expect an order in the third quarter. Regarding our data center engagement, we continue to have constructive dialogue with a range of counterparties interested in the compelling fundamentals which our service territory can provide for data center investment. We know well the state of Indiana is great for energy development. We are excited about the prospects our strategy can provide to new customers and the growth it could bring to the state and our local communities. Our team is very focused on maximizing this opportunity for the many stakeholders involved, our existing customers, our communities, our policymakers, and of course our shareholders. We remain hard at work to convert this opportunity into a reality and continue to believe we are on track. Sean, I'll now turn it over to you.

Thanks, Lloyd. I'd like to start on slide seven. Our generation transition began in 2019 with a launch of a multi-year strategy to enhance energy capacity and improve our energy footprint in Indiana. As part of this initiative, we executed a series of strategic projects that have significantly expanded our renewable energy portfolio. This includes short-term contracted capacity resources, expanded demand side management programs, solar facilities, battery storage, and new natural gas peaking resources. Today, the portfolio is nearly complete, with Gibson approaching finalization and Templeton Wind progressing according to schedule, on track for commercial operation in 2027.

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