Slide 1: Leading the Clean Energy Transformation: Second Quarter 2022 Results and Outlook
Leading the CLEAN ENERGY TRANSFORMATION Second Quarter 2022 Results and Outlook July 28, 2022
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: Investment Thesis
Investment Thesis . . . Industry-leading net zero commitments Clean Energy Leader Diversified Service Infrastructure Excellence through the Territory Renewal a Top-tier regulatory jurisdiction Strong Cash Flow Constructive & Balance Sheet Legislation Affordable Prices Premium total shareholder retur
Slide 4: Michigan Regulatory Environment
Michigan Regulatory Environment . . . Top-Tier Supportive Energy Law Regulatory Jurisdictiona • Timely recovery of investments Michigan ✓ Forward-looking test years 1 6 2013-present ✓ 10-month rate cases ✓ Earn authorized ROEs 2 11 ✓ Monthly fuel adjustment trackers (PSCR/GCR) 3 17 • Supportive ince
Slide 5: Our Clean Energy Transformation
Our Clean Energy Transformation . . . Exit Coal by 2025… …While Ensuring Reliability a (Coal % PP&E ) • Purchase ~1.2 GW of existing gas <20% Classic 7 capacity (Covert) retirement and Karn 1&2 retirement • RFP 700 MW of PPAs (500 MW of dispatchable resources) • Maintain ~1.2 GW of peaking capacity
Slide 6: Confidence in the Outlook
Confidence in the Outlook . . . Q2 2022 Results Amount Commentary Adjusted EPS $0.53 Ahead of plan Dividend Per Share (DPS) Paid $0.46 Consistent growth 2022 Outlook Adjusted EPS Guidance $2.85 – $2.89 Premium growth Annual DPS $1.84 Up 10¢ vs. 2021 Long-term Outlook Adjusted EPS Growth +6% to +8% T
Slide 7: 2022 Adjusted EPS
2022 Adjusted EPS . . . First Half Six Months To-Go 9¢ 11¢ – 15¢ 30¢ $2.65 16¢ 3¢ ✓10¢ $2.85 – $2.89 (24)¢ – (28)¢ (7)¢ (3)¢ (1)¢ ✓Base rates set for 2022 First Half EPS Results 2021 2022 Reported EPS $1.82 $1.71 First Adjustments a (0.18) 0.02 First Half Adjusted EPS a $1.64 $1.73 Half $1.64 $1.73
Slide 8: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured • Strong financial A A1 A+ position Commercial Paper A-2 P-2 F-2 • Growing operating cash flow Outlook Stable Stable Stable CMS Energy • Constructive return on regulated Senior Unsecured BBB Baa2 BBB in
Slide 9: 2022 Planned Financings
2022 Planned Financings . . . Financings Existing Facilities 2022 Plan ($M) >$2½Ba of net liquidity Consumers Energy: First Mortgage Bonds $800 $250M (Nov-2023) CMS Energy: Hybrid / Continuous Preferred None $56M Planned Equity -- Contracted $850M Retirements (incl. term loans): (Jun-2024) $550M Con
Slide 10: Industry-Leading Financial Performance
Industry-Leading Financial Performance . . . Adjusted EPSa +6% to +8% Dividend Weather Recession Recession Help Recession / Hurt Pandemic 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+ Cold M ild Hot Warm M ild Cold Summer- Hot Hot Warm M ild Pol
Slide 11: Q&A Thank You!
Q&A Thank You! 11 11
Slide 12: Appendix
Appendix 12 12
Slide 13: Michigan's Strong Regulatory Construct
Michigan’s Strong Regulatory Construct . . . 2021 2022 Integrated Resource Plan (IRP) ✓Jun. 30 : Filed IRP th ✓Jun. 23 : rd Settlement Approved U-21090 IRP U-21090 Electric ✓ Dec. 22 : Final Order $59M nd a ✓Apr. 28 : th b Q1 2023: Filed $272M Expected 9.9% ROE 10.25% ROE Final Order U-20963 U-21224
Slide 14: Utility Sales Continue to Recover
Utility Sales Continue to Recover . . . a Weather-Normalized Electric Deliveries (YTD 2022 vs. YTD 2021) 3.1% 2.9%b 1.5%b (0.6)% Residential Commercial Industrial Total Residential Customer Growth Economic Development (5-Yr Avg. Customer Count) Policy Support • $1B of state incentives 105 MW • New e
Slide 15: 2022 Sensitivities
2022 Sensitivities . . . Full-Year Impact Sensitivity Adj. EPS OCF 2022 Adj. EPS Sensitivities (1% Full Year in Volume) Salesa (¢) ($M) Electric Gas Electric (~37,000 GWh) + 1% + 7 + 27 Residential 4¢ 2½¢ Gas (~304 Bcf) + 1 + 3 + 13 Commercial 2½ ~½ Industrial ½ ~½ Gas Prices + 50¢ + 0 + 60 Electr
Slide 16: De-risking Inflationary Pressures
De-risking Inflationary Pressures . . . Near-term Risk Mitigation Episodic Cost Savings Global Risks Countermeasures Year Event Savings ✓ Executed 5-yr union contracts in 2020 2022 Palisades retirement >$90M (>40% unionized) Labor ✓ 95% non-union retention ratea 2023 Karn 1&2 coal unit $30M b retire
Slide 17: Key IRP Components
a Key IRP Components . . . Renewables & Storage Delivering Across the Solar 4.5 GW by 2030, ~8.0 GW by 2040 Triple Bottom Line Battery >0.5 GW by 2040 (75 MW beginning in 2024) Wind ~0.8 GW pre-2025 (approved via RPS) ✓ Accelerate Customer Programs By 2030 decarbonization Energy Efficiency ~1.1 GW D
Slide 18: Endnotes
Endnotes “severe?
Slide 19: Presentation Endnotes
Presentation Endnotes a Slide 3: UBS Research, 2022 state rankings and D.C. a Slide 4: UBS Research, 2018 - 2022 state rankings and D.C.; Barclays Research, 2013 – 2017 state rankings and D.C. a Slide 5: PP&E associated with coal based on calendar year; Today refers to 2Q2022 or ~$2.3B of coal asset
Slide 20: GAAP Reconciliation
CMS Energy provides historical financial results on both a reported (GAAP) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. During an oral presentation, references to “earnings” are on an adjusted basis. All references to net income refer to net income availa
Slide 21: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Six Months Ended 6/30/22 6/30/21 6/30/22 6/30/21 Net Income Available to Common Stockholders $ 145 $ 176 $ 496 $ 525 Reconciling items: Dispos
Slide 22: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter (Unaudited) In Millions, Except Per Share Amounts 2022 1Q 2Q Net Income Available to Common Stockholders $ 351 $ 145 Reconciling items: Electric utility and gas utility - 11 Tax impact - (3) Enterpris