Slide 1: Third Quarter 2017 Results & Outlook
Third Quarter 2017 Results & Outlook October 26, 2017 CMS MODEL: CONSISTENT PAST WITH A SUSTAINABLE FUTURE
Slide 2: 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 175 of the Securities Act of 1933, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. All f
Slide 3: Agenda
Agenda Business Update Patti Poppe People, Planet, Profit President & CEO PEOPLE PLANET PROFIT Performance -- The Consumers Energy Way Financial Results & Outlook Rejji Hayes Third Quarter; Full Year Executive VP & CFO 2
Slide 4: EPS Results and Guidance
EPS Results and Guidance . . . a PROFIT First Nine Months 2017 at $1.66: up 8% from 2016 weather-normalized 2017 Full-Year guidance raised: • to $2.15 - $2.18, up 6% to 8% 2018 Full-Year guidance introduced: • at $2.29 - $2.33, up 6% to 8% Future long-term annual growth: • at 6% to 8% _____ a Adjust
Slide 5: The Triple Bottom Line: People, Planet, Profit
The Triple Bottom Line . . . PEOPLE • PLANET • PROFIT PEOPLE PLANET PROFIT PERFORMANCE . . . world class performance delivering hometown service. 4
Slide 6: Long-Term Regulatory Planning
Long-Term Regulatory Planning . . . Second Half 2017 2018 Customer Benefits Energy Law Transparency 12/1: Capacity Q2: File long-term charge determined generation plan (SRM) (IRP) Gas Safety 7/31: Final order; Oct./Nov.: File 1/1: Gas Order by $29 MM; ROE 10.1% New case investment 10 months +$18 tra
Slide 7: Story of the Month: SAIDI Performance
Story of the Month . . . SAIDI Performance CE Way Driven: Quality (Q3 Storm Season) Minutes 70 69.3 Down 40%! Prioritized customer investment 60 50 41.5 40 Targeted circuits for Lower = Better 30 tree-trimming Best 20 performance ever! 10 0 Reduced animal interference 10-yr Average 2017 . . . ope
Slide 8: First Nine Months of 2017
First Nine Months of 2017 . . . Results By Business Segment Year-to-Date 2016 2017 a EPS EPS – (GAAP) $1.70 $1.65 Better Adjustment 0.03 0.01 Actual than Plan Utility $1.76 $0.12 Adjusted (non-GAAP) $1.73 $1.66 Enterprises 0.10 0.03 Interest & other (0.20) 0.01 a Weather-normalized $1.71 $1.84 +8% C
Slide 9: 2017 EPS
2017 EPS . . . a First Nine Months Three Months To Go $2.15 - $2.18 6% - 8% 9¢ - 12¢ $2.02 8¢ 4¢ 5¢ 8¢ 3¢ (24)¢ Managing Work Our Model Q4 2016 Discretionary Activities: customer rates <2% Debt Pre-funding 4¢ Foundation & Low Income 5 Other 5 Total 14¢ YTD YTD $1.66 $1.73 2016 Weather & Cost Rates
Slide 10: 2017 Outlook
2017 Outlook . . . Adjusted EPS (non-GAAP) 2016 Benefits 4¢ Property taxes 4 Total 8¢ Weather & Storms Mild October Reinvestment Guidance +6% to +8% Recovery Recovery Recovery Income taxes 5¢ Accelerated financing 3¢ Enhanced capitalization 2 Enterprises 1 EE incentives 1 EE incentives 2 Sales mix &
Slide 11: Simple, Perhaps Unique Model
Simple, Perhaps Unique Model . . . 2017+ Plan Customer investment (reliability, costs, enviro mandates) 6% - 8% Self Funding: - O&M cost reductions a 2 - 3 pts - Sales growth 1 - No “block” equity dilution & other 2 INVESTMENT SELF-FUNDED 5 - 6 pts Rate increase “at or below inflation” < 2% _____ aC
Slide 12: Customer Investment
Customer Investment . . . Gas Meter Gas Distribution: Installations 25 years of Detail (2019): replacements 1.1 MM Capex $ (Bn) Gas 8 Electric 10 Gas Transmission: Total Plan 18 75% of miles pre-1970 Electric HVD System: Opportunities 7 1/3 past useful life Plan With Ops $25 Electric LVD System: O
Slide 13: Our Entire Cost Structure
Our Entire Cost Structure . . . Cost Components Above Market Costs 100% 100% 90% PPA PPA 80% Down Fuel $166 MM or 7% Fuel 70% Fuel and Power Costs annually 2011 2016 60% ~70% 50% O&M Reductions in Rates O&M Operating Costs 40% $659 Down 30% Taxes $87 MM $572 or 3% 20% annually Capital Investments 10
Slide 14: Operating Cash Flow Funds Investment
Operating Cash Flow Funds . . . Amount Up $0.8 (Bn) billion Gross operating cash flowa $2.9 $ 2.9 up > $0.1 billion per year $2.7 Up $2.6 $1.8 billion since 2004! 2.4 $2.3 Interest, working $2.2 capital and taxes $2.1 $1.9 1.9 $1.63 $1.65 1.4 Operating cash flow NOLs avoid 0.9 Investment need for bl
Slide 15: EPS Guidance Reflects 6% to 8% Growth
EPS Guidance Reflects . . . a a EPS $2.60 +8% $2.33 +6% $2.18 $2.29 +7% $2.02 $2.15 +7% Actual $1.89 $2.14 Guidance 0 2015 2016 2017 2018 Future _____ a Adjusted EPS (non-GAAP) . . . 6% to 8% annual growth. 14
Slide 16: Sustainable Future
Sustainable Future . . . 7% CAGR Opportunities More Gas Renewables Grid Infra. Modernization PPA c Replacements Future TSR LAW +6% to +8% Plan Ops • Customer Investment (Bn) $18 $25 NEW ENERGY a EPS • O&M Reductions (10)% (15)% b • Coal Capacity 21 % 15 % Recession Recession People Planet Profit Div
Slide 17: Q&A Thank you!
Q&A Thank you! See you at EEI. 16
Slide 18: GAAP Reconciliation
GAAP Reconciliation
Slide 19: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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 $1.89 $1.98 Pretax items:
Slide 20: Earnings By Quarter and Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings By Quarter and Year GAAP Reconciliation (Unaudited) (In Millions, Except Per Share Amounts) 2016 1Q 2Q 3Q 4Q YTD Dec Net Income Available to Common Stockholders Reported - GAAP $164 $124 $186 $77 $551 Pretax items: Electric and gas utility - - 11 * 11 Tax impact - - (
Slide 21: Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2015 2016 2017 2018 2019 2020 2021 Consumers Operating Income + Depreciation & Amortization $ 1,866 $ 2,037 $ 2,134 $ 2,246 $ 2,547 $ 2,678 $ 2,816 Enterprises Project Cash Flows 20 46 58 58 53 53
Slide 22: Summary of Consolidated Earnings Reconciliations
CMS ENERGY CORPORATION Summary of Consolidated Earnings Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income (In Millions, Except Per Share Amounts) Third Quarter Nine Months (Unaudited) (Unaudited) 2017 2016 2017 2016 Net Income Available to Common Stockholders $ 172 $ 186 $ 463 $ 474
Slide 23: Segment Earnings Per Share GAAP Reconciliation
CMS ENERGY CORPORATION Segment Earnings Per Share GAAP Reconciliation CUS ENERGY (Unaudited) ‘Three Months Ended Nine Months Ended ‘September 30 2017 2016 017 2016 ‘Electric Utility, ‘Reported S$ 06 $ 069 § 1400S 142 ‘Voluntary Separation Program 0.03 0.03 ‘Tax Impact - (0.01) - (0.01) Adjusted S08