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NiSource Inc. beats earnings expectations. Reported EPS is $0.53, expectations were $0.52. NI isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and welcome to NiSource Company Conference Call. Participants will be able to listen-only until the question-and-answer portion of this call. Please note that today’s call is being recorded. [Operator Instructions] I’d now like to introduce to the call Chris Turnure, Head of Investor Relations. You may now proceed. Thank you.

Chris Turnure: Good morning, and welcome to the NiSource Fourth Quarter 2023 Investor Call. Joining me today are President and Chief Executive Officer, Lloyd Yates; Executive Vice President and Chief Financial Officer, Shawn Anderson; Executive Vice President of Strategy and Risk and Chief Commercial Officer, Michael Luhrs; and Executive Vice President and Group President, NiSource Utilities, Melody Birmingham. The purpose of this presentation is to review NiSource’s financial performance for the fourth quarter of 2023 as well as provide an update on our operations and growth drivers. Following 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.

Lloyd Yates: Thanks, Chris. Good morning, and thank you for joining us. I’m excited to be with you this morning to share outstanding financial results and to discuss the advancement of key business initiatives, which are devoted and talented workforce delivered to support our customers, communities and our shareholders across all of 2023. We began the year with a premium business plan represented by the value proposition you see on Slide 3. The bottom line is the NiSource team delivered. You’ll notice successful execution of these key initiatives across the Board. Let me provide a few highlights, which fuel our resilient and sustaining business across all years of our plan. We executed our highest CapEx investment in 2023, exceeding our rate based investment goals.

As of the year-end 2023, we had $18.8 billion of rate base. We continue to forecast $3.3 billion to $3.5 billion of capital expenditures in 2024 and $16 billion over our five-year financial plan through 2028. Year-over-year, NOEPS growth achieved 9% increase and achieved the highest end of our guidance range. We are acutely focused on smart capital deployment and maximizing risk adjusted returns and responsible rate-based investing through strong recovery mechanisms across our businesses. Project Apollo achieved this goal of over $50 million of cost savings initiatives. Perhaps more important than the amount of savings is the energy and support demonstrated by our people to build a continuous improvement mindset and enhance productivity by doing things safer, better, more efficiently and with less cost.

These initiatives contributed greatly to a total shareholder return, which exceeded mid cap and large cap U.S. utility peers in 2023. For the three-year period, total shareholder return was 10.1% compound annual growth rate versus 5% per peers, which is reflective of our strong earnings per share execution and future growth prospects. We are confident our commitments are resilient to rapidly changing business conditions such as those seen by the utility industry over the last two years and which our financial results have delivered over this period. We continue building a track record of growth and execution, and our commitment to investors, customers, employees is central to everything we do. On Slide 4, you’ll see our key priorities. First, as you observed in our release, we delivered 2023 non-GAAP EP – NOEPS of $1.60 versus the upper half of $1.54 to $1.60 revised guidance range.

This underscores our execution of resilient financial commitments and a business plan which anticipated the broader headwinds our customers and our sector are facing today. This result was achieved despite a $128 million increase in interest expense and without sacrificing our FFO to debt commitment. Built on the strength of our infrastructure investment programs, we are raising 2024 guidance to $1.70 to $1.74 from $1.68 to $.72, which we initiated in November. We continue to expect a 2023 through 2028 annual EPS growth rate of 6% to 8%, supported by 8% to 10% annual rate-based growth. The 2024 guidance range is refreshed reflective of the annual growth expected up our strong year-end 2023 financial results. Second, our superior regulatory and stakeholder foundation differentiates us from peers.

NIPSCO received IURC approval of renewable CPCN amendment for several of our investments in January. Intervener testimony was also received last month for our NIPSCO gas rate case filed in October 2023. Third, our balance sheet flexibility allows us to optimize cost of capital for customers and ultimate return on capital for shareholders. A key focus for 2023 was the NIPSCO minority interest transaction with Blackstone Infrastructure Partners, which successfully closed in December. This transaction diversified capital fundraising for NiSource from public capital markets and creates a long-term partnership for years to come. Fourth, our company is experiencing a record investment cycle driven by safety, reliability, regulation, decarbonization and modernization.

Slide 5 details our annual capital expenditures across our six state service territory. Our $16 billion five-year plan was introduced in November 2023, built on and extended our prior November 2022, $15 billion plan. It incorporates electric generation, transmission, gas modernization and economic development investments through 2028. The nature of our capital plan diversifies project risk, including our generation project investments, which lack the large project execution risk on the scale seen elsewhere in the industry in recent years. We intend to layer in projects from our $2 billion upside capital program as they meet our threshold for base plan execution. Key rate case and capital rider activity is shown on Slide 6. Our leading regulatory and stakeholder execution advances as we continue to work with stakeholders through rate case and tracker cycles to efficiently deploy capital investments and recover cost associated with these investments to drive value for customers, our communities and our shareholders.

The strength of our company continues to be working constructively with stakeholders and communities to safely and reliably deliver the energy they deserve and to be there for our customers when they need energy most. Since our last update, our Virginia SAVE Rider was approved and implemented and our Kentucky SMRP Rider went into effect subject to refund, together covering over $100 million of capital investment made for our customers. Slide 7 shows how our operational excellence model is incorporated into decision making in all areas of the company. Last year, we significantly improved safety performance by delivering a 14% reduction in Days Away Restricted or Transferred or DART, and are on a path to achieving a goal of top decile performance.

Additionally, we recorded a 16% reduction in Preventable Vehicle Collisions, or PVC. As I already mentioned, Project Apollo is generating enhanced productivity by doing things safer, better, more efficiently and with less costs. The improvements in our work plans and cost profiles are expected to continue and sustain this year after an implementation that exceeded expectations in 2023. I have provided you with specific examples of project initiatives in recent quarters, but want to highlight the underlying cultural change occurring throughout the company. The team continues to find new ways to improve every day and this will generate value for all our stakeholders for decades. I am impressed with the continuous improvement mindset fueling our organization and I am excited for our teams as we continue this journey.

Before we advance the call, I want to close this section with the following. I couldn’t be more proud of our entire team and their devotion each and every day to support our nearly 4 million customers. With extreme cold weather across much of January, we delivered critical energy to keep our customers safe and warm. 2023 was a banner year for NiSource as the first full year of execution across our strategy shared in November 2022 and we deliver on all marks across the Board. This sets the foundation for continued growth in safety and reliability for our customers and value for our shareholders, which we strongly believe in. Michael and Shawn will dive into greater details on why 2023 was a successful year for our stakeholders, and also why 2024 and beyond will be even better.

Now, I’ll turn the call over to Michael.

Michael Luhrs: Thank you, Lloyd. I’ll begin on Slide 8. NIPSCO’s generation transition remains on track, I believe support the retirement of two of the remaining three coal-fired generation units by the end of 2025 and the final unit by 2028. To this end, construction on our crossroads two wind PPA was completed at the end of 2023 and the facility is now producing sustainable zero fuel cost generation for NIPSCO’s Northern Indiana customers. In fact, customers are seeing the benefit of this generation as part of our renewable portfolio already receiving $18 million in renewable energy credits sold into the marketplace in 2023, lowering customers overall cost of energy. In November of 2023, NIPSCO received approval on a CPCN amendment converting Gibson from a PPA to a build-transfer agreement.

Also, progress continues on Cavalry and Dunns Bridge II Solar facilities, and we expect both to be completed as planned later this year. In January, NIPSCO received approval from the IURC to own 100% of these two projects in lieu of owning them through tax equity joint ventures. Fully owning these projects will benefit customers by leveraging the tax credit transferability provisions of the IRA, NIPSCO will be able to monetize tax credits associated with the projects more efficiently than under tax equity agreements, resulting in comparatively lower energy costs for customers. We continue to evaluate the customer benefits of utilizing similar approaches for the Fairbanks and Gibson projects, which are in development. Though we have made significant advancements in our generation portfolio, we are looking forward to how we advance the portfolio in reliability, resiliency, customer benefits, and towards our goal of net zero by 2040.

An important component of our generation portfolio planning process is NIPSCO’s Triennial Integrated Resource Plan, or IRP. The 2024 IRP will evaluate NIPSCO’s long-term generating capacity requirements and inform generation investment decisions beyond NIPSCO’s gas peaker project and the renewable projects already in development. The 2024 IRP will incorporate a number of scenarios and updates since the 2021 IRP, such as MISO seasonal construct and its proposed resource accreditation approach. The customer centric process will include a series of stakeholder meetings that will kick off in the spring and will culminate with the submissions of an integrated resource plan to the IURC in November. We look forward to working together with stakeholders to continue on our path to reliably serve and strengthen our communities.

The IRP will build on our current generation portfolio, our build transfer agreements and PPA projects in development as outlined on Slide 8, and our 400 megawatt gas peaker project expected in service in 2027. As a reminder, the base capital plan released in November includes the gas peaker full ownership of Cavalry and Dunns Bridge II projects, and tax equity joint ventures for the Fairbanks and Gibson projects. On Slide 9, you’ll see additional investment opportunities not included in our current base five-year capital plan. We continue to develop and grow in a disciplined and measured way a portfolio of opportunities that benefit customers and stakeholders. We continue to advance these opportunities and will layer them into the upside CapEx plan as appropriate.

Relative to gas system investments, the PHMSA rulemaking process is now expected to take longer than originally anticipated. However, we still expect regulatory clarity in 2024. We do not believe the final rule will materially shift CapEx within our base plan. We will continue to evaluate how the rules apply to our systems and engage with stakeholders to deliver the system reliability and benefits expected under the rules. This engagement will inform how the implementation of rules may shape timing of investments in our upside CapEx plan. I would like to conclude my comments today with an update on our ESG performance. In addition to being on track to achieve our net zero and interim decarbonization goals, we achieved 19% diverse supplier spend in 2023, up from 16% in 2022 and 10% in 2021, and are well on our way to our goal of achieving 25% diverse supplier spend by 2025.

I’ll now turn the call over to Shawn.

Shawn Anderson: Thanks, Michael, and good morning, everyone. I’m excited to share our 2023 financial results on Slide 10. Non-GAAP net operating earnings in the fourth quarter were $239 million or $0.53 per diluted share, up from $221 million or $0.50 per diluted share in the same period in 2022. This earnings increase is driven by regulatory mechanisms recovering capital investment, partly offset by a modest increase in non-tracked O&M and higher interest expense. For the full year, we reported $716 million of non-GAAP net operating earnings for $1.60 per diluted share, up from $648 million and $1.47 in 2022, respectively. Across this period, regulated revenue returns were partly offset by higher depreciation expense, interest expense, and lower other income.

On Slide 11, you’ll find segment detail and key drivers of our results. For the full year, non-GAAP operating income increased across each of the gas, electric and corporate segments, accounting for a $209 million increase to consolidated net operating earnings. Capital expenditures fueled regulated returns, and as Lloyd highlighted earlier, we deployed approximately $3.6 billion in infrastructure projects to enhance safety and reliability of our energy systems. This drove an increase of $335 million through regulatory activity, in rate cases and capital trackers across our jurisdictions. A growing customer base across our businesses also provided a lift in our 2023 financial results and supports customer affordability. Demand for our fuel continues to be very strong, with residential customer count growing over 80 basis points in our gas businesses and over 50 basis points in our electric business last year, both of which enhanced the scale of NiSource.

Economic development continues to thrive in the Midwest, and there is no better example of how this collaboration can benefit customers, communities and investors than in Ohio. Our operations in the state serve 1.5 million customers, nearly 550,000 of which are supported by our Columbus operations center. Public private partnership has propelled Ohio’s recent economic development success. In 2023 alone, 33 projects were brought to central Ohio, with over $10 billion in investment being committed. This momentum continues today as there are nearly 100 active opportunities being pursued for future development with the potential to create thousands of new jobs and invest billions of dollars more into central Ohio communities. The majority of these projects are focused in manufacturing industries, representing a diverse range of sectors, including electric vehicles, energy storage, logistics, life sciences, semiconductors, advanced computing facilities and many more.

Additionally, Ohio will continue to see new corporate investment driven by downstream supplier activity from megaprojects currently under construction, such as a joint venture with Honda and LG Energy and the Intel chip manufacturing facility. This development can enhance value for NiSource and create an upside to our plan from residential housing demand, which grows as these secondary businesses develop. Central Ohio’s metro population grew an average of 1.8% annually over the last 30 years, and the population is expected to grow an additional 30% by 2050, boosted by strong economic development prospects. Broad stakeholder and policy support is critical to onshoring and manufacturing success and will fuel healthy and growing Midwest economies.

Our communities benefit from numerous constructive regulatory mechanisms that encourage energy infrastructure investment across to our states, including economic development programs to spur investments in our region, which create jobs and enhance local tax base. Switching to Slide 13, I’d like to highlight several key value drivers which represent the foundation of our long-term financial commitments. We have increased our non-GAAP net operating earnings per share guidance range for 2024 by $0.02 at the midpoint compared to the range introduced in November. This midpoint now represents a 7.5% year-over-year growth rate from 2023 actual results. The revised guidance is driven primarily by revenues from regulatory activity and enhanced customer demand and lower financing costs relative to our prior year forecast.

These growth drivers, along with the strength of our infrastructure investment programs, underpin our expectation to continue to deliver annual non-GAAP NOEPS growth of 6% to 8% and annual rate based growth of 8% to 10% over the 2023 to 2028 period. This is driven by $16 billion of capital expenditures, and it is expected to approximate residential customer bill growth to below 4% on average across the plan horizon. Finally, inconsistent with our last update, our base capital plan includes full ownership of Cavalry and Dunns Bridge II solar projects expected in service in 2024. Fairbanks and Gibson continue to be expected in service in 2025, using a tax equity financing structure. Our upside plan includes incremental CapEx associated with full ownership of these projects, as well as electric and gas investments which Michael detailed earlier.

Our financing plan is outlined on Slide 14, which remains unchanged from our mid-November update. As we outlined in that update, we continue to expect to issue up to $600 million in ATM equity in 2024 and $200 million to $300 million of maintenance ATM equity annually in the 2025 to 2028 period to support our base capital plan. Within the operation of our at-the-market program, we retain the flexibility to include small, bilateral discrete transactions should they be efficient to execute. We also continue to reaffirm our commitment to an FFO to debt ratio of 14% to 16% through 2028. In January, our board of directors authorized a 6% increase to our dividend, which is consistent with the annual increase authorized last year. This projects our annual dividend at the bottom half of our stated range for targeted dividend payout ratio of 60% to 70%.

We will continue to be thoughtful about capital allocation in the high cost of capital environment. The final two slides will conclude our presentation and focus on execution of our stakeholder commitments. First, our multiyear track record of execution and growth continued in 2023. Lloyd touched on the premium business plan we shared with each of you in November of 2022, and this represents the full year of execution of this plan. We continue to prioritize safety while optimizing our long-term cost profile. We built on our superior regulatory and stakeholder foundation through the execution of four general rate cases and numerous CPCN amendments and capital tracker approvals. During the year, we invested over $3.6 billion to support our customers and keep our communities and our employees safe, all while enhancing the balance sheet afforded through the minority interest sale.

We are proud of the execution delivered by the entire NiSource team, including achieving a 9% year-over-year growth rate and landing at the high end of our guidance range. All of these investments and the long-term visibility of our results fuel our confidence to execute each and every year as we move forward. As we share on Slide 16, each of the last three years, we’ve executed strong financial growth, achieving the upper half of our guidance range in each year. This is important. Each year we’ve done this, we’ve rebased future NOEPS guidance upwards off those actual results. We’ve accomplished this in 2021, 2022 and now 2023. And we expect to keep doing this, as we move forward, exemplified by our upgraded guidance range with an implied midpoint of 7.5% over 2023’s already strong results.

And this is differentiated in our sector, which has delivered an average 5% non-GAAP NOEPS CAGR since 2021 compared to the 8% achieved by NiSource. The underlying business plan supported by strong regulatory construct in NiSource jurisdictions coupled with responsible investments in identifiable regulatory programs, enable a reasonable return of investment over our plan. The confidence in these investments enables the rebasing of annual growth rate which supports this higher NOEPS range as we execute the plan, which in turn enhances the future earnings potential of our business in each forward year of our plan. We are excited about the future prospects of our business and to continue building a track record of execution and growth. We remain confident.

Our commitments are resilient to rapidly changing business conditions, as which was seen across the utility industry over the last two years. Despite this, the NiSource plan is stronger than ever. Thank you for your time this morning and your interest in NiSource. And with that, I’d like to open the call to your questions.

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Operator: Ladies and gentlemen, we are now opening the floor for question-and-answer session. [Operator Instructions] Our first question comes from Barclays Capital. Your line is now open.

Nick Campanella: Hey, thanks. Good morning. This is Nick Campanella on.

Lloyd Yates: Good morning, Nick.

Nick Campanella: Appreciate all the disclosures today. Good morning. So I guess, just to start, the renewables investment and ownership upside that you kind of highlighted on slides here, just how are you kind of thinking about the timing of layering that into the plan? And then I guess, Shawn, can you still sequence those cash flows from those projects to kind of do this without additional equity financing or just how are you kind of thinking about that? Thanks.

Michael Luhrs: Yes, thank you. So this is Michael. We’re continuing to work through this in a discipline and methodical way, just as we have been all through the last year. Just maybe to walk through a little bit of history associated with it. So if you look at the Gibson and Fairbanks projects, which are part of the billion dollar upside, when we look at a $2 billion upside, when we look at the CapEx plan. We filed for in July, a change for the Gibson from a PPA to a bill transfer agreement that was received in November. We also in 2023 filed for full ownership of Cavalry and Dunns Bridge. We received that in January of 2024. During this period, we’ve been evaluating our analysis on Fairbanks and Gibson, and we expect to be able to work through those final details at our analysis now and give a more fulsome update in Q2. But we would plan to have that update and roll that through as we complete that analysis.

Shawn Anderson: Yes. Then, Nick, this is Shawn to the second part of your question. I think the way we’ve described the future financing plan associated with any of the upside CapEx is that we would need to evaluate the cash flow profile of the projects, in this case, the two renewables projects that Michael’s described that you asked about would have some assistance from PTC monetization over the plan horizon. It also would come with a higher depreciation rate relative to some of the alternative investments. Those have the ability to help the cash flow profile of the business. That said, construction timelines, regulatory recovery, and obviously the approval from the IURC would all play into the fact of how we would finance those projects, which is why we’ve described a potential modest increase associated with the ATM to maintain the capital structure when we access the upside CapEx plan.

Nick Campanella: Got it. That’s helpful. And then I guess, just maybe sticking with financing. You’re clear in slides that it’s an ATM strategy for 2024, but it does seem in the prepared remarks that you’re open to doing something more kind of bilateral. Can you just kind of explain the thought there and where you stand.

Shawn Anderson: Yes, sure. We’ve studied our available trading days for the remainder of the year, and we’re confident the equity need is highlighted. It’s very executable under the ATM without placing any undue pressure on daily volumes. We’ve got strong sales agents set up to support the execution, and we’ll be highly engaged in this on a daily basis to ensure successful execution. And that our stock can realize the valuation uplift that we expect with our continued strong performance. That said, what we like about the ATM is it’s very low cost. It has low friction costs and transaction fees associated with it. It also allows us to dollar cost average, the access of equity to the timing by which that we would deploy the CapEx and line those cash flows up, which creates more efficiency throughout the year as opposed to a scenario where you might need to over finance or bring in more dollars than you need at any one point to deploy.

So those are the things we like about the ATM. There are still ways inside the ATM to be able to line those fundamentals up. And we’re open to those options if it makes sense. But bottom line, we need to be very, very efficient from a cost basis standpoint and very much lined up with the timing of cash flows that we need to deploy to support our CapEx.

Nick Campanella: All right, thanks so much. Have a great day.

Shawn Anderson: Thanks, Nick.

Operator: Our next question comes from Shar Pourreza from Guggenheim Partners. Your light is now open.

Shar Pourreza: Hey, good morning, Lloyd and Shawn. How are you guys doing?

Lloyd Yates: Good morning, Shar.

Shawn Anderson: Hey, good morning, Shar.

Shar Pourreza: Good morning. So, obviously, you rebased higher again today, and you have the $2 billion of upside CapEx that you’ve identified. But obviously that’s not reflected in your plan. It’s obviously, the messaging is pretty straightforward, right. You guys have confidence in the 6% to 8% growth. Are you comfortable guiding kind of where you are within the range you sit, the numbers seem to point closer to the top end. But as we’re thinking about the incremental opportunities, I guess, were you within the 6% to 8%? Thanks.

Shawn Anderson: So, Shar, we did a detail assessment. We did raise guidance. We said it in the past, we’re going to raise guidance. Our guidance for 2024 was based off of our strong performance in 2023. So if you think about the $1.60, the $1.70 to $1.74implies a 7.5% target for 2024. And we’re very comfortable with those guidance ranges. So we’re not necessarily guiding between the 6% and 8% at this point.

Lloyd Yates: Yes, just to reinforce that. Shar, it’s a great question, when we see signs from the business that will lead us to a different outcome. We’ve built a track record to flow those updates through this call. We’ve done so at various points. So we won’t wait to give you greater insight once we have a higher degree of confidence of exactly where we’re going to land within the range if we need to send that signal. But right now, 6% to 8% off of a strong 2023 year end is the plan.

Shar Pourreza: Okay, perfect. That’s helpful. And then just on the next – just any status on the next NIPSCO case? Just trying to get a sense on how much renewable spending will likely be captured since the last case. Thanks.

Lloyd Yates: So, Melody, you want to talk about NIPSCO Gas case? Are you talking about – I’m sorry, Shar, NIPSCO – are you talking about the NIPSCO, current NIPSCO gas case or future electric?

Shar Pourreza: The future electric.

Melody Birmingham: Well, we have not filed an electric case, so there isn’t an electric case currently that has been shared. But we have in fact filed our gas case October of last year. And we are currently working with our interveners as we’re discussing what we see as a successful outcome through those negotiations, what we’re expecting and working towards with those interveners.

Lloyd Yates: The way to think about the next electric case, Shar, is what we like to do is file that case, pretty much align with when we finish those renewable projects. And if you think about the last case, those renewable projects went in right before that case was executed. So I think we try to keep that gap really small. So that was to be dependent upon finishing those renewable projects. And right now they’re on time and on schedule. We have more information about that. We’ll file the electric case and we’ll let you guys know that as soon as possible.

Shar Pourreza: Okay, Lloyd. Yes. That was the impetus of the question. It’s just how do we think about the timing of the next electric? I think you answered it. Thanks, guys.

Operator: Our next question comes from Durgesh Chopra from Evercore ISI. Your line is now open.

Durgesh Chopra: Hey, good morning team. Thanks for giving me time. Hey, Shawn, just housekeeping for us, the $600 million, have you done any equity so far, year-to-date? And then can you clarify, you mentioned, you might be doing some, I think you said some private placements, some small private placements, if I heard that correctly. So what did you intend to say there?

Shawn Anderson: Yes, absolutely, Durgesh. We have not executed anything under the 600 – up to $600 million ATM program anticipated for 2024. In fact, we had an ATM equity program expire at the end of 2023 and we’ll need to file a new ATM equity program to access the current guidance of up to $600 million. And we plan to do that very soon, which would give us the balance of year for us to be able to execute that equity plan. We described a potential bilateral or discrete agreement inside the context of the ATM. It wouldn’t be a private placement necessarily. However, some investors can solicit interest from sales agents directly and transact at greater than one share, for example, and that transaction would then be placed under the ATM. And certainly, we would be interested if investors are interested at an efficient pricing.

Durgesh Chopra: Got it. And so perfect, that’s very helpful, Shawn. And you’ll update us on the quarterly calls as you execute on this program, or how will we know over time what portion of the $600 million you have executed?

Shawn Anderson: Yes, that’s exactly correct. We’ll keep score along the way and we’ll certainly let folks know what we expect for the balance of the year and/or if any of the other aspects of the financing plan change, we’ll be sure to update the slide that you see in the disclosure doc deck today.

Durgesh Chopra: Perfect. Thank you. And then just one big picture question, perhaps for Lloyd, CenterPoint announced gas LDC sales earlier, just thinking about the opportunities you have within your current portfolio. Are there opportunities to optimize assets to fund that growth? Or how are you thinking about that?

Lloyd Yates: So let me talk about it this way. I don’t necessarily comment on any kind of specific M&A, but what I will say is, when you think about NiSource, we are always very diligently reviewing options to enhance shareholder value in our plan. But we’re currently focused on our organic plan, investing $16 billion at one times rate base with another potential upside to invest another $2 billion. If you go back to 2022, we did a lot of work here in terms of our business review and we see a couple of things that we like, and that is the scale at NiSource has tremendous value and we like the diversification of our six operating companies. You also saw us last year raise capital via – but you all raise capital via the NIPSCO transaction, what we thought was a very efficient process with respect – very efficient tax process with respect to taxes.

So with all that being said, what I’ll say to you is, we are always looking to enhance shareholder value. And if we find an opportunity to raise capital more efficiently to improve our enterprise value, we plan to take advantage of it. But right now, we’re focused on our organic plan.

Durgesh Chopra: Super. Very clear. Thanks guys. Congrats on a solid quarter here.

Shawn Anderson: Thanks, Durgesh.

Operator: Our next question comes from Travis Miller from Morningstar. Your line is now open.

Travis Miller: Good morning, everyone. Thank you.

Shawn Anderson: Hey, good morning, Travis.

Travis Miller: Question on this CapEx plan, I know it’s difficult to parse out things here, but especially on the gas side of that five-year plan and whatever incremental part would be associated with the gas, how much would you attribute to base spending, safety spending, core spending on the system, and then how much would you attribute to the new expansion opportunities you’ve talked about manufacturing and other new build opportunities on the industrial side.

Shawn Anderson: Yes. Thanks, Travis. This is Shawn. I think that what we would attribute the planned CapEx for gas is almost all planned for safety, reliability, and compliance work supporting our regulatory requirements from PHMSA and from the local PUCs that we support. So as we think about the gas CapEx, that’s the vast majority of the CapEx. We actually don’t plan for significant amount of future expansion costs into the CapEx guidance itself because we often see that those CapEx amounts can be supported by incoming revenues to support the cost of basis itself. So as we have incremental projects like we had in Ohio for Intel to help support a larger economic development project. We’ll work with local stakeholders, local mechanisms, and move those into the capital plan as necessary.

Some of those are signaled on the slides that Michael shared from the upside plan itself. But the way I would think about it is nearly all of the CapEx that we spend from a gas standpoint, absent a small amount is driven for safety, compliance, reliability upgrades across our system.

Travis Miller: Okay. That makes sense. And then similar question of that, how much do you expect to flow through some of the mechanisms you have that are non-base rate case related?

Shawn Anderson: Yes. We do have mechanisms in different jurisdictions that enable recovery of whether you’re calling economic development type projects. We have legislation that’s supported in Ohio have had for a number of years to support economic development expansion as well as in Indiana. But some of the forward-look test years, such as that in Pennsylvania can enable us to project these types of projects, if we have line of sight to where economic development is going to come into place. And we can work through the regulatory mechanisms themselves or the rate cases themselves to ensure that we can get quick recovery or prompt recovery of those. So we haven’t seen economic development or business expansion be a drag on our earnings power across any of our businesses. And in fact, it often is one of the components that leads us to an upside within our range.

Travis Miller: Okay. That’s great. Thanks so much.

Shawn Anderson: Thanks, Travis.

Operator: We have our next question from Barclays. Your line is now open.

Nick Campanella: Hey, it’s Nick Campanella again. I just had a quick follow-up, if you don’t mind. Just I’m looking through your regulatory kind of outlook slides here, and I just wanted to know if you’re still planning to file a rate case in Pennsylvania this year.

Lloyd Yates: Melody, you want to handle that one?

Melody Birmingham: Hi there, Nick. We did file a notice of intent for Pennsylvania. And so we are working through the details of when we file for this year.

Operator: Right. We don’t have any raised hands as of the moment. I’d now like to hand back over to the management for their final remarks.

Lloyd Yates: So before I close, I want to take a minute here to thank Donald Brown. Donald is our EVP and Chief Innovation Officer, our former CFO. And after nearly a decade with NiSource, Donald informed us that he’ll be leaving the company to pursue other professional opportunities. I would say we’re extremely grateful to Donald for his service to NiSource and for helping us build a strong financial foundation and to help us evolve and execute our transformation strategy. And we wish him well in his future endeavors. I want to thank all of you for great questions and your support of NiSource and look forward to continue to update you on future business activities. Thank you very much.

Operator: For attending today’s call, we hope you have a wonderful day. Goodbye.