Cms Energy Corporation · NYSE:CMS
Cms Energy — Q4 2023 Earnings Presentation
33 slides from Cms Energy's earnings presentation, Feb 1, 2024
Slide 1: 2023 Year-End Earnings Call
2023 Year-End Earnings Call February 1, 2024
Slide 2: Enter “so what” if necessary – Century Gothic, Bold, Size 18 or smaller 2
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: Investment Thesis
Investment Thesis . . . ✓ Industry-leading net zero commitments Clean Energy Leader Strong Cash Flow Infrastructure ✓ & Balance Sheet Renewal Excellence through the ✓ Attractive & Constructive Top-tier regulatory jurisdictiona Diversified Territory Legislation Affordable Prices ✓ Premium total share
Slide 4: 2023 Successes
2023 Successes . . . People Planet Profit • Recipient of Secretary of Defense • Retired ~515 MW of coal at Karn 1&2 • Delivered adjusted EPS of $3.11 – Employer Support Freedom Award from service – reducing coal and toward the high end of our guidance carbon footprint (~2% of total PP&E) range • Fil
Slide 5: New Michigan Energy Legislation
New Michigan Energy Legislation . . . Key Items Prior Law New Lawa Benefits • Renewable Portfolio Standard 60% by 2035 ✓Maintains customer 15% by 2021 • Next Renewable Energy Plan (REP) filing in Michigan in MISO affordability (H2 2024) (50% by 2030) • Clean Energy Standard ✓Ensures continued (incl.
Slide 6: Michigan's Strong Regulatory Environment
Michigan’s Strong Regulatory Environment . . . 2023 2024 Supportive Energy Policy Renewable Energy Plan (REP) • Timely recovery of investments H2 2024: File updated REP ✓ Forward-looking test to meet 60% renewable energy by 2035 years/earn authorized ROEs ✓ 10-month rate cases Electric ✓ Monthly fue
Slide 7: Updated Customer Investment Plan
Updated Customer Investment Plan . . . New Utility Investment Plan Rate Base Growth Other Growth Driversb ~7½%/yr a $35.2B ✓ EE incentive moving 63% 20% from 20% to 22.5% Electric utility investment $24.6B (at 2% YoY load ’24 – ’28 reduction) $17B 37% 43% ✓ ~9% FCM on new PPAs for clean energy contr
Slide 8: Financial Results & Outlook
Financial Results & Outlook . . . 2023 Full-Year Results Amount Commentary Delivered toward the Adjusted EPS $3.11 high end 2024 Full-Year Outlook Adjusted EPS Guidance $3.06 $3.29 – $3.12 $3.35 Toward the high end Annual Dividend Per Share $2.06 Up 11¢ Long-Term Outlook Adjusted EPS Growth +6% to +
Slide 9: 2023 Results
2023 Results . . . Full Year Adjusted EPS by Segment 2022 2023 2023 Reported EPS $2.85 $3.01 Utility $3.07 Adjustmentsa 0.04 0.10 NorthStar 0.23 Adjusted EPSa $2.89 35X $3.11 Parent (0.19) Fourth Quarter 2022 2023 Total Adjusted EPS $3.11 Reported EPS $0.58 $1.05 Adjustmentsa 0.02 -- Adjusted EPSa $
Slide 10: 2023 Objectives Achieved
2023 Objectives Achieved . . . Objectives Actual Adjusted EPS guidance $3.06 – $3.12 $3.11 ✓ Toward the high end DPS growth guidance +6% to +8% $2.06 (up 11¢) ✓ Target credit ratings Solid investment grade Solid investment grade ✓ FFO/Debt target: Mid-teensa FFO/Debt target: Mid-teensa Utility inves
Slide 11: 2024 Guidance Offers Continued Growth
2024 Guidance Offers Continued Growth . . . Adjusted EPS Utility $3.74 – $3.80 NorthStar 0.16 – 0.18 Parent (0.61) – (0.63) Consolidated EPS $3.29 – $3.35 Toward the high end . . . compounding off 2023 actuals. 11
Slide 12: 2024 Adjusted EPS Growth Range
2024 Adjusted EPS Growth Range . . . 16¢ 23¢ a 43¢ $3.29 - $3.35 a $3.11 (58)¢ - (64)¢ 2023 Normal Rates & Cost Savings Usage, 2024 Weather Investment & Productivity Non-Utility, (incl. Storms) Tax & Other Presentation endnotes are included after the appendix. . . . managing through COVID-19 risks.
Slide 13: Near- and Long-Term Objectives
Near- and Long-Term Objectives . . . 2024 Long-Term Plan Adjusted EPS guidance $3.29 – $3.35 +6% to +8% Toward the high end Toward the high end DPS growth guidance +6% to +8% +6% to +8% Targeting ~60% payout ratio Target credit ratings Solid Solid investment grade investment grade FFO/Debt target: M
Slide 14: 2024 Planned Financings
2024 Planned Financings . . . Financingsa Existing Facilities Plan YTD b ($M) ($M) ~$1.9B of net liquidity Consumers Energy: 5-yr $250M First Mortgage Bonds ~$1,100 $600 4.60% (Nov-2025) CMS Energy: Contracted Equity (issued) ~266 ~266 ✓ ~$70/sh Retirements (incl. term loans): $1,100M (Dec-2027) Con
Slide 15: 2024 Sensitivities
2024 Sensitivities . . . Full-Year Impact Sensitivity Adj. EPS OCF 2024 Adj. EPS Sensitivities (1% Full Year in Volume) Salesa (¢) ($M) Electric Gas Electric (~37,000 GWh) + 1% + 7 + 27 Residential 4¢ 3¢ Gas (~311 Bcf) + 1 + 4 + 15 Commercial 2½ ~½ Industrial ½ ~½ Gas Prices + 50¢ + 0 + 60 Utility
Slide 16: Industry-Leading Financial Performance
Industry-Leading Financial Performance . . . Adjusted EPSa +6% to +8% Dividend Weather Help Recession Recession Recession / Hurt Pandemic 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+ Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Polar
Slide 17: Q&A Thank You!
Q&A Thank You! 1717
Slide 18: Appendix
Appendix 1818
Slide 19: Strong Balance Sheet
Strong Balance Sheet . . . Consumers Energy S&P Moody’s Fitch Key Strengths Senior Secured A A1 A+ ✓ Forward-looking recovery ✓ Constructive rate construct Commercial Paper A-2 P-2 F-2 ✓ Strong operating cash flow Outlook Stable Stable Stable generation CMS Energy Senior Unsecured BBB Baa2 BBB ✓ 100
Slide 20: 2023 Adjusted EPS
2023 Adjusted EPS . . . a 68¢ $3.11 a $2.89 19¢ (2)¢ (63)¢ 2022 Weather Rates & Cost Savings Usage, 2023 Investment & Productivity Non-Utility, (inlc. Storms) Tax & Other Presentation endnotes are included after the appendix. . . . managing through COVID-19 risks. . . . reflects another year of prem
Slide 21: DIG (750 MW) & Peakers (200 MW)
DIG (750 MW) & Peakers (200 MW) . . . Pre-Tax Income Opportunities (M) $80 70 ~$65M 60 ~$55M Available Available capacity capacity 50 40 ~$35M ~$30M 30 20 10 0 Historic 2024E 2026+ 2026+ Capacity Price ($kw-mon) ~$3.00 ~$3.25 $5.00 $7.50 Capacity Available 0% 0% >30% >30% . . . supports the Plan wit
Slide 22: Utility Sales Remain Strong
Utility Sales Remain Strong . . . a Weather-Normalized Electric Deliveries (2023 vs. 2022) 1.1% b 0.2% (0.2)% b (0.8)% Residential Commercial Industrial Total Residential Customer Growth Economic Development (5-Yr Avg. Customer Count) Policy Support Attracted >1,000 MW of • $1B of state incentives n
Slide 23: Operating Cash Flow
Operating Cash Flow . . . Adjusted Operating Cash Flow NOLsa & Credits Year Amount >$2½B ($B) 2024 $0.4 >$1½B ~$13.2B in aggregate 2025 $0.4 ~$8.6B in 2026 $0.4 aggregate 2027 $0.4 2028 $0.3 2019 - 2023 2024 - 2028 Plan Average Average Presentation endnotes are included after the appendix. . . . rem
Slide 24: Utility Customer Investment Plan
Utility Customer Investment Plan 5-Year Plan ($B) 2024 2025 2026 2028 2028 Total Clean Energy Generation $0.7 $0.8 $0.7 $0.7 $0.5 $3.4 63% Electric utility investment Electric Distribution & Other 1.4 1.8 1.3 1.4 1.4 7.3 Gas Utility 1.2 1.3 1.3 1.3 1.2 6.3 Total $3.3 $3.9 $3.3 $3.4 $3.1 $17.0 Deprec
Slide 25: Endnotes
Endnotes “cus evens?
Slide 26: Presentation Endnotes
Presentation Endnotes Slide 3: aRRA state regulatory energy rankings, May 2023. Regulatory Research Associates, a group within S&P Global Commodity Insights. Slide 5: aNew energy law effective June 1, 2024 Slide 7: aAssumes $24.6B rate base in 2023, $35.2B in 2028, CAGR bOver plan period years 2024-
Slide 27: GAAP Reconciliation
CMS Energy provides historical financial results on both a reported (GAAP) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. During an oral presentation, references to “earnings” are on an adjusted basis. All references to net income refer to net income availa
Slide 28: Reconciliation of GAAP to Non-GAAP Adjusted Operating Cash Flows
CMS ENERGY CORPORATION Reconciliation of GAAP Cash Flows from Operating Activities to Non-GAAP Adjusted Cash Flows from Operating Activities (Unaudited) 2019 2020 2021 2022 2023 Cash Flows from Operating Activities $ 1,790 $ 1,276 $ 1,819 $ 855 $ 2,309 Adjustments - Discretionary Pension Contributio
Slide 29: Reconciliation of GAAP Cash Flows to Non-GAAP Funds from Operations
CMS ENERGY CORPORATION Reconciliation of GAAP Cash Flows from Operating Activities to Non-GAAP Funds from Operations Reconciliation of GAAP Indebtedness to Non-GAAP Adjusted Debt (Unaudited) In millions Year Ended 12/31/2023 FUNDS FROM OPERATIONS Net Cash Provided by Operating Activities $ 2,309 Rec
Slide 30: Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS by Segment
CMS ENERGY CORPORATION Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS by Segment (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Twelve Months Ended 12/31/23 12/31/22 12/31/23 12/31/22 Electric Utility Reported net income per share $ 0.50 $ 0.23 $ 1.89 $ 1.96 Reconciling it
Slide 31: 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 Millions, Except Per Share Amounts Three Months Ended Twelve Months Ended 12/31/23 12/31/22 12/31/23 12/31/22 Net Income Available to Common Stockholders $ 306 $ 168 $ 877 $ 827 Reconciling items:
Slide 32: Reconciliation of Adjusted Net Income by Quarter 2023
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter (Unaudited) In Millions, Except Per Share Amounts 2023 1Q 2Q 3Q 4Q Net Income Available to Common Stockholders $ 202 $ 195 $ 174 $ 306 Reconciling items: Electric utility and gas utility 3 30 6 3 Tax
Slide 33: Reconciliation of Adjusted Net Income by Quarter 2022
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter (Unaudited) In Millions, Except Per Share Amounts 2022 1Q 2Q 3Q 4Q Net Income Available to Common Stockholders $ 351 $ 145 $ 163 $ 168 Reconciling items: Electric utility and gas utility - 11 (*) 10 T