NiSource (NI) Q1 2012 Earnings Call May 01, 2012 9:00 am ET Executives Glen L. Kettering - Senior Vice President of Corporate Affairs Robert C. Skaggs - Chief Executive Officer, President, Director and Interim Chief Executive Officer for Gas Distribution Segment Stephen P. Smith - Chief Financial Officer and Executive Vice President Analysts Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division Stephen J. Maresca - Morgan Stanley, Research Division Carl L. Kirst - BMO Capital Markets U.S. James L. Dobson - Wunderlich Securities Inc., Research Division Charles J. Fishman - Morningstar Inc., Research Division Faisel Khan - Citigroup Inc, Research Division Craig Shere - Tuohy Brothers Investment Research, Inc. Unknown Analyst Yves Siegel - Crédit Suisse AG, Research Division Presentation Operator
Robert C. SkaggsThanks, Glen, and good morning, and thanks for joining us. Our agenda today will be crisp to leave plenty of time for questions. So we'll review our first quarter earnings which continued to be solid, sustainable and on track with our 2012 outlook. In the process, we'll touch on key achievements and initiatives in each of our business units, progress, demonstrating the continued strength of our well established investment-driven growth strategy. And finally, before opening the line to questions, I'll touch again on our core financial commitments to investment-grade credit, long-term earnings growth and a strong, attractive and growing dividend. Let's start with the first quarter highlights on Slide 3. In the supplemental deck is our earning report reflects our NiSource teams are continuing to build on the positive momentum we generated in 2011. We delivered first quarter results squarely in line with our plan, continued earnings growth from robust regulatory, modernization and expansion initiatives and a solid start to our record $1.4 billion capital investment program. All in all, the NiSource team continued to demonstrate its commitment, focus and solid execution during the first quarter. In fact, they believe we're well on our way towards upping our gain in 2012 as we generate even greater value for our customers, investors and other key stakeholders. With that backdrop, let's take a look at our first quarter results starting with our financial highlights on Slide 4. As you can see, we delivered net operating earnings, non-GAAP of about $215 million or $0.76 per share for the 3 months ended March 31. That compares with about $207 million or $0.74 per share for the first quarter of 2011. Our operating earnings for the quarter grew from about $402 million to more than $435 million compared to the same period in 2011. As I noted earlier, these results our squarely in line with our 2012 earnings outlook. On a GAAP basis, our net income for the quarter was about $194 million. Schedules 1 and 2 to our earnings release showed the GAAP to non-GAAP reconciling items, the most significant of which was weather.
Let's now turn to our individual business unit results starting with our NiSource Gas Transmission & Storage, or NGT&S, operations highlighted on Slide 5. At NGT&S, CEO Jimmy Staton and his team have truly hit the ground sprinting in 2012. They are developing and deploying a robust, comprehensive strategy for modernizing our system, meeting customer needs and maximizing the value of our extensive pipeline and storage assets. And that includes our very attractive position in the Marcellus and Utica production regions. From a financial perspective, NGT&S grew operating earnings to about $139 million during the first quarter compared to about $118 million for the same period in 2011. Net revenues were up about $17 million, driven by a number of growth projects at NGT&S as well as the impact of new rates under our Columbia Gulf base rate settlement that took effect in May 2011. As you know, shale gas development in midstream opportunities are key focus for our team. One important 2012 project on that front is our midstream services, Big Pine gathering system. Anchored by a long-term agreement with XTO Energy, this 70-mile, $150 million project in Western Pennsylvania will offer an initial capacity of 425 million cubic feet per day with interconnections to multiple interstate pipelines. In service for that project is this December. Our midstream team also is pursuing opportunities in the liquids-rich portion of the Utica play in eastern Ohio. These prospects include proposals to provide gathering services as well as cryogenic processing.Read the rest of this transcript for free on seekingalpha.com