Dte Energy Company · NYSE:DTE
Dte Energy — Q2 2014 Earnings Presentation
30 slides from Dte Energy's earnings presentation, Jul 25, 2014
Slide 1: 2nd Quarter 2014 Earnings Conference Call
2nd Quarter 2014 Earnings Conference Call July 25, 2014
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: impact of regulation by the FERC, MPSC, NRC, CFTC and other applicable governmental proceedings and regulati
Slide 3: Participants
Participants • Peter Oleksiak – Senior Vice President and CFO • Jeff Jewell – Vice President and Controller • Mark Rolling – Vice President and Treasurer • Anastasia Minor – Executive Director, Investor Relations 3
Slide 4: Agenda: Overview
• Overview • Second Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 4
Slide 5: Our business strategy is fundamental to how we create value for our investors
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by infrastructure investments 5% - 6% Annual Strategic, transparent, low-risk growth EPS Growth opportunities in non-utility businesses provide diversity in earnings and geography Construct
Slide 6: DTE raised its annualized dividend over 5% to $2.76
DTE raised its annualized dividend over 5% to $2.76 marking the fifth consecutive year of an increase in line with our stated long-term earnings targets (dollars) Operating EPS* Guidance 7.2% CAGR Midpoint 2008-2014 $4.30 $4.09 $3.94 $3.75 $3.64 Dividend $3.33 per share 5.4% CAGR 2009-2014 $2.83 $2.
Slide 7: DTE has delivered total shareholder return above market indices
DTE has delivered total shareholder return above market indices Historical Total Shareholder Return CAGR* 25% 21% 19% 19% 19% 17% 14% 14% 12% 11% 8% 7% YTD 3 YR 5 YR 10 YR DTE S&P500 Utilities S&P500 * As of June 30, 2014 Source: Bloomberg 7
Slide 8: Strong opportunities in our growth segments support 5-6% EPS growth
We see strong opportunities in our growth segments that support our 5-6% EPS growth outlook Utility Utility investments more than double depreciation levels driven by… • Replacement of aging coal plants and energy policy reform • Main renewal, pipeline integrity and meter move out investments Non-Ut
Slide 9: We remain confident in our 2014 operating earnings guidance
We remain confident in our 2014 operating earnings* guidance (millions, except EPS) 2014 YTD 2014 Actuals Guidance DTE Electric $265 $520 - $530 DTE Gas 125 120 - 126 • DTE Gas performance providing contingency for Gas Storage & Pipelines 39 78 - 86 potential unfavorable weather and O&M reinvestment
Slide 10: Agenda: Second Quarter 2014 Earnings Results
• Overview • Second Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 10
Slide 11: DTE Energy Second Quarter 2014 Operating Earnings Per Share
DTE Energy Second Quarter 2014 Operating Earnings Per Share* $0.73 DTE Electric DTE Gas Non-Utility Corporate & Other $0.73 ($0.02) $0.12 ($0.10) Gas Storage & Power & Industrial Energy Trading Pipelines Projects $0.10 $0.07 ($0.05) * Reconciliation to GAAP reported earnings included in the appendix
Slide 12: DTE Energy Second Quarter 2014 Operating Earnings Variance
DTE Energy Second Quarter 2014 Operating Earnings Variance Operating Earnings* Drivers (millions, except EPS) 2Q 2013 2Q 2014 Change DTE Electric DTE Electric $ 89 $ 129 $ 40 • Primarily revenue decoupler amortization and 2Q 2013 O&M reinvestment not DTE Gas 8 (4) (12) repeated in 2Q 2014 Gas Storag
Slide 13: DTE Electric Variance Analysis
DTE Electric Variance Analysis Operating Earnings* Variance Drivers (millions) • Favorable weather in Q2 2014 $10 $4 $129 Variance to normal weather $21 - 2Q 2013: ($2) - 2Q 2014: $3 $5 $89 • Revenue decoupler mechanism (RDM) amortization in first half of 2014 • O&M primarily lower benefit expenses
Slide 14: DTE Gas Variance Analysis
DTE Gas Variance Analysis Operating Earnings* Variance Drivers (millions) • Warmer weather in 2Q 2014 vs. $8 ($3) 2Q 2013 Variance to normal weather ($6) - 2Q 2013: $4 - 2Q 2014: $1 • O&M primarily timing and increased uncollectible expense, ($3) ($4) partially offset by lower benefit expenses * Rec
Slide 15: Contingency exists for potential weather variability and O&M reinvestment
Contingency exists for potential weather variability and O&M reinvestment 2014 Operating EPS* Guidance Range • Uses for contingency include: Balance of year weather $0.27 ($0.27) • 28% fewer CDDs July month to date $4.20 - $4.40 vs. normal O&M reinvestment Flow through to shareholders 2014 YTD
Slide 16: Agenda: Cash Flow and Balance Sheet Metrics
• Overview • Second Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 16
Slide 17: DTE Energy YTD 2014 Cash Flow
DTE Energy YTD 2014 Cash Flow Cash Flow Summary Drivers (billions) YTD 2013 YTD 2014 • Free cash flow lower due primarily to Cash From Operations* $1.3 $1.1 higher fuel and power purchases and Capital Spending (0.9) (1.1) increased capital spending at DTE Electric Free Cash Flow $0.4 $0.0 Asset Sale
Slide 18: DTE Energy YTD 2014 Capital Expenditures
DTE Energy YTD 2014 Capital Expenditures Capital Expenditures Drivers (millions) YTD 2013 YTD 2014 DTE Electric • DTE Electric higher due to planned outages Operational $419 $584 at fossil and nuclear generation, distribution reliability and renewable energy investments Environmental 72 82 Renewable
Slide 19: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* Target • Targeting zero equity issuances in 2014 50% - 52% – Annual issuances of $200 million to 49% 52% $300 million in 2015 and 2016 2013 2014E • $1.4 billion of available liquidity as of June 30, 2014 Funds from Operations
Slide 20: Agenda: Summary
• Overview • Second Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 20
Slide 21: Summary
Summary • We are on track to meet our operating earnings* guidance in 2014 with contingency for balance of year unfavorable weather and utility reinvestment • Raised annualized dividend over 5% marking the fifth consecutive year of an increase • Cash flow and balance sheet metrics remain strong • Ut
Slide 22: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 22
Slide 23: Appendix
=> _ DTE Energy’: Appendix
Slide 24: DTE Energy 2014 Cash Flow Guidance
DTE Energy 2014 Cash Flow Guidance Cash Flow Summary Drivers (billions) 2013 2014 Actual Guidance • 2014 cash from operations decreases due Cash From Operations* $2.2 $1.6 to lower utility surcharge collections than Capital Spending (1.9) (2.3) 2013 and higher cash contributions to employee benefit
Slide 25: DTE Energy 2014 Capital Expenditure Guidance
DTE Energy 2014 Capital Expenditure Guidance Capital Expenditures Summary Drivers (millions) 2013 2014 Actual Guidance • DTE Electric capital higher due to DTE Electric increased environmental, renewable energy and reliability spending Operational $999 $1,080 Environmental 165 280 Renewable Energy 1
Slide 26: Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $21 $11 • Economic net income Operating Earnings* ($10) equals economic gross (millions, after-tax) margin*** minus O&M expenses and taxes. 2Q 2014 2Q 2013 • DTE Energy management Accounting 2Q 2014 Economic u
Slide 27: Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $23 $21 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) margin*** minus O&M ($2) expenses and taxes. YTD 2014 YTD 2013 • DTE Energy management Accounting YTD 2014 Economic
Slide 28: Second Quarter and June Year To Date Reconciliation of Reported to Operating Earnings
Second Quarter and June Year To Date Reconciliation of 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
Slide 29: 2008 – 2013 Full Year Reconciliation of Reported to Operating Earnings
2008 – 2013 Full Year Reconciliation of 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
Slide 30: Reconciliation of Other Reported to Operating Earnings
Reconciliation of Other 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 meas