Cms Energy Corporation · NYSE:CMS
Cms Energy — H1 2018 Earnings Presentation
30 slides from Cms Energy's earnings presentation, Jul 26, 2018
Slide 1: CMS Energy forward-looking statements
CMS ENERGY 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 uncertain
Slide 2: Agenda
CMS ENERGY Agenda 3 Financial Results & Outlook Rejji Hayes Executive VP & CFO Business UpdatePatti Poppe President & CEO
Slide 3: First Half Results
CMS ENERGY First Half... Results First Half 2018 EPS Reaffirm Guidance to 8% Full-year EPS.ru 6% Long-Term Outlook EPS.ru & DPS growth .!.! Adjusted EPS (non-GAAP) agrowth. 4 ... on track for 6°/o to 8°/o EPS $2.30 to $2.34
Slide 4: The Triple Bottom Line
CMS ENERGY The Triple Bottom line... 5 world class performance delivering hometown service. PEOPLE PLANET PROFIT PERFORMANCE
Slide 5: Filed Integrated Resource Plan Overview
CMS ENERGY Filed Integrated Resource Plan “IRP”..: Overview Clean and Lean future. 6 ... seizing a once in-a-generation opportunity to reshape Michigan's energy File Date: June 15, 2018 Expected Order Date: Q2 2019 Case No.: U-20165 Capital Investment Opportunities:No Change to 5-year, $10 Bn Plan (
Slide 6: Rate Base Growth: Customer Investment Plan Evolves
CMS ENERGY Rate Base Growth Customer Investment Plan Evolves.. Large and Aging System ? $50 Bn $10 Bn 5-yr Plan ... with incremental renewables. 7 $21 Bn 20172022 $15 Bn 30o/o D Electric D Gas
Slide 7: Protecting Michigan's Environment
CMS NERGEY Protecting Michigan's Environment... Adding Renewable Energy Reducing Carbon Emissions 8 ... for future generations. (Sinee 2005) 0Today2024 20322040 -100
Slide 8: Expanding Our Renewable Portfolio
CMS ENERGY Expanding Our Renewable Portfolio New Utility Wind Renewable Tariff Enter rises Cross Winds® II35MWFully subscribed by Switch & GM with competitive pricing Gratiot Farms Wind150 MWIn Service: 2020Helps achieve 15o/o Northwest Ohio Wind105 MW15-yr PPA with GMLargely contracted portfolio wi
Slide 9: Utility Driven, Low Risk Growth
CMS ENERGY UtilitY Driven,lowRiskGrowth CMS Energy Long-Term Growth Plan Segments: - Utility Needed system upgrades I robust backlog Affordable prices driven by cost controls Largely contracted & utility-like Contracted generation & renewables 0-1 - Enterprises Refinancing high coupon debt Tax plann
Slide 10: First Half 2018 EPS Results By Business Segment
CMS ENERGY First HalF 2018 EPS Results By Business Segment I year. 11 ... tracking well for the I Year-to-Date I2017E2018 IEPS-(GAAP)$1.04$1.351 Adjustment Adjusted (non-GAAP)!J 33¢49¢ ill 33¢ ISecond Quarter I EPS-{GAAP) Adjustment Adjusted (non-GAAP)!J Weather-normalized!J EPSa Utility$1.39 Enterp
Slide 11: 2018 EPS: First Half, Six Months To Go
CMS ENERGY 2018 EPSa... First Half Six Months To Go 9t 1 r - _(1?l_ _(1 l-----4¢ - 100¢ Il I _ 28 - : 2¢ : {12)¢ {4)¢ Rates & Investment Cost Savings Usage, Enterprises & Other Absence of 2017 Weather Rates & Investment Cost Savings/ 2017 Weather 2018 : (Reinvestments): & Other AedEPS{nonI AAPf _ gu
Slide 12: Managing Work Every Year
CMS ENERGY Managing Work Every Year.. 2010 2011 2012 2013 2014 2015 2016 2017 EPS.!J $2.20 Mild 2.00 Cost productivity above plan Cost 1.80 productivity above plan productivity Storms 1.60 RECORD WARM productivity above plan Hot Summer 1.40 Summer 1.20 0 investors. 13 ... maximizes benefits for cust
Slide 13: Simple, Perhaps Unique Model
CMS ENERGY Simple, Perhaps Unigue Model... Plan I EPS Growtha 6%-a% 1 Self Funding:Cost reductions •Sales (continued economic development & EE) Other (Enterprises, tax planning, etc.) 2-3 pts 1 2 5-6 pts INVESTMENT SELF-FUNDED Adjusted EPS (non-GAAP) ... enhanced with tax reform. 14 Customer Prices
Slide 14: Our Entire Cost Structure
CMS ENERGY Our Entire Cost Structure Residential Electric Bills .!J Cost Components Residential Gas Bills_!j Taxes .!J Source: bls.gov for historicaldata,Bloombergfor 2018 estimate fatigue. 15 ... provides opportunities to lower costs and avoid rate Capital Investments Cost of Capital (current dolla
Slide 15: Economic Development Efforts
Economic Development Efforts... CMS ENERGY Examples of New Business Our Service Territory Outperforms ... are robust and helps drive our CJ Electric ContinentalDairy Building permits GOP Growth 2010--+2016 Population Growth 2010 2017 Unemployment (May 2018) aJ GrandRapids bJ Annualizednumbers May201
Slide 16: Operating Cash Flow Generation
Operating Cash Flow Generation... CMS ENERGY Amount (Bn) $2.2 Cash flow before dividend 2017 2018 2019 2020 2021 2022 I NOLs & credits $0.6 $0.4 $0.3 $0.3 $0.3 $0.2 1 17 ... remains strong and supports our capital plan. Investment
Slide 17: Credit Metrics Maintained
Credit Metrics Maintained ... CMS ENERGY S&P/ Fitch FFO I Average Debt.!J Moody's Consumers Secured ...••.. .. .. •r \ ,... (I 888+ 888 8aa1 8aa2 CMS Unsecured '.•••.. '.•••.. ...... 1 .. .. e Present (:} 2002 88 8a2 \ I ,1 : Outlook Stable Stable Stable : L levels. 18 ... at solid investment-grade
Slide 18: Compelling Investment Thesis
Compelling Investment Thesis CMS ENERGY Aging Infrastructure CMS ENERGY 19 Constructive ulation Affordable Prices
Slide 19: Compelling Investment Thesis
Compelling Investment Thesis cus EVERGYD ——_ Aging Infrastructure trong Cash Flow 8 Balance Sheet Affordable Prices
Slide 20: Modeling Scenarios
Modeling Scenarios... CMS ENERGY-Model Selection Energy Efficiency Renewables Traditional Baseload 22 ... almost always chose energy efficiency and renewables. Emerging TechnologiesTechnological advancements and economies of scale Environmental PolicyStringent carbon regulations Business as UsualSus
Slide 21: Tax Reform - Three Step Approach
Tax Reform - Three Step Approach... CMS ENERGY Step 3: (Calculation C)To be filed to determine deferred federal income taxes treatment by Oct. 1st <1111: Credit A implemented for Gas Utility $49 MM Credit to Customers v-"7/24: Credit A approved for Electric Utility $113 MM Credit to Customers 10/1:
Slide 22: DIF & Peakers Opportunities
“DIF” [750MW] & Peakers [200 MW]... CMS ENERGY Opportunities Pre-Tax Income (MM) $80 $75 $45 Better 40 $30 $12 0 2018 Future 2015 2016 2017 : I 0% 25% 0% 0% 0% I I Energy - - - - - - - Plan. 24 Capacity II Available Capa ($/kW-mth)= $1.00= $2.00= $3.00< $3.00$4.50$7.50 city000<5I50%90% ""'-.= I L" "
Slide 23: 2018 Financial Targets
2018 Financial Targets... CMS ENERGY 2018 Long-Term Plan Adjusted EPS (non-GAAP) Operating cash flow (MM) Dividend payout ratio (non-GAAP) Customer price Electric Gas FFO/average debt (non-GAAP) Customer investment (Bn) Continuous equity (MM) .!.! Beginning in 2020 25 ...16th year of transparent, co
Slide 24: 2018 Sensitivities
2018 Sensitivities... CMS ENERGY Full Year Impact Sensitivit EPS OCF (MM) SalesElectric (37,477 GWh)Gas (303 Bcf) Gas prices (NYMEX) -+ -+ + -+ -+ -+ 6¢ 9 0 + $20 1°/o 5 50¢ -+ -+ 40 55 Utility ROE (planned) 'fle-{.!4..9f1 o IGas (10.1o/o) Interest rates + 10 -+ % <1 +100 bps .!J Reflect 2018 sales
Slide 25: 2018 Sensitivities
2018 Sensitivities cus VERE Full Year Impact Sensitivity EPS OCF Sales 4 God * Electric (37,477 GWh) + 1% + 6¢ +$20 * Gas (303 Bef) +5 + 9 + 40 Gas prices (NYMEX) + 50¢ z 0 zy 55 Utility ROE (planned) + Electric (10.1%) +-10-bps- +—tk + * Gas (10.1%) +10 + th + 3 Interest rates +100 bps <1 * 7 *)Ref
Slide 26: GAAP Reconciliation
GAAP Reconciliation
Slide 27: Earnings Per Share by Year GAAP Reconciliation
cms energy corporation earnings per share by year gaap reconciliation (unaudited) reported earnings (loss)per share-gaap pretax items electric and gas utility tax impact enterprises tax impact corporate interest and other tax impact discontinued operations (income) loss, net asset impairment charges
Slide 28: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
cms energy corporation reconciliation of gaap net income to non gaap adjusted net income ny quarter (naudited) net income available to common stockholders reconciling items: electric utility and gas utility tax impact enterprises tax impact corporate interest and other tax impact discontinued operat
Slide 29: Weather Impacts on Year Over Year Earnings
cms energy corporation weather impacts on year over year earnings (unaudited) net income available to common stockholders reconciling items: restructuring costs and other tax impact gain on assets previously sold tax impact adjusted net income reconciling items non-normal weather impact tax impact n
Slide 30: Weather Impacts on Year Over Year Earnings
(CMS ENERGY CORPORATION Weather Impacts on Year Over Year Earnings (Unaudited) Poleersty Romane etinds ' 2 o amnsrpesoat st © © Tuer — —1 ont cme som tom foe eae cementing ” 2 ow Tempe 4 on mi See Sor Weert a a ee Mont Ween Smad te a sus pe taco Fr Stare ss sue som omaegcosinkote : : : ‘eres ° ° ° a