Cms Energy Corporation · NYSE:CMS
Cms Energy — Non-Deal Roadshow (March 2024)
45 slides from Cms Energy's roadshow presentation, March 2024
Slide 1: Europe Investor Meetings March 2024
Europe Investor Meetings March 2024
Slide 2: Forward-looking statements disclaimer
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 2023 $907M Adjusted net incomeb >95% regulated Avg. Rate Base 21 years Industry-leadin
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 Attracted Planet Goals a >1,300 MW • Exit coal in 2025 of new
Slide 5: NorthStar Clean Energy Provides Clean Solutions
NorthStar Clean Energy Provides Clean Solutions . . . Renewable Platforma • 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 future re
Slide 6: Our Commitment to Sustainability
Our Commitment to Sustainability . . . TOP QUARTILE FOR GLOBAL UTILITIES DOUBLE A RATED . . . continues to be recognized globally. 6
Slide 7: 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 8: Investment Thesis
INVESTMENT THESIS
Slide 9: Investment Thesis
Investment Thesis . . . ✓ Industry-leading net zero commitments Clean Energy Strong Cash Flow & Leader Infrastructure ✓ Balance Sheet Renewal Excellence through the ✓ Attractive & Constructive Top-tier regulatory jurisdictiona Diversified Legislation & Territory Regulation Affordable Prices ✓ Premiu
Slide 10: 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 11: Infrastructure Renewal is Necessary
Infrastructure Renewal is Necessary . . . $7B Electric Reliability Roadmap New Energy Legislation 5-yr plan Provides capital opportunity to meet 60% Including up to 400 Renewable Portfolio Standard by 2035 and miles per year of 100% Clean Energy Standard by 2040 undergrounding 25 years of main repla
Slide 12: Electric Reliability Roadmap
Electric Reliability Roadmap . . . Capital Investment Opportunity Actions & Customer Benefits (5-year) Actions: • Vegetation management to a 7-year trim cycle ~$7B • Up to 400 miles of annual undergrounding 10 mile +$3B • Replace >20K poles per year undergrounding pilot approved Nearly half of $3B •
Slide 13: 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 (H2 2024) (50% by 2030) • Clean Energy Standard ✓Ensures continued (incl.
Slide 14: Michigan's Strong Regulatory Environment
Michigan’s Strong Regulatory Environment . . . 2023 2024 Supportive Energy Policy Renewable Energy Plan (REP) • Timely recovery of investments H2 2024: File updated REP ✓ Forward-looking test to meet 60% renewable energy by 2035 years/earn authorized ROEs ✓ 10-month rate cases Electric ✓ Monthly fue
Slide 15: 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 16: Expansive Economic Development Efforts
Expansive Economic Development Efforts . . . Electric Gas Combined 2022 New Load 2023 New Load 2024 New Load Switch Attracted World-Renowned Data Center >1,300 MW Corning Incorporated of new or expanding load Leading Provider since 2015a 326 MW of Polysilicon ~$900M investment ~1,100 jobs 359 MW For
Slide 17: 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 18: Industry-Leading Financial Performance
Industry-Leading Financial Performance . . . Adjusted EPSa +6% to +8% Dividend Weather Help Recession Recession Recession / Hurt Pandemic 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+ Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Polar
Slide 19: Environmental, Social & Governance
Environmental, Social & Governance
Slide 20: 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 ~365 MW gas delivery system ✓ Approved for ~$11M in low-carbon energy infras
Slide 21: 2023 Asset Mix
2023 Asset Mix . . . Total PP&E ($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 22: 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 23: 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 24: 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 25: Our VGP Renewable Programs
a Our VGP Renewable Programs . . . Large Customer Program Other Programs (Available to Residential and Commercial) Large Customer Renewable Energy Program • >450MW subscribed of >1,000 MW approved MI Clean Air • >650 residential and business customers enrolled • Open to natural gas and combination c
Slide 26: 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 27: Energy Waste Reduction Program
Energy Waste Reduction Program . . . Energy Efficiency Programs Electric ✓ ~$6.3B of customer savings on energy bills since • ~2% annually 2009 • Next 5 years: ✓ ~6,600 GWh of reduced usage since 2009 • Spend ~$210M/yr – equivalent to ~1 power planta • Pre-tax incentive ~$42M/yr ✓ ~34K/yr appliances
Slide 28: Goal to Power >1M EVs by 2030
Goal to Power >1M EVs by 2030 . . . PowerMIDrive PowerMIDrive PowerMIFleet Residential Public Charging • ~31K EVs in Consumers Energy territory today – ~3x the that of 2020 • >80% of all charging is off-peak with best in class >90% residential off-peak • >50 EV fast chargers installed and working to
Slide 29: 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 30: 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 31: DE&I Strategy and Movement
DE&I Strategy and Movement . . . Diversity by the Numbers Our commitment to DE&I begins with our CEO who pledged to take PoC Female 25% action to advance diversity and Board of 33% inclusion in the workplace through Directors Male White the CEO Action for Diversity and 67% 75% Inclusion™ coalition —
Slide 32: Our Supplier Diversity Initiatives
Our Supplier Diversity Initiatives . . . 2023 Key Wins Increased annual spend with diverse suppliers by 3x since the inception of the program Exceeded Tier II target of $100M and increased suppliers reporting Tier II spend by 20% Added new requirement that all large contract awards must include l
Slide 33: Continued Corporate Giving
Continued Corporate Giving . . . Charitable Organizationsa Highlights $11M in total charitable donations in 2023 • $7.8M donated through Consumers Energy Foundation $180M $180M since 2009 • $1.5M in signature grants focused on neighborhood revitalization, providing economic security for community me
Slide 34: We're Helping Michigan Thrive
We’re Helping Michigan Thrive . . . Competitive Advantages in the State New and Expanding Load ✓ $1B of state incentives ✓ Energy intensive economic development 2024 rate >1,300 MW a since 2015 ✓ 2023 (6th consecutive year in a row) Editor’s Choice Top Utility 2023 - Business Facilities 2022 2021 20
Slide 35: Exceptional Board Governance
Exceptional Board Governance . . . JOHN RUSSELL GARRICK ROCHOW JON BARFIELD DEBORAH BUTLER Independent Chair KURT DARROW WILLIAM HARVEY RALPH IZZO SUZANNE SHANK 12 Members MYRNA SOTO JOHN SZNEWAJS RONALD TANSKI LAURA WRIGHT 42% Gender, racial & ethnic diversity 92% Independent . . . led by an indepe
Slide 36: Diverse, Engaged and Experienced Board
Diverse, Engaged and Experienced Board . . . Demographics Experience 64 Average age Senior Leadership Finance, Accounting or Fin. Reporting 100% 100% (49 – 72 yrs. old) Regulatory Environment & Governmental Affairs 100% 33% Female Risk Management 100% Customer Experience 73% Info. Tech. / Safety & S
Slide 37: 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 Jon E. Barfield Deborah H. Butler Kurt L. Darrow William
Slide 38: CEO Compensation
CEO Compensation . . . Compensation Mix for CEO Operational Goals • Employee Safety ~25% tenure- PEOPLE • Culture Index based 18% Annual • Customer Experience Index incentive 68% PROFIT • Electric Reliability Long-term Based on 14% incentive PROFIT PLANET EPS (70%) & Base (Based on relative Operatio
Slide 39: 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 40: 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 41: Endnotes
ENDNOTES 41 41
Slide 42: Presentation Endnotes (pg 1 of 2)
Presentation Endnotes (pg 1 of 2) 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 marke
Slide 43: Presentation Endnotes (pg 2 of 2)
Presentation Endnotes (pg 2 of 2) Slide 25: aVoluntary Green Pricing Slide 26: aMethane emissions from our natural gas delivery system since 2012 Slide 27: aAssumes roughly 1,159 MW saved (6,000 GWh ÷ (65% efficiency rate x 8,760 annual hours) = 1,159 MW) Slide 33: aIncludes contributions made by Co
Slide 44: GAAP Reconciliation
MS 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 availab
Slide 45: 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: