DTE Energy Company · NYSE:DTE
DTE Energy — Q2 2011 Earnings Presentation
29 slides from DTE Energy's earnings presentation, Jul 28, 2011
Slide 1: 2nd Quarter 2011 Earnings Conference Call
2nd Quarter 2011 Earnings Conference Call July 28, 28 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. Many factors may impact forward-looking statements including, but not limited to, the following: economic conditions and population changes in our geographic area resulting in changes in demand, customer c
Slide 3: Participants
Participants p • Dave Meador, Executive Vice President and CFO • Peter Oleksiak, Vice President, Controller & Investor Relations • Nick Khouri, Vice President and Treasurer • M kR Mark Rolling, lli Di Director t off IInvestor t R Relations l ti 3
Slide 4: Agenda: Overview
• Overview • Second Quarter 2011 Earnings Results • Cash Flow and Capital Expenditures y • Summary 4
Slide 5: Investment Thesis
Investment Thesis DTE Energy has a plan it believes will provide 5% - 6% long-term operating EPS growth, an attractive dividend yield and a strong balance sheet – Utility growth plan driven by mandated investments – Constructive regulatory structure and continued 5%-6% Average Annual EPS Growth cost
Slide 6: Overview
Overview DTE Energy 2Q 2011 operating earnings per share share* of $0.65 vs. $0.39 in 2Q 2010; – Detroit Edison results driven higher by favorable margin – Power & Industrial earnings down following non-repeating earnings in 2010 – Gas Storage g & Pipelines continues to provide solid earnings g stre
Slide 7: Maintaining 2011 Operating Earnings Guidance
Maintaining 2011 Operating Earnings Guidance Operating Earnings* (millions, except EPS) YTD 2011 2011 Actual Guidance • YTD performance supports full year Detroit Edison $ 197 $435 - $445 guidance MichCon 80 110 - 115 Gas Storage & • Utilities on track to earn allowed ROE 29 53 Pipelines – Final ord
Slide 8: Agenda: Second Quarter 2011 Earnings Results
• Overview • Second Quarter 2011 Earnings Results • Cash Flow and Capital Expenditures y • Summary 8
Slide 9: Second Quarter 2011 Operating Earnings Per Share
Second Quarter 2011 Operating Earnings Per Share Share* $0.65 Detroit Edison MichCon** Non-Utility Corporate & Other $0 59 $0.59 ($0 02) ($0.02) $0 18 $0.18 ($0 10) ($0.10) Gas Storage & Unconventional Power & Industrial Energy Pipelines Gas Production Projects Trading $0.09 ($0.01) $0.03 $0.07 * Re
Slide 10: Second Quarter 2011 Operating Earnings Variance
Second Quarter Q 2011 Operating p g Earnings g Variance Operating Earnings* Drivers (millions, except EPS) 2Q 2011 2Q 2010 Change Detroit Edison Detroit Edison $ 100 $ 87 $ 13 • Favorability due to self-implemented rates in 2Q 2011 Mi hC MichCon (3) (1) (2) MichCon Gas Storage & • Final rates lower
Slide 11: Agenda: Cash Flow and Capital Expenditures
• Overview • Second Quarter 2011 Earnings Results • Cash Flow and Capital Expenditures y • Summary 11
Slide 12: Targeted Financial Metrics
Targeted Financial Metrics Leverage* • A strong balance sheet continues to be a key Target priority 50% - 52% 53% • Leverage and cash flow metrics within 51% 51% targeted ranges, ranges without additional equity in 2011 2009 2010 2011E • $1.7 billion of available liquidity at end of 2Q 2011 Funds fr
Slide 13: YTD 2011 Cash Flow
YTD 2011 Cash Flow DTE Energy Cash Flow* Flow Drivers (billions) YTD 2011 YTD 2010 • Cash C h from f operations ti comparable bl to t Cash From strong levels achieved in 2010 Operations $1.2 $1.2 • Increased capital spend reflects p Capital Spending p g ((0.7)) ((0.5)) higher renewable energy and Fr
Slide 14: YTD 2011 Capital Expenditures
YTD 2011 Capital Expenditures DTE Energy Capital Expenditures Drivers (millions) YTD 2011 YTD 2010 Detroit Edison • Detroit Edison primarily driven by Operational $341 $355 increased spending on wind projects and higher environmental spend at Monroe Environmental 75 36 Power Plant Renewable Energy /
Slide 15: Agenda: Summary
• Overview • Second Quarter 2011 Earnings Results • Cash Flow and Capital Expenditures • Summary y 15
Slide 16: Summary
Summary ¾ YTD earnings are on track; maintaining 2011 operating EPS* guidance of $3.40 - $3.70 ¾ Balance sheet and cash flow metrics remain strong g ¾ Working towards constructive outcome in Detroit Edison rate case; final order expected in October 2011 ¾ Significant utility investment underway driv
Slide 17: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030 17
Slide 18: Appendix
DTE Energy’ ” Appendix
Slide 19: Gas Storage & Pipeline Growth: Bluestone Pipeline & Gathering Project
Gas Storage & Pipeline Growth: Bluestone Pipeline & Gathering Project Bluestone Project • Signed long‐term agreement with Southwestern Energy • Gathering pipeline lateral • In‐field gathering system Bluestone • Up to $280 million capital investment • Assets begin going in in‐service service Q2 2012
Slide 20: Reduced Emissions Fuel: Potential for Significant Value and Strong Earnings
Reduced Emissions Fuel: Potential for Significant V l and Value d Strong St Earnings E i for f 10 Years Y Illustrative Project Returns (millions) High Case Factors that Drive Earnings, NPV Level $400 $300 • Number of units ultimately sited Base case $200 – Five completed; two additional facilities L
Slide 21: 2011 Capital Expenditures & Cash Flow Guidance
2011 Capital Expenditures & Cash Flow Guidance Cash Flow Summary* y Capital p Expenditures p (billions) (millions) 2011 2011 Guidance Guidance Detroit Edison Cash From Operations $1.9 Operational $720 Capital Spending (1.7) Environmental 230 Free Cash Flow $0.2 Renewables / EE 350 $1,300 Asset Sales
Slide 22: DTE Energy Trading Reconciliation of 2Q Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of 2Q O Operating ti Earnings* E i * to t Economic E i Net N t Income I (millions) Energy Trading Operating E i Earnings* * $12 ($10) (millions, after-tax) • Economic net income equals economic gross 2Q 2011 2Q 2010 $2 margin*** minus O&M expenses and taxes. Realize
Slide 23: DTE Energy Trading Reconciliation of YTD Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of YTD O ti E Operating i * tto E Earnings* i N Economic Nett IIncome (millions) $12 $26 Energy Trading Operating E Earnings* i * $14 • Economic net income (millions, after-tax) equals economic gross margin*** minus O&M YTD 2011 YTD 2010 expenses and taxes. • DTE En
Slide 24: Barnett Shale Operating Metrics
Barnett Shale Operating Metrics Reserves (Bcfe) Acreage Position (000’s Acres) 2011 YTD Results 77 • 13 new wells on-line, 1 in 555 70 489 progress 17 Net 201 16 • Production of 2.4 Bcfe Proven Developed 234 Acres • 60% increase in oil sales 60 Net volume year-over-year 354 54 255 Probable Undevelop
Slide 25: Reconciliation of 2Q 2011 Reported to Operating Earnings
Reconciliation of 2Q 2011 Reported to O Operating ti Earnings E i 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 perfo
Slide 26: Reconciliation of YTD June 30, 2011 Reported to Operating Earnings
Reconciliation of YTD June 30, 2011 R Reported t d to t Operating O ti Earnings E i 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
Slide 27: Reconciliation of 2Q 2010 Reported to Operating Earnings
Reconciliation of 2Q 2010 Reported to O Operating ti Earnings E i 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 perfo
Slide 28: Reconciliation of YTD June 30, 2010 Reported to Operating Earnings
Reconciliation of YTD June 30, 2010 R Reported t d to t Operating O ti Earnings E i 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
Slide 29: Reconciliation of Full Year 2011 Reported to Operating Earnings
Reconciliation of Full Year 2011 Reported to O Operating ti Earnings E i 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 primar