Cms Energy Corporation · NYSE:CMS
Cms Energy — Non-Deal Roadshow (July 2015)
32 slides from Cms Energy's roadshow presentation, Jul 8, 2015
Slide 1: CMS Energy
CMS CUS EVERGY
Slide 2: Investor Meetings July 9 & 10, 2015
Cross Winds Energy Park Ludington Pumped Storage Ray Compressor Station Fourth largest in the world #1 LDC in gas storage #2 in renewable sales in the Great Lakes area Investor Meetings July 9 & 10, 2015 Exhibit 99.1
Slide 3: Forward-looking statements and non-GAAP disclaimer
This presentation is made as of the date hereof and contains “forward-looking statements” as defined in Rule 3b-6 of the Securities Exchange Act of 1934, Rule of the Securities Act of 1933, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. All forwa
Slide 4: Business model is delivering results
. . . . business model is delivering results. • Senator Nofs introduced energy bill – Improvement to 2008 Law • PA 169 (cost of service) approved – Improves industrial rate competitiveness by 4% • MISO Zone 7 capacity shortfall 1,300 MW – More upside to ten-year $15.5 billion capital investment plan
Slide 5: Our growth engine: $15.5 billion plan with upside
. . . . next 10 years even brighter than last 10 year record! Billion Supported By UPSIDES create headroom PARTNERS in progress PASSION to improve for customers AND owners SELF-FUNDED! Our Growth Engine $15.5 More “upside” $5 bil NOT yet in Plan! (2015-2024 Capex) (Investment, Sales, Cost, & DIG) (C
Slide 6: Michigan energy law improvements
. . . . contains necessary improvements for Michigan Energy Law. • “Fair Choice,” no subsidies • 10% cap and queue remain • Minimum of three years firm capacity requirement • One-time election, “one-way door” • Integrated Resource Plan (IRP) replaces Certificate of Necessity • 270 day approval proce
Slide 7: Consistent leadership provides stability
. . . . provide stability. John Quackenbush (R), Chairman Term Ends: July 2, 2017 Greg White (I) Term Ended: July 2, 2015 Sally Talberg (I) Term Ends: July 2, 2019 Commission Powering Michigan’s Comeback Governor Rick Snyder Energy Committee Chairs Senator Mike Nofs House Rep. Aric Nesbitt Consisten
Slide 8: Affordable for residential and improving for industrial customers
. . . . affordable for residential and improving for industrial customers. -20 -10 Residential Bills Industrial Rates (13)% (15)% (19)% (13)% National Avg % Better Worse Rates Rates & Fuel -30 -20 -10 26% 21% 11% Midwest Avg % 4% Better Worse Rates & Fuel Flat (8)% Plus Plus (17)% Policy could elimi
Slide 9: Peer comparison creating opportunity for the next ten years
. . . . creating an opportunity for the next ten years. Amount (billions) $1.8 CMS Peers _ _ _ _ _ a Based on December 31, 2014 information percent of market cap Source: 10K; actual amounts through 2014 smoothed for illustration 14% 15% 16% 12% 20% 15% Capex Liquidity Cash Flow (oper) Consumers Ener
Slide 10: Opportunity for another 30% with no big bets
. . . . opportunity for another 30%, with no “big bets” over ten years! 2015-2024 2005-2014 $10.7 bil $15.5 bil Opportunity $20 + bil
Slide 11: Expanding one of the largest gas systems
. . . . expanding one of the largest systems in the country. $2.9 Amount (bils) $5.6 Capital Investment +93% Pipeline Integrity Civic Improvement Capacity & Deliverability Compression & Other Infrastructure New Customers Gas service area Transmission line Compressor stations Storage fields Interconn
Slide 12: Investing $5.6 billion over the next years
. . . . investing $5.6 billion over the next 10 years. Main Replacements 800 miles $1 billion Modernization 6 city gates, 7 regulation stations, 24 relief valves New Connections 100,000 customers $550 million Replace Transmission Mains 275 miles More Conversions 70,000 customers Compression 35,000 h
Slide 13: Generation capacity emerging incrementally
. . . . emerging incrementally with replacements not yet in plan! PPA 2,600 capacity ~30% 540 MW Owned 6,000 Owned 8,820 PPA 580 ~800 MW 1,240 MW MW ~8,600 MW 410 MW Shortfall 780 MW ~9,400 MW 11,000 Capacity Growth Over Next Ten Years PPA’s Expire Lower customer bills 201X Today Future
Slide 14: Adding value to our DIG plant
. . . . adding value to our “DIG” plant. $0.50 $2.00 $4.50 $7.50 Capacity price ($ kW per month) Was (mils) Upside Scenarios (mils) $55 $35 New Business • Long - term E nergy • 250 MW at $4.00 per kWm (6/14) • 250 MW at $6.02 per kWm (4/15) • Recent Capacity • Long-term > $3.30 • Near-term $4.50 Ups
Slide 15: Economic Growth
Fconomic Growth.... OMS ENERGY o D D |
Slide 16: Cost savings provide more headroom for capital investment
. . . . provide more headroom for more capital investment. Down 10% $1.1 bil $0.9 bil $1.0 bil • Coal to Gas Switching (Zeeland) • Smarter Benefit Plans • Productivity/Attrition • Coal to Gas Switching (Jackson) • “Pole Top” Hardening • Productivity/Smart Energy Down 7% Inflation 2% Inflation 2%
Slide 17: Cost savings accelerated; funding investment and reducing risk
. . . . accelerated; funding investment and reducing risk. O&M Trend vs Peers O&M Cost Savings FAST START! Attrition $ - $ - Productivity (Coal Gas) - - “Pole Top” Hardening - - Smart Meters - - Eliminate Waste (UA’s) - - Mortality Tables & Discount Rates +50 + 50 Service Upgrades +10 + 50 Net Savin
Slide 18: Sustainable future growth even easier with upsides
. . . . even easier, with lots of upsides. Sustainable Future Growth Investment (bils) O&M Reductions Sales Growth Energy Policy Future Shines Bright $6.4 (10)% +1% $7.6 (7)% + ½ % Past Performance Next 5 Years Improved Law (2010-2014) (2006-2014) (2010-2014) Law Last 7 Years Next 5 Years +7% /year
Slide 19: Customer satisfaction continues to improve rapidly
. . . . continues to improve rapidly. Electric st Quartile nd Quartile th Quartile 2010 2012 2014 2016 rd Quartile Gas st Quartile nd Quartile th Quartile rd Quartile 2010 2012 2014 2016 Present Rank Present Rank Residential Business Residential Business #6 #3 #2 #9
Slide 20: Positioned to be in a good carbon position
. . . . to be in a good carbon position. Carbon Tonnage Reduction (Preliminary) 2005 Baseline Million Tons of CO Consumers Energy Clean Power Plan Projected emission level “Implied” EPA Target
Slide 21: Combined cycle gas is the most attractive new source of supply
. . . . combined cycle gas is the most attractive new source of supply. 9¢ 6¢ Coal Nuclear Levelized cost of new build (¢/kWh) Gas price= $3.00 $4.50 $6.00 W/ tax credit W/o tax credit W/ emission controls Today $3.00 per watt 5¢ 6¢ 7¢ 10¢ 12¢ 22¢ 8¢ 11¢ Back -up Wind Combined Cycle Gas Plant Reside
Slide 22: Capital Expenditures
Capital Expenditin CUS EMERY, 2045-2019 2020-2024 2015-2024 2015 2016 27 2018 2019 Subtotal Subtotal Total (mils) (mils) (mils) (mils) (mils) (mils) (mils) (mils) New Generation (includes Renewables) $ mM $ 24 § 52 § 64 § 14 $M SHA S158 Environmental 254 98 136 153 22 853. 139 992 Gas Infrastructure
Slide 23: Evolving to cleaner generation while becoming more cost competitive
Coal 34% Gas 32% Coal 24% Gas 37% . . . . evolving to cleaner generation while becoming more cost competitive. Coal 41% Gas 31% Pumped Storage 11% Renewables 9% Oil 6% Nuclear 8% Pumped Storage 12% Renewables 10% Purchases 3% Oil 6% Nuclear 8% Pumped Storage 11% Renewables 3% Oil 6% Nuclear 8%
Slide 24: Cash flow up $½ billion or 30% over five years
. . . . up $½ billion or 30% over five years! 15% (0.5) 0.0 0.5 1.0 1.5 2.0 2.5 Amount (bils) $ Investment Cash flow before dividend _ _ _ _ _ a Non-GAAP NOLs & Credits $0.7 $0.7 $0.5 $0.4 $0.3 $0.2 $2.2 Interest, working capital and taxes $1.8 $2.4 $1.68 Pct of Market Cap (as of Dec. 2014) Cap Inv
Slide 25: Credit ratings show continuous improvement
. . . . show continuous improvement. • Consistent Performance • Less Risk • Customer Focus • Constructive Regulation • Good Energy Policy Reflects Present Prior Scale S&P Moody’s S&P (Dec. ‘14) Moody’s (Mar. ‘15) A+ A1 A A2 A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+ Ba1 BBB Baa2 BBB- Baa3 BB+ Ba1 BB Ba2
Slide 26: Sensitivities reflect strong risk mitigation
. . . . reflect strong risk mitigation. _ _ _ _ _ a Reflect 2015 sales forecast; weather adjusted 2015 Impact Status Sensitivity EPS OCF Sales a • Electric (38,093 GWh) • Gas (302.6 Bcf) + 1% + + $0.05 + 0.07 + $ 20 + Gas prices (NYMEX) + 50¢ ROE (authorized) • Electric (10.3%) • Gas (10.3%) + 10 bp
Slide 27: Autos only 5% of gross margin
. . . . “autos” only 5% of gross margin. Commercial 33% • Hemlock Semiconductor • General Motors • Nexteer Automotive Corporation • Gerdau MacSteel • Denso International • Packaging Corporation of America • Meijer • State of Michigan • Spectrum Health • AT&T Percentage of electric gross margin is 2.
Slide 28: 2015 Gas and Electric Rate Cases
2015 Gas And Electric Rate Cases.... CMS ENERGY >
Slide 29: Reported earnings per share GAAP to adjusted
Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.42 $1.66 $1.74 After-tax items: Electric and gas utility 0.21 (0.39) - - (0.07) 0.05 0.33 0.03 - 0.17 - - Enterprises 0.74 0.62 0.04 (0.02) 1.25 (0.02) 0.09 (0.03) (0.11) (0.01) * 0.03 Corporat
Slide 30: Reconciliation of Gross Operating Cash Flow to GAAP
Consumers Operating Income + Depreciation & Amortization 1,813 $ 1,940 $ 1,955 $ 2,081 $ 2,194 $ 2,358 $ Enterprises Project Cash Flows Gross Operating Cash Flow 1,833 $ 1,960 $ 1,983 $ 2,131 $ 2,246 $ 2,413 $ (386) (280) (583) (631) (646) (713) Net cash provided by operating activities 1,447 $ 1,68
Slide 31: Our model; our plan - investor information
July 2015 OUR MODEL; OUR PLAN INVESTOR INFORMATION CMS Energy Corporation Phil McAndrews (517) 788-1464 Investor Relations Department Travis Uphaus (517) 768-3114 One Energy Plaza, Jackson, MI www.cmsenergy.com • 12 year track record (EPS and dividend growth) • Capex -- 100% organic (no “big bets”)
Slide 32: 2015 Update: adjusted EPS, capex and energy policy
• • • • $20 + B Adjusted EPS Gross OCF Dividend CapEx CMS O&M Cost Electric Sales (Ind. /Total ) Energy Policy 10% 16% 21% • Energy efficiency standards • File and implement • 10% renewables by 2015 • 10% ROA cap • Adaptability • Reliability • Affordability • Environmentally protective 2015 Update 2