Alliant Energy Corporation (LNT) Earnings Call Transcript & Summary

Thank you for holding, and welcome to Alliant Energy's Second Quarter 2026 Earnings Conference Call. At this time, all mode. Today's conference call is being recorded. I would now like to turn the call over to your host, Susan Gille, Investor Relations Manager at Alliant Energy.

Good morning, and thank you for joining Alliant Energy's Second Quarter 2026 Financial Results Conference Call. Joining me today are Lisa Barton, President and Chief Executive Officer; and Robert Durian, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will have time to take questions from the investment community. Last night, we issued a news release announcing our second quarter 2026 results and reaffirmed 2026 full year earnings guidance. That release, along with our earnings presentation will be referenced during today's call and is available on the Investors section of our website at alliantenergy.com. Before we begin, please note that today's remarks and responses will include forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described in last night's earnings release 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 is a non-GAAP financial measure. Reconciliations to GAAP results are provided in the earnings release available on our website. At this point, I'll turn the call over to Lisa.

Thank you, Sue, and good morning, everyone. We delivered strong second quarter results and continue to execute well across our business. Despite milder weather during the first 6 months of the year, we are currently trending in the upper half of our 2026 earnings guidance range, while advancing the investments and customer solutions that support our long-term growth strategy. Our structure is anchored in the Alliant Energy Advantage the ability to align customer growth, constructive regulation, flexible resource planning and disciplined execution in a way that benefits customers, communities and shareowners. As previously announced, our efforts to date have resulted in an expectation of driving a 60% increase in our demand by 2031. And through 5 executed electric service agreements with large load customers. Three of these large loads are already under active construction with commission-approved contracts. In Cedar Rapids, Iowa, Google has energized their transmission service. They are anticipating ramping in accordance with the contracted load schedule. Also in Cedar Rapids, QTS continues to make substantial progress on construction of its 7 building data center campus with initial energization of 300 megawatts anticipated later this year. In Beaver Dam, Wisconsin, Meta has entered the vertical construction phase with work actively progressing on data center facilities and supporting infrastructure. We are also encouraged by continued progress on future large load opportunities. QTS remains active in development of its second Iowa project in Clinton. We plan to file the ICR for this 900-megawatt project later this year. Our recently signed 370-megawatt data center agreement in Iowa announced on our Q1 call, marks continued progress on our customer pipeline that currently represents between 2 and 4 gigawatts of potential future load. And as always, each of these loads are responsible for their cost of service, while helping ensure existing customers benefit from growth opportunities without subsidizing new development. These opportunities are transformational for rural communities, expanding the local tax base, strengthening schools and essential services enhancing infrastructure and creating lasting economic growth and prosperity for generations to come. We are prioritizing local collaboration and readiness. So our communities are well positioned to compete for and capture those benefits. A recent study by the Brow Group reinforces this approach, finding that large new electricity users such as data centers, can improve affordability for existing customers. That is what our approach is designed to do, ensure large load customers pay their own way while creating opportunities to further reduce costs for existing customers. It remains a cornerstone of our regulatory filings and demonstrates how disciplined growth can support reliability and long-term value for all customers. Building on the customer benefits generated through last year's fiber conduit lease agreement with Meta, this quarter, we amended our agreement with QTS Cedar Rapids to support accelerated load growth. allowing them to accelerate their load ramp with firm and nonfirm transmission. We also remain focused on disciplined financing and have been awarded approximately of Department of Energy grants for our Columbia Energy Center and energy done projects. These are just a few of the strong examples of the Alliant Energy Advantage in action. Working collaboratively with customers to support their growth objectives while creating broader benefits for all customers. Across our portfolio, we consistently transform strategic intent into measurable outcomes. Our team continues to execute exceptionally well across our customer investments while advancing the next generation of investments needed to serve customers and support economic development. In Iowa, we are refreshing our resource plan to support future regulatory filings and ensure our long-term resource plan remains aligned with evolving customer needs. This approach supports base rate stability and predictability for existing IPL retail electric customers through the end of the decade. During the quarter, we made meaningful progress across our generation portfolio from placing additional generation resources into service to breaking ground on our new gas and wind investments. as well as advancing regulatory approvals. We are building momentum that positions us well for future growth. Robert will provide more detail on these developments in a moment. Before turning over to Robert, I would like to recognize our employees and especially our line workers following National Lineworker Appreciation Day earlier this month. Recent summer storms and summer heat has once again demonstrated the critical role our field and generation teams play in safely restoring service and supporting our customers when they need us most. Their commitment to safety, reliability and operational excellence reflects the values that define Alliant Energy. I'll close with the recent milestone our team is proud of. In the recent J.D. Power study of Midwest large utility providers, we ranked #1 in power reliability and safety. On behalf of the management team, we thank our employees who work tirelessly each day to provide the energy our customers and communities count on, fueling the economic engine of our communities. With that, I'll turn the call over to Robert.

Thank you, Lisa, and good morning, everyone. Yesterday, we reported strong second quarter 2026 GAAP earnings of $0.65 per share. As shown on Slide 5, the year-over-year change in ongoing earnings was primarily driven by higher revenue requirements associated with capital investments across our Iowa and Wisconsin utilities, along with increased equity earnings from corporate venture fund investments, and higher temperature normalized retail electric and gas sales. These positive drivers were offset by higher operations and maintenance expenses related to the growth of our business, impacts of milder temperatures on electric and gas sales timing of income tax expense and higher financing and depreciation costs. Milder than normal temperatures reduced second quarter electric and gas margins by approximately $0.03 per share compared to a $0.02 benefit in the same period last year. Excluding the impacts of temperatures, second quarter electric sales were approximately 3% higher year-over-year. Reflecting continued strength from Wisconsin commercial and industrial customers, particularly within the food processing and manufacturing sectors, and we are starting to see increases from the initial phase of the expected data center loads ramping in Iowa. Strong execution across our business gives us confidence with our 2026 earnings guidance range despite impacts at our 2 utilities from milder temperatures in the first half of the year. In addition, corporate venture fund investments in our nonutility business are expected to provide incremental earnings this year. Accordingly, we are reaffirming our 2026 earnings guidance range and are currently trending in the upper half of the range. Key assumptions supporting our 2026 outlook are summarized on Slide 6. Our longer-term earnings outlook remains intact. Based on our current plan, we expect compound annual earnings growth across 2027 through 2029 to be 7% plus. We will continue to assess our long-term earnings growth potential -- as we execute our data center expansion and update our capital expenditure and financing plans on the third quarter earnings call. Turning to financing. Slide 7 outlines our remaining 2026 debt financing plans, which include up to $800 million of long-term issuances consisting of up to $300 million at WPL and up to $500 million at IPO. As a reminder, our 4-year capital investment plan is supported by a balanced financing strategy that includes cash generated from operations, proceeds from tax credit monetization and new financings, including debt, hybrid instruments and common equity. As shown on Slide 8, we have made significant progress in the second quarter with proactively addressing our stated equity needs. Of the approximately $2.4 billion of announced common equity needs through 2029 and -- we have already raised approximately $1.8 billion through forward equity agreements. These actions effectively address our stated equity needs through 2028 and leave approximately $500 million of remaining equity to be raised through 2029 and excluding equity expected to be raised under our share of direct plan. Our financing plan, together with our proactive execution to date provides meaningful flexibility to support the efficient implementation of our strategy. Turning to regulatory matters. Our regulatory agenda remains closely aligned with our capital investment strategy and the growing needs of our customers. During the quarter, we made significant progress advancing projects that support both reliability and economic development across our service territories. Our recent regulatory advancements and active filings are shown on Slide 9. We -- in Wisconsin, we recently received approval of our individual customer rate agreement, supporting Meta's data center development in Beaver Dam. In response to that order, we expect to file a broader large load tariff later this quarter. We also received written approval for the expansion of our Bent Tree wind farm adding approximately 150 megawatts of renewable generation that have now advanced that project into construction. In Iowa, we continue to advance the energy resource investments included in our long-term capital plan. During the quarter, we filed generation certificates for the 720-megawatt Morgan Valley and the 1.2 gigawatt River hawk simple cycle natural gas projects, and a generation certificate for an energy storage project totaling approximately 125 megawatts. From a project execution perspective, our storage, wind repowering and generation enhancement projects remain on schedule. We recently placed into service the final 2 generation enhancement projects at Nina and Sheboygan. These projects allow us to efficiently unlock an additional 260 megawatts of near-term capacity from existing assets while enhancing customer value. We also recently started construction activities on the Bobcat Energy Center, a 720-megawatt simple cycle natural gas project in Marshalltown, Iowa; and the 95-megawatt rice project in Burlington, Island. Later this year, we anticipate further filings to support customer growth, including an individual customer rate application associated with QTS' Clinton data center in Iowa, and our recently announced 370-megawatt electric supply agreement. Our focus on execution positions us well to deliver sector-leading growth, help our customers and communities grow and thrive and create long-term value for customers and charters. Thank you for your continued interest in Alliant Energy. We look forward to speaking with many of you over the coming months. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from Shar Purreza with Wells Fargo. Your line is open. Please go ahead.

Good morning Lisa, I always been kind of like this growth story for you guys. It's been like a pretty good hedge against some of the Wisconsin noise. But now you're seeing both Republican and Democratic candidates has been somewhat more guarded around data center developments and their comments Iowa is getting a little bit noisier than people would have thought. They're not calling for a statewide moratorium, but can we get your latest thoughts around the political backdrop in the state. It's getting noisier than I think a lot of people would have thought. So just till a la the land would be great.

Sure. I mean while it's always disappointing that some PJM narratives are being repeated more broadly, we tend to see just more from election standpoint, look, the map is self-explanatory by growing, we're able to keep rates flat in Iowa and the more we grow, the longer we can do that quite frankly. I think it's important when you're thinking about moratoriums and hearing about them. One, these are big states. So rest assured that the -- whether it be ordinances or moratoriums that we're seeing, they're not impacting our projects nor our pipeline. I'll also say that there's not a one-size-fits-all when it comes to moratoriums. The language really matters. And 1 of the things that we're really excited to see is that the data centers are really focusing on transparency. They're having early conversations with communities, making them feel more comfortable. It's something we're focusing on as well, whether it be open houses for generation or just being there and available to answer questions that they have with respect to data centers. But I'd tell you, 1 of the things that I just love hearing is the fact that we'll get some phone calls from community saying, hey, how do we get a data center in our backyard. And not just to me shows that Iowa remains and will continue to remain open for business.

Got it. So political rhetoric is rhetoric. Okay. I appreciate that. And then obviously, you guys are seeing good growth across the footprint and -- you've got new generation, you've signed 370 megawatts SA, which is in the plan, you have no 3.4 gigs out there. It sounds like from Robert's comments that you're going to revisit the CAGR I guess as we're thinking about it, are you married to the plus? Or could we get back into a range, albeit higher Obviously, we have to account for the lumpiness of the projects and this being kind of a politically sensitive year. But I guess, how are you sort of thinking about how you would guide, in the third quarter?

Yes. Great question, Shar. Yes. So we're looking forward to sharing more information in the third quarter call. As part of that process is typical for us, we'll update our 4- to 5-year capital expenditure plan and that will really drive kind of our confidence level at how we might be able to change the EPS CAGR going forward. So more to come on that in Yes, we're evaluating probably wanting to probably provide more transparency in how we characterize more details in the future. And so historically, when we were going into last year, and we wanted to use the plus to give us a little more flexibility, but I think we'll have more confidence in when we get to the third quarter and provide a little more specificity if that will help the investors.

Got it. So not to lead the witness, but it sounds like it will go back into a range at some form

More specificity whether it's a range or more specific targets for each year. As you indicated, there is some lumpiness to it in the sense of, if you look at our capital managers on an annual basis, there will be some years that are higher than others, and that could drive some of the earnings higher than the others.

Your next question comes from the line of Steve bars with RBC Capital Markets. Please go ahead.

Just had a quick 1 on the QTS amendments and the ramp. Can you just speak a little bit to kind of either what that means from a financial plan perspective or a shaping of capital deployment perspective or -- and like I say apps, there's a lot of questions in there, but I guess the way we've been thinking about it is maybe you'd be utilizing tax credits a little more upfront and then the lower ramp ramps in later and allows you to earn your returns on higher invested capital balances. And just wondering if this increased accelerated load ramp, how that changes the financial plan.

Yes. Thanks, Steve, and I'm going to talk to a couple of things that I'm incredibly proud of with respect to our team. We've been consistent in our approach and making sure that we're targeting near-term growth opportunities and being able to accommodate an accelerated low ramp with QTS is something that makes sure that our communities see the benefits sooner from a property tax standpoint, other customers see the benefit and shareholders as well. So I'll turn it over to Robert to kind of walk through some of the more details with respect to your question.

Yes, Steve, I think about it, our CapEx plan is aligned with the ramp rates right now. So I wouldn't expect much of a change there for CapEx, but we are expecting to have higher revenues, specifically in the years 2027 and 2028. And what that really does for us. It really helps our existing customers in the sense of allows us to not use as many tax credits through the kind of the growth phase of our business here and could potentially translate into helping us to stay out over a longer period of time. SP551402319 And just a data point, QTS as of today, has got over 40 megawatts worth of load, which is great to see. .

That's awesome. And then just a follow-up on that. Just can you talk a little bit about discussions around expansion of the existing customers in Iowa, like Obviously, you have the 900 megawatts at ICR that you're filing a QTS 2, but just if QTS 1 or Google and Cedar Rapids have existing extra acreage they could potentially expand into? Or just any thoughts on that?

Yes. So when you think about the 2% to 4% that we talk about with respect to the plan, we're super excited that we had even though we announced the 2% to 4%, not less than a year ago that we were able to announce 370 megawatts worth of additional low growth conversations are all of the above, new sites, existing sites, all of that. We're, of course, not able to share that at this time, but just stay tuned with respect to our third quarter update, which will have any load, whether it be load accelerations or new load growth opportunities reflected in the resource plan and our CapEx plan.

Your next question comes from the line of Andrew Weisel with Scotiabank. Your line is open. Please go ahead. Andrew?

Good morning, everyone. First question, just if I could elaborate on shares a little bit and get more specific. Can you talk about the status of the LinCounty data center moratorium? How does that work with the City of Cedar Rapids in your projects there? Would they be impacted -- or if they were to expand, might they be affected? And if so, would that depend on the timing of announcements or construction, how would that all work?

No impact -- it's the unincorporated area of Linn County. It has no impact. on the data center growth opportunity. In fact, I don't think we can have a better advocate out there. with Mayor Tiffany O'Donnell. -- if you follow any of her feeds, he's got an active podcast and so forth. She continues to call out the benefits that they are seeing real time and Cedar Rapids tied to these data centers.

Terrific. That's what we thought just wanted to confirm Okay. Next question. I just wanted to ask about the load growth forecasted. From the slides, it looks like you're taking up the numbers for 2026. -- now 2% to 3% from 1% previously. Is that a function of data centers ramping up faster than expected or better growth from the rest of the customer base and is that going to bode well for 2017 and beyond? Or is that more of like a near-term positive that might not be sustainable. And then similarly, on the O&M side, that number went up by 1 percentage point as well. but with a comment that it's weighted to the first half. So is that onetime expenses that have already happened? Or is that more of like a higher run rate due to inflation or whatever?

Yes. Great questions, Andrew. Yes, I think of the sales is probably higher than expected for us. We're seeing some positive developments, not only with the data centers going a little bit faster than we expected originally here. So we see some uplift there, but also just our core business, when you think about all the other businesses throughout our service territory seem to be doing better than we originally expected. So I don't think that that's temporary. I think that's probably more of a function of what we're seeing as far as ongoing economic impacts. And some of that we would actually attribute to the data center developments themselves, specifically in the city of Cedar app, it's driving a lot of economic benefits when you think about all the construction workers there. We have projects right now underway, 1 for QTS and 1 for Google, and they have in excess of 10,000 workers in that city. And if you think about the size of that city of roughly 150,000 in population. It's got a pretty big impact. And so that's driving more hotel uses, more restaurant usage and other things. And so we're seeing some of the ancillary benefits of some of that data center development activities that we're looking forward to spreading throughout other parts of the state into Wisconsin as well. Specifically related to your O&M question, yes, as we continue to manage the business as we're seeing higher what I'd say temperature-normalized sales, that gives us an opportunity to continue to invest in the business. And so -- we're investing in generation, energy delivery. We want to make sure that we have a very reliable system for our customers. And so we're making sure we're breaking prudent investments to make sure that, that happens. So -- and we had kind of expected that we were going to have a little bit higher expenses in the first half of the year. Some of that's related to things like the timing of generation outages. So all in all, I'd say the first half of the year is pretty much what we had expected. The second half will be a little bit lighter, but we may see if we continue to have some higher retail sales, continued investments in the business to make sure we, like I said, focus on the reliability and customer service.

That's great. So it's essentially pulling forward some of these expenses and increasing a good situation at the end. And just to clarify, the construction workers and the benefits from them, should they be expected to continue to be there in line with the load ramps that you detailed in Slide 4 there, like through 28, 29, 30.

It's a -- they're there for quite some time, exactly. I mean there's just a lot of development that's being undertaken. When you think about -- I'll just use QTS as an example, there are 7 building campus, I mean they're doing on building than the next building and so forth, and they're really moving at a very quick pace. And we're glad we could come with potentially more to come if you secure more of the 2 to 4 gigawatts and then some potential lift .