Cms Energy Corporation · NYSE:CMS
Cms Energy — Non-Deal Roadshow (September 2016)
27 slides from Cms Energy's roadshow presentation, Sep 6, 2016
Slide 1: Investor Meetings September 7 – 9, 2016
Investor Meetings September 7 – 9, 2016 Jackson Generating Station Ludington Pumped Storage Cross Winds Energy Park Among lowest acquisition cost ever Fourth largest in the world #2 in renewable sales in the Great Lakes area
Slide 2: Forward-looking statements and non-GAAP disclaimer
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: Recent Update
Recent Update . . . . A. Good position to meet high-end guidance Consistent & predictable B. Appointment of Commissioner Eubanks Constructive regulation C. Routine and regular rate cases Recover investment D. Reduce coal capacity to <25% Transition to cleaner fuels E. Launched Consumers Ener
Slide 4: 2016 EPS Outlook
2016 EPS Outlook . . . . Adjusted EPS (non-GAAP) Flex Items • O&M choices • Low cost financing • Plant outages • Contributions Weather & +7% other Guidance to Weather & +5% Recovery Storms Offsets Pension “Yield Curve” 5¢ Enhanced Capitalization 3 ‘15 Pension Contribution 2 Improved “UAs” & Other 3
Slide 5: Strong Commission
Strong Commission . . . . Commission Tier 1 State Ranking Sally Talberg (I) Chairman 1 6 Michigan Term Ends: July 2, 2019 2 9 Norm Saari (R) Term Ends: July 2, 2021 3 18 4 9 Rachael Eubanks (I) Term Ends: July 2, 2017 5 6 Newly appointed! Barclays Research, 2016 state rankings . . . . constructive r
Slide 6: Routine and Regular Rate Cases
Routine and Regular Rate Cases . . . . Gas Rate Cases Electric Rate Cases Year Step Amount Capex ROE Step Amount Capex (mils) (mils) 2012 Settled $16 188% Order $118 110% 2013 Stay-out 10.3% Settled 89 127 2014 Stay-out Stay-out 2015 Settled 45 200 Order 126 137 2016 Settled 40 158 Self-impl.
Slide 7: Reducing Coal Dependence
Reducing Coal Dependence . . . . A Sustainable Strategy Coal Mix • Shut down 950 MW of coal 2005 2016 • Found positions for affected employees Largest reduction of any investor-owned utility • Worked with local communities early on • Reduced our environmental 41% impact <24% Positioned well for carb
Slide 8: Launched Consumers Energy Way
Launched Consumers Energy Way . . . . Strategy Customers AND Investors Safety: • On the road to zero incidents Every day is a safe day 81% improvement past ten years Quality: • Consistent & predictable growth We get it right the first time +6% to +8% Cost: • O&M cost reductions We see and elim
Slide 9: Simple, Perhaps Unique Model
Simple, Perhaps Unique Model . . . . 2017+ Plan Capital investment (reliability, costs, enviro mandates) 6% - 8% Self Funding: - O&M cost reductions 2 - 3 pts - Sales growth 1 - No “block” equity dilution & other 2 INVESTMENT SELF-FUNDED 5 - 6 pts Rate increase at or below inflation <2% . . . . cont
Slide 10: Capex $17 Billion Over 10 Years
Capex $17 Billion Over 10 Years . . . . 2016-2025 2016-2025 Investor AND Customer How this adds value! Cleaner Energy Electric Infrastructure & Gas Enhancing Maintenance Infrastructure & Improving Productivity Maintenance Service New Reducing Generation Electric Cost Distribution & Reliability Envir
Slide 11: O&M Cost Performance
O&M Cost Performance . . . . Actual Cost Reduction New Cost Savings (2015 over 2006) 2014 2016 & 2015 & 2017 (mils) (mils) • Attrition (VSP) $ - 35 $ - 35 • Productivity (Coal Gas) - 35 - 15 • “Pole Top” Hardening - 20 - 10 • Smart Meters - 5 - 20 Peer Average ~5% • Eliminate Waste (UAs) - 15 - 10 &
Slide 12: O&M Cost Performance: Room to Improve
O&M Cost Performance . . . . Room to Improve Here’s How (Electric Distribution Cost Per Customer) 2014 2015 $30 mil Build the job as to go until 1st Quartile 1st Quartile designed 2nd Quartile Consumers Accurately schedule ($97) the job Consumers ($100) 3rd Quartile “Field services” project 4th Quar
Slide 13: Economic Development Growth
Economic Development Growth . . . . Our Service Territory Outperforms Examples of New Business a Electric Gas Combination Grand Announcement Announcement Rapids Michigan U.S C3 Ventures Inteva Products Building Permits b +224% +205% +96% Flint Adrian • Eco-friendly injection • Auto-supply maker to m
Slide 14: Operating Cash Flow
Operating Cash Flow . . . . Amount Up $0.7 (bils) Billion Gross operating cash flowa $2.8 $ 2.9 up > $0.1 billion per year $2.7 Up $2.5 $0.8 billion $2.4 since 2009! 2.4 $2.2 Interest, working $2.1 capital and taxes $1.9 1.9 $1.55 1.4 Operating cash flow NOLs avoid 0.9 Investment need for block 0.4
Slide 15: Brexit
Brexit . . . . Lower Cost Debt Pension/Debt Pre-Brexit Plan August 1 EPS Utility Bond Sensitivities Impact • Amount (mils) -- $450 • Treasury 3.90% 2.20% • Benefit Liability -50 bps -3 ¢ Spread 1.45 1.05 Coupon 5.35% 3.25% • Interest Expense -50 bps +1½ • Term 30 years • Annual Savings (mils) $ 10 •
Slide 16: Consistent Growth Through Recessions, Weather and Policy
Consistent Growth Through . . . . 7% CAGR a EPS Dividend 6% to 8% 5% to 7% Weather Recession Recession Help _____ Hurt a Adjusted EPS (non-GAAP) Cold 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Feb. Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Polar Cold Feb.
Slide 17: Appendix
Appendix
Slide 18: DIG (750 MW) & Peakers (200 MW)
“DIG” (750 MW) & Peakers (200 MW) . . . . Pre-Tax Income Opportunities (mils) $ 80 $75 70 Contracts (layering in over time) 60 $55 +$40 50 +$20 40 $35 30 New contracts $20 20 $12 10 Outage pull-ahead 0 2015 2016 2017 Future Capacity ($/kw-mth) ≈ $1.00 ≈ $2.00 ≈ $3.00 $4.50 $7.50 Available: • Energy
Slide 19: Generation Strategy: New Supply Sources
Generation Strategy: New Supply Sources . . . . Levelized cost of new build (¢/kWh) New Build 25 Consumers Energy Sources 22¢ 20 15¢ 15 12¢ 10¢ 10 9¢ Back 6¢ -up 7¢ 6¢ 6¢ 5.5¢ 5¢ 5¢ 5 4¢ 4¢ Back -up Cross Winds 7¢ Big 5 Palisades Zeeland 4¢ 0 Combined Cycle Gas Plant Wind Coal Nuclear Residential
Slide 20: Electric Customer Base Diversified
Electric Customer Base Diversified . . . . Top Ten Customers 2015 Electric Gross Margin (2015 Ranked by Deliveries) 1. Hemlock Semiconductor 2. General Motors 3. Nexteer Automotive Corporation Commercial 4. Gerdau 32% 5. Denso International Residential 50% 6. Meijer 7. State of Michigan 8. Spectrum
Slide 21: Capacity Diversity
Capacity Diversity . . . . Nuclear 8% Oil 10% Coal reduced Coal by over 40%! Purchases <24% 2nd best in U.S. 3% Renewables 10% 2016 Pumped Nuclear Storage Gas Oil 6% 8% 11% 34% Future Capacity Mix Renewables 3% • More Renewables Pumped Coal Storage 41% • Expanded Pumped 11% 2005 Storage Gas • Clean
Slide 22: Clean Power Plan
Clean Power Plan . . . . Tons CO2 (mils) 20 Consumers Energy 2012 Emissions 19 18 Retire State of Michigan Target 17 950 MW (Consumers Energy’s share) coal 16 15 14 13 12 Positioned well for compliance 11 100 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 . . . . rec
Slide 23: GAAP Reconciliation
GAAP Reconciliation
Slide 24: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.42 $1.66 $1.74 $1.89 Pretax items: Electric an
Slide 25: Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2014 2015 2016 2017 2018 2019 2020 2021 Consumers Operating Income + Depreciation & Amortization $ 1,813 $ 1,866 $ 2,056 $ 2,139 $ 2,243 $ 2,390 $ 2,518 $ 2,621 Enterprises Project Cash Flows 20 20
Slide 26: Customers and Investors: Our Model; Our Plan
Electric Customer Prices . . . . Residential Bills Industrial Rates CUSTOMERS 20% 30 % 26% 15 20 Rates & Worse Worse Fuel 5 10 Rates & 5% OUR MODEL; OUR PLAN National Avg Act 169 Midwest Avg 0 -5 Flat Residential bills well below U.S. average -10 Policy could (7)% Better (18)% Better -15 (13)% Rates
Slide 27: Actual Plan Model
Actual Plan Model 7% /year 2017+ Plan $1.89 $2.02 6% – 8% $1.55 $1.66 $1.77 Capital investment 6% - 8% $1.99 a Adjusted EPS $0.81 $1.36 $1.45 $1.08 $1.21 $1.26 $1.02 $1.08 $1.16 $1.24 - O&M cost reductions 2 - 3 pts A $0.90 $0.96 96¢ 66¢ 84¢ - Sales growth 1 B Int’l Sale $0.84 50¢ Dividend 20¢ 36¢ -