NiSource Inc (NI) | The Buildout — AI Infrastructure
The Verdict
NiSource generates and delivers regulated natural gas and electricity, and has built a Genco structure that signs long-term power contracts with hyperscale data center customers in northern Indiana. Instead of relying only on a traditional rate-base utility model, Genco pools owned and contracted generation, battery storage, and market purchases to serve large load. That makes NiSource a physical-power provider for the data center buildout in its service area.
| Market Cap | — |
| Revenue (TTM) | $6.8B |
| Revenue Growth | +15.0% |
| EBITDA Margin (TTM) | 45.3% |
| Net Debt | $16.7B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Signed data center capacity of approximately 4 GW, with Amazon and Alphabet contracts approved by the IURC.
- Long-term consolidated adjusted EPS CAGR raised to 9–10%, with Genco EPS targets of $0.25–$0.35 by 2030 and $0.40–$0.60 by 2033.
- $7.6 billion of Genco/data center capital within a $30.6 billion five-year plan.
- Customer savings of approximately $1.4 billion, up to $124 per residential customer annually, as an affordability defense.
- Expedited regulatory schedules of 90–120 days agreed for future data center agreements.
What We’re Watching
- Indiana affordability technical conference on August 7, 2026 and gas TDSIC recovery path could shift rate design or timing.
- Amazon 400 MW amendment final order sought by November 2026.
- Genco segment reporting expected by end of fiscal 2026 could reveal how capital-light the economics are.
- Schahfer coal plant is under a third federal order, with FERC Section 205 cost recovery pending.
Thesis is strengthening: management raised and then reaffirmed long-term growth, received key IURC approvals, and added Alphabet as a second hyperscaler. The open question is whether pipeline conversion and Indiana regulatory outcomes support the guided 9–10% EPS CAGR.
Earnings Beat
Q2 2026 adjusted EPS was $0.16, down from $0.22 a year earlier. GAAP net income available to common shareholders was $45.5 million, or $0.09 per share, versus $102.2 million and $0.22 in Q2 2025. Management attributed the decline to higher storm activity and workforce-continuity costs during union negotiations, and called Q2 a shoulder quarter.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.4B | $1.9B | $2.2B | +8.2% |
| Gross margin | 59.5% | 58.1% | 50.7% | +880bps |
| EBITDA | $1.1B | $831M | $1.0B | +8.8% |
| EPS | $1.05 | $0.54 | $1.00 | +4.9% |
| Consolidated adjusted EPS (non-GAAP) | $0.16 | $1.06 | $0.22 | −27.3% |
you should not interpret that we’re looking at the ability to expand further as any sign of a constraint, but more as preplanning so that we can focus on execution.— Michael Luhrs, 2026-08-05
Management tone: Management shifted from an expansive Q1 posture to a reaffirm-and-execute stance on the Q2 call. They were direct on the pipeline, Schahfer, and Genco segment reporting, but less precise on the same-day Indiana gas TDSIC order and affordability outcomes, which they said they were still evaluating.
Management Guidance
Management reaffirmed 2026 consolidated adjusted EPS guidance of $2.02–$2.07. It also reaffirmed base plan adjusted EPS growth of 6–8% through 2030 and consolidated adjusted EPS CAGR of 9–10% through 2033, with FFO-to-debt of 14–16% and annual equity issuance of approximately $400–600 million.
Trajectory
Reported revenue grew to $2,363.1M in Q1 FY2026 from $2,183.2M a year earlier, about 8%, down from roughly 20% year-over-year in the prior quarter. Growth came from new rates and recovery mechanisms rather than volume, with physical volumes flat to slightly down. Gross margin expanded to 59.5% from 50.7%, while Q1 operating margin remained roughly flat at 34.7% as O&M and depreciation rose. Q2 adjusted EPS then fell to $0.16 from $0.22 on storm and union-related costs.
The Model
The model projects FY+1 revenue of $7,250 million and EBITDA of $3,306 million, a 45.6% margin, anchored by the base regulated utility and the start of Alphabet energization. FY+2 revenue steps up to $8,030 million with EBITDA of $3,694 million, a 46.0% margin, as Amazon load begins in 2027 and the Genco pool scales.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $6.6B | $7.2B | $8.0B |
| YoY Growth | — | +9.2% | +10.8% |
| EBITDA | $3.0B | $3.3B | $3.7B |
| EBITDA Margin | 45.2% | 45.6% | 46.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 8.8% above analyst consensus.
Management reaffirmed 2026 consolidated adjusted EPS guidance of $2.02–$2.07. It also reaffirmed base plan adjusted EPS growth of 6–8% through 2030 and consolidated adjusted EPS CAGR of 9–10% through 2033, with FFO-to-debt of 14–16% and annual equity issuance of approximately $400–600 million.
What Could Go Right — and Wrong
- Conversion of about 3 GW of active strategic negotiations and 2 GW of developing opportunities into signed contracts would materially enlarge the disclosed data center layer.
- Final IURC approval of the 400 MW Amazon amendment by November 2026 would keep the near-term ramp on track.
- Expansion beyond the 9 GW pipeline, including a potential Microsoft/LaPorte County disclosure, would diversify the hyperscaler base.
- Separate Genco segment reporting by end of fiscal 2026 could confirm the capital-light spread economics behind the 9–10% earnings CAGR.
- A constructive Indiana affordability outcome and clear TDSIC recovery pathway would reduce the largest regulatory overhang.
- A restrictive Indiana affordability outcome or loss of tracker recovery would pressure base utility returns.
- Rejection or meaningful delay of the Amazon 400 MW amendment would slow Genco growth.
- If pipeline conversion stalls into 2027, the guided 9–10% consolidated CAGR would rely on a smaller contracted base than the narrative implies.
- Sustained storm, union, or O&M inflation could pressure the 2026 adjusted earnings guidance range.
- Denial or delay of Schahfer cost recovery would leave the company absorbing federal compliance costs.
Looking Ahead
The next 12 months center on delivering the first data center contracts and resolving Indiana regulatory open items. Alphabet is expected to energize in summer 2026, the Amazon 400 MW amendment seeks a final order by November 2026, and customer savings could begin flowing as early as Q4 2026. Genco segment reporting is expected by end of fiscal 2026, and Virginia and Kentucky rate case decisions are expected in the first half of 2027.
- Summer 2026Alphabet energization — Tests the 340 MW pooled resource start and service launch.
- August 7, 2026Indiana affordability technical conference — Could signal rate case timing and recovery design.
- November 2026Amazon 400 MW amendment final order — IURC decision on incremental contracted generation.
- Q4 2026Customer savings begin — Bill credits appear for existing NIPSCO electric customers.
- End fiscal 2026Genco segment reporting — Separate Genco financials expected for the first time.
- 1H 2027Virginia and Kentucky rate cases — Rate case decisions expected in both states.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $5.5B | $6.6B | $6.8B | +21.8% |
| Gross Margin | 51.5% | 52.7% | 55.9% | +125bps |
| EBITDA | $2.5B | $3.0B | $18.6B | +20.2% |
| EBITDA Margin | 45.8% | 45.2% | 45.3% | 60bps |
| Net Income | $760M | $930M | $962M | +22.2% |
| Free Cash Flow | −$862M | −$420M | −$7.5B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)55.9%
- EBITDA Margin (TTM)45.3%
- Net Margin (TTM)14.1%
- ROIC5.7%
- FCF Conversion-26.9%
- SBC / Revenue0.0%
The Company
NiSource is an energy holding company whose primary subsidiaries are fully regulated natural gas and electric utility companies, serving approximately 3.8 million customers across six states. Columbia Operations provides natural gas distribution to about 2.4 million customers in Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. NIPSCO Operations provides gas to about 0.9 million customers and electric service to about 0.5 million customers in 20 northern Indiana counties. That electric service area is the physical link to data center campuses, and the Genco structure signs long-term special contracts and PPAs for generation capacity and energy.
NiSource operates across electric generation, transmission, and distribution, with owned coal, gas, hydro, wind, solar, and storage assets, plus gas storage and headquarters facilities. The Genco model does not require owning all assets; it pools owned assets, contracted generation, battery storage, and market purchases, ring-fenced from retail customers. Regulatory approvals are handled through Genco special contracts, and future agreements have an expedited 90–120 day procedural schedule.
Business Segments
Competitive Landscape
The 10-K says NiSource competes with investor-owned, municipal, and cooperative electric utilities, other regulated and unregulated natural gas intra- and interstate pipelines, and alternate fuels such as propane and fuel oil. The three provided source documents do not name specific overlapping utilities or data center peer figures.
- Investor-owned electric utilitiesIdentified as a competitive category in the 10-K.
- Municipal and cooperative electric utilitiesIdentified as a competitive category in the 10-K.
- Regulated and unregulated natural gas pipelinesIdentified as a competitive category in the 10-K.
- Alternate fuels such as propane and fuel oilIdentified as a competitive category in the 10-K.
Supply Chain
NiSource sits between generation equipment suppliers and large-load data center customers in northern Indiana. Quanta Services named NiSource directly as a $5.7 billion opportunity, confirming the Genco build-out.
More on NI: Earnings recap