Cms Energy Corporation · NYSE:CMS
Cms Energy — Investor Presentation (July 2019)
30 slides from Cms Energy's investor presentation, Jul 8, 2019
Slide 1: CMS South Haven Investor Gathering
CMS South Haven Investor Gathering July 8, 2019 FOCUSED ON WORLD CLASS PERFORMANCE
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: Welcome and Agenda
Welcome . . . Safety Tailboard Agenda: • People, Planet, Profit Patti Poppe – President & CEO • IRP • Clean & Lean PEOPLE PLANET PROFIT • Financial Review Rejji Hayes – EVP & CFO • Wrap-up / Q&A Patti & Rejji • Regulatory Fireside Chat Dan Scripps – Commissioner Mike Byrne – COO MPSC Brandon Hofmeis
Slide 4: The Triple Bottom Line: People, Planet, Profit
The Triple Bottom Line . . . PEOPLE • PLANET • PROFIT PEOPLE PLANET PROFIT PERFORMANCE . . . world class performance delivering hometown service. 4
Slide 5: IRP Settlement Approved
IRP Settlement Approved . . . Near-Term Additional Details • Financial Compensation Mechanism Energy Efficiency (FCM) for PPAs as an incentive • FCM = PPA payment x Company’s WACC a Demand Response (currently 5.88%) Expiration of Palisades PPA • Includes 525 MW of wind approved in Karn 1&2 closu
Slide 6: Clean and Lean
Clean and Lean . . . Old Utility Model Clean And Lean Big Build Supply Supply Fully utilize Modular Retirement assets Excess supply Big Excess Build supply Modular Actual Modular Demand Demand EE & DR Excess O&M O&M supply Expected Demand Fuel Fuel Big Bets Lower Risk Results in excess capacity, hig
Slide 7: Clean Energy Future
Clean Energy Future . . . Less Coal More Renewable Energy Innovative Energy Solutions Consumers Energy Capacity Mix 11% 10% 20% 22% Customer 9% Customer Customer Efficiency Efficiency 6% Efficiency Programs 11% Programs Programs 12% 8% 8% 14% 10% 90% 80% 10% 78% Total 31% Total Total Supply Su
Slide 8: Our Large Battery: Ludington Pumped Storage
Our Large Battery . . . Ludington Pumped Storage 2,292 MW Name Plate (post upgrade in 2020) . . . supports our Clean Energy Plan. 8
Slide 9: Compelling Investment Thesis
Compelling Investment Thesis . . . Aging Infrastructure Clean Energy Leader Constructive Regulation Strong Cash Flow & Affordable Prices Balance Sheet Diversified Service Territory . . . adaptive to changing conditions. 9
Slide 10: Financial Review
CMS ENERGY Financial Review
Slide 11: Our Self-Funding Model
Our Self-Funding Model . . . Plan a EPS Growth 6% - 8% Self-Funding: - Cost management (O&M, fuel, purchased power) 2 - 3 pts - Sales (economic development, energy efficiency) 1 - Other (Enterprises, tax planning, etc.) 2 INVESTMENT SELF-FUNDED 5 - 6 pts Customer Prices “at or below inflation” <2% _
Slide 12: Utility Customer Investment Plan
Utility Customer Investment Plan . . . 5-Year Plan Rate Base Growth Electric Prior Current Gas Capital Investment (Bn): Plan Plan Mix $ 4 $ 5 ~45% $23 Bn Electric Utility >7% CAGR $16 Bn New Utility Renewables 1 1 ~10 60% Gas Utility 5 5 ~45 70% Total $10 $11 100% ~40% ~30% System Need: >$50 Bn 2018
Slide 13: Michigan Offers Premium Regulatory Support
Michigan Offers . . . Premium Regulatory Supportive Policy Tier Michigan • Economic growth (tax policies, 1 7 2013 - Present skilled labor, balanced budgets) 2 10 2012 • Forward-looking test year (10-month rate case) 2008 3 18 • Energy efficiency incentive (20% of spend) 4 9 • Attractive renewable i
Slide 14: Managing Customer Bills
Managing Customer Bills . . . Cost Components Residential Bills as % of Wallet a 100% 100% (Electric & Gas) Utility Bill Down 90% 50 bps! Utility Bill ~ 4% ~ 3½% 80% Fuel and Power Costs TV & Phone ~ 4% TV & Phone ~ 4% Healthcare ~ 5% Healthcare ~ 9% 70% Food ~ 12% ~70% Food ~ 13% 60% ~70% Transport
Slide 15: Economic Development is Robust
Economic Development is Robust . . . Customer Committed Load Diversified Customer Base Economic Grand (2018 Electric & Gas Rate Mix) a Indicators: Rapids U.S. GDP Growth 32 % 17 % 20102017 Population Growth 8% 6% Auto Other 20102018 Other 2% 2% Unemployment* 2.9 % 3.6 % Industrial *April 2019 Unem
Slide 16: Credit Metrics Maintained
Credit Metrics Maintained . . . S&P / S&P Moody’s Fitch Fitch Moody’s (Dec. ‘18) (Jun. ‘19) (Jul. ‘19) Ratings Drivers AA- Aa3 A+ A1 • Strong financial position Consumers A A2 Secured A- A3 BBB+ Baa1 • Growing operating BBB Baa2 cash flow BBB- Baa3 BB+ Ba1 BBB+ Baa1 BBB Baa2 CMS Unsecured • Return o
Slide 17: Managing Work Every Year
Managing Work Every Year . . . a 2011 2012 2013 2014 2015 2016 2017 2018 2019 EPS $2.60 Reinvestment $2.40 +7% Weather & Storms $2.20 Mild +7% Summer Hot Cost +7% Summer $2.00 productivity above plan +7% Cost productivity $1.80 Reinvestment +7% above plan Cost productivity Hot Mild Storms Summer Win
Slide 18: Consistent Growth Through Changing Circumstances
Consistent Growth Through . . . 7% CAGR b a EPS Dividend +7% Weather Recession Help _____ _____ Hurt a Adjusted EPS (non-GAAP) b Non-GAAP Cold 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Feb. Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Polar Cold F
Slide 19: Compelling Investment Thesis
Compelling Investment Thesis . . . Aging Infrastructure Clean Energy Leader Constructive Regulation Strong Cash Flow & Affordable Prices Balance Sheet Diversified Service Territory . . . adaptive to changing conditions. 19
Slide 20: Q&A
Q&A
Slide 21: Fireside Chat with Commissioner Dan Scripps, Mike Byrne & Brandon Hofmeister
Fireside Chat with: Commissioner Dan Scripps, Mike Byrne & Brandon Hofmeister
Slide 22: Appendix
Appendix
Slide 23: Regulatory Outlook
Regulatory Outlook . . . 2019 Regulatory / Policy 2/7: REP approved for 3/23: Filed settlement 6/7: IRP settlement order approved Q3: Anticipated final orders 525 MW of agreement for on Calc. C & wind IRP U-20165 Demand Response Electric 1/9: Settlement approved Next Electric Order 2020 U-20
Slide 24: Annual Use of Supply
Annual Use of Supply . . . . . . demonstrates waste in the system . 24
Slide 25: Solar's Unique Characteristics
Solar’s Unique Characteristics . . . 9,000 Solar matches peak (MW) system load; 50% EE & DR Programs capacity credit Shave the Peak (Zonal Resource Credits) Potential New Load Economic Development EV Overnight Charging Existing Load Solar 6:00 a.m. 5:00 p.m. 6:00 a.m. . . . offer the best approach t
Slide 26: Mix of Coal
Mix of Coal . . . Revenue Keep in Mind… (MM) Electric $ 4,561 Our electric Utility is just one Gas 1,903 Electric! portion of Consumers Energy... Total Revenue $6,464 Electric Assets (MM) Generation $ 6,305 …generation makes up just a Transmission, Dist. & Other 9,722 Generation! portion of the elec
Slide 27: GAAP Reconciliation
GAAP Reconciliation
Slide 28: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) GAAP GAAP 2018 over 2018 over 2003 2017 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CAGR Growth Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20
Slide 29: People Planet Profit - Underpinned by Performance
People Planet Profit - Underpinned by Performance IRP Settlement Approved . . . Clean Energy Future . . . Near-Term Additional Details Less Coal Energy Efficiency • Financial Compensation Mechanism (FCM) for PPAs as an incentive Innovative More Renewable Energy • FCM = PPA payment x Company’s W
Slide 30: World Class Performance Delivering Hometown Service
World Class Performance Delivering Hometown Service Managing Customer Bills . . . Economic Development is Robust . . . Cost Components Residential Bills as % of Wallet a Customer Committed Load Diversified Customer Base 100% 100% (Electric & Gas) Economic Grand (2018 Electric & Gas Rate Mix) a Indic