Dte Energy Company · NYSE:DTE
Dte Energy — Q2 2020 Earnings Presentation
30 slides from Dte Energy's earnings presentation, Jul 28, 2020
Slide 1: DTE 2Q 2020 Earnings Conference Call
EXHIBIT 99.2 c DTE 2Q 2020 EARNINGS CONFERENCE CALL JULY 28, 2020 1
Slide 2: Safe harbor statement
Safe harbor statement Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, and businesses of DTE Energy. Words such as “anticipate,” “belie
Slide 3: Participants
Participants Jerry Norcia – President and CEO Dave Ruud – Senior Vice President and CFO Barbara Tuckfield – Director Investor Relations 3
Slide 4: Focusing on our employees, customers and communities; positioned to deliver on financial targets
Focusing on our employees, customers and communities; positioned to deliver on our financial targets Employees Investors • Ensuring the health and safety of our • Reaffirming 2020 operating EPS1 guidance employees • Confirming 5% – 7% operating EPS growth Successfully implemented work from target
Slide 5: On track to deliver in 2020
On track to deliver in 2020 • Achieved strong 2Q results; solid year-to-date operating earnings1 across all business lines • Executing economic response plan Operational savings implemented and being realized • Reaffirming 2020 operating EPS guidance • Progressing on key deliverables in all busine
Slide 6: Executing on our economic response plan; on track to achieve 2020 targets
Executing on our economic response plan; on track to achieve 2020 targets Economic impact update • Overall tracking below the $60 million impact detailed on the 1Q call Electric residential sales better than anticipated; commercial and industrial sales in-line with May start scenario COVID-19 co
Slide 7: DTE Electric: providing customers clean, reliable and affordable energy
DTE Electric: providing customers clean, reliable and affordable energy DTE Electric • Constructive regulatory approvals provide certainty to plan General rate case order issued in May supports investment plans Order issued in July delays rate case filing to 2021, maintains financial health and
Slide 8: DTE Gas: advancing toward net zero emissions
DTE Gas: advancing toward net zero emissions through infrastructure investments and innovative planning DTE Gas • Announced first-of-its-kind plan to reduce greenhouse gas emissions to net zero by 2050 Partnering with suppliers and customers across the natural gas chain Reducing 6 million metric
Slide 9: GSP: continuing to deliver successful results; well-positioned for future growth
GSP: continuing to deliver successful results; well-positioned for future growth Gas Storage & Pipelines Percentage of revenue from demand-based contracts or MVCs/flowing gas • LEAP flowing test gas in July and full in- service August 1; on time and under budget • Assets are well-positioned for futu
Slide 10: P&I: underpinned by strong growth in RNG and industrial energy services
P&I: underpinned by strong growth in RNG and industrial energy services Power & Industrial Projects • RNG and industrial energy services projects drive long-term growth Finalized cogeneration agreement in June Operationalized large Wisconsin RNG and Ford Motor projects this year • Developing hig
Slide 11: 2Q 2020 operating earnings variance
2Q 2020 operating earnings1 variance (millions, except EPS) 2Q 2019 2Q 2020 Variance Primary drivers Warmer weather, rate implementation, non- DTE Electric$ 134 $ 219 $ 85 qualified benefit plan investment gains and tax item offset by rate base growth costs Cooler weather and infrastructure recovery
Slide 12: On track to achieve our 2020 operating earnings guidance
On track to achieve our 2020 operating earnings1 guidance with robust economic response plan and additional growth (millions, except EPS) 2020 guidance Primary drivers DTE Electric $759 - $773 Weather and economic response plan DTE Gas 185 - 193 Gas Storage & Pipelines 277 - 293 Strong 1H performanc
Slide 13: Maintaining strong cash flow, balance sheet and credit profile
Maintaining strong cash flow, balance sheet and credit profile (billions) • Maintaining strong investment-grade credit rating and FFO1/Debt2 target at 18% Planned equity issuances 2020 – 2022 • $3.4 billion of available liquidity at end of 2Q 2020 $1.3 Convertible equity units Credit ratings S&P Moo
Slide 14: Supporting employees, customers and communities and delivering on financial targets
Supporting employees, customers and communities and delivering on financial targets • Executing plan to achieve 2020 operating earnings1 guidance with strong 2Q results • Confirming 5% – 7% operating EPS growth target • Driving utility growth by investing 80% of total 5- year capital in utility infr
Slide 15: Contact Us
CONTACT US DTE Investor Relations www.dteenergy.com/investors 313.235.8030 15
Slide 16: Appendix
Appendix DTE
Slide 17: Clear line of sight for growth supported by investment in utility infrastructure
Clear line of sight for growth supported by investment in utility infrastructure and disciplined non-utility opportunities 2020 – 2024 DTE Energy investment $19 billion Electric: Distribution infrastructure, $15 $12 cleaner generation, maintenance Gas: Base infrastructure, main $3 80% renewal accele
Slide 18: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric DTE Gas • General rate case final order (U-20561) • General rate case (U-20642): filed settlement Effective: May 15, 2020 agreement July 2020 Rate recovery: $188 million Order expected before September 25, 2020 ROE: 9.9% Effective: Oc
Slide 19: Cash flow and capital expenditures guidance
Cash flow and capital expenditures guidance Cash flow Capital expenditures (billions) (millions) 2020 2020 guidance guidance Cash from operations1 $3.0 DTE Electric Capital expenditures (4.5) Base infrastructure $680 Free cash flow ($1.5) New generation 1,050 Distribution infrastructure 850 Dividend
Slide 20: Cash flow and capital expenditures actuals
Cash flow and capital expenditures actuals Cash flow Capital expenditures (billions) (millions) YTD 2019 YTD 2020 YTD 2019 YTD 2020 Cash from operations1 $1.4 $1.7 DTE Electric Capital expenditures (1.8) (2.2) Base infrastructure $316 $475 Free cash flow ($0.4) ($0.5) New generation 318 502 Distribu
Slide 21: Weather impact on sales
Weather impact on sales Cooling degree days – DTE Electric service area Heating degree days – DTE Gas service area 2Q 2019 2Q 2020 % Change 2Q 2019 2Q 2020 % Change Actuals 150 259 73% Actuals 859 957 11% Normal 215 215 0% Normal 777 781 1% Deviation from normal (30%) 20% Deviation from normal 11% 2
Slide 22: Delivering higher operating earnings with increased certainty
Delivering higher operating earnings1 with increased certainty (millions) • Continued organic growth from well-positioned platforms GSP operating earnings Supported by strong contracts 9.5% CAGR Connected to power and industrial markets • Adjusted EBITDA2 and allocated debt2 provide $400 – $420
Slide 23: Longer-term demand increases will require continued production growth through new drilling
Longer-term demand increases will require continued production growth through new drilling U.S. natural gas demand forecast (Bcf/d) • Longer-term natural gas supply/demand fundamentals remain attractive; shorter-term gas prices 130 +2% remain challenged CAGR 120 110 • Gas demand is forecasted to gro
Slide 24: It is necessary to drill new natural gas supply annually to hold production flat
It is necessary to drill 19 Bcf/d of new natural gas supply on an annual basis to hold production flat Annual decline of U.S. natural gas supply • Given decline profiles of flowing wells, from currently-flowing wells (Bcf/d) new production is needed to just keep supply flat Wood Mackenzie forecast
Slide 25: As associated gas supply decreases, demand for other sources of dry gas increases
As associated gas supply decreases due to lower oil prices, demand for other sources of dry gas increase • The quality of the resource underlying our assets ensures gas will continue to flow on our systems 2021 – 2023 drilling supply curve (Bcf/d) Additionally, our assets are well- positioned in s
Slide 26: 2Q and YTD Energy Trading reconciliation of operating earnings to economic net income
2Q and YTD Energy Trading reconciliation of operating earnings1 to economic net income (millions) Energy Trading reconciliation • Economic net income equals economic 3 2Q 2019 2Q 2020 gross margin minus O&M expenses and taxes Operating earnings ($2) $5 Accounting adjustments2 5 (4) • DTE Energy mana
Slide 27: 2019 – 2020 reconciliation of reported to operating earnings
2019 – 2020 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
Slide 28: 2019 – 2020 reconciliation of reported to operating EPS (non-GAAP)
2019 – 2020 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 perf
Slide 29: 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 represe
Slide 30: Adjusted EBITDA and Allocated Debt are non-GAAP measures
Adjusted EBITDA and Allocated Debt are non-GAAP measures Adjusted EBITDA is calculated using net income, the most comparable GAAP measure and adding back expenses for interest, taxes, depreciation and amortization. Adjusted EBITDA also includes an adjustment for DTE’s proportional share of joint ven