Randy G. Hulen - NiSource, Inc. Joseph J. Hamrock - NiSource, Inc. Donald E. Brown - NiSource, Inc.

Good morning, ladies and gentlemen, and welcome to the NiSource Q4 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Mr. Randy Hulen, Vice President of Investor Relations. You may begin. Randy G. Hulen - NiSource, Inc.: Thank you, Catherine, and good morning, everyone. Welcome to our quarterly investor call. Joining me this morning are Joe Hamrock, Chief Executive Officer; and Donald Brown, Chief Financial Officer. The purpose of today's call is to review the NiSource financial performance for the fourth quarter and the full year of 2016, as well as provide an overall update on our utility operations and growth drivers. We'll then open the call up to your questions. As a reminder, we will be referring to our supplemental slides during this call. These slides are available on our website. Also available on our website is a document that contains segment and financial information to accompany this presentation. Before turning the call over to Joe, just a couple of reminders, some of the statements made on this conference call will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A and Risk Factors sections of our periodic SEC filings. In addition, some of the statements made on this conference call relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and additional segment and financial information available on NiSource.com. In that document, you'll also find our full financial schedules that have historically been available in our earnings release. One final reminder, when comparing our full year 2016 results to 2015, keep in mind that we successfully completed the separation of Columbia Pipeline Group on July 1, 2015, and those results for CPG are now classified as discontinued operations. So, with all that out of the way, the call is yours, Joe. Joseph J. Hamrock - NiSource, Inc.: Thanks, Randy. Good morning, everyone, and thanks for joining us. 2016 marks the first fiscal year for NiSource operating exclusively as a regulated utility company, and the financial and operational results that our team produced during the year demonstrate the enduring strengths of our long-term infrastructure investment strategy. The customer-focused investments we're making are enhancing the safety, reliability and environmental performance of our systems, as well as customer service and employee training, all of which supported earnings and dividend growth for our investors. Let's look at slide 3 of our supplemental deck and highlight some of our significant achievements in 2016 and early 2017. We delivered net operating earnings per share non-GAAP of $1.09, which compares to $0.94 in 2015, and is near the upper-end of our 2016 guidance of $1.05 to $1.10. We invested a record $1.5 billion in our gas and electric utility infrastructure across our seven states. The value these investments deliver included replacement of 406 miles of priority pipe, 12% more than in 2015, driving continued reductions in leaks, outages and emissions. In addition, we replaced 60 miles of underground cable and more than 1,200 electric poles, improving electric reliability for our Indiana customers. We also completed significant regulatory initiatives supporting these investments across our footprint. These included gas base rate case settlement approvals in Kentucky, Maryland and Pennsylvania, and just last month reaching a settlement agreement in Virginia, as well as approvals of settlements in a long-term electric modernization program and electric base rate case in Indiana, and finally, infrastructure tracker updates in several states. We're committed to further reduce our greenhouse gas emissions through these continued gas modernization investments and planned coal-fired plant retirements as we diversify our electric generation portfolio. In fact, in early 2016, we became a charter member of the U.S. EPA's Methane Challenge Program, committing to reduce our methane emissions by more than 300 million cubic feet over five years. We also added about 33,000 new customers in 2016, our best year for customer growth in a decade. The growth was driven by a number of factors, including an increase in gas conversions from other fuels, recovery in the new housing market, and low customer attrition. With our continuing track record of producing strong results and the confidence that we have the right business plan and the right team in place, we are reaffirming our net operating earnings guidance of $1.12 per share to $1.18 per share for 2017. In addition, we now expect to invest about $1.6 billion to $1.7 billion in our infrastructure this year, up from our prior estimate of $1.5 billion. The increase is driven primarily by investments on the electric side related to increasing service reliability and repositioning our generation fleet. These investment levels keep NiSource on pace for continuing sustained execution on the $30 billion of identified regulated utility investments we first outlined in 2014. Now, I'd like to turn the call over to Donald who will discuss our financial performance in more detail. Donald E. Brown - NiSource, Inc.: Thanks, Joe, and good morning everyone. Turning to slide 4, as Joe mentioned earlier, we delivered non-GAAP net operating earnings of about $351 million or $1.09 per share in 2016 compared with about $299 million or $0.94 per share in 2015. On an operating earnings basis, NiSource reported about $894 million for the year, which is an increase of about $62 million over the same year in 2015. On a GAAP basis, our operating income was about $858 million for 2016 versus about $800 million in 2015. The biggest driver of our solid financial performance continues to be the impact of our long-term infrastructure investments. Now, let's take a closer look at our segment level results. Our Gas Distribution Operations segment delivered operating earnings of about $598 million in 2016, an increase of about $30 million from 2015, and our Electric Operations segment reported operating earnings of about $302 million in 2016, an increase of about $23 million from 2015. These increases were driven primarily by higher net revenues from returns earned on our infrastructure investments across our seven states. And as Joe mentioned, our net operating earnings for the year came in near the upper end of our guidance range, and our solid overall results demonstrate the strength of our investment-driven plan. For full details of our results, including details of our fourth quarter performance, are available in our earnings release and supplemental financial information posted this morning at NiSource.com. Now, turning to slide 5, I'd like to briefly touch on our debt and credit profile. Our debt level as of December 31 was about $7.9 billion, with a weighted average maturity on long-term debt of approximately 13 years and a weighted average interest rate of approximately 5.4%, down from 5.9% at the end of 2015. At the end of the year, we maintained net available liquidity of about $684 million, consisting of cash and available capacity under our credit facility. I'll note that we increased our credit facility by $350 million to $1.85 billion during the fourth quarter to provide additional liquidity and support for our capital investment program. It's also worth mentioning again that our credit ratings at the three major agencies are investment-grade. Standard & Poor's rates NiSource at BBB+; Moody's at Baa2; and Fitch at BBB, all with stable outlook. Going forward, our financial foundation is strong and poised (09:50) for continued growth. But before turning the call back to Joe, I'd like to briefly address federal tax reform, which we know is a topic that many of you are tracking closely. As with any potential legislation that could affect our customers and shareholders, NiSource is actively monitoring the discussion and working with our industry partners at AGA and EEI as well as elected officials help shape a balanced and constructive outcome. Our objectives in this policy efforts are to retain interest deductibility, ensure fair and effective transition rules, while also balancing the interest of our customers and our shareholders. I'd also say, it's way too early to comment specifically on tax reform. However, I would note that as a 100% regulated company, most tax changes would be reflected in customer rates and has minimal to no impact on regulated earnings. Sorry, I think we're having a fire drill here. We're going to check on that. I'll continue until we get noticed. So, where was it, say, it's too early – we are a 100% regulated company, and so, most tax changes would be reflected in customer rates and has minimal to no impact on regulated earnings and only a modest potential impact on cash flow. The primary exposure NiSource has under some current proposals is related to a portion of our corporate level debt, not capitalized and regulated operating companies, or our current investment programs. Therefore, eliminating the deductibility of interest and/or reducing the corporate tax rate below the current 35% would have a modest dilutive impact on consolidated earnings. Now, I'll turn the call back to Joe to discuss a few customer, infrastructure investment, and regulatory highlights. Joseph J. Hamrock - NiSource, Inc.: Thanks, Donald. We've continued to execute on our well-established, customer-focused infrastructure modernization investments. Together with regulatory initiatives and enhanced customer programs, we're focused on delivering our results the right way with our customers, communities, employees, and investors in mind. In 2016, we received several recognitions for doing just that. For instance, we were named to the Dow Jones Sustainability Index North America for the third straight year. The Ethisphere Institute named NiSource to its list of the World's Most Ethical Companies for the fifth year in a row. And we were named by Forbes Magazine as one of America's Best Large Employer, an honor based on independent surveys of employees at the nation's largest organizations. We're also continuing to provide programs and services that can help our customers reduce energy usage and manage their bills. For instance, in December, the Public Utilities Commission of Ohio approved a plan by Columbia Gas of Ohio to continue offering its energy efficiency programs for another six years. We expect that approximately 700,000 customers will benefit from these programs during that period, helping them save money by reducing their gas, electric, and water usage. Since the separation of Columbia Pipeline Group on July 1, 2015, NiSource has produced a total shareholder return of nearly 41%, outperforming the Dow Jones Utility Index, and in November we were ranked number one for total shareholder return among mid-cap electric companies over a five-year period by the Edison Electric Institute. Now let's turn to some specific highlights for the fourth quarter from our Gas Operations on slide 6. New rates became effective December 19 at Columbia Gas of Pennsylvania following Pennsylvania Public Utility Commission approval in October of a joint settlement agreement in our base rate case. The approved settlement supports the continued upgrade and replacement of infrastructure and allows recovery of increases in safety-related operating and maintenance costs. The new rates increase annual revenue by $35 million and the settlement includes incentives to expand gas service to commercial customers. In Virginia, we reached the settlement in January with all parties to our base rate case pending before the Virginia State Corporation Commission. The settlement, if approved, as filed would allow for about a $29 million annual revenue increase. We filed the rate request in April 2016, seeking to adjust base rates to recover investments that improve the overall safety and reliability of the distribution system. The case also supports the growth of our Virginia system, driven by increased customer demand for service. Updated interim base rates subject to refund were implemented in September. On February 8, the hearing examiner recommended approval of the settlement without modification and a Commission's decision is expected in the first half of 2017. In Kentucky, we implemented new base rates on December 27, following Kentucky Public Service Commission modification and approval of our base rate case settlement agreement. The approval includes an annual revenue increase of about $13 million and will allow for continued system modernization and pipeline safety investments. In Maryland, we implemented new base rates on October 27, following Maryland Public Service Commission approval of a settlement agreement in our base rate case. The approval increases annual revenue by about $4 million and supports the continued replacement of aging infrastructure and increased pipeline safety investment. In Massachusetts, we implemented revised rates under our 2015 base rate case settlement. The settlement provided for about a $4 million incremental annual revenue increase effective November 1, 2016, which was in addition to the approximately $33 million increase that took effect on November 1, 2015. The settlement supports our continued efforts to modernize our pipeline infrastructure and reduce emissions, while positioning our Massachusetts operations to continue to serve customers safely and reliably. [Technical Difficulty] (16:56-24:53) Randy G. Hulen - NiSource, Inc.: Hello, Catherine. This is Randy Hulen again. We are back in the building and ready to reconvene. So, we apologize for the inconvenience to everyone, but we appreciate your patience. So, as soon as Joe grabs the seat, we'll restart where he left off. Thanks. Joseph J. Hamrock - NiSource, Inc.: Thanks, Randy, and thanks, Catherine. And again, our apologies for that. Although I will say as we keep safety as our top priority in all that we do important that we respond to these kind of incidents appropriately, so thanks for your patience and we'll pick up right where we left off. I was updating on our gas business segment and regulatory activity had gone through a number of the states, I will resume with the Massachusetts story where we implemented revised rates under our 2015 base rate case settlement. That settlement provided for about a $4 million incremental annual revenue increase effective November 1, 2016, which was in addition to the approximately $33 million increase that took effect on November 1, 2015. The settlement supports our continued efforts to modernize our pipeline infrastructure and reduce emission while positioning our Massachusetts operations to continue to serve customers safely and reliably. In Indiana, we continued to execute on our seven-year $824 million gas infrastructure modernization program to further improve system reliability and safety. On December 28, the Indiana Utility Regulatory Commission, or IURC, approved our semi-annual tracker update covering about $67 million of investments that were made in the first half of 2016 under this program. Several other NiSource utilities also filed annual tracker updates related to their gas infrastructure modernization programs. This includes Columbia Gas of Massachusetts under its Gas System Enhancement Program, Columbia Gas of Virginia under Virginia's SAVE Act Program, and Columbia Gas of Maryland under its Strategic Infrastructure Development and Enhancement Program. Combined, these filings provide for recovery of about $125 million in capital investments focused on safety and reliability. The SAVE and STRIDE updates were approved in December. In Massachusetts, we expected a Department of Public Utilities order prior to May 1, 2017 when the update is scheduled to be implemented. As you can see across our gas utilities, we had a robust list of accomplishments on the regulatory, customer, and infrastructure fronts to wrap up 2016. Now let's turn to our Electric Operations on slide 7. On November 1, NIPSCO submitted its Integrated Resource Plan to the IURC. It outlines NIPSCO's plans to meet its customers' anticipated long-term energy needs. The NIPSCO team worked constructively with stakeholders to develop a balanced plan focused on providing customers affordable, clean energy while maintaining flexibility for future technology and market changes. Under the plan, NIPSCO would retire 50% of its coal-fired generating fleets by the end of 2023, including Bailly Generating Station Units 7 and 8 and R.M. Schahfer Generating Station Units 17 and 18. The Midcontinent Independent System Operator has approved closure of Bailly Units 7 and 8 by mid-2018. Also, as outlined in the plan, on November 1, NIPSCO requested IURC approval to invest approximately $400 million in required environmental upgrades at its Michigan City Unit 12 and Schahfer Units 14 and 15 generating facilities. New rates became effective October 1 under NIPSCO's electric base rate case settlement, which was approved by the IURC on July 18. The settlement provides a platform for NIPSCO's continued investments and service improvements for customers and increases NIPSCO's annual revenues by about $73 million. We're also focusing Indiana on executing our seven-year electric infrastructure modernization program, which includes enhancements to electric transmission and distribution systems, designed to improve safety and reliability. The IURC approved program represents approximately $1.25 billion of investments to be made through 2022. We began recovering on approximately $46 million of these investments this month. And finally, our two major electric transmission projects remain on schedule with anticipated in-service dates in the second half of 2018. The 100-mile, 345-kV and 65-mile, 765-kV projects are designed to enhance region-wide system flexibility and reliability. Substation, line and tower construction are underway for both projects. Before opening the call to your questions, I'd like to remind everyone of our Investor Day scheduled for March 8 in New York City. That's in two weeks. The event will begin at 8 o'clock AM Eastern Time and I will be joined there by other members of NiSource's senior management team to discuss in detail the company's regulated utility infrastructure investment strategy. The event will be webcast live on NiSource.com. As we wrap up today, just some key takeaways for the year and our long-term investment proposition. NiSource's long-term utility infrastructure modernization programs continue to enhance value for customers and communities, while also driving solid financial performance for our shareholders. We expect to deliver non-GAAP net operating earnings of $1.12 per share to $1.18 per share in 2017, with about $1.6 billion to $1.7 billion in capital investments. With our robust investment plans, we continue to expect to grow both net operating earnings per share and our dividend every year, while maintaining our investment-grade credit ratings. Thank you all for participating today and for your ongoing interest in and support of NiSource. Now, let's open the call to your questions. Catherine?

Thank you. I'm showing no questions at this time. I would like to turn the call back to Mr. Joe Hamrock, CEO, for any closing remarks. Joseph J. Hamrock - NiSource, Inc.: Thank you, Catherine. I appreciate that. We'll take that not as a sign of no questions, but as an indication that we'll have a chance to talk in a couple of weeks and we do look forward to that. Thanks again for your interest in NiSource. Once again, a reminder about our Investor Day on March 8 in New York City. It will be a great opportunity to do a deeper dive into our business and give you a chance to hear from some other members of our senior team. Thanks for your interest today, and have a great and safe day. Take care.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.