Alliant Energy (LNT) Q2 2025 earnings call transcript

Susan Gille: Good morning. I would like to thank all of you on the call and the web cast for joining us today. We appreciate your participation. With me here today are Lisa Barton, President and CEO, and Robert Durian, Executive Vice President and CFO. Following prepared remarks by Lisa and Robert we will have time to take questions from the investment community. We issued a news release last night announcing Alliant Energy’s second quarter financial results and reaffirmed our 2025 earnings guidance range. This release, as well as an earnings presentation, will be referenced during today’s call, and are available on the investor page of our website at www. alliantenergy. com. Before we begin, I need to remind you that the remarks we make on this call, and our answers to your questions, include forward-looking statements.

These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters discussed in Alliant Energy’s news release issued last night and in our filings with the Securities and Exchange Commission. We disclaim any obligation to update these forward- looking statements. In addition, this presentation contains references to ongoing earnings per share, which, for 20-24, is a non-GAAP financial measure. References to ongoing earnings exclude material charges or income that are not normally associated with ongoing operations. The reconciliation between non-GAAP and GAAP measures is provided in the earnings release which is available on our website. At this point, I will turn the call over to Lisa.

LISA BARTON: Thank you, Sue. Good morning, everyone and thank you for joining us. 20-25 is shaping up nicely – and positions us well to meet our 20-25 operational and earnings objectives for the year. The Alliant Energy Advantage™ reflects our unwavering commitment to support economic growth in Iowa and Wisconsin, by meeting our customer’s evolving energy needs. Our bold commitment to accelerate near-term, sustainable economic development and growth is already delivering clear benefits for our customers, communities and shareowners - driving momentum that positions us for sustained, sector-leading growth. We’re not just planning for growth- we’re enabling it in real time. We have been clear on our ambitions to drive growth in the communities we have the privilege to serve, and we are beginning to see this materialize in a significant manner.

Physical construction has now started in both Iowa and Wisconsin on three large-scale data centers. Our progress to date reflects a deliberate focus on creating solutions that benefit both new and existing customers, as well as our investors. We have attracted and accelerated the onboarding of projects by securing length through a deliberate mix of new capital investments, market purchases and strategic forward positioning of existing energy resources. Our commitment is clear: to grow at the pace of our customers and communities - ensuring all customers benefit from economic development. Earlier today, QTS Centers, a Blackstone portfolio company, announced a planned $10 billion investment- the largest investment in Cedar Rapids history. Our partnership with the QTS Cedar Rapids data center is a clear demonstration of how we’re delivering transformational growth in the communities we serve.

Notably, QTS is also seeking to advance a multiphase data center in WPL’s service territory in the greater Madison area. With an agreement in principle in place, we are continuing to make progress towards finalizing and executing definitive agreements. QTS has been working proactively with the community through public meetings to discuss their plans and will be seeking town, city and county approvals. As I’ve said before, our focus is on creating cascading waves of growth- and executing with discipline and precision every step of the way. We’ve also emphasized our commitment to transparency – sharing details on growth opportunities and projects that we believe our investors can count on, with a realistic line of sight into what’s ahead. Our focus has been on reporting well-developed, high–confidence projects, in contrast to reporting all early-stage projects.

On slides 4 and 5, we provide a line of sight to our updated data center demand. Fueled by the progress we have made, we continue to steadily expand our backlog of prospective customers and are engaged in advanced discussions to convert these opportunities into concrete growth -- reinforcing the strength and momentum of our long-term pipeline. New load supported by signed ESAs will be included in our Q3 capital expenditure plan update. Incremental load growth – beyond the 2.1 GW already in our plan– is expected to be primarily served by new energy resources.

Turning to the recently passed budget bill - while it accelerates the phase-out of certain clean energy tax credits, we’re encouraged by the provisions that promote customer affordability and strengthen the support for renewable projects already in progress. As documented on slide 6, under the budget reconciliation law:  Our current capex plan is intact.  Transferability of renewable tax credits is intact.  Our Iowa regulatory construct – which enables us to earn our authorized return while growing to serve the needs of our customers and communities - is not impacted and  Our customers and communities maintain benefits associated with the projects along with the tax credits. Our congressional delegations played a key role in securing these protections and we remain committed to working collaboratively with them and our industry partners as further Treasury guidance materializes.

We expect the Treasury’s guidance to reflect a pragmatic and constructive approach as it relates to the start of construction guidance. Under current start of construction guidance we have:  safe harbored 100% of the energy storage projects in our capital plan  safe harbored seven hundred and fifty megawatts of the twelve hundred megawatts of wind in our plan.  And - we are confident in our ability to safe harbor the remaining four hundred and fifty megawatts - either directly or through a third-party developer. As we have stated before – we have very flexible resource planning processes in both states. This positions us well to navigate, if needed, potential changes to the long-standing start of construction guidance and deliver cost effective energy resources to meet the growing energy needs – and timelines - our customers expect.

We continue to make significant progress on regulatory filings and approvals – which Robert will address in detail. As a result of these efforts - and our strong execution capabilities - we are advancing key strategic capital projects.  We completed construction of our first utility scale energy storage project at the Grant County solar site in Wisconsin And, by the end of this year, we expect to complete construction of  an additional 175 megawatts of energy storage,  and,  our Wisconsin advance gas path projects for two of the four units at Neenah and Sheboygan. As we grow alongside our customers, we plan to continue to propose and execute projects that drive efficiencies within our existing fleet, as well as adding new energy supply resources that strike the right balance between system reliability, efficiency, and customer cost.

I could not be more excited about the direction of this company. At Alliant Energy we are positioning ourselves for scalable, long-term growth-unlocking the potential for our customers, our communities and our investors. We are accomplishing this with a strong aligned team, solving the utility industry’s Rubik’s Cube for reliability, resiliency, affordability and growth-while maintaining the strong balance sheet our investors expect from us. Our commitment has been consistent and clear: we deliver win-win-win solutions without compromising one priority for another. That’s how we create lasting value across all stakeholders. To the analysts and investors on the call today, thank you for your interest in our great company – when you invest in us, you’re choosing a proven track record of consistency, backed by industry leading growth opportunities that drive long-term, sustainable value.

I will now turn the call over to Robert.

ROBERT DURIAN: Thank you, Lisa. Good morning, everyone. Yesterday, we announced second quarter 20-25 ongoing earnings of 68 cents per share, compared to ongoing earnings of 57 cents per share in the second quarter of 20-24. The quarter-over-quarter increase in our ongoing earnings was mainly driven by the successful execution of IPL’s and WPL’s customer focused capital investment programs which supported new electric and gas rates that took effect on October first and January first, respectively - and higher electric and gas sales driven by changes in temperatures compared to last year. These positive results were partially offset by higher depreciation and financing expenses related to capital investments. Temperatures in the second quarter of 20-25 resulted in increased electric and gas margins of 2 cents per share.

In comparison, the temperatures in the second quarter of 20-24 decreased our electric and gas margins by approximately 2 cents. Excluding the impacts of temperatures, our retail electric sales were fairly consistent with the second quarter of 20-24. Our ability to consistently deliver solid financial results is supported by our efforts to ensure customers and investors realize the value of our capital investments. Recent achievements by our team to capture such value include  Safe harbor activities to preserve the qualification of tax credits for future energy storage and renewable projects,  Monetization of tax credits to reduce financing costs, Extending the value of existing energy resources, including generating higher revenues from the recent MISO annual capacity auction and  Controlling operating expenses.

Capturing growth from economic development activities occurring in our states will also aid in absorbing a portion of our fixed costs - helping mitigate costs for all customers in the future. With a solid first half behind us, we are reaffirming our 20-25 earnings guidance range of 3 dollars and 15 cents to 3 dollars and 25 cents per share. And we are reaffirming our long-term annual earnings growth target of 5 to 7 percent.

Turning to financings - We are successfully executing our 20-25 financing plan which will fund our capital investments and support refinancing 300 million dollars in debt maturities in the second half of the year. In the second quarter, we issued 575 million dollars of convertible senior notes at the parent company and 600 million dollars of senior debentures at IPL. Both debt issuances reflected strong investor interest resulting in favorable pricing relative to our 20-25 plan. The remaining debt financings are included in slide 10 which includes estimated issuances at our three registrants. In the second quarter, we launched an ATM program which, in addition to our shareowner direct program, will support our planned new common equity issuances. Through June, we raised approximately 175 million dollars of new common equity, executed on a forward basis under the ATM, which we plan to settle throughout 2026.

ATM issuances on a forward basis allow us flexibility in future funding while managing dilution effectively. Finally, slide 11 includes our 20-25 regulatory proceedings that have been recently approved by our state regulators, the filings that are currently pending and filings we plan to initiate later this year. The Wisconsin rate review is progressing according to schedule - and we continue working collaboratively with staff and intervenors. The next steps in this proceeding include continued discovery and audit by the commission staff and interveners to support their testimony scheduled to be filed next week, followed by the public hearing in early September and a final decision expected from the PSCW later this year. We have provided the procedural schedule for WPL’s rate review on slide 12.

The Iowa and Wisconsin constructive regulatory environments continue to support our customer-focused investment plan. In Wisconsin, we recently received approval from the PSCW for the Energy Dome which is our long-duration storage project in Columbia County. Our remaining active dockets in Wisconsin include one individual customer rate service agreement for the Beaver Dam, Wisconsin data center and three dockets for customer focused investments. In Iowa, we received several approvals from the IUC since our last earnings call including - approval for the individual customer rate service agreement with Google, approval for an approximately 100- megawatt new natural gas generating facility near the existing site of the Prairie Creek Generating Station, and approval for 150 megawatts of energy storage at the existing site of the retired Lansing Generating Station.

We currently have 4 active filings in progress before the IUC including:  The individual customer rate service agreement with QTS  Requests for approximately 150 megawatts of additional energy storage, and  An advance ratemaking filing for up to 1 gigawatt of new wind energy resources. The expected timing of decisions from the state regulators on these pending dockets is provided on slide 11. We expect to make additional regulatory filings later this year in both Iowa and Wisconsin for renewables and dispatchable resources to enhance reliability, further diversify our energy resources and meet growing customer energy needs. The investment thesis for Alliant Energy is simple – we are a fully integrated utility with industry leading growth opportunities - driven by data centers and enabled by constructive regulation.

We have and expect to continue to consistently deliver on customer and investor expectations. We thank you for your continued support and look forward to speaking with many of you in the coming months. At this time, I will turn the call back over to the operator to facilitate the question-and-answer session.

Susan Gille: With no more questions, this concludes our call. A replay will be available on our investor website. Thank you for your continued support of Alliant Energy and feel free to contact me with any follow-up questions. The accompanying conference call script includes forward-looking statements. These forward-looking statements can be identified as such because the statements include words such as “believe,” “will,” “expected,” “expect,” “plan,” “estimated,” or other words of similar import. Similarly, statements that describe future financial performance, including earnings guidance, earnings growth, long-term growth projections, and plans or strategies, including our capital expenditure and investment plans, financing plans, plans for load growth, and regulatory plans, are forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those currently anticipated.

Actual results could be affected by the following factors, among others:  IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, the recovery of and/or the return on costs, including fuel costs, operating costs, transmission costs, capacity costs, costs of generation projects including such costs that are incurred prior to regulatory approval or exceed initial estimates, deferred expenditures, deferred tax assets, tax expense, interest expense, capital expenditures, marginal costs to service new customers, and remaining costs related to electric generating units (EGUs) that have been or may be permanently closed and certain other retired assets, environmental remediation costs, and  decreases in sales volumes, as well as earning their authorized rates of return, payments to their parent of expected levels of dividends, the impact of rate design on current and potential customers and demand for energy in their service territories, and the ability to obtain regulatory approval with acceptable conditions for individual customer rates for large load growth customers;  the impact of IPL’s retail electric base rate moratorium;  the ability to complete construction of generation and energy storage projects by planned in-service dates and within the cost targets set by regulators due to cost increases of and access to materials, equipment and commodities, which could result from tariffs, duties or other assessments, inflation, labor issues or supply shortages, the ability to successfully resolve warranty issues or contract disputes and the ability to obtain adequate generator interconnection agreements to connect the new projects to Midcontinent Independent System Operator, Inc. (MISO) in a timely manner;  weather effects on utility sales volumes and operations;  the direct or indirect effects resulting from cybersecurity incidents or attacks on Alliant Energy, IPL, WPL, or their suppliers, contractors and partners, or responses to such incidents;  the impact of customer- and third party-owned generation, including alternative electric suppliers, in IPL’s and WPL’s service territories on system reliability, operating expenses and customers’ demand for electricity;  economic conditions and the impact of business or facility closures in IPL’s and WPL’s service territories;  the ability and cost to provide sufficient generation and the ability of ITC Midwest LLC and ATC LLC to provide sufficient transmission capacity for potential load growth, including significant new commercial or industrial customers, such as data centers;  the ability of potential large load growth customers to timely construct new facilities, as well as the resulting higher system load demand by expected levels and timeframes;  the impact of energy efficiency, franchise retention and customer disconnects on sales volumes and operating income;  the impact that price changes may have on IPL’s and WPL’s customers’ demand for electric and gas services and their ability to pay their bills;  changes in the price of delivered natural gas, transmission, purchased electric energy, purchased electric capacity and delivered coal, particularly during elevated market prices, and any resulting changes to counterparty credit risk, due to shifts in supply and demand caused by market conditions, regulations and MISO’s seasonal resource adequacy process;  the ability to obtain regulatory approval for construction projects with acceptable conditions;  the ability to achieve the expected level of tax benefits for renewable generation and energy storage projects based on tax guidelines, timely beginning of construction and in-service dates, sourcing permissible amounts of construction support from entities with ties to certain foreign countries, compliance with prevailing wage and apprenticeship requirements, project costs and the level of electricity output generated by qualifying generating facilities, and the ability to efficiently utilize the renewable generation and energy storage project tax benefits to achieve IPL’s authorized rate of return and for the benefit of IPL’s and WPL’s customers;  federal and state regulatory or governmental actions, including the impact of legislation, Treasury regulations, executive orders, interpretations and guidance, and changes in public policy, including changes impacting renewable tax credits;  the ability to utilize tax credits generated to date, and those that may be generated in the future, before they expire, as well as the ability to transfer tax credits that may be generated in the future at adequate pricing;  the impacts of changes in the tax code, including tax rates, minimum tax rates, adjustments made to deferred tax assets and liabilities, and changes impacting the availability of and ability to transfer renewable tax credits, including preserving the qualification of any future tax credits;  disruptions to ongoing operations and the supply of materials, services, equipment and commodities needed to continue to operate and maintain existing assets and to construct capital projects, which may result from geopolitical issues, tariffs, supplier manufacturing constraints, regulatory requirements, labor issues or transportation issues, and thus affect the ability to meet capacity requirements and result in increased capacity expense;  inflation and higher interest rates;  continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;  the future development of technologies related to electrification, and the ability to reliably store and manage electricity;  employee workforce factors, including the ability to hire and retain employees with specialized skills, impacts from employee retirements, changes in key executives, ability to create desired corporate culture, collective bargaining agreements and negotiations, work stoppages or restructurings;  disruptions in the supply and delivery of natural gas, purchased electricity and coal;  changes to the creditworthiness of, or performance of obligations by, counterparties with which Alliant Energy, IPL and WPL have contractual arrangements, including large load growth customers, participants in the energy markets and fuel suppliers and transporters;  the impact of penalties or third-party claims related to, or in connection with, a failure to maintain the security of personally identifiable information, including associated costs to notify affected persons and to mitigate their information security concerns;  impacts that terrorist attacks may have on Alliant Energy’s, IPL’s and WPL’s operations and recovery of costs associated with restoration activities, or on the operations of Alliant Energy’s investments;  changes to MISO’s resource adequacy process establishing capacity planning reserve margin and capacity accreditation requirements that may impact how and when new and existing generating facilities, including IPL’s and WPL’s additional solar generation, may be accredited with energy capacity, and may require IPL and WPL to adjust their current resource plans, to add resources to meet the requirements of MISO’s process, or procure capacity in the market whereby such costs might not be recovered in rates;  any material post-closing payments related to any past asset divestitures, including the transfer of renewable tax credits, which could result from, among other things, indemnification agreements, warranties, guarantees or litigation;  issues associated with environmental remediation and environmental compliance, including compliance with all current environmental and emissions laws, regulations and permits and future changes in environmental laws and regulations, including the Coal Combustion Residuals Rule, Cross-State Air Pollution Rule and federal, state or local regulations for emissions reductions, including greenhouse gases, from new and existing fossil-fueled EGUs under the Clean Air Act, and litigation associated with environmental requirements;  increased pressure from customers, investors and other stakeholders to more rapidly reduce greenhouse gases emissions;  the timely development of technologies, innovations and advancements to provide cost effective alternatives to traditional energy sources;  the ability to defend against environmental claims brought by state and federal agencies, such as the U. S. Environmental Protection Agency and state natural resources agencies, or third parties, such as the Sierra Club, and the impact on operating expenses of defending and resolving such claims;  the direct or indirect effects resulting from breakdown or failure of equipment in the operation of electric and gas distribution systems, such as mechanical problems, disruptions in telecommunications, technological problems, and explosions or fires, and compliance with electric and gas transmission and distribution safety regulations, including regulations promulgated by the Pipeline and Hazardous Materials Safety Administration;  issues related to the availability and operations of EGUs and energy storage facilities, including start-up risks, breakdown or failure of equipment, fires, availability of warranty coverage and successful resolution of warranty issues or contract disputes for equipment breakdowns or failures, performance below expected or contracted levels of output or efficiency, operator error, employee safety, transmission constraints, compliance with mandatory reliability standards and risks related to recovery of resulting incremental operating, capacity, fuel-related and capital costs through rates;  impacts that excessive heat, excessive cold, storms, wildfires, or natural disasters may have on Alliant Energy’s, IPL’s and WPL’s operations and construction activities, and recovery of costs associated with restoration activities, or on the operations of Alliant Energy’s investments;  Alliant Energy’s ability to sustain its dividend payout ratio goal;  changes to costs of providing benefits and related funding requirements of pension and other postretirement benefits plans due to the market value of the assets that fund the plans, economic conditions, financial market performance, interest rates, timing and form of benefits payments, life expectancies and demographics;  material changes in employee-related benefit and compensation costs, including settlement losses related to pension plans;  risks associated with operation and ownership of non-utility holdings;  changes in technology that alter the channels through which customers buy or utilize Alliant Energy’s, IPL’s or WPL’s products and services;  impacts on equity income from unconsolidated investments from changes in valuations of the assets held, as well as potential changes to ATC LLC’s authorized return on equity;  impacts of IPL’s future tax benefits from Iowa rate-making practices, including deductions for repairs expenditures and cost of removal obligations, allocation of mixed service costs and state depreciation, and recoverability of the associated regulatory assets from customers, when the differences reverse in future periods;  current or future litigation, regulatory investigations, proceedings or inquiries;  reputational damage from negative publicity, protests, fines, penalties and other negative consequences resulting in regulatory and/or legal actions;  the direct or indirect effects resulting from pandemics;  the effect of accounting standards issued periodically by standard-setting bodies; and  the ability to successfully complete tax audits and changes in tax accounting methods with no material impact on earnings and cash flows.

Without limitation, the expectations with respect to 2025 earnings guidance, long-term earnings growth objective, financing plans, regulatory plans and growth associated with data centers in this script are forward-looking statements and are based in part on certain assumptions made by Alliant Energy, some of which are referred to in the forward-looking statements. Alliant Energy cannot provide any assurance that the assumptions referred to in the forward-looking statements or otherwise are accurate or will prove to be correct. Any assumptions that are inaccurate or do not prove to be correct could have a material adverse effect on Alliant Energy’s ability to achieve the estimates or other targets included in the forward-looking statements. The statements, including forward-looking statements, included herein are made as of the date hereof and, except as required by law, Alliant Energy undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.