Dte Energy Company · NYSE:DTE
Dte Energy — FY2012 Earnings Presentation
40 slides from Dte Energy's earnings presentation, Feb 20, 2013
Slide 1: Year End 2012 Earnings Conference Call
Year End 2012 Earnings Conference Call February 20, 2013
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 • Gerry Anderson – Chairman, President and CEO • Dave Meador – Executive Vice President and CFO • Peter Oleksiak – Senior Vice President of Finance • Dan Brudzynski – Vice President, Treasurer & Investor Relations • Anastasia Minor – Director, Investor Relations 3
Slide 4: 2012 Accomplishments, Long-Term Growth Update, Financial Update
• 2012 Accomplishments • Long-Term Growth Update • Financial Update 4
Slide 5: DTE Energy System of Priorities
DTE Energy System of Priorities 5
Slide 6: 2012 Accomplishments
2012 Accomplishments Employee Engagement • Higher employee engagement o Six consecutive years of increased Gallup scores o Achieved Gallup first quartile* ranking for the first time (78th percentile) Continuous Improvement • Continuous improvement driven deeper into organization o Maintained utility
Slide 7: 2012 Accomplishments (continued)
2012 Accomplishments (continued) Political / Regulatory • Solid political and regulatory context continues to support utility investments • Clear strategy for future rate case deferral at both utilities Growth / Value • Gratiot and Thumb wind parks online (212 MW) with construction underway at Echo
Slide 8: Transition to one DTE Energy brand for our two utilities
We are transitioning to one DTE Energy brand for our two utilities Detroit DTE Electric MichCon Edison DTE Gas 8
Slide 9: 2012 Accomplishments, Long-Term Growth Update, Financial Update
• 2012 Accomplishments • Long-Term Growth Update • Financial Update 9
Slide 10: Targeting 5%-6% operating EPS growth from 2012 guidance midpoint
Targeting 5% - 6% operating EPS* growth from original 2012 guidance midpoint of $3.80 (dollars) Operating EPS* Guidance 7% CAGR Midpoint 2008-2013 $3.94 $4.00 $3.75 $3.80 $3.64 $3.33 Dividend per share 5.4% CAGR $2.83 2009-2012 (Annualized) $2.42 $2.32 $2.12 $2.18 $2.12 2008A 2009A 2010A 2011A 2012A
Slide 11: Michigan economic indicators highlight continued recovery
Michigan economic indicators highlight continued recovery Increased Auto Production Housing Starts Up Lower Unemployment Rate (000s) (000s) 2,249 2,376 15.5 13.4% 1,912 11.8 12.6% 1,578 8.7 9.8 10.3% 8.9% 8.3% 1,144 6.7 2009 2010 2011 2012 2013E 2009 2010 2011 2012 2013E 2009 2010 2011 2012 2013E Ra
Slide 12: Electric utility investments in three key growth areas through 2017
Our electric utility is making significant investments in three key growth areas through 2017 Base Environmental Renewable Energy & Infrastructure Compliance Energy Efficiency $4.7 billion $1.2 billion $500 million • Investments to ensure reliability • Investments to meet evolving • Renewable genera
Slide 13: Two wind parks came online in 2012; third under construction
Two wind parks successfully came online in 2012 with construction underway on a third park Thumb Wind Parks 110 MW Wind online December 2012 ~$250 million capital investment Echo Wind Park 110 MW Wind Gratiot Wind Energy 2013 Construction; 212 MW Wind online March 2012 102 MW (64 turbines) owned and
Slide 14: Gas utility reliability and pipeline integrity investments through 2017
Our gas utility continues to make reliability and pipeline integrity investments through 2017 Base Main Renewal, Meter Move-Out Infrastructure & Pipeline Integrity $650 million $400 million • Strengthen and expand distribution system • Capital recovered through proposed Infrastructure Recovery Mecha
Slide 15: Strategies to delay rate case filings
Both utilities have strategies to delay rate case filings while maintaining financial health and customer affordability 2013 2014 2015 • Amortize former Electric Strategy • Continued cost • Securitization surcharge** revenue decoupling “Bridge to 2015” control in 2013 ends; headroom for new regulato
Slide 16: Governor to recommend changes to Michigan energy policy
The Governor will recommend changes to Michigan’s energy policy in December following a year-long review 2013 February - April October - November December • Seven public forums will be held • Draft reports issued • Final reports released; throughout the state hosted by for public feedback informatio
Slide 17: Gas Storage & Pipelines asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 17
Slide 18: Gas Storage & Pipelines platforms drive growth
Gas Storage & Pipelines platforms drive growth through new projects and expansions Storage & Vector Platforms Marcellus Platform Utica Platform Wood-fired Plant Cassville, WI Gas Storage and Vector Pipeline Bluestone Pipeline NEXUS Gas Transmission • Includes Michigan storage facilities Bluestone Pi
Slide 19: Power & Industrial Projects utility-like business lines
Power & Industrial Projects delivers growth through utility-like business lines Industrial Energy Services Renewable Energy Reduced Emissions Fuel Wood-fired Plant Cassville, WI Coke Battery - Detroit, MI Wood-fired Plant, Mt. Poso Reduced Emissions Fuel Plant • Coke and pulverized coal • Own 5 wood
Slide 20: 2012 Accomplishments, Long-Term Growth Update, Financial Update
• 2012 Accomplishments • Long-Term Growth Update • Financial Update 20
Slide 21: DTE Energy 2012 Operating Earnings Per Share
DTE Energy 2012 Operating Earnings Per Share* $3.94 DTE Electric DTE Gas Non-Utility Corporate & Other $2.81 $0.67 $0.73 ($0.27) Gas Storage & Power & Industrial Energy Trading Pipelines Projects $0.07 $0.36 $0.30 Note: Unconventional Gas Production had 2012 reported earnings per share of ($0.33), b
Slide 22: DTE Energy 2012 Operating Earnings Variance
DTE Energy 2012 Operating Earnings Variance Operating Earnings* Drivers (millions, except EPS) 2011** 2012 Change DTE Electric DTE Electric $ 443 $ 483 $ 40 • Warm summer weather absent revenue decoupler in 2012 and renewables growth partially offset by DTE Gas 110 115 5 reinvestment O&M expenses Ga
Slide 23: DTE Energy 2013 Operating Earnings Guidance
DTE Energy 2013 Operating Earnings Guidance (millions, except EPS) 2012 2013 Actuals* Guidance* 2013 Drivers Renewables growth, continued cost control and normal DTE Electric $483 $475 - $485 weather DTE Gas 115 113 - 118 Normal weather and full year rate increase offset by 2012 one-time items Gas S
Slide 24: DTE Energy 2012 Cash Flow Actuals
DTE Energy 2012 Cash Flow Actuals Cash Flow Summary Drivers (billions) 2011 2012 • Cash from operations increased due to surcharge collections partially Cash From Operations* $2.0 $2.2 offset by higher corporate income tax Capital Spending (1.6) (2.1) payments Free Cash Flow $0.4 $0.1 • Higher capit
Slide 25: DTE Energy 2013 Cash Flow Guidance
DTE Energy 2013 Cash Flow Guidance Cash Flow Summary 2013 Drivers (billions) 2012 2013 Actual Guidance • 2013 cash from operations decrease due to higher benefit plan contributions, higher gas Cash From Operations* $2.2 $1.8 inventory purchases and lower surcharge Capital Spending (2.1) (2.2) collec
Slide 26: DTE Energy 2013 Capital Expenditure Guidance
DTE Energy 2013 Capital Expenditure Guidance Capital Expenditures Summary 2013 Drivers (millions) 2012 2013 DTE Electric Actual Guidance • Increased investment in operational capital for DTE Electric improved generation and distribution reliability Operational $823 $1,020 • Higher environmental capi
Slide 27: Strong Balance Sheet Supports Growth
Strong Balance Sheet Supports Growth Leverage* • A strong balance sheet remains a key priority Target • Series of credit improvements 50% - 52% o Moody’s upgraded DTE Energy, DTE Electric and DTE Gas in February 2013 50% 50% o Fitch upgraded DTE Gas in January 2013, after upgrading both DTE Electric
Slide 28: Investment Thesis
Investment Thesis DTE Energy has a plan it believes will provide 5% - 6% long-term operating EPS growth, an attractive dividend yield and a strong balance sheet – Utility growth plan driven by mandated investments – Constructive regulatory structure and continued 5%-6% Average Annual EPS Growth cost
Slide 29: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 29
Slide 30: Appendix
DTE Energy’ Appendix
Slide 31: DTE Electric Variance Analysis
DTE Electric Variance Analysis Operating Earnings* Variance Drivers (millions) $45 $14 ($20) $1 $483 $443 • Warm weather absent revenue decoupler in 2012 • Growth in renewables projects • O&M reinvestment into plant reliability and preventative maintenance 31 * Reconciliation to GAAP reported earnin
Slide 32: DTE Gas Variance Analysis
DTE Gas Variance Analysis Operating Earnings* Variance Drivers (millions) $19 $115 $110 ($27) • Unusually warm weather in 1Q $10 2012 and colder than normal $3 weather in 1Q 2011 • Continuous improvement of distribution system driving lower lost gas expense • One-time items primarily due to revenue
Slide 33: Reduced Emissions Fuel growth driven by relocations and optimization
Reduced Emissions Fuel growth driven by relocations and continued optimization (millions) Earnings Contribution* • Operations and volume on target 2012 ~$40 at five placed units • One unit successfully relocated by year end • One unit sited; in operation mid-2013 2013 E ~$50 • Negotiating with host
Slide 34: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) Energy Trading Operating $21 $33 Earnings* (millions, after-tax) $12 • Economic net income equals economic gross 2012 2011 margin*** minus O&M expenses and taxes. Realized $57 $71 FY 2012 Accounting FY 2012 Un
Slide 35: Reconciliation of 2012 Reported to Operating Earnings
Reconciliation of 2012 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: Reconciliation of 2011 Reported to Operating Earnings
Reconciliation of 2011 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 2010 Reported to Operating Earnings
Reconciliation of 2010 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 38: Reconciliation of 2009 Reported to Operating Earnings
Reconciliation of 2009 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 39: Reconciliation of 2008 Reported to Operating Earnings
Reconciliation of 2008 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 40: 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