Dte Energy Company · NYSE:DTE
Dte Energy — Q2 2009 Earnings Presentation
35 slides from Dte Energy's earnings presentation, Jul 31, 2009
Slide 1: Business and Financial Update
Business and Financial Update July 31, 2009
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: the length and severity of ongoing economic decline; changes in the economic and financial viability of our
Slide 3: Participants
Participants • Dave Meador, Executive Vice President and CFO • Peter Oleksiak, Vice President and Controller • Nick Khouri, Vice President and Treasurer • Lisa Muschong, Director of Investor Relations 3
Slide 4: Agenda: Overview
• Overview • 2nd Quarter 2009 Earnings Results • Cash Flow and Capital Expenditures • Summary 4
Slide 5: 2009 Overview: Solid Q2 2009 Results
2009 Overview Solid Q2 2009 Results • Overall, 2009 earnings and cash flow remain on track to our plan • Continuous improvement initiatives continue to produce ongoing cost savings • Continued pressure on Detroit Edison sales volumes • Additional one-time cost savings helping offset weak demand prio
Slide 6: 2009 Operating Earnings Guidance Remains on Track
2009 Operating Earnings Guidance Remains on Track 2009 Operating Earnings* Guidance Solid YTD 2009 Results ($ millions, except EPS) • Continuous improvement initiatives are driving YTD 2009 2009 Actual Guidance ongoing cost savings Detroit Edison $161 $355 - $385 • Additional one-time cost savings h
Slide 7: Detroit Edison 2009 Operating Earnings Drivers
Detroit Edison 2009 Operating Earnings Drivers* ($ millions) Assumptions $355-385 $75 • 8% sales reduction year over year $331 ($125) • Higher pension and healthcare $35 expenses $50 $261 ($15) $15 • Higher interest expense related to higher long-term debt balance ($35) $65 • 2008 rate orders includ
Slide 8: Energy Trading 2009 Operating Earnings
Energy Trading 2009 Operating Earnings* Energy Trading Operating Earnings* • Strong YTD Energy Trading results ($ millions) • Risk metrics and controls remain in $67 line with prior years $53 • Projecting 2009 operating earnings will exceed guidance; earnings are $43 $40 - $45 more heavily loaded in
Slide 9: Agenda: 2nd Quarter 2009 Earnings Results
• Overview • 2nd Quarter 2009 Earnings Results • Cash Flow and Capital Expenditures • Summary 9
Slide 10: 2nd Quarter 2009 Operating Earnings Per Share
2nd Quarter 2009 Operating Earnings Per Share* $0.56 Detroit Edison MichCon** Non-Utility Corporate & Other $0.50 ($0.09) $0.20 ($0.05) Power and Unconventional Gas Midstream Energy Trading Industrial Projects Gas Production $0.06 $0.16 ($0.01) ($0.01) * Reconciliation to GAAP reported earnings incl
Slide 11: 2nd Quarter 2009 Operating Earnings Variance
2nd Quarter 2009 Operating Earnings Variance Operating Earnings* Drivers ($ millions, except EPS) Detroit Edison 2Q 2009 2Q 2008 Change • December 2008 rate order and O&M cost Detroit Edison $ 83 $ 51 $ 32 reductions partially offset by decreased sales volumes and cooler weather MichCon (15) (11) (4
Slide 12: Detroit Edison Variance Analysis
Detroit Edison Variance Analysis Detroit Edison Operating Earnings* Variance Drivers ($ millions) • Temperature-normal sales down 9% $11 $83 • Cooler weather Q2 2009 $8 • December 2008 rate order and $35 expiration of temporary rate reduction $51 ($34) from show-cause settlement • O&M driven by cont
Slide 13: Detroit Edison Sales Volumes
Detroit Edison Sales Volumes Service Area Sales Volume Temperature Normalized (GWh) Q2 2009 Q2 2008 % Change Residential 3,346 3,455 -3% Commercial 4,606 4,890 -6% Industrial 2,417 3,231 -25% • Temperature normal sales volumes Other 783 788 -1% down 9% Q2 2009, which was a Subtotal 11,152 12,364 -10
Slide 14: MichCon Variance Analysis
MichCon Variance Analysis MichCon Operating Earnings* Variance Drivers ($ millions) • Seasonal second quarter loss is typical • Margin driven by customer conservation and higher lost and stolen gas • O&M driven by continuous ($11) improvement initiatives and one- time cost reduction efforts partiall
Slide 15: 2009 Utility O&M Expense
2009 Utility O&M Expense* ($ millions) Utility O&M Expected to be Down $65 Million from 2008 2009 O&M Savings ($ millions, after-tax) Pension, Continuous healthcare, Improvement environmental and one-time Detroit Total Total and other costs cost savings Edison MichCon Utility Pre-Tax Continuous Impr
Slide 16: Agenda: Cash Flow and Capital Expenditures
• Overview • 2nd Quarter 2009 Earnings Results • Cash Flow and Capital Expenditures • Summary 16
Slide 17: YTD June 2009 Cash Flow
YTD June 2009 Cash Flow DTE Energy Cash Flow Drivers ($ billions) • Free cash flow reached ~$700 million YTD YTD YTD 2009 06/30/09 06/30/08 • Free cash flow is down from 2008 due Adjusted Cash to the phasing out of synfuel cash; From Operations* $1.3 $1.5 2008 net cash was enhanced by sale Capital S
Slide 18: YTD June 2009 Capital Expenditures
YTD June 2009 Capital Expenditures DTE Energy Capital Expenditures Drivers ($ millions) YTD 6/30/09 YTD 6/30/08 • Detroit Edison increase driven by higher Detroit Edison planned spring outages for fossil generation Operational $430 $300 fleet and nuclear refueling Environmental 60 114 $490 $414 • Mi
Slide 19: Agenda: Summary
• Overview • 2nd Quarter 2009 Earnings Results • Cash Flow and Capital Expenditures • Summary 19
Slide 20: DTE Energy: A Focused, Integrated Energy Strategy
DTE Energy: A Focused, Integrated Energy Strategy • Constructive regulatory environment • Realistic 2009 Plan • Managing economic risk • Investment opportunities support long term growth • Well supported dividend Save the Date: October 19th - DTE Energy Analyst Meeting 20
Slide 21: Contact Us
Contact Us DTE DTE Energy Energy Investor Investor Relations Relations www.dteenergy.com/investors www.dteenergy.com/investors 313-235-8030 313-235-8030 21
Slide 22: Appendix
DTE Energy: Appendix
Slide 23: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income ($ millions) ($13) Energy Trading YTD Operating $67 Earnings* $54 • Economic net income ($ millions, after-tax) equals economic gross margin*** minus O&M 2009 2008 expenses and taxes. • DTE Energy management Realized $27
Slide 24: Auto Bankruptcy Impacts
Auto Bankruptcy Impacts DTE Energy Receivables Exposure (after-tax)* ($ millions) Prior Estimated Current Estimated Exposure Exposure GM $15 - $20 $4 Chrysler 6 - 12 5 Key Automotive Suppliers 5 - 10 2-5 $26 - $42 $11 - $14 * These after-tax income impacts are considered non-recurring, one-time even
Slide 25: Barnett Shale Operating Metrics
Barnett Shale Operating Metrics Reserves (Bcfe) Acreage Position (000’s Acres) 2009 YTD Results • Drilled 6 new wells 432 60 60 Net 336 Proven 15 Developed • Net Production of 2.7 Bcfe 167 14 Acres 144 • Capital Expenditures $12 million Net 265 Probable 46 45 Undeveloped 192 Acres YE2007 YE2008 YE20
Slide 26: DTE Energy – Liquidity Summary
DTE Energy – Liquidity Summary Available Liquidity ($ millions) As of 6/30/09 Bank Credit Revolver * $2,075 Cash on Hand 8 Total Capacity $2,083 Credit Lines Drawn - Commercial Paper Outstanding 181 Letters of Credit 273 Total Utilized $454 Unused Liquidity $1,629 * Includes $150 million of bilatera
Slide 27: 2009 Capital & Cash Flow Guidance
2009 Capital & Cash Flow Guidance Capital Summary Cash Flow Summary ($ millions) ($ billions) 2009 2008 2009 2008 Guidance Actuals Guidance Actuals Detroit Edison Adjusted Cash Operational $700 $675 From Operations * $1.3 $1.3 Environmental 100 269 Capital Spending (1.1) (1.5) $800 $944 MichCon Free
Slide 28: Reconciliation of 2Q 2009 Reported to Operating Earnings
Reconciliation of 2Q 2009 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 me
Slide 29: Reconciliation of 2Q 2008 Reported to Operating Earnings
Reconciliation of 2Q 2008 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 me
Slide 30: Reconciliation of YTD 2009 Reported to Operating Earnings
Reconciliation of YTD 2009 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 m
Slide 31: Reconciliation of YTD 2008 Reported to Operating Earnings
Reconciliation of YTD 2008 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 m
Slide 32: Reconciliation of 2008 Reported to Operating Earnings
Reconciliation of 2008 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 measu
Slide 33: Reconciliation of 2007 Reported to Operating Earnings
Reconciliation of 2007 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 measu
Slide 34: Reconciliation of 2009 Reported to Operating Earnings
Reconciliation of 2009 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 measu
Slide 35: Reconciliation of Cash from Operations to Adjusted Cash from Operations
Reconciliation of Cash from Operations to Adjusted Cash from Operations Use of Adjusted Cash From Operations - DTE Energy management believes that adjusted cash from operations provide a more meaningful representation of the company's cash from ongoing operations and uses adjusted cash from operatio