DTE Energy Company · NYSE:DTE
DTE Energy — FY2014 Earnings Presentation
42 slides from DTE Energy's earnings presentation, Feb 13, 2015
Slide 1: Year End 2014 Earnings Conference Call
Year End 2014 Earnings Conference Call February 13, 2015
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. Many factors may impact forward-looking statements including, but not limited to, the following: impact of regulation by the FERC, MPSC, NRC, CFTC, EPA and other applicable governmental proceedings and reg
Slide 3: Participants
Participants • Gerry Anderson – Chairman and CEO • Peter Oleksiak – Senior Vice President and CFO • Anastasia Minor – Executive Director, Investor Relations 3
Slide 4: Agenda
• 2014 Accomplishments • Energy Policy Update • Long-Term Growth Update • Financial Update • Summary 4
Slide 5: Our system of priorities is fundamental to how we create value for our investors
Our system of priorities is fundamental to how we create value for our investors 5% - 6% Annual Attractive Strong EPS Growth Dividend Balance Sheet 5
Slide 6: We achieved top performance across our priorities in 2014
We achieved top performance across our priorities in 2014 Employee Higher employee engagement Engagement • Ranked in the top-decile in Gallup’s* employee engagement survey • Earned second Gallup Great Workplace award • Top-quartile safety results for the second year in a row • National Safety Counci
Slide 7: We achieved top performance across our priorities in 2014 (continued)
We achieved top performance across our priorities in 2014 (continued) Political / Constructive political and regulatory environment Regulatory • Positive momentum on Michigan’s energy policy • First electric rate case in four years • Reduced average customer rates by 6% in early 2014 • Michigan spen
Slide 8: Agenda
• 2014 Accomplishments • Energy Policy Update • Long-Term Growth Update • Financial Update • Summary 8
Slide 9: Michigan continues to have a constructive political and regulatory environment
Michigan continues to have a constructive political and regulatory environment Governor Rick Snyder Michigan Public Service Commission John Quackenbush Sally Talberg Greg White Chairman Commissioner Commissioner Term Ends: 7/2/17 Term Ends: 7/2/19 Term Ends: 7/2/15 9
Slide 10: The state has experienced leadership to drive successful changes in energy policy
The state has experienced leadership to drive successful changes in energy policy Senator Mike Nofs Representative Aric Nesbitt Valerie Brader Energy and Technology Energy Policy Deputy Legal Counsel and Committee Chair Committee Chair Senior Policy Advisor to Governor Snyder “I am calling for the c
Slide 11: Federal and state policy will lead to transformation of our generation mix
Federal and state policy will lead to transformation of our generation mix by replacing coal with natural gas and renewables DTE Electric Generation Output EPA ~20% Nuclear / Policy ~20% other ~10% Gas / ~50% Renewables ~70% Coal ~30% 2014 2030 Scenario* * Ultimate timing and mix of generation impac
Slide 12: Agenda
• 2014 Accomplishments • Energy Policy Update • Long-Term Growth Update • Financial Update • Summary 12
Slide 13: We remain committed to our 5%-6% operating EPS growth target
We remain committed to our 5%-6% operating EPS* growth target (per share) Operating EPS* $4.60 $4.60 6.7% CAGR 2009 – 2014 $4.09 $3.94 $3.75 $3.64 $3.33 EPS Dividend per $2.76 share 5.4% CAGR $2.62 2009 – 2014 (Annualized) $2.48 $2.35 $2.24 $2.12 Dividend 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 14: We will invest over $11 billion in capital projects to drive growth through 2019
We will invest over $11 billion in capital projects to drive growth through 2019 (billions) ~$11.2 – $11.8 Power & Industrial Projects On-site energy, cogeneration $0.6 – $0.8 $1.5 – $1.9 Gas Storage & Pipelines Gathering investments, NEXUS, additional pipeline expansions $1.6 DTE Gas Base investmen
Slide 15: Minimizing the customer rate impact as we continue to grow
As we continue to grow, we continue to focus on minimizing the customer rate impact Downward pressure Continuous Improvement DTE Electric Surcharge Reductions $600 million* surcharge $ Revised Business Rates reductions Load Growth Revised business cost of service rates 2015 general rate case $
Slide 16: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms Michigan Gathering DTE Gas DTE Storage Bluestone Pipeline Bluestone Gathering System Utica Marcellus Shale Shale Proposed NEXUS Pipeline 16
Slide 17: NEXUS and Vector pipelines have taken important steps forward
The NEXUS and Vector pipelines have taken important steps forward in recent months NEXUS GAS TRANSMISSION • Agreements executed with LDCs and several key shippers; additional discussions underway • Supplemental open season completed providing for additional receipt points and other services • Interc
Slide 18: Gas Storage & Pipelines' operating earnings potential is $145 million by 2019
Gas Storage & Pipelines’ operating earnings* potential is $145 million by 2019 (millions) ~$145 $10 New Project Development (Other gathering and pipeline expansions) 10% – 15% $20 Storage Platform CAGR $80 - $88 $45 Gathering Platform $82 $70 $70 Pipeline Platform** 2013A 2014A 2015E 2016E 2017E 201
Slide 19: Power & Industrial Projects is pursuing new opportunities in each business line
Power & Industrial Projects is pursuing new opportunities in each business line in order to achieve growth aspirations Industrial Energy Services • On-site energy and utility services for industrial, commercial and institutional customers • Several cogeneration projects currently under development R
Slide 20: Power & Industrial Projects is targeting $145 million of operating earnings by 2019
Power & Industrial Projects is targeting $145 million of operating earnings* by 2019 through growth in each business line (millions) 10% - 15% ~$145 CAGR $20 New Project Development / Acquisitions $90 - $100 $35 Renewable Energy $90 $70 $70 Reduced Emissions Fuel $85 Industrial Energy Services Corpo
Slide 21: Agenda
• 2014 Accomplishments • Energy Policy Update • Long-Term Growth Update • Financial Update • Summary 21
Slide 22: DTE Energy 2014 Operating Earnings Variance
DTE Energy 2014 Operating Earnings* Variance (millions, except EPS) 2013 2014 Change Drivers DTE Electric $ 484 $ 528 $ 44 DTE Electric DTE Gas 143 140 (3) • Revenue decoupling mechanism amortization and lower O&M Gas Storage & Pipelines 70 82 12 DTE Gas Power & Industrial Projects 70 90 20 • Colder
Slide 23: We are raising our 2015 operating EPS guidance
We are raising our 2015 operating EPS* guidance from our previous early outlook (millions, except EPS) 2015 2014 2015 Early Drivers Actuals* Guidance Outlook DTE Electric $528 $554 - $570 $554 - $570 DTE Gas 140 128 - 134 128 - 134 Gas Storage & Pipelines Gas Storage & Pipelines 82 79 - 87 80 -
Slide 24: Growth segments provide 5.5% EPS growth with normal weather
Growth segments provide 5.5% EPS growth with normal weather (per share) +5.5% $0.04 $4.60 $0.20 $4.48 ($0.12) 2014 Growth Weather Utility Non-Utility 2015 Growth Segment Performance Performance Segments Operating EPS* Operating EPS* Guidance * Reconciliation to GAAP reported earnings included in the
Slide 25: DTE Energy 2014 Cash Flow Actuals
DTE Energy 2014 Cash Flow Actuals (billions) Cash Flow Summary Drivers 2013 2014 • Cash from operations decreased due to lower surcharge collections and higher Cash From Operations* $2.2 $1.8 purchased power costs at DTE Electric Capital Spending (1.9) (2.1) Free Cash Flow $0.3 ($0.3) • Capital expe
Slide 26: DTE Energy 2015 Cash Flow Guidance
DTE Energy 2015 Cash Flow Guidance (billions) Cash Flow Summary Drivers 2014 2015 Actual Guidance • Cash from operations decreases due to elimination of securitization bond surcharge Cash From Operations $1.8 $1.7 at DTE Electric Capital Spending (2.1) (2.6) Free Cash Flow ($0.3) ($0.9) • Capital ex
Slide 27: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* Target 50% - 53% • Achieved target of zero equity issuance 51% 53% in 2014 49% 51% – Targeting $200 million of equity issuance in 2015 and $800 - $900 million 2015 - 2017 2014 2015E • $1.5 billion of available liquidity as of
Slide 28: Agenda
• 2014 Accomplishments • Energy Policy Update • Long-Term Growth Update • Financial Update • Summary 28
Slide 29: Summary
Summary • Exceeded our operating EPS* growth target with historical growth of nearly 7% • Targeting 5% to 6% operating EPS* growth ‒ 2015 growth segment guidance midpoint of $4.60 provides 5.5% EPS growth over 2014, with normal weather ‒ Grow dividends in line with earnings • Meaningful investment o
Slide 30: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 Credit Suisse Energy Summit presentation is February 25 at 10:25 AM MT with Peter Oleksiak – Senior Vice President and CFO Webcast access: www.dteenergy.com/investors 30
Slide 31: Appendix
se DTE Energy: Appendix
Slide 32: DTE Energy 2014 Operating Earnings Per Share
DTE Energy 2014 Operating Earnings Per Share* $4.60 DTE Electric DTE Gas Non-Utility Corporate & Other $2.98 $0.79 $1.09 ($0.26) Gas Storage & Power & Industrial Energy Trading Pipelines Projects $0.46 $0.51 $0.12 * Reconciliation to GAAP reported earnings included in the appendix 32
Slide 33: DTE Electric Variance Analysis
DTE Electric Variance Analysis (millions) Operating Earnings* Variance Drivers $17 $528 • Cooler than normal weather in 2014 $41 $484 ($18) $27 ($23) Variance to normal weather - 2013: $4 - 2014: ($14) • Revenue decoupling mechanism (RDM) amortization supports rate base growth (property taxes and de
Slide 34: DTE Gas Variance Analysis
DTE Gas Variance Analysis (millions) Operating Earnings* Variance Drivers $19 ($12) • Colder than normal weather in 2014 ($5) ($5) $143 $140 Variance to normal weather - 2013: $17 - 2014: $36 • Higher O&M primarily driven by system repairs due to weather • Other includes higher depreciation and prop
Slide 35: Utility regulatory timeline
Utility regulatory timeline DTE Electric DTE Gas • Filed expanded • Filed cost of service rates 2014 Infrastructure Recovery and general rate case Mechanism (IRM) • Revised business cost of service rates 2Q • Self implement general 2015 • IRM review and ruling rates 3Q • Final rate order 4Q • Begin
Slide 36: DTE Energy 2015 Capital Expenditure Guidance
DTEEnergy DTE Energy 2015Capital 2015 CapitalExpenditure ExpenditureGuidance Guidance (millions) Capital Expenditures Summary Drivers 2014 2015 Actual Guidance • DTE Electric capital higher due to increased generation and reliability DTE Electric investment Operational $1,187 $1,270 Environmental 16
Slide 37: Gas Storage & Pipelines assets have expansion opportunities
Gas Storage & Pipelines assets have expansion opportunities to accommodate increased demand Capacity Pipeline Assets Bcf/ d In-Service Millennium Pipeline 0.8 Future Expansion (planning phase) 0.2 - 0.5 2017 + Total Planned Capacity 1.0 - 1.3 Bluestone Pipeline (bi-directional)* 0.8 Expansion #2 0.1
Slide 38: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $37 $57 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) $20 margin*** minus O&M expenses and taxes 2014 2013 • DTE Energy management 2014 Operating Accounting 2014 Economi
Slide 39: 2014 Reconciliation of Reported to Operating Earnings
2014 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 40: 2013 Reconciliation of Reported to Operating Earnings
2013 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 41: 2009 – 2014 Full Year Reconciliation of Reported to Operating Earnings
2009 – 2014 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 42: Reconciliation of Other Reported to Operating Earnings
Reconciliation of Other 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 meas