Alliant Energy Corporation (LNT) Bundle
Understanding Alliant Energy Corporation (LNT) Revenue Streams
Understanding Alliant Energy Corporation’s Revenue Streams
Alliant Energy Corporation (LNT) derives its revenues primarily from utility operations, which include electric and gas services. Below is a detailed breakdown of the company’s revenue sources:
Breakdown of Primary Revenue Sources
- Electric Utility Revenues: For the nine months ended September 30, 2024, electric utility revenues totaled $2,579 million, compared to $2,562 million for the same period in 2023, reflecting a year-over-year increase of 0.66%.
- Gas Utility Revenues: During the same period, gas utility revenues were $322 million, down from $400 million in 2023, indicating a decrease of 19.5%.
- Other Revenues: Other revenues, which include non-utility and miscellaneous revenues, contributed $49 million for the nine months ended September 30, 2024.
Year-over-Year Revenue Growth Rate
The overall revenue growth rate for Alliant Energy from the nine months ended September 30, 2023, to the same period in 2024 is as follows:
| Revenue Source | 2024 Revenue (in millions) | 2023 Revenue (in millions) | Growth Rate (%) |
|---|---|---|---|
| Electric Utility | $2,579 | $2,562 | 0.66% |
| Gas Utility | $322 | $400 | -19.5% |
| Other Revenues | $49 | N/A | N/A |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions of different business segments to total revenue were:
- Electric Utility: 80.5% of total revenue
- Gas Utility: 10.5% of total revenue
- Other Revenues: 1.9% of total revenue
Analysis of Significant Changes in Revenue Streams
The decrease in gas utility revenues by $78 million is attributed to lower consumption due to milder temperatures and a reduction in customer base. In contrast, electric utility revenues saw an increase due to higher retail rates and increased demand.
Additionally, the company experienced a 2% decrease in retail electric sales volumes for the three months ended September 30, 2024, primarily due to changes in sales volumes at industrial customers.
The following table summarizes the electric and gas revenues and sales for the three months ended September 30, 2024:
| Type | Electric Revenues (in millions) | Gas Revenues (in millions) | MWh Sold (Electric) | Dth Sold (Gas) |
|---|---|---|---|---|
| Retail | $887 | $38 | 6,697 | 3,281 |
| Wholesale | $58 | N/A | 782 | N/A |
| Bulk Power | $31 | N/A | 1,363 | N/A |
Overall, the revenue analysis indicates a mixed performance across different segments, with electric utility growth driven by higher rates, while gas utility revenues faced challenges due to external factors.
A Deep Dive into Alliant Energy Corporation (LNT) Profitability
A Deep Dive into Alliant Energy Corporation's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was reported at $2,579 million compared to $2,562 million for the same period in 2023, reflecting a gross profit margin of approximately 40.7% in 2024 versus 40.5% in 2023.
Operating Profit Margin: The operating income for the nine months ended September 30, 2024 was $540 million, resulting in an operating profit margin of 20.9%, compared to $582 million and a margin of 22.7% in 2023.
Net Profit Margin: The net income attributable to common shareowners for the nine months ended September 30, 2024 was $540 million, translating to a net profit margin of 20.9% compared to $582 million and a margin of 22.7% in 2023.
Trends in Profitability Over Time
In the three months ended September 30, 2024, net income was $295 million compared to $259 million for the same period in 2023. This indicates a year-over-year increase in net income of 13.9%.
Comparison of Profitability Ratios with Industry Averages
The average operating profit margin in the utilities industry is around 22%. Alliant Energy's operating profit margin of 20.9% indicates it is slightly below the industry average. The net profit margin for the industry averages around 21%, which places Alliant Energy's performance at a comparable level.
Analysis of Operational Efficiency
The company has demonstrated efficient cost management through a reduction in operating expenses. Operating expenses for the nine months ended September 30, 2024, were $2,039 million, compared to $1,980 million in the same period of 2023, reflecting an increase of 2.9%.
Gross margin trends indicate stability, with a gross margin of 40.7% in 2024, slightly improving from 40.5% in 2023, indicating effective management of production costs despite increasing regulatory expenses.
| Metric | 2024 (9 months) | 2023 (9 months) | Change (%) |
|---|---|---|---|
| Gross Profit | $2,579 million | $2,562 million | 0.66% |
| Operating Income | $540 million | $582 million | -7.21% |
| Net Income | $540 million | $582 million | -7.21% |
| Operating Margin | 20.9% | 22.7% | -7.92% |
| Net Margin | 20.9% | 22.7% | -7.92% |
Cost management strategies have resulted in a stable gross margin, while the operating profit margin shows slight volatility due to increased operating costs and regulatory expenses, which are expected to stabilize as operational efficiencies improve.
Debt vs. Equity: How Alliant Energy Corporation (LNT) Finances Its Growth
Debt vs. Equity: How Alliant Energy Corporation Finances Its Growth
As of September 30, 2024, Alliant Energy Corporation reported a total debt of $4.420 billion, which includes both short-term and long-term obligations. The breakdown of this debt structure is as follows:
| Debt Component | Amount (in millions) |
|---|---|
| Short-term Debt | $330 |
| Long-term Debt | $4,090 |
| Total Debt | $4,420 |
The company’s debt-to-equity ratio stands at 0.63, calculated from total debt of $4.420 billion and total equity of $6.968 billion as of the same date. This ratio is indicative of a moderate level of leverage compared to the industry average of approximately 1.0 for utility companies, suggesting that Alliant Energy maintains a conservative approach to financing its growth.
Recent debt issuances include:
- In March 2024, a $300 million variable rate term loan was secured, with a current interest rate of 6%.
- In June 2024, $375 million of senior notes were issued at an interest rate of 5.4% due in 2027.
- In September 2024, IPL issued $350 million of senior debentures at 4.95% due in 2034 and $300 million at 5.45% due in 2054.
- In March 2024, WPL issued $300 million of green bonds at 5.375% due in 2034.
As of September 30, 2024, the company’s credit ratings are as follows:
- Standard & Poor’s: BBB- (outlook changed from stable to negative in March 2024)
- Moody’s: Baa3
Alliant Energy balances its financing between debt and equity effectively. Recent capital contributions from the parent company amount to $325 million for the nine months ended September 30, 2024. The company also plans to issue up to $600 million of long-term debt in 2025 alongside a targeted $25 million issuance of common stock through its Shareowner Direct Plan.
The following table summarizes the recent debt activity and equity structure:
| Type | Amount (in millions) | Interest Rate | Due Date |
|---|---|---|---|
| Variable Rate Term Loan | $300 | 6.0% | March 2025 |
| Senior Notes | $375 | 5.4% | 2027 |
| Senior Debentures | $350 | 4.95% | 2034 |
| Senior Debentures | $300 | 5.45% | 2054 |
| Green Bonds | $300 | 5.375% | 2034 |
Assessing Alliant Energy Corporation (LNT) Liquidity
Assessing Alliant Energy Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.52, calculated from current assets of $2,288 million and current liabilities of $1,504 million.
Quick Ratio: The quick ratio is 0.58, derived from quick assets of $1,332 million (current assets excluding inventory) divided by current liabilities of $1,504 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $1,484 million, reflecting a decrease from $1,509 million in December 31, 2023. This trend indicates a tightening liquidity position.
Cash Flow Statements Overview
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $913 | $622 |
| Investing Activities | ($940) | ($952) |
| Financing Activities | $794 | $515 |
Cash flows from operating activities increased significantly by $291 million in 2024 compared to 2023, primarily due to higher collections from retail electric and gas base rate increases. Cash flows used for investing activities remained consistent with prior trends, while financing activities showed an increase, largely due to higher net proceeds from debt issuance.
Potential Liquidity Concerns or Strengths
At September 30, 2024, cash and cash equivalents totaled $830 million, with additional available credit facility capacity of $670 million. This liquidity position indicates a strong ability to meet short-term obligations despite a decrease in working capital.
Furthermore, the weighted average interest rate on short-term borrowings was 5.4%, reflecting the cost of maintaining liquidity. Monitoring interest expense and maintaining a balance between debt and equity will be crucial for sustaining this liquidity strength moving forward.
Overall, while the current liquidity ratios indicate a solid position, the decline in working capital and the high reliance on short-term debt warrant close monitoring to ensure ongoing financial health.
Is Alliant Energy Corporation (LNT) Overvalued or Undervalued?
Valuation Analysis
To determine whether Alliant Energy Corporation is overvalued or undervalued, we will analyze several key financial metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of the latest financial data, the P/E ratio for Alliant Energy Corporation is 21.5. This figure is derived from the latest earnings per share (EPS) of $1.15 and the current stock price of approximately $24.75.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.6, calculated from a book value per share of $15.45 and the current stock price of $24.75.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 14.3, indicating the company's valuation relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, Alliant Energy's stock price has shown a fluctuation trend, starting at approximately $22.50 and reaching a high of $26.00 before settling around $24.75 as of the most recent data. The stock has experienced a 10% increase year-to-date.
Dividend Yield and Payout Ratios
The current dividend yield stands at 4.0%, based on an annual dividend of $1.00 per share. The payout ratio is calculated at 87%, indicating a high proportion of earnings allocated to dividends.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a hold rating for Alliant Energy Corporation, with a mix of analysts suggesting buy and sell positions based on the current valuation metrics and market conditions.
| Metric | Value |
|---|---|
| P/E Ratio | 21.5 |
| P/B Ratio | 1.6 |
| EV/EBITDA Ratio | 14.3 |
| Stock Price (12-month high) | $26.00 |
| Stock Price (current) | $24.75 |
| Dividend Yield | 4.0% |
| Payout Ratio | 87% |
| Analyst Consensus | Hold |
Key Risks Facing Alliant Energy Corporation (LNT)
Key Risks Facing Alliant Energy Corporation
Overview of Internal and External Risks
Alliant Energy Corporation faces several internal and external risks that could impact its financial health. Key factors include:
- Industry Competition: The energy sector is highly competitive, with increasing pressure from renewable energy sources and regulatory changes that favor cleaner technologies.
- Regulatory Changes: Recent legislation in Iowa allows for the inclusion of electric storage and nuclear-fired generation projects in the advance rate-making principles, which could impact future investments and operational costs.
- Market Conditions: Fluctuating energy prices and demand can significantly affect revenue, as evidenced by a 2% decrease in retail electric sales volumes for the nine months ended September 30, 2024.
Operational Risks
Operational challenges include:
- Asset Valuation Charges: The company recorded a pre-tax non-cash charge of $60 million related to the Lansing Generating Station.
- Weather Impacts: Variations in temperature have been estimated to decrease operating income, with electric impacts of $(18) million for the nine months ended September 30, 2024.
Financial Risks
Financial risks highlighted in recent earnings reports include:
- Interest Expense Increases: The company expects an increase in interest expenses in 2025, primarily due to financings completed in 2024, with an interest rate of 5.4% on some debt.
- Debt Levels: As of September 30, 2024, long-term debt was reported at $3.789 billion.
Strategic Risks
Strategic risks include:
- Restructuring Activities: The company announced voluntary separation packages for approximately 5% of its workforce, with expected pre-tax charges of $25 million to $30 million in Q4 2024.
- Regulatory Approval Challenges: Future capital expenditures are subject to regulatory approval, which can be delayed, affecting project timelines and financial forecasts.
Mitigation Strategies
Mitigation strategies involve:
- Investment in Renewable Energy: Alliant Energy is focusing on transitioning to cleaner energy sources, with projected expenditures on renewable generation and battery storage projects totaling $915 million for 2024.
- Financial Management: The company has maintained a cash position of $827 million as of September 30, 2024, alongside $670 million of available capacity under its revolving credit facility.
| Risk Factor | Description | Impact |
|---|---|---|
| Asset Valuation Charge | Non-cash charge related to Lansing Generating Station | $60 million |
| Temperature Variations | Impact on retail electric sales and operating income | Decrease of $(18) million |
| Long-term Debt | Total long-term debt reported | $3.789 billion |
| Interest Expense | Expected increase in interest expenses | Rate of 5.4% |
| Restructuring Charges | Pre-tax charges for workforce restructuring | $25 million to $30 million |
Future Growth Prospects for Alliant Energy Corporation (LNT)
Future Growth Prospects for Alliant Energy Corporation
Key Growth Drivers:
- Investment in renewable energy projects is projected to reach $915 million in 2024, with a focus on solar and battery storage.
- Annual retail gas base rate increase of $10 million, supported by a retail gas rate base of $630 million.
- Strategic partnerships with local governments to expand electric and gas services to new customers.
Future Revenue Growth Projections:
- Revenue from electric utility operations is expected to increase by approximately 6.5% in 2025 compared to 2024.
- Overall net income for the nine months ended September 30, 2024, was reported at $540 million, compared to $582 million in the same period of 2023.
Earnings Estimates:
- Projected earnings per share (EPS) for 2025 is estimated at $1.20, reflecting growth from ongoing investments and operational efficiencies.
- Net income attributable to common shareholders for the three months ended September 30, 2024, was $295 million, an increase from $259 million in the same quarter in 2023.
Strategic Initiatives:
- Implementation of a new electric distribution system investment cap not exceeding $900 million from 2026 through 2029.
- Plans to issue $600 million in long-term debt in 2025 to support capital expenditures and operational enhancements.
- Restructuring initiatives expected to yield pre-tax savings of $25 million to $30 million in the fourth quarter of 2024.
Competitive Advantages:
- Strong regulatory framework allowing for timely recovery of investments in renewable generation.
- Established customer base with a retention rate of over 90%.
- Access to federal and state renewable energy tax credits, enhancing profitability from solar and battery storage investments.
| Year | Renewable Investments ($ millions) | Retail Gas Base Rate Increase ($ millions) | Projected EPS ($) | Net Income ($ millions) |
|---|---|---|---|---|
| 2024 | 915 | 10 | 1.15 | 540 |
| 2025 | 800 | 10 | 1.20 | Projected Increase |
Alliant Energy's growth strategy emphasizes the transition to cleaner energy sources, enhancing customer service, and maintaining financial stability through strategic investments and operational efficiency.
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Article updated on 8 Nov 2024
Resources:
- Alliant Energy Corporation (LNT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Alliant Energy Corporation (LNT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Alliant Energy Corporation (LNT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.