Alliant Energy Corporation 2022 Q1 Form 10-Q Summary
Business context and reporting period
This combined unaudited Form 10-Q covers Alliant Energy Corporation, Interstate Power and Light Company (IPL), and Wisconsin Power and Light Company (WPL) for the three months ended March 31, 2022, with comparisons to the three months ended March 31, 2021. Alliant Energy operates regulated electric and natural gas utilities in Iowa and Wisconsin, with additional non-utility activities and investments, including ATC Holdings.
Key financial metrics
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Total revenues | $1,068 million | $901 million | +$167 million |
| Operating income | $248 million | $198 million | +$50 million |
| Net income attributable to common shareowners | $192 million | $171 million | +$21 million |
| Diluted EPS | $0.77 | $0.68 | +$0.09 |
| Operating cash flow | $251 million | $145 million | +$106 million |
| Capital and acquisition expenditures | $330 million | $231 million | +$99 million |
Revenue growth was led by electric utility revenue of $773 million versus $701 million and gas utility revenue of $262 million versus $170 million. Retail electric sales volumes increased 2%, while retail gas sales volumes increased 11%, primarily due to temperature effects, customer growth, and comparisons with COVID-19-related impacts in 2021.
Alliant Energy’s non-GAAP utility electric margin increased to $467 million from $434 million, and utility gas margin increased to $94 million from $70 million. Management reported that higher WPL rate base revenue requirements, favorable temperatures, higher temperature-normalized sales, and rider-related changes were major contributors.
The consolidated effective income tax rate was 4% in Q1 2022 versus a 19% benefit in Q1 2021. The change primarily reflected lower amortization of excess deferred taxes, particularly at WPL, and other tax-related factors.
Financial position, debt, and liquidity
- Cash and cash equivalents were $67 million at March 31, 2022, compared with $39 million at December 31, 2021. Cash, cash equivalents, and restricted cash totaled $71 million at quarter-end.
- Total assets were $18.839 billion, compared with $18.553 billion at year-end 2021.
- Long-term debt, including current maturities, had a carrying amount of $7.716 billion at March 31, 2022, versus $7.368 billion at December 31, 2021.
- Commercial paper outstanding was $276 million, with $724 million of available capacity under the single revolving credit facility. IPL also had $109 million of available capacity under its receivables-sale program.
- In February 2022, Alliant Energy Finance issued $350 million of 3.6% senior notes due 2032. In March 2022, it entered into a $300 million variable-rate term loan maturing in March 2024 and used the proceeds to retire an expiring $300 million term loan.
- Alliant Energy paid $107 million of common dividends during the quarter, based on a quarterly dividend of $0.4275 per share.
Material changes versus the prior comparable period
- Operating income increased $50 million, primarily from higher electric and gas margins, partially offset by higher operation and maintenance, depreciation, and other expenses.
- Utilities and Corporate Services net income increased to $183 million from $166 million. ATC Holdings contributed $8 million in both periods, while non-utility and Parent results improved to $1 million from a $3 million loss.
- Operating cash flow improved to $251 million from $145 million, primarily due to customer collections, temperature-related sales, regulatory liabilities, and working-capital timing.
- Investing cash outflows increased to $223 million from $38 million, driven by higher utility construction expenditures, particularly WPL solar generation, and lower cash receipts from sold receivables.
- WPL received $180 million of capital contributions from its parent and increased its net property, plant, and equipment balance by approximately $209 million during the quarter.
- Alliant Energy’s derivative assets increased primarily because of higher natural gas prices, with corresponding regulatory liabilities under utility cost-recovery mechanisms.
Guidance, outlook, risks, contingencies, and unusual items
The filing does not provide a new consolidated earnings or revenue guidance figure. Management states that first-quarter results are not necessarily indicative of full-year results.
- WPL’s 2022 retail electric and gas rate increases became effective January 1, 2022. The PSCW had authorized annual base rate increases of $114 million for retail electric customers and $15 million for retail gas customers.
- WPL received an oral PSCW decision authorizing up to 414 MW of additional solar generation. IPL expected a decision by the end of 2022 on its filing concerning up to 400 MW of solar generation and 75 MW of battery storage.
- The U.S. Department of Commerce initiated an investigation involving potential tariff circumvention for solar materials sourced from certain Southeast Asian countries. Alliant Energy stated that the matter could increase costs or delay renewable projects, but its impact could not yet be predicted.
- March 2022 Iowa tax reform is expected to reduce the Iowa corporate income tax rate beginning in 2023 if specified revenue triggers are met. The timing and amount of reductions remain uncertain. Alliant Energy expects a fourth-quarter 2022 charge related to remeasurement of deferred tax assets at non-utility businesses after the 2023 rate is known.
- At March 31, 2022, minimum future commitments for specified capital projects were $214 million for Alliant Energy and $213 million for WPL. Commodity and other purchase commitments totaled $1.201 billion for Alliant Energy.
- IPL’s remaining obligations under its EPA Consent Decree include fuel switching or retiring Prairie Creek Units 1 and 3 by December 31, 2025. The companies currently expect to recover material compliance costs from IPL customers.
- Alliant Energy estimated potential exposure of approximately $60 million under guarantees related to a former Whiting Petroleum affiliate, with a $5 million liability recorded for expected credit losses. No material probable loss was identified for the related guarantees.
- WPL’s collective bargaining agreement with IBEW Local 965 was scheduled to expire in May 2022. A tentative agreement had been reached, but the outcome was not yet certain at the filing date.
- Key ongoing risks include regulatory cost recovery, inflation and interest rates, commodity prices, supply-chain constraints, renewable project execution, environmental compliance, weather, cybersecurity, capital-market access, credit risk, and changes in MISO capacity requirements.
Important facts for investors to verify
- Whether higher first-quarter margins and sales volumes persist after favorable temperature impacts and rider-related items.
- The final scope, timing, and cost impact of the solar-material tariff investigation and related renewable project delays.
- Final regulatory outcomes for IPL’s solar and battery-storage filing and WPL’s solar authorizations.
- The timing and financial effects of Iowa tax-rate reductions and the expected deferred-tax remeasurement charge.
- Capital spending, project commitments, and financing needs as WPL and IPL expand renewable generation and storage.
- Progress toward the Prairie Creek Units 1 and 3 compliance deadline and the recoverability of related costs.
- Debt refinancing, commercial-paper usage, interest-rate exposure, and continued access to credit facilities and capital markets.
- Settlement of WPL’s labor agreement and any resulting labor-cost or operational effects.