NiSource : Quarterly Materials Document

Segment and Financial Information First Quarter 2021

Supplement to NiSource First Quarter 2021

Earnings Presentation

Information contained herein is on a non-GAAP basis that is supplemental to and should be read in conjunction with our GAAP financial results. For our GAAP financial results and discussion of segment operations, please refer to Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, of the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021. For a reconciliation of GAAP to non-GAAP earnings, see Schedules 1, 2 and 3 contained herein.

First Quarter 2021 Net Operating Earnings - Segment Results (non-GAAP)

NiSource's consolidated net operating earnings (non-GAAP) for the first quarter of 2021 were

319.6 million, compared to 304.7 million in the comparable 2020 period. Refer to the attached schedules for the items included in 2021 and 2020 GAAP net income but excluded from net operating earnings (non-GAAP).

Operating income (non-GAAP) for NiSource's business segments for the three months ended March 31, 2021, are discussed below.

Gas Distribution Operations

For the first quarter of 2021, Gas Distribution Operations reported non-GAAP operating income of $374.0 million, compared to non-GAAP operating income of $391.6 million in the comparable 2020 period.

Non-GAAP operating revenues for the first quarter of 2021 were $1,147.3 million, a decrease of $108.5 million from the comparable 2020 period.

Changes in non-GAAP Operating Revenues (in millions)		Favorable
	(Unfavorable)
Lower revenues associated with the Massachusetts Business in 2020	$	(123.1)
New rates from base rate proceedings, infrastructure replacement programs and Columbia of		38.0
Ohio's CEP
The effects of customer growth		3.4
Other		(2.1)
Change in operating revenues (before cost of energy and other tracked items)	$	(83.8)
Operating revenues offset in operating expense
Higher cost of energy billed to customers		81.3
Lower cost of energy associated with the Massachusetts Business in 2020		(79.7)
Lower operation and maintenance trackers associated with the Massachusetts Business in 2020		(24.3)
Lower operation and maintenance, depreciation, and tax trackers		(2.0)
Total change in non-GAAP operating revenues	$	(108.5)

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Non-GAAP operating expenses for the first quarter of 2021 were $773.3 million, a decrease of $90.9 million from the comparable 2020 period.

Changes in non-GAAP Operating Expenses (in millions)		Favorable
	(Unfavorable)
Lower operating expenses associated with the Massachusetts Business in 2020	$	65.6
Lower employee and administrative expenses		4.9
Higher depreciation and amortization expense primarily due to higher capital expenditures		(5.8)
placed in service
Other		1.5
Change in operating expenses (before cost of energy and other tracked items)	$	66.2
Operating expenses offset in operating revenue
Higher cost of energy billed to customers		(81.3)
Lower cost of energy associated with the Massachusetts Business in 2020		79.7
Lower operation and maintenance trackers associated with the Massachusetts Business in 2020		24.3
Lower operation and maintenance, depreciation, and tax trackers		2.0
Total change in non-GAAP operating expense	$	90.9

Electric Operations

For the first quarter of 2021, Electric Operations reported non-GAAP operating income of $90.6 million, compared to non-GAAP operating income of $80.0 million in the comparable 2020 period.

Non-GAAP operating revenues for the first quarter of 2021 were $403.3 million, a increase of $24.3 million from the comparable 2020 period.

Changes in non-GAAP Operating Revenues (in millions)		Favorable
	(Unfavorable)
Increased customer usage, primarily driven by residential customers	$	4.8
New rates from infrastructure improvement and DSM programs		2.8
The effects of customer growth		1.0
Other		0.5
Change in operating revenues (before cost of energy and other tracked items)	$	9.1
Operating revenues offset in operating expense
Higher cost of energy billed to customers		12.8
Higher operation and maintenance and depreciation trackers		2.4
Total change in non-GAAP operating revenues	$	24.3

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Non-GAAP operating expenses for the first quarter of 2021 were $312.7 million, an increase of $13.7 million from the comparable 2020 period.

Changes in non-GAAP Operating Expenses (in millions)		Favorable
	(Unfavorable)
Higher generation-related maintenance	$	(4.2)
Increased depreciation primarily due to additional plant placed in service		(3.4)
Decreased environmental costs		6.8
Lower employee and administrative costs		4.3
Other		(2.0)
Change in operating expenses (before cost of energy and other tracked items)	$	1.5
Operating expenses offset in operating revenue
Higher cost of energy billed to customers		(12.8)
Higher operation and maintenance and depreciation trackers		(2.4)
Total change in non-GAAP operating expense	$	(13.7)

Corporate and Other Operations

For the first quarter of 2021, Corporate and Other Operations reported non-GAAP operating income of zero compared to a non-GAAP operating loss of $8.9 million in the comparable 2020 period. This change resulted primarily from favorable fluctuations in unrealized gains and losses on the cash surrender value of corporate owned life insurance investments.

Other Deductions, net

Other deductions, net, reduced income by $74.1 million for the first quarter of 2021 compared to a reduction in income of $87.5 million in the comparable 2020 period. This change is primarily driven by lower short term debt interest due to lower balances and a lower rate on commercial paper in 2021 compared to 2020.

Income Taxes

The effective tax rate of net operating earnings was 18.2 percent compared to 18.8 percent for the same period last year. The decrease in 2021 is primarily due to increased amortization of excess deferred federal income tax liabilities and deduction for AFUDC equity in 2021.

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NiSource Inc.

Consolidated Net Operating Earnings Available to Common Shareholders (Non-GAAP)(unaudited)

	Three Months Ended
		March 31,
(in millions, except per share amounts)		2021		2020
Operating Revenues	$	1,554.6	$	1,631.8
Operating Expenses
Cost of energy		476.8		462.4
Operation and maintenance		297.7		360.5
Operation and maintenance - trackers		48.5		76.0
Depreciation and amortization		182.0		182.8
Depreciation and amortization - trackers		3.0		1.5
Loss on sale of assets, net		1.2		-
Other taxes		53.7		60.9
Other taxes - trackers		27.1		25.0
Total Operating Expenses		1,090.0		1,169.1
Operating Income		464.6		462.7
Other Income (Deductions)
Interest expense, net		(84.6)		(92.9)
Other, net		10.5		6.5
Other, net - trackers		-		(1.1)
Total Other Deductions, Net		(74.1)		(87.5)
Operating Earnings Before Income Taxes		390.5		375.2
Income Taxes		70.9		70.5
Net Operating Earnings		319.6		304.7
Net income attributable to noncontrolling interest		1.0		-
Net Operating Earnings attributable to NiSource		318.6		304.7
Preferred dividends		(13.8)		(13.8)
Net Operating Earnings Available to Common Shareholders (Non-GAAP)		304.8		290.9
Non-GAAP Diluted Net Operating Earnings Per Share	$	0.77	$	0.76
Diluted Average Common Shares Outstanding		393.9		384.1

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