Cms Energy Corporation · NYSE:CMS
Cms Energy — Investor Presentation (May 2023)
37 slides from Cms Energy's investor presentation, May 2023
Slide 1: Leading the Clean Energy Transformation
Leading the CLEAN ENERGY TRANSFORMATION Investor Meetings May 2023
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: CMS Energy Overview
CMS Energy Overview Corporate Structure Key Information CMS Energy 2022 Financial Statistics (NYSE: CMS) Based in Jackson, MI ~8,500 Employees (41% unionized)a Consumers Energy NorthStar Clean Energy $8.6B Revenue 2022 $838M Adjusted net incomeb >95% regulated Avg. Rate Base 20 years Industry-leadin
Slide 4: Consumers Energy Positioned Well
Consumers Energy Positioned Well . . . 4th Largest Combination Utility Electric Gas Combined • Electric Utility 1.9M electric customers 7,526 MW of capacity • Gas Utility 1.8M gas customers 309 Bcf gas storage • Serving 6.7M Michigan residents Attracted Planet Goalsa >750 MW of new or expanding • Ex
Slide 5: NorthStar Clean Energy
a NorthStar Clean Energy . . . Renewable Platform NorthStar Clean Energy helps companies with sustainability targets decarbonize through customized green energy and decarbonization solutions. Based in Michigan, NorthStar Clean • 368 MW of wind (OH, TX) Energy works alongside its commercial and indus
Slide 6: Over 135 years of Sustainable Business Practices
Over 135 years of Sustainable Business Practices. . . Founded by the Exiting Coal in 2025 and Foote Brothers in 1886 adding 8 GW of solar by 2040 Solar Gardens Cross Winds Energy Park Karn Coal Plant Ludington Pumped Storage . . . now cleaner and leaner than ever. 6
Slide 7: Our Commitment to Sustainability
Our Commitment to Sustainability . . . TOP QUARTILE FOR DOUBLE A RATED GLOBAL UTILITIES Economic Developmenta 800 230 >750 600 105 Megawatts 126 400 Attracted >750 MW of 75 new or expanding 101 businesses to our service 200 territory since 2015 69 Received U.S. Environmental Protection Agency 2022 E
Slide 8: ESG Disclosures are Transparent
ESG Disclosures are Transparent . . . • CMS Energy & Consumers Energy • DE&I Website Websites • EEO1 Report • SEC Filings (10-K & Proxy) • Carbon Disclosure Project • SASB Index (Electric Utilities & Power Generation) • Report Scope 1, 2 & 3 Emissions • Water • SASB Index (Gas Utilities & Distributo
Slide 9: Investment Thesis
INVESTMENT THESIS
Slide 10: Investment Thesis
Investment Thesis . . . Industry-leading net zero commitments Clean Energy Leader Diversified Service Territory Infrastructure Excellence through the Renewal a Top-tier regulatory jurisdiction Strong Cash Flow Constructive & Balance Sheet Legislation Affordable Prices Premium total shareholder retur
Slide 11: Needed Infrastructure Renewal
Needed Infrastructure Renewal . . . Electric distribution system Exiting coal in 2025 and is older than peers adding 8 GW of solar by 2040 Goal to improve ≥1K miles annually 25 years of main replacement >$500M of vegetation through our management spend over Enhanced Infrastructure a 5 years to impro
Slide 12: Michigan's Strong Regulatory Environment
Michigan’s Strong Regulatory Environment . . . 2022 2023 Supportive Energy Law Integrated Resource Plan (IRP) • Timely recovery of investments ✓ Forward-looking test years ✓Jun. 23 : rd Settlement Approved ✓ 10-month rate cases U-21090 ✓ Earn authorized ROEs ✓ Monthly fuel adjustment trackers (PSCR/
Slide 13: De-risking Inflationary Pressures
De-risking Inflationary Pressures . . . Near-term Risk Mitigation Episodic Cost Savings Global Risks Countermeasures Year Event Savings ✓ Executed 5-yr union contracts in 2020 (>40% unionized) 2022 Palisades retirement >$90M Labor ✓ ~95% non-union retention ratea 2023 Karn 1&2 coal unit retirementsb
Slide 14: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured • Strong financial A A1 A+ position Commercial Paper A-2 P-2 F-2 • Growing operating cash flow Outlook Stable Stable Stable CMS Energy • Constructive return on regulated Senior Unsecured BBB Baa2 BBB in
Slide 15: Expansive Economic Development Efforts
Expansive Economic Development Efforts . . . Electric Gas Combined 2022 New Load Gotion New & Expanding Global EV Battery Load in 2022 Manufacturer 230 MW ~$2,400M investment >100 agreements >2,000 jobs Gotion Hemlock Semiconductor Leading Provider of Polysilicon ~$375M investment ~170 jobs SK Siltr
Slide 16: Net Zero Commitments Drive Decarbonization
Net Zero Commitments Drive Decarbonization . . . 2025 Zero coal ~60% carbon emissions reduction a Net zero methane emissions for our gas delivery system and 20% 2030 gas customer emissions reductionb Accelerating vintage main and service replacements Zero coal Renewable natural gas Net zero carbon e
Slide 17: Our Clean Energy Transformation
Our Clean Energy Transformation . . . Exit Coal in 2025… …While Ensuring Reliability a (Coal % PP&E ) <20% • Purchase ~1.2 GW of existing gas Classic 7 capacity (Covert) retirement and Karn 1&2 retirement • RFP 700 MW of PPAs (500 MW of Campbell 1–3 dispatchable resources) retirement; <10% Regulator
Slide 18: Industry-Leading Financial Performance
Industry-Leading Financial Performance . . . Adjusted EPSa +6% to +8% Dividend Weather Help Recession Recession Recession / Hurt Pandemic 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+ Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild P
Slide 19: Governance
We integrate oversight by the board, our enterprise risk management (ERM) program and robust strategic and business planning processes when addressing ESG matters. GOVERNANCE
Slide 20: Exceptional Board Governance
Exceptional Board Governance . . . 11 Members 91% Independent . . . led by an independent Chair and highly skilled, diverse Board. 20
Slide 21: Diverse, Engaged and Experienced Board
Diverse, Engaged and Experienced Board . . . Diversity Experience 63 Average age Senior Leadership Financing Accounting or Fin. Reporting 100% 100% Regulatory Environment & Governmental Affairs 100% Compared to 36% Female 32% for the Risk Management 100% S&P 500a Customer Experience 82% Compared to
Slide 22: Committee Membership
Committee Membership . . . Political contributions >$10K need Member 100% Board approval Chairperson Independent Governance, Compensation & Sustainability, & Name Audit Human Resources Executive Finance Public Responsibility Jon E. Barfield Deborah H. Butler Kurt L. Darrow William
Slide 23: Committee Responsibilities
Committee Responsibilities • Oversees: Audit • Integrity of financial statements & information • Compliance with legal & regulatory requirements • Risk management policies, controls & exposures • Reviews: • Performance of internal audit function Compensation & • Review & Approve: • Executive compens
Slide 24: CEO Compensation
CEO Compensation . . . Compensation Mix for CEO Operational Goals • Employee Safety ~25% tenure- PEOPLE • Culture Index based 18% Annual • Customer Experience Index incentive 67% PROFIT Long-term • Electric Reliability Based on 15% incentive PROFIT PLANET EPS (70%) & Base (Based on relative Utility
Slide 25: Risks are Carefully Considered
Risks are Carefully Considered . . . Risks Mitigation Efforts • Participation in legislative and regulatory policy Regulatory Environment development Climate • Settled the Clean Energy Plan case approving transitioning Carbon Emissions out of all coal in 2025 and expansion of renewable build-out (Re
Slide 26: Political Giving
Political Giving . . . Political Giving Focus Enhanced Disclosures • Meeting Michigan’s energy needs • Publishing annually on the company’s website: • Expenditures made to influence the outcome • Helping the state’s communities thrive of ballot initiatives • Providing safe, reliable, affordable and
Slide 27: Appendix
Appendix 27 27
Slide 28: Approved 2021 IRP
Approved 2021 IRP . . . Key Objectives 2021 IRP 2018 IRP One of the 1st in • Exit Coal Operations the nation In 2025 By 2040 Retire: Karn 1&2 ~60% carbon 2023 2023 emission reduction Campbell 1&2/3 in 2025a 2025 2031/39 • Reliable, Affordable, Capital Upside Covert $815M / >1 GW No new dispatchable
Slide 29: 2022 Business Mix
2022 Business Mix Total PP&E ($M) (%) Electric Generation $3,277 14% Coal 477 ~2% ~2% coal of Wind, solar, hydro 2,013 9 total PP&E in Gas & other 787 3 2022 Distribution 8,294 37 Other 781 3 Total electric $12,352 ~54% Gas Distribution $5,473 24% Transmission 2,230 10 Underground storage facilities
Slide 30: Financial Results & Outlook
Financial Results & Outlook . . . Q1 2023 Results Amount Commentary Adjusted EPS $0.70 Managing through weather 2023 Outlook Adjusted EPS Guidance $3.06 – $3.12 Toward the high end Annual Dividend Per Share $1.95 Up 11¢ Long-Term Outlook Adjusted EPS Growth +6% to +8% Toward the high end Dividend Pe
Slide 31: Utility Customer Investment Plan
Utility Customer Investment Plan 5-Year Plan ($B) 2023 2024 2025 2026 2027 Total Clean Energy Generation $0.7 $0.6 $0.8 $0.5 $0.5 $3.1 59% Electric utility investment Electric Distribution, Covert & Other 1.8 1.0 1.1 1.1 1.1 6.1 Gas Utility 1.2 1.3 1.3 1.3 1.2 6.3 Total $3.7 $2.9 $3.2 $2.9 $2.8 $15.
Slide 32: Endnotes
ENDNOTES 32 32
Slide 33: Presentation Endnotes
Presentation Endnotes Slide 3: aExcludes seasonal and contract workers bAdjusted, (non-GAAP) cDividend per share Slide 4: aNet zero methane emissions for our gas delivery system, net zero carbon emissions for our electric business (includes PPAs and MISO market purchases), net zero GHG emissions for
Slide 34: 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 35: 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 3/31/23 3/31/22 Net Income Available to Common Stockholders $ 202 $ 351 Reconciling items: Disposal of discontinued operations gain - (5) Tax
Slide 36: 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) FUNDS FROM OPERATIONS In millions Year Ended 12/31/2022 Net Cash Provided by Operating Activities $ 855 Recon
Slide 37: 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 12/31/22 12/31/21 12/31/22 12/31/21 Net Income Available to Common Stockholders $ 168 $ 637 $ 827 $ 1,348 Reconciling item