Slide 1: 3rd Quarter 2014 Earnings Conference Call
3rd Quarter 2014 Earnings Conference Call October 24, 2014
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, CFTC and other applicable governmental proceedings and regula
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: Overview
• Overview • Third 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 Strategic, transparent, low-risk growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive regulatory structure a
Slide 6: We achieved several important milestones with key projects during 3Q 2014
New electric cost of service rates related to Michigan PA169 filed Electric generation RFP submittals complete and in final negotiations Open season initiated by Vector Pipeline for potential expansion Successful open season for NEXUS capacity; FERC pre-filing on track for year end We achiev
Slide 7: Michigan economy continues to improve
Michigan economy continues to improve Michigan most improved Pro-Business state AMERICAN ECONOMIC DEVELOPMENT INSTITUTE with Pollina Corp. Real Estate Michigan leads nation in manufacturing job growth Top 10 Competitive States of 2013 Rank State 1 Georgia 2 Tennessee 3 Texas 4 Louisiana 5 North Caro
Slide 8: Committed to growth targets; increased 2014 operating EPS guidance midpoint
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 $2.12 * Reconciliation to GAAP reported earnings included in the appendix We remain committed to delivering on our growth targets, and we have increased our 2014 operating EPS* guidance
Slide 9: Third Quarter 2014 Earnings Results
• Overview • Third Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 9
Slide 10: DTE Energy Third Quarter 2014 Operating Earnings
3Q 2013 3Q 2014 Change DTE Electric 179$ 135$ (44)$ DTE Gas (13) (16) (3) Gas Storage & Pipelines 16 20 4 Power & Industrial Projects 27 38 11 Corporate & Other (5) 1 6 Growth segments** 204$ 178$ (26)$ Growth segments operating EPS 1.16$ 1.00$ (0.16)$ Energy Trading (6)$ 3$ 9$ DTE Energy 198$ 181$
Slide 11: DTE Electric Variance Analysis
DTE Electric Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix (millions) • Cooler weather in 3Q 2014 Variance to normal weather - 3Q 2013: $0 - 3Q 2014: ($33) • Higher storm expenses • Lean and reinvestment - 3Q 2013: reinvestment $5 - 3Q 2014: lean initiatives $
Slide 12: Increasing and narrowing 2014 operating earnings guidance
DTE Electric $400 $520 - $530 $505 - $515 DTE Gas 109 120 - 126 134 - 139 Gas Storage & Pipelines 59 78 - 86 80 Power & Industrial Projects 66 75 - 85 90 - 95 Corporate & Other (26) (49) - (45) (49) - (45) Growth segments** $608 $744 - $782 $760 - $784 Growth segments operating EPS $3.44 $4.20 - $4.
Slide 13: Cash Flow and Balance Sheet Metrics
• Overview • Third Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 13
Slide 14: DTE Energy YTD 2014 Cash Flow
YTD 2013 YTD 2014 Cash From Operations* $1.7 $1.2 Capital Spending (1.4) (1.5) Free Cash Flow $0.3 ($0.3) Asset Sales 0 0 Dividends (0.3) (0.3) Net Cash ($0.0) ($0.6) Debt Financing: Issuances $0.8 $1.8 Redemptions (0.8) (1.2) Change in Debt $0.0 $0.6 DTE Energy YTD 2014 Cash Flow Cash Flow Summary
Slide 15: We are revising our 2014 cash flow guidance
We are revising our 2014 cash flow guidance Cash Flow Summary (billions) Capital Expenditures Summary (millions) 15 DTE Electric Operational $1,080 $1,160 Environmental 280 200 Renewable Energy 240 240 $1,600 $1,600 DTE Gas Operational $150 $150 Main Renewal / Meter Move-out / Pipeline Integrity 90
Slide 16: 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 17: Summary
• Overview • Third Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 17
Slide 18: Summary
• Our third quarter operating earnings* reflect cooler weather and storms at DTE Electric, partially offset by strong results in our non-utility segments • We are confident in this year’s performance and are increasing our operating EPS* guidance midpoint to $4.35 • Our balance sheet and cash flow m
Slide 19: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 19
Slide 20: Appendix
mo DTE Energy: Appendix
Slide 21: Third Quarter 2014 Operating Earnings Per Share
DTE Energy Third Quarter 2014 Operating Earnings Per Share* Gas Storage & Pipelines $0.11 Power & Industrial Projects $0.21 * Reconciliation to GAAP reported earnings included in the appendix Energy Trading $0.02 Corporate & Other $0.01 DTE Gas ($0.09) Non-Utility $0.34 DTE Electric $0.76 $1.02 21
Slide 22: Capital Expenditures
22 Capital Expenditures DTE Energy YTD 2014 Capital Expenditures Drivers (millions) YTD 2013 YTD 2014 DTE Electric Operational $682 $845 Environmental 125 119 Renewable Energy 139 179 $946 $1,143 DTE Gas Operational $99 $99 Main Renewal / Meter Move Out / Pipeline Integrity 56 53 $155 $152 Non-Utili
Slide 23: Third Quarter DTE Energy Trading Reconciliation
Third Quarter 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,
Slide 24: Year to Date DTE Energy Trading Reconciliation
Year to Date 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,
Slide 25: Third Quarter and YTD Reconciliation of Reported to Operating Earnings
Third Quarter and September 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 earni
Slide 26: 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 performance measurement for external communications with analysts and i
Slide 27: 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