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UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy

Cms Energy · Mar 3, 2015 · 30 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. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 1
    Top of Mind Why invest in CMS Whats in the Plan; Whats not How do we do it What makes us different UBS 2015 Natural Gas & Electric Utilities Conference March 3 & 4, 2015 Ludington Pumped Storage Ray Compressor Station Cross…
  2. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 2
    Why Invest in CMS Energy Our Growth Engine Supported By (2015-2024 Capex) UPSIDES create headroom (Investment, Sales, Cost, & DIG) PARTNERS in progress 15.5 Billion (Customers, Regulators, & Policy Makers) 5% - 7% EPS growth…
  3. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 3
    Whats in the Plan INVESTMENT CATCH-UP . . . . Amount (billions) 1.8 1.5 per year Peers Peer Performance a Consumers Energy Peer Average CMS Capex Liquidity Cash Flow (oper) 20% 16% 15% 14% 15% 12% 2003 2004 2005…
  4. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 4
    Whats in the Plan VISIBLE CAPEX . . . . 2005-2014 2015-2024 10.7B 15.5B Up +83% Gas Gas Electric Infrastructure Infrastructure Maintenance Electric Maintenance Electric Reliability New Smart Energy New Generation…
  5. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 5
    Whats in the Plan SUSTAINABLE EARNINGS GROWTH . . . . a +5% to +7% EPS Growth +7% Annual Growth 2.00 1.75 1.50 1.25 1.00 0.75 0.50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Future 2017 2018…
  6. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 6
    Whats NOT in the Plan UPSIDE INVESTMENT OPPORTUNITIES . . . . 2015-2024 Opportunity Level 10-Year Plan Amount (bils) Generation capacity 3.0 Gas conversions & expansion 1.0 Grid modernization 1.0 20+ Billion 15.5 Billion Total…
  7. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 7
    Whats NOT in the Plan UPSIDE CAPACITY OPPORTUNITIES . . . . Capacity Growth Over Next Ten Years MW 11,000 10,000 PPAs Expire 9,400 MW PPA 8,600 MW 1,240 MW 580 PPA 2,600 780 MW 7,500 capacity Owned 30% 8,820 800 MW 410…
  8. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 8
    Whats NOT in the Plan UPSIDE CAPACITY PRICE INCREASES . . . . Was Now Future Scenarios (mils) (mils) (mils) +40 55 +20 35 15 5 Capacity price < 0.50 2.00 4.50 7.50 ( kW per (Market) (Market) (CONE) month) . . . .…
  9. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 9
    Whats NOT in the Plan SALES GROWTH . . . . In the News Annual Electric Salesa Industrial Total Kent County [Grand Rapids] leads nations 8.7% largest counties in post-recession employment gains -- Grand Rapids Press 5.0%…
  10. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 10
    How Do We Do It . . . . Capital investment catch-up No big bets Organic growth Self-funded Premier cost reductions and reinvestment Strong Energy Law; Constructive rate making Conservative planning Customer passion . . . .…
  11. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 11
    How Do We Do It O&M COST CONTROL . . . . Average Annual O&M Change +6% Peers PeersActual/Plan Actual/Plan +2% +2% Peers Peers Peers CMS +1% CMS CMS CMS Excluding CMS CMS Catastrophic December -1% Storm -2% -3% -3% -3%…
  12. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 12
    How Do We Do It O&M COST SAVINGS . . . . O&M Trend vs Peers O&M Cost Savings 2014 2014 0 50% & 2015 2018 (mils) (mils) 6% per year 0 Peers Attrition - 35 - 75 0 2% per year Productivity (Coal Gas) - 35 - 50 0 Pole Top…
  13. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 13
    How Do We Do It O&M COST REDUCTIONS . . . . -3% -3% Amount 1,080 +5% (mils) 1,060 1060 1,040 +9% 1,020 1,000 980 -8% 960 940 920 -12% 900 880 860 840 2013 Cost Reinvestment 2014 Benefits Cost 2015 Reductions…
  14. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 14
    How Do We Do It REINVESTMENT HELPS CUSTOMERS . . . . Adjusted EPS (non-GAAP) 2014 2015 1.77 +7% Guidance January March 31 June 30 September 30 December . . . . AND provides sustainable growth for INVESTORS. 14
  15. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 15
    How Do We Do It 2015 GAS AND ELECTRIC RATE CASES . . . . 2014 2015 2016 Our View GAS Filed 88 M 7/01 Settled 45 M A) Settled 45 million B) 10.3% ROE A) A) Jackson Plant in Jackson Plant Classic 7 Decommissioned rate…
  16. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 16
    How Do We Do It EXPERIENCED POLICY MAKERS . . . . Governor Rick Snyder Commission Powering Michigans John Quackenbush (R), Comeback Chairman Term Ends: July 2, 2017 Consistent Sally Talberg (I) Term Ends: Energy Committee…
  17. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 17
    How Do We Do It 2015 MICHIGAN ENERGY LAW . . . . Adaptability Reliability Upside RPS Expansion Affordability ROA Elimination Environmental protection 10% renewables by 2015 Energy efficiency 2015 Energy Timeline standards…
  18. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 18
    How Do We Do It ELECTRIC CUSTOMER PRICES . . . . Residential Bills Industrial Rates Worse Worse 20 % 30 % 26% 21% 20 Rates & 10 Fuel 13% Rates & 10 Design 7% 3% National Avg Midwest Avg 0 0 (5)% -10 Policy or market…
  19. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 19
    How Do We Do It WITH A PASSION FOR CUSTOMER SATISFACTION . . . . Electric Gas 2 1st Quartile 3 1st Quartile 2nd Quartile 2nd Quartile 6 9 3rd Quartile 3rd Quartile 4th Quartile 4th Quartile Present Present 2010 2012 2014…
  20. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 20
    What Makes Us Different A Passion for Customers AND Investors . . . . Future Shines Bright Sustainable Future Growth 3.50 EPS a Past Next 5 Dividend +5% to +7% Performance Years Investment (bils) 6.4 7.6 (2010-2014) Capacity Op…
  21. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 21
    Appendix
  22. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 22
    Operating Cash Flow Growth . . . . Amount Up 0.5 Billion (bils) Gross operating cash flowa 2.5 up 0.1 billion per year 2.4 2.2 2.1 2.0 2.0 1.9 Interest, working 1.8 capital and taxes 1.55 1.5 Pct of Market Cap (as of Dec.…
  23. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 23
    Plan . . . . 10-Year Actual 1.77 1.89 7% CAGR a EPS 1.66 1.86 Dividend Peers 4% 1.55 1.45 1.36 b 1.26 7% 1.21 1.16 6% 1.08 6% 1.08 14% 1.02 0.96 96 0.90 27% 84 0.84 32% 0.81 Intl Sale 66 39% 50 80% 36 20 2003…
  24. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 24
    Credit Ratings . . . . Scale Reflects S&P / S&P Moodys Fitch Fitch Moodys (Dec. 14) (Jan. 14) (Feb. 14) A+ A1 Consistent A A2 Consumers Performance Secured A- BBB+ A3 Baa1 Less Risk BBB Baa2 BBB- Baa3 Customer Focus BB+…
  25. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 25
    Generation Strategy: New Supply Sources . . . . Levelized cost of new build (/kWh) New Build 25 Consumers Energy Sources 22 20 15 15 12 11 Back 10 10 -up 8 7 6 Back 7 6 -up 6 9 5.5 5 5 5 Cross Winds 6 Big 5…
  26. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 26
    2015 Sensitivities . . . . 2015 Impact Status Sensitivity EPS OCF (mils) Sales a Electric (37,847 GWh) + 1% + 0.05 + 20 Gas (294.1 Bcf) + 5 + 0.07 + 30 Gas prices (NYMEX) + 50 0 55 + + ROE (authorized) Electric (10.3%) + 10…
  27. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 27
    2015 Guidance . . . . Adjusted EPS (non-GAAP) Utility Electric 1.50 - 1.52 Gas 0.59 - 0.60 Total Utility 2.09 - 2.12 Enterprises 0.04 Parent and other (0.27) Total EPS 1.86 - 1.89 +5% to +7% Operating cash flow (GAAP) (mils)…
  28. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 28
    GAAP Reconciliation
  29. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 29
    CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Reported earnings (loss) per share - GAAP (0.30) 0.64 (0.44) (0.41) (1.02) 1.20 0.91 1.28…
  30. UBS 2015 Natural Gas & Electric Utilities Conference – Cms Energy – slide 30
    CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2014 2015 2016 2017 2018 2019 Consumers Operating Income + Depreciation & Amortization 1,813 1,885 1,955 2,081 2,194 2,358…

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