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NiSource CEO Discusses Q3 2010 Results – Earnings Call Transcript

NiSource CEO Discusses Q3 2010 Results â¿¿ Earnings Call Transcript

NiSource Inc. (

NI

)

Q3 2010 Earnings Call Transcript

October 29, 2010 9:00 am ET

Executives

Glen Kettering – SVP, Corporate Affairs

Bob Skaggs – President and CEO

Steve Smith – CFO and EVP

Analysts

Xin Liu – JPMorgan

Theresa Kim [ph] – Gideon [ph]

Carl Kirst – BMO Capital Markets

Paul Ridzon – KeyBanc Capital Markets

Scott [ph] – Decade Capital

Presentation

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Operator

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Previous Statements by NI
» NiSource Inc. Q2 2010 Earnings Call Transcript
» NiSource Inc. Q1 2010 Earnings Call Transcript
» NiSource, Inc. Q4 2009 Earnings Call Transcript
» NiSource Inc. Q3 2009 Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the third quarter 2010 NiSource earnings conference call. My name is Tijuana, and I will be your coordinator for today. (Operator instructions) I would now like to turn the conference over to Mr. Glen Kettering, Senior Vice President of Corporate Affairs. You may proceed.

Glen Kettering

Thank you and good morning. On behalf of NiSource, I’d like to welcome you to our quarterly analyst call. Joining me this morning are Bob Skaggs, President and Chief Executive Officer; Steve Smith, Executive Vice President and Chief Financial Officer; and Randy Hulen, Managing Director of Investor Relations.

As you know the focus of today’s call is to review our financial performance for the third quarter of 2010 and provide a business update. We will then open the call to your questions. At times during the call, we will refer to the supplemental slides available on our website at NiSource.com.

I’d like to remind you that some of the statements made on this conference call will be forward-looking statements. 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 MDNA and risk factors sections of our periodic SEC filings.

And now I’d like to turn the call over to Bob Skaggs.

Bob

Skaggs

Thanks Glen, and good morning, and thanks for joining us. Today, we will cover several key points before opening the line to your questions. First, I will touch on the team’s strong performance thus far in 2010, which has enabled us to increase our full-year earnings outlook for 2010. I will also speak to our third quarter results, which very closely in line with our business plan, and finally, I will highlight several areas, where our team continues to execute our plan to build shareholder value and long-term investment driven earnings growth.

So first, let us turn to our 2010 non-GAAP earnings guidance. If you recall that at the beginning of 2010, we provided net operating earnings guidance of $1.10 to $1.20 per share, the midpoint of which represented about 7% growth from our 2009 earnings level. We are pleased to announce that we now anticipate full-year net operating earnings to fall within a range of $1.20 to $1.25 per share, again non-GAAP. This improved earnings outlook reflects the core strength of our team’s 2010 performance, as well as continued signs of resilience in some of our key markets.

I am confident the team will deliver on our updated outlook by executing on our business strategy, meeting the needs of our customers and enhancing shareholder value through long-term infrastructure investment driven growth. As noted in today’s news release, we also remain strongly committed to growing annual earnings by 3% to 5% on a long term, sustainable basis. To that point, during the third quarter we significantly improved our flexibility to fund our deep inventory of infrastructure investment opportunities by successfully executing $400 million common stock equity offering.

The offering was fully subscribed under favorable pricing plans, and aligned very nicely with our infrastructure investment profile. Notably, we are now in a position to fund our capital investment opportunities at the run rate level of about $1 billion annually. As I have noted in the past, we expect that in some years our CapEx level will be more than $1 billion, and in some it may be less. But the key takeaway is that we are now poised to spend at our optimal investment level on a year in and year out basis, fundamental breakthrough for the team as well as for all of our stakeholders.

And on that note, throughout this process, we have remained mindful of our (inaudible) of stakeholders’ commitments. One, to create long-term shareholder value; two, to maintain and eventually grow our dividend; and three, to preserve our investment grade credit rating. Our equity offering meets these key criteria, and positions NiSource to sustainably grow long-term earnings at the upper end of our corrected range.

As we have discussed, we do have opportunities to grow at a higher rate over the next couple of years as we establish a new baseline earnings level in 2012 as a result of executing on our Indiana regulatory strategy. Finally, I can’t leave this subject without expressing our deep appreciation to all of NiSource’s financial stakeholders for your support as we’ve traveled the long and sometimes bumpy road to strengthening the company’s financial profile, and enhancing our investment capabilities. I can assure you that the entire team is as focused and energized as ever as we move forward and continue to build long-term sustainable growth.

Now let’s turn to our third quarter results, and the supplemental slides that are available on NiSource.com. On slide 3, you can see that we delivered third quarter net operating earnings non-GAAP of about $10 million, or $0.04 per share, compared to $0.07 per share last year. Operating earnings for the quarter were about $110 million, compared to about $135 million for the same period last year.

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