DTE Energy Company · NYSE:DTE
DTE Energy — Q3 2010 Earnings Presentation
28 slides from DTE Energy's earnings presentation, Oct 29, 2010
Slide 1: Third Quarter 2010 Earnings Conference Call
Third Quarter 2010 Earnings Conference Call October 29, 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 • Dave Meador, Executive Vice President and CFO • Peter Oleksiak, Vice President, Controller & Investor Relations • Nick Khouri, Vice President and Treasurer • Mark Rolling, Director of Investor Relations 3
Slide 4: Agenda: Overview
• Overview • Third Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures • Summary 4
Slide 5: Investment Thesis
Investment Thesis DTE Energy has a plan it believes will provide 5%-6% long-term operating EPS growth, an attractive dividend yield and a strong balance sheet – Utility growth plan driven by mandated investments – Constructive regulatory structure and continued 5%-6% Average Annual EPS Growth cost s
Slide 6: Third Quarter 2010 Overview
Third Quarter 2010 Overview DTE Energy Q3 2010 operating earnings per share* of $0.96 vs. $0.91 in Q3 2009 – Solid results at our utilities and strong performance at Power & Industrial partially offset by a loss at Energy Trading Revised 2010 operating EPS guidance of $3.50 - $3.70 provides 9% growt
Slide 7: 2010 Operating Earnings Guidance
2010 Operating Earnings* Guidance Original Prior Revised (millions) Guidance Guidance Guidance Drivers Detroit Edison $405 - 435 $410 - 435 $420 - 435 Raising utility guidance on strong performance MichCon 95 - 105 95 - 105 105 - 110 – Increasing lower end of Detroit Gas Storage & Edison guidance ra
Slide 8: Agenda: Third Quarter 2010 Earnings Results
• Overview • Third Quarter 2010 Earnings Results • Cash Flow and Capital Expenditure • Summary 8
Slide 9: Third Quarter 2010 Operating Earnings Per Share
Third Quarter 2010 Operating Earnings Per Share* $0.96 Detroit Edison MichCon** Non-Utility Corporate & Other $0.97 ($0.04) $0.13 ($0.10) Gas Storage & Unconventional Power & Industrial Energy Pipelines Gas Production Projects Trading $0.07 ($0.02) $0.15 ($0.07) * Reconciliation to GAAP reported ear
Slide 10: Third Quarter 2010 Operating Earnings Variance
Third Quarter 2010 Operating Earnings Variance Operating Earnings* Drivers (millions) 3Q 2010 3Q 2009 Change Detroit Edison Detroit Edison $ 165 $ 149 $ 16 Weather-normal sales in 2010 due to MichCon (6) (23) 17 decoupling partially offset by 2009 property tax settlement Gas Storage & 12 13 (1) Pipe
Slide 11: Detroit Edison Variance Analysis
Detroit Edison Variance Analysis Detroit Edison Operating Earnings* Variance Drivers (millions) • Margin primarily driven by weather- $5 ($3) ($10) normal sales in 2010 due to $24 $165 decoupling compared to colder than $149 normal weather in Q3 2009 • O&M driven by continuous improvement, one-time
Slide 12: MichCon Variance Analysis
MichCon Variance Analysis MichCon Operating Earnings* Variance Drivers (millions) • Margin driven by June 2010 rate order and lower lost gas expense partially offset by lower midstream revenues and ($6) $1 conservation $4 • Lower depreciation rates in 2010 • Other primarily driven by favorable inter
Slide 13: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income (millions) $23 $23 $0 • 2010 has been a challenging year for the trading industry overall: YTD Sept 2010 Accounting YTD Sept 2010 – Oversupplied gas market Operating Earnings* Adjustments** Economic Net Income** – Signifi
Slide 14: Agenda: Cash Flow and Capital Expenditures
• Overview • Third Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures • Summary 14
Slide 15: Our Solid Balance Sheet Provides Financial Flexibility
Our Solid Balance Sheet Provides Financial Flexibility Leverage* 53% 52% 50% - 52% • A strong balance sheet continues to be a key DTE Energy priority 2009A 2010E Target • Leverage and cash flow metrics within targeted ranges Funds from Operations / Debt* • In August, Detroit Edison priced a $300 mil
Slide 16: YTD September 2010 Cash Flow
YTD September 2010 Cash Flow DTE Energy Cash Flow* Drivers (billions) YTD YTD • Strong year-to-date cash from 09/30/10 09/30/09 operations; above average cash from operations in 2009 Cash From Operations $1.5 $1.7 Capital Spending (0.9) (0.8) • Capital spending in 2010 primarily Free Cash Flow $0.6
Slide 17: 2010 Capital Expenditures & Cash Flow Guidance
2010 Capital Expenditures & Cash Flow Guidance Cash Flow Summary* Capital Expenditures (billions) (millions) 2010 2010 2010 2010 Original Revised Original Revised Guidance Guidance Guidance Guidance Detroit Edison Operational $750 $775 Cash From Operations $1.6 $1.7 Environmental 75 75 Capital Spend
Slide 18: Agenda: Summary
• Overview • Third Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures • Summary 18
Slide 19: Summary
Summary Q3 operating EPS* of $0.96 driven by strong performance at our utilities and Power & Industrial Projects Revised 2010 operating EPS guidance provides 9% growth at midpoint – Solid performance at our utilities driven by constructive regulatory environment and intense focus on continuous impro
Slide 20: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030 20
Slide 21: Appendix
DTE Energy’ Appendix
Slide 22: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $23 $23 Energy Trading Operating Earnings* • Economic net income (millions, after-tax) $0 equals economic gross margin*** minus O&M YTD 2010 YTD 2009 expenses and taxes. YTD Sept 2010 Accounting YTD Sept 2010
Slide 23: Barnett Shale Operating Metrics
Barnett Shale Operating Metrics Reserves (Bcfe) Acreage Position (000’s Acres) 2010 YTD Results 489 • Drilled 11 wells 432 63 69 Net 234 Proven 16 Developed • Net Production of 3.6 Bcfe 167 15 Acres • Increased crude oil production Net 265 255 Probable 48 53 Undeveloped • Capital Expenditures $20 mi
Slide 24: YTD September 2010 Capital Expenditures
YTD September 2010 Capital Expenditures DTE Energy Capital Expenditures Drivers (millions) YTD 09/30/10 YTD 09/30/09 Detroit Edison Operational $569 $589 Environmental 54 46 • MichCon capital lower due to completion Renewables / EO 18 5 of a pipeline expansion project in 2009 $641 $640 MichCon Opera
Slide 25: Reconciliation of Full Year 2010 and Q3 2010 Reported to Operating Earnings
Reconciliation of Full Year 2010 and Q3 2010 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 pri
Slide 26: Reconciliation of YTD September 30, 2010 Reported to Operating Earnings
Reconciliation of YTD September 30, 2010 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 27: Reconciliation of Q3 2009 Reported to Operating Earnings
Reconciliation of Q3 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 performance me
Slide 28: Reconciliation of YTD September 30, 2009 Reported to Operating Earnings
Reconciliation of YTD September 30, 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