Cms Energy Corporation · NYSE:CMS
Cms Energy — Kohler Midwest Utilities, August 15-17, 2017
20 slides from Cms Energy's conference presentation, Aug 15, 2017
Slide 1: Kohler Midwest Utilities
Kohler Midwest Utilities August 15 - 17, 2017
Slide 2: 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 3: Consistent Growth Through . . .
Consistent Growth Through . . . 7% CAGR a EPS +6% to +8% Dividend Weather Recession Recession Help _____ Hurt a Adjusted EPS (non-GAAP) Cold 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Feb. Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Polar Cold Feb. Warm War
Slide 4: Clean and Lean . . .
Clean and Lean . . . PEOPLE PLANET PROFIT Old Utility Model Clean And Lean Big Build Supply Supply Fully utilize Modular Retirement assets Excess supply Big Excess Build supply Modular Actual Modular Demand Demand EE & DR O&M Excess O&M supply Expected Fuel Demand Fuel Modular Big Bets Investments R
Slide 5: Reducing Coal Intensity . . .
Reducing Coal Intensity . . . a PLANET a Coal Energy Renewable Energy b 49% Demand from Shut down customers coal c Meets 22% RPS d 15% 15% b 10% 3% 2005 2016 Future 2005 2016 2021 Future _____ _____ a_ _ _ _ _Energy CMS a Consumers Energy b_ Includes _ _ _ _ Classic 7, includes PPA contracts b Inclu
Slide 6: The CE Way
The Consumers Energy Way . . . The CE Way Safety . Quality . Cost . Delivery . Morale CUSTOMER ENABLED FOCUS EMPLOYEES BUSINESS RESULTS CONTINUOUS STANDARDIZED IMPROVEMENT PROCESSES . . . a culture of continuous improvement. 6
Slide 7: Regulatory Update . . .
Regulatory Update . . . 2017 PEOPLE 2018 Customer Benefits Energy Law No subsidies 4/20: Energy Law 12/1: SRM June: Capacity effective capacity charge determined charge implemented Gas Rate Case Safety 1/29: Self-impl.; Monday 7/31: $20 MM Final order; $29 MM Electric Rate Case Reliability 2/28: Fin
Slide 8: 2017 Outlook . . .
2017 Outlook . . . Adjusted EPS (non-GAAP) Second Half 2016 Reinvestment: 2016 Debt Pre-funding 4¢ Foundation & Low Income 5 Benefits 4¢ Other 5 Property taxes 4 Total 14¢ Total 8¢ Weather & Storms Reinvestment last year Guidance +6% to +8% Recovery Recovery Accelerated Financing 3¢ Enterprises 1 EE
Slide 9: Managing Work Every Year . . .
Managing Work Every Year . . . a 2008 2009 2010 2011 2012 2013 2014 2015 2016 EPS Mild $2.20 Summer +7% +18¢ +17¢ Cost +7% productivity above plan Cost $2.00 productivity +7% above plan Reinvestment +13¢ Storms Hot +7¢ -13¢ Mild $1.80 Reinvestment Summer Winter +7% RECORD Hot WARM Offsets Summer +7%
Slide 10: Simple, Perhaps Unique Model . . .
Simple, Perhaps Unique Model . . . 2017+ Plan Customer investment (reliability, costs, enviro mandates) 6% - 8% Self Funding: - O&M cost reductions 2 - 3 pts - Sales growth 1 - No “block” equity dilution & other 2 INVESTMENT SELF-FUNDED 5 - 6 pts Rate increase “at or below inflation” < 2% . . . cont
Slide 11: Ten-year Customer Investment Plan . . .
Ten-year Customer Investment Plan . . . Gas Electric Infrastructure & Distribution Maintenance $18 billion Supply . . . with opportunities to expand to $21 - $25 billion. 11
Slide 12: Modular Customer Investment Plan . . .
Modular Customer Investment Plan . . . Last 10 Years Next 10 Years $13 Bn $18 Bn Up 40% Gas Electric Gas Distribution 41% 29% Electric Distribution Supply Supply % of projects <$200 MM a ~75% >90% _____ a Plan assumes a modular renewable build-out with individual projects less than $200 million. . .
Slide 13: O&M Cost Performance Helps to Fund . . .
O&M Cost Performance Helps to Fund . . . Actual Cost Reduction New Annual Cost Savings (Peers 2016 over 2006) Three-Year Avg 2014 2017 - 2016 - 2019 Good Business Decisions (MM) (MM) • Attrition $ - 16 $ - 16 • Productivity (Coal Gas) - 20 - 5 • Enhanced capitalization - 10 - 4 • Smart Meters - 4 -
Slide 14: Economic Development Growth . . .
Economic Development Growth . . . Our Service Territory Outperforms Examples of New Business a Grand Electric Gas Combination Rapids Michigan U.S. Announcement Announcement Building Permits b +290% +214% +106% Royal Technologies Zeeland Farm Services Ottawa Ithaca • Manufactures plastic • Products a
Slide 15: Operating Cash Flow Funds . . .
Operating Cash Flow Funds . . . Amount Up $0.8 (Bn) billion Gross operating cash flowa $2.9 $ 2.9 up > $0.1 billion per year $2.7 Up $2.6 $1.8 billion since 2004! 2.4 $2.3 Interest, working $2.2 capital and taxes $2.1 $1.9 1.9 $1.63 $1.65 1.4 Operating cash flow NOLs avoid 0.9 Investment need for bl
Slide 16: "DIG" (750 MW) & Peakers (200 MW) . . .
“DIG” (750 MW) & Peakers (200 MW) . . . Pre-Tax Income Opportunities (MM) $ 80 $75 70 Contracts (layering in over time) 60 $55 +$40 50 +$20 40 $35 $30 30 Better Performance 20 $12 10 Outage pull-ahead 0 2015 2016 2017 Future Capacity ($/kw-mth) ≈ $1.00 ≈ $2.00 ≈ $3.00 $4.50 $7.50 Available: • Energy
Slide 17: Fifteen Years of Growth
Fifteen Years of Growth . . . PROFIT 7% CAGR Opportunities More Gas Renewables Grid Infra. Modernization PPA Replacements Future LAW +6% to +8% Plan Ops NEW ENERGY a EPS • Customer Investment (bils) $18 $25 • O&M Reductions (10)% (15)% • Coal Capacity 21 % 15 % Recession Recession People Planet Prof
Slide 18: GAAP Reconciliation
GAAP Reconciliation
Slide 19: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.42 $1.66 $1.74 $1.89 $1.98 Pretax items:
Slide 20: Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2015 2016 2017 2018 2019 2020 2021 Consumers Operating Income + Depreciation & Amortization $ 1,866 $ 2,037 $ 2,134 $ 2,246 $ 2,547 $ 2,678 $ 2,816 Enterprises Project Cash Flows 20 46 58 58 53 53
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