NISOURCE INC. Q3 FY2026 earnings call

• Strategic Extension & Growth: Extended long-term plan through 2033 with a $40 billion capital plan ($32B base, $8B Genco). Targeting 10-11% compounded annual EPS growth rate.
• Genco Momentum: Secured agreement with Microsoft as the third customer, bringing total signed agreements to five across three customers. Expected savings to NIPSCO electric customers increased to $1.75 billion. Pipeline includes ~5 GW assigned capacity and ~4 GW in strategic negotiations/development.
• Operational Resilience: Successfully restored power after severe derecho storms in Northern Indiana in August without injury. Completed internal after-action review and hired third-party expert for independent assessment.
• Regulatory Progress: Filed first three-year forward-looking rate case in Ohio under SB 103. Virginia rates effective October 12; Kentucky and Virginia decisions expected H1 2027. Complying with federal orders for Schaefer coal units while evaluating IRP options.
• Financial Discipline: Narrowed 2026 EPS guidance to upper half of range. Initiated 2027 EPS guidance at $2.22-$2.30. Maintaining FFO-to-debt ratio of 14-16%. Projected average annual residential bill increases of <4% from 2027-2031.

The transcript does not provide specific absolute financial figures or revenue contribution percentages for individual product segments (Base Business vs. Genco) for the third quarter. Management reports consolidated adjusted EPS of 27 cents for Q3 2026, up from 19 cents in Q3 2025, driven by disciplined cost management and outperformance in natural gas and electricity demand across operating companies. The Genco segment is disclosed as a separate segment going forward, with indicative EPS contribution targets provided for future years rather than current period breakdowns.

• 2026 Consolidated Adjusted EPS: Narrowed to the upper half of the previous range of 200-207 cents.
• 2027 Consolidated Adjusted EPS: Initiated guidance of 222-230 cents per share.
• Long-Term Growth: Expanded commitments through 2033, targeting a 10-11% compounded annual EPS growth rate off the 2027 baseline.
• Base Plan Growth: Expects 6-8% annual EPS growth from the base plan through 2033.
• Genco Contribution: Indicative EPS contribution targets raised to 32-40 cents in 2030 and 52-68 cents in 2033.

• Regulatory Uncertainty: Risks associated with regulatory approvals for rate cases, tracker mechanisms, and Genco special contracts. Changes in ROE methodologies and affordability frameworks in PA, IN, OH, KY, and VA.
• Operational Hazards: Exposure to severe weather events and infrastructure damage, requiring significant restoration efforts and potential hardening investments.
• Execution Risk: Challenges in securing long-lead equipment, construction delays, and integration of new generation assets alongside existing operations.
• Market Dynamics: Fluctuations in customer load ramps, financing costs, and evolving MISO accreditation rules affecting capacity needs.

Q: Shar Pourreza asked about the size of the Microsoft site and whether this represents the full opportunity or just Phase 1, plus regulatory risks in Indiana. / A: Lloyd Yates stated they cannot comment on specific site sizes but confirmed active engagement with all major customers and a robust pipeline. He expressed optimism about Indiana's regulatory environment, noting that Genco aligns with state priorities for economic development and affordability, mitigating risk profiles.

Q: Julien Dumoulin-Smith inquired if infrastructure plans preserve capacity for additional Microsoft load and how battery ownership/tolling is managed. / A: Michael Luhrs explained that assets are planned to serve the totality of customers within the pool without overbuilding, but with flexibility for growth. They utilize a balanced mix of owned and tolled batteries to adapt to technology changes and optimize portfolio performance, maintaining capability to expand with high-credit counterparties.

Q: Nicholas Campanella asked if a strategic review of Genco must precede execution on the next 4 GW and how storm resiliency informs the capital plan. / A: Lloyd Yates clarified that the review is not a prerequisite for executing the next 4 GW, with updates expected in 2027. Regarding resiliency, the company is studying necessary hardening investments post-storm and will present these opportunities to regulators and legislators as part of ongoing IURC hearings.

Q: Ross Fowler questioned the shift of Amazon CCGT timelines to 2030, who bears incremental costs, and how funding balances debt/equity with Genco growth. / A: Michael Luhrs described the timeline adjustment as an optimization to de-risk construction and accelerate other assets, not a delay. Shawn Anderson noted capital requirements remain unchanged. He explained that strong base business cash flows and Genco’s self-sustaining cash flow design reduce equity needs, allowing efficient funding through a mix of debt and equity while maintaining investment-grade status.

Q: Eli Josten asked about the regulatory playbook for customer savings in Indiana post-election and how the 'Data Center Credit' works. / A: Lloyd Yates emphasized that Genco directly addresses affordability by rolling back $1.75 billion to customers via a credit mechanism pending IURC approval, likely appearing late Q4 or early Q1. Michael Luhrs added that Genco assets are isolated from the regulated rate base, meaning utilities do not bear the construction risk, enhancing stakeholder acceptance.