Slide 1: Third Quarter 2020 Results and Outlook
Third Quarter 2020 Results and Outlook October 29, 2020
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: Agenda
Agenda Business Update and Long-Term Outlook Patti Poppe President & CEO Financial Results Rejji Hayes Executive VP & CFO PEOPLE PLANET PROFIT Enter “so what” if necessary – Century Gothic, Bold, Size 18 or smaller 33
Slide 4: 2020 On Track and 2021 Outlook Strong
2020 On Track and 2021 Outlook Strong . . . Results Amount Commentary Demonstrating best-in-class cost • YTD 2020 EPSa $2.11 management Guidance Focusing on reinvestment with • 2020 Full-year EPSa $2.64 - $2.68 three months to go a Up 6% to 8% from midpoint of • 2021 Full-year EPS $2.82 - $2.86 2020
Slide 5: Triple Bottom Line Focus
Triple Bottom Line Focus . . . People Planet Profit Caring for Our Co-workers, Customers & …Protecting Our Planet with Our Clean & …And Delivering on Our Commitment Communities We Serve… Lean Energy Strategy… to Our Investors. ✓ Continued focus on employee and Today: ✓ 2020 guidanceb reaffirmed publ
Slide 6: Utility Customer Investment
Utility Customer Investment . . . Investment Plans Growing Utility Renewables b (Estimated % EPS ) $3 - $6 Bn Capital 2020 ‘20-’24 10-Yr Investment opportunity Investment (Bn): Plan Plan Plan Supported by: PLUS Incentives on PPAs Renewables $0.4 $ 1¾ $ 4 ✓20% EE incentive and Demand Response ✓FCM at
Slide 7: Our Commitment to ESG
Our Commitment to ESG . . . Named the #1 Michigan Received 2019 Energy Star® Company for Diversity in 2019 Partner of the Year Sustained PEOPLE PLANET PROFIT by Forbes® Magazine Excellence Award PERFORMANCE Ranked Top Quartile by Named a Top U.S. utility for Ranked #1 overall in the Midwest EEI Util
Slide 8: Regulatory Outlook
Regulatory Outlook . . . 2020 2021 Regulatory / Policy 4/15: U-20757 9/18: Filed for securitization COVID-19 order for deferred of Karn 1&2 coal plants accounting ~$703 MM Electric 2/27: U-20697 a Dec. Expected Q1: File next Filed $244 MM a final order rate case Updated $230 MM 10.5% ROE Gas G
Slide 9: Managing Work Every Year
Managing Work Every Year . . . 2012 2013 2014 2015 2016 2017 2018 2019 2020 EPSa $100 MM+ Reinvestment Cold savings January +23¢ +7% Weather Actively being & storms +7% reinvested (9)¢ +7% Storms Hot summer Mild +17¢ summer +7% +18¢ +7% Cost Cost productivity (16)¢ productivity above plan above plan
Slide 10: 2020 YTD Performance
2020 YTD Performance . . . Year to Date Results By Business Segment 2019 2020 YTD EPS b EPS - (GAAP) $1.81 $2.09 Utility $2.24 Adjustments a -- 0.02 Enterprises 0.11 Adjusted (non-GAAP) $1.81 $2.11 EnerBank 0.12 Parent & other (0.36) CMS Energy $2.11 Third Quarter 2019 2020 EPS - (GAAP) 73¢ 76¢ a Ad
Slide 11: Utility Sales Continue to Recover
Utility Sales Continue to Recover . . . a b Weather-Normalized Electric Deliveries 2019 Electric & Gas Rate Mix (3Q20 vs. 3Q19) Auto Other Other 6% 2% 2% Industrial 11% ~½%c Residential Electric Commercial 39% 23% (4)% (3½)%c Combined Residential Residential Gas >60% 23% Res. Com. Ind. Total a b c 2
Slide 12: 2020 EPS on Track
a 2020 EPS on Track . . . First Nine Months Three Months To Go 30¢ (11)¢ - (15)¢ 16¢ 7¢ $2.64 - $2.68 13¢ 6% to 8% $2.49 (2)¢ 5¢ (16)¢ - (20)¢ (4)¢ Cost Savings Reinvestment opportunity to benefit Benefits 4¢ customers and de-risk Operations 14 2021 beyond Other 10 Total 28¢ YTD YTD $1.81 COVID-19 e
Slide 13: Our Entire Cost Structure
Our Entire Cost Structure . . . Cost Components Residential Bills as % of Walleta 100% (Electric & Gas) Down Utility Bill Utility Bill 100 bps ~4% ~3% Fuel and Power Costs TV & Phone 4% TV & Phone 4% Healthcare 5% Healthcare 8% ~70% Food 12% Food 13% Non-capital related Transportation 15% ~$19 Bn Tr
Slide 14: Consistent Growth Through Changing Circumstances
Consistent Growth Through . . . a 7% CAGR +6% to +8% a EPS +7% Dividend Weather Recession Recession Help Hurt 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cold Mild Warm Warm Mild Cold Summer- Hot Hot Warm Mild Polar Cold Feb Warm Warm Hot Storms winter s
Slide 15: Investment Thesis
Investment Thesis . . . Investment Thesis Takeaways Prudent Liquidity Management • 2020 financings largely completed • No pension contributions required in 2020 Aging Operational Excellence and Track Record Infrastructure • Increased productivity driven by the CE Way Clean Energy Constructive Lead
Slide 16: Q&A Thank You
Q&A Thank You 1616
Slide 17: Appendix
Appendix 1717
Slide 18: Financing Plan Largely Completed
Financing Plan Largely Completed . . . Planned 2020 Financing Existing Facilities b Plan YTD (MM) (MM) Consumers Energy: $250 MM (Nov-2021) >$2 Bna of First Mortgage Bonds $650 $1,361 net liquidity Term Loan $300 $300 position with no CP outstanding (as of 9/30/20) CMS Parent: Opportunistic financin
Slide 19: Operating Cash Flow Generation
Operating Cash Flow Generation . . . Amount ~$10 Bn in aggregate (Bn) $2.2 $2.15 $2.05 a $1.85 $1.95 $1.79 $1.75 Investment Cash flow before dividend (1.1) 2019 2020 2021 2022 2023 2024 b NOLs & Credits $0.2 $0.3 $0.5 $0.5 $0.6 $0.7 a b Excludes $531 MM discretionary pension contributions in January
Slide 20: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured A Aa3 A+ • Strong financial Commercial Paper A-2 P-1 F-2 position Outlook Stable Negative Stable • Growing operating cash flow CMS Energy Senior Unsecured BBB Baa1 BBB • Return on regulated investment J
Slide 21: DIG (750 MW) & Peakers (200 MW)
DIG (750 MW) & Peakers (200 MW) . . . Pre-Tax Income Planning Year (MISO) Opportunities a (MM) 2020 Through 2023 (MM) $100 Contracted Capacity 100% ~$90 $90 (~$2.00/kw-month) $80 Energy >95% $70 $7.50 b • LCR upheld by MI Supreme Court $60 • MISO Zone 7 PY ’20/’21 cleared $50 $45 at CONE ~$45 ~30 MW
Slide 22: Declining Exposure to Coal
Declining Exposure to Coal . . . Coal % of Rate Basea Growing Utility Renewables b 20% 20% 2016 (Estimated % EPS ) $3 - $6 Bn Classic 7 Investment retirement opportunity PLUS Incentives on PPAs 2023 and Demand <15% Karn 1&2 Response retirement <10% <10% ~9½% 2031 Campbell Campbell (4)% 1&2 1&2 2039
Slide 23: GAAP Reconciliation
GAAP Reconciliation 23
Slide 24: 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 Nine Months Ended 9/30/20 9/30/19 9/30/20 9/30/19 Electric Utility Reported net income per share $ 0.79 $ 0.78 $ 1.62 $ 1.47 Reconciling items: O
Slide 25: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter (Unaudited) In Millions, Except Per Share Amounts 2020 1Q 2Q 3Q Net Income Available to Common Stockholders $ 243 $ 136 $ 218 Reconciling items: Electric utility and gas utility 15 4 4 Tax impact (4)
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 Millions, Except Per Share Amounts Three Months Ended Nine Months Ended 9/30/20 9/30/19 9/30/20 9/30/19 Net Income Available to Common Stockholders $ 218 $ 207 $ 597 $ 513 Reconciling items: Other
Slide 27: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) GAAP GAA 2019 over 2019 o 2003 201 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 CAGR Grow Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0
Slide 28: Reconciliation of GAAP to Non-GAAP Operating Activities
CMS ENERGY CORPORATION Reconciliation of GAAP Operating Activities to Non-GAAP Operating Activities (Unaudited) (mils) 2020 GAAP Net cash provided by operating activities $ 1,219 Add back discretionary pension contribution 531 Non-GAAP Net cash provided by operating activities $ 1,750 28