Dte Energy Company · NYSE:DTE
Dte Energy — FY2013 Earnings Presentation
43 slides from Dte Energy's earnings presentation, Feb 14, 2014
Slide 1: Year End 2013 Earnings Conference Call
Year End 2013 Earnings Conference Call February 14, 2014 EXHIBIT 99.3
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 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 and other applicable governmental proceedings and regulations,
Slide 3: Participants
Participants • Gerry Anderson – Chairman and CEO • Peter Oleksiak – Senior Vice President and CFO • Anastasia Minor – Executive Director, Investor Relations 3
Slide 4: 2013 Accomplishments, Long-Term Growth Update, Financial Update
• 2013 Accomplishments • Long-Term Growth Update • Financial Update 4
Slide 5: The success of our system of priorities continues to create value for investors
The success of our system of priorities continues to create value for investors 5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet 5
Slide 6: 2013 Accomplishments
2013 Accomplishments • Distinctive Continuous Improvement (CI) capability o O&M expense at 2003 levels o CI program recognized by London Process Excellence Network o Reduced renewable energy surcharge 85% due to operational efficiencies Continuous Improvement Employee Engagement Customer Satisfactio
Slide 7: 2013 Accomplishments (continued)
Financial Growth / Value • DTE Energy 2013 Operating EPS* of $4.09 compared to EPS guidance midpoint of $4.05 • Earned allowed ROE at electric and gas utilities • Increased annual dividend 5.6% to $2.62 per share • Credit upgrade at all 3 rating agencies • Invested over $1.5 billion in the utilities
Slide 8: Long-Term Growth Update
• 2013 Accomplishments • Long-Term Growth Update • Financial Update 8
Slide 9: We remain committed to delivering 5% to 6% operating EPS growth
2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E $3.33 $4.09 $3.75 $3.64 $2.12 $2.24 $2.35 $2.48 $2.12 * Reconciliation to GAAP reported earnings included in the appendix We remain committed to delivering 5% to 6% operating EPS* growth (dollars) Operating EPS* 7.2% CAGR 2008-2014 Di
Slide 10: DTE Energy has many catalysts for strong future growth opportunities
DTE Energy has many catalysts for strong future growth opportunities Constructive REGULATORY environment Michigan’s economic recovery Long-term non-utility growth Long-term utility growth 10
Slide 11: Our electric utility is investing $6.7 billion in three key growth areas through 2018
Our electric utility is investing $6.7 billion in three key growth areas through 2018 • Environmental requirements • $280 million in 2014 • Power plant reliability • Expanded distribution reliability program • Advanced Metering Infrastructure • $1.1 billion in 2014 • 10% renewable energy standard by
Slide 12: Our gas utility is making $1.2 billion of reliability and pipeline integrity investments
Our gas utility is making $1.2 billion of reliability and pipeline integrity investments through 2018 • Capital recovered through the Infrastructure Recovery Mechanism • ~4,000 miles of distribution main to be replaced • $90 million investment in 2014 • Strengthen and expand distribution system • Co
Slide 13: Upward pressure on customer rates being minimized by cost control initiatives
Upward pressure on customer rates being minimized by cost control initiatives and surcharge reductions Lower Surcharges Structural Cost Reductions Continuous Improvement Reliability Investments Cost Pressure Environmental Investments Customer Rates $650 million of surcharge reductions Targeting
Slide 14: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms Pipeline Gathering Storage 14
Slide 15: Gas Storage & Pipelines has a portfolio of investment opportunities
Gas Storage & Pipelines has a portfolio of investment opportunities that drive earnings growth • Bluestone lateral expansion • Millennium expansion II Continued build-out of Bluestone gathering • New project development ‒ NEXUS ‒ other gathering and pipeline expansions • Millennium expansion III 201
Slide 16: Gas Storage & Pipelines operating earnings potential of $130 million by 2018
2012A 2013A 2014E 2015E 2016E 2017E 2018E $78 - $86 Gas Storage & Pipelines operating earnings* potential of $130 million by 2018 * Reconciliation to GAAP reported earnings included in the appendix (millions) Pipeline Platform Gathering Platform Storage Platform New Project Development $1.0 - $1.3 b
Slide 17: Power & Industrial Projects is focused in three key business lines
Power & Industrial Projects is focused in three key businesses lines Wood-fired Plant Cassville, WI • Fuel that reduces emissions from coal-fired plants • 9 units, 5 states • Utility contracted • Utility services at industrial sites • Coke and pulverized coal for steel customers • 37 projects, 11 st
Slide 18: Power & Industrial Projects targeting $155 million of operating earnings by 2018
2012A 2013A 2014E 2015E 2016E 2017E 2018E Power & Industrial Projects is targeting $155 million of operating earnings* by 2018 through growth in each of its business lines ~$155 (millions) $35 $70 $85 ($65) $30 $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Indust
Slide 19: Financial Update
• 2013 Accomplishments • Long-Term Growth Update • Financial Update 19
Slide 20: DTE Energy 2013 Operating Earnings Per Share
DTE Energy 2013 Operating Earnings Per Share* Gas Storage & Pipelines $0.40 Power & Industrial Projects $0.40 * Reconciliation to GAAP reported earnings included in the appendix Energy Trading ($0.02) Corporate & Other ($0.25) DTE Gas $0.80 Non-Utility $0.78 DTE Electric $2.76 $4.09 20
Slide 21: DTE Energy 2013 Operating Earnings Variance
DTE Electric 483$ 484$ 1$ DTE Gas 115 143 28 Gas Storage & Pipelines 61 70 9 Power & Industrial Projects 52 70 18 Energy Trading 12 (3) (15) Corporate & Other (47) (44) 3 DTE Energy 676$ 720$ 44$ Operating EPS 3.94$ 4.09$ 0.15$ Avg. Shares Outstanding 172 175 DTE Energy 2013 Operating Earnings Varia
Slide 22: Energy Trading mark-to-market adjustment will substantially reverse in 2014
Energy Trading mark-to-market (MTM) operating earnings adjustment is timing related and will substantially reverse in 2014 (millions) * Subject to changes in market prices ** Majority of 2014 reversal occurs in 1Q 22 MTM timing reverses when contracts settle* • Operating adjustment pertains to pipel
Slide 23: We are raising our 2014 operating EPS guidance
We are raising our 2014 operating EPS* guidance from our previous early outlook 2014 Guidance Drivers 2014 Early Outlook* (millions, except EPS) DTE Electric $484 $515 - $525 DTE Gas 143 120 - 126 Gas Storage & Pipelines 70 76 - 84 Power & Industrial Projects 70 75 - 85 Energy Trading (3) 5 - 15 Cor
Slide 24: DTE Energy 2013 Cash Flow Actuals
2012 2013 Cash From Operations* $2.2 $2.2 Capital Spending (2.1) (1.9) Free Cash Flow $0.1 $0.3 Asset Sales 0.3 - Dividends (0.4) (0.4) Net Cash $0.0 ($0.1) Debt Financing: Issuances $0.8 $1.2 Redemptions (0.8) (1.1) Change in Debt $0.0 $0.1 DTE Energy 2013 Cash Flow Actuals Cash Flow Summary (billi
Slide 25: DTE Energy 2014 Cash Flow Guidance
2013 2014 Actual Guidance Cash From Operations* $2.2 $1.6 Capital Spending (1.9) (2.3) Free Cash Flow $0.3 ($0.7) Asset Sales - - Dividends (0.4) (0.5) Net Cash ($0.1) ($1.2) Debt Financing: Issuances $1.2 $2.1 Redemptions (1.1) (0.9) Change in Debt $0.1 $1.2 DTE Energy 2014 Cash Flow Guidance Cash
Slide 26: Strong balance sheet remains a key priority and supports growth
2013 2014E * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Leverage* Funds from Operations / Debt* 2013 2014E 49% 52% Target 50% - 52% 23% 22% Target 20% - 22% Strong balance sheet remains a key priority and supports
Slide 27: 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 environmental and renewable energy investments Meaningful, transparent, low-risk growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive r
Slide 28: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 28
Slide 29: Appendix
mo DTE Energy: Appendix
Slide 30: DTE Electric Variance Analysis
DTE Electric Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix $483 ($41) (millions) ($26) $18 Drivers Operating Earnings* Variance $484 • Return to near normal weather in 2013 Variance to normal weather - 2012: $45 - 2013: $ 4 • Other margin driven by increased t
Slide 31: DTE Gas Variance Analysis
DTE Gas Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix $115 (millions) • Colder than normal weather in 2013 Variance to normal weather - 2012: ($28) - 2013: $17 • Lower benefits expense due to plan design changes • One-time items include 2012 lean initiatives a
Slide 32: DTE Energy 2014 Capital Expenditure Guidance
DTE Energy 2014 Capital Expenditure Guidance 2013 2014 Actual Guidance DTE Electric Operational $999 $1,080 Environmental 165 280 Renewable Energy 161 240 $1,325 $1,600 DTE Gas Operational $132 $150 Main Renewal / Meter Move-out / Pipeline Integrity 77 90 $209 $240 $366 $490 Total $1,900 $2,330 Non-
Slide 33: Utility rate strategies minimize new rate filings and their impacts on customers
Utility rate strategies minimize new rate filings and their impacts on our customers DTE Electric DTE Gas • Periodic rate cases to support investment profile • File mid-2014; self-implement early 2015 • Targeting to stay as close to rate neutral as possible through 2018 (vs. 2013) • ~$300 million su
Slide 34: Gas Storage & Pipelines platforms drive growth through new projects and expansions
Bluestone Pipeline • 0.6 Bcf/d to Millennium and Tennessee pipelines; 0.3 Bcf/d expansion in 2014 Millennium Pipeline • 1Q 2014 0.3 Bcf/d expansion; total capacity over 0.8 Bcf/d Vector Pipeline • 1.3 Bcf/d from Chicago to Dawn, Ontario Proposed NEXUS Pipeline • 1 Bcf/d from western Marcellus and ce
Slide 35: Gas Storage & Pipelines assets have expansion opportunities
Pipeline Assets Capacity / d In-Service Millennium Pipeline 0.5 Bcf Expansion #1 and #2 0.3 Bcf 2014 Expansion #3 0.2 - 0.5 Bcf 2016 - 2017 Total Planned Capacity 1.0 - 1.3 Bcf Bluestone Pipeline (bi-directional) 0.6 Bcf Northward Expansion 0.3 Bcf 2014 Total Planned Capacity 0.9 Bcf Vector Pipeline
Slide 36: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income ** Consists of 1) the income statement effect of not recognizing changes in the fair market value of certain non-derivative contracts including physical inventory and capacity contracts for transportation, transmission a
Slide 37: 2013 Reconciliation of Reported to Operating Earnings
2013 Reconciliation of Reported to Operating Earnings Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measu
Slide 38: 2012 Reconciliation of Reported to Operating Earnings
2012 Reconciliation of Reported to Operating Earnings 2012 DTE Energy DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Energy Trading Corporate and Other Unconventional Gas Reported Earnings 610$ 483$ 115$ 61$ 42$ 12$ (47)$ (56)$ Coke oven gas settlement 7 - - - 7 - - - C
Slide 39: 2011 Reconciliation of Reported to Operating Earnings
2011 Reconciliation of Reported to Operating Earnings 2011 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 711$ 434$ 110$ 57$ 38$ 52$ 23$ (3)$ Michigan Corporate Income Tax Adjustment (87) - - - - - (8
Slide 40: 2010 Reconciliation of Reported to Operating Earnings
2010 Reconciliation of Reported to Operating Earnings * Deferral of previously expensed cost to achieve as allowed for in June 3, 2010 MPSC order (case - U-15985) 2010 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. epo
Slide 41: 2009 Reconciliation of Reported to Operating Earnings
2009 Reconciliation of Reported to Operating Earnings 2009 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 532$ 376$ 80$ 49$ 31$ 75$ (73)$ (6)$ Gain on Sale - gathering and treating assets (before good
Slide 42: 2008 Reconciliation of Reported to Operating Earnings
2008 Reconciliation of Reported to Operating Earnings 2008 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Syn Fuel Reported Earnings 546$ 331$ 85$ 38$ 40$ 42$ (97)$ 87$ 20$ Performance Excellence Process 6 - 4 - 1 1 -
Slide 43: 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