Slide 1: Third Quarter Financial Update November 9, 2007
Third Quarter Financial Update November 9, 2007
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as "anti
Slide 3: Participants
Participants Dave Meador, Executive Vice President and CFO Peter Oleksiak, VP and Controller Nick Khouri, VP and Treasurer Lisa Muschong, Director of Investor Relations
Slide 4: 2007 Operating Earnings Guidance / Cash Flow and Capital Expenditures Summary
2007 Operating Earnings Guidance YTD 2007 / Third Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 5: 2007 Earnings Outlook
2007 Earnings Outlook Detroit Edison performance impacted by one time cost pressures Startup costs associated with 2007 enterprise business systems (EBS) implementation Higher than normal storm restoration expenditures Lower territory sales Overall cash flow has improved MichCon remains on track to
Slide 6: 2007 Earnings Guidance
2007 Earnings Guidance * Reconciliation to GAAP reported earnings included in the appendix Note: EPS based on expected 170.5M average shares outstanding Operating Earnings* $ millions 2007 Previous Guidance 2007 Current Guidance 2007 operating EPS $2.50 - $2.65 Detroit Edison expected to earn $300 -
Slide 7: YTD 2007 / Third Quarter 07 Earnings Results
2007 Operating Earnings Guidance YTD 2007 / Third Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 8: YTD 2007 Operating Earnings Variance
YTD 2007 Operating Earnings Variance * Reconciliation to GAAP reported earnings included in the appendix 2005 excl synfuel DECO MichCOn coal UGP pip ET hold 377 312 312 320 325 329 336 317 65 8 5 4 24 17 19 317 Operating Earnings Variance Excluding Synthetic Fuel* ($ millions) YTD06 Operating Earnin
Slide 9: Third Quarter 2007 Operating Earnings per Share
Third Quarter 2007 Operating Earnings Operating Earnings per Share* 3Q average shares outstanding: 166 million Detroit Edison $0.69 Unconventional Gas Production $0.01 Non-Utility $0.66 Coal & Gas Midstream $0.09 Corporate & Other ($0.13) MichCon** ($0.13) $1.09 Power and Industrial Projects $0.02 *
Slide 10: DTE Energy Third Quarter 2007 Operating Earnings Variance
2006 2007 2006 255 181 -3 DTE Energy Third Quarter 2007 Operating Earnings Variance * Reconciliation to GAAP reported earnings included in the appendix 2005 excl synfuel DECO MichCOn coal UGP pip ET hold 205 174 159 159 164 165 146 136 31 15 5 1 2 21 8 136 Operating Earnings Variance Excluding Synth
Slide 11: Detroit Edison Third Quarter 2007 Operating Earnings Variance
Detroit Edison Third Quarter 2007 Operating Earnings Variance Operating Earnings Variance* ($ millions) * Reconciliation to GAAP reported earnings included in the appendix 2006 show cause weather choice DTE2 storms 2007 145 133 129 125 113 107 107 114 12 4 4 12 6 7 3Q06 Operating Earnings Weather ($
Slide 12: MichCon Third Quarter 2007 Operating Earnings Variance
2005 Gas Markets SAP Uncoll O&M/other 2006 -8 -8 -9 -13 -16 -22 -1 -4 -3 -6 MichCon Third Quarter 2007 Operating Earnings Variance Operating Earnings Variance* ($ millions) Gross Margin * Reconciliation to GAAP reported earnings included in the appendix 3Q06 Operating Earnings 3Q07 Operating Earning
Slide 13: Non-Utility Third Quarter 2007 Operating Earnings Results
Non-Utility Third Quarter 2007 Operating Earnings Results Operating Earnings* ($ millions) * Reconciliation to GAAP reported earnings included in the appendix Earnings Drivers
Slide 14: Cash Flow and Capital Expenditures Summary
2007 Operating Earnings Guidance YTD 2007 / Third Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 15: 2007 Cash Flow
Cash remains on track to hit 2007 full year guidance YTD adjusted cash from operations down from last year, driven in large part by one time tax payments tied to non-utility monetizations Capital spending YTD is down at Detroit Edison and up at MichCon 2007 Cash Flow DTE Energy Cash Flow ($ millions
Slide 16: Balance Sheet Metrics are Improving
12/31/2006 12/31/07E 0.195 0.25 One time cash infusions are driving an improved balance sheet Non-utility monetizations are expected to generate over $1.5 billion in after-tax cash proceeds Synfuels should produce $900 million of net cash Allows us to buy back stock, reduce holding company debt, and
Slide 17: 2007 Operating Earnings Guidance / Cash Flow Summary
2007 Operating Earnings Guidance YTD 2007 / Third Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 18: DTE Energy's Investment Thesis
DTE Energy's Investment Thesis DTE Energy expects to create significant value for shareholders over the next five years and beyond 5 - 6% long-term utility earnings growth Well-run utilities engaged in a customer-focused investment program, operating in a constructive regulatory environment Potentia
Slide 19: DTE Energy Investor Relations
DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030
Slide 20: Appendix
Appendix DTE Energy s€
Slide 21: Detroit Edison 2007 Operating Earnings Drivers
Detroit Edison 2007 Operating Earnings Drivers Detroit Edison 2007 Guidance Walk* Original 2007 Guidance SAP Startup Costs Economy Weather Revised 2007Guidance Detroit Edison 345 310 300 300 305 35 10 5 2007 Original Guidance 2007 Current Guidance EBS Start Up Costs Net Weather Impacts Lower Territo
Slide 22: 2008 Utility Outlook Remains Strong
2008 Utility Outlook Remains Strong 2008 Earnings Drivers Utilities on track to earn their authorized ROE of 11% in 2008 Detroit Edison Enterprise business system startup costs behind us Expiration of rate reduction in April 2008 Resolution of electric rate case in Q3 2008 MichCon Innovative restruc
Slide 23: Utility Capital Spending
Utility capital spending Detroit Edison operational spending is down primarily due to timing of outages Detroit Edison environmental spending increased from last year due to increased spend on SCR and Low NOx projects MichCon spending is up from $95M last year to $152M in 2007, led by expansion of t
Slide 24: 2007 Net Cash Has Improved Since Our Original Guidance
2007 Net Cash Has Improved Since Our Original Guidance 2007 Current Guidance ($ millions) DTE Energy Net Cash Flow ** Accounted for as 'investing activity' on statement of cash flows * Includes approximately $220M of accelerated tax credits *** Reconciliation to GAAP reported cash flow included in t
Slide 25: DTE Energy 2007 Capital Expenditure Guidance
DTE Energy 2007 Capital Expenditure Guidance 2007 Original Guidance 2007 Current Guidance DTE Energy Capital Expenditures $ millions
Slide 26: Synfuels Expected To Produce $900M in Cash in 2007-2009
Synfuels Expected To Produce $900M in Cash in 2007-2009 2007 2008 2009 Total 675 675 850 175 50 900 2007E 2008E 2009E Total Expected Synfuel Cash Flow* ($ millions) ~$675 ~$175 ~$50 ~$900 Gains from non-utility monetizations enabled DTE to use more of its banked tax credits in 2007 Pulls ahead cash
Slide 27: Sources and Uses of Monetization Proceeds and Synfuel Cash
Sources Long-Term Uses East 1.4 0.75 West 0.95 0.75 0.25 0.65 Sources and Uses of Monetization Proceeds and Synfuel Cash Synfuel ~$900 (2007 - 2009) Monetization Proceeds ~$1,500 (2007) Monetization Proceeds and Synfuel Cash Sources and Uses ~$2,400 ~$2,400 Debt Redemption ~$600 Share Repurchase* ~$
Slide 28: Synfuel Operating Earnings
Synfuel Operating Earnings* * Reconciliation to GAAP reported earnings included in this appendix ($ millions, after-tax)
Slide 29: DTE Energy Trading Earnings Reconciliation
DTE Energy Trading Earnings Reconciliation Total EITF 51 51 55 4 ** Consists of the income statement effect of not recognizing changes in the fair market value of certain non derivative contracts including physical inventory and capacity contracts for transportation, transmission and storage. These
Slide 30: Reconciliation of Q3 2007 Reported to Operating Earnings
Reconciliation of Q3 2007 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 me
Slide 31: Reconciliation of Q3 2007 Reported to Operating Earnings per Share
Reconciliation of Q3 2007 Reported to Operating Earnings per Share 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 perf
Slide 32: Reconciliation of Q3 2006 Reported to Operating Earnings
Reconciliation of Q3 2006 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 me
Slide 33: Reconciliation of YTD 2007 Reported to Operating Earnings
Reconciliation of YTD 2007 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 m
Slide 34: Reconciliation of YTD 2006 Reported to Operating Earnings
Reconciliation of YTD 2006 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 m
Slide 35: Reconciliations of Synfuel and 2007 Reported to Operating Earnings
Reconciliations of Synfuel Reported to Operating Earnings and 2007 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 operati
Slide 36: Reconciliations of Cash From Operations to Adjusted Cash from Operations
Reconciliations of Cash From Operations to Adjusted Cash from Operations * Accounted for in the investing activities section of the consolidated statement of cash flows Adjusted Cash From Operations Use of Adjusted Cash From Operations - DTE Energy management believes that adjusted cash from operati