Cms Energy Corporation · NYSE:CMS
Cms Energy — Edison Electric Institute 43rd Annual Financial Conference (November 2008)
22 slides from Cms Energy's conference presentation, Nov 7, 2008
Slide 1: Edison Electric Institute 43rd Annual Financial Conference
Edison Electric Institute 43rd Annual Financial Conference November 11, 2007 David W. Joos President and Chief Executive Officer Thomas J. Webb Executive Vice President and Chief Financial Officer Growing Forward
Slide 2: Forward-looking statements
This presentation contains "forward-looking statements" as defined in Rule 3b-6 of the Securities Exchange Act of 1934, as amended, Rule 175 of the Securities Act of 1933, as amended, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. They should be
Slide 3: Growing Forward
Consistent financial performance Fair and timely regulation Utility investment Customer value Safe, excellent operations Growing Forward
Slide 4: What's Top of Mind?
What's Top of Mind? Financial markets and economy Sales and uncollectibles Pension funding Capital spending plans Earnings growth 2008 adjusted EPS guidance confirmed at $1.20.
Slide 5: Energy Legislation
Energy Legislation Bills balance need for regulatory certainty with customer interests. File and implement ratemaking with forward test year Cap on choice Rate deskewing Certificate of Necessity Renewables Energy efficiency
Slide 6: Regulatory Update
Regulatory Update Gas Rate Case U-15506 Seeking $91 million base rate increase; 11% ROE Staff recommends $36 million; 10.45% ROE Major differences: Amount (mils) Sales assumption $10 Energy efficiency program (recovered elsewhere) 9 Lower ROE 8 Lower working capital (gas prices) 7 Lower incomes taxe
Slide 7: Utility Growth Investment Plan
2009-13 (mils) Base capital $ 3,800 Choices in Plan Coal plant $ 1,150 AMI 700 Renewables/energy efficiency 375 Electric reliability and other 400 Gas compression/pipelines 250 Total Choices in Plan $ 2,875 Total Capital 2009-13 $ 6,675 Investment plan maximizes customer value and provides 6%-8% EPS
Slide 8: Working to stay ahead of the curve
Nation Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb- 09 Mar-09 CMS Working ... 2007 2008 2009 .... to stay ahead of the curve. Monoline collapse (11/07) Credit and stock market implosion (9/15) CMS Completed $130 million Monoline
Slide 9: Liquidity Outlook
Liquidity Outlook Twenty-one banks committed to credit facilities of $1.2 billion, with only one bank (after consolidations) having 10%. $1.3 Amount (bils) $ $1.0 Gas Inventory Gas Inventory Credit Facilities Revolvers AR Program Cash 2008 2009 2010 Maturities (mils) Utility - - $200 - $150 - - $308
Slide 10: Sales Trend and Cash Flow Risks and Recovery
Sales Trend (Weather Adjusted) Electric Planning for recession in 2009. Cash Flow Risks and Recovery 2009 1975 1986 1997 2008 7% Decline over three years ('79 -'82 recession) Prior Outlook Plan Plan w/o HSC +2% 0% - -3% 0 2009 (mils) Economy-related Risks Lower sales margin (net of relief) (20) $ Pe
Slide 11: Retirement Plans Exposure
Retirement Plans Exposure 2008 2009 Qualified Plan EPS $ - $ - Cash flow (mils) Base Plan $ (50) Incremental plan (160) Total $(210) Memo: Minimum required contribution $ (70) Nonqualified Plan EPS $(0.03) $ - Cash flow (mils) - - Exposure Qualified plan exposure from asset decline offset by lower l
Slide 12: 2008 Adjusted (non-GAAP) Guidance
2008 Adjusted (non-GAAP) Guidance Despite economic turmoil, ongoing results on track to meet full year adjusted EPS guidance of $1.20. $1.17 with unrealized loss on nonqualified plan $1.20 $1.20 11¢ (11)¢ (4)¢ 4¢ 3¢ (3)¢ Target Sales & Rates Storms & Uncollectibles SAP Launch Resource Conservation P
Slide 13: 2008 Sensitivities
2008 Sensitivities EPS Cash Flow (mils) Sales Electric sales change 200 Gwh (.5%) +/- 2¢ +/- $8 Gas sales change 4 Bcf (1.3%) +/- 2 +/- 8 Uncollectibles up 10% (from $38 million) (1) (4) Cash conservation * + 20 _ _ _ _ *less than 0.5¢
Slide 14: Liquidity and Business Strategy
Liquidity and Business Strategy Protect near-term liquidity Access capital market in good windows - be flexible Accelerate Consumers FMB Replace CMS convertibles Extend and add revolver capacity Continue strong risk management Implement cash conservation Act now Be ready to go Stay ahead of curve.
Slide 15: What Makes CMS Different?
What Makes CMS Different? Recent State legislation provides framework for growth Diversified investment opportunities boost rate base and EPS Competitive customer rates Solid liquidity position, no need to issue equity in near term NOL and AMT credits add value Predictable track record 6% - 8% EPS g
Slide 16: Appendix
Appendix
Slide 17: 2008 Third Quarter EPS By Business Segment
2008 Third Quarter EPS By Business Segment Results Adjusted third quarter 2008 EPS up 20¢ from 2007. By Business Segment Appendix 2008 2007 Reported -- (GAAP) 34¢ 34¢ Less: Assets sold (4)¢ (25)¢ Legacy legal cost and other - - 4 Unrealized loss on nonqualified plan 3 - - Subtotal (1)¢ (21)¢ Adjuste
Slide 18: 2008 Third Quarter Adjusted (non-GAAP) EPS
2008 Third Quarter Adjusted (non-GAAP) EPS Utility Enterprises + Parent 15¢ 5¢ Rate increase 29¢ Sales - Weather (4) - Economy (4) Cost and other (10) Total 11¢ Restructuring benefits continue to flow to bottom line. with unrealized loss on nonqualified plan GAAP 34¢ 34¢ Appendix 30¢ 13¢ 11¢ 4¢ 33¢
Slide 19: Debt Maturity Profile
Debt Maturity Profile Millions $ Cash & Credit Facilities $1,190 $1,155 $1,050 Parent 550 615 600 Utility 640 540 450 Backup capacity to cover Parent debt refinancing in place, if not needed for possible convertible tender. Convertibles Convertibles CMS Energy Consumers Energy $300 Appendix $350 $30
Slide 20: 2008 Cash Flow (non-GAAP) Forecast
2008 Cash Flow (non-GAAP) Forecast CMS Energy Parent Consumers Energy $235 _ _ _ _ _ a Includes other _ _ _ _ _ b Includes cost of removal and capital leases Liquidity strong, counterparty gross exposure $10 million. Appendix Cash at year end 2007 136 $ Sources Consumers Energy dividends/tax sharing
Slide 21: 2008 Financial Targets
2008 Financial Targets Target Adjusted (non-GAAP) EPS: without unrealized loss on nonqualified plan $1.20 ? with unrealized loss on nonqualified plan 1.17 Free cash flow before capex and dividends (mils) 400 ? Capital structure (year-end) FFO/Average debt 16% ? Parent debt (bils) a $1.7 ? Utility eq
Slide 22: GAAP Reconciliation
GAAP Reconciliation CMS Energy Corporation Earnings By Quarter and Year GAAP Reconciliation (Unaudited) (In millions, except per share amounts) 2007 1Q 2Q 3Q Sept YTD 4Q Dec YTD Reported net income (loss) — GAAP ($215 ) $ $ ($100 ) ($127 ) ($227 ) After-tax items: Electric and gas utility — — — Ente
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