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ALLIANT ENERGY CORP 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Alliant Energy Corporation

Filing date:

02/21/2025

TLDR:

Alliant Energy’s 2024 financial performance saw a slight decrease in net income, driven by asset valuation charges and higher expenses. The company faces regulatory, environmental, and cybersecurity risks, but is investing in renewable energy and infrastructure upgrades.

ELI5:

Alliant Energy, like your local electricity and gas company, made a bit less money this year. They’re spending a lot on new green energy projects, but face challenges from government rules and potential cyber attacks.

Accession #:

0000352541-25-000014

Published on

Analyst Summary

  • Consolidated net income decreased from $703 million in 2023 to $690 million in 2024.
  • Diluted EPS decreased from $2.78 to $2.69.
  • Significant capital expenditure plans focused on renewable energy projects and infrastructure upgrades.
  • Faces regulatory risks related to rate relief and environmental compliance.
  • Exposed to economic conditions, cybersecurity threats, and supply chain disruptions.

Opportunities and Risks

  • Opportunity: Transitioning to renewable energy sources and upgrading infrastructure.
  • Risk: Regulatory uncertainties and economic conditions.
  • Risk: Environmental compliance, including GHG emissions and coal combustion residuals.
  • Risk: Cybersecurity threats that could disrupt operations and compromise sensitive information.
  • Risk: Supply chain disruptions impacting construction projects and asset maintenance.

Potential Implications

Company Performance

  • Long-term growth potential from renewable energy and infrastructure investments.
  • Regulatory uncertainties and economic conditions pose significant risks.
  • Impacted by weather patterns on energy sales.
  • MISO Seasonal Resource Adequacy Process impacts energy capacity accreditation.

Alliant Energy Corp – 2024 10-K Filing Analysis

Executive Summary

This report analyzes Alliant Energy Corp’s 2024 10-K filing. Key areas of focus include financial performance, capital expenditures, regulatory landscape, and risk factors. The company operates in a heavily regulated environment, and its performance is significantly influenced by regulatory decisions, weather patterns, and economic conditions. A hold rating is suggested, pending further clarity on the impact of regulatory changes and large capital projects.

Company Overview

Alliant Energy Corporation (LNT) is a regulated investor-owned public utility holding company. It provides electricity and natural gas services to customers in the Midwest, primarily through its subsidiaries Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL). The company is focused on delivering affordable, reliable, and sustainable energy solutions.

Detailed Analysis

Financial Performance

Alliant Energy’s consolidated net income attributable to common shareowners decreased slightly from $703 million in 2023 to $690 million in 2024. This decrease was primarily driven by an asset valuation charge for IPL’s Lansing Generating Station, temperature impacts, and higher depreciation and financing expenses, partially offset by higher revenue requirements from capital investments.

Key Financial Ratios and Trends:

  • Revenue: Increased slightly from $3,345 million to $3,372 million in electric utility revenues. Gas utility revenues decreased from $540 million to $465 million.
  • EPS: Diluted EPS decreased from $2.78 to $2.69.

Capital Expenditures

The company has significant capital expenditure plans over the next four years, primarily focused on renewable energy projects, energy storage, and upgrades to electric and gas distribution systems. These investments are subject to regulatory approval and various risks, including cost overruns and delays.

Planned Capital Expenditures (Millions):

  • 2025: $2,205
  • 2026: $2,680
  • 2027: $3,020
  • 2028: $2,960

Management’s Discussion and Analysis (MD&A)

Management emphasizes the company’s commitment to serving customers and building stronger communities. The MD&A highlights the company’s strategy to provide affordable energy solutions, make customer-focused investments, and grow customer demand. Key initiatives include transitioning to renewable energy sources, upgrading infrastructure, and promoting electrification.

Risk Factors

The 10-K filing outlines several risk factors that could impact Alliant Energy’s future performance. These include:

  • Regulatory Risks: The company’s ability to obtain adequate and timely rate relief is crucial for recovering costs and earning authorized rates of return.
  • Environmental Risks: Compliance with environmental regulations, including those related to GHG emissions and coal combustion residuals, could result in significant expenses.
  • Economic Conditions: Economic conditions and business closures in the company’s service territories could impact customer demand and operating income.
  • Cybersecurity Risks: The company faces ongoing threats from cyber attacks, which could disrupt operations and compromise sensitive information.
  • Supply Chain Disruptions: Disruptions in the supply chain could impact the company’s ability to complete construction projects and maintain existing assets.

Uncommon Metrics

The filing mentions several uncommon metrics that provide deeper insights into the company’s operations:

  • Cooling and Heating Degree Days: These metrics provide insights into the impact of weather patterns on energy sales.
  • MISO Seasonal Resource Adequacy Process: This process impacts how and when new and existing generating facilities are accredited with energy capacity.

Fair Value Measurements

The company uses fair value measurements for various assets and liabilities, including derivative instruments and pension plan assets. The fair value hierarchy prioritizes inputs to valuation techniques, with Level 1 inputs being the most reliable and Level 3 inputs requiring significant management judgment.

Pension and Other Postretirement Benefits

The company has significant pension and OPEB obligations, which are subject to investment and interest rate risk. Changes in actuarial assumptions, such as discount rates and expected rates of return, could impact the company’s financial condition.

Conclusion and Actionable Insights

Alliant Energy operates in a complex and evolving industry, facing both opportunities and challenges. The company’s commitment to renewable energy and infrastructure upgrades positions it for long-term growth, but regulatory uncertainties and economic conditions pose significant risks. A hold rating is suggested, pending further clarity on the impact of regulatory changes and large capital projects. Investors should closely monitor the company’s progress in obtaining rate relief, managing environmental compliance, and mitigating cybersecurity risks.

Alliant Energy (LNT) Financial Analysis – 2024

Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:

    • Calculation: ($3,981 – $628 – $613 – $224) / $3,981 = 63.2%
    • Trend: Gross Profit Margin in 2023: ($4,027 – $736 – $583 – $299) / $4,027 = 60.3%. Percentage change: (63.2% – 60.3%) / 60.3% = 4.8%
    • Industry: The average gross profit margin for utilities is around 40-50%. Alliant Energy’s gross profit margin is significantly higher than the industry average.
  • Operating Profit Margin:

    • Calculation: $886 / $3,981 = 22.3%
    • Trend: Operating Profit Margin in 2023: $943 / $4,027 = 23.4%. Percentage change: (22.3% – 23.4%) / 23.4% = -4.7%
    • Industry: The average operating profit margin for utilities is around 15-25%. Alliant Energy’s operating profit margin is within the industry average.
  • Net Profit Margin:

    • Calculation: $690 / $3,981 = 17.3%
    • Trend: Net Profit Margin in 2023: $703 / $4,027 = 17.5%. Percentage change: (17.3% – 17.5%) / 17.5% = -1.1%
    • Industry: The average net profit margin for utilities is around 10-20%. Alliant Energy’s net profit margin is within the industry average.
  • Return on Assets (ROA):

    • Calculation: $690 / $22,714 = 3.0%
    • Trend: ROA in 2023: $703 / $21,237 = 3.3%. Percentage change: (3.0% – 3.3%) / 3.3% = -9.1%
    • Industry: The average ROA for utilities is around 2-4%. Alliant Energy’s ROA is within the industry average.
  • Return on Equity (ROE):

    • Calculation: $690 / $7,004 = 9.9%
    • Trend: ROE in 2023: $703 / $6,777 = 10.4%. Percentage change: (9.9% – 10.4%) / 10.4% = -4.8%
    • Industry: The average ROE for utilities is around 8-12%. Alliant Energy’s ROE is within the industry average.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Calculation: Basic EPS: $690 / 256.5 = $2.69. Diluted EPS: $690 / 256.8 = $2.69
    • Trend: Basic EPS in 2023: $703 / 253.0 = $2.78. Diluted EPS in 2023: $703 / 253.3 = $2.78. Percentage change: (2.69 – 2.78) / 2.78 = -3.2%
    • Industry: EPS varies widely.

Liquidity

  • Current Ratio:

    • Calculation: $1,184 / $2,715 = 0.44
    • Trend: Current Ratio in 2023: $1,272 / $2,304 = 0.55. Percentage change: (0.44 – 0.55) / 0.55 = -20%
    • Industry: A current ratio of 1.0 or greater is generally considered healthy. Alliant Energy’s current ratio is below the healthy range.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: ($1,184 – $54 – $55 – $186) / $2,715 = 0.33
    • Trend: Quick Ratio in 2023: ($1,272 – $62 – $79 – $202) / $2,304 = 0.40. Percentage change: (0.33 – 0.40) / 0.40 = -17.5%
    • Industry: A quick ratio of 1.0 or greater is generally considered healthy. Alliant Energy’s quick ratio is below the healthy range.
  • Cash Ratio:

    • Calculation: $81 / $2,715 = 0.03
    • Trend: Cash Ratio in 2023: $62 / $2,304 = 0.03. Percentage change: (0.03 – 0.03) / 0.03 = 0%
    • Industry: A cash ratio of 0.5 or greater is generally considered healthy. Alliant Energy’s cash ratio is significantly below the healthy range.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Calculation: $8,677 / $7,004 = 1.24
    • Trend: Debt-to-Equity Ratio in 2023: $8,225 / $6,777 = 1.21. Percentage change: (1.24 – 1.21) / 1.21 = 2.5%
    • Industry: The average debt-to-equity ratio for utilities is around 1.0-1.5. Alliant Energy’s debt-to-equity ratio is within the industry average.
  • Debt-to-Assets Ratio:

    • Calculation: $8,677 / $22,714 = 0.38
    • Trend: Debt-to-Assets Ratio in 2023: $8,225 / $21,237 = 0.39. Percentage change: (0.38 – 0.39) / 0.39 = -2.6%
    • Industry: The average debt-to-assets ratio for utilities is around 0.4-0.6. Alliant Energy’s debt-to-assets ratio is below the industry average.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: $886 / $449 = 1.97
    • Trend: Interest Coverage Ratio in 2023: $943 / $394 = 2.39. Percentage change: (1.97 – 2.39) / 2.39 = -17.6%
    • Industry: A times interest earned ratio of 2.0 or greater is generally considered healthy. Alliant Energy’s interest coverage ratio is slightly below the healthy range.

Activity/Efficiency

  • Asset Turnover:

    • Calculation: $3,981 / $22,714 = 0.18
    • Trend: Asset Turnover in 2023: $4,027 / $21,237 = 0.19. Percentage change: (0.18 – 0.19) / 0.19 = -5.3%
    • Industry: The average asset turnover for utilities is around 0.3-0.5. Alliant Energy’s asset turnover is below the industry average.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Market Cap = 62.81 * 256.690222 = $16,123.9 million. P/E Ratio: $16,123.9 / $690 = 23.4
    • Industry: The average P/E ratio for utilities is around 15-20. Alliant Energy’s P/E ratio is above the industry average.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap = 62.81 * 256.690222 = $16,123.9 million. P/B Ratio: $16,123.9 / $7,004 = 2.30
    • Industry: The average P/B ratio for utilities is around 1-2. Alliant Energy’s P/B ratio is above the industry average.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap = 62.81 * 256.690222 = $16,123.9 million. P/S Ratio: $16,123.9 / $3,981 = 4.05
    • Industry: The average P/S ratio for utilities is around 1-2. Alliant Energy’s P/S ratio is above the industry average.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: Market Cap = 62.81 * 256.690222 = $16,123.9 million. EV = $16,123.9 + $8,677 – $81 = $24,719.9 million. EBITDA = $886 + $772 = $1,658 million. EV/EBITDA = $24,719.9 / $1,658 = 14.9
    • Industry: The average EV/EBITDA ratio for utilities is around 10-12. Alliant Energy’s EV/EBITDA ratio is above the industry average.

Growth Rates

  • Revenue Growth:

    • Calculation: ($3,981 – $4,027) / $4,027 = -1.1%
  • Net Income Growth:

    • Calculation: ($690 – $703) / $703 = -1.9%
  • EPS Growth:

    • Calculation: ($2.69 – $2.78) / $2.78 = -3.2%

Commentary

Alliant Energy’s financial performance in 2024 shows a slight decline compared to 2023. While profitability margins remain within industry averages, there are decreases in operating profit margin, net profit margin, ROA, ROE, and EPS. The company’s liquidity ratios are below healthy levels, indicating potential short-term financial challenges. Despite these concerns, the company’s leverage ratios are within industry norms, suggesting a manageable debt structure.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️