Thank you for holding, and welcome to Alliant Energy's Third Quarter 2023 Earnings Conference Call. At this time, all lines are in listen-only 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. I would like to thank all of you on the call and the webcast for joining us today. We appreciate your participation. With me here today are John Larsen, Chair and CEO; Lisa Barton, President and COO, and Robert Durian, Executive Vice President and CFO. Following prepared remarks by John, 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 third quarter and year-to-date financial results, narrowed our 2023 earnings guidance range, provided 2024 earnings and dividend guidance, and provided our annual capital expenditure plan through 2027. This release as well as earnings presentation will be referenced during today's call and is available on the Investor page of our website at www.alliantenergy.com. Before we begin, I need to remind you 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 non-GAAP financial measures. The reconciliation between non-GAAP and GAAP measures are provided in the earnings release and our quarterly report on Form 10-Q, which is available on our website. At this point, I'll turn the call over to John.

Thank you, Susan. Good morning, everyone, and thank you for joining us today. I'm pleased to report that we are firmly on track for delivering another year of solid financial and operating results. Consequently, we are narrowing our 2023 earnings guidance range, and I am affirming our long-term earnings growth range of 5% to 7%. We take great satisfaction in consistently achieving our earnings growth objectives. Continuing that momentum, turning to 2024, I'm pleased to share our earnings guidance and dividend target. Our 2024 earnings guidance midpoint represents a 6% increase to our forecasted 2023 adjusted earnings, and our 2024 annual common stock dividend target is $1.92 per share, which is a 6% increase from this year's dividends. We are focused on delivering steady and predictable results. We have several key headlines and highlights this quarter, but before I get to them, I'd like to touch on the news you likely saw last week. I'm incredibly honored to have been with Alliant Energy for the past 35 years, and I'm excited to be continuing that journey and moving into the role of Executive Chairman of our company, as Lisa Barton assumes the role of CEO. Lisa is an exceptional leader with a well-established track record of success. Together with the Board of Directors, I have complete confidence that she is well-positioned to further Alliant Energy's ability to deliver consistent results as we continue to focus on our purpose of serving customers and building stronger communities. Speaking of that purpose, let me take a few minutes to share a few headlines from quarter three that I'm particularly proud of. Then I'll pass it over to Lisa and Robert to provide more details. The first headline centers on our strong core investment thesis. That is why you choose to invest in our…

Thank you, John. It is an honor to be entrusted with the future growth and stewardship of this industry-leading company. Since joining Alliant Energy, it has been abundantly clear that our organization lives and delivers on its purpose day in and day out. In fact, the organization's commitments and alignment with its purpose is what drew me to Alliant Energy. I recently had the opportunity to meet with our team in Janesville, Wisconsin and was struck by the level of engagement and ideas our frontline teams brought to the table to better serve our customers. As you know, we are actively undergrounding our lines to provide greater reliability and system resiliency. In this conversation, our employees were offering suggestions to prioritize the undergrounding of overhead facilities located in backyards. They were sharing how these facilities can be difficult to get to, require specialized equipment, and due to the nature of the terrain, restoration can be time-consuming, factors that can be avoided by undergrounding. I appreciated their ideas and focus on our customers with the goal to reduce outages and restoration times, a notable example of the level of engagement and the connection with our purpose to serve our customers and build stronger communities. Our team's passion for innovation and dedication to serving our customers and communities is consistent across the company in both Iowa and Wisconsin. And it's precisely why it is a true privilege to take on the role of CEO and to serve as a member of our Board of Directors. Before going into the CapEx plan, I would like to underscore our organization's ongoing role of being at the forefront of the clean energy transition by providing our customers with access to a cleaner and more diverse energy mix. In 2022, approximately 40% of the energy we…

Thanks, Lisa. Good morning, everyone. Yesterday, we announced third quarter non-GAAP earnings of $1.05 per share compared to $0.93 per share in the second -- or third quarter of 2022. Our quarterly earnings change year-over-year was primarily due to higher revenue requirements and AFUDC from WPL capital investments and lower operating and maintenance expenses. These positive drivers were partially offset by higher interest expense. The non-GAAP adjustment recorded in the third quarter of $0.03 per share related to Iowa state tax reform. In September, the Iowa Department of Revenue announced a corporate state tax rate of 7.1% for 2024, which is down from the current rate of 8.4%. This change resulted in a current year charge at our non-utility and parent operations related to lower deferred tax asset values. This change will also enable us to pass millions of dollars of annual savings from lower state taxes onto our customers in Iowa for decades into the future. A similar non-GAAP adjustment was recognized in the third quarter last year related to Iowa's corporate tax rate change effective for 2023. Through September of this year, our net temperature impacts decreased Alliant Energy's earnings by approximately $0.02 per share. In comparison, net temperatures increased Alliant Energy earnings for the first three quarters of 2022 by $0.07 per share. Our temperature-normalized electric sales through the first three quarters are tracking in line with sales for the same period in 2022, including no material changes across the customer classes or our two states. Looking forward to the fourth quarter and our full-year 2023 results, we expect strong earnings growth from investments in Wisconsin and Iowa solar projects and lower O&M, partially offset by higher interest expense. As a result of solid earnings through September and our projected fourth quarter results, we have narrowed our…

Thank you, Mr. Durian. At this time, the company will open up the call to questions from members of the investment community. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Nicholas Campanella with Barclays. Please go ahead.

Hey, everybody. It's actually Nathan Richardson on for Nick.

Hey, Nathan.

Good morning.

Hello. Happy Friday. I just have a couple of questions here. You touched on the tax credit opportunity a little bit, and I appreciate the '23 and '24 guidance, but I was wondering if you could give any more Color into '25 and '26 and then maybe the full contribution over the five-year plan?

Yes, Nathan, probably paint a little bit of a picture here for our financing plans. When we think about the capital expenditure refresh that we've done through 2027, and as we look at the kind of financing needs for that, we actually think that we'll be able to fund all of that through cash flows from operations, including the monetization of tax credits, as well as some new long term debt. As we look at the opportunities to be able to monetize those tax credits, given the volume of tax credits we're generating currently with the wind projects and the solar projects, as well as those that will be added into our portfolio over the next few years, along with battery storage, we actually think we'll be averaging probably close to $300 million a year in tax credit monetization proceeds. So that provides us a lot of flexibility with our financing plans and therefore does not require any material common equity to be able to finance those capital expenditure plans. Where we do see potentially some need for new common equity is largely related to the regulatory constructs, specifically the capital structures for our two utilities that is dependent upon the outcomes of the pending rate cases. So that's to be determined, we should be seeing, hopefully, our WPL rate case decision here in the next couple of weeks. And as I indicated before, the Iowa decision, sometime probably by the second quarter, or third quarter of next year. And so that'll give us more insights as to any potential equity needs, but it's really tied into those additional equity layers at the two utilities.

Got it. That's super helpful. Thank you. And then my last question is some of your Midwest peers have been showing some decline in load in fiscal year '23. And I just wanted to see how we could think about what you've embedded in the fiscal year '24 outlook from a sales perspective and then maybe any longer term sales growth assumptions.

Hey, Nathan. This is John here. You know, '23 has been largely in line with our expectations from temperature-normalized load, and we're planning for that similarly going forward. But I would say we do have some pretty strong economic development interests. We've kept our forecast pretty conservative, pretty steady, as we've seen, but we've seen some great interest here. And when we see that materialize a bit more, we'll provide updates if or as needed.

Got it. Thank you so much.

You bet. Thank you.

Your next question comes from Julien Dumoulin Smith with Bank of America. Please go ahead.

Hey, good morning. This is Dariusz on for Julien. Thanks for taking the question. Just wanted to start off on the narrowed 2023 guidance. Thank you for providing that update. Just wondering if now that we're in November and there's probably good line of sight to the end of the year. If you can make any commentary as far as where you might be tracking within that range for the balance of the year.

Yes, Dariusz, this is Robert. Yes, I would characterize that we're tracking towards the midpoint. We have seen what I'd characterize, some milder weather temperatures in the first quarter this year. That really put our earnings down about $0.4 per share. But we actually picked up $0.2 back in the third quarter, given some warmer temperatures. And so far here in the fourth quarter, we've actually started out with some favorable weather temperatures, so we actually think we'll land pretty close to the midpoint and so that's we've been guiding people, too.

Okay, excellent. Thank you. Appreciate that. And then just looking ahead to 2024 and the guidance and the drivers that you provided, certainly appreciate that the WPL process is still ongoing. In the event that you did receive an improved equity layer there, could you see any upside too or perhaps tracking to the upper end of the range that you provided for 2024?

Yes. Dariusz, John here. You know, I'd say there's really four factors for our guidance with, you know, sales, great execution of capital, and you mentioned constructive decisions from regulatory filings and cost management. I would say right now we feel very comfortable with the guidance range that we've put out there. And as we get into '24, we would certainly update that if we're tracking a different part of that range. But think of it as pretty solid for our range in '24.

Okay, excellent. Thank you. If I could sneak in one more obviously. Certainly, appreciate the ITL rate case is recently filed, but you've had some fairly constructive processes and outcomes, especially with the advanced rate-making this year. Curious if you can make any comments on efforts towards or prospects for settling that rate case.

Yes, Dariusz, it's Lisa here, and I'll handle that question. So, you know, as you know, we always have a very transparent process with respect to our rate reviews. Our Clean Energy blueprint provides a high level of transparency. We had a balanced ask with a two-step request, both in the single digits. Obviously, we've had a strong track record of settlements in Iowa, and we continue to think that that's going to be possible in the future. But as always, we're going to assess the pros and cons of settlement along the way.

Okay, excellent. Thank you very much for the responses. I'll pass it along and we'll see you guys at EEI in about a week.

That was great. Thanks, Dariusz.

Your next question comes from Ross Fowler with UBS. Please go ahead.

Good morning, John. Good morning, Lisa. Hey, congratulations on the appointments.

Thank you.

Thanks, Ross.

So -- and I apologize if I'm bouncing between, sort of three calls this morning, so this has already been asked and answered. I do apologize, but I was just kind of looking through your CapEx refresh, and Lisa, I think I heard you say that the lower sort of renewables CapEx here is really being driven by this shift to gas projects to be responsive to MYSO and not driven by sort of some of the consternation we've seen over the last 18 months around renewable investments, right? You're still supply chain is okay. Like, it's none of that. It's more being responsive and adding this gas project into the plan?

Yes, Ross. Ross, you're correct. I mean, we're constantly reviewing our resource plans, taking into account changing conditions such as the MYSO capacity construct. Again, it's always that very transparent process that we use. And, you know, we'll be talking with regulators and stakeholders here in the earlier parts of '24.

Okay. And then given that renewable spending is a little bit lower in the plant, Robert, I think I heard you say that. Despite that, you still expect pretty good tax transferability -- tax credit transferability generation here that the only equity we need is around if you get a higher equity ratio at the regulated utilities from your regulated rate cases that are currently underway.

Yes, that's correct. Ross, it's a reminder, so we've got 2019 and 2020 vintage wind projects that will be continuing to provide PTCs for us. We'll be building out the full 1,500 megawatts of new solar projects. We've added to our recent CapEx plans, 500 megawatts of repowering of wind projects that will produce new PTCs for us to be able to monetize. And we also have battery projects that we've put into the plant, 275 megawatts, which have already been approved by the PSCW that have all be generating tax credits. And so still a very robust set of tax credits for us to monetize over the next four or five years.

And then one last one for me. If I heard correctly, there's still some go-forward filings here that could raise your CapEx profile around some renewable projects and some clean energy initiatives in your state. So if I think about sort of looking forward, there's still an opportunity to add more renewables to the plant?

You know, Ross, John here. I think what I'd say, we've got a lot of future CapEx opportunities, so we'll be sharing more of the details of how we're thinking about the latter part of not only this four years but, you know, kind of where we would see our future CapEx going. But we're continuing to advance development for future renewables. But as Robert and Lisa noted, right now it just makes sense for us to add some capacity resources while we continue to look for future renewable developments.

That's perfect, John. Thank you. And that's it for me. Congratulations once again and we'll see you soon in Arizona.

Thanks, Ross.

Thanks, Ross.

Your next question comes from Andrew Weisel with Scotiabank. Please go ahead.

Hi, everybody. Agrivoltaic, that's a new one for me. First, I just want to say congrats to John and Lisa. Great to see for both of you next.

Thank you.

Next, my first question is on O&M. You've talked about a 3% to 4% reduction. I know a lot of the year-over-year swing was supposed to come in the fourth quarter. Now that we're here, can you maybe refine or reaffirm that estimate and maybe some thoughts on how much might be sustainable versus one time?

Yes. Hey Andrew, this is John here. I'm going to let Robert talk about that and it's really good news and the timing, but I want to -- I appreciate you listening and picking up on Agrivoltaics. We can talk more about that when I see you at EEI. So Robert, over to you.

Definitely.

Yes, Andrew. I would say, as we've kind of evaluated 2023 and 2024, we are looking for opportunities to continue to kind of time to spend to be able to achieve all of our financial objectives over the two years. You're correct in thinking that when we announced our plans for O&M spend for 2023, there is a fair amount of reduction that we were expecting as a result of some of the strategic spend we had in 2022, including focuses on resource planning, economic development, and advancing some of our technology projects. But we continue to find opportunities to be able to reduce costs through the efficiencies of a lot of the folks out in our field organizations. I think Lisa had a nice story that she started out with her script talking about efforts underway with our underground program that are providing some benefits for us. We're also seeing some reductions on the generation side as a result of our Lansing retirement. So, I would say it's a mix, maybe half sustainable half what I would characterize as strategic spend in 2022 that we see for reductions, but we're continuing to anticipate we'll see some further O&M reductions in the fourth quarter and probably end up lower than we expected from 2022.

Very good. Next on the 400-megawatt solar in Iowa, the settlement I believe called for 10.75% ROE under the advanced rate making, but the IUB approved 10.25%. Can you talk about why that was reduced and do you see any kind of read through to the rate case as a result of this?

Yes Andrew, so basically what the IUB did is they said that 10.25% would be in essence the base and we have the opportunity to go up from there. So we're going to use our rate review process to be pushing for that 10.25%. As you know, the settlement that we had in place in Iowa was with one party and was not with all of the parties. We do not think that anything, you know, that was decided as part of this RPU is indicative of anything with for -- respect to the rate review filing. So we continue to think that there are opportunities to settle in Iowa similar to the history and the strong history we've had for settlements in the past.

Okay, very good then on equity, two-part question. So first of all, the $200 million that you might need. Robert, did you see that was for IPL and WPL, or is that just WPL and how much, you know, it looks like a sensitivity? Every, you know, 10 basis points of equity ratio would need some amount of equity. Can you provide that?

Yes, I think of that, Andrew, as just the WPL decision that we'll hopefully be seeing here in the next few weeks. And so, yes, as we've stated in some of our previous remarks, what we've requested is about a 250 basis point increase in our equity layer in Wisconsin. So that equates to about $200 million. So it's about $40 million for every 50 basis points.

Okay, very helpful. And then just to clarify, other than that, quote-unquote, one time step up, are you suggesting about $25 million of equity per year in '25 and beyond, or am I reading too far into that?

Yes, we would plan to continue to utilize our share direct plan to be able to issue approximately $25 million a year in new common equity. That's dependent upon the decisions of our shareowners as to how much they want to leverage that program. But that's just a continuation of what we've had historically, and we plan to keep that going into the future.

Perfect. Thank you so much. Look forward to seeing you soon.

Your next question comes from Alex Mortimer with Mizuho Securities. Please go ahead.

Hi. Good morning, team.

Good morning.

So, while you highlight the transferability benefit helping to keep financing costs manageable in the future, given a higher for longer rate environment and your increased capital plan announced today, how should we think of the magnitude of rate requests in future cases going forward as compared to historical levels?

Yes, I think -- thanks for your question, Alan. You know, we continue to push for what I'd say, you know, a general rate increase that, you know, kind of keep the increases very similar to, you know, kind of like cost of living increases, if you will, at or below. So we've been very, very consistent with that over the past few years, and we would see that continuing going forward.

And the one thing that I would add, Alan, is that we continue to add zero fuel cost resources as part of the plan, and that very much plays into affordability. Affordability has been and will continue to be top of mind for us going forward.

Understood. Thank you. And then we've seen some other states where parties with maybe a larger priority on policy related goals as opposed to economic ones, are playing a larger role in rate case proceedings and are making it slightly more challenging to settle cases. How do you view the future of the settlement process in Wisconsin?

I think we would view it as continuing to be a very constructive opportunity. You know, as both Lisa and Robert have noted, as we file these, we'll continue to monitor. We always look forward to being very transparent and bringing parties to the table, but we don't see any material change in our ability to settle going forward.

And the one thing that I would add is, again, our Clean Energy Blueprint provides that high level of transparency and an opportunity for stakeholders to really engage ahead of time. This year was a little bit unique in the sense that five IOUs were before the Commission at one time. So that made it a little bit challenging this year.

Understood. Thanks so much. Look forward to seeing you all soon.

Thank you.

[Operator Instructions] Ms. Gille, there are no further questions at this time.

With no more questions, this concludes our call. A replay will be available on our investor website. We thank you for your continued support of Alliant Energy, and feel free to contact me with any follow up questions.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.