NiSource Inc. (NYSE:NI) Q4 2017 Earnings Conference Call - Final Transcript

Feb 20, 2018 • 09:00 am ET

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NiSource Inc. (NYSE:NI) Q4 2017 Earnings Conference Call - Final Transcript

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Q & A
Operator
operator

(Operator Instructions) Paul Ridzon, KeyBanc Capital Markets.

Analyst
Paul Ridzon

Congratulations on another solid year. Joe, since you took the helm, you kind of laid out a pretty solid story of sustainable growth, protecting the balance sheet, predictability and then kind of recently, we kind of saw a headline that suggested you might be taking a different tack. Can you comment on that?

Executive
Joseph Hamrock

I'm not sure what headline you're referring to, Paul, but --

Analyst
Paul Ridzon

It's kicking the tires (ph) on Vector.

Executive
Joseph Hamrock

Got you. Yes. So I won't speculate or comment on M&A activity or market rumors. I'll say that NiSource has always had a disciplined approach to growing shareholder value. And the most recent example of that was last year, when we elevated our CapEx program announced at Investor Day that should result in an increased long-term growth rate of 5% to 7%. And our current focus to grow shareholder value calls for continued execution of the $30 billion of long-term identified investments that, as you know, will benefit our customers and communities and underpins the sustainability of our plan. Our focus remains there.

Analyst
Paul Ridzon

And then because NiSource has a little bit of a unique structure from a corporate structure standpoint, can you just give a little more detail around how you've addressed tax reform issues and interest deductibility?

Executive
Joseph Hamrock

Sure. As noted earlier, as I mentioned, and Donald touched on this as well, we're very pleased that the new framework reflects the targeted solutions that so many of us advocated for across the industry throughout 2017. Fundamentally, because it benefits our customers and supports economic growth, which underpins our business, and it enhances the sustainability of our infrastructure modernization strategy by reducing one of the pass-through costs in customer bills.

So while there is near-term adjustments to cash flow that we'll need to navigate, we're confident in our ability to do that as evidenced by our reaffirmation of 2018 guidance back in December. Donald can provide some additional insights and details. But one of the things that we've looked at is the key to the retention of interest expense deductibility, and we're able to retain that through one of the elements of legal entity restructuring at the subsidiary level that we initiated in early 2017.

Among other changes, this effort includes the conversion of NIPSCO to an LLC, which was completed just last week. So note that this minor restructuring has no effect on either investors or customers, but helps us to retain the overall framework that's so important to us. Donald, any other additional details on our positioning on that?

Executive
Donald Brown

No. I think when you think about the other impact of interest deductibility, yes, we did lose some value from the interest tax shield going from 35% to 21%, but we've got levers from an O&M standpoint and financing standpoint and regulatory mechanisms that allows us to offset that and maintain our earnings commitment for 2018 and going forward.

Analyst
Paul Ridzon

Just another quick question, Donald. You indicated you hedged $1 billion of interest rate