Dte Energy Company · NYSE:DTE
Dte Energy — FY2020 Earnings Presentation
34 slides from Dte Energy's earnings presentation, Feb 19, 2021
Slide 1: DTE Year End 2020 Earnings Conference Call
DTE YEAR END 2020 EARNINGS CONFERENCE CALL FEBRUARY 19, 2021
Slide 2: Safe harbor statement
Safe harbor statement The information contained herein is as of the date of this document. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as “anticipa
Slide 3: Participants
Participants Jerry Norcia – President and CEO David Slater – President and CEO-Elect, Midstream Dave Ruud – Senior Vice President and CFO Barbara Tuckfield – Director Investor Relations 3
Slide 4: DTE delivered for employees, customers and communities against a challenging backdrop
DTE delivered for employees, customers and communities against a challenging backdrop Achieved extraordinary safety and engagement performance in 2020 ✓ Safest year on record ✓ Ranked by Gallup among the top companies globally for employee engagement ✓ Implemented work from home for over half of our
Slide 5: Achieved significant success in 2020 across all business units
Achieved significant success in 2020 across all business units Delivered strong financial results Operating EPS ✓ Operating EPS1 growth of 14% from 2019; 8.8% above 2020 original guidance, continuing a trend of among best growth in industry 7.9% CAGR $7.19 ✓ Exceeded original guidance midpoint for 1
Slide 6: Positioned for success in 2021 and beyond
Positioned for success in 2021 and beyond Operating EPS 7% Focusing on continued growth in 2021 ✓ Continuing strong growth with 2021 operating EPS1 guidance providing $7.07 7% growth over 2020 original guidance $6.61 ✓ Utility growth from distribution, modernization and cleaner generation investment
Slide 7: DTE Electric progressed on key initiatives in 2020; accelerating distribution and generation investments
DTE Electric progressed on key initiatives in 2020; accelerating distribution and generation investments Electric investment Advanced our clean energy investments and plan to accelerate the modernization (billions) of our electric grid $14 • Progressed toward net zero carbon emissions target by 2050
Slide 8: DTE Gas progressed on key initiatives in 2020; replacing aging infrastructure
DTE Gas progressed on key initiatives in 2020; replacing aging infrastructure to reduce greenhouse gas emissions Gas investment (billions) Advanced our clean energy investments and upgrading and replacing aging $3.5 infrastructure Additional $3.0 $0.5 opportunity • Announced innovative program to ac
Slide 9: Midstream continuing track record of success; well-positioned for the future
Midstream continuing track record of success; well-positioned for the future Key markets Achieved success in 2020 • Placed LEAP in service ahead of schedule and under budget; Ontario Northeast Blue Union and LEAP executing on plan • Delivered solid operational results across existing platforms • Gen
Slide 10: Midstream will be a uniquely positioned C-corp with a strong leadership team
Midstream will be a uniquely positioned C-corp with a strong leadership team Executing Midstream separation • Establishes Midstream as an independent, natural gas midstream C-corp with assets in premium basins connected to major demand markets Seasoned leadership team with proven track record • Spin
Slide 11: 2020 operating earnings variance
2020 operating earnings1 variance (millions, except EPS) 2019 2020 Variance Primary drivers Higher residential sales and rate implementation offset DTE Electric $716 $813 $97 by rate base growth costs One-time O&M cost savings, rate implementation and DTE Gas 181 196 15 infrastructure recovery mecha
Slide 12: 2021 guidance provides 7% operating EPS growth over 2020 original guidance
2021 guidance provides 7% operating EPS1 growth over 2020 original guidance (millions, except EPS) 2020 original 2021 guidance Primary drivers guidance midpoint Distribution, modernization and cleaner generation DTE Electric $766 $826 - $840 investments Continued main renewal and other infrastructur
Slide 13: Maintaining long-term operating EPS growth of 5% - 7% while becoming a predominantly pure-play utility
Maintaining long-term operating EPS1 growth of 5% - 7% while becoming a predominantly pure-play utility DTE annualized proforma2 operating EPS excluding Midstream • 7.4% proforma (excluding Midstream) operating EPS growth from 2020 original guidance midpoint to 2021 guidance midpoint • Continuing 5%
Slide 14: Maintaining strong cash flow, balance sheet and credit profile
Maintaining strong cash flow, balance sheet and credit profile (billions) Planned equity issuances • Issued $173 million of equity in 2020 through internal 2021 - 2023 mechanisms • Strong investment-grade credit rating $1.3 − Spin transaction is credit enhancing allowing FFO1 / Debt2 target to be lo
Slide 15: Visit us: DTE Investor Relations 2020 ESG Report
VISIT US: DTE INVESTOR RELATIONS 2020 ESG REPORT 2019 - 2020 CORPORATE CITIZENSHIP HIGHLIGHTS
Slide 16: Appendix
Appendix DTE
Slide 17: Cash flow and capital expenditures
Cash flow and capital expenditures Cash flow Capital expenditures (billions) (millions) 2020 2021 2020 2021 actuals guidance1 actuals guidance1 Cash from operations2 $3.7 $3.0 DTE Electric Base infrastructure $872 $1,030 Capital expenditures (4.5) (4.2) Free cash flow ($0.8) ($1.2) New generation 84
Slide 18: Weather impact on sales
Weather impact on sales DTE Electric DTE Gas Cooling degree days Heating degree days 2019 2020 % Change 4Q 2019 4Q 2020 % Change 2019 2020 % Change Actuals 863 961 11% Actuals 2,289 2,100 (8%) 6,625 6,082 (8%) Normal 803 803 0% Normal 2,197 2,205 0% 6,340 6,389 1% Deviation Deviation from normal 7%
Slide 19: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric DTE Gas • General rate case final order (U-20561) • General rate case filed February 2021 (U-20940) − Effective: May 15, 2020 − Effective: January 1, 2022 − Rate recovery: $188 million − Rate recovery: $195 million − ROE: 9.9% − ROE: 10.25% − C
Slide 20: Environmental, social and governance efforts are key priorities
Environmental, social and governance efforts are key priorities; aspiring to be the best in the industry Environmental Transitioning towards net zero greenhouse gas emissions Delivering clean and reliable energy to customers Protecting our natural resources Social Focusing on the diversity, safety,
Slide 21: Award-winning commitment to being a top ESG employer in the country
Award-winning commitment to being a top ESG employer in the country Superior corporate citizenship Ambassadors Championing Veteran friendly employer America’s Most Responsible and community involvement Excellence Award for commitment Companies 2021 to supporting minority businesses Gallup Great Work
Slide 22: Environmental sustainability is critical to the creation of long-term shareholder value
Environmental sustainability is critical to the creation of long-term shareholder value Driving collaboration in the fight against climate change • Leading by example with aggressive goal to achieve net zero carbon emissions by 2050 • Active participant in coalitions that advocate for strong environ
Slide 23: More than doubling renewable energy by 2024
More than doubling renewable energy by 2024 Cleaner generation mix 1% 2% 17% 20% 25 – 30% Renewables 18% 20 - 25% Natural gas 20% 77% 20% Nuclear & other 45% 30% Coal 2005 2023E 2030E River St. Trenton Belle Monroe Rouge Clair Channel River 2021 2022 2030 2040 23
Slide 24: Committed to diversity, equity and inclusion, creating an environment where all are welcome
Committed to diversity, equity and inclusion, creating an environment where all are welcome Office of Diversity, Equity and Inclusion 9 active employee resource groups that promote a safe and • Led by our CEO and key executive leaders welcoming environment, and offer professional development, networ
Slide 25: Governance framework provides shareholder rights and enables sustainable value creation
Governance framework provides shareholder rights and enables sustainable value creation ✓ Lead Independent Director ✓ Stock ownership guidelines for non-employee Directors ~9yr average tenure 3 Directors since 2018 added ✓ Majority voting standard Board diversity ✓ Annual Director elections 2 Best-i
Slide 26: Spin transaction underway with completion expected mid-2021
Spin transaction underway with completion expected mid-2021 • Spin-off of Midstream designed to be tax-free • Immediately after closing, DTE shareholders will: Structure − Retain current DTE shares − Receive pro-rata dividend of Midstream shares • Expected close mid-year 2021 • Multiple workstreams
Slide 27: Numerous benefits for DTE Energy as a predominantly pure-play regulated utility
Numerous benefits for DTE Energy as a predominantly pure-play regulated utility Enhanced strategic ✓ Premier, predominantly pure-play regulated electric and natural Operating earnings transformation focus gas utility 70% 90% Investments in ✓ Substantially growing rate base with $17 billion of utilit
Slide 28: Midstream will be well-positioned with experienced leadership and unique, high-quality assets
Midstream will be well-positioned with experienced leadership and unique, high-quality assets Enhanced strategic ✓ Positioned to be a premier, publicly traded natural gas midstream company with high-quality assets strategically focus located in premium basins connected to major demand markets Experi
Slide 29: Spin generates a combined dividend expected to be higher than DTE's current dividend
Spin generates a combined dividend that is expected to be higher than DTE’s current, pre-transaction dividend ($ per share) Annualized dividend • Increased annualized dividend per share every year since ~$4.70 - $4.803 2010 $4.341 • 7% dividend increase in 2021 • Spin generates a combined dividend t
Slide 30: 2020 Energy Trading reconciliation of operating earnings to economic net income
2020 Energy Trading reconciliation of operating earnings1 to economic net income (millions) Energy Trading reconciliation • Economic net income equals economic gross margin3 minus O&M expenses and taxes 2019 2020 Operating earnings $30 $39 • DTE Energy management uses economic net income as one of t
Slide 31: 2019 - 2020 reconciliation of reported to operating earnings and operating EPS
2019 - 2020 reconciliation of reported to operating earnings (non-GAAP) and operating EPS (non-GAAP) Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses oper
Slide 32: 2008 reconciliation of reported to operating EPS (non-GAAP)
2008 reconciliation of reported to operating EPS (non-GAAP) Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance
Slide 33: Reconciliation of reported to operating earnings (non-GAAP)
Reconciliation of reported to operating earnings (non-GAAP) Use of Operating Earnings Information – Operating earnings exclude non-recurring items, certain mark-to-market adjustments and discontinued operations. DTE Energy management believes that operating earnings provide a more meaningful represe
Slide 34: Adjusted EBITDA and distributable cash flow (DCF) are non-GAAP measures
Adjusted EBITDA and distributable cash flow (DCF) are non-GAAP measures (millions) Adjusted EBITDA is calculated using net income, the most comparable GAAP measure and adding back expenses for interest, taxes, depreciation and amortization. Adjusted EBITDA also includes an adjustment for DTE’s propo