DTE Energy Company · NYSE:DTE
DTE Energy — Q2 2015 Earnings Presentation
28 slides from DTE Energy's earnings presentation, Jul 24, 2015
Slide 1: 2nd Quarter 2015 Earnings Conference Call
2nd Quarter 2015 Earnings Conference Call July 24, 2015
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. Many factors may impact forward-looking statements including, but not limited to, the following: impact of regulation by the EPA, FERC, MPSC, NRC and CFTC as well as other applicable governmental proceedin
Slide 3: Participants
Participants • Peter Oleksiak – Senior Vice President and CFO • Jeff Jewell – Vice President and Controller • Mark Rolling – Vice President and Treasurer • Anastasia Minor – Executive Director, Investor Relations 3
Slide 4: Overview / Earnings Results / Cash Flow agenda
• Overview • Second Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 4
Slide 5: Our business strategy is fundamental to how we create value
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by infrastructure 5% - 6% Annual investments EPS Growth Strategic and transparent growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive reg
Slide 6: We continue to make progress on many fronts
We continue to make progress on many fronts 2015 operating EPS guidance increase Dividend per share increase Michigan energy policy 2015 utility rate proceedings ‒ Self implementation of electric general rates ‒ Electric business cost of service rate order Non-utility projects ‒ Millennium upda
Slide 7: Economic indicators continue to improve in Michigan and Detroit
Economic indicators continue to improve in Michigan and the City of Detroit Lowest Michigan unemployment since 2001 #7 most competitive state for job creation* Michigan has most new manufacturing jobs since 2009** Detroit Metro #8 in number of new or expansion projects* * Source: Site Selection maga
Slide 8: Governor appoints new commissioner to Michigan Public Service Commission
Governor Snyder appoints new commissioner to Michigan Public Service Commission • Norm Saari appointed to a six year term beginning August 2, 2015 • “Norm has had a distinguished career in the utility industry as well as in public service, and he brings decades of experience to the Michigan Public S
Slide 9: Michigan leaders are working toward a constructive energy policy
Michigan leaders are working toward a constructive energy policy Retail Open Access (ROA) Options Current 10% cap with Fully 10% cap capacity requirements regulated Proposing... • 10% ROA cap with capacity requirements • Long-term, comprehensive generation plan • Focus on energy efficiency Governor
Slide 10: Raising our 2015 operating EPS guidance to midpoint of $4.72
We are raising our 2015 operating EPS* guidance to a midpoint of $4.72 per share (dollars per share) 2015 Operating EPS Guidance Midpoint Growth segments $4.66 Total DTE Energy $4.72 $4.72 $4.60 Operating EPS* 6.7% CAGR $4.66 2009 – 2014 $4.09 $3.94 $3.75 $3.64 $3.33 Operating 5.8% increase EPS Divi
Slide 11: Increasing 2015 operating earnings guidance due to strong first half
We are increasing our 2015 operating earnings* guidance due to strong performance in the first half of the year (millions, except EPS) 2015 2015 2015 YTD 2Q Prior Revised Guidance Drivers Actuals Guidance Guidance DTE Electric $247 $554 - $570 $554 - $570 DTE Gas 104 128 - 134 128 - 134 Gas Stor
Slide 12: Overview / Earnings Results / Cash Flow agenda
• Overview • Second Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 12
Slide 13: DTE Energy Second Quarter 2015 Operating Earnings Variance
DTE Energy Second Quarter 2015 Operating Earnings Variance (millions, except EPS) Operating Earnings* Drivers 2Q 2014 2Q 2015 Change DTE Electric DTE Electric $ 129 $ 111 $ (18) • Rate base growth expense and unfavorable weather, partially offset by DTE Gas (4) (7) (3) lower O&M Gas Storage & Pipeli
Slide 14: Energy efficiency programs offset economic sales growth
Strength of our energy efficiency programs offsets economic sales growth Total Service Area Electric Sales* • Population and economic growth 0.4% (1.1%) (0.7%) offset by temporary industrial net change plant idling resulted in 0.4% 23,228 increase GWh 23,054 GWh • The strength of our residential ene
Slide 15: Overview / Earnings Results / Cash Flow agenda
• Overview • Second Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 15
Slide 16: YTD 2015 Cash Flow and Capital Expenditures
YTD 2015 Cash Flow and Capital Expenditures (billions) (millions) Cash Flow Summary Capital Expenditures Summary YTD YTD YTD YTD 2014 2015 2014 2015 Cash From Operations* $1.1 $1.2 DTE Electric Operational $584 $593 Capital Spending (1.1) (1.2) Environmental 82 59 Free Cash Flow $0.0 $0.0 Renewable
Slide 17: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* • 2015 financing plan is on track Target 50% - 53% ‒ Issued ~$200 million of equity YTD; targeting $800 to $900 million 2015 - 51% 53% 2017 49% 51% ‒ DTE Energy issued $300 million of 7-year, 3.30% long-term debt in June 2015
Slide 18: Overview / Earnings Results / Cash Flow agenda
• Overview • Second Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 18
Slide 19: Summary
Summary • We are confident in this year’s performance and are increasing our 2015 operating EPS* guidance midpoint to $4.66 for our growth segments and $4.72 for DTE Energy • We increased our annual dividend 16 cents to $2.92 per share, a 5.8% increase • On track to meet balance sheet and cash flow
Slide 20: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 20
Slide 21: Appendix
se DTE Energy: Appendix
Slide 22: DTE Electric Variance Analysis
DTE Electric Variance Analysis (millions) Operating Earnings* Variance Drivers • Colder weather in 2Q 2014 than 2Q 2015 $129 ($5) ($15) Variance to normal weather $2 $111 - 2Q 2014: $3 - 2Q 2015: ($2) • Rate base growth (property taxes, depreciation and interest) • Other primarily lower O&M expense
Slide 23: 2015 Cash Flow and Capital Expenditures Guidance
2015 Cash Flow and Capital Expenditures Guidance (billions) (millions) Cash Flow Summary Capital Expenditures Summary 2014 2015 2014 2015 Actual Guidance Actual Guidance Cash From Operations* $1.8 $1.7 DTE Electric Operational $1,187 $1,270 Capital Spending (2.1) (2.6) Environmental 169 100 Free Cas
Slide 24: Second Quarter Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Second Quarter Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) • Economic net income Operating Earnings* $16 $19 equals economic gross (millions, after-tax) margin*** minus O&M expenses and taxes $3 2Q 2015 2Q 2014 • DTE Energy management uses economic net
Slide 25: Year-to-Date Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Year-to-Date Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $24 $39 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) $15 margin*** minus O&M expenses and taxes YTD 2015 YTD 2014 • DTE Energy management uses economic net
Slide 26: Second Quarter 2015 and YTD Reconciliation of Reported to Operating Earnings
Second Quarter 2015 and June Year to Date Reconciliation of Reported to Operating Earnings 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 earn
Slide 27: 2009 – 2014 Full Year Reconciliation of Reported to Operating Earnings
2009 – 2014 Full Year Reconciliation of Reported to Operating Earnings 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
Slide 28: Reconciliation of Other Reported to Operating Earnings
Reconciliation of Other Reported to Operating Earnings 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 meas