Dte Energy Company · NYSE:DTE
Dte Energy — Corporate Update (March 2020)
51 slides from Dte Energy's corporate update, Mar 31, 2020
Slide 1: DTE Business Update
D T E B U S I N E S S U P D AT E MARCH 31, 2020 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, and businesses of DTE Energy. Words such as “anticipate,” “belie
Slide 3: Business update
Business update Environmental, social and governance (ESG) update 3
Slide 4: Continuing track record of delivering premium shareholder returns
Continuing track record of delivering premium shareholder returns Strong operational and financial performance in 1 2019; well-positioned for future growth 5% – 7% operating EPS1 growth through 2024 from 2 2020 base 3 7% dividend growth extended through 20212 Driving utility growth by investing 80%
Slide 5: Delivering premium operating EPS results through disciplined planning and management
Delivering premium operating EPS 1 results through disciplined planning and management History of exceeding operating EPS guidance Robust planning Annually create detailed 5-year plan $6.30 Includes earnings contingency across the portfolio $2.90 Weekly detailed executive management review of first
Slide 6: Increased dividend every year since 2010; 7% dividend growth targeted through 2021
New slide Increased dividend every year since 2010; 7% dividend growth targeted through 20211 ($ per share) Annualized dividend 6.1% CAGR • Increased annualized dividend per 7.1% CAGR $4.05 share every year since 2010 6.1% average increase over that time $3.08 7.1% average increase since 2016 •
Slide 7: Clear line of sight for growth supported by investment in utility infrastructure
Clear line of sight for growth supported by investment in utility infrastructure and disciplined non-utility opportunities (billions) 2020 – 2024 DTE Energy investment $19 billion Electric: Distribution infrastructure, $12 cleaner generation, maintenance $15 Gas: Base infrastructure, main $3 renewal
Slide 8: Increased liquidity by 50% from the beginning of the year
New slide Increased liquidity by 50% from the beginning of the year, which is greater than 2x our remaining 2020 financing needs Liquidity Financial strength and culture of cash control (billions) • Strong liquidity position Liquidity position is greater than 2x our $0.1 $2.4 remaining 2020 financ
Slide 9: Pension plan is well funded
Pension plan is well funded Pension details • No funding required in 2020 • 88% qualified funded status at year-end 2019 • Asset allocation is conservative 42% fixed income 35% equity 23% other • Rate of return and discount rate changes will not impact 2020 expense • Pension expense gets reset
Slide 10: Consistently earning authorized ROE in a constructive regulatory environment
Consistently earning authorized ROE in a constructive regulatory environment Ranking of U.S. regulatory jurisdictions1 DTE Electric ROE (Michigan in tier 1) Tier 1 8 10.3% 10.3% 10.1% 10.0% 10.0% Tier 2 9 2015 2016 2017 2018 2019 Authorized ROE Earned ROE Tier 3 18 DTE Gas ROE Tier 4 9 Tier 5 7 10.5
Slide 11: Distinctive continuous improvement culture drives strong cost management vs. peer average
Distinctive continuous improvement culture drives strong track record of cost management vs. peer average All 10,000+ employees engaged in CI to Average annual percentage change in surface and solve problems O&M costs 2008 – 2018 Electric utility1 • Controlling costs while improving the customer exp
Slide 12: Potential $2 billion upside to 5-year utility investment plan
Potential $2 billion upside to 5-year utility investment plan with visible infrastructure investment (billions) Utility investment plan $1.0 – $1.5 billion additional electric investments above 5-year plan Additional ~$2 opportunity • Additional voluntary renewables Current 600 MW plan with long-t
Slide 13: DTE Electric: transformational investments in generation and distribution
DTE Electric: transformational investments in generation and distribution provide customers cleaner, more reliable energy (billions) 2020 – 2024 electric investment Transformational investments Cleaner energy $3 Delivering 80% carbon emissions reduction by 2040 $5 $12 billion Infrastructure renewal
Slide 14: Integrated resource plan provides a roadmap for future investments
Integrated resource plan provides a roadmap for future investments Cleaner energy plan on-track • Majority of investment has been approved through regulatory process including the Blue Water Energy Center gas plant and 450 MW wind project • Filing amended renewable plan by April 1st • Filled the cap
Slide 15: Changes in customer sales can be mitigated with proven contingency and lean plans
Changes in customer sales can be mitigated with proven contingency and lean plans Annualized utility sensitivities (millions) • We have a strong history of successfully Impact on implementing contingency plans including Sensitivity operating earnings1 during the last recession +/- +/- • We do this b
Slide 16: Cost control allowed us to deliver on plan during the last economic downturn
Our culture of continuous improvement and cost control allowed us to deliver on plan during the last economic downturn 2008/2009 recession pressured electric sales DTE response delivered results above targets • 2008/2009 recession impacted electric sales, • Through continuous improvement and other m
Slide 17: Steady march toward clean, reliable, affordable, home-grown energy
Steady march toward clean, reliable, affordable, home-grown energy 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 • More than doubling renewable energy by Rouge Clair Channel R
Slide 18: DTE Gas: replacing aging infrastructure reduces methane emissions
DTE Gas: replacing aging infrastructure reduces methane emissions while improving performance, cost and productivity (billions) 2020 – 2024 gas investment Transformational investments Main renewal Minimizing leaks to reduce costs and $1.4 improve customer satisfaction $3 billion $1.6 Pipeline integr
Slide 19: Committed to methane reduction goal of 80% by 2040
Committed to methane reduction goal of 80% by 2040 Reduced methane emissions continuing reductions in …to achieve goal by 2040 more than 20% since 2011… 2020... Compressor station upgrades Main renewal program Continued infrastructure • Reduced emissions by 93% • Achieving further emission investmen
Slide 20: Non-utility businesses complement utility growth and provide portfolio mix
New slide Non-utility businesses complement utility growth and provide portfolio mix to manage business cycles Non-utility value creation Extension of our utility business core competencies into other geographies Delivering higher than utility returns Proven ability of early identification of value-
Slide 21: GSP: high-quality assets with revenue certainty is the foundation for growth
GSP: high-quality assets with revenue certainty is the foundation for long-term growth 85% of total revenue covered by fixed Pipeline revenue contracts and flowing gas Connecting world-class supply basins to high-quality markets 100% Contract renewal and Gathering 15% volume growth Serving some of t
Slide 22: Majority of GSP growth secured; delivering higher operating earnings
New slide Majority of GSP growth secured; delivering higher operating earnings1 with increased certainty (millions) GSP operating earnings • Focusing on continued organic growth 9.5% CAGR from well-positioned platforms Majority of future growth secured and supported by strong contracts $400 – $420
Slide 23: Highly contracted assets provide confidence in meeting our plans
Highly contracted assets provide confidence in meeting our plans Percentage of revenue from demand-based contracts or MVCs/flowing gas • Our assets are well-positioned Pipelines have long-term contracts and favorable future dynamics as it is increasingly difficult to build new pipes 100% 92% 93%
Slide 24: Longer-term demand increases will require continued production growth
Longer-term demand increases will require continued production growth through new drilling U.S. natural gas demand forecast (Bcf/d) • Longer-term natural gas supply/demand fundamentals remain attractive; shorter-term gas prices 130 +2% remain challenged 120 CAGR • Gas demand is forecasted to grow at
Slide 25: It is necessary to drill 19 Bcf/d of new natural gas supply annually
It is necessary to drill 19 Bcf/d of new natural gas supply on an annual basis to hold production flat Annual decline of US natural gas supply • Given decline profiles of flowing wells, from currently-flowing wells (Bcf/d) new production is needed to just keep supply flat 92 -27% Wood Mackenzie fo
Slide 26: Our assets are well-positioned in low cost resource basins
Our assets are well-positioned in low cost resource basins • The quality of the resource underlying our assets will ensure that gas will continue to flow on our 2021 – 2023 drilling supply curve (Bcf/d) systems Additionally, our assets are well- positioned in supply basins that ~19 Bcf/d of new su
Slide 27: P&I: achieving growth from high-quality platforms
P&I: achieving growth from high- quality platforms Industrial energy services Developing new cogeneration projects to improve customer environmental attributes and lower energy costs Renewable energy Expanding RNG business at landfill and agricultural sites to meet growing demand for carbon reductio
Slide 28: Operating earnings underpinned by RNG and cogeneration growth opportunities
Operating earnings1 are underpinned by RNG and cogeneration growth opportunities (millions) P&I operating earnings • RNG and cogeneration projects drive long- term earnings $133 – $148 Backfill sunsetting REF projects with $125 – $135 new projects • Continuing an origination pace of ~$15 million p
Slide 29: Environmental, social and governance update
Business update Environmental, social and governance (ESG) update 29
Slide 30: Environmental, social and governance efforts are key priorities
Environmental, social and governance efforts are key priorities Environmental Net zero carbon emissions by 2050 80% carbon emissions reduction by 2040 80% methane emissions reduction by 2040 Providing renewable natural gas from agricultural waste Social Supporting employment and education of local c
Slide 31: Continuing to secure a greener future
New slide Continuing to secure a greener future Ludington Hydropower Plant Wind • 14 wind parks • Enough clean energy to power more than 500,000 homes Solar • 31 solar parks • Lapeer solar park one of the largest parks east of the Mississippi Voluntary renewables largest pumped storage • Enables cus
Slide 32: Reaching a world class status in volunteerism
New slide Reaching a world class status in volunteerism and strengthening ties with communities where we live and serve 5,610 $16m 101,618 1,335 volunteers value of in-kind hours nonprofits helped services since volunteered 2015 New pic 32
Slide 33: Promoting environmental sustainability through stewardship and conservation
New slide Promoting environmental sustainability through stewardship and conservation • Received Corporate Conservation Leadership award from the Wildlife Habitat Council for leadership in wildlife management • 37 sites certified under the Wildlife Habitat Council • Taking care of land, water and li
Slide 34: Commitment to strong culture provides a solid framework for success
Commitment to strong culture provides a solid framework for success Safety National Safety Council’s top 2% of companies surveyed in safety culture Employee engagement Top 3% in the world by Gallup; 7 consecutive Gallup Great Workplace Awards Customer satisfaction Top quartile at both utilities for
Slide 35: Promoting employee resource groups creates diversity and inclusion
New slide Promoting employee resource groups creates an atmosphere of diversity and inclusion Black LGBTQ group Young professionals professionals group group Family Differently- Latinx oriented group abled group professionals group Women’s group Asian and Middle Veteran Eastern group empowerment gro
Slide 36: Our award-winning commitment to being a top ESG employer
New slide Our award-winning commitment to being a top ESG employer in the country Superior corporate Company diversity Top quartile in Named as one of citizenship and customer satisfaction America’s best large community employers involvement Outstanding Inclusion of women- Overall excellence contrib
Slide 37: Outperforming industry average in ESG scores
New slide Outperforming industry average in ESG scores A 75 • Continuing to make progress on ESG performance Improved MSCI rating from BBB to A BBB 50 • Aspiring to be the best in the industry MSCI Sustainalytics DTE Energy Industry average 37
Slide 38: Contact Us
CONTACT US DTE Investor Relations www.dteenergy.com/investors 313.235.8030 38
Slide 39: Appendix
Appendix DTE
Slide 40: DTE Energy
DTE Energy 70% – 75% utility DTE Electric Electric generation and distribution DTE Gas Natural gas transmission, storage and distribution 25% – 30% non-utility Gas Storage & Pipelines (GSP) Transport, store and gather natural gas Power & Industrial Projects (P&I) DTE Energy Own and operate energy re
Slide 41: Positioned for continued growth from strong 2020 guidance
Positioned for continued growth from strong 2020 guidance Operating EPS1 • 2020 operating EPS guidance midpoint provides 7.5% growth from 2019 original guidance 7.5% • Well-positioned for 5% – 7% operating EPS growth through 2024 • Continued investment in utilities $6.61 Investing 80% of 5-year ca
Slide 42: 2020 operating earnings guidance
2020 operating earnings1 guidance (millions, except EPS) 2020 operating earnings guidance DTE Electric $759 - $773 DTE Gas 185 - 193 Gas Storage & Pipelines 277 - 293 Power & Industrial Projects 133 - 148 Energy Trading 15 - 25 Corporate & Other (122) - (132) DTE Energy $1,247 - $1,300 Operating EPS
Slide 43: Maintaining strong cash flow, balance sheet and credit profile
Maintaining strong cash flow, balance sheet and credit profile (billions) • $2.4 billion of available liquidity as of Planned equity issuances March 2020 2020 – 2022 • Maintaining strong investment-grade credit $1.3 rating and FFO1/Debt2 target at 18% Convertible equity units $0.1 – $0.4 $0.1 – $0.3
Slide 44: Cash flow and capital expenditures
Cash flow and capital expenditures Cash flow Capital expenditures (billions) (millions) 2020 2020 guidance guidance Cash from operations1 $3.0 DTE Electric Capital expenditures (4.5) Base infrastructure $680 Free cash flow ($1.5) New generation 1,050 Distribution infrastructure 850 Dividends $(0.8)
Slide 45: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric DTE Gas • General rate case – filed July 2019 (U-20561) • General rate case – filed November 2019 May 2020: effective (U-20642) Rate recovery: $351 million October 2020: effective ROE: 10.5% Rate recovery: $204 million Capital struc
Slide 46: Well-positioned platforms provide confidence in securing highly accretive growth
Well-positioned platforms provide confidence in securing highly accretive growth Platforms Regulation Phase Growth Opportunities • $2.2 – $2.7 billion of investment in 2020 – 2024 Blue Union Early Gathering build-outs $1.0 billion of growth Gathering build-outs/compression/ LEAP System Early contr
Slide 47: Blue Union and LEAP asset additions to portfolio
Blue Union and LEAP asset additions to portfolio provide great value and growth Perryville Hub • Premier assets in high-quality Haynesville Carthage Hub basin Southeast Power Markets Existing fully contracted gathering system Gulf South Fully contracted large-diameter Texas markets via Mid-coast
Slide 48: 2018 – 2019 reconciliation of reported to operating EPS (non-GAAP)
2018 – 2019 reconciliation of reported to operating EPS (non-GAAP) 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 perf
Slide 49: 2008 reconciliation of reported to operating EPS (non-GAAP)
2008 reconciliation of reported to operating EPS (non-GAAP) 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
Slide 50: Reconciliation of reported to operating earnings (non-GAAP)
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
Slide 51: Adjusted EBITDA is a non-GAAP measure
New slide Adjusted EBITDA is a non-GAAP measure 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 share of joint venture net