Cms Energy Corporation · NYSE:CMS
Cms Energy — Investor Presentation (February 2014)
31 slides from Cms Energy's investor presentation, Feb 10, 2014
Slide 1: CMS Energy
Slide 2: Forward-looking statements and non-GAAP measures
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 EPS cumulative growth at the very high end of all peers
. . . . at the very high end of all peers. at the very high end of all peers. _ _ _ _ _ Source: Bloomberg, periods ending 12/31/2013. Consensus used for companies that haven’t reported. One Year Three Year Five Year Ten Year Future Annual Growth CMS Energy 7% 22% 37% 105% 5%-7% Note: Dividend Growth
Slide 4: Purchase of Jackson gas plant provides substantial savings to customers
. . . . provides substantial savings to customers. Purchase of Jackson Gas Plant Asset: 540 MW gas plant located in Jackson, Michigan Price: $155 million ($286/kW) Technology: Combined cycle Heat rate – 8,800 Btu/kWh provides substantial savings to customers. The Transaction The Transaction Connecti
Slide 5: New gas plant adds capacity and makes room for more investment
. . . . adds capacity and makes room for more investment. New Gas Plant adds capacity and makes room for more investment. • Customers benefit: • Lower rates • Better timing • Investors benefit: • Lower risk • Investment backfill • EPS & OCF growth more certain • No block equity Electric Reliability
Slide 6: Regulatory update: savings, securitization, avoided rate cases
• Savings from purchase of Jackson Plant; • Securitize Classic 7 • Avoid rate cases until 2015 test year • New investment self - funded . . . . new investment self-funded, improving rates. Regulatory Update Amount (mils) $545 replacing build $390 • MPSC Order complete • No appeals $150 new investmen
Slide 7: Rate cases eliminated: good for customers and investors
. . . . good for customers (prices) and investors (no ROE risk). good for customers (prices) and investors (no ROE risk). Electric Rate Case Avoided Gas Rate Case Avoided Rate Cases Eliminated! . . . .
Slide 8: CMS Energy model benefits customers and shareowners
. . . . benefits customers AND shareowners. CMS Energy MODEL Investment • Ten year - $15 billion • Small, bite size projects • None “Bet The Company” Upside Catalysts A. Capex >$15 billion B. PPA’s expire = 2,000 MW C. Credit rating D. Sales E. Capacity price increases F. ROA elimination G. Continuo
Slide 9: Visible 10-year investment plan reflects catch-up needed
. . . . reflects catch-up needed to reduce cost and improve reliability. reflects catch-up needed to reduce cost and improve reliability. 2013-2022 2013-2022 10-Year Plan 10-Year Plan Opportunity Level Opportunity Level A. Visible, 10 - Year I NVESTMENT Plan . . . .
Slide 10: Capital investment visibility clear for next ten years
. . . . clear for next ten years – needed, not just wanted. Capital Investment Visibility Amount (bils) $ clear for next ten years – needed, not just wanted.
Slide 11: Investment catch-up creates unique opportunity; lagging for peers
. . . . creates unique opportunity; lagging for peers. creates unique opportunity; lagging for peers. Amount (bils) $1.8 _ _ _ _ _ Source: 10K; actual amounts through 2012 smoothed for illustration Catch Investment -Up .
Slide 12: Expiring PPAs will provide investment headroom
. . . . will provide investment headroom. . . .. . will provide investment headroom. • Replace PPA contracts with owned generation • Provides incremental rate base (and earnings potential) with no impact to customer rates Opportunities Opportunities Capacity Need Capacity Need B. Expiring PPA’S . .
Slide 13: Credit ratings just upgraded
. . . . just upgraded. C. Credit RATINGS just upgraded. • Consistent Performance • Less Risk • Customer Focus • Constructive Regulation • Good Energy Policy Reflects Reflects Present Prior Scale S&P / Fitch Moody’s S&P Moody’s Fitch A+ A1 A A2 Consumers Secured A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+
Slide 14: Sales growth best in Midwest
. . . . best in Midwest. D. SALES Growth best in Midwest. Economic Indicators Economic Indicators Grand Rapids Michigan U.S Unemployment December 2013 5.6% 8.4% 6.7% GDP (real) thru Population Census thru July 2012
Slide 15: Capacity price increases could add value to DIG plant
. . . . could add value to the 700 MW “DIG” plant. E. CAPACITY Price Market Increases could add value to the MW “DIG” plant. Capacity price < ($ kW per month) Today (mils) Future Scenarios (mils) $5 +$30 $55 $35 +$50
Slide 16: Retail open access policy change could allow lower industrial rates
. . . . change could allow for lower industrial rates. 1.8 Million Consumers Energy Customers = 99.98% F. Retail Open Access Policy (ROA) change could allow for lower industrial rates. 1.8 Million Consumers Energy Customers = 99.98% 0.02% • Governor wants affordable residential bills and competitive
Slide 17: Michigan's energy future with sound policy and strong leadership
. . . . will continue to strengthen with sound policy and strong leadership. Michigan's Energy Future Governor’s 2025 Energy Goals Governor’s 2025 Energy Goals • Adaptability • Eliminate energy waste • Reduce coal, replace with renewables and gas • Reliability • Top quartile performance (SAIFI) • To
Slide 18: Choice is not the solution to industrial competitiveness
. . . . choice is not the solution to industrial competitiveness. “Choice creates a lot of challenges and problems so I wouldn’t jump to say increasing choice is the answer. I’m concerned about people bouncing back and forth depending on what’s going on with rates, essentially trying to arbitrage ma
Slide 19: Self-initiated cost control holds down rates
. . . . . holds down rates and allows better system reliability. holds down rates and allows better system reliability. Average Annual O&M Change +6% Peers Reinvestment -8% -2% Major Storms -6% -3% Major 2013 Storms CMS Flat -2% G. Self-Initiated Control . . . . COST
Slide 20: Continuous cost reduction a way of life at CMS
. . . . . a way of life at CMS. G. Continuous COST Reduction . . . . . a way of life at CMS. Past Progress Past Progress Future Examples Future Examples Fuel Mix Benefits MW Employees Retire Coal - - Add GCC + 540 + 20 Total -360 - Future Savings (mils) $25 Future Annual Savings (mils) 2002-2012 Act
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Slide 22: CMS mindset: deliver for customers and investors
. . . . deliver for customers AND investors. 2013 Cold Winter & Cost Savings CMS Mindset deliver for customers AND investors. 2013 Cold Winter & Cost Savings $1.66 +7% Guidance Warm Winter Cost Saving 2012 Hot Summer Reinvested earlier 2014 Cold Winter 2013 Mild Summer Icy Late December O&M B/(W) Th
Slide 23: Operating cash flow growth self-funds investment and strategy
. . . . self-funds investment and strategy. Operating Cash Flow Growth Amount (bils) $ Investment Cash flow before dividend NOLs & Credits $0.7 $0.6 $0.4 $0.5 $0.4 $0.2 $0.1 Gross operating cash flow a up $0.1 billion per year self-funds investment and strategy. Up $0.5 Billion Working capital and t
Slide 24: Mindset drives consistent real growth
. . . . drives consistent “real” growth. Mindset drives consistent “real” growth. _ _ _ _ _ Adjusted EPS (non-GAAP) excluding MTM in 2004-2006 a $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock $1.66
Slide 25: Key takeaways: attractive future total shareowner return
. . . . attractive future total shareowner return. Growth Growth • • 5%-7% EPS growth 5%-7% EPS growth • • Dividend growth premium (like earnings) Dividend growth premium (like earnings) Transparent Transparent • • Ten-year, $15 billion investment plan Ten-year, $15 billion investment plan • • Const
Slide 26: Adjusted EPS growth up 5% to 7% over 2013
. . . . growth up 5% to 7% over 2013. Adjusted EPS (non - GAAP) Enterprises and Parent Enterprises and Parent growth up 5% to 7% over 2013. growth up 5% to 7% over 2013. Utility Utility
Slide 27: CMS Energy Parent and Consumers Energy cash flow
CMS Energy Parent CMS Energy Parent Cash at year end 2013 $ Sources Consumers Energy dividend and tax sharing $ Enterprises Sources $ Uses Interest and preferred dividend (135) $ Overhead and Federal tax payments (10) Equity infusion (350) Pension contribution Uses a (495) $ Cash flow $ Financing an
Slide 28: Reported to adjusted earnings per share reconciliation
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 After-tax items: Electric and gas utility 0.21 (0.39) - - (0.07) 0.05 0.33 0.03 - 0.17 - Enterprises 0.74 0.62 0.04 (0.02) 1.25 (0.02) 0.09 (0.03) (0.11) (0.01) * Corporate interest an
Slide 29: Consumers Energy forecasted cash flow GAAP reconciliation
Consumers Energy Forecasted Cash Flow GAAP Reconciliation (in millions) (unaudited)
Slide 30: CMS Energy Parent 2014 forecasted cash flow GAAP reconciliation
CMS Energy Parent 2014 Forecasted Cash Flow GAAP Reconciliation (in millions) (unaudited)
Slide 31: Consolidated CMS Energy 2014 forecasted cash flow reconciliation
Other Consumers Equity Consumers CMS Parent Consolidated Common Dividend Infusions to Consolidated Statements of Cash Flows Description Amount Amount Entities as Financing Consumers Amount Description Cash at year end 2013 $ - $ $ - $ - $ $ Cash at year end 2013 Net cash provided by 1,328 $ $ $ (445