Cms Energy Corporation · NYSE:CMS
Cms Energy — Q1 2020 Earnings Presentation
27 slides from Cms Energy's earnings presentation, Apr 27, 2020
Slide 1: First Quarter 2020 Results and Outlook
First Quarter 2020 Results and Outlook April 27, 2020 FOCUSED ON WORLD CLASS PERFORMANCE
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: Agenda
Agenda Business Update & Long-Term Outlook Patti Poppe COVID-19 Response President & CEO PEOPLE PLANET PROFIT Financial Results Rejji Hayes Executive VP & CFO 3
Slide 4: First Quarter Results
First Quarter . . . Results Amount Commentary a First Quarter 2020 EPS $0.86 Challenging weather offset by cost management Guidance (as of 1/30/20) a Full-year EPS $2.64 – $2.68 Unchanged given uncertainty of duration & full impact of COVID-19 Long-Term Outlook EPS & DPS Growth +6% to +8% a Long-ter
Slide 5: Response to COVID-19
Response to COVID-19 . . . Co-workers Customers Community • Enhanced safety protocols • Dedicated customer service • Dream Maker Fund • Work from home (office) representatives helping to • $1 MM for local small • Direct job-site reporting navigate stimulus programs businesses (field) • Suspended shu
Slide 6: Managing Work Every Year
Managing Work Every Year . . . a EPS 2012 2013 2014 2015 2016 2017 2018 2019 $2.60 +7% +7% +7% Storms (9)¢ +7% +7% Weather & storms (16)¢ +7% Weather Weather (13)¢ & storms +7% Weather (13)¢ (13)¢ +7% Storms (10)¢ _____ a Adjusted EPS (non-GAAP) . . . maximizes benefits for customers and investors.
Slide 7: 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. 7
Slide 8: 2020 First Quarter EPS Results
2020 First Quarter EPS Results . . . Results By Business Segment 2019 2020 EPS b Utility $0.86 EPS – (GAAP) $0.75 $0.85 Enterprises 0.06 Adjustments a -- 0.01 EnerBank 0.05 Adjusted (non-GAAP) $0.75 $0.86 Parent & other (0.11) CMS Energy $0.86 _____ _____ a See non-GAAP reconciliations b Adjusted EP
Slide 9: Key COVID-19 Financial Risks
Key COVID-19 Financial Risks . . . Potential Impacts Mitigating Factors Utility • Lower sales volume from commercial • Higher margin residential usage and industrial • Regulatory deferral mechanisms • Increased uncollectible accounts • Operational flexibility/waste elimination • Sequestration/quaran
Slide 10: Preliminary April Sales Challenged
Preliminary April Sales Challenged . . . a 2019 Electric & Gas Rate Mix 2020 EPS Sensitivities b 1% Full Year Δ in Volume Auto Other Electric Gas Other 2% Industrial 2% Residential ~ 3+¢ 2 ¢ 11% Commercial ~ 2 ½ Industrial ½ + Impact of Observed Electric Trends (since March) Residential Electric Com
Slide 11: 2020 EPS
2020 EPS . . . a First Quarter Nine Months To Go 11¢ 4¢ - 8¢ $2.64 - $2.68 14¢ 4¢ 1¢ - 5¢ 6% - 8% $2.49 12¢ 8¢ (1)¢ (23)¢ Select COVID-19 Risks: •Sales ~(3)¢ - (4)¢/ mo. Reference: •Historical flex range ~10¢ - 15¢ First First Quarter Quarter $0.75 $0.86 2019 Weather Absence of Rates & Usage, Absenc
Slide 12: Financing Plan on Track
Financing Plan on Track . . . Planned 2020 Financing Existing Facilities Plan YTD (MM) $250 MM (MM) (Nov-2021) $2.3 Bn a Consumers Energy: of net liquidity position 3.5% with no CP outstanding First Mortgage Bonds $650 $575 closed 3/26 (as of 3/31/20) Term Loan $300 $300 CMS Parent: Term-loan $850 M
Slide 13: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured A Aa3 A+ • Strong financial position Commercial Paper A-2 P-1 F-2 • Growing operating Outlook Stable Stable Stable Highest cash flow Governance CMS Energy Practices Score (GA-1) • Return on regulated Se
Slide 14: Investment Thesis
Investment Thesis . . . Investment Thesis Takeaways Prudent Liquidity Management • 2020 financings largely executed • No pension contributions required in 2020 Operational Excellence and Track Record • Increased productivity driven by the CE Way • Adaptive to changing conditions Top-Tier Regulato
Slide 15: Q&A Thank You!
Q&A Thank You! CMS ENERGY >
Slide 16: Appendix
Appendix
Slide 17: 2020 Sensitivities
2020 Sensitivities . . . Full-Year Impact a Sensitivity EPS OCF b (¢) ($ MM) Sales Electric (~36,500 GWh) + 1% + 6 + 25 Gas (~300 Bcf) + 5 + 13 + 50 Gas prices (NYMEX) + 50¢ + 0 + 55 Utility Earned ROE Electric + 10 bps + 1½ + 6 Gas + 10 + 1 + 4 Interest rates + 25 bps <1 2 Effective Tax Rate (16%)
Slide 18: Post Retirement Benefit Plans
Post Retirement Benefit Plans . . . a Pension OPEB (Bn) (Bn) Asset Allocation Asset Allocation Equity 55% Equity 48% Fixed-income 39% Fixed-income 33% Multi-asset 6% Multi-asset 19% Expected rate of return 6.75% Expected rate of return 6.75% ~$3.0 $531 MM contribution in ~$2.5 January 2020 $1.5 $1.2
Slide 19: Regulatory Outlook
Regulatory Outlook . . . 2019 2020 Regulatory / Policy 4/15: 2016 Energy COVID-19 order Law fully U-20757 implemented for deferred accounting Electric 2/27: Filed $244 MM a Dec. Expected U-20697 final order 10.5% ROE GasGas 9/26: 12/16: Final order Filed $245 MM b Oct. Expected U-20322 U-20650
Slide 20: Utility Customer Investment Plan
Utility Customer Investment Plan . . . Investment Plan Rate Base Growth Renewables Prior New Electric ‘19-‘23 ‘20-‘24 Gas $24½ Capital Investment (Bn): Plan Plan +7% Renewables $ 1¾ $ 1¾ $17½ Electric Utility 5 5½ Gas Utility 5 5 Total $11¾ $12¼ 2019 2024 $25 Bn 10-Yr Plan with $3 - $4 Bn of Opportu
Slide 21: CMS Enterprises
CMS Enterprises . . . DIG & Other Renewable Platform • ~1,000 MWs of plants in MI Operating Projects: • 27 MWs of solar • DIG long-term energy (>95% • 64 MWs biomass contracted) & short-term capacity • 105 MWs of wind (100% contracted) (15-year PPA with GM) • Filer City PPA with the Utility • Nearly
Slide 22: DIG (750 MW) & Peakers (200 MW)
“DIG” (750 MW) & Peakers (200 MW) . . . Planning Year (MISO) a Pre-Tax Income Opportunities (MM) 2020 Through 2023 $ 100 Contracted Capacity 100% ~$90 90 (~$2.00/kw-month) 80 Energy >95% 70 $7.50 b • LCR upheld by MI Supreme Court 60 • MISO Zone 7 PY cleared at CONE 50 $45 ~$45 40 $38 $38 ~$35/ yr.
Slide 23: GAAP Reconciliation
GAAP Reconciliation
Slide 24: 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 3/31/20 3/31/19 Electric Utility Reported net income per share $ 0.41 $ 0.37 Reconciling items: Other exclusions from adjusted earnings 0.01 - Ta
Slide 25: 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 2020 1Q Net Income Available to Common Stockholders $ 243 Reconciling items: Electric utility and gas utility 15 Tax impact (4) Enterprises 1 Tax impa
Slide 26: 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 3/31/20 3/31/19 Net Income Available to Common Stockholders $ 243 $ 213 Reconciling items: Restructuring Other exclusions costs from andadjust
Slide 27: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation CMS ENERGY CORPORATION (Unaudited) Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2012 2013 2014 2015 2016 2017 2018 2019 Reported earnings per share - GAAP $1.42 $1.66 $1.74 $1.89 $1.98 $1.64 $2.32 $2.39 Pretax items: