NiSource Reports Second Quarter 2018 Earnings

MERRILLVILLE, Ind., Aug. 1, 2018 /PRNewswire/ -- NiSource Inc. (NYSE: NI) today announced, on a GAAP basis, net income available to common shareholders for the three months ended June 30, 2018 of $23.2 million, or $0.07 per share, compared to a net loss of $44.4 million, or $0.14 per share, for the same period of 2017. For the six months ended June 30, 2018, NiSource's net income available to common shareholders was $299.3 million, or $0.86 per share, compared to $166.9 million, or $0.51 per share, for the same period of 2017.

NiSource also reported net operating earnings available to common shareholders (non-GAAP) of $26.4 million, or $0.07 per share, for the three months ended June 30, 2018, compared to $33.3 million, or $0.10 per share, for the same period of 2017. For the six months ended June 30, 2018, NiSource's net operating earnings available to common shareholders (non-GAAP) were $286.1 million, or $0.83 per share, compared to $263.9 million, or $0.81 per share, for the same period of 2017.

Schedule 1 of this press release contains a complete reconciliation of GAAP measures to non-GAAP measures.

During the second quarter, NiSource took a number of steps to address cash and credit matters related to federal tax reform. These included a common equity block offering of approximately $600 million in May, followed by long-term debt refinancing initiated in June and completed in mid-July, which included the issuance of $400 million of preferred stock and $350 million of five-year notes, the proceeds of which were used to acquire certain outstanding notes totaling $760 million through tender offers and redemptions.

"The actions we have taken through the first half of 2018 enhance the sustainability of our long-term infrastructure investment strategy, which is driving value for our customers, communities and investors," said NiSource President and CEO Joe Hamrock. "Our financing activities helped mitigate the cash flow and credit impacts arising from federal tax reform, while strengthening our credit metrics and balance sheet."

Additional information for the quarter ended June 30, 2018 is available on the Investors section of www.nisource.com, including segment and financial information and our presentation to be discussed at our second quarter 2018 earnings conference call scheduled for August 1, 2018 at 9:00 a.m. ET.

Growth, Capital Forecasts Reaffirmed

NiSource is on track to invest $1.7 to $1.8 billion in its utility infrastructure capital programs in 2018 and deliver non-GAAP net operating earnings in the range of $1.26 to $1.32 per share for the year. The company expects to make capital investments of $1.6 to $1.8 billion and grow its net operating earnings per share (non-GAAP) and dividend by 5 to 7 percent each year through 2020.

NiSource also remains committed to maintaining investment grade credit ratings, and on June 4, 2018, Fitch Ratings affirmed its long-term issuer default rating for NiSource at BBB and upgraded NiSource's short-term debt rating to F2 from F3. The company also maintains investment-grade ratings from Moody's (affirmed at Baa2 in February 2018) and Standard & Poor's (affirmed at BBB+ in May 2018). All three agencies have stable outlooks for NiSource. As of June 30, 2018, NiSource had approximately $2.2 billion in net available liquidity, consisting of cash and available capacity under its credit facility and accounts receivable securitizations.

NiSource reminds investors that it does not provide a GAAP equivalent of its earnings guidance due to the impact of unpredictable factors such as fluctuations in weather, asset sales and impairments, and other items included in GAAP results.

Second Quarter 2018 and Recent Business Highlights

Gas Distribution Operations

• Northern Indiana Public Service Company (NIPSCO) is awaiting an order on the settlement of its base rate case, which remains pending before the Indiana Utility Regulatory Commission (IURC). The request, which seeks NIPSCO's first natural gas base rate increase in more than 25 years, supports continued investment in system upgrades, technology improvements and other measures to increase pipeline safety and system reliability. If the settlement filed in April 2018 is approved, it is expected to result in an annual revenue increase of $107.3 million, inclusive of various tracker programs and reflecting the impact of federal tax reform. An order is expected in the third quarter of 2018.
• Also in Indiana, NIPSCO's application for a new seven-year gas infrastructure modernization program remains pending before the IURC. The filing represents approximately $1.25 billion of gas infrastructure investments through 2025. The program allows for modernization of natural gas infrastructure and recovery of associated costs through a tracker known as the Transmission, Distribution and Storage System Improvement Charge (TDSIC). NIPSCO has invested more than $400 million in the previously approved program since 2014. An IURC order on the new seven-year plan is expected in the fourth quarter of 2018. NIPSCO's latest TDSIC tracker update request, covering approximately $54 million of investments made in the second half of 2017, remains pending before the IURC with an order expected in the third quarter of 2018.
• Columbia Gas of Pennsylvania's base rate case remains pending before the Pennsylvania Public Utility Commission with a decision expected in the fourth quarter of 2018. Filed in March 2018, the request seeks authority to adjust base rates for distribution service to support continued upgrades and replacement of the company's natural gas distribution pipelines and to reflect the impact of federal tax reform. If approved as filed, the request would provide the company with an opportunity to earn a fair return on its infrastructure capital investments and enhance pipeline safety through a number of initiatives. The request seeks an annual revenue increase of approximately $46.9 million.
• On April 25, 2018 the Public Utilities Commission of Ohio (PUCO) approved Columbia Gas of Ohio's (COH) annual Infrastructure Replacement Program tracker adjustment. Cost recovery on approximately $207 million of infrastructure investments made in 2017 began with the May billing cycle. This well-established pipeline replacement program covers replacement of priority mainline pipe and targeted customer service lines.
• Columbia Gas of Massachusetts' base rate case remains pending before the Massachusetts Department of Public Utilities (DPU). The request, filed April 13, 2018, seeks authorization to increase base rates to recover operating costs associated with federal and state regulatory mandates and capital costs associated with upgrading its gas distribution infrastructure. If approved as filed, it is expected to increase annual revenues by about $24.1 million, net of infrastructure trackers and reflecting the impact of federal tax reform.
• Also in Massachusetts, the DPU approved CMA's 2018 Gas System Enhancement Plan on April 30, 2018. This approval authorizes recovery of incremental 2018 capital investments of about $84 million, and new rates took effect on May 1, 2018.
• On July 31, 2018, Columbia Gas of Maryland filed a settlement in its base rate case pending before the Maryland Public Service Commission (PSC). The request seeks to adjust rates for distribution service so the company can continue to replace aging gas pipeline and adopt pipeline safety upgrades. It also reflects reduced corporate tax rates to include the impact of federal tax reform. If approved as filed, the settlement is expected to increase annual revenues by approximately $3.7 million. A PSC order is expected in the fourth quarter of 2018. Also in Maryland, a five-year extension of the company's Strategic Infrastructure Development Enhancement Plan remains pending before the PSC.

Electric Operations

• NIPSCO's two major electric transmission projects -- Greentown-Reynolds and Reynolds-Topeka -- were completed and placed into service in June 2018. The 100-mile 345-kV and 65-mile 765-kV projects are expected to enhance region-wide system flexibility and reliability, and represent an investment of approximately $600 million.
• NIPSCO continues to discuss its 2018 Integrated Resource Plan (IRP) with stakeholders in order to develop a balanced plan to meet customers' long-term electric energy needs. Under the last IRP, submitted in November 2016, the company outlined a plan to retire 50 percent of its coal-fired generation fleet by 2023, including Bailly Generating Station Units 7 and 8, which were retired on schedule in May. The 2018 IRP, which is expected to be submitted to the IURC by the end of this year, will contain additional details on NIPSCO's long-term capacity plans.
• Investments in NIPSCO's approximately $193 million Coal Combustion Residuals capital projects are well underway, and expected to be completed by the end of 2018. These projects include environmental upgrades at its Michigan City Unit 12 and R.M. Schahfer Units 14 and 15 generating facilities. The IURC in December 2017 approved a settlement authorizing these projects and recovery of associated costs.
• NIPSCO continues to execute on its seven-year electric infrastructure modernization program, which includes enhancements to its electric transmission and distribution system designed to further improve system safety and reliability. The IURC-approved program represents approximately $1.25 billion of electric infrastructure investments expected to be made through 2022. A tracker update request, filed on January 30, 2018, covering approximately $75 million in investments made from May 2017 through November 2017, was approved by the IURC on May 30, 2018. NIPSCO filed its latest update request on July 31, 2018 seeking a semi-annual incremental rate decrease of $10.6 million, due primarily to the pass back to customers of a $14.1 million base rate refund for the January through May 2018 period related to federal tax reform.

About NiSource 
NiSource Inc. (NYSE: NI) is one of the largest fully-regulated utility companies in the United States, serving approximately 3.5 million natural gas customers and 500,000 electric customers across seven states through its local Columbia Gas and NIPSCO brands. Based in Merrillville, Indiana, NiSource's approximately 8,000 employees are focused on safely delivering reliable and affordable energy to our customers and communities we serve. NiSource has been designated a World's Most Ethical Company by the Ethisphere Institute since 2012 and is a member of the Dow Jones Sustainability - North America Index and was named by Forbes magazine as the top-rated utility among America's Best Large Employers in 2017. Additional information about NiSource, its investments in modern infrastructure and systems, its commitments and its local brands can be found at www.nisource.com. Follow us at www.facebook.com/nisource, www.linkedin.com/company/nisource or www.twitter.com/nisourceinc.  NI-F

Forward-Looking Statements 
This press release contains forward-looking statements within the meaning of federal securities laws. Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. Examples of forward-looking statements in this press release include statements and expectations regarding NiSource's or any of its subsidiaries' business, performance, growth, commitments, investment opportunities, and planned, identified, infrastructure or utility investments. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ materially from the projections, forecasts, estimates, plans, expectations and strategy discussed in this press release include, among other things, NiSource's debt obligations; any changes in NiSource's credit rating; NiSource's ability to execute its growth strategy; changes in general economic, capital and commodity market conditions; pension funding obligations; economic regulation and the impact of regulatory rate reviews; NiSource's ability to obtain expected financial or regulatory outcomes; any damage to NiSource's reputation; compliance with environmental laws and the costs of associated liabilities; fluctuations in demand from residential and commercial customers; economic conditions of certain industries; the success of NIPSCO's electric generation strategy; the price of energy commodities and related transportation costs or an inability to obtain an adequate, reliable and cost-effective fuel supply to meet customer demands; the reliability of customers and suppliers to fulfill their payment and contractual obligations; potential impairments of goodwill or definite-lived intangible assets; changes in taxation and accounting principles; potential incidents and other operating risks associated with our business; the impact of an aging infrastructure; the impact of climate change; potential cyber-attacks; construction risks and natural gas costs and supply risks; extreme weather conditions; the attraction and retention of a qualified work force; advances in technology; the ability of NiSource's subsidiaries to generate cash; tax liabilities associated with the separation of Columbia Pipeline Group, Inc.; NiSource's ability to manage new initiatives and organizational changes; the performance of third-party suppliers and service providers; the availability of insurance to cover all significant losses and other matters set forth in Item 1A, "Risk Factors" section of NiSource's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in other filings with the Securities and Exchange Commission. A credit rating is not a recommendation to buy, sell or hold securities, and may be subject to revision or withdrawal at any time by the assigning rating organization. In addition, dividends are subject to board approval. NiSource expressly disclaims any duty to update, supplement or amend any of its forward-looking statements contained in this press release, whether as a result of new information, subsequent events or otherwise, except as required by applicable law.

Regulation G Disclosure Statement 
This press release includes financial results and guidance for NiSource with respect to net operating earnings available to common shareholders, which is a non-GAAP financial measure as defined by the SEC's Regulation G. The company includes this measure because management believes it permits investors to view the company's performance using the same tools that management uses and to better evaluate the company's ongoing business performance. With respect to such guidance, it should be noted that there will likely be a difference between this measure and its GAAP equivalent due to various factors, including, but not limited to, fluctuations in weather, the impact of asset sales and impairments, and other items included in GAAP results. The company is not able to estimate the impact of such factors on GAAP earnings and, as such, is not providing earnings guidance on a GAAP basis.

SOURCE NiSource Inc.

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