Alliant Energy Announces Third Quarter 2018 Results And Increased Annual Common Stock Dividend Target By 6% For 2019

MADISON, Wis., Nov. 6, 2018 /PRNewswire/ -- Alliant Energy Corporation (NYSE: LNT) today announced U.S. generally accepted accounting principles (GAAP) and non-GAAP consolidated unaudited earnings per share (EPS) from continuing operations for the three months ended September 30 as follows:

"We continued to deliver solid financial and operational results in the third quarter.  We raised our 2018 earnings guidance to a range of $2.13 to $2.19 per share, largely due to the benefits of weather during the first nine months of this year," said Patricia Kampling, Alliant Energy Chairman and CEO.  "I am also pleased to share that our Board of Directors has approved a 6% increase to our annual common stock dividend target, raising it to $1.42 per share for 2019."

Utilities and Corporate Services - Alliant Energy's Utilities and Alliant Energy Corporate Services, Inc. (Corporate Services) operations generated $0.88 per share of GAAP EPS from continuing operations in the third quarter of 2018, which was $0.13 per share higher than the third quarter of 2017.  The primary drivers of higher EPS were higher retail electric sales due to warmer temperatures in the third quarter of 2018 compared to the same period last year, higher margins due to Interstate Power and Light Company's (IPL's) and Wisconsin Power and Light Company's (WPL's) increasing rate base, and higher allowance for funds used during construction.  These items were partially offset by higher depreciation expense.

Non-utility and Parent - Alliant Energy's Non-utility and Parent operations generated ($0.04) per share of GAAP EPS from continuing operations in the third quarter of 2018, which was a $0.01 per share earnings increase compared to the third quarter of 2017.  The primary driver of higher EPS was the timing of income tax expense.

Earnings Adjustments - Non-GAAP EPS for the three and nine months ended September 30, 2018 excludes earnings of $0.02 per share related to tax return adjustments due to Federal Tax Reform.  Non-GAAP EPS for the three and nine months ended September 30, 2017 excludes charges of $0.02 per share related to the write-down of regulatory assets due to the IPL electric rate review settlement.  Non-GAAP adjustments, which relate to material charges or income that are not normally associated with ongoing operations, are provided as a supplement to results reported in accordance with GAAP.

Temperature Impacts to Non-GAAP EPS from Continuing Operations - The estimated year-to-date impact of temperatures on EPS compared to normal temperatures, is a $0.05 per share gain in 2018.  The midpoint of the temperature normalized non-GAAP EPS from continuing operations guidance for the full year 2018 is $2.11.

Details regarding GAAP EPS from continuing operations variances between the third quarters of 2018 and 2017 for Alliant Energy are as follows:

Higher margins primarily from earning on increasing rate base - In April 2017, IPL filed a request with the Iowa Utilities Board (IUB) to increase annual rates for its Iowa retail electric customers.  The request was based on a 2016 historical Test Year as adjusted for certain known and measurable changes occurring up to 12 months after the commencement of the proceeding.  An interim retail electric rate increase of $102 million, on an annual basis, was implemented effective April 13, 2017.  In February 2018, the IUB issued an order approving IPL's settlement reached in September 2017, for an annual electric base rate increase of $130 million, or approximately 9%.  Final rates were effective May 1, 2018.  IPL recognized $0.03 per share of higher electric margins in the third quarter of 2018 due to the final retail electric rate increases.

In December 2016, WPL received an order from the Public Service Commission of Wisconsin authorizing WPL to implement a retail electric rate increase effective January 1, 2017 followed by a freeze of such rates through the end of 2018.  To reflect the higher margins in 2018, primarily from earning on increasing rate base, the order lowered the amortization of amounts that WPL previously over-recovered from its customers for electric transmission cost recovery beginning in January 2018.  WPL recognized $0.02 per share of higher electric margins in the third quarter of 2018 due to lower transmission cost recovery amortization.

Estimated temperature impact on retail electric and gas sales - The impact of warmer than normal temperatures in the third quarter of 2018 is estimated to be a $0.02 per share gain in margins.  By comparison, the impact of temperatures in the third quarter of 2017 was estimated to be a $0.02 per share loss.

WPL's retail electric and gas rate settlement covering 2018 includes an earnings sharing mechanism whereby WPL must defer a portion of its earnings and return this amount to its retail electric and gas customers if its annual regulatory return on common equity exceeds 10.25% during 2018.  As a result, a majority of the higher margins recognized at WPL as a result of the temperature impact on retail electric and gas sales for the nine months ended September 30, 2018 is currently expected to be given back to customers in the future.

A portion of Alliant Energy's performance pay is based on earnings.  As a result, a portion of the higher earnings resulting from the temperature impact on retail electric and gas sales is offset by higher performance pay expense.  Year-to-date, Alliant Energy's estimated temperature impact on retail electric and gas sales, net of the WPL earnings sharing mechanism and the portion of performance pay associated with temperature impacts on earnings, is estimated to be a $0.05 per share increase in earnings.

Tax return adjustments due to Federal Tax Reform - In December 2017, Federal Tax Reform was enacted.  The enactment of Federal Tax Reform had a material impact on the 2017 financial statements since changes in tax laws must be recognized in the period in which the law was enacted.  The most significant provision of Federal Tax Reform was the reduction in the federal corporate tax rate from 35% to 21%, which required a re-measurement of deferred tax assets and liabilities in December 2017.  During the third quarter of 2018, additional rules were issued including clarifications of the treatment of bonus depreciation deductions, which impacted the 2017 Federal income tax return.  As a result of these clarifying rules, the impact of Federal Tax Reform was updated resulting in $0.02 per share of higher earnings in the third quarter of 2018.

Write-down of regulatory assets in 2017 due to the IPL electric rate review settlement - In September 2017, IPL's electric rate review settlement resulted in one-time charges associated with certain regulatory assets that were not fully included in the settlement's revenue requirement.

2018 Earnings Guidance

Alliant Energy is updating its EPS guidance for 2018 as follows.  The midpoint of the 2018 EPS guidance was increased by $0.05 per share to reflect higher earnings from temperature impacts on retail electric and gas sales during the first nine months of 2018.

Drivers for Alliant Energy's 2018 earnings guidance include, but are not limited to:

• Ability of IPL and WPL to earn their authorized rates of return
• Stable economy and resulting implications on utility sales
• Normal temperatures for the remainder of the year in its utility service territories
• Execution of cost controls
• Execution of IPL's and WPL's capital expenditure plans
• Consolidated effective tax rate of 10%

The 2018 earnings guidance does not include the impacts of any material non-cash valuation adjustments, regulatory-related charges or credits, reorganizations or restructurings, further impacts from anticipated changes to ATC LLC's authorized return on equity, current and future changes in laws and regulations, including tax reform (such as the tax return adjustment of $0.02 per share due to clarifying rules for Federal Tax Reform in the third quarter of 2018), regulations or regulatory policies, adjustments made to deferred tax assets and liabilities from valuation allowances, pending lawsuits and disputes, federal and state income tax audits and other Internal Revenue Service proceedings, or changes in GAAP and tax methods of accounting that may impact the reported results of Alliant Energy.

2019 Earnings Guidance

Alliant Energy is issuing the following EPS guidance for 2019:

Drivers for Alliant Energy's 2019 earnings guidance include, but are not limited to:

• Ability of IPL and WPL to earn their authorized rates of return
• Anticipated interim retail electric base rate increase to be implemented by IPL
• Stable economy and resulting implications on utility sales
• Normal temperatures in its utility service territories
• Execution of cost controls
• Execution of capital expenditure and financing plans
• Consolidated effective tax rate of 9%

The 2019 earnings guidance does not include the impacts of any material non-cash valuation adjustments, regulatory-related charges or credits, reorganizations or restructurings, further impacts from anticipated changes to ATC LLC's authorized return on equity, future changes in laws, regulations or regulatory policies, adjustments made to deferred tax assets and liabilities from valuation allowances, pending lawsuits and disputes, federal and state income tax audits and other Internal Revenue Service proceedings, or changes in GAAP and tax methods of accounting that may impact the reported results of Alliant Energy.

"We expect to continue to deliver solid earnings per share growth as a result of our strong pipeline of investments in renewable energy and electric and gas distribution.  Our 2019 earnings guidance of $2.17 to $2.31 per share, is consistent with our long term growth objective of 5 to 7% annually," said Kampling.  "The customers and the communities we serve will continue to benefit from reliable, low cost, cleaner energy."

2019 Annual Common Stock Dividend Target

Alliant Energy's Board of Directors approved a 6% increase, or $0.08 per share, to its 2019 expected annual common stock dividend target of $1.42 per share from the current annual common stock dividend target of $1.34 per share.  Payment of the 2019 quarterly dividend is subject to the actual dividend declaration by the Board of Directors each quarter, which is expected in January 2019 for the first quarter dividend.

Projected Capital Expenditures

Alliant Energy has updated its projected capital expenditures for 2018 through 2022, which total $7.0 billion, as follows (in millions).  In addition, Alliant Energy currently projects aggregate capital expenditures of $5.7 billion for 2023 through 2027.  The projected capital expenditures exclude AFUDC and capitalized interest, if applicable.  Cost estimates represent Alliant Energy's estimated portion of total construction expenditures.

Earnings Conference Call

A conference call to review the third quarter 2018 results, updated 2018 earnings guidance, 2019 earnings guidance, 2019 common stock dividend target, and projected capital expenditures for 2018 - 2027 is scheduled for Wednesday, November 7th at 9:00 a.m. central time.  Alliant Energy Chairman and Chief Executive Officer Patricia Kampling, President John Larsen, and Senior Vice President, Chief Financial Officer and Treasurer Robert Durian will host the call.  The conference call is open to the public and can be accessed in two ways.  Interested parties may listen to the call by dialing 888-394-8218 (United States or Canada) or 323-794-2149 (International), passcode 4175543.  Interested parties may also listen to a webcast at www.alliantenergy.com/investors.  In conjunction with the information in this earnings announcement and the conference call, Alliant Energy posted supplemental materials on its website.  A replay of the call will be available through November 14, 2018, at 888-203-1112 (United States or Canada) or 323-794-2149 (International), passcode 4175543.  An archive of the webcast will be available on the Company's Web site at www.alliantenergy.com/investors for 12 months.

About Alliant Energy Corporation

Alliant Energy is the parent company of two public utility companies - Interstate Power and Light Company and Wisconsin Power and Light Company - and of Alliant Energy Finance, LLC, the parent company of Alliant Energy's non-utility operations.  Alliant Energy is an energy-services provider with utility subsidiaries serving approximately 960,000 electric and 410,000 natural gas customers.  Providing its customers in the Midwest with regulated electricity and natural gas service is the Company's primary focus.  Alliant Energy, headquartered in Madison, Wisconsin, is a component of the S&P 500 and is traded on the New York Stock Exchange under the symbol LNT.  For more information, visit the Company's Web site at www.alliantenergy.com.

Forward-Looking Statements

This press release includes forward-looking statements.  These forward-looking statements can be identified by words such as "forecast," "expect," "guidance," or other words of similar import.  Similarly, statements that describe future financial performance or plans or strategies are forward-looking statements.  Such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements.  Actual results could be materially affected by the following factors, among others:

• IPL's and WPL's ability to obtain adequate and timely rate relief to allow for, among other things, earning a return on rate base additions and the recovery of costs, including fuel costs, operating costs, transmission costs, environmental compliance and remediation costs, deferred expenditures, deferred tax assets, capital expenditures, and remaining costs related to electric generating units (EGUs) that may be permanently closed, earning their authorized rates of return, and the payments to their parent of expected levels of dividends;
• federal and state regulatory or governmental actions, including the impact of energy, tax, financial and health care legislation, and regulatory agency orders;
• ability to obtain necessary regulatory approval for capital projects with acceptable conditions;
• the impact of customer- and third party-owned generation, including alternative electric suppliers, in IPL's and WPL's service territories on system reliability, operating expenses and customers' demand for electricity;
• the impact of energy efficiency, franchise retention and customer disconnects on sales volumes and margins;
• the impact that price changes may have on IPL's and WPL's customers' demand for electric, gas and steam services and their ability to pay their bills;
• the ability to utilize tax credits and net operating losses generated to date, and those that may be generated in the future, before they expire;
• the direct or indirect effects resulting from terrorist incidents, including physical attacks and cyber attacks, or responses to such incidents;
• the impact of penalties or third-party claims related to, or in connection with, a failure to maintain the security of personally identifiable information, including associated costs to notify affected persons and to mitigate their information security concerns;
• employee workforce factors, including changes in key executives, ability to hire and retain employees with specialized skills, ability to create desired corporate culture, collective bargaining agreements and negotiations, work stoppages or restructurings;
• weather effects on results of utility operations;
• issues associated with environmental remediation and environmental compliance, including compliance with the Consent Decree between WPL, the U.S. Environmental Protection Agency (EPA) and the Sierra Club, the Consent Decree between IPL, the EPA, the Sierra Club, the State of Iowa and Linn County in Iowa, the Coal Combustion Residuals Rule, future changes in environmental laws and regulations, including the EPA's regulations for carbon dioxide emissions reductions from new and existing fossil-fueled EGUs, and litigation associated with environmental requirements;
• the ability to defend against environmental claims brought by state and federal agencies, such as the EPA, state natural resources agencies or third parties, such as the Sierra Club, and the impact on operating expenses of defending and resolving such claims;
• continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;
• inflation and interest rates;
• the impact of the economy in IPL's and WPL's service territories and the resulting impacts on sales volumes, margins and the ability to collect unpaid bills;
• changes in the price of delivered natural gas, purchased electricity and coal due to shifts in supply and demand caused by market conditions and regulations;
• disruptions in the supply and delivery of natural gas, purchased electricity and coal;
• changes in the price of transmission services and the ability to recover the cost of transmission services in a timely manner;
• developments that adversely impact the ability to implement the strategic plan;
• ability to obtain regulatory approval for wind projects with acceptable conditions, to complete construction within the cost caps set by regulators and to meet all requirements to qualify for the full level of production tax credits;
• the direct or indirect effects resulting from breakdown or failure of equipment in the operation of electric and gas distribution systems, such as mechanical problems and explosions or fires, and compliance with electric and gas transmission and distribution safety regulations;
• issues related to the availability and operations of EGUs, including start-up risks, breakdown or failure of equipment, performance below expected or contracted levels of output or efficiency, operator error, employee safety, transmission constraints, compliance with mandatory reliability standards and risks related to recovery of resulting incremental costs through rates;
• impacts that storms or natural disasters in IPL's and WPL's service territories may have on their operations and recovery of costs associated with restoration activities;
• any material post-closing adjustments related to any past asset divestitures, including the sales of IPL's Minnesota electric and natural gas assets, and Whiting Petroleum Corporation, which could result from, among other things, indemnification agreements, warranties, parental guarantees or litigation;
• Alliant Energy's ability to sustain its dividend payout ratio goal;
• changes to costs of providing benefits and related funding requirements of pension and OPEB plans due to the market value of the assets that fund the plans, economic conditions, financial market performance, interest rates, life expectancies and demographics;
• material changes in employee-related benefit and compensation costs;
• risks associated with operation and ownership of non-utility holdings;
• changes in technology that alter the channels through which customers buy or utilize Alliant Energy's, IPL's or WPL's products and services;
• impacts on equity income from unconsolidated investments due to further potential changes to ATC LLC's authorized return on equity;
• impacts of IPL's future tax benefits from Iowa rate-making practices, including deductions for repairs expenditures, allocation of mixed service costs and state depreciation, and recoverability of the associated regulatory assets from customers, when the differences reverse in future periods;
• the impacts of adjustments made to deferred tax assets and liabilities from changes in the tax laws;
• changes to the creditworthiness of counterparties with which Alliant Energy, IPL and WPL have contractual arrangements, including participants in the energy markets and fuel suppliers and transporters;
• current or future litigation, regulatory investigations, proceedings or inquiries;
• reputational damage from negative publicity, protests, fines, penalties and other negative consequences resulting in regulatory and/or legal actions;
• the effect of accounting standards issued periodically by standard-setting bodies;
• the ability to successfully complete tax audits and changes in tax accounting methods with no material impact on earnings and cash flows; and
• factors listed in the "2018 Earnings Guidance" and "2019 Earnings Guidance" sections of this press release.

For more information about potential factors that could affect Alliant Energy's business and financial results, refer to Alliant Energy's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), including the section therein titled "Risk Factors," and its other filings with the SEC.

Without limitation, the expectations with respect to 2018 and 2019 earnings guidance, 2019 annual common stock dividend target and 2018-2027 capital expenditures guidance in this press release are forward-looking statements and are based in part on certain assumptions made by Alliant Energy, some of which are referred to in the forward-looking statements.  Alliant Energy cannot provide any assurance that the assumptions referred to in the forward-looking statements or otherwise are accurate or will prove to be correct.  Any assumptions that are inaccurate or do not prove to be correct could have a material adverse effect on Alliant Energy's ability to achieve the estimates or other targets included in the forward-looking statements.  The forward-looking statements included herein are made as of the date hereof and, except as required by law, Alliant Energy undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding Alliant Energy's financial results, this press release includes reference to certain non-GAAP financial measures.  These measures include the use of (1) income from continuing operations and EPS from continuing operations for the three and nine months ended September 30, 2018 excluding the tax return adjustments due to Federal Tax Reform; and (2) income from continuing operations and EPS from continuing operations for the three and nine months ended September 30, 2017 excluding the write-down of regulatory assets due to the IPL electric rate review settlement.  Alliant Energy believes this non-GAAP financial measure is useful to investors because it provides an alternate measure to better understand and compare across periods the operating performance of Alliant Energy without the distortion of items that management believes are not normally associated with ongoing operations, and also provides additional information about Alliant Energy's operations on a basis consistent with the measures that management uses to manage its operations and evaluate its performance.  Alliant Energy's management also uses income from continuing operations, as adjusted, to determine performance-based compensation.

In addition, Alliant Energy included in this press release IPL; WPL; Corporate Services; Utilities and Corporate Services; ATC Holdings; and Non-utility and Parent EPS from continuing operations for the three and nine months ended September 30, 2018 and 2017.  Alliant Energy believes these non-GAAP financial measures are useful to investors because they facilitate an understanding of segment performance and trends, and provide additional information about Alliant Energy's operations on a basis consistent with the measures that management uses to manage its operations and evaluate its performance.

This press release references year-over-year variances in utility electric margins and utility gas margins.  Utility electric margins and utility gas margins are non-GAAP financial measures that are reported and reconciled to the most directly comparable GAAP measure, operating income, in our third quarter 2018 Form 10-Q.

This press release also includes temperature-normalized non-GAAP EPS from continuing operations guidance for the year ended December 31, 2018.  Alliant Energy believes this non-GAAP guidance measure is useful to investors because the measure facilitates period-to-period comparison of Alliant Energy's operating performance and provides investors with information on a basis consistent with measures that management uses to assess Alliant Energy's earnings growth rate.

The tax impact adjustments represent the impact of the tax effect of the pre-tax non-GAAP adjustments excluded from non-GAAP net income.  The tax impact of the non-GAAP adjustments is calculated based on the estimated consolidated statutory tax rate.

Reconciliations of the non-GAAP financial measures included in this press release to the most directly comparable GAAP financial measures are included in the earnings summaries that follow, and in the case of temperature normalized non-GAAP EPS from continuing operations guidance, in the press release above.

Note: Unless otherwise noted, all "per share" references in this release refer to earnings per diluted share.

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