Cms Energy Corporation · NYSE:CMS
Cms Energy — Investor Presentation (September 2024)
41 slides from Cms Energy's investor presentation, Sep 3, 2024
Slide 1: Investor Meetings September 2024
Investor Meetings September 2024
Slide 2: Enter “so what” if necessary – Century Gothic, Bold, Size 18 or smaller
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: CMS Energy Overview
CMS Energy Overview Corporate Structure Key Information CMS Energy 2023 Financial Statistics (NYSE: CMS) Based in Jackson, MI >8,300 Employees (44% unionized)a Consumers Energy NorthStar Clean Energy $7.5B Revenue b 2023 $907M Adjusted net income >95% regulated Avg. Rate Base 21 years Industry-leadi
Slide 4: Consumers Energy Positioned Well
Consumers Energy Positioned Well . . . Service Territory Electric Gas Combined • Electric Utility 1.9M electric customers 9,260 MW of capacity • Gas Utility 1.8M gas customers 309 Bcf gas storage • Serving 6.8M Michigan residents >1,300 a Planet Goals MW cumulative • Exit coal in 2025 contracted loa
Slide 5: NorthStar Clean Energy Provides Flexible Solutions
a NorthStar Clean Energy Provides Flexible Solutions . . . Renewable Platform • 368 MW of wind (OH, TX) • 64 MW of biomass (MI, NC) • 210 MW of solar (AR, MI, WI) Dearborn Industrial Generation (DIG) & Other • >1,000 MW in MI (including DIG & Peakers) • Upside: tightening capacity markets with futur
Slide 6: Industry-Leading Financial Performance
Industry-Leading Financial Performance . . . Adjusted EPS +6% to +8% Dividend Weather Help Recession Recession Recession / Hurt Pandemic 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+ Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mi
Slide 7: Investment Thesis
INVESTMENT THESIS
Slide 8: Investment Thesis
Investment Thesis . . . Clean Energy Industry-leading net zero commitments Leader s Co or Strong Infrastructure Cash Flow & Renewal st -w Balance Sheet Inve orkers Excellence through the Cu Customers sto m ers Attractive & Constructive Top-tier regulatory jurisdictiona Diversified Legislation & Terr
Slide 9: Infrastructure Renewal is Necessary
Infrastructure Renewal is Necessary . . . $7B Proposed Electric Reliability New Energy Legislation Roadmap Provides capital opportunity to meet 60% 5-yr plan Renewable Portfolio Standard by 2035 and Including up to 400 100% Clean Energy Standard by 2040 miles per year of undergrounding 25 years of m
Slide 10: Updated Customer Investment Plan
Updated Customer Investment Plan . . . New Utility Investment Plan Rate Base Growth Other Growth Driversb ~7½%/yr a $35.2B ✓ EE incentive moving 63% 20% from 20% to 22.5% Electric utility investment $24.6B (at 2% YoY load ’24 – ’28 reduction) $17B 37% 43% ✓ ~9% FCM on new PPAs for clean energy contr
Slide 11: Reliability and Decarbonization Opportunities
Reliability and Decarbonization Opportunities . . . Electric Reliability Roadmap Clean Energy Law • Supports and accelerates decarbonization +$3B ~$7B • Ensures continued resource adequacy • Maintains customer affordability Benefits • Enhanced Financial Compensation ~$4B • More reliable and resilien
Slide 12: Needed Customer Investments
Needed Customer Investments . . . Customer Investments Key Affordability Drivers Clean Energy Transformation ✓ CE Way cost savings (REP & IRP)a • ~$220M since 2020 ✓ Large episodic savings (PPAs/coal exit) • >$200M savings through 2025 ✓ Economic development Electric Natural Gas • >1,300 MW of new o
Slide 13: Michigan's Strong Regulatory Environment
Michigan’s Strong Regulatory Environment . . . 2024 Supportive Energy Policy Electric • Timely recovery of investments ✓ Forward-looking test years/earn authorized ✓ Mar. 1st: Order May 31st: Filed Rate Case By Mar. 31, 2025: Expected Order ROEs $92M, 9.9% ROE $325Ma, 10.25% ROE U-21389 U-21585 U-21
Slide 14: De-risking Inflationary Pressures
De-risking Inflationary Pressures . . . Near-term Risk Mitigation Episodic Cost Savings Global Risks Countermeasures Year Event Savings ✓ Manageable wage inflation Labor (>40% unionized) 2022 Palisades retirement >$90M ✓ ~95% non-union retention ratea ✓ Manageable supply chain risk 2023 Karn 1&2 c
Slide 15: Expansive Economic Development Efforts
Expansive Economic Development Efforts . . . Electric Gas Combined Contracted Load 2022 New Load 2023 New Load 2024 New Load Hemlock Semiconductor (MW) Leading provider of polysilicon for chips and solar panels ~$375M investment >1,300 MW ~175 jobs cumulative contracted a load since 2015 326 Ford Bl
Slide 16: Strong Balance Sheet
Strong Balance Sheet . . . Consumers Energy S&P Moody’s Fitch Key Strengths Senior Secured A A1 A+ ✓ Forward-looking recovery ✓ Constructive rate construct Commercial Paper A-2 P-2 F-2 ✓ Strong operating cash flow Outlook Stable Stable Stable generation CMS Energy Senior Unsecured BBB Baa2 BBB ✓ 100
Slide 17: Environmental, Social & Governance
Environmental, Social & Governance
Slide 18: Executing on the Clean Energy Transformation
Executing on the Clean Energy Transformation . . . Net Zero Targets Proof Points ✓ Retired Karn 1 & 2 coal units, 515 MW 2030 Today ✓ Acquired existing ~1.2 GW CCGT a Net zero methane emissions for our ✓ Grew VGP Program to ~490 MW gas delivery system ✓ Approved for ~$11M in low-carbon energy infras
Slide 19: Our Clean Energy Transformation
Our Clean Energy Transformation . . . Exit Coal in 2025… …While Ensuring Reliability a (Coal % PP&E ) <20% • Purchase ~1.2 GW of existing gas Classic 7 retirement and capacity (Covert) Karn 1&2 retirement • Maintain ~1.2 GW of peaking capacity Campbell 1–3 through 2031 (Karn 3&4) retirement; <10% Re
Slide 20: 2023 Asset Mix
2023 Asset Mix . . . Total PP&E ($M) (%) Electric Generation $4,155 17% Coal 400 ~2% Wind, solar, hydro 2,245 9 Gas & other 1,510 6 Distribution 8,899 35 Other 737 3 Total electric $13,791 ~55% Gas Distribution $5,887 23% Transmission 2,503 10 Underground storage facilities 1,145 5 Other 412 2 Total
Slide 21: A Just Transition Out of Coal
A Just Transition Out of Coal . . . We Have Done This Before Proven Examples ✓ Nine coal units retired to date ✓ Coal plant decommissioning included: ✓ Clear and ongoing communication with affected ✓ Environmental abatement communities and stakeholders ✓ Dismantlement and demolition ✓ Co-workers pro
Slide 22: Decarbonization of Gas Infrastructure
Decarbonization of Gas Infrastructure . . . Net zero methane by 2030... …with additional opportunities. • >100 miles/yr main replacement • New Michigan Energy Legislation – 100% Clean Energy (renewables, gas w/ CCS and • ~5.5K/yr vintage services replacement nuclear) by 2040 • Renewable natural gas
Slide 23: ESG Disclosures are Transparent
ESG Disclosures are Transparent . . . • CMS Energy & Consumers Energy Websites • SASB Index (Electric Utilities & Power Generation) • SEC Filings (10-K & Proxy) • SASB Index (Gas Utilities & • Carbon Disclosure Project Distributors) • Report Scope 1, 2 & 3 • TCFD Index Emissions • Water • Global Rep
Slide 24: Committed to Physical Safety
Committed to Physical Safety . . . Safety Performance 2023 • >50% reduction in high-risk injuries vs. 2022 – (Recordable Safety Incidents) 3rd year in a row of reduction in high-risk injuries 558 • Safety performance awarded for Down (77)% executive and employee compensation for 2nd year in a row •
Slide 25: Cyber and Physical Security Program
Cyber and Physical Security Program . . . Program Focus & Approach Robust Corporate Governance • Protect critical infrastructure, customer data and • Board oversight of security risks including cyber and employee safety physical security, compliance and data privacy • Dedicated team monitors environ
Slide 26: Exceptional Board Governance
Exceptional Board Governance . . . JOHN RUSSELL GARRICK ROCHOW DEBORAH BUTLER MYRNA SOTO Independent Chair KURT DARROW RALPH IZZO SUZANNE SHANK RONALD TANSKI JOHN SZNEWAJS LAURA WRIGHT 10 Members 90% Independent . . . led by an independent Chair and highly skilled, diverse Board. 26
Slide 27: Diverse, Engaged and Experienced Board
Diverse, Engaged and Experienced Board . . . Demographics Experience 63 Average age Senior Leadership Finance, Accounting or Fin. Reporting 100% 100% (49-71 yrs. old) Regulatory Environment & Governmental Affairs 100% Risk Management 100% Customer Experience 70% 40% Female Info. Tech. / Safety & Sec
Slide 28: Committee Membership
Committee Membership . . . Political contributions >$10K need Member 100% Board approval Chairperson Independent Governance, Compensation & Sustainability, & Name Audit Human Resources Executive Finance Public Responsibility Deborah H. Butler Kurt L. Darrow Ralph Izzo John G. Russell
Slide 29: CEO Compensation
CEO Compensation . . . Compensation Mix for CEO Operational Goals mance-Bas • Employee Safety rfor ed ~25% Pe tenure- PEOPLE • Culture Index based 18% % 86 Annual • Customer Experience Index incentive 68% PROFIT • Electric Reliability Long-term Based on 14% incentive PROFIT PLANET EPS (70%) & Base (
Slide 30: Risks are Carefully Considered
Risks are Carefully Considered . . . Risks Mitigation Efforts Regulatory Environment • Participation in legislative and regulatory policy development Climate • New Michigan Energy Legislation – 60% renewable portfolio mandate by Carbon Emissions 2035 and 100% clean energy (incl. renewables, gas with
Slide 31: Political Giving
Political Giving . . . Political Giving Focus Enhanced Disclosures • Meeting Michigan’s energy needs • Publishing annually on the company’s website: • Expenditures made to influence the outcome • Helping the state’s communities thrive of ballot initiatives • Providing safe, reliable, affordable and
Slide 32: Appendix
APPENDIX 32 32
Slide 33: 2024 Planned Financings
2024 Planned Financings . . . Financingsa Plan YTD b ~$2.5B of net liquidity ($M) ($M) Consumers Energy: $250M 5-yr First Mortgage Bonds ~$1,275 $600 4.60% (Nov-2025) CMS Energy: Contracted Equity (issued) ~266 ~266 ✓ ~$70/sh $1,100M Retirements (incl. term loans): (Dec-2027) Consumers Energy 302 --
Slide 34: New Michigan Energy Legislation
New Michigan Energy Legislation . . . Key Items Prior Law New Lawa Benefits • Renewable Portfolio Standard 60% by 2035 ✓Maintains customer 15% by 2021 • Next Renewable Energy Plan (REP) filing in Michigan in MISO affordability (Nov. 2024) (50% by 2030) • Clean Energy Standard ✓Ensures continued (inc
Slide 35: Our Clean Energy Transformation
Our Clean Energy Transformation . . . a Pre-Energy Capacity Mix Legislation 3% 12% 7% 6% 13% 14% 15% 11% 10% 9% 11% 10% 9% 9% 10% • Exit coal in 2025 • Maintain reliability, 19% 38% 31% resiliency and affordability • 2x renewable 61% 61% 15% energy capacity 43% 30% <14% Today 2025 2030 2040 Coal Ren
Slide 36: Our Energy Supply Will Be Cleaner
a Our Energy Supply Will Be Cleaner . . . Pre-Energy Current Energy Mix Legislation Future Energy Mix (2031) (Post-MCV PPA Expiration) One-Time PPA/ Market >50% Purchases Carbon free Wind, Customer 10% 45% Hydro & Programs Natural other 14% Gas 10% 33% Customer Storage Programs 2% Natural 18% Gas So
Slide 37: Endnotes
ENDNOTES 37 37
Slide 38: Presentation Endnotes
Presentation Endnotes Slide 3: aExcludes seasonal and contract workers bAdjusted, (non-GAAP) cDividend Policy: Payout Ratio of ~60% overtime Slide 4: aNet zero methane emissions for our gas delivery system, net zero carbon emissions for our electric business (includes PPAs and MISO market purchases)
Slide 39: Presentation Endnotes
Presentation Endnotes Slide 22: aMethane emissions from our natural gas delivery system since 2012 Slide 30: aNew or expanding load since 2015 as of June 2024 Slide 33: aAs of June 30, 2024, excludes tax-exempt remarketing in October 2024 b$1,835M in unreserved revolvers + $676M of unrestricted cash
Slide 40: GAAP Reconciliation
CMS Energy provides historical financial results on both a reported (GAAP) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. During an oral presentation, references to “earnings” are on an adjusted basis. All references to net income refer to net income availa
Slide 41: 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 Twelve Months Ended 12/31/23 12/31/22 12/31/23 12/31/22 Net Income Available to Common Stockholders $ 306 $ 168 $ 877 $ 827 Reconciling items: