|
|
|
|
||
Coronavirus further clouds NiSource's earnings outlook amid Mass. asset sale from SNL Energy Finance Daily Coronavirus further clouds NiSource's earnings outlook amid Mass. asset saleByline: Tom DiChristopher Executives at NiSource Inc. suggested the COVID-19 pandemic could put downward pressure on the multi-utility's 2021 earnings, which are already in question due to the sale of its Massachusetts gas distribution business. The executives said they still expect to establish a 5% to 7% long-term growth rate for net operating EPS and dividend payments once they complete the sale of Columbia Gas of Massachusetts to Eversource Energy. However, they declined to reaffirm their earlier expectation that 2021 EPS would be at or above their withdrawn 2020 guidance of $1.36 to $1.40. NiSource withdrew the outlook in February, saying 2021 guidance would largely hinge on the magnitude of lost synergies and earnings from the Massachusetts business and the company's ability to offset them. "Certainly, COVID provides some incremental pressure as we think about operating expenses as well as cash flows," NiSource Executive Vice President and CFO Donald Eugene Brown said on the company's May 6 quarterly conference call. "And so we're working through that. At this point, not having any specifics on what the revenue impacts will be, I'd say it's difficult to give any specific direction." Pressed on whether he still thought 2021 EPS would be at or above earlier 2020 guidance, Brown said, "It's too early to provide that guidance for 2021 not knowing what the impact of COVID will be on the business." Executives said COVID-19 did not have a meaningful impact on first-quarter earnings. Brown said NiSource could not offer specifics on April performance because the company is closing its books this week. However, NiSource expects the COVID-19 pandemic to result in a drop in sales volumes to industrial and commercial customers, an increase in uncollectible bills and sustained customer losses. The company announced it would trim its 2020 capital investment plan by $100 million, to $1.7 billion to $1.8 billion to manage cash flow through the year. Commercial and industrial customers account for 35% and 26%, respectively, of NiSource's electric power margins. They account for a smaller share of gas distribution margin: 22% for commercial and 9% for industrial. The company estimated every 1% drop in annual electric power sales volumes results in a decline in commercial pretax operating earnings of $3.9 million among commercial customers and $2.3 million for industrial customers. The same percentage drop in gas sales would reduce earnings by $2.4 million for commercial customers and $1.2 million for industrial customers. The company's most significant industrial and commercial demand load comes from energy-intensive sectors including steelmaking and petrochemicals, NiSource President and CEO Joe Hamrock said. NiSource on May 6 reported that first-quarter net operating earnings fell 5.5% from the year-ago period to $290.9 million. Adjusted earnings of 76 cents per share missed Wall Street's expectations for 81 cents a share, according to estimates compiled by S&P Global Market Intelligence. The company's net income for the quarter plunged to $61.8 million from $205.1 million a year ago, due largely to a $280.2 million loss on the Massachusetts asset sale. |
return to message board, top of board |