DTE Energy Company · NYSE:DTE
DTE Energy — Q2 2010 Earnings Presentation
30 slides from DTE Energy's earnings presentation, Jul 30, 2010
Slide 1: Second Quarter 2010 Earnings Conference Call
Second Quarter 2010 Earnings Conference Call July 30, 30 2010
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 resulting in changes in demand, customer conservation and increased thefts of electricit
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: Overview, Earnings Results, Cash Flow and Capital Expenditures
• Overview • Second Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures y • Summary 4
Slide 5: Investment Thesis
I Investment t t Thesis Th i • DTE Energy has a robust plan for 5%-6% long-term operating EPS growth combined with an attractive dividend yield • Strong utility growth plan driven by mandated rate base investments • Constructive regulatory structure and continued 5%-6% Average Annual EPS Growth cost
Slide 6: Second Quarter 2010 Summary
Second Quarter 2010 Summary • DTE Energy Q2 2010 operating earnings per share* of $0.39 vs. $0.56 Q2 2009 – Q2 2010 earnings impacted by lower Energy Trading results – Better than expected results at Power & Industrial and solid results at both utilities – 2010 remains on track to meet operating ear
Slide 7: Dividend Growth
Dividend Growth DTE E Energy A Annualized li d Di Dividend id d $2.24 • Increased annualized dividend from $2.12 per share to $2.24 per share; 5 7% increase 5.7% $2.12 • Improves indicated dividend yield to 4.6% based on 07/28/10 share price • Our annualized payout ratio based on the midpoint of 201
Slide 8: 2010 Operating Earnings Guidance
2010 Operating p g Earnings* g Guidance YTD 2010 2010 (millions except EPS) (millions, A t l Actual G id Guidance • Overall, YTD results are tracking to plan Detroit Edison $178 $410 - 4359 • Utility results remain on target to meet 95 - 105 9 full year guidance MichCon 78 • Power & Industrial deliv
Slide 9: Overview, Earnings Results, Cash Flow and Capital Expenditures
• Overview • Second Quarter 2010 Earnings Results • Cash Flow and Capital Expenditure y • Summary 9
Slide 10: Second Quarter 2010 Operating Earnings Per Share
Second Q Quarter 2010 Operating p g Earnings g Per Share* $0.39 Detroit Edison MichCon** Non-Utility Corporate & Other $0.51 ($0.01) $0.03 ($0.14) Gas Storage & Unconventional Power & Industrial Energy Pipelines Gas Production Projects Trading $0.06 ($0.01) $0.13 ($0.15) * Reconciliation to GAAP rep
Slide 11: Second Quarter 2010 Operating Earnings Variance
Second Quarter Q 2010 Operating p g Earnings g Variance Operating Earnings* Drivers (millions, except EPS) Q2 2010 Q2 2009 Change Detroit Edison Detroit Edison $ 87 $ 83 $ 4 • January 2010 rate order partially offset by 2009 property tax settlement and other Mi hC MichCon (1) (15) 14 one-time cost r
Slide 12: Detroit Edison Variance Analysis
Detroit Edison Variance Analysis Detroit Edison Operating Earnings* Variance Drivers ($ millions) $40 ($8) • Margin primarily driven by ($7) January 2010 rate order ($21) • O&M driven by 2009 one-time $87 $83 cost reduction efforts • Higher depreciation on increased asset base • Taxes and other prim
Slide 13: MichCon Variance Analysis
MichCon Variance Analysis y MichCon Operating Earnings* Variance Drivers ($ millions) • Warmer weather Q2 2010 ($1) $2 • June 2010 rate order $4 • O&M primarily driven by lower uncollectible expense • Other primarily driven by lower lost gas expense ($15) ($7) $15 13 * Reconciliation to GAAP reporte
Slide 14: Energy Trading Variance Analysis
Energy gy Trading g Variance Analysis y YTD Energy Trading Operating Earnings* Variance Drivers ($ millions) • Decrease in earnings driven $67 ($32) mainly by timing, which represents transactions where the accounting income is recognized in future periods • Results impacted by increasing gas prices
Slide 15: Overview, Earnings Results, Cash Flow and Capital Expenditures
• Overview • Second Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures y • Summary 15
Slide 16: Our Solid Balance Sheet Provides Financial Flexibility
Our Solid Balance Sheet Provides Financial Flexibility • A strong balance sheet continues to be a key DTE Energy priority • Leverage and cash flow metrics within targeted ranges (50%-52% leverage, 22%-24% FFO/debt) • Nearly completed 2010 funding requirements: – Issued $100 million of equity to pens
Slide 17: YTD June 2010 Cash Flow
YTD June 2010 Cash Flow DTE Energy Cash Flow Drivers ($ billions) • Strong year-to-date cash from YTD YTD operations, in-line with 2009 06/30/10 06/30/09 • Lower capital spending in 2010 Cash From Operations $1.2 $1.3 primarily driven by timing of utility Capital Spending (0.5) (0.6) projects Free C
Slide 18: YTD June 2010 Capital Expenditures
YTD June 2010 Capital p Expenditures p DTE Energy Capital Expenditures Drivers ($ millions) YTD 06/30/10 YTD 06/30/09 Detroit Edison Operational $362 $424 • Lower Detroit Edison capital driven by Environmental 29 60 timing of generation outages and Renewables / EO 11 6 completion of large environmen
Slide 19: Overview, Earnings Results, Cash Flow and Capital Expenditures
• Overview • Second Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures • Summary y 19
Slide 20: Summary
Summary h 2010 remains on track to meet operating earnings guidance; expect 10% operating EPS growth in 2010 h Solid S lid b balance l sheet h and d$$700 00 million illi off ffree cash h flflow through h h Q2 h Increased annualized dividend from $2.12 to $2.24 per share; 5.7% increase h Constructive
Slide 21: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030 21
Slide 22: Appendix
DTE Energy’ ” Appendix
Slide 23: Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* Earnings to Economic Net Income ($ millions) Energy Trading Operating $19 $31 E Earnings* i * • Economic net income ($ millions, after-tax) equals economic gross margin*** minus O&M YTD 2010 YTD 2009 $12 expenses and taxes. • DTE Energygy mana
Slide 24: Unconventional Gas Production Barnett Shale Operating Metrics
Unconventional Gas Production B tt Sh Barnett l O Shale ti M Operating ti Metrics Reserves (Bcfe) Acreage Position (000’s Acres) 2010 YTD Results • Drilled 6 wells 489 432 63 67 Net • Net Production of 2.4 Bcfe 234 Proven Developed 15 167 15 Acres • Capital Expenditures $12 million Net • 4 wells wai
Slide 25: 2010 Capital Expenditures & Cash Flow Guidance
2010 Capital p Expenditures p & Cash Flow Guidance Capital Expenditures Cash Flow Summary ($ millions) ($ billions) 2010 2009 Guidance Actual 2010 2009 Guidance Actual Detroit Edison Operational $750 $666 Cash From Operations $1.6 $1.8 Environmental 75 116 Capital Spending (1.4) (1.1) Renewables / E
Slide 26: Reconciliation of Full Year 2010 Reported to Operating Earnings
Reconciliation of Full Year 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 primar
Slide 27: Reconciliation of Q2 2010 Reported to Operating Earnings
Reconciliation of Q2 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 Q2 2009 Reported to Operating Earnings
Reconciliation of Q2 2009 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 30: Reconciliation of YTD June 30, 2009 Reported to Operating Earnings
Reconciliation of YTD June 30, 2009 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