Dte Energy Company · NYSE:DTE
Dte Energy — Corporate Update (January 2021)
44 slides from Dte Energy's corporate update, Jan 15, 2021
Slide 1: DTE Energy Business Update
DTE ENERGY BUSINESS UPDATE JANUARY 15, 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: Overview
Overview Spin transaction Long-term growth Environmental, Social and Governance (ESG) Appendix 3
Slide 4: Positioned to deliver significant shareholder value
Positioned to deliver significant shareholder value Strategic separation of DTE and Midstream 1 • Positions DTE as a predominantly pure-play utility ✓ ~90% of operating earnings2 and investments in utility operations ✓ 5-year utility investment $2 billion higher than prior plan ✓ Delivering clean, s
Slide 5: Spin transaction
Overview Spin transaction Long-term growth Environmental, Social and Governance (ESG) Appendix 5
Slide 6: Delivering greater shareholder value
Delivering greater shareholder value by creating a predominantly regulated utility and a uniquely positioned high-quality midstream business • Positions DTE Energy as a high-growth, predominantly pure-play, best-in-class regulated Michigan-based utility • Establishes Midstream as an independent, nat
Slide 7: Transaction overview
Transaction overview • 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 well underway Timing / approvals • Subj
Slide 8: 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 $17 billion of utilit
Slide 9: Midstream will be well-positioned
Midstream will be well-positioned with experienced leadership and unique, high-quality assets Enhanced strategic ✓ Positioned to be a premier, publicly traded natural gas midstream company with high-quality assets strategically focus located in premium basins connected to major demand markets Experi
Slide 10: Long-term growth
Overview Spin transaction Long-term growth Environmental, Social and Governance (ESG) Appendix 10
Slide 11: Delivering premium results through disciplined planning and management
Delivering premium results through disciplined planning and management Delivering 2008 - 2019 operating EPS1 CAGR near Delivering total shareholder return2 well above top of Midwest pure-play utility peers industry average 422% 8.1% 7.3% 6.5% 285% 5.6% 5.6% 3.4% 79% 5-year 10-year 15-year Midwest pu
Slide 12: Maintaining operating EPS growth of 5% - 7%
Maintaining operating EPS1 growth of 5% - 7% while becoming a predominantly pure-play utility DTE annualized proforma2 operating EPS excluding Midstream • 7.4% proforma operating EPS growth from 2020 original guidance midpoint to 2021 DTE early outlook midpoint • Continuing 5% - 7% long-term operati
Slide 13: Long history of finding opportunities to improve the customer experience
Long history of finding opportunities to improve the customer experience with incremental investments at the utilities DTE Electric DTE Gas operating earnings annual operating earnings annual growth percentage growth percentage • Average annual operating earnings1 growth of 7% - 8% at DTE Electric a
Slide 14: Spin generates a combined dividend higher than current
Spin generates a combined dividend that is expected to be higher than DTE’s current, pre-transaction dividend ($ per share) Annualized dividend • Increased annualized dividend per share every year since ~$4.70 - $4.803 2010 1 $4.34 • 7% dividend increase in 2021 • Spin generates a combined dividend
Slide 15: Maintaining strong cash flow, balance sheet and credit profile
Maintaining strong cash flow, balance sheet and credit profile (billions) Planned equity issuances 2021 - 2023 • Strong investment-grade credit rating − Currently maintaining 18% FFO1 / Debt2 $1.3 − Spin transaction is credit enhancing allowing for ~16% FFO / Debt target Convertible • $3.5 billion o
Slide 16: Distinctive continuous improvement culture
Distinctive continuous improvement culture drives strong track record of cost management vs. peer average All 10,000+ employees engaged in CI to surface and Average annual percentage change in O&M costs solve problems 2008 - 2019 Electric utility1 • Controlling costs while improving the customer exp
Slide 17: Two high-quality utilities operating in a constructive regulatory environment
Two high-quality utilities operating in a constructive regulatory environment Ranking of U.S. regulatory jurisdictions1 DTE Electric ROE (Michigan in tier 1) Tier 1 7 10.3% 10.3% 10.1% 10.0% 10.0% Tier 2 9 2015 2016 2017 2018 2019 Tier 3 18 Authorized ROE Earned ROE DTE Gas ROE Tier 4 9 Tier 5 8 10.
Slide 18: Electric and gas utilities targeting net zero emissions by 2050
Electric and gas utilities targeting net zero emissions by 2050 DTE Electric delivering clean and reliable energy to customers DTE Electric carbon emissions reductions • 80% carbon emissions reduction by 2040; net zero by 2050 Percent carbon emission reduction • $3 billion invested in renewable ener
Slide 19: DTE Electric: increasing generation and distribution investments
DTE Electric: increasing generation and distribution investments by $2 billion in 5-year plan to provide customers cleaner, more reliable energy (billions) Electric investment Cleaner energy $14 ✓ Net zero carbon emissions target by 2050 $2 $12 ✓ 80% carbon emissions reduction target by 2040 ~$1 Inf
Slide 20: DTE Gas: replacing aging infrastructure
DTE Gas: replacing aging infrastructure to reduce methane emissions while improving performance, cost and productivity (billions) Main renewal Gas investment ✓ Targeting net zero greenhouse gas emissions by 2050 $3.5 Additional ✓ Minimizing leaks to reduce costs and improve customer satisfaction $3.
Slide 21: Midstream: diversified, long-term contracts and well-capitalized balance sheet
Midstream: diversified, long-term contracts and well-capitalized balance sheet bolster cash flow quality and growth potential Percentage of revenue from demand-based Unique midstream investment opportunity contracts or MVCs / flowing gas • Only independent, mid-cap, gas-focused midstream company wit
Slide 22: Highly focused, independent gas pipeline, storage and gathering company
Highly focused, independent gas pipeline, storage and gathering company with proven track record Consistently delivering strong financial results • Solid adjusted EBITDA1 − $710 - $750 million in 2021 • Over $3.0 billion of cash generation since 2008; avoided raising additional debt and equity Posit
Slide 23: P&I operating earnings underpinned by RNG and cogeneration
P&I: operating earnings1 are underpinned by RNG and cogeneration growth opportunities (millions) Operating earnings Industrial energy services $147 - $163 ✓ Developing new cogeneration projects to improve customer $135 - $150 environmental attributes and lower energy costs Renewable energy ✓ Expandi
Slide 24: Environmental, Social and Governance (ESG)
Overview Spin transaction Long-term growth Environmental, Social and Governance (ESG) Appendix 24
Slide 25: Focusing on our employees, customers and communities
Focusing on our employees, customers and communities while delivering on our financial targets Employees • Ensuring the health and safety of our employees • Ranked among the top 3% globally for employee engagement by Gallup • Devoted to diversity, equity, inclusion and a discrimination-free culture
Slide 26: 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 27: Award-winning commitment to being a top ESG employer
Award-winning commitment to being a top ESG employer in the country Superior corporate citizenship Company diversity Veteran friendly employer Named as one of America’s best and community involvement large employers Gallup Great Workplace Award Inclusion of women-owned Overall excellence 8 consecuti
Slide 28: Environmental sustainability is critical
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 29: 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 29
Slide 30: A force for growth and prosperity in Michigan communities
A force for growth and prosperity in the Michigan communities we serve World class volunteerism improves our communities Our efforts include education and mentoring programs and contributes to employee engagement Partnering with a correctional facility to train inmates to Consistently recognized as
Slide 31: Helping employees, communities and customers through COVID-19
Helping employees, communities and customers through COVID-19 Employees Successfully implemented work from home for over half of our employees New procedures to ensure plant and employee safety Providing personal protective equipment for employees Communities Led $23 million initiative that provided
Slide 32: Health and safety of our people is a priority
Health and safety of our people is a priority • Multiple safety committees spanning all levels of the company providing input into seasonal safety plans, addressing unique challenges of each business unit • Regular employee safety training − Leading industry OSHA rate in 2020 with recordable injury
Slide 33: Committed to diversity, equity and inclusion
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 34: Building on the momentum of the last decade
Building on the momentum of the last decade, DTE has committed to procure $10 billion with Michigan-based companies over the next 5 years 2019 Michigan spend (millions) of the 5-year, $10 billion commitment in diverse- 35% owned businesses $13 $2.1B invested in Michigan businesses in 2019 $783M inve
Slide 35: Governance framework provides shareholder rights
Governance framework provides shareholder rights and enables sustainable value creation ✓ Lead Independent Director ✓ Stock ownership guidelines for non-employee Directors ~8yr average tenure 3 Directors since 2018 added ✓ Majority voting standard Board diversity ✓ Annual Director elections 83% 2 Be
Slide 36: Executive management compensation plan
Executive management compensation plan is aligned with our core priorities Priorities Performance-based compensation elements Annual incentive metrics Long-term metrics • Employee engagement Highly engaged employees • Employee safety Top decile customer • Customer satisfaction satisfaction • Custome
Slide 37: DTE ESG Reports & Disclosures
DTE ESG REPORTS & DISCLOSURES 2019 CDP Climate Change (Link) 2019 CDP Water Security (Link) 2019 Energy Waste Reduction Report (Link) 2019 Health & Well-being Report (Link) 2019 Integrated Resource Plan Summary (Link) 2019 - 2020 Corporate Citizenship Highlights (Link) 2019 - 2020 Task Force on Clim
Slide 38: Appendix
Overview Spin transaction Long-term growth Environmental, Social and Governance (ESG) Appendix 38
Slide 39: 2021 early outlook provides 7% operating EPS growth
2021 early outlook provides 7% operating EPS1 growth over 2020 original guidance (millions, except EPS) 2021 early outlook Primary drivers DTE Electric $826 - $840 Distribution and cleaner generation investments DTE Gas 202 - 212 Continued main renewal and other infrastructure improvements Gas Stora
Slide 40: 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 settlement approved August 2020 (U-20642) − Effective: May 15, 2020 − Effective: October 1, 2020 − Rate recovery: $188 million − Rate recovery: $110 million along with $20 mi
Slide 41: Energy industry leader with assets to stand on its own
Energy industry leader with the assets, resources and capabilities to stand on its own Key markets Pipelines • 900 miles of FERC regulated gas transmission lines providing Ontario Northeast connectivity to high-quality markets Storage • 91 Bcf of FERC regulated storage capacity • Capitalizing on str
Slide 42: Visibility into highly accretive Midstream growth projects
Visibility into highly accretive Midstream growth projects Platforms Regulation Phase Growth opportunities Blue Union Early Gathering build-outs Gathering build-outs / compression / LEAP System Early market connections NEXUS Pipeline FERC Early Compression / market connections Generation Pipeline PU
Slide 43: Adjusted EBITDA and distributable cash flow are non-GAAP measures
Adjusted EBITDA and distributable cash flow (DCF) are non-GAAP measures 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 proportional sha
Slide 44: Reconciliation of reported to operating earnings
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