Good day and thank you for standing by, and welcome to the Q1 2021 NiSource Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand today's conference over to your speaker for today, Randy Hulen, Vice President of Investor Relations and Treasurer.

Thank you, and good morning, everyone, and welcome to the NiSource first quarter 2021 investor call. Joining me today are Joe Hamrock, our Chief Executive Officer; Donald Brown, our Chief Financial Officer; and Shawn Anderson, our Chief Strategy and Risk Officer. The purpose of this presentation is to review NiSource's financial performance for the first quarter of 2021 as well as provide an update on our operations, growth drivers and financing plans. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available on nisource.com. Before turning the call over to Joe, Donald and Shawn, just a quick reminder. Some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A and Risk Factors sections of our periodic SEC filings. Additionally, some of the statements made on this call relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and segment information, including our full financial schedules available at nisource.com. With all that out of the way, I'd like to turn the call over to Joe.

Thanks, Randy. Good morning, everyone. And thank you for joining us. Hopefully, you've all had a chance to read our first quarter earnings release which we issued earlier today. With the successful completion of last month's convertible issuance, NiSource is well-positioned to execute the next stage of our growth plan, driven by safety and asset modernization programs, as well as our electric generation transmission strategy. In Indiana, we kicked off our 2021 Integrated Resource Plan process, which will inform our strategy beyond 2023 and we initiated four new renewable energy projects. We continue to expect that our infrastructure and generation investments will drive compound annual growth of 7% to 9% in diluted net operating earnings per share from the midpoint of our narrowed 2021 guidance through 2024. We also expect to reduce greenhouse gas emissions 90% by 2030. Let's turn now to Slide 3 and take a closer look at our key takeaways. In the first quarter, we delivered non-GAAP diluted net operating earnings of $0.77 per share. These results include increased earnings from our safety and modernization investments and reflect the profile of our business without Columbia Gas of Massachusetts. As you saw in our release, today we narrowed our 2021 non-GAAP diluted net operating earnings guidance to a $1.32 to a $1.36 per share, which represents the upper half of the previous range. This narrowed range reflects lower than previously expected COVID impacts and more certainty with regulatory outcomes offset by slightly higher diluted share count resulting from the equity unit issuance. We expect to make approximately $10 billion in capital investments through 2024. These include annual investments of $1.9 billion to $2.2 billion in growth, safety and modernization programs. In addition, our investments in renewable generation are now expected to total approximately $2 billion over this period. As we outlined at our 2020 Investor Day, NiSource expects to grow its diluted net operating earnings per share by 7% to 9% on a compound annual growth rate basis from 2021 through 2024 including near-term annual growth of 5% to 7% through 2023. Columbia Gas of Pennsylvania received an order in its 2020 rate case and it has filed a new rate case to support its safety and modernization plans, which I will discuss in more detail later in this call. In addition, we have continued to successfully execute on our renewable energy strategy adding four new renewable energy projects as part of our Your Energy, Your Future initiative. Now I'd like to turn the call over to Donald who will discuss our first quarter financial performance in more detail.

Thanks, Joe and good morning, everyone. Looking at our first quarter 2021 results in Slide 4, we had non-GAAP net operating earnings of about $305 million or $0.77 per diluted share compared to non-GAAP net operating earnings of about $291 million or $0.76 per diluted share in the first quarter of 2020. I would note that 2021 results exclude earnings related to Columbia Gas of Massachusetts or CMA due to the sale closing in October of 2020. Looking more closely at our segment three-month non-GAAP results on Slide 5, gas distribution operating earnings were about $374 million for the quarter, representing a decline of approximately $18 million versus last year. Operating revenues, net of the cost of energy and tracked expenses were down about $84 million due to the sale of CMA, partially offset by increased infrastructure program revenues and customer growth. Operating expenses also net of the cost of energy and tracked expenses were lower by about $66 million, mostly due to the CMA sale and lower employee-related costs, partially offset by increased depreciation and amortization expense. In our Electric segment, three-month non-GAAP operating earnings were about $91 million, which was approximately $11 million higher than the first quarter of 2020. This increase was driven primarily by an approximately $9 million increase in operating revenues, net of the cost of energy and tracked expenses due to infrastructure investments and increased customer usage. Operating expenses net of the cost of energy and tracked expenses were slightly lower due to environmental and employee-related cost. Now, turning to Slide 6, I'd like to briefly touch on our debt and credit profile. Our debt level as of March 31 was about $9.8 billion, of which about $9.1 billion was long-term debt. The weighted average maturity in our long-term debt was approximately 15 years, and the weighted average interest rate was approximately 3.7%. At the end of the first quarter, we maintained net available liquidity of about $1.9 billion, consisting of cash and available capacity under our credit facility and other accounts receivable securitization program. Our credit rating from all three major rating agencies are investment grade and we remain committed to maintaining our current investment grade ratings. Taken together, this represents a solid financial foundation to support our long-term safety and infrastructure investments. Let's take a quick look at Slide 8, which highlights our updated financing plan. I would just note that following last month's equity unit issuance, we no longer expect to issue block or discrete equity through 2024. This issuance that received 100% equity credit from all three agencies allows NiSource to capture share price upside and provide timely proceeds for our renewable investment. Most importantly, this issuance significantly de-risks our financing plans and is consistent with all of our earnings and credit commitments. Now, I'd like to turn the call back over to Joe, who will provide some infrastructure investment and regulatory updates for our gas and electric business.

Thank you, Donald. Now, let's look at some NiSource utilities highlights for the first quarter of 2021 starting with our gas operations on Slide 9. In Pennsylvania, the Public Utility Commission approved an annual revenue increase of $63.5 million in the rate case we filed in 2020. This reflects our investments to modernize and upgrade our natural gas distribution system, as well as maintain the continued safety of the system. The commission also approved an ROE of 9.86% with rates effective as of January 23 of this year. In addition, the company filed another base rate case in March to support its ongoing safety and modernization program. In Kentucky, we received an order on April 30 from the Public Service Commission in our Safety Modification and Replacement Program Tracker filing. This order approves $40 million in upgrades and replacements under way in 2021 and $2.6 million of incremental revenue. In Indiana, NIPSCO continues its long-term gas modernization program. Nearly $950 million in capital investments are planned through 2025 to be recovered through semi-annual adjustments to the existing gas transmission, distribution and storage improvement charge or TDSIC tracker. Rates approved in our 2020 filing became effective in January of this year. In Virginia, we implemented rates approved in our 2020 Steps to Advance Virginia Energy or SAVE tracker filing. Now let's look at our electric operations on Slide 10. NIPSCO has filed notice to terminate its current electric transmission, distribution and storage improvement charge or TDSIC plan. We expect to file a new five-year plan on or soon after June 1. The updated plan will include newly identified projects aimed at enhancing service and reliability for customers, as well as some previously identified projects. As mentioned earlier, we have begun our 2021 Integrated Resource Plan or IRP process. Similar to our 2018 IRP, the process will include an RFP for new resources. We plan to receive input from customers in a wide variety of other stakeholders throughout the year and expect to submit our plan to the Indiana Utility Regulatory Commission by November. I would now like to ask Shawn to provide more on the significance of the IRP and an update about our renewable generation projects.

Thank you, Joe. We continue to make strong progress on our renewable generation transition. In total, we have announced 14 renewable projects which will likely fill the balance of capacity necessary to replace the retiring units at our Schahfer generating station, which continues to track for retirement by May 2023. Four new projects have been announced in 2021. They include two projects with EDP renewables, Indiana Crossroads Solar Park, which is a build-transfer agreement and is expected to enter service in 2022. And Indiana Crossroads II which is a wind project announced as a power purchase agreement or PPA and is expected to enter service in 2023. We also announced Fairbanks Solar, a build-transfer agreement with Invenergy for a 250-megawatt project expected to be online in 2023. And finally, we signed a build-transfer agreement with Capital Dynamics for a 200-megawatt project expected to be operational in 2023 named Elliot Solar. We've already begun the regulatory approval process for these projects. Upcoming shortly in the second quarter of 2021 we expect an order from the IURC on four previously filed projects our Dunns Bridge I and II, Cavalry Solar Energy Center and Green River Solar Projects. All of these updates continue to track on time to retire nearly 80% of our remaining coal-fired generation by 2023 and retire all coal generation by 2028 to be replaced by lower cost, reliable and cleaner options. The plan is expected to drive a 90% reduction in our greenhouse gas emissions by 2030 and is expected to save our electric customers an estimated $4 billion over 30 years. The executed agreements we've announced are also within budget, representing approximately $2 billion of renewable generation investments. The projects these agreements support represent NIPSCO's investment interest in the replacement capacity which equates to approximately half of the total capacity needed. The remaining new capacity is in the form of power purchase agreements. Finally, as Joe has highlighted, in the fourth quarter of 2021, NIPSCO plans to submit a new integrated resource plan to the IURC that will continue to outline its long-term generation plans including the planned retirement of Michigan City Generating Station. The preferred plan that emerges from the 2021 IRP could create additional capital investment opportunities. We are excited about the significant progress in executing our plan and we look forward to more updates in the future quarters. Now, I'd like to turn the call back over to Joe.

Thank you, Shawn. I'd like to turn to our foundational commitment; safety. Our Safety Management System, SMS, is an established operating model within NiSource. Recent advances in SMS include expanded quality management and achieving Gold Shovel Standard Certification. We are continuously enhancing process safety capabilities and ensuring effective asset management to reduce risks. I'd also like to note that we've begun a third-party validation of our SMS implementation and we are working toward accreditation in 2022. Before turning to the Q&A portion of today's call, I'll share and reiterate a few key takeaways. With last month's convertible issuance, NiSource is well positioned to execute the next stage of our growth plan driven by continued execution of our safety and asset modernization programs as well as our electric generation transition strategy. We are narrowing our 2021 non-GAAP deluded net operating earnings guidance to $1.32 to $1.36 per share, which represents the upper half of the previous guidance. We expect to make approximately $10 billion in capital investments through 2024. These include annual investments of $1.9 billion to $2.2 billion in growth, safety and modernization programs. In addition, our investments in renewable generation are now expected to total approximately $2 billion over this period. As we outlined at our 2020 Investor Day, NiSource continues to expect to grow its deluded net operating earnings per share by 7% to 9% on a compound annual growth rate basis from 2021 through 2024 including near-term annual growth of 5% to 7% through 2023. In addition, we now have a total of 14 renewable energy projects as part of our Your Energy, Your Future initiative. Thank you all for participating today and for your ongoing interest in and support of NiSource. We're now ready to take your questions.

[Operator Instructions] And your first question is from the line of Shahriar Pourreza of Guggenheim.

So, just a couple quick questions here, Joe and Donald. So, obviously, the block equity needs are solved but maybe curious how you're sort of thinking about further asset optimization, especially with some of the healthier prints we've seen with Centerpoint and Duke. I guess, Joe, do you see value maybe to further simplify your jurisdictional footprint, maybe shrink your balance sheet, shut off the ATMs and internal programs, and take some incremental dry powder especially as we're seeing additional opportunities on the renewable side ramp up over the next few years? Further of a strategic start question.

Yes. Thanks, Shar. And as we've said consistently, we're always exploring opportunities to drive and sustain long-term shareholder value. That's really the underpinning of the question. And options for shaping our footprint and our business mix are a key part of that. And we objectively and thoroughly evaluate those on an ongoing basis. The key backdrop for us is the current plan that has 10% or higher rate base growth in each of our utility companies. And that comprises the $40 billion of identified investments over 20 years that I think is uniquely well balanced and supported by constructive regulatory mechanisms and policy environments across our jurisdiction. So, that all adds up to a strong hand with options and time to ensure any moves that we might make truly enhance value on a risk-adjusted basis. So, very open minded, very deliberate and thoughtful about that and as we work through particularly this year, our electric IRP as we've talked about today and we refine other long-range investment plans particularly beyond 2023, it's pretty clear plan out through '23. These options will all remain on the table. We'll continue to look at those opportunities. And then on the point about LDC values, we're all seeing that LDC value indicators in the private markets appear to be really strong and either more aligned with the fundamentals and the sustainable growth that we see in the business. And so, I think it's important to take that as an input that kind of cuts both ways and then maybe even extending that perspective just a bit in a clean energy transition supporting a modern high-tech economy. It's more important that we solve for and plan for secure, reliable, resilient energy systems. And we think the natural gas system has a key role in that transition. So, we're looking at all of that with a long-term shareholder value perspective. And it'll always be an alternative to traditional financing as you noted.

And let me add Joe, I'd say if you look at the financing we've done, it really does put us in a place of having more flexibility because it firmly puts this in our target range of 14% to 15% episode of debt, which gives us some flexibility really think strategically about how we grow the business. And certainly, as we continue to look at the long-term plan, we'll look at portfolio, but we'll also look at what are those growth opportunities in our business, and the timing of the growth investments and how we finance those.

Terrific. Thanks, Donald. And then, just on sort of the uptick in renewable spend get to see that there. And obviously, you guys highlighted there could be incremental spend coming from the new IRP. Can you just remind us if the incremental spend that can come about is that sort of embedded in your current trajectory as we think about rate base growth or earnings especially as you guys extend through '24, right, or potential new opportunities that come about from the IRP potentially accretive to the - to how you guys currently guide? So, extend the runway or accretive and assuming that you guys are embedding a 50/50 PPA versus JV structure on any new opportunities anyway it appears.

Yes. If we think about the - if you're referring to the new IRP that we just entered into that's really going to look at opportunities and what that generation strategy is post-2024, so Michigan City replacement opportunities. So, it'll be an extension of that. And so, we'll get through that by the end of the year. That will provide some insight in terms of what that portfolio would look like beyond 2024 and potentially provide some insight on what investment opportunities there might be for us.

Yes. And so, just to bring that back around, the $2 billion we talked about today is all included in the growth rate guidance that we reaffirmed today. And I'd note that just this morning, even as we speak, the Indiana Commission approved three more renewable projects and another PPA, so really four projects like those being the Dunns Bridge project and the Cavalry project. So, with those now approved, approximately two-thirds of the $2 billion that we've talked about is already approved by the commission.

Your next question is from the line of Charles Fishman of Morningstar.

Good morning, Charles.

Charles, your phone is muted, please unmute.

I'm sorry. Joe, you said that you had more certainty with respect to regulatory outlook and you just had a decision or recently had a decision in Pennsylvania. Is that what you base that statement on? Is it because you have a ROE in that decision where you had a settlement the time before or is there any more color you can provide to that statement you made?

Yes. Thanks, Charles. Good to hear from you this morning. That's a big part of the '21 regulatory agenda but also a number of our trackers are already approved. So we're well through the regulatory calendar for 2021. And so that total picture is the basis for the revision to our guidance.

Okay. And then if I could just ask just a couple housekeeping things probably for Donald. On the guidance now, when we say the 7% to 9% on top of '21 guidance, is that the original guidance of $1.28 to $1.36 or the revised guidance this morning?

It would be the revised guidance, the narrowed guidance.

The growth is off the narrowed guidance?

That's right.

Okay. And then, I certainly had a discussion with Randy and Chris on the equity units. But just I guess a question I forgot to ask them is, if you're willing to answer or giving an answer to this. Can you give us any guide at the weighted average shares in '21?

Weighted average shares in '21.

Yes. That's for your EPS.

Have patience. I don't know if Randy - if you've got - why don't we follow up with you?

That's fine. That's just a modeling question. Thank you. Thank you. That's all I had.

If I can insert just a second. If you just take where we ended 2020, Charles which was about $392 million and you assume the equity units and even the price they were issued at $24.51 that would be approximately $35 million additional shares. But of course, you'd only take seven-twelfths of that if you will from a weighted average standpoint. And then of course then you would add in an assumption around the ATM which we've guided toward $200 million to $300 million and divide it by a price perhaps $24 or $25 you get about $12 million additional shares there. But usually, we settle on those shares in December so they won't have a huge impact from a weighted average standpoint. But that should give you a good indication for modeling on where the share count is.

Your next question is from the line of Julien Dumoulin-Smith with Bank of America.

Thanks for the time and opportunity to connect here.

Hey. Morning, Julian.

Good morning.

Thank you. Hey, perhaps if I could follow up on Charles question a little bit here. You talk about being more front footed and thinking strategically here after raising the latest liquidity and improving your metrics. Can you elaborate what those criteria might be or how are you thinking about things? I mean, is it about having a certain critical mass in certain states? Is it about being weighted electric versus gas or are there other factors? I just want to - if you don't mind elaborating a little bit.

Yes. Sure. I mean it goes back to risk-adjusted growth prospects and strong balance sheet for the cash generation. But among the factors that you mentioned, business mix, and I would characterize the scale and the jurisdiction as one of those factors as well. All of those things go into the way we look at the portfolio. And we'll continue to look at those as we go forward. But you put in front of that the $40 billion of identified investment and the growth rate that's driven off of the current footprint. And then it's really that's kind of your base case for evaluation of strategic alternatives.

Your next question is from the line of Richard Sunderland of JPMorgan.

Thanks for taking my questions. Maybe just starting off with the narrow guidance range. What are your COVID assumptions baked into that over the balance of the year and realized on the quarter?

Yes. Thanks for the question. So, for the quarter, overall, COVID did not have a material impact on us. Really had some offsetting items in terms of higher residential sales offsetting continued lower sales from our small commercial and some industrial. And so as we think - so, what we've done is we removed that $0.05 that we had in our guidance with the expectation that it's not going to be material for the balance of this year. Certainly, we've got some risk from a bad debt expense. But even with that, we think that won't be material for us for the balance of this year.

Got it. That's very clear. And then just turning back to the optimization discussion. I can appreciate that the financing strategy has been derisked materially falling to equity units. But just curious as a financing tool specifically how you view that as a piece of the toolset meaning you removed these discrete equity needs for the renewables through 2024. So, does that kind of push out the financing driven timing of any elements there or is it may be tied to that longer term look around the 2021 IRP that we should be getting later this year? I know it's kind of a specific angle here but curious for any thoughts.

Yes. Certainly, as Joe talked about, we're always evaluating the plan and there's quote in each of our operating companies so we'll continue to do that. As we look at portfolio, that's an ongoing analysis as we look at what's the best alternative to finance the plan. So, I would not say that we have to wait for any other catalysts in terms of our business plan changing including that IRP. It's something that we'll continue to use the data points from those transactions and others to update our analysis. And if it makes sense to do something with portfolio, we would absolutely do that. Again, it's always against evaluating our plan with significant growth 8% to 10% or 10% to 12% rate base growth in all of our businesses and financing that in the most effective way.

[Operator Instructions] And your next question is from the line of [David Peter] with [indiscernible] Research.

Just on the TDSIC filing in Indiana in June. I guess what prompted the termination of the old program and I guess what should we sort of expect kind of in this new filing? Is it more of the same?

Yes. For the TDSIC program, yes, there's opportunity driven off of the legislation from a couple of years ago to enhance the investment mix in a TDSIC filing. So that's certainly one of the opportunities we'll be looking at. In the areas of grid modernization even technology footprint, all of those are in the mix of consideration for the next plan. And then, you also have an interplay between your TDSIC timing and your rate cases. So, that's another driver of the timing for this filing.

Great. And then, the second question just with respect to potential legislation out there at the federal level. If you were to see some form of direct payment for PTCs or ITCs come across, have you looked at how that might impact your renewable strategy current or future projects just given that you guys are using a good amount of tax equity?

Yes. That's something we're paying attention to. There's not a lot of detail yet on how that might happen, and from the timing of where we are in our plan, how to impact that plan. So, I think current expectations our plan won't change, but certainly direct payments could provide some upside. But we've got to get more information on what that means. And again, it's also based upon the timing of that legislation with our financing of our current projects.

And then, strategically, longer term, while we're on that topic of the tax credits, we like to see that concept expanded to support renewable natural gas and/or hydrogen because in the clean energy transition there's not only a room for but a need for alternative energy across the spectrum. So, we think there's an opportunity there as well.

At this time, there are no further questions. I'll hand over the call to Joe Hamrock, President and Chief Executive Officer for any closing remarks.

Thanks, Stephanie. Appreciate it. And thanks again to all of you for joining us today. We appreciate your interest and your support. We look forward to more updates in the future. Our plan is dynamic, a number of things moving at any given time. So, it's always a good opportunity. And we appreciate catching up with you. Look forward to seeing many of you at the upcoming AGA Financial conference. So, until then, make every day a safe day. Take care.

Thank you. This does conclude today's conference call. You may now disconnect.