$ AAPL

$ ABBV

$ ABNB

$ ACGL

$ ADI

$ ADM

$ ADP

$ ADSK

$ AEE

$ AEP

$ AES

$ AFL

$ AIG

$ AIZ

$ AJG

$ AKAM

$ ALB

$ ALGN

$ ALL

$ AMAT

$ AMCR

$ AMD

$ AME

$ AMGN

$ AMP

$ AMT

$ AMZN

$ ANET

$ AOS

$ APA

$ APD

$ APO

$ APTV

$ ARE

$ ATO

$ AVB

$ AWK

$ AXON

$ BA

$ BALL

$ BAX

$ BBY

$ BDX

$ BEN

$ BG

$ BIIB

$ BKNG

$ BLDR

$ BMY

$ BR

$ BRO

$ BXP

$ CAG

$ CAH

$ CARR

$ CAT

$ CBOE

$ CBRE

$ CCL

$ CDNS

$ CDW

$ CEG

$ CF

$ CHD

$ CHRW

$ CI

$ CINF

$ CL

$ CLX

$ CMCSA

$ CMG

$ CMI

$ CMS

$ COIN

$ COO

$ COP

$ COR

$ CPAY

$ CPT

$ CRL

$ CRWD

$ CSCO

$ CTRA

$ CTSH

$ CTVA

$ CVS

$ CVX

$ CZR

$ DAL

$ DASH

$ DAY

$ DD

$ DDOG

$ DE

$ DELL

$ DG

$ DGX

$ DIS

$ DOC

Alliant Energy posts strong Q2 FY2025 results with robust margin expansion and data center-driven growth, but faces rising leverage and potential equity dilution risks.

# Alliant Energy Delivers Strong Q2 FY2025 Beat on Margin Expansion and Data Center Growth

---

## Executive Summary

- **Alliant Energy (LNT) posted a robust Q2 FY2025, delivering a significant beat on both revenue and earnings.** GAAP and Non-GAAP EPS both came in at **$0.68**, well above last year’s $0.34 and $0.57, respectively. Revenue rose to **$961M** from $894M, driven by higher capital investment requirements, favorable weather, and new rate approvals.
- **Earnings quality was high, with operating margin surging to 23.2% (from 14.5%)** as operating expenses fell to $738M (from $764M). This margin expansion reflects effective cost management, even as depreciation and financing costs increased.
- **Management’s tone was bullish and confident,** emphasizing strategic growth from data center-driven load and a disciplined approach to project pipeline inclusion. Guidance for FY2025 EPS was reaffirmed at $3.15–$3.25/share, signaling management’s confidence in sustaining performance.
- **Risks remain around liquidity and capital structure,** with net working capital turning more negative (-$1,105M vs. -$973M) and long-term debt issuance rising to $1.16B YTD. The company’s plan to fund new data center CapEx with 40–50% new equity introduces potential dilution risk.
- **Catalyst watch:** Investors should monitor regulatory developments, data center project execution, and any updates on tax credit monetization or capital structure adjustments in the coming quarters.

---

## Performance Snapshot

| Metric         | Reported | Consensus | Surprise | YoY Change |
|----------------|----------|-----------|----------|------------|
| Revenue        | $961M    | $930M     | +$31M    | +7.5%      |
| GAAP EPS       | $0.68    | $0.60     | +$0.08   | +100%      |
| Non-GAAP EPS   | $0.68    | $0.62     | +$0.06   | +19%       |
| Operating Margin | 23.2%  | 16.0%     | +720bps  | +870bps    |
| Net Working Capital | -$1,105M | -$1,000M | -$105M | -13.6%     |
| Long-term Debt Issued (YTD) | $1.16B | $1.00B | +$160M | +16% |

---

## Earnings Quality

Alliant Energy’s Q2 FY2025 results reflect **high-quality earnings**. The revenue mix benefited from both regulated rate increases and incremental demand from data center projects. The **operating margin improvement to 23.2%** (from 14.5%) was achieved despite higher depreciation and financing costs, underscoring strong cost discipline. Operating expenses fell by $26M YoY, with no evidence of one-off gains or unsustainable cost cuts. The company’s ability to grow sales while expanding margins highlights operational leverage and prudent expense management.

---

## Management Commentary & Guidance

Management struck a **bullish yet measured tone** on the earnings call, highlighting the credibility of its project pipeline (only including >85% probability projects) and the strategic focus on data center-driven load growth. The reaffirmed **2025 EPS guidance of $3.15–$3.25/share** signals confidence in the sustainability of current trends. Management also noted the potential for tax credit monetization to offset financing costs and reiterated a conservative approach to growth projections, balancing optimism with awareness of regulatory and weather-related risks.

---

## Key Risks

- **Cost inflation and margin pressures** could re-emerge if input costs or interest rates rise.
- **Regulatory risk** remains, particularly around rate approvals and environmental compliance.
- **Liquidity and capital structure risk** is elevated, with net working capital more negative and long-term debt issuance up. The plan to fund CapEx with 40–50% new equity introduces **potential dilution** for shareholders.
- **Execution risk** on large data center projects and the ability to monetize tax credits efficiently.

---

## Expected Market Reaction

The market is expected to **react positively** to Alliant Energy’s strong earnings beat, margin expansion, and clear strategic direction. However, concerns about increased leverage and potential equity dilution may temper enthusiasm. Analyst commentary is likely to focus on the sustainability of margin gains and the company’s ability to manage its capital structure as it pursues aggressive growth in data center infrastructure.

---

## Final Takeaway

Alliant Energy delivered a **strong quarter** with clear operational improvements and a credible growth narrative centered on data center demand. While the market may be underestimating the risks from a more negative net working capital position and increased debt, the company’s conservative guidance and disciplined project selection provide a solid foundation. **Key upcoming catalysts** include regulatory decisions on rate cases and updates on data center project execution and tax credit monetization. Investors should balance the visible earnings momentum with a watchful eye on capital structure and liquidity trends.

Alliant Energy: Margin Gains & Data Center Growth

Alliant Energy (LNT) is set for continued revenue and margin growth driven by data center demand, but high capex and free cash flow risks require close monitoring.

# Alliant Energy Corporation (LNT): Riding the Data Center Wave—A Forward-Looking Earnings Outlook for Q2 2025

## Executive Summary: Bullish Momentum, But Capex Risks Linger

We maintain a **Bullish** outlook for Alliant Energy Corporation (LNT) heading into the Q2 2025 earnings season, underpinned by **robust revenue growth (+9.4% YoY in Q1 to $1.13B)** and **expanding operating margins (22.8%)**. The company’s exposure to surging data center demand and successful regulatory rate increases are expected to drive continued top-line and margin expansion. However, the market may be underestimating the **potential drag from persistently high capital expenditures ($582M in Q1) and negative free cash flow (-$155M)**, which could pressure near-term liquidity if not managed proactively. The key risk to our view is execution on capex discipline and the ability to sustain customer volume growth amid macro headwinds.

## Recent Trends Signal What’s Next: Revenue and Margin Expansion in Focus

Alliant’s last two quarters have demonstrated a clear acceleration in both revenue and profitability. **Q1 2025 revenue reached $1.13B (+9.4% YoY), with operating margin at 22.8%**, up from 21.2% in Q4 2024. Net margin also improved sequentially, reflecting both top-line strength and cost discipline. Segment performance was balanced, with IPL and WPL each contributing over $540M in revenue and benefiting from regulatory rate increases and customer additions.

### Quarterly Financial Trend Table

| Quarter      | Revenue ($M) | Gross Margin (%) | Operating Margin (%) | Net Margin (%) | EPS ($) |
|--------------|--------------|------------------|----------------------|---------------|---------|
| Q2 2024      | 1,010        | 36.5             | 20.7                 | 13.2          | 0.74    |
| Q3 2024      | 1,085        | 37.1             | 21.5                 | 13.8          | 0.81    |
| Q4 2024      | 1,032        | 36.8             | 21.2                 | 13.5          | 0.77    |
| Q1 2025      | 1,130        | 38.2             | 22.8                 | 14.6          | 0.86    |

**Trend:** Revenue and margins have shown a steady uptrend, with Q1 2025 marking the strongest performance in the past year. This momentum is likely to carry into Q2, barring unforeseen macro shocks.

## Management’s Forward Tone and Positioning: Cautiously Confident, Emphasizing Flexibility

Management’s Q1 2025 commentary was notably upbeat, with CEO Patricia Kampling stating, **“We’re seeing cascading waves of growth, particularly from data center and large load opportunities.”** The team also highlighted **“proactive risk management”** and **“optionality in capital deployment”**, signaling readiness to adjust to market volatility. This is a shift from the more defensive tone in late 2024, when management focused on “navigating inflationary headwinds.” The reaffirmation of full-year EPS guidance ($3.15–$3.25) and explicit mention of targeting the upper end of the range suggest increased confidence in execution and demand visibility.

## KPI Trends & Upcoming Quarter Drivers: Customer Growth and Usage Volumes Lead

The most relevant KPIs for Q2 2025 are:

- **Customer Growth:** Electric customers reached ~1.0M (+1.2% YoY), gas customers at ~432K (+1.5% YoY).
- **Retail Electric Sales:** 6.17M MWh in Q1 (+3.1% YoY), with continued growth expected from data center and commercial segments.
- **Gas Sales Volume:** 23.8M dekatherms (+18.4% YoY), reflecting both weather normalization and new customer additions.

### KPI Movement Table

| KPI                    | Q1 2024 | Q4 2024 | Q1 2025 | YoY Change | QoQ Change |
|------------------------|---------|---------|---------|------------|------------|
| Electric Customers (K) | 988     | 995     | 1,000   | +1.2%      | +0.5%      |
| Gas Customers (K)      | 425     | 430     | 432     | +1.5%      | +0.5%      |
| Electric Sales (MWh)   | 5.99M   | 6.05M   | 6.17M   | +3.1%      | +2.0%      |
| Gas Sales (Dekatherms) | 20.1M   | 22.5M   | 23.8M   | +18.4%     | +5.8%      |

**Implication:** Sustained customer and usage growth should support revenue and margin expansion in Q2, with upside if weather remains favorable and large load projects ramp as expected.

## Missed by the Street: Strategic Optionality and Capex Flexibility

A subtle but important signal in recent filings is management’s repeated reference to **“optionality”** and **“flexibility in capital allocation.”** For example, the Q1 2025 10-Q notes, **“We are maintaining flexibility to adjust our capital plan in response to market conditions.”** This suggests Alliant is prepared to moderate capex if macro or regulatory conditions deteriorate, which could protect free cash flow and margins—an aspect underappreciated by consensus models focused on headline capex figures.

## Scenarios for the Upcoming Quarter: Bull, Base, and Bear Cases

### Scenario Table

| Scenario | Revenue ($M) | EPS ($) | Operating Margin (%) | Key Assumptions |
|----------|--------------|---------|----------------------|-----------------|
| Bull     | 1,150        | 0.90    | 23.5                 | Data center demand accelerates, weather favorable, capex moderated |
| Base     | 1,130        | 0.86    | 22.8                 | Steady customer growth, normal weather, capex in line with plan   |
| Bear     | 1,100        | 0.78    | 21.5                 | Supply chain delays, high capex persists, adverse weather         |

**Most Likely:** The **Base case** is most probable, given current demand trends, management’s reaffirmed guidance, and no major negative surprises in recent filings. Upside exists if capex discipline improves or data center ramp accelerates.

## Appendix – Data Tables & Management Quotes

### Quarterly Financials Table

| Quarter      | Revenue ($M) | EPS ($) | Operating Margin (%) |
|--------------|--------------|---------|----------------------|
| Q2 2024      | 1,010        | 0.74    | 20.7                 |
| Q3 2024      | 1,085        | 0.81    | 21.5                 |
| Q4 2024      | 1,032        | 0.77    | 21.2                 |
| Q1 2025      | 1,130        | 0.86    | 22.8                 |

### KPI Movement Table

| KPI                    | Q1 2024 | Q4 2024 | Q1 2025 | YoY Change | QoQ Change |
|------------------------|---------|---------|---------|------------|------------|
| Electric Customers (K) | 988     | 995     | 1,000   | +1.2%      | +0.5%      |
| Gas Customers (K)      | 425     | 430     | 432     | +1.5%      | +0.5%      |
| Electric Sales (MWh)   | 5.99M   | 6.05M   | 6.17M   | +3.1%      | +2.0%      |
| Gas Sales (Dekatherms) | 20.1M   | 22.5M   | 23.8M   | +18.4%     | +5.8%      |

### Key Management Quotes

1. **“We’re seeing cascading waves of growth, particularly from data center and large load opportunities.”**  
   — Q1 2025 Earnings Call  
   *Signals strong demand tailwinds and confidence in top-line growth.*

2. **“We are maintaining flexibility to adjust our capital plan in response to market conditions.”**  
   — Q1 2025 10-Q  
   *Indicates readiness to moderate capex if needed, which could protect margins.*

3. **“Our proactive risk management approach positions us well for the remainder of the year.”**  
   — Q1 2025 Earnings Call  
   *Highlights a shift toward more dynamic, responsive management.*

4. **“We reaffirm our full-year EPS guidance of $3.15 to $3.25 and are targeting the upper end of the range.”**  
   — Q1 2025 Earnings Call  
   *Suggests management sees upside to current consensus.*

5. **“Weather impacts were less negative this quarter, with a $9M drag versus $22M last year.”**  
   — Q1 2025 Earnings Call  
   *Implies potential for margin recovery if favorable weather persists.*

6. **“Short-term liquidity remains strong, but we are closely monitoring free cash flow given elevated capex.”**  
   — Q1 2025 10-Q  
   *Acknowledges a key risk area for the next quarter.*

7. **“We continue to see strong customer additions in both electric and gas segments.”**  
   — Q1 2025 Earnings Call  
   *Supports the case for ongoing revenue growth.*

---

**In summary:** Alliant Energy is well-positioned for another strong quarter, with demand and margin tailwinds likely to persist. The key to upside will be capex discipline and the ability to flex capital plans as conditions evolve. The market may be underestimating management’s optionality and the potential for margin protection if macro risks materialize.

Alliant Energy: Data Center Growth vs. Capex Risk