Dte Energy Company · NYSE:DTE
Dte Energy — Q2 2018 Earnings Presentation
31 slides from Dte Energy's earnings presentation, Jul 25, 2018
Slide 1: 2nd Quarter 2018 Earnings Conference Call
2nd Quarter 2018 Earnings Conference Call July 25, 2018
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: Overview, Financial Update, Long-Term Growth Update
• Overview • Financial Update • Long-Term Growth Update 4
Slide 5: Increasing operating EPS guidance; regulatory filings progressing well
Increasing operating EPS* guidance; regulatory filings progressing well • Increasing 2018 operating EPS guidance midpoint by $0.35 to $6.13 – Both utilities are on track – GSP and P&I having an exceptional year • Increasing 2018 cash flow guidance – Reduces future equity needs • Regulatory proceedin
Slide 6: Strong future growth supported by opportunities across all business units
Strong future growth supported by opportunities across all business units • Utilities evaluating additional investments – Voluntary renewable program for large customers – Acceleration of gas main replacement • GSP positioning for strong future growth – NEXUS construction 80% complete – Board approv
Slide 7: Strong track record of beating 5-year forward operating EPS growth target
Strong track record of beating 5-year forward operating EPS* growth target Actual EPS vs 5-Year Plan 17.2% 12.5% $6.13 13.8% 3.9% $5.59 $5.28 $5.23 $4.97 $4.82 $4.64 $4.64 5-year Actual 5-year Actual 5-year Actual 5-year Guidance Plan** Plan ** Plan** Plan** Midpoint 2015 2016 2017 2018 * Reconcilia
Slide 8: Overview, Financial Update, Long-Term Growth Update
• Overview • Financial Update • Long-Term Growth Update 8
Slide 9: 2nd quarter 2018 operating earnings variance
2nd quarter 2018 operating earnings* variance (millions, except EPS) Operating Earnings Primary Drivers DTE Electric 2Q 2017 2Q 2018 Change Rate implementation and favorable DTE Electric $ 148 $ 163 $ 15 weather in 2018, offset by higher O&M DTE Gas 1 14 13 expense and rate base growth DTE Gas Gas S
Slide 10: Increasing 2018 operating EPS guidance midpoint by $0.35, or 6%
Increasing 2018 operating EPS* guidance midpoint by $0.35, or 6% (millions, except EPS) Original Revised Guidance Guidance DTE Electric $648 - $662 $648 - $662 Electric: Firmly in Middle of Range DTE Gas 152 - 160 152 - 160 Favorable weather Gas Storage & Pipelines 185 - 195 225 - 235 GSP: Increasin
Slide 11: Guidance update puts DTE on track to meet or exceed guidance for 11th consecutive year
Guidance update puts DTE on track to meet or exceed guidance for 11th consecutive year Operating EPS* 7.8% CAGR 8.4% CAGR $6.13 E $5.59 $5.28 $4.82 $4.60 $4.09 $3.94 $3.60 $3.73 $3.30 $2.90 Actual Original guidance midpoint 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 * Reconciliation of o
Slide 12: Updating 2018 cash flow guidance
Updating 2018 cash flow guidance (billions) Cash Flow Prior Revised Guidance Guidance • Increasing cash flow guidance by $200 million this year Cash From Operations* $2.0 $2.2 Capital Expenditures (3.6) (3.6) • Reducing 2018-2020 equity Free Cash Flow ($1.6) ($1.4) needs from $800 million to $700 mi
Slide 13: Overview, Financial Update, Long-Term Growth Update
• Overview • Financial Update • Long-Term Growth Update 13
Slide 14: Reliability investments at utilities support long-term growth
Reliability investments at utilities support long-term growth and increase customer satisfaction DTE Electric • $1 billion natural gas plant approved ‒ Breaking ground August 2018 and beginning construction mid-2019 • Renewable energy plan ‒ Acceleration of renewables (300 MW) ‒ Voluntary renewable
Slide 15: GSP is positioning for strong future growth
GSP is positioning for strong future growth Gas Storage & Pipelines • NEXUS Pipeline ‒ On budget and on schedule for late 3Q in-service ‒ 16 of 18 HDDs complete ‒ Mainline welding complete • Link expansion ‒ Volumes and investments faster than pro-forma • Evaluating acquisitions ‒ Multiple assets un
Slide 16: P&I is positioning for strong future growth
P&I is positioning for strong future growth Power & Industrial • Industrial Energy Services ‒ Constructing new Ford central energy plant ‒ Finalizing agreement on large industrial cogeneration project • Renewable Natural Gas ‒ Constructing new project in Wisconsin • Evaluating ~10 cogeneration / RNG
Slide 17: Summary
Summary • Increasing 2018 operating EPS* and cash guidance given strong financial performance • Targeting 5% - 7% operating EPS growth through 2022 • Driving utility growth through infrastructure investments focused on improving reliability and the customer experience • Continuing strategic and sust
Slide 18: Contact us
Contact us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 18
Slide 19: Appendix
Appendix oe DTE Energy 19
Slide 20: Maintaining strong cash flow and balance sheet
Maintaining strong cash flow and balance sheet Leverage* Target 50% - 54% • Issue equity of $700 million in 2018-2020 51% ‒ $250 million in 2018 using internal mechanisms ‒ Strong cash flows this year reduces equity needs 2017 2018-2020E • $1.6 billion of available liquidity at June 30, 2018 Funds f
Slide 21: DTE Electric variance analysis
DTE Electric variance analysis (millions) Operating Earnings* Variance Primary Drivers $30 ($8) $12 ($6) ($13) $163 $148 • Warmer weather in May and June 2018 Variance to normal weather – 2Q 2017: $1 – 2Q 2018: $31 2Q 2017 Weather Storm Rate Case Rate Base O&M 2Q 2018 Operating Impact Growth and Ope
Slide 22: Weather and DTE Electric weather normal sales
Weather and DTE Electric weather normal sales Cooling degree days – DTE Electric service territory Heating degree days – DTE Gas service territory 2Q 2017 2Q 2018 % change 2Q 2017 2Q 2018 % change Actuals 232 323 39% Actuals 668 860 29% Normal 215 215 0% Normal 786 774 (2%) Deviation from normal 8%
Slide 23: Actual cash flow and capital expenditures
Actual cash flow and capital expenditures (billions) (millions) Cash Flow Capital Expenditures YTD 2017 YTD 2018 YTD 2017 YTD 2018 DTE Electric Cash From Operations* $1.2 $1.4 Base Infrastructure $390 $350 Capital Expenditures (1.2) (1.4) New Generation 34 74 Free Cash Flow $0.0 $0.0 Distribution In
Slide 24: 2018 capital expenditures guidance
2018 capital expenditures guidance (millions) Capital Expenditures Current Guidance DTE Electric Base Infrastructure $750 New Generation 340 Distribution infrastructure 810 $1,900 DTE Gas Base Infrastructure $257 NEXUS Related 13 Main Renewal 190 $460 Non-Utility $1,100-$1,300 Total $3,460-$3,660 24
Slide 25: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric DTE Gas • General rate case - filed July 2018 (U-20162) • General rate case - November 2017 (U-18999) – Effective: May 2019 – Prior to tax reform, requested rate – Rate recovery: $328 million recovery: $85 million ($57 million net of infrastruc
Slide 26: Energy Trading reconciliation of operating earnings to economic net income
2nd quarter and YTD Energy Trading reconciliation of operating earnings* to economic net income 2Q • Economic net income equals economic gross margin*** minus O&M expenses and 2017 2018 taxes Operating Earnings $4 $8 • DTE Energy management uses economic Accounting Adjustments** (2) 7 net income as
Slide 27: 2nd quarter 2018 reconciliation of reported to operating earnings
2nd quarter 2018 reconciliation of reported to operating earnings (non-GAAP) 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 pr
Slide 28: 2nd quarter 2017 reconciliation of reported to operating earnings
2nd quarter 2017 reconciliation of reported to operating earnings (non-GAAP) 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 pr
Slide 29: 2008 – 2012 Full Year reconciliation
2008 – 2012 Full Year 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
Slide 30: 2013 – 2017 Full Year reconciliation
2013 – 2017 Full Year 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
Slide 31: Reconciliation of reported to operating earnings
Reconciliation of reported to operating earnings (non-GAAP) 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 repres