Dte Energy Company · NYSE:DTE
Dte Energy — Q3 2018 Earnings Presentation
33 slides from Dte Energy's earnings presentation, Oct 24, 2018
Slide 1: 3Q 2018 Earnings Conference Call
3Q 2018 Earnings Conference Call October 24, 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement Many factors impact forward-looking statements including, but not limited to, the following: impact of regulation by the EPA, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC, as well as other applicable governmental proceedings and regulations, including any associate
Slide 3: Participants
Participants • Gerry Anderson – Chairman and CEO • Jerry Norcia – President and COO • Peter Oleksiak – Senior Vice President and CFO • Barbara Tuckfield – Director, Investor Relations 3
Slide 4: Overview, Financial Update, Business Update
• Overview • Financial Update • Business Update 4
Slide 5: Increasing 2018 operating EPS guidance; continuing to deliver significant shareholder value
Increasing 2018 operating EPS* guidance; continuing to deliver significant shareholder value • Increasing 2018 operating EPS guidance midpoint by $0.17 to $6.30 • Broke ground on natural gas power plant • Received constructive gas rate order • Achieved successful NEXUS in service • Progressing on Re
Slide 6: 2018 guidance update keeps DTE on track to meet or exceed guidance for 11th consecutive year
2018 guidance update keeps DTE on track to meet or exceed guidance for 11th consecutive year Operating EPS* 8% CAGR 9% CAGR $6.30E $5.59 $5.28 $4.82 $4.60 $4.09 $3.94 $3.60 $3.73 $3.30 $2.90 Actual Original guidance midpoint 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 * Reconciliation of
Slide 7: Strong operating EPS growth continues in 2019
Strong operating EPS* growth continues in 2019 Operating EPS • Early outlook for 2019 EPS is $6.15 6% CAGR – 6% CAGR over 5 year period $6.30 $6.15 • 2019 outlook anticipates REF tax equity $5.78 transaction $5.59 $5.28 – Accelerates cash flows of ~$100 $4.82 $4.60 million/year for 3 years – Lowers
Slide 8: Overview, Financial Update, Business Update
• Overview • Financial Update • Business Update 8
Slide 9: 3Q 2018 operating earnings variance
3Q 2018 operating earnings* variance (millions, except EPS) 3Q 2017 3Q 2018 Change Primary Drivers Favorable weather (enabling 4Q reinvestment) and rate implementation offset by higher O&M DTE Electric $ 222 $ 304 $ 82 expense and rate base growth DTE Gas (13) (28) (15) O&M expense timing and rate b
Slide 10: Increasing 2018 operating EPS guidance midpoint by $0.17
Increasing 2018 operating EPS* guidance midpoint by $0.17 (millions, except EPS) Prior Revised Guidance Guidance Weather favorability offset by reliability DTE Electric $648 - $662 $667 - $679 reinvestment DTE Gas 152 - 160 152 - 160 Raised guidance midpoint by $40 million Gas Storage & Pipelines 22
Slide 11: 2019 operating EPS early outlook grows 6.4% from 2018 original guidance
2019 operating EPS* early outlook grows 6.4% from 2018 original guidance (millions, except EPS) 2018 2018 2019 Original Revised Early Guidance Guidance Outlook DTE Electric $648 - $662 $667 - $679 $698 - $712 DTE Gas 152 - 160 152 - 160 171 - 179 Gas Storage & Pipelines 185 - 195 225 - 235 208 - 218
Slide 12: 2019 operating earnings early outlook for utilities grows from 2018 original guidance
2019 operating earnings* early outlook for utilities shows material growth from 2018 original guidance (millions) DTE Electric DTE Gas Operating Earnings Operating Earnings $705 $175 Revised guidance $673 $18 $156 Original guidance $655 Original guidance 2018 2019 Early 2018 2019 Early Midpoint Outl
Slide 13: 2019 operating earnings early outlook for non-utilities grows from 2018 original guidance
2019 operating earnings* early outlook for non-utilities grows from 2018 original guidance (millions) GSP P&I Operating Earnings Operating Earnings Revised guidance $230 Revised guidance $163 $213 $40 $38 $127 Original guidance $190 Original guidance $125 2018 2019 Early 2018 2019 Early Midpoint Out
Slide 14: Overview, Financial Update, Business Update
• Overview • Financial Update • Business Update 14
Slide 15: Reliability investments at utilities support growth and increase customer satisfaction
Reliability investments at utilities support growth and increase customer satisfaction DTE Electric • Broke ground on 1,100 MW natural gas power plant • Proposing expanded renewables investments to support 300 MW voluntary renewables program with the opportunity to expand based on customer demand DT
Slide 16: Non-utility businesses achieved significant milestones with encouraging new project queue
Non-utility businesses achieved significant milestones with encouraging new project queue GSP • NEXUS in service – Flowing gas – Able to serve multiple markets P&I • RNG – Two projects started in 2017 performing well – Two projects closed in 2018 under construction – Currently in exclusive discussio
Slide 17: Summary
Summary • Strong 2018 performance enables 2nd guidance increase and significant reinvestment • On path to 11th consecutive year of meeting or exceeding original guidance • Providing early outlook for 2019 operating EPS* which provides 6.4% growth from 2018 original guidance • Driving utility growth
Slide 18: Contact us
Contact us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 18
Slide 19: Appendix
Appendix Ms DTE Energy 19
Slide 20: DTE Electric variance analysis
DTE Electric variance analysis (millions) Operating Earnings* Variance Primary Drivers $14 ($11) $16 $304 $63 • Warmer weather in 2018 $222 Variance to normal weather – 3Q 2017: $3 – 3Q 2018: $66 3Q 2017 Weather Rate Case Rate Base O&M 3Q 2018 Operating Impact Growth and Operating Earnings Other Ear
Slide 21: Weather and DTE Electric weather normal sales
Weather and DTE Electric weather normal sales Cooling degree days – DTE Electric service territory Heating degree days – DTE Gas service territory 3Q 2017 3Q 2018 % change 3Q 2017 3Q 2018 % change Actuals 590 822 39% Actuals 100 88 (12%) Normal 580 580 0% Normal 115 118 3% Deviation from normal 2% 4
Slide 22: Actual cash flow and capital expenditures
Actual cash flow and capital expenditures (billions) (millions) Cash Flow Capital Expenditures YTD 2017 YTD 2018 YTD 2017 YTD 2018 DTE Electric Cash From Operations* $1.6 $2.0 Base Infrastructure $584 $630 Capital Expenditures (1.8) (2.3) New Generation 41 81 Free Cash Flow ($0.2) ($0.3) Distributio
Slide 23: 2018 cash flow and capital expenditures guidance
2018 cash flow and capital expenditures guidance (billions) (millions) Cash Flow Capital Expenditures 2018 2018 Guidance Guidance Cash From Operations* $2.2 DTE Electric Base Infrastructure $750 Capital Expenditures (3.6) New Generation 340 Free Cash Flow ($1.4) Distribution Infrastructure 810 $1,90
Slide 24: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric DTE Gas • General rate case - filed July 2018 (U-20162) • General rate case - order received – Final order: May 2019 September 2018 (U-18999) – Rate recovery: $328 million – Effective: October 2018 – ROE: 10.5% – Rate recovery: $9 million ($47
Slide 25: 3Q and YTD Energy Trading reconciliation of operating earnings to economic net income
3Q and YTD Energy Trading reconciliation of operating earnings* to economic net income 3Q 2017 2018 • Economic net income equals economic Operating Earnings ($10) $15 gross margin*** minus O&M expenses and Accounting Adjustments** 7 3 taxes Economic Net Income ($3) $18 • DTE Energy management uses e
Slide 26: Reconciliation of reported to operating earnings
Reconciliation of reported to operating earnings (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 27: Reconciliation of reported to operating EPS
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 meas
Slide 28: 2008 – 2009 full year reconciliation of reported to operating EPS
2008 – 2009 full year 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 pr
Slide 29: 2010 – 2011 full year reconciliation of reported to operating EPS
2010 – 2011 full year 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 pr
Slide 30: 2012 – 2013 full year reconciliation of reported to operating EPS
2012 – 2013 full year 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 pr
Slide 31: 2014 – 2015 full year reconciliation of reported to operating EPS
2014 – 2015 full year 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 pr
Slide 32: 2016 – 2017 full year reconciliation of reported to operating EPS
2016 – 2017 full year 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 pr
Slide 33: Reconciliation of reported to operating earnings
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 repres