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Q2 2015 EARNINGS CALL – Cms Energy

Cms Energy · Jul 23, 2015 · 43 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q2 2015 EARNINGS CALL – Cms Energy – slide 1
    Second Quarter 2015 Results & Outlook July 23, 2015 Ludington Pumped Storage Ray Compressor Station Cross Winds Energy Park Fourth largest in the world 1 LDC in gas storage 2 in renewable sales in the Great Lakes area
  2. Q2 2015 EARNINGS CALL – Cms Energy – slide 2
    Agenda Overview First Half Results Regulatory/Legislative Update Gas Utility Growth Results & Outlook First Half Performance Sustainable Growth Model 2
  3. Q2 2015 EARNINGS CALL – Cms Energy – slide 3
    First Half Results . . . . First half EPS at 98 a Down 7 from 2014; up 3 weather-normalized Up 13 from Plan a Reaffirm full year EPS guidance of 1.86 to 1.89 _____ aAdjusted EPS (non-GAAP) . . . . ahead of plan, with…
  4. Q2 2015 EARNINGS CALL – Cms Energy – slide 4
    Rate Cases . . . . Gas (mils) Electric Track Record 21 85 Date Step Amount (mils) May 2013 Settlement 89 64 2014 Stay out -- June 2015 Self-implement 110 Dec. 2015 Order expected 2 years Investment Cost of Capital, Filed…
  5. Q2 2015 EARNINGS CALL – Cms Energy – slide 5
    Electric Prices & Act 169 . . . . Industrial Rates Impact Worse 30 % 26% Rates now 21% competitive 20 Rates & Fuel 11% Rates & ROA policy could 10 Act 169 create an advantage 4% Midwest Avg Flat Good for our 0 customers…
  6. Q2 2015 EARNINGS CALL – Cms Energy – slide 6
    Growing Business in Michigan . . . . Pure Michigan Business Connect Our Service Territory a Helps drive economic growth Has outperformed Michigan and U.S. Investment (bils) Grand 5 5 Rapids Michigan U.S b Building Permits +30%…
  7. Q2 2015 EARNINGS CALL – Cms Energy – slide 7
    Michigan Energy Law . . . . Sen. Nofs Gov. Snyder Rep. Nesbitt Keep cap Keep cap End ROA Retail Open 3-year capacity 5-year capacity Access requirement, requirement Fully regulated one way door Fair choice No subsidy No…
  8. Q2 2015 EARNINGS CALL – Cms Energy – slide 8
    Capex Up 45% . . . . Electric Capex Criteria Gas Opportunity +30% Add customer value 20 + Organic growth +45% 15.5 Reduce O&M Balance fuel 10.7 Mandated by regulations No big bets 2005 - 2014 2015 - 2024 Opportunity . .…
  9. Q2 2015 EARNINGS CALL – Cms Energy – slide 9
    Growing the Gas Business . . . . a U.S. Rank Storage 1 Storage Field 309 bcf Compression 1 Compression Station 168,721 horsepower Sales 2 Transmission Pipeline 373 bcf Transmission 4 Distribution Mains 2,497 miles…
  10. Q2 2015 EARNINGS CALL – Cms Energy – slide 10
    Growing the Gas Business . . . . Capex (bils) 6 5.8 +100% New Customers Infrastructure 4 2.9 Pipeline Integrity Capacity & Deliverability 2 Civic Improvement Compression & Storage Smart Energy & Other 0 Last 10 Next 10…
  11. Q2 2015 EARNINGS CALL – Cms Energy – slide 11
    2015 First Half EPS . . . . Results By Business Segment 2015 2014 EPS Better EPS 0.98 1.05 Actual than Plan Utility 1.08 0.09 -7 Enterprises 0.03 0.02 Interest & other (0.13) 0.02 Weather-normalized 0.86 0.83 Company 0.98 0.13…
  12. Q2 2015 EARNINGS CALL – Cms Energy – slide 12
    2015 EPS . . . . a First Half Second Half (7) 16 - 19 1.86 - 1.89 _+5% - +7% 1.77 3 12 9 - 12 (5) (10) First Half First Half 1.05 0.98 2014 Rate Change, Weather Lower O&M Mortality Tables Rate Relief & 2015 Cost &…
  13. Q2 2015 EARNINGS CALL – Cms Energy – slide 13
    O&M Reinvestment Helps CUSTOMERS . . . . Adjusted EPS (non-GAAP) 2015 O&M 2016 Reinvestment Savings (mils) (mils) DIG outage (8) 10 2014 Forestry (5) 5 17 Donations & other (5) 5 Total (18) 20 13 Weather 12 Natural…
  14. Q2 2015 EARNINGS CALL – Cms Energy – slide 14
    One of a Kind, CMS Growth Model . . . . Plan Capital investment (drives EPS growth) 5% - 7% - O&M cost reductions -2 pts - Sales growth - - No block equity dilution -1 - Surcharges and other -1 Investment self-funded -5 pts Rate…
  15. Q2 2015 EARNINGS CALL – Cms Energy – slide 15
    Rate Base Growth . . . . 15
  16. Q2 2015 EARNINGS CALL – Cms Energy – slide 16
    Capex Up 45% . . . . 2005-2014 2015-2024 Opportunity 10.7 bil 15.5 bil 20 + bil Opportunity +30% +45% Gas Electric Gas Infrastructure Maintenance Infrastructure Electric Maintenance Electric Environ. Reliability Smart…
  17. Q2 2015 EARNINGS CALL – Cms Energy – slide 17
    O&M Cost Reductions . . . . 2006 2014 2018 Down 7% Down 10% or 2%/yr 1.1 bil 1.0 bil 0.9 bil Inflation Inflation 2% 2% Coal to Gas Switching (Zeeland) Coal to Gas Switching (Jackson) Smarter benefit plans Pole Top Hardening…
  18. Q2 2015 EARNINGS CALL – Cms Energy – slide 18
    O&M Cost Performance . . . . Electric Annual Growth O&M Cost Savings (2014 over 2006) 2014 2014 & 2015 2018 (mils) (mils) Attrition - 35 - 75 Productivity (Coal Gas) - 35 - 50 Pole Top Hardening - 30 - 30 Smart Meters - 5 - 25…
  19. Q2 2015 EARNINGS CALL – Cms Energy – slide 19
    Sales Growth . . . . Examples of New Business Annual Electric Sales a Electric Gas Combination Industrial Total Announcement Bayer CropScience 6% One of the worlds leading crop science companies Secures 70 jobs 50 million…
  20. Q2 2015 EARNINGS CALL – Cms Energy – slide 20
    No Block Equity Dilution . . . . Typical utility Model w/o NOLs CMS Model w/ NOLs 6% 6% < 6% < 5% -1% 0 Rate Base Dilution EPS Growth Rate Base Dilution EPS Growth Growth Growth . . . . under CMS growth model. 20
  21. Q2 2015 EARNINGS CALL – Cms Energy – slide 21
    One of a Kind, CMS Growth Model . . . . Plan Opportunity Capital investment (drives EPS growth) 5% - 7% 6% - 8% - O&M cost reductions -2 pts Short-term - Sales growth - ROA return - No block equity dilution -1 and/or - Surcharges and…
  22. Q2 2015 EARNINGS CALL – Cms Energy – slide 22
    PPAs (2,000 MW) Create Unique Opportunity for . . . . PPA vs Owned Capacity Opportunity 2,000 MW 30% 2 Bil Investment Amount (mils) PPAs (650) New Gas Build 650 10% Annual Cust. Impact zero 5% Peers CMS Today CMS…
  23. Q2 2015 EARNINGS CALL – Cms Energy – slide 23
    ROA (800 MW) Creates Unique Opportunity for . . . . Potential Return Opportunity 800 MW 150 million subsidy One-Way Door Decision 0.02% of customers on ROA (300 customers) Build Could lower rates 4% for Decision everyone if…
  24. Q2 2015 EARNINGS CALL – Cms Energy – slide 24
    MISO Zone 7 Capacity . . . . 2016 Forecasted Shortfall (MW) Impact Annual MISO Survey June June New capacity to meet 2014 2015 shortfall not assumed More upside to 15.5 billion capex plan CMS & DTE purchase IPPs -1,300 New…
  25. Q2 2015 EARNINGS CALL – Cms Energy – slide 25
    CMS Energy . . . . +5% to +7% /year 7% CAGR Recession Recession Help Hurt 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Polar Cold winter…
  26. Q2 2015 EARNINGS CALL – Cms Energy – slide 26
    Operating Cash Flow a . . . . Resources Percent of Market Cap for the Future 18% Reinvest back into + 0.3B the business 15% - - - - AND/OR - - - - + 0.6B 13% Grow rate-base 12% - - - - AND/OR- - - - 9% CMS Peers CMS Peers…
  27. Q2 2015 EARNINGS CALL – Cms Energy – slide 27
    2015 Sensitivities . . . . 2015 Impact Status Sensitivity EPS OCF (mils) Sales a Electric (37,550 GWh) + 1% + 0.05 + 20 Gas (302.4 Bcf) + 5 + 0.07 + 30 Gas prices (NYMEX) + 50 0 55 + + ROE (authorized) Electric (10.3%) + 10…
  28. Q2 2015 EARNINGS CALL – Cms Energy – slide 28
    2015 Financial Targets . . . . Target Focus Adjusted EPS (non-GAAP) 1.86 - 1.89 +5% to +7% Consistent, high- end performance Operating cash flow (mils) 1,550 No big bets Dividend payout ratio Customer price decreases 62%…
  29. Q2 2015 EARNINGS CALL – Cms Energy – slide 29
    CMS Energy Consistent Growth . . . . Future Shines Bright Sustainable Future Growth a 2.50 +5% to +7% / Past Next 5 year Performance Years Investment (bils) 6.4 7.6 (2010-2014) Capacity Op +7% /year O&M Reductions (10)% (7)%…
  30. Q2 2015 EARNINGS CALL – Cms Energy – slide 30
    Appendix
  31. Q2 2015 EARNINGS CALL – Cms Energy – slide 31
    Capacity Diversity . . . . Nuclear Oil 8% 6% Renewables 9% Coal 34% Pumped Storage 2014 11% Nuclear Gas Nuclear Oil 6% 32% 8% 8% Oil 6% Renewables Purchases 3% 3% Coal 24% Pumped Coal Renewables Storage 41% 10%…
  32. Q2 2015 EARNINGS CALL – Cms Energy – slide 32
    Liquidity (as of June 2015) . . . . Renewal Capacity Availability 2.1 Billion CMS Energy 1.9 Billion Stronger liquidity 5-year revolver May 2020 550 mils than peers 547 mils Consumers Energy 5-year revolver May 2020 650 640…
  33. Q2 2015 EARNINGS CALL – Cms Energy – slide 33
    Operating Cash Flow Growth . . . . Amount Up 0.6 Billion (bils) Gross operating cash flowa up 0.1 billion per year 2.6 2.6 2.5 2.3 2.2 2.1 Interest, working 2.1 1.9 1.8 capital and taxes 1.6 1.55 1.1 0.6 Investment…
  34. Q2 2015 EARNINGS CALL – Cms Energy – slide 34
    Credit Ratings . . . . Scale Reflects S&P Moodys S&P Moodys (Dec. 14) (Mar. 15) A+ A1 Consistent A A2 Consumers Performance Secured A- A3 BBB+ Baa1 Less Risk BBB Baa2 BBB- Baa3 Customer Focus BB+ Ba1 CMS Constructive…
  35. Q2 2015 EARNINGS CALL – Cms Energy – slide 35
    2015 Cash Flow Forecast (non-GAAP) CMS Energy Parent Consumers Energy Cash at year end 2014 95 Amount (mils) Sources Consumers Energy dividend and tax sharing 365 Cash at year end 2014 71 Enterprises 20 Sources Sources 385…
  36. Q2 2015 EARNINGS CALL – Cms Energy – slide 36
    GAAP Reconciliation
  37. Q2 2015 EARNINGS CALL – Cms Energy – slide 37
    CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2008 2009 2010 2011 2012 2013 2014 Reported earnings per share - GAAP 1.20 0.91 1.28 1.58 1.42 1.66 1.74 After-tax items: Electric and gas utility…
  38. Q2 2015 EARNINGS CALL – Cms Energy – slide 38
    CMS ENERGY CORPORATION Earnings By Quarter and Year GAAP Reconciliation (Unaudited) (In Millions, Except Per Share Amounts) 2014 1Q 2Q 3Q 4Q YTD Dec Reported net income - GAAP 204 83 94 96 477 After-tax items: Electric and gas…
  39. Q2 2015 EARNINGS CALL – Cms Energy – slide 39
    CMS ENERGY CORPORATION Earnings Segment Results GAAP Reconciliation (Unaudited) Three Months Ended Six Months Ended June 30 2015 2014 2015 2014 Electric Utility Reported 0.30 0.36 0.64 0.72 Restructuring Costs and Other - - -…
  40. Q2 2015 EARNINGS CALL – Cms Energy – slide 40
    Consumers Energy 2015 Forecasted Cash Flow GAAP Reconciliation (in millions) (unaudited) Reclassifications From Sources and Uses to Statement of Cash Flows Interest/ Capital Presentation Sources and Uses Tax Other Financing Other…
  41. Q2 2015 EARNINGS CALL – Cms Energy – slide 41
    CMS Energy Parent 2015 Forecasted Cash Flow GAAP Reconciliation (in millions) (unaudited) Reclassifications From Sources and Uses to Statement of Cash Flows Presentation Sources and Uses Non Equity Consolidated Statements of Cash…
  42. Q2 2015 EARNINGS CALL – Cms Energy – slide 42
    Consolidated CMS Energy 2015 Forecasted Consolidation of Consumers Energy and CMS Energy Parent Statements of Cash Flow (in millions) (unaudited) Eliminations/Reclassifications/Consolidation to Arrive at the Consolidated Statement of…
  43. Q2 2015 EARNINGS CALL – Cms Energy – slide 43
    CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2014 2015 2016 2017 2018 2019 2020 Consumers Operating Income + Depreciation & Amortization 1,813 1,920 2,027 2,145 2,266…

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