DTE Energy Company · NYSE:DTE
DTE Energy — Q1 2010 Earnings Presentation
27 slides from DTE Energy's earnings presentation, Apr 28, 2010
Slide 1: Business and Financial Update
Business and Financial Update April 28, 2010
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: economic conditions resulting in lower demand, customer conservation and increased thefts of electricity and
Slide 3: Participants
Participants • Dave Meador, Executive Vice President and CFO • Peter Oleksiak, Vice President, Controller & Investor Relations • Nick Khouri, Vice President and Treasurer • Lisa Muschong, Director of Investor Relations 3
Slide 4: Agenda: Overview
• Overview • First Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures • Summary 4
Slide 5: Investment Thesis
Investment Thesis • DTE Energy has a robust plan for 5%-6% long-term operating EPS growth combined with an attractive dividend yield • Strong utility growth plan, driven by mandated rate base investments, is not dependent on economic growth 5%-6% Average Annual EPS • Constructive regulatory structur
Slide 6: First Quarter 2010 Overview
First Quarter 2010 Overview Q1 2010 Earnings Results Cash Flow / Balance Sheet • DTE Energy Q1 2010 operating • Cash flow and balance sheet metrics earnings per share* of $1.38 vs. $1.10 remain strong Q1 2009 • Generated $600 million of free cash • Positive results at our utilities as we flow in Q1
Slide 7: Increasing 2010 Operating Earnings Guidance
Increasing 2010 Operating Earnings* Guidance Prior ($ millions, Revised except EPS) Guidanc • Increasing 2010 operating EPS guidance from Guidance e $3.35 - $3.75 to $3.45 - $3.80 after a strong start to Detroit Edison $405 - 435 $410 - 435 the year • Expect 10% operating EPS growth in 2010; higher
Slide 8: Agenda: First Quarter 2010 Earnings Results
• Overview • First Quarter 2010 Earnings Results • Cash Flow and Capital Expenditure • Summary 8
Slide 9: First Quarter 2010 Operating Earnings Per Share
First Quarter 2010 Operating Earnings Per Share* $1.38 Detroit Edison MichCon** Non-Utility Corporate & Other $0.55 $0.48 $0.40 ($0.05) Gas Storage and Unconventional Power and Energy Pipelines Gas Production Industrial Projects Trading $0.08 ($0.02) $0.11 $0.23 * Reconciliation to GAAP reported ear
Slide 10: First Quarter 2010 Operating Earnings Variance
First Quarter 2010 Operating Earnings Variance Operating Earnings* Drivers ($ millions, except EPS) 1Q 2010 1Q 2009 Change Detroit Edison Detroit Edison $ 91 $ 78 $ 13 • January 2010 rate order and continuous improvement, partially offset by higher MichCon 79 61 18 depreciation Gas Storage and 14 14
Slide 11: Detroit Edison Variance Analysis
Detroit Edison Variance Analysis Detroit Edison Operating Earnings* Variance Drivers ($ millions) $4 ($6) $15 $91 • Margin primarily driven by $78 January 2010 rate order • O&M driven by continuous improvement partially offset by higher benefits • Higher depreciation on increased asset base th n rn
Slide 12: MichCon Variance Analysis
MichCon Variance Analysis MichCon Operating Earnings* Variance Drivers ($ millions) • January 2010 rate increase $43 ($14) • Warmer weather Q1 2010 ($7) $4 ($8) $79 • Other margin primarily driven by customer conservation and lower $61 midstream revenues • O&M primarily driven by continuous improvem
Slide 13: Agenda: Cash Flow and Capital Expenditures
• Overview • First Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures • Summary 13
Slide 14: Our Solid Balance Sheet Provides Financial Flexibility
Our Solid Balance Sheet Provides Financial Flexibility Leverage* • Maintaining balance sheet strength continues to be a 53% 51% 50% key priority • In the first quarter, S&P and Fitch moved DTE’s outlook from negative to stable • $1.8 billion of available liquidity at quarter end • On track to meet 2
Slide 15: First Quarter 2010 Cash Flow
First Quarter 2010 Cash Flow DTE Energy Cash Flow Drivers ($ billions) Q1 2010 Q1 2009 • Strong first quarter cash from operations, in-line with 2009 Cash From Operations $0.8 $0.8 Capital Spending (0.2) (0.3) • Lower capital spending in 2010 primarily driven by timing of utility Free Cash Flow $0.6
Slide 16: First Quarter 2010 Capital Expenditures
First Quarter 2010 Capital Expenditures DTE Energy Capital Expenditures Drivers ($ millions) Q1 2010 Q1 2009 Detroit Edison • Lower Detroit Edison capital driven by Operational $155 $230 timing of generation outages and Environmental 15 33 completion of large environmental project Renewables / EO 7
Slide 17: Agenda: Summary
• Overview • First Quarter 2010 Earnings Results • Cash Flow and Capital Expenditures • Summary 17
Slide 18: Summary
Summary • On track to achieve strong 2010 results • Constructive regulatory structure and continued focus on operational excellence and customer satisfaction enables meaningful growth at utilities • Continue to see attractive/premium return non-utility investment opportunities • Executing robust pla
Slide 19: Contact Us
Contact Us DTE DTE Energy Energy Investor Investor Relations Relations www.dteenergy.com/investors www.dteenergy.com/investors 313-235-8030 313-235-8030 19
Slide 20: Appendix
DTE Energy: Appendix
Slide 21: Illustrative Decoupling Example
Illustrative Decoupling Example Annual Decoupling Example (Residential Customers) Base Rates Actual Surcharge Number of Customers (millions) 1.94 1.92 1.92 (Actual Number of Customers) Annual Sales (GWh) 15,186 14,900 (Actual minus base average Average Usage Per Customer (kWh) 7,822 7,777 x (45) usa
Slide 22: Detroit Edison Sales Volumes
Detroit Edison Sales Volumes Detroit Edison Temperature-Normal Sales (GWh) (Territory Sales, includes Electric Choice) Q1 2010 Q1 2009 % Change Residential 3,762 3,707 1% Commercial 4,719 4,858 ‐3% Industrial 2,809 2,500 12% Other 801 817 ‐2% Total 12,092 11,883 2% 22
Slide 23: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income ($ millions) $43 Energy Trading Operating $38 $5 Earnings* • Economic net income ($ millions, after-tax) equals economic gross margin*** minus O&M Q1 2010 Q1 2009 expenses and taxes • DTE Energy management Realized $25 $
Slide 24: Barnett Shale Operating Metrics
Barnett Shale Operating Metrics Reserves (Bcfe) Acreage Position (000’s Acres) 1Q 2010 Results • Drilled 2 wells, completed 5 wells 489 432 63 66 Net • Net Production of 1.1 Bcfe 234 Proven Developed 167 15 Acres • Capital Expenditures of $8M 15 Net • Production down slightly due to 265 255 Probable
Slide 25: 2010 Capital Expenditures & Cash Flow Guidance
2009 Capital Expenditures & Cash Flow Guidance Capital Expenditures Cash Flow Summary ($ millions) ($ billions) 2010 2009 Guidance Actual 2010 2009 Guidance Actual Detroit Edison Operational $750 $666 Cash From Operations $1.6 $1.8 Environmental 75 116 Capital Spending (1.4) (1.1) Renewables / EO 12
Slide 26: Reconciliation of 1Q and Full Year 2010 Reported to Operating Earnings
Reconciliation of 1Q and Full Year 2010 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 27: Reconciliation of 1Q 2009 Reported to Operating Earnings
Reconciliation of 1Q 2009 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