Slide 1: Business and Financial Update October 30, 2008
Business and Financial Update October 30, 2008
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement The information contained herein is as of the date of this presentation. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as "an
Slide 3: Overview, 3rd Quarter 2008 Earnings Results, Cash Flow and Capital Expenditures
3 Overview 3rd Quarter 2008 Earnings Results Cash Flow and Capital Expenditures
Slide 4: Participants
4 Participants Dave Meador, Executive Vice President and CFO Peter Oleksiak, VP and Controller Nick Khouri, VP and Treasurer Lisa Muschong, Director of Investor Relations
Slide 5: DTE Energy: A Focused, Integrated Energy Strategy
5 Execute strong regulated growth plan DTE Energy: A Focused, Integrated Energy Strategy Execute value-focused non-utility plan Continue to pay an attractive dividend Realize projected utility earnings growth Long-term: 5 - 6% per year average Effectively incorporate renewable energy, environmental
Slide 6: Overview
6 Overview Comprehensive energy legislation passed in Michigan Maintaining our commitment to a strong balance sheet and solid liquidity Continued cost savings as we closely monitor impacts of the economy Solid Q3 2008 earnings results Maintaining 2008 operating EPS guidance of $2.80 - $3.20* We will
Slide 7: 3rd Quarter 2008 Earnings Results
7 Overview 3rd Quarter 2008 Earnings Results Cash Flow and Capital Expenditures
Slide 8: Q3 2008 Operating Earnings per Share
8 Q3 2008 Operating Earnings per Share* Detroit Edison $0.98 Unconventional Gas Production $0.02 Non-Utility $0.34 Gas Midstream $0.07 Corporate & Other ($0.18) MichCon** ($0.08) $1.06 Power and Industrial Projects $0.15 * Reconciliation to GAAP reported earnings included in the appendix ** Includes
Slide 9: Q3 2008 Operating Earnings Variance
9 1st Qtr 136 136 182 190 192 209 182 172 45 8 2 17 2 29 10 172 Q3 2008 Operating Earnings Variance 3Q 2007 Operating Earnings Detroit Edison MichCon Power & Industrial Projects Unconventional Gas Production Gas Midstream Energy Trading Corporate & Other 3Q 2008 Operating Earnings $136 $9 $2 $17 $2
Slide 10: YTD Operating Earnings Variance
10 1st Qtr 317 317 338 338 340 343 327 327 23 2 2 5 2 17 2 329 YTD Operating Earnings Variance YTD 2007 Operating Earnings Detroit Edison MichCon Power & Industrial Projects Unconventional Gas Production Gas Midstream Energy Trading Corporate & Other YTD 2008 Operating Earnings $317 ($2) ($1) $5 $2
Slide 11: Detroit Edison Q3 Variance Analysis
11 1st Qtr 114 103 103 116 125 142 146 11 13 9 17 4 13 159 Detroit Edison Q3 Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix 3Q 2007 Operating Earnings $17 ($11) $114 3Q 2008 Operating Earnings $4 Economy $13 ($ millions) Detroit Edison Operating Earnings Varian
Slide 12: Detroit Edison Sales Volumes
12 1st Qtr 40.2 39.8 25.8 1st Qtr 14.4 14.1 12.7 Detroit Edison Sales Volumes Detroit Edison Service Area: Electric Sales Temperature Normalized (GWh thousands) 14.1 Q3 2007 Q3 2008 14.4 40.2 YTD 9/30/07 YTD 9/30/08 39.8 Temperature normalized sales volumes were down 2% Q3 2008 Sales are down 1% on
Slide 13: MichCon Q3 Variance Analysis
13 1st Qtr -17 -13 -22 -5 -4 -13 MichCon Q3 Variance Analysis ($22) $5 ($13) 3Q 2007 Operating Earnings 3Q 2008 Operating Earnings * Reconciliation to GAAP reported earnings included in the appendix Other O&M Seasonal third quarter loss is typical Non-recurring computer system startup costs in 2007
Slide 14: Non-Utility Q3 Variance Analysis
14 Non-Utility Q3 Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix ($ millions) Non-Utility Operating Earnings Variance* Drivers Increased coke production coupled with higher margins on incremental volumes and a Holding Company true-up related to synfuels Energy
Slide 15: 2008 Earnings Guidance
15 2008 Earnings Guidance * Reconciliation to GAAP reported earnings included in the appendix 2008 Operating Earnings Guidance * Drivers ($ millions) 15 Guidance remains unchanged YTD 2008 results are on track Strong focus on cost reductions as we continue to monitor the economy YTD 09/30/2008 2008
Slide 16: Cash Flow and Capital Expenditures
16 Overview 3rd Quarter 2008 Earnings Results Cash Flow and Capital Expenditures
Slide 17: Strong Balance Sheet and Available Liquidity
Strong Balance Sheet and Available Liquidity Successfully accessed the bond market in October Expect to occasionally access credit markets to improve liquidity Drew on bank lines to provide cushion Staggered maturities of bank credit lines No remaining debt maturities this year; only $220M next year
Slide 18: YTD 2008 Cash Flow
18 YTD 2008 Cash Flow Adjusted cash from operations includes refunds to synfuel partners in 2008 Proceeds from Antrim sale used for stock repurchases and debt reductions in 2007 Capital primarily driven by operational improvements at our utilities ($ billions) DTE Energy Cash Flow Drivers YTD 09/30/
Slide 19: YTD 2008 Capital Expenditures
19 YTD 2008 Capital Expenditures YTD 09/30/07 YTD 09/30/08 Detroit Edison capital spending totaled $651M YTD 2008, driven by environmental spending and normal operational improvements MichCon capital driven by timing of routine capital spend Power & Industrial capital driven by a coke battery invest
Slide 20: DTE Energy: A Focused, Integrated Energy Strategy
20 Execute strong regulated growth plan DTE Energy: A Focused, Integrated Energy Strategy Execute value-focused non-utility plan Continue to pay an attractive dividend Realize projected utility earnings growth Long-term: 5 - 6% per year average Effectively incorporate renewable energy, environmental
Slide 21: Contact Us
21 Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030
Slide 22: Appendix
DTE Energy’ Appendix
Slide 23: DTE Energy Trading Earnings Reconciliation
Total EITF 36 36 71 35 DTE Energy Trading Earnings Reconciliation ** Consists of the income statement effect of not recognizing changes in the fair market value of certain non derivative contracts including physical inventory and capacity contracts for transportation, transmission and storage. These
Slide 24: Detroit Edison Sales Volumes
Detroit Edison Sales Volumes 24
Slide 25: 2008 Cash Flow and Capital Guidance
25 2008 Cash Flow and Capital Guidance DTE Energy 2008 Cash Flow Guidance ($ billions) 2008 Capex Guidance ($ billions) * Reconciliation to GAAP reported cash flow included in the appendix
Slide 26: Barnett Shale Operating Metrics
Net Production Rate (Mmcfe/day) Gross Producing Wells 155 Reserves (Bcfe) Probable Proven Acreage Position (000's Acres) Net Undeveloped Acres Net Developed Acres YE2007 192 144 336 Barnett Shale Operating Metrics (Excludes Sold or Held for Sale Properties) 111 180 YE2006 291 13 9/30/08 51 64 10 38
Slide 27: Reconciliation of Q3 2008 Reported to Operating Earnings
27 Reconciliation of Q3 2008 Reported to Operating Earnings 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 performance
Slide 28: Reconciliation of Q3 2008 Reported to Operating Earnings per Share
28 Reconciliation of Q3 2008 Reported to Operating Earnings per Share 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 p
Slide 29: Reconciliation of Q3 2007 Reported to Operating Earnings
29 Reconciliation of Q3 2007 Reported to Operating Earnings 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 performance
Slide 30: Reconciliation of YTD 2008 Reported to Operating Earnings
30 Reconciliation of YTD 2008 Reported to Operating Earnings 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 performanc
Slide 31: Reconciliation of YTD 2007 Reported to Operating Earnings
31 Reconciliation of YTD 2007 Reported to Operating Earnings 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 performanc
Slide 32: Reconciliation of 2008 and 2009 Reported to Operating Earnings
32 Reconciliation of 2008 and 2009 Reported to Operating Earnings 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 33: Reconciliations of Cash From Operations to Adjusted Cash from Operations
33 Reconciliations of Cash From Operations to Adjusted Cash from Operations * accounted for in the investing activities section of the statement of cash flows Adjusted Cash From Operations Use of Adjusted Cash From Operations - DTE Energy management believes that adjusted cash from operations provid