Cms Energy Corporation · NYSE:CMS
Cms Energy — Q3 2019 Earnings Presentation
31 slides from Cms Energy's earnings presentation, Oct 24, 2019
Slide 1: Third Quarter 2019 Results and Outlook
Third Quarter 2019 Results and Outlook October 24, 2019 FOCUSED ON WORLD CLASS PERFORMANCE
Slide 2: Forward-looking statements and non-GAAP disclaimer
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: Agenda
Agenda Outlook & Business Update Patti Poppe President & CEO PEOPLE PLANET PROFIT Financial Results Rejji Hayes Executive VP & CFO 3
Slide 4: EPS Results and Guidance
EPS Results and Guidance . . . a First nine months 2019: at $1.81 remains on track with Plan 2019 Full-year guidance reaffirmed: • at $2.47 - $2.51, up 6% to 8% 2020 Full-year guidance introduced: • at $2.63 - $2.68, up 6% to 8% Future long-term annual growth: • at +6% to +8% a Adjusted EPS (non-GAA
Slide 5: Utility Customer Investment Plan
Utility Customer Investment Plan . . . Investment Plan Upside Opportunities Prior Revised New a 10-Yr Plan ‘19-‘23 ‘19-‘23 10-Yr (Bn) Capital Investment (Bn): Plan Plan Plan Electric Reliability Electric Utility $ 5 $ 5 $ 11 Grid Modernization New Utility Renewables 1 1¾ 4 Gas Distribution Gas Utili
Slide 6: Regulatory Outlook
Regulatory Outlook . . . 2019 2020 Regulatory / Policy 2016 Energy Law fully 9/26: Calc. C implemented order U-20309 Electric Q1: Dec. File next Expected electric rate final order case Gas Gas 9/26: Final order $156.5 MM Dec. File next Q4: Expected U-20322 final order a gas rate 9.9% ROE case a
Slide 7: Story of the Month
Story of the Month . . . JD Power Ranking a Driven by Triple Bottom Line 2010 2010 2019 2019 • rank from fourth quartile CMS 767 • Better customer experience driven by 1st 1st digital and infrastructure improvements Quartile: Quartile: > 630 > 755 • Lower vintage service line unit costs and improved
Slide 8: Consistent Growth Through Changing Circumstances
Consistent Growth Through . . . 7% CAGR b a EPS +6% to +8% Dividend +7% Weather Recession Recession Help Hurt a Adjusted EPS (non-GAAP) b Non-GAAP Cold 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Feb. Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Pol
Slide 9: 2019 YTD Performance
2019 YTD Performance . . . Results By Business Segment Year-to-Date 2018 2019 EPS – (GAAP) $1.94 $1.81 EPS a Adjustment (0.01) -- Utility $1.89 Adjusted (non-GAAP) $1.93 $1.81 Enterprises 0.06 Interest & other (0.14) a Weather-normalized $1.73 $1.77 CMS Energy $1.81 Third Quarter EPS – (GAAP) 59¢ 73
Slide 10: 2019 EPS
2019 EPS . . . a First Nine Months Three Months To Go (12)¢ 26¢ - 30¢ $2.47 - $2.51 6% - 8% $2.33 10¢ 2¢ 15¢ 13¢ (2)¢ - 2¢ (16)¢ (8)¢ Absent 2018: Weather (7)¢ Reinvestment 22 15¢ YTD YTD $1.81 $1.93 Weather Storm Costs Rates and Usage, Absence of Rates & Usage, 2018 Investments Enterprises 2018 We
Slide 11: Managing Work Every Year
Managing Work Every Year . . . a 2011 2012 2013 2014 2015 2016 2017 2018 2019 EPS $2.60 Reinvestment $2.40 +7% Weather & Storms $2.20 Mild +7% Summer Hot Cost +7% Summer $2.00 productivity above plan +7% Cost productivity $1.80 Reinvestment +7% above plan Cost productivity Hot Mild Storms Summer Win
Slide 12: Our Self-Funding Model
Our Self-Funding Model . . . Plan a EPS Growth 6% - 8% Self-Funding: - Cost management (O&M, fuel, purchased power) 2 - 3 pts - Sales (economic development, energy efficiency) 1 - Other (Enterprises, tax planning, etc.) 2 INVESTMENT SELF-FUNDED 5 - 6 pts Customer Prices “at or below inflation” < 2%
Slide 13: Managing Customer Bills
Managing Customer Bills . . . Cost Components Residential Bills as % of Wallet a 100% 100% (Electric & Gas) Utility Bill Down 90% 50 bps! Utility Bill ~ 4% ~ 3½% 80% Fuel and Power Costs TV & Phone ~ 4% TV & Phone ~ 4% Healthcare ~ 5% Healthcare ~ 9% 70% Food ~ 12% ~70% Food ~ 13% 60% ~70% Transport
Slide 14: Economic Development is Robust
Economic Development is Robust . . . Customer Committed Load Diversified Customer Base Economic Grand (2018 Electric & Gas Rate Mix) b Indicators: Rapids U.S. Building Permits a 187% 120 % Population Growth 8% 6% Auto Other 20102018 Other 2% 2% Unemployment* 2.9% 3.7 % Industrial *August 2019 Unemp
Slide 15: 2019 Sensitivities
2019 Sensitivities . . . Full Year Impact a Sensitivity EPS OCF (MM) Sales b • Electric (37,789 GWh) + 1% + 6¢ + $ 25 • Gas (303 Bcf) + 5 + 9 + 35 – – 55 Gas prices (NYMEX) + 50¢ + 0 + Utility ROE (planned) Settled • Electric (10.0%) + 10 bps + 1½ + 6 order 1/9 • Gas (10.0%) + 10 + < ½ Order + ~1 re
Slide 16: Compelling Investment Thesis
Compelling Investment Thesis . . . Aging Infrastructure Clean Energy Leader Constructive Regulation Strong Cash Flow & Affordable Prices Balance Sheet Diversified Service Territory . . . adaptive to changing conditions. 16
Slide 17: Q&A
Q&A Thank You! See you at EEI 17
Slide 18: Appendix
Appendix
Slide 19: 2019 and Long-Term Financial Targets
2019 and Long-Term Financial Targets . . . 2019 Five-Year Plan Adjusted EPS (non-GAAP) $2.47 to $2.51 +6% to +8% +6% to +8% DPS growth In-line w/ earnings In-line w/ earnings a Operating cash flow (MM) $1,650 Up $100 Customer bills b Electric 2% < Inflation Gas (4)% FFO/average debt (non-GAAP) ~ 17%
Slide 20: Revised Utility Investment Plan
Revised Utility Investment Plan Revised 5-year Plan (Bn) 2019 2020 2021 2022 2023 Total Electric Utility $ 1.0 $ 1.0 $ 1.0 $ 1.0 $ 1.1 $5.1 New Renewables 0.2 0.5 0.3 0.3 0.3 1.6 Gas Utility 1.0 1.1 1.0 1.0 1.0 5.1 Total $2.2 $2.6 $2.3 $2.3 $2.4 $11.8 Depreciation & Amortization $1.0 $1.0 $1.1 $1.1
Slide 21: Regulatory Outlook
Regulatory Outlook . . . 2019 Regulatory / Policy 2/7: REP approved for 3/23: Filed settlement 6/7: IRP settlement 7/18: Demand Response 9/26: Calc. C 525 MW of agreement for order approved order order wind IRP U-20165 U-20164 U-20309 Electric 1/9: Settlement approved Next Electric Filin
Slide 22: Solid Rate Case History
Solid Rate Case History . . . Electric Rate Base a Gas Rate Base (Bn) (Bn) 2013A 2019E 2013A 2019E b b Residential Electric Bill $106 $106 Residential Gas Bill $87 $60 (Weather-normalized) Flat (Weather-normalized) (31)% $11.1 $6.4 $10.7 $10.7 $9.8 Settled $5.2 Order 9/26 Stay $4.1 $4.3 out $8.5 $
Slide 23: Operating Cash Flow Generation
Operating Cash Flow Generation . . . Amount (Bn) > $9 Bn in aggregate $ 2.2 2.05 1.95 1.85 1.70 1.75 1.7 1.65 1.2 0.7 Investment 0.2 (0.3) Cash flow before dividend (0.8) (1.3) 2018 2019 2020 2021 2022 2023 NOLs & credits $0.4 $0.3 $0.3 $0.4 $0.4 $0.5 . . . remains strong and supports our capital pl
Slide 24: 2019 Financing Plan
2019 Financing Plan . . . $300 MM FMBs (3.75%) Plan YTD a 550 MM FMBs (3.10%) b (MM) (MM) 76 MM ESOP FRN (1.86%) c 75 MM Tax Exempt (1.80%) New Issuances: $1,001 MM Consumers Energy: First Mortgage Bonds $600 $1,001 • Supports Utility investment CMS Parent: Term Loan (drawn) $300 $465 • Provides
Slide 25: Credit Metrics Maintained
Credit Metrics Maintained . . . S&P / S&P Moody’s Fitch Fitch Moody’s (Dec. ‘18) (Jul. ‘19) (Oct. ‘19) Ratings Drivers AA- Aa3 A+ A1 • Strong financial position Consumers A A2 Secured A- A3 BBB+ Baa1 • Growing operating BBB Baa2 cash flow BBB- Baa3 BB+ Ba1 BBB+ Baa1 BBB Baa2 CMS Unsecured • Return o
Slide 26: GAAP Reconciliation
GAAP Reconciliation
Slide 27: Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS by Segment
CMS ENERGY CORPORATION Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS by Segment (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Nine Months Ended 9/30/19 9/30/18 9/30/19 9/30/18 Electric Utility Reported net income per share $ 0.78 $ 0.70 $ 1.47 $ 1.65 Reconciling items: O
Slide 28: 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 by Quarter (Unaudited) In Millions, Except Per Share Amounts 2019 1Q 2Q 3Q Net Income Available to Common Stockholders $ 213 $ 93 $ 207 Reconciling items: Electric utility and gas utility - - - Tax impact - - -
Slide 29: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) GAAP GAAP 2018 over 2018 over 2003 2017 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CAGR Growth Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20
Slide 30: Weather Impact on Year Over Year Earnings (Nine Months)
CMS ENERGY CORPORATION Weather Impact on Year Over Year Earnings (Unaudited) In Millions, Except Per Share Amounts Nine Months Ended 9/30/2019 9/30/2018 Change Net Income Available to Common Stockholders $ 513 $ 549 $ (36) Reconciling items: Other exclusions from adjusted earnings 1 1 - Tax impact (
Slide 31: Weather Impact on Year Over Year Earnings (Three Months)
CMS ENERGY CORPORATION Weather Impact on Year Over Year Earnings (Unaudited) In Millions, Except Per Share Amounts Three Months Ended 9/30/2019 9/30/2018 Change Net Income Available to Common Stockholders $ 207 $ 169 $ 38 Reconciling items: Other exclusions from adjusted earnings 1 * 1 Tax impact (*