DTE Energy Company · NYSE:DTE
DTE Energy — Q1 2014 Earnings Presentation
37 slides from DTE Energy's earnings presentation, Apr 25, 2014
Slide 1: 1st Quarter 2014 Earnings Conference Call
1st Quarter 2014 Earnings Conference Call April 25, 2014
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: impact of regulation by the FERC, MPSC, NRC and other applicable governmental proceedings and regulations, i
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: Agenda: Overview, Earnings Results, Cash Flow and Balance Sheet, Summary
• Overview • First Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 4
Slide 5: Our business strategy is fundamental to how we create value
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by infrastructure investments 5% - 6% Annual Strategic, transparent, low-risk growth EPS Growth opportunities in non-utility businesses provide diversity in earnings and geography Construct
Slide 6: We remain committed to delivering 5% to 6% operating EPS growth
We remain committed to delivering 5% to 6% operating EPS* growth (dollars) Operating EPS* Guidance 7.2% CAGR Midpoint 2008-2014 $4.30 $4.09 $3.94 $3.75 $3.64 Dividend $3.33 per share 5.4% CAGR 2009-2013 $2.83 (Annualized) $2.62 $2.48 $2.35 $2.24 $2.12 $2.12 2008A 2009A 2010A 2011A 2012A 2013A 2014E
Slide 7: We remain confident in our 2014 operating earnings guidance
We remain confident in our 2014 operating earnings* guidance (millions, except EPS) 2014 YTD 2014 Actuals Guidance DTE Electric $136 $520 - $530 DTE Gas 129 120 - 126 • DTE Gas is above current guidance range due to favorable Gas Storage & Pipelines 21 78 - 86 1Q weather Power & Industrial Projects
Slide 8: Michigan economic indicators highlight continued growth
Michigan economic indicators highlight continued growth over the next few years Increased Auto Production Gross State Product (000s) (billons) $368 $369 2,509 $362 2,433 2,295 2,277 $353 $314 Michigan #5 in 1,144 new investment projects 2007 2009 2013 2014E 2015E 2007 2009 2013 2014E 2015E Detroit n
Slide 9: DTE Electric's next rate case filing will be more than 3 years after last rate order
DTE Electric’s next rate case filing will be more than 3 years after last rate order 2011 2014 2015 • Amortize revenue Previous • Amortize decoupler $127 million liability • File case mid-2014 Plan revenue over 12decoupler months • Self-implement rates early 2015 liability over 12 months Last Rate D
Slide 10: Financial Overview
Financial Overview • We are confident in achieving our 2014 operating earnings* guidance • 1Q 2014 operating earnings* per share are $1.69 vs. $1.34 in 1Q 2013 ‒ Extremely cold weather vs. normal weather last year ‒ Higher earnings at non-utility businesses • Balance sheet remains strong ‒ Generated
Slide 11: Agenda: First Quarter 2014 Earnings Results
• Overview • First Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 11
Slide 12: DTE Energy First Quarter 2014 Operating Earnings Per Share
DTE Energy First Quarter 2014 Operating Earnings Per Share* $1.69 DTE Electric DTE Gas Non-Utility Corporate & Other $0.77 $0.73 $0.25 ($0.06) Gas Storage & Power & Industrial Energy Trading Pipelines Projects $0.12 $0.08 $0.05 * Reconciliation to GAAP reported earnings included in the appendix 12
Slide 13: DTE Energy First Quarter 2014 Operating Earnings Variance
DTE Energy First Quarter 2014 Operating Earnings Variance Operating Earnings* Drivers (millions, except EPS) 1Q 2013 1Q 2014 Change DTE Electric DTE Electric $ 115 $ 136 $ 21 • Primarily extremely cold weather and revenue decoupler amortization DTE Gas 96 129 33 Gas Storage & Pipelines 17 21 4 DTE G
Slide 14: Extremely cold weather was a significant operating earnings driver
Extremely cold weather was a significant operating earnings* driver at both utilities (millions) DTE Electric DTE Gas $14 ($6) $136 $5 $129 $13 $28 $115 $96 * Reconciliation to GAAP reported earnings included in the appendix 14
Slide 15: Favorable 1Q weather creates contingency for summer weather variability
The favorable 1Q weather creates contingency for potential summer weather variability 2014 Operating EPS* Guidance Range $0.25 ($0.25) • Extremely cold weather this year $4.20 - $4.40 $4.20 - $4.40 has resulted in a strong start for the two utilities • Summer weather remains the largest source of ea
Slide 16: Agenda: Cash Flow and Balance Sheet Metrics
• Overview • First Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 16
Slide 17: DTE Energy First Quarter 2014 Cash Flow
DTE Energy First Quarter 2014 Cash Flow Cash Flow Summary Drivers (billions) 1Q 2013 1Q 2014 Cash From Operations* $0.6 $0.5 • Free cash flow lower due to employee Capital Spending (0.4) (0.5) benefit programs contributions in cash in 2014 vs. equity in 2013 and higher capital Free Cash Flow $0.2 $0
Slide 18: DTE Energy First Quarter 2014 Capital Expenditures
DTE Energy First Quarter 2014 Capital Expenditures Capital Expenditures Drivers (millions) 1Q 2013 1Q 2014 DTE Electric • DTE Electric higher due to planned outages Operational $211 $308 at fossil and nuclear generation and distribution reliability investments Environmental 34 41 Renewable Energy 10
Slide 19: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* Target 50% - 52% • Targeting zero equity issuances in 2014 49% 52% – Annual issuances of $200 million to $300 million in 2015 and 2016 2013 2014E • $1.5 billion of available liquidity as of March 31, 2014 Funds from Operations
Slide 20: Agenda: Summary
• Overview • First Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 20
Slide 21: Summary
Summary • We are on track to meet our operating earnings* guidance in 2014 • Delaying next electric rate case filing to late 2014 or early 2015 • Cash flow and balance sheet metrics remain strong • Utility investments and strategic, low-risk growth opportunities in our non-utility businesses expecte
Slide 22: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 22
Slide 23: Appendix
Appendix
Slide 24: DTE Electric Variance Analysis
DTE Electric Variance Analysis Operating Earnings* Variance Drivers (millions) • Extremely cold weather in 1Q 2014; $14 ($6) near-normal weather in 1Q 2013 $136 $13 Variance to normal weather $115 - 1Q 2013: $0 - 1Q 2014: $13 • One quarter of revenue decoupler mechanism (RDM) amortization in 2014 •
Slide 25: DTE Gas Variance Analysis
DTE Gas Variance Analysis Operating Earnings* Variance Drivers (millions) • Extremely cold weather in 1Q 2014; $5 $129 near-normal weather in 1Q 2013 $28 Variance to normal weather - 1Q 2013: $3 $96 - 1Q 2014: $31 • Other primarily weather-driven higher storage and transportation revenue partially o
Slide 26: DTE Energy 2014 Cash Flow Guidance
DTE Energy 2014 Cash Flow Guidance Cash Flow Summary Drivers (billions) 2013 2014 Actual Guidance • 2014 cash from operations decreases due Cash From Operations* $2.2 $1.6 to lower utility surcharge collections than Capital Spending (1.9) (2.3) 2013 and higher cash contributions to employee benefit
Slide 27: DTE Energy 2014 Capital Expenditure Guidance
DTE Energy 2014 Capital Expenditure Guidance Capital Expenditures Summary Drivers (millions) 2013 2014 Actual Guidance • DTE Electric capital higher due to DTE Electric increased environmental, renewable Operational $999 $1,080 energy, and reliability spending Environmental 165 280 Renewable Energy
Slide 28: Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income ($ millions) $2 $10 $8 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) margin*** minus O&M expenses and taxes. 1Q 2014 1Q 2013 • DTE Energy management Accounting 1Q 2014 Economic use
Slide 29: 1Q 2014 Reconciliation of Reported to Operating Earnings
1Q 2014 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 me
Slide 30: 1Q 2013 Reconciliation of Reported to Operating Earnings
1Q 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 me
Slide 31: 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 32: 2012 Reconciliation of Reported to Operating Earnings
2012 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 33: 2011 Reconciliation of Reported to Operating Earnings
2011 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 34: 2010 Reconciliation of Reported to Operating Earnings
2010 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 35: 2009 Reconciliation of Reported to Operating Earnings
2009 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 36: 2008 Reconciliation of Reported to Operating Earnings
2008 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 37: 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