Good day, ladies and gentlemen. And welcome to the First Quarter 2019 NiSource Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Mr. Randy Hulen, Vice President of Investor Relations and Treasurer. Sir you may begin.

Thanks, Deranda and good morning, everyone. And welcome to the NiSource first quarter 2019 investor call. Joining me today are Joe Hamrock, Chief Executive Officer and Donald Brown, Chief Financial Officer. The purpose of this presentation is to review NiSource's financial performance for the first quarter of 2019, as well as provide an update on our operations, growth drivers and financing plans. Following our prepared remarks, we will open the call to your questions. Slides for today’s call are available on nisource.com. Before turning the floor 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 Factors sections of our periodic SEC filings. Additionally, some of the statements made on this recording 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 additional segment information, including our full financial schedules available on nisource.com. With all that out of the way, I would like to turn the call over to Joe.

Thanks Randy. Good morning everyone and thank you for joining us. I'm pleased to report on our first quarter 2019 results, which reflect our team’s continued execution of our long-term utility infrastructure modernization program. These programs are the foundation of our focus on safety and enhancements to our GAAP distribution system across all seven states. In addition, we continue to advance our electric generation strategy in Indiana and our dedicated team continues to support customers and communities in the Merrimack Valley during Phase II of our restoration work. With the progress we have made thus far, NiSource is well positioned to deliver on its commitments for 2019. Let’s turn to Slide 3, which summarizes our key accomplishments through the first quarter and early second quarter of the year. We delivered non-GAAP net operating earnings of $0.82 per share versus $0.77 in 2018 in line with expectations and positioning us to deliver net operating earnings per share within our $1.27 to a $1.33 guidance range for 2019. We also continue to expect to complete $1.6 billion to $1.7 billion in capital investments in 2019 in line with our guidance. We remain confident in our long-term forecast of 5% to 7% annual growth of our non-GAAP earnings per share and dividend from 2019 through 2022 and capital investments of $1.6 billion to $2 billion annually from 2020 through 2022. Gas system safety enhancements remain a key focus across our seven state footprint. We are executing on our accelerated safety management system or SMS implementation. Our SMS is aligned with a framework developed for pipeline operators by the American petroleum institute. SMS is a comprehensive approach to managing safety, emphasizing continual assessment and improvement and identifying and mitigating potential operational risks proactively. To provide independent review and oversight of our SMS implementation we…

Thanks Joe, and good morning, everyone. Looking at our first quarter results on Slide 4. We delivered non-GAAP net operating earnings of about, $308 million or $0.82 per share compared with about $260 million or $0.77 per share for the same period in 2018. The biggest driver of our non-GAAP financial performance continues to be the impact of our long-term infrastructure modernization investments supported by constructive regulatory outcome and established infrastructure trackers. Before turning our business segment financial results, I would just like to address Greater Lawrence incident expenses. Our estimates which are detailed on Slide 10 are higher than what we have provided with our fourth quarter 2018 results. This increase was driven by final billings for construction and emergency response expenses as we as adjustments made to reserves for legal liability and settlement expenses. Despite this upward adjustment, our strong first quarter financial results coupled with our solid execution on the regulatory front has of confident in reaffirming both our 2019 non-GAAP net operating earnings per share guidance range of $1.27 to $1.33, as well as our long-term earnings and dividend growth forecast. We also expect to maintain our current financing plan. As we have previously stated, we have $800 million of cash for the insurance coverage and 300 million of property insurance that we expect will recover a substantial portion of our Greater Lawrence incident cost. We have started submitting claims in December 2018, and have recorded casualty insurance recoveries of $235 million through March 31st. We have also provided notice to our property insurer and discussions around the claims and recovery have begun. As the insurance recovery process move forward we will continue to provide quarterly updates on our progress. Let's turn now to the non-GAAP financial results for our business segment. Our gas distribution operation…

Thank you Donald. Now let’s turn to some specific highlights for the first quarter and early second quarter of 2019 from our gas operations on Slide 7. In Virginia we filed our unanimous settlement agreement last months with parties to our base rate case, which remains pending before the Virginia State Corporation Commission. Filed in August 2018, our request seeks to recover costs associated with ongoing infrastructure investment programs and to incorporate changes from Federal Tax Reform. If approved is filed the settlement is expected to increase annual revenues by $9.5 million including $8.2 million in revenues currently collected through our infrastructure tracker. New rates went into effect subject to refund with the February billing cycle. We expect to commission order in the second half of 2019. In Ohio we received regulatory approval last week of our infrastructure replacement program tracker annual adjustments allowing us to begin recovery of approximately $200 million of infrastructure investments made in 2018. This well established pipeline replacement program authorized through 2022 covers replacement of priority mainline pipe and targeted customer service lines. Also in Ohio, we filed in February our first annual application for adjustments to our capital expenditure program writer. The CEP writer which was first approved by the Public Utilities Commission of Ohio in 2018, allows us to recover capital investments and related deferred expenses that are not recovered through our infrastructure modernization tracker. The adjustment application seeks to being recovery of approximately a $122 million of capital invested in 2018. A PUCL order is expected in August 2019. In Indiana our PHMSA compliance plans covering approximately $230 million of capital expected to be invested between 2019 and 2023 remains pending before the Indiana utility regulatory commission. We expecting an order in the second half of 2019. And just yesterday, we received…

Thank you. [Operator Instructions] Our first question comes from Michael Weinstein from Credit Suisse. Your line is now open.

Hi this is Mike, how are you doing, good morning. I’m wondering, if you could discuss a little bit about the differences between the IRP in Indiana that you guys filed and one that Vectren recently field and had a rejection of their CCGT certificate of need. You know how does your IRP differ from that and maybe what are the lessons learned from the combination of the two processes that have happened here?

Yes. Thanks Mike. I won't opine on the Vectren IRP, but I will talk about our approach and for us the first principle throughout the entire process have included a transparent evaluation of all of the viable options that we saw for replacement capacity in particular and then tested that through an RFP a transact able RFP last year with the broadest possible stakeholder participation. And we believe this approach stands up well as the IURC evaluates our filings our CPCN filings, that of course follow that IRP and are consistent with that strategy. And we will continue to move through this process embracing those principles including later this year as I noted earlier our expectation for an next round of RFPs to continue to show what is available in the market and what the best solutions will be for our replacement capacity going forward. I think the IURC and all of our stakeholders value that approach and have been very engaged in that approach throughout.

And on the same subject the seed of SP472, what do you think that says about the political lobby of some state and I guess the power of the coal industry in particular going forward?

You know I would say it's not surprising, it's not unexpected that various groups would try to protect their interest and we certainly welcome that this course and welcome the opportunity to discuss that and again it all risks on our approach of putting all the options on the table and making sure that we can all see as objective and transparent picture as possible. And I think that stands up well as we move forward through what by any measure the pretty dynamic and complex transition in Indiana in particular, but in general across the country.

Do you think we will see a new type of replacement builds for that that try to achieve the same thing or do you think that this issue of a moratorium is dead for the time being?

I think it's too early to try to predict all that. It does appear that the more moratorium is off the table right now, we are proceeding on the course that we were on before, all of those activities, but we will continue to monitor that and we will continue to look forward attractive one on here and we expect that to be the case.

Okay, great. Thank you very much. That is all I have for now.

Thanks Mike.

Our next question comes from the line of Julien Dumoulin-Smith from Bank of America. Your line is open.

Hey good morning. Excellent. So I just wanted to be actually clear about Michael was just asking about. So again just to come back to this whole process in Indiana here on the electric side. At the end of the day the issues they are very discreet and legislative and peer companies out there and any implications with respect to your settlement that you have just filed and or future procurement plans are not existing or present. And maybe if you can talk about - let's go and talk a little bit more about what the remaining issues are that weren’t settled here, just to go through sort of the remaining items as you look to close that out?

Sure thing. Yes again I don’t see significant implications for us. We have said all along that each company really is going to see a unique set of factors and circumstances that drive our IRP process in general, the retirement of our assets, the evaluation of that is unique to the age and the operating conditions of our assets, you can’t transpose that on any other company. I think we would all agree with that. We did as I noted earlier test the market, so I think we have given a pretty clear and transparent picture of all the options available to us and so I wouldn’t expect the process that is in front of us to substantially change that. And as I said earlier, we will continue to commit to that kind of transparency to ensure that we are looking at all the options as we step through this progression of sequence of retirements and replacement capacity overtime. So I think we are in a really good position here. I don’t expect the review and the stakeholder process to setup at the legislature to substantially change our outlook. And as we noted earlier, a lot of this is further out on the horizon for us, so we have time to navigate the dynamics of this situation. As it relates to the rate case, I would remind us that for us this was a policy case at its core, at the very beginning designed to align with our IRP and our generation strategy. The core issue being depreciation of the generation assets as it relates to the retirement schedule. With the partial settlement that we have setting revenue requirements that effectively sets that piece of the puzzle in place, which is not the most important point, but the key for us as it relates to the overall strategy. The open issues are related to allocation of revenue requirements among the customer groups, which has not solved and is always complex. We will continue to facilitate and support parties communicating in that that may ultimately result in litigated case. And that is okay, that is something that is what the process is for. And then the other piece for us is within the revenue allocation the question of the industrial tariff that we set up for the large industrial is a part of that puzzle. We continue to work with parties on that as well. So we feel good about the position that we are in on all fronts here as it relates to IRP, the wind CPC and in the rate case the relationship with the rate case settlements that we have. Donald anything you want to add to that?

Yes. I would add that think about the process we ran last year for the IRP including that RFP the current projects that we have contracted with and have filed for approval on those projects, they were really to fill a gap we had on our Bailey plants that we shut down last year. And so as we think about going forward on retiring the Schahfer units in 2023, we will need to go through another IRP process and we plan to issue another RFP to seek supply resources to replace that generation when we close out. So, it’s an opportunity for us to give feedback on our old process, the process last year as well as Vectren and others in the state so that we structure our next IRP and RFP to make sure that all of our stakeholders understand and have clarity around our plans in the markets going forward.

Excellent. If I can follow-up just on the basic side of the equation. Can you elaborate a little bit more on your confidence level on just the latest round of increases in total cost of that. If you can I know this is a little bit difficult and then separately progress on any strategic decisions, rate case, timing and or financing implications for me in the latest increase. I imagine just that financing is most far?

Yes, Julien let me take the first part of that now and I will ask Donald to touch on the financing. I will note and Donald touched on this in the earlier remarks, but several factors drove the change to the cost estimates this quarter, which were up approximately 20% from prior estimates. Those factors include finalizing emergency response and construction cost, billing as well as adjusting legal liability and settlement reserves based on our current view. And despite these adjustments, we are confident in reaffirming our 2019 guidance our long-term annual growth rate and maintaining our current financing plan. And I think it's important to note that key drivers for us is always include regulatory timing and out outcomes and financing cost and timing and in the cycle that we are in were also drivers within our range include timing of insurance recoveries as it relates to the cash flows here. So we will continue to provide updates each quarter as it relates to all of these factors, but I do feel like we continue to put more of this in the rearview mirror than not. Donald.

Yes. I think Joe said it, as we look forward and look at the estimates that we have got, the items that we are working on are around settlements with parties, in having started those discussions between the different parties third-party claimants, we have got more information, but certainly as we continue having those discussions those estimates could be updated and will be updated in future quarters. And to Joe's comment around the insurance recovery, we continue to progress there and it's steady, weekly conversation that we were having with all of our insurance providers in the tower is very constructive and were just progressing up the tower. So we have got confidence that we continue to move in that path to get recovery on the insurance side and on other side from a claims and reserves on our litigation we are moving forward there as well.

And Julien, you asked about the regulatory. We haven't made any decisions at this point about regulatory plans in Massachusetts, as it relates to the investments in pipeline replacement in the Merrimack Valley. As we have noted before, and as it is noted here, we are working with our property insurance on that side and we will go to that process before we make any determination on the regulatory front.

Excellent. Alright, I will leave it there. Thank you very much for your patience.

Thank you. Have a great day.

Our next question comes from Insoo Kim from Goldman Sachs. Your line is open.

Thank you. Just going back to the cost estimates from that shift, it's acknowledging that the larger increase did come from the third-party claims could potentially fluctuate based on negotiations and what not. Could you elaborate on why it seems to be a bit difficult to get to more comprehensive estimate at this time just given the quarter - the increase from fourth quarter that you guys had estimated. And just up really from the settlement that has been failed, does any has been filed on the claims, have they been a face value or some level below that?

So let’s start with the insurance cost and recovery there. Certainly there is a process to go through each claim, understand the claims, how we made decisions on the claims process. The first couple of insurance providers and our tower has been very constructive and consistent. We haven’t seen at this point any significant concerns about the cost that we incurred for the restoration events and the construction events last year. And so at this point we are confident in that process and certainly we will continue to have conversations as we walk through each of those claims. But we have provided the full amount of the costs and our estimates to all of our insurance provider and so they are all seeing that information and now it’s really the process going through provided-by-provider as they work through their process to get comfort with the costs. On the other third-party claims and litigation reserves, I would say the big change really is the timing of having conversations. You think about where we were at year end, at the time we were still finishing up the restoration and so it really have allowed us here in the first quarter to start having conversations with the different third-parties, whether that is the municipalities or other claims that - larger reserves and litigation reserves that we have had here in the first quarter. So it did have the announcement earlier this week about one of the significant injury claims that we were able to settle and so that is certainly in our reserve estimate and we will continue to have more conversations with the different third-parties.

Understood and then on the financing front, I know that plan hasn’t really changed, but is there any clarity you could give or any level you could give on the preferred equity front, I know it’s always kind of a TBD amount for 2019 and 2020.

Yes it’s still early, as we said the amount of preferred equity that we may need will depend on the cash flow this year and in particular the timing and amount of the insurance recovery. So it’s too early at this point, but it’s still something that we are looking at as an opportunity this year.

Got it. Thank you very much.

Yes.

Our next question comes from Christopher Turnure from JP Morgan. Your line is open.

Thank you. Most of my questions have been answered, but I wanted to follow-up I think Joe on your comments on HP1470 and kind of how that impacts your longer term plans, how your filing will kind of come together on the gas side there in end of sell with the exploration of the existing T DISC?

Yes. So thanks Chris good morning. The T DISC statue that is now passed brings substantial clarity for all of us regarding eligible investments, it also provides opportunities for advanced technology investments on the electric side, as well as targeted economic development investments on the electric side, which is a great feature. So as we look at the new gas plant, we are in a cycle where we would want to be updating anyways, since the current plan runs through 2020. So it will just set us up to file for the next plan, so to speak. On the electric side, we are evaluating the opportunities that might exist or the options that might exist as a result of the legislation. And we may or may not file a new plan there. We are continuing to evaluate that, because the electric plant runs through 2022. So it's more about the clarity that it brings in how much value that might provide for all stakeholders as we step through the next couple of years.

Okay, great. That's all I had. Thank you Joe.

Alright. Thank you, Chris. Have a good day.

Our next question comes from Steven Fleishman from Wolfe Research. Your line is open.

Hi, good morning. Hey, so just maybe you could just kind of tie us back to the - you do have couple of $100 million insurance increase, but really no change in your comfort level on financing plan and credit. Is that kind of a reflection that the rest of the business is doing a little better or you are getting a little more confident on timing of the insurance recoveries?

Thanks Steve. Good morning. I think that's right, I think as we continue to progress both from conversations with our insurance providers having the NIPSCO electric rate case, having that partial settlement in especially the acceleration of the depreciation for the closure plants that has a positive cash impact annually to our business, as well as we look forward at the different regulatory items, we have got. That, ultimately, we have got confidence in our long-term plan. But at the same time, we will continue to work with our insurance providers on really the timing of those cash flows and getting the initially 800 million back and then also seeking recovery on the property insurance side, which helps offset the higher costs that we have incurred.

Okay, and I guess, do you have enough certainty with a risk of future increases to the point where you - what is the risk, I guess that we come in future quarters and certainly have to add more financing or other stuff to deal to preserve credit? Or do you have enough visibility now that's unlikely?

Yes, I think it's always possible. I'm not going to say that our reserves could not change as we continue down settlement discussions with third-parties. But from the information we have now, we are confident in the reserves we have got and estimates we have at this time. If you think about financing, again, it's really going to change depending on the timing of insurance recoveries. And so that might impact needing more equity content in 2019 to ensure we hit our targets for this year, but that's really a timing between, 2019 and 2020 and doesn’t impact our long-term financing plan.

Okay thank you.

Our next question comes from Shahriar Pourreza from Guggenheim Partners. Your line is open.

Hey guys. So I think you touched on most of it, but let me ask I'm still trying to get a sense on how you are thinking about the rate case in Massachusetts, because you guys obviously have a higher - the claims have jumped up so the lag is increasing. With sort of some of the increase in confidence level you guys have around your discussions and insurance recoveries, I guess what is holding you back from filing a rate case?

I wouldn’t say that we are being held back, we are progressing through a series of restoration activities. As it relates to some of the claims there is really no relationship between the claims issues and the rate case itself, except we on the properties side, which I noted earlier where we are looking at the investments we made there. And we do want to make sure we proceed through the insurance process before we establish a strategy for the regulatory. So I wouldn’t call that holding it back, I think it’s just order of operations so to speak before we determine what the best course of action would be on the regulatory side. Any other thing I would note is we did pull a settlement last year so we have got some work to do to get back to where we were before we even put the replacement investments into the rate base last year. So we have got some things to work through, but it’s not about being held back, it’s really about an orderly process to get to the best strategy.

And then just are you still - from a timing perspective we should be thinking about for modeling Q4 maybe early 2020 for a filing?

Yes. I think what we have said before is it will be late this year early next year before we make decisions. So it wasn’t about the timing of a case, but it was about the timing of a decision.

Okay got it. Thanks guys that was my main questions.

Thanks Shahriar. I appreciate it.

Our next question comes from Greg Gordon from Evercore ISI. Your line is open.

Thanks. You know what guys I think you have been pretty thorough and my questions have been answered. Have a good day.

Thank you too.

[Operator Instructions] Our next question comes from Charles Fishman from Morningstar Research. Your line is open.

Yes thank you. Just one quick one Joe, does this pending legislation in Indiana move the needle as I'm looking at your Slide 12, in other words that 24% of your infrastructure investment 2020 to 2022 comes from periodic rate cases. Is it material enough to lower that number 100 or 200 basis points or is it really insignificant?

Hi good morning Charles. That is a great question I think it’s too early to tell. I think it’s back to the point I made a few minutes ago about evaluating some of the new features in the TDISC statue, especially around economic development and advanced technologies. So grid modernization in particular, some advanced grids investments might be a good opportunity that would have been in traditional rate cases where not for this legislation. We will evaluate that it could move that line, but right now it’s too early for us to say that with any clarity.

Okay, got it. That is all I had thank you.

Thank you. Have a great day.

Our next question comes from Andrew Levi form ExodusPoint. Your line is now open.

Hi guys, and I apologize for asking this because I haven't really been on the cost, but just on the liabilities, what were you guys saying as far say Europe is like billion dollars now, is the likelihood of that increasing significantly not likely or likely just kind of - everything kind of around that? I'm sorry that I missed it so.

Good morning Andy, no problem. I think what I stated was that it's certainly possible that as we continue to have litigation settlement discussions that the reserves could be adjusted in the future, but based upon the information we have got, as well as our progress and discussions this quarter we are confident and where those reserves are.

So you say you have taken access beyond what has been claimed I guess is what you are saying, is that right? So whatever you took this quarter and you have taken is an estimate of where it may go, not what has actually been filed.

Yes. It would be our estimate of where were going - what settlement amount would be for the major third-party claims.

Right okay and that is higher than what is been already filed or not.

The filed - what do you mean by filing?

Well, I mean you know like whether lawsuits or claims or things like that those amounts relative to what you have reserved.

Well they are higher than what we had in our fourth quarter results. In some cases there hasn’t been a filing of cases, but we started having discussions with third-parties. So it depends on really with the third-party, kind of what the status is from a legal standpoint as well as our discussions.

Okay. And then my last question is just in general, I don’t know if you want to answer this, but is it possible that some of the claims could be inflated or not real, have you experienced that or has there been a discussions around that.

We are having constructive conversations, we are trying to understand the third-parties and their claims and how they have made up their claims and that's part of the process of settlement discussions its really understanding how they have made up their claims.

Okay. I will follow-up Randy offline.

Its Joe here. The other things I would note is the adjustments this quarter are not all related to claims and litigation, there is a number of other factors driving it. So I just don’t want you to walk away thinking that whole adjustment was based on claims alone. As I noted earlier, and as Donald noted, it was also true ups to some of the restoration costs from last year, some of the mutual assistance cost, so there is a lot of different things moving inside that adjustment that we have booked this quarter.

Okay. I will follow-up with Randy. Thank you very much guys.

Thanks. Have a good day Andy.

And we do have a follow-up from Julien Dumoulin-Smith from Bank of America. Your line is now open.

Hey guys, sorry just to come back very Quickly, the TDISC plan that you expected to file later this year. I would imagine that doesn’t change your near year CapEx for instance based on the reasoning for it, but I suspect that adding greater than you - adding back potentially some of the CapEx that might have been pushed out given the ambiguity earlier and the reason for the legislation itself, you could actually see that reintroduced and increased. I just want to understand what your current assumption is relative to the baseline in TDISC and how that could be updated as you think about it later this year?

Yes. Are you talking about the gas side Julien?

Admittedly both sides.

Okay, yes. On the gas side, possibly I don’t think we have enough clarity to go back and sort of back cast what we originally filed. Keep in mind those are pretty small changes in the original plan as we adjusted through the various filings. So even if it was kind of a back to where we were it’s not a significant shift there. On the electric side it’s possibly a little more interesting as we look at advanced technologies and some of those, but too early to say that with clarity.

Alright. I will leave it there. Thank you.

Thank you.

I'm showing no further questions at this time. I would now like to turn the call over to Joe Hamrock, CEO for closing remarks.

Thank you Deranda and thanks all of you for your participation today and your continued interest in, in support of NiSource. Have a great day.

Ladies and gentlemen thank you for participating in today’s conference this concludes the program. You may disconnect and have a wonderful day.