Cms Energy Corporation · NYSE:CMS
Cms Energy — Q3 2018 Earnings Presentation
31 slides from Cms Energy's earnings presentation, Oct 25, 2018
Slide 1: Forward-looking statements and non-GAAP measures
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 2: Agenda
-------eMS" ENERG"Y> A=g=e==n=d=a================== 3 •Financial Results & OutlookRejji Hayes Executive VP & CFO •Business UpdatePatti Poppe President & CEO
Slide 3: EPS results and guidance
-------eMS" ENERG"Y> I=P=S==R=I=IS=U=I=IS=a==n=d=G=u=id=a=D=C==II•=•=•= • First nine months 2018: up 16o/o from 2017 • 2018 Full-year guidance raised: • 2019 Full-year guidance introduced: • Future long-term annual growth: at aJAdjustedEPS (non-GAAP) 4 ... updated with confidence in this year and lo
Slide 4: Managing work every year
ManagingWorkEVIllY Y11ar••• --------E-N--E-R--G-"Y> eMS" 2010 2013 2014 2015 2016 2017 2011 2012 EPS.!I $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 Significant utility reinvestm
Slide 5: The triple bottom line: people, planet, profit
---EN-ERG-Y:> ThllTrA 'Ill BottomlintJ... eMS 6 ... world class performance delivering hometown service. PEOPLE•PLANET•PROFIT PERFORMANCE
Slide 6: Consistent growth through weather and recessions
---E-N-E-R-G-"Y> ConsisttJntGrowthThrough••• eMS" ,, 0 0 co co + + .......... 0 0 CD CD Weather + + Recession bJ Non-GAAP •JAdjustedEPS (non-GAAP) Warm winter Mlid summer WarmMild winter summer . Warm Warm 7 ... recessions and adverse weather. Governor (D)Governor (R) Commission (D) Commission (D) C
Slide 7: 2018 performance results
CAtS ENeNGY:> c2=0=1=8="=DPlltf=o=r=m=a=n=c=t=l.=..=== Results B Business Se ment Interest & other (0.20) b • reinvestments. 8 . .. ahead of plan and focused on EPS!J Utility$2.02 Enterprises0.11 CMS Energy$1.93 IYear-to-Date I2017!12018 EPS-(GAAP)$1.65$1.941 Adjustment(0.01) Adjusted (non-GAAP) $1.
Slide 8: 2018 EPS first nine months and three months to go
--------eMS" ENERG"Y> 2018/PS:.. First Nine Months Three Months To Go (13)¢ • (10)¢ +27¢ -----------------------------------------, 6¢ 3¢ (8)¢-(5)¢ $1.66 2017 2018 Rates & Investment WeatherCost Savings & Rates and Investments Usage, Enterprises Absence of 2017 Cost Savings/ (Reinvestment) (Reinvest
Slide 9: 2018 and 2019 regulatory planning
M S EMreR_G_Y?> 2019 long-TBrmRtlgulatoryPlanning... C =========================-= 2018 Regulatory I Policy 6/15: Filed long-term generation plan (IRP) U-20165 Q2: Expected IRP order U-20165 order U-18494 order for Gas Utility $49 MM 3/29: Final order U-18322 $72 MM (on 6/28) 10.0% ROE Current Reque
Slide 10: Gas investments
---E-N-ER-G-"Y> GasIDVIISimtJDIIIIIIIdS••• eMS" c=====--========----Customer Experience Leak Reduction Increased Capacity 11 ... prioritize safety, reliability and affordability. Benefits
Slide 11: Customer investment plan
-----eMS" ENERG"Y> cC==u=s=to==m=t=J=r=ln==v=tJ=s=t=m==tJ=n=t=PlanSlttJWIJd••• Large and Aging System Rate Base Growth ? -$-5-0--Bn ..... , ,. $10 Bn 5-yr Plan ... towards gas investments. 12 $21 Bn 20172022 $15 Bn D Electric D Gas
Slide 12: Our entire cost structure
--OMS' ENERGY:> OurEntirtJCostStructurtJ••• c=============--=========-=---Cost ComponentsResidential Electric Bills 100 esidential Gas Bills 2013 2018E .!lSource:bls.gov for historicaldata,Bloombergfor 2018 estimate 13 ... provides opportunities to lower costs and avoid rate fatigue. Taxes Capital I
Slide 13: Utility-driven, low-risk growth
-----eMS" ENERG"Y> cU=t=il=it=Y==D=r=iv=B-n,=l=o=w==R==is=k==G=r=o=w= th••• 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 • Enterp
Slide 14: Compelling investment thesis
eMS ENERG--- Y:> cC=o==m=p=t=J=/I=in==g=In=v=e==s=tm-e=n=t=T=h=e=sis... Aging Infrastructure 15 ... adaptive to changing conditions.
Slide 15: Compelling investment thesis
Compelling Investment Thesis... cus eveRey > ... adaptive to changing conditions.
Slide 16: Thank You! Q&A
Q&A Thank You! See you at EEl
Slide 17: Michigan political environment
--------eMS" ENERG"Y> MichiganPoliticallnvironmllnt =========================-= Gubernatorial Election Senate •••••••••••• 4-year terms, concurrent with Governor's term, 2-term limit House of Representatives •••••• @ •••••• ·•·•:•·•·•·=•·•·•·•:•·•-••·•· 2-year terms, even numbered years, 3-term limi
Slide 18: Integrated resource plan
-----eMS" ENERG"Y> liltJdlnttJgrattJdRtJsourctJPlan 1RP':•• =========================-= Clean and Lean Overview Fully utilize future. 19 ... 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 Investm
Slide 19: Credit metrics maintained
-------eMS" ENERG"Y> CreditMetricsMaintained... S&P/ Fitch FFO I Average Debt!J Moody's ....... .. .. Secured I ,\ (.......I ,\ ..·.·.·... 1 .···. .···. Unsecured 888-8aa3 I • I • 1e Present 88 8a2 Reform) 8-83 \I ,----------------------------------------------, : Outlook Stable Stable Stable : ----
Slide 20: Tax reform three-step approach
---EN-ER-G-"Y> TaxRtJtorm-Thr1111SttJPApproach••• eMS" Step 3: {Calculation C) • Filed Oct. 1st to determine deferred federal income taxes treatment 7/24: Credit A 1/8/27: Filed 3/30: Filed forward-looking Credit A for Gas Utility v'9/24: Filed 10/1: Filed 12/1: Credit B implemented for Gas Utility
Slide 21: Capacity and peakers opportunities
----EN-E-R-G-Y:> 11/G''1150MWJ&PtJaktJrs1200MWJ... Pre-Tax Income (MM) $80 eMS Opportunities $75 40 $12 Outage Pull-a head 2018 Future 2015 2016 2017 I Available: I • Capacity <5 50% • 90% I I 0 0 0 - - - - - --=-'=-Plan. 22 Capacity ($/kW-mth):::: $1.00:::: $2.00:::: $3.00< $3.00$4.50$7.50 • Energy
Slide 22: Operating cash flow generation
------eMS" ENERG"Y> OptJratingCashFlowGtJntJration••• r=-===================== Amount (Bn) $2.2 -$9 Bn in aggregate Investment Cash flow before dividend 2017 I NOLs & credits $0.6 2018 2019 2020 2021 2022 $0.4 $0.3 $0.3 $0.3 $0.2 1 23 ... remains strong and supports our capital plan.
Slide 23: 2018 financial targets
---EN-ER-G"Y> 2018FinancialTargtJts... eMS" Adjusted EPS (non-GAAP) 6 Yo to +8°/o Operating cash flow (MM) Dividend payout ratio (non-GAAP) Customer price Electric Gas FFO/average debt (non-GAAP) Customer investment (Bn) Continuous equity (MM) . .. -----a Begmnmg m 2020 24 ...16th year of transparen
Slide 24: 2018 sensitivities
------eMS" ENERG"Y> 2018SIJRSiliviliiJS••• =========================-= Full Year Impact EPS OCF (MM) Sensitivi Sales • Electric (37,477 GWh) • Gas (303 Bcf) Gas prices (NYMEX) -+ -+ + 1o/o 5 50¢ -+ 6¢ 9 0 + $20 -+ -+ -+ -+ 40 55 UtiIity ROE (planned) r&:-1-• I IO"J • • Interest rates +100 bps <1 .!.
Slide 25: 2018 sensitivities
2018 Sensitivities cus ENERGY > Full Year Impact Sensitivity EPS OCF (MM) Sales 4 * Electric (37,477 GWh) + 1% + 6¢ +$20 * Gas (303 Bef) +5 + 9 + 40 Gas prices (NYMEX) + 50¢ = Utility ROE (planned) * Electric-(10.4%) +-40-bps +—4 + * Gas-(40:4%) +40 +" + Interest rates +100 bps <1 7 Reflect 2018 sal
Slide 26: 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 (Unaudited) In.\Jilli41tu1 Exce f!!. Prr Sh4n Amounll Three loorhs Inded :-.1ne lonrbs Inded 9/30/18 9 /30117 9/30/18 9/30117 et loc-on1e ATailable to Common StO<-kbo lders RvcoTl( i/ing items: Discontinue-d o r
Slide 27: Reconciliation of GAAP net income to adjusted net income by quarter
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quat'tet· (Unaudited) b.! J/illi.oJu,E xc'?t p SNln AJnDWUJ' lOIS !_Q_ !_Q_ !Q XH lac:ome .\niliblt to Common Stod:boldus Rnowilir.,r!tl1'".: El.tctr;;til-u.d ;n \Otiliy Tu: iq)act Ezm rins Tu.ir.l;.lact Con.
Slide 28: Earnings per share by year GAAP reconciliation
-----------------eMS" ENERG"Y> CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2 003 2004 2005 200 6 2007 2008 2009 2010 20 ll 2012 2013 2014 201 5 201 6 2017 Re ort ed earnings {loss) er share - G A. .\I' (SOJO} 0.6-1 (0.44} (0.-11} (1.02} $1.20 0.91 1.28 $1.58 $1.
Slide 29: Weather impact on year over year earnings
-----------------eMS" ENERG"Y> CMS ENERGY CORPORATION \Veather Impact on Year Over Year Earnings (Unaudited) l1.1. }lilliazu, E.c.ep.cl!.e.c. S:hac.e. til1112UlJt:S. :'\1ne )lmths .Ended 9/30/2018 9/30/2017 Change s s ::"et Income.-\xailableto Common Stockholders Reconciling irems: Restructuring cos
Slide 30: Weather impact on year over year earnings
-----------------eMS" ENERG"Y> CMS ENERGY CORPORATION \Veather Impact on Year Over Year Earnings (Unaudited) In \filUons, E cf'pt p,,. Shal'eAmowttt Th ree onths Inded 9130/2018 9/30/2017 Chango 172 Xet Inc-ome Anil:tble to Common Stockho lders Reconciling items: Rt'structwing costs and otht'r Tax i
Slide 31: Weather impact on year over year earnings
Hs Wee CMS ENERGY CORPORATION ‘Weather Impact on Year Over Year Earnings (Unaudited) Stent Aan Conmeesectiden Fw FE un no seu Aetna sows Naeem Wen ap ee te Sarin ace Reger Setaceme Per Stare ed Stam Pe Stare Sere Weer np et aero