Cms Energy Corporation · NYSE:CMS
Cms Energy — Non-Deal Roadshow (May 2014)
27 slides from Cms Energy's roadshow presentation, May 8, 2014
Slide 1: Investor Meetings May 8 - 14, 2014
Investor Meetings May 8 - 14, 2014 Cross Winds® Energy Park Jackson Gas Plant Consumers Smart Energy Program
Slide 2: Forward-looking statements
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: Mindset drives consistent real EPS growth
Mindset . . . . 2 . . . . drives consistent “real” EPS growth. $0.81 _ _ _ _ _ Adjusted EPS (non-GAAP) excluding MTM in 2004-2006 a $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock Int’l Sale a 10-Year Actual 7% CAGR Dividend Payo
Slide 4: CMS Energy Model
CMS Energy MODEL . . . . 3 Investment Ten year - $15 billion Small, bite size projects None “Bet The Company” “Upside” Catalysts A. Capex >$15 billion B. PPA’s expire = 2,000 MW C. Sales growth D. Capacity price increases E. Michigan Energy Law F. Continuous cost reductions Self-Imposed Limits Susta
Slide 5: Model Delivers good, future return opportunity
Model Delivers . . . . 4 . . . . good, future return opportunity. Above Average Return EPSa Growth vs Peers _ _ _ _ _ a Adjusted EPS (non-GAAP) Ten-Year Growth Future 5%-7% Future Return Attractive dividend yield 4% 62% payout ratio EPS growth rate 5%-7% Driven by $7 billion investment in regulated
Slide 6: A. Visible Investment: Ten-Year Plan
A. Visible Investment: Ten-Year Plan . . . . 5 . . . . reflects needed catch-up to further reduce cost and improve reliability. 2013-2022 10-Year Plan Opportunity Level $15 Billion $15 Billion $20+ Billion Opportunity Amount (bils) Generation capacity PPA replacement $1.7 ROA return Higher renewable
Slide 7: Visible Investment: Catch-Up
Visible Investment: Catch-Up . . . . 6 2013 Pct of Market Cap Cap Inv OCF Liquidity CMS 21% 20% 24% Peers 18 16 20 21% 20% 24% . . . . creates unique opportunity; with OCF already stronger than peers. Amount (bils) $1.8 CMS Peers _ _ _ _ _ Source: 10K; actual amounts through 2012 smoothed for illust
Slide 8: Visible Investment: Gas System
157 Bcf of gas delivered in Q1 49% from storage Customers protected from price volatility No major service interruptions Investing $5 billion over the next 10 years Visible Investment: Gas System . . . . 7 . . . . added value and held up to the test. Investment Performance Southwest Michigan Pipelin
Slide 9: Visible Investment: Gas Infrastructure
Visible Investment: Gas Infrastructure . . . . 8 . . . . accelerating investment opportunities. 52,000 miles of distribution pipe Program to replace 3,000 miles $500 M next five years 1,700 miles of transmission lines $100 M West Oakland pipeline complete $120 M Southwest Michigan pipeline under con
Slide 10: Visible Investment: Rate Base Growth
Visible Investment: Rate Base Growth . . . . 9 . . . . drives EPS, cash flow, and dividend growth. Base Rate Increases <2% <2% Capital Investment “Checklist” Add Customer Value Reduce O&M Costs Reduce Fuel Costs Mandated by State or Federal Regulators $8 $11 $13 Upside: Creates headroom for more inv
Slide 11: B. PPA's Expire
B. PPA’s Expire . . . . 10 . . . . Replacement not yet in plan! Ten-year Capacity Growth ~780 MW 1,240 MW ~Potential for 3,000 MW of owned capacity MW PPA 2,600 capacity ~30% ~8,600 MW 540 MW 410 MW Shortfall Owned (6,000) 780 MW 8,600 MW Owned (8,020) PPA 580 MW 10,000 7,500 Today Jacksonplant Repl
Slide 12: New Capacity Opportunities
New Capacity Opportunities . . . . Replace PPA With New Build Full Year Impact Customer Bill Investor (EPS) (mils) 1,000 MW of PPA’s expire - $325 0 ¢ Add 1,000 MW owned capacity + 325 + 5 Impact ≈ Flat Incremental Step-up Not in Plan 2 points Build - Thetford Expand - Zeeland Buy - ? LT PPA 11 . .
Slide 13: C. Sales Growth
C. Sales Growth . . . . . . . even after Energy Efficiency. First Quarter Electric Salesa Economic Indicators Annual Industrial Sales Grand Rapids Michigan U.S Building Permits* + 39% +25% +16% GDP (real) 2010 thru 2012 14 11 7 Population 2010 Census thru July 2013 3 0 2 Unemployment February 2014 6
Slide 14: D. Capacity Price
D. Capacity Price Market Increases . . . . 13 . . . . could add value to the 700 MW “DIG” plant. Capacity price < ($ kW per month) Today (mils) Future Scenarios (mils) $5 +$30 $55 $35 +$50 Opportunity Upside: Conditions improving <$0.50 $4.50 $7.50
Slide 15: E. Michigan Energy Law
E. Michigan Energy Law . . . . Historical test year 12-18 months regulatory lag No cap on ROA 14 10% renewables by 2015 Energy efficiency standards File-and-implement 10% ROA cap Adaptability Reliability Affordability Environmental protection Before 2008 TODAY 2015 Improvements . . . . builds on 200
Slide 16: Michigan Governor's Race
Michigan Governor’s Race . . . . 15 . . . . Election Day is November 4th, 2014. Mark Schauer Democrat, Challenger Rick Snyder Republican, Incumbent Campaign Issues Education Jobs Roads Detroit On Energy On ROA 39% 45% As Senate Democratic Leader, Mark played a key role in the successful passage of t
Slide 17: F. Continuous O&M Cost Reductions
F. Continuous O&M Cost Reductions . . . . 16 . . . . . holds down rates and allows better system reliability. _ _ _ _ _ a O&M Change excluding major storms Amount (mils) $ $1,050 -3%a -8% +5% -8% +5% -3%a +5% 2012 Cost Reduction Reinvestment 2013 Cost Reduction Reinvestment 2014
Slide 18: Self-Initiated Cost Control
Self-Initiated Cost Control . . . . 17 . . . . . holds down rates and allows better system reliability. Average Annual O&M Change +6% Peers -2% CMS Flat -2% Average -3% Plan Conservatively Upside? _ _ _ _ _ a -8% Before reinvestment +6% Peers Actual/Plan (exc 2013 major storms) 2006-2012 2012 2013 2
Slide 19: Opportunity to Reinvest Helps Customers
Opportunity to Reinvest Helps Customers . . . . 18 . . . . reinvestment already underway. 2014 2013 +14¢ +9¢ Adjusted EPS (non-GAAP) +18¢ Guidance 7% - 5% Remaining Reinvestment – Offsets (2)¢ (1) (7) (3) } } (3)¢ (10)¢ “Natural” offsets: Gas O&M Higher UAs Reinvestment: O&M choices Parent debt pref
Slide 20: Key Takeaways
Key Takeaways . . . . 20 . . . . distinguish CMS favorably with customers and owners. _ _ _ _ _ a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006 EPS a “Real” Growth (No “Resets”) $2.00 Core Fundamentals Visible Investment Cost Controls Plan Conservatively Supportive Regulatory Catalysts Upside T
Slide 21: Appendix
Appendix
Slide 22: Operating Cash Flow Growth
Operating Cash Flow Growth . . . . Amount (bils) $ Investment Cash flow before dividend _ _ _ _ _ a Non-GAAP NOLs & Credits $0.7 $0.6 $0.5 $0.4 $0.4 $0.2 $0.1 Gross operating cash flowa up $0.1 billion per year . . . . self-funds investment and strategy. Up $0.5 Billion $2.1 Interest Working capital
Slide 23: Liquidity (as of 3/31/14)
Liquidity (as of 3/31/14) . . . . . . . . strong and conservative. Availability CMS Energy 5-year revolver - 2018 Consumers Energy Cash AR Facility – Nov 2015 5-year revolver - 2018 $548 mils 650 250 758 $2.2 Billion Financing Timing Parent Debt February Continuous Equity March 2016 Term Loan Spring
Slide 24: Capital Expenditures
Capital Expenditures 25 New Gas Plant Capacity 2014-2018 Plan 2013 2014 2015 2016 2017 2018 Total (mils) (mils) (mils) (mils) (mils) (mils) (mils) Electric Distribution $ 199 $ 190 $ 197 $ 202 $ 211 $ 208 $ 1,008 Generation 89 96 93 88 60 155 492 New Customers 48 47 38 39 38 34 196 Other 96 102 81 8
Slide 25: GAAP Reconciliation
CT GAAP Reconciliation
Slide 26: Reported to adjusted earnings per share reconciliation
27 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.42 $1.66 After-tax items: Electric and gas utility 0.21 (0.39) - - (0.07) 0.05 0.33 0.03 - 0.17 - Enterprises 0.74 0.62 0.04 (0.02) 1.2
Slide 27: Gross operating cash flow reconciliation
28 2012 2013 2014 2015 2016 2017 2018 Consumers Operating Income + Depreciation & Amortization 1,635 $ (a) 1,740 $ 1,820 $ 1,876 $ 1,952 $ 2,054 $ 2,162 $ Enterprises Project Cash Flows 17 16 25 30 28 35 36 Gross Operating Cash Flow 1,652 $ 1,756 $ 1,845 $ 1,906 $ 1,980 $ 2,089 $ 2,198 $ (411) (335)