DTE Energy Company · NYSE:DTE
DTE Energy — FY2016 Earnings Presentation
29 slides from DTE Energy's earnings presentation, Feb 9, 2017
Slide 1: Year End 2016 Earnings Conference Call
Click to edit Master title style Year End 2016 Earnings Conference Call February 9, 2017 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Many factors impact forward-looking statements including, but not limited to, the following: impact of regulation by the EPA, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC, as well as other applicable governmental proceedings and regulations, including any associate
Slide 3: Participants
Participants • Gerry Anderson – Chairman and CEO • Jerry Norcia – President and COO • Peter Oleksiak – Senior Vice President and CFO • Barbara Tuckfield – Director, Investor Relations 3
Slide 4: 2016 Accomplishments, Long-Term Growth Update, Financial Update
• 2016 Accomplishments • Long-Term Growth Update • Financial Update 4
Slide 5: Focus on our employees and customers has been the foundation of our success
Focus on our employees and customers has been the foundation of our success Employee Engagement • Best employee safety rate in company history • 4th consecutive Gallup Great Workplace award; only utility to be recognized Customer Satisfaction • Top quartile customer satisfaction for both electric an
Slide 6: Our growth plans for the utilities and non-utilities are well supported for the long-term
Our growth plans for the utilities and non-utilities are well supported for the long-term Political & Regulatory Environment • Constructive electric and gas rate orders • Michigan energy legislation signed into law Capacity requirements 10-month rate case cycle 10% ROA cap 15% renewables by
Slide 7: DTE achieved strong financial performance in 2016
DTE achieved strong financial performance in 2016 (dollars per share) Achieved operating EPS* of $5.28 $5.28 $5.31 Exceeded original guidance for 10th consecutive year $5.14 $5.25 Increased operating EPS growth Growth $4.93 Growth Segment Segment target to 5% - 7% from 5% - 6% $3.08 $3.30 In
Slide 8: 2016 Accomplishments, Long-Term Growth Update, Financial Update
• 2016 Accomplishments • Long-Term Growth Update • Financial Update 8
Slide 9: Growth through 2021 fueled by investment in utility infrastructure and generation along with midstream opportunities
Growth through 2021 fueled by investment in utility infrastructure and generation along with midstream opportunities $13.5 billion 2017 – 2021 Capital Plan Electric............... $8.4 billion Distribution infrastructure, maintenance, new generation +12.5% Gas .................... $1.8 billion 2017
Slide 10: DTE Electric distribution investments continue to drive reliability and increase customer satisfaction
DTE Electric distribution investments continue to drive reliability and increase customer satisfaction Infrastructure Resilience Infrastructure Redesign Upgraded nearly 20% of circuits since 2013; impact 33% of circuits by the end of 2020, improving reliability Major investments planned at 20-25 sub
Slide 11: Replacing aging infrastructure achieves a fundamental shift in performance at DTE Gas
Replacing aging infrastructure achieves a fundamental shift in performance, cost and productivity at DTE Gas Main Replacement Pipeline Integrity Systematically replaces poor performing Strengthens the system - decreasing the unprotected main - minimizing leaks and potential for system failures impro
Slide 12: Pipeline and gathering platforms provide unique opportunities and synergies for long-term growth
Pipeline and gathering platforms provide unique opportunities and synergies for long-term growth NEXUS • FERC certificate of construction expected 1H17 • In-service 4Q17 • Ohio interconnect agreements provide 1.75 Bcf/d of market access • Mainline expandable up to 2.0 Bcf/d Link Lateral & Gathering*
Slide 13: 2016 Accomplishments, Long-Term Growth Update, Financial Update
• 2016 Accomplishments • Long-Term Growth Update • Financial Update 13
Slide 14: DTE Energy 2016 Operating Earnings Variance
DTE Energy 2016 Operating Earnings* Variance (millions, except EPS) Operating Earnings Primary Drivers 2015 2016 Change DTE Electric DTE Electric $ 562 $ 622 $ 60 • Weather and rate implementation offset by 2015 RDM*** amortization DTE Gas 132 138 6 and O&M initiatives to enhance customer reliabilit
Slide 15: 2017 operating EPS guidance supports 5% - 7% growth
2017 operating EPS* guidance supports 5% - 7% growth (millions, except EPS) 2016 2017 Actuals Guidance DTE Electric $622 $610 - $624 • 2017 operating EPS growth DTE Gas 138 143 - 151 segment guidance midpoint growing 6.5% from 2016 Gas Storage & Pipelines 127 140 - 150 original guidance of $4.93 Pow
Slide 16: With tax reform, DTE is uniquely situated to maximize customer and shareholder value
With tax reform, DTE is uniquely situated to maximize customer and shareholder value Assumptions + Utilities + Non-utilities - Holding Company • Reduces customers rates • Allows acceleration • Corporate tax rate of customer centric • Increases earnings • Reduces earnings reduction to 20% reliability
Slide 17: Summary
Summary Engaged employees create a safe work environment and drive great operational results Value driven utility investments provide an excellent customer experience while ensuring affordable rates Constructive regulatory environment and continued cost savings enable utilities to earn authorized re
Slide 18: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 18
Slide 19: Appendix
ys DTE Energy: Appendix
Slide 20: DTE Electric Variance Analysis
DTE Electric Variance Analysis (millions) Operating Earnings* Variance Primary Drivers $101 ($27) • Warmer weather ($38) ($34) $58 $622 Variance to normal weather $562 – 2015: $1 – 2016: $59 • Rates supporting infrastructure improvements to enhance customer reliability • Rate base growth (depreciati
Slide 21: Weather and DTE Electric Weather Normal Sales
Weather and DTE Electric Weather Normal Sales Cooling degree days Heating degree days DTE Electric service territory DTE Gas service territory YTD 2015 YTD 2016 % change 4Q 2015 4Q 2016 % change Actuals 836 1,123 34% Actuals 1,719 2,010 17% Normal 803 803 0% Normal 2,238 2,185 (2%) Deviation from no
Slide 22: Strong balance sheet supports growth
Strong balance sheet supports growth Leverage* Target 50% - 53% • Cash flow and balance sheet strength are a key priority 51% • No equity issuances in 2016 ‒ Acquisition related equity of $675 million in late 2019 (through convertible equity units) 2016 2017-2019E ‒ No additional equity planned thro
Slide 23: DTE Energy 2016 Cash Flow and Capital Expenditures Actuals
DTE Energy 2016 Cash Flow and Capital Expenditures Actuals (billions) (millions) Cash Flow Capital Expenditures 2015 2016 2015 2016 Actual Actual Actual Actual Cash From Operations* $1.9 $2.1 DTE Electric Distribution Infrastructure $579 $567 Capital Expenditures (2.3) (3.4) New Generation 316 131 F
Slide 24: DTE Energy 2017 Cash Flow and Capital Expenditures Guidance
DTE Energy 2017 Cash Flow and Capital Expenditures Guidance (billions) (millions) Cash Flow Capital Expenditures 2016 2017 2016 2017 Actual Guidance Actual Guidance Cash From Operations $2.1 $1.9 DTE Electric Distribution Infrastructure $567 $690 Capital Expenditures (3.4) (3.0) New Generation 131 4
Slide 25: Regulatory Update – Electric and Gas
Regulatory Update – Electric and Gas DTE Electric DTE Gas • Self implemented general 2016 • Final rate order and IRM rates 3Q ruling 4Q – $122 million rate order – 10.1% ROE • Final rate order 1Q 2017 – $184 million rate order – 10.1% ROE • File rate case 2Q • Annual rate cases 2018+ • Expect rate c
Slide 26: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $15 $40 • Economic net income Operating Earnings* $25 equals economic gross (millions, after-tax) margin*** minus O&M expenses and taxes 2015 2016 • DTE Energy management 2016 Operating 2016 Economic uses econ
Slide 27: 2016 Reconciliation of Reported to Operating Earnings
2016 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 28: 2015 Reconciliation of Reported to Operating Earnings
2015 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 29: Reconciliation of Other Reported to Operating Earnings
Reconciliation of Other Reported to Operating Earnings Use of Operating Earnings Information – Operating earnings exclude non-recurring items, certain mark-to- market adjustments and discontinued operations. DTE Energy management believes that operating earnings provide a more meaningful representat