Slide 1: Year-End 2019 Results and Outlook
Year-End 2019 Results and Outlook January 30, 2020 FOCUSED ON WORLD CLASS PERFORMANCE
Slide 2: This presentation is made as of the date hereof and contains “forward-looking statements” as
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: Agenda
Agenda Business Update & Outlook Patti Poppe 5-yr Capital Plan Update President & CEO PEOPLE PLANET PROFIT Financial Results Rejji Hayes Executive VP & CFO 3
Slide 4: Financial Results & Outlook
Financial Results & Outlook . . . vs. 2019 Results Amount Prior Year • EPS a $2.49 +7% • Operating Cash Flow (MM) $1,790 $87 2020 Outlook • EPS Guidance a $2.64 – $2.68 +6% to +8% • Annual Dividend $1.63 +7% Long-Term Outlook • EPS & DPS Growth a +6% to +8% • 5-yr Capital Plan (Bn) $12¼ Up from $1
Slide 5: CMS' 2019 Performance Exemplifies
CMS’ 2019 Performance Exemplifies . . . PEOPLE PLANET PROFIT PERFORMANCE a • Ranked #1 for customer • Approval of • 17 years of +7% EPS • Constructive regulatory satisfaction in Midwest Integrated Resource growth outcomes with electric residential gas by JD Plan settlement and gas order Power • Rais
Slide 6: Managing Work Every Year
Managing Work Every Year . . . EPS a 2012 2013 2014 2015 2016 2017 2018 2019 $2.60 Reinvestment +7% Cold January $2.40 +7% Cost Weather & Storms Offsets Storms $2.20 +7% Mild Hot Summer Summer +7% $2.00 Cost productivity above plan +7% Cost productivity Cost $1.80 +7% above plan productivity Storms
Slide 7: 2020 Priorities
2020 Priorities . . . People Planet Profit • Top decile safety performance • Continue progress in reduction • Consistent industry-leading – Implement gas safety of CO2 and methane emissions financial performance management system (API 1173) • Solid investment grade credit – Eliminate 9,250 gas vinta
Slide 8: Utility Customer Investment Plan
Utility Customer Investment Plan . . . Investment Plan Rate Base Growth Renewables Prior New Electric ‘19-‘23 ‘20-‘24 Gas $24½ Capital Investment (Bn): Plan Plan +7% Renewables $ 1¾ $ 1¾ $17½ Electric Utility 5 5½ Gas Utility 5 5 Total $ 11¾ $12¼ 2019 2024 $25 Bn 10-Yr Plan with $3 - $4 Bn of Opport
Slide 9: Regulatory Outlook
Regulatory Outlook . . . 2019 2020 Regulatory / Policy 2016 Energy Law fully implemented Electric Q1: Dec. File next Expected electric rate final order case GasGas 9/26: 12/16: Final order Filed $245 MM a Oct. Expected U-20322 U-20650 final order 10.5% ROE a Final order $157 MM, 9.9% ROE excludi
Slide 10: Consistent Growth Through Changing Circumstances
Consistent Growth Through . . . 7% CAGR b a EPS +6% to +8% Dividend +7% Weather Recession Recession Help Hurt 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cold 2020 Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild Polar Cold Feb. Warm Warm Hot Feb. Storm
Slide 11: 2019 Results
2019 Results . . . Results By Business Segment 2018 2019 EPS -- (GAAP) $2.32 $2.39 EPS Jan. 2019 Adjusted b Guidance b a Adjustments 0.01 0.10 Consumers $2.63 $2.63 – $2.67 Adjusted (non-GAAP) $2.33 +7% $2.49 Enterprises EnerBank 0.17 0.12 0.14 0.16 Parent and other (0.43) (0.46) Fourth Quarter CM
Slide 12: 2019 Targets Achieved
2019 Targets Achieved . . . Target Actual Adjusted EPS (non-GAAP) $2.47 – $2.51 +6% to +8% $2.49 +7% DPS growth In-line w/ earnings In-line w/ earnings Operating cash flow (MM) $1,650 $1,790 Customer bills a Electric 2% (2)% Gas (4)% (3)% FFO/average debt (non-GAAP) ~ 17% ~17½% (solid inve
Slide 13: 2020 Guidance
2020 Guidance . . . a Adjusted EPS (non-GAAP) Utility $2.84 – $2.88 Enterprises 0.08 – 0.10 EnerBank 0.18 – 0.20 Parent and other (0.46) – (0.50) Consolidated EPS $2.64 – $2.68 +6% to +8% _____ a Adjusted EPS (non-GAAP) . . . built on 2019’s actual performance. 13
Slide 14: 2020 EPS
2020 EPS . . . a $2.64 – $2.68 +6% to +8% (2) - 2¢ $2.49 6¢ 17¢ (6)¢ Approved: b Gas (U-20322) $157 MM REP (U-18231) $25 MM Pending: Gas (U-20650) $245 MM 2019 Normal Cost Rates & Usage, Tax 2020 Weather Savings Investments & Other _____ a Adjusted EPS (non-GAAP) b $13 MM of Calc. C included in ra
Slide 15: Our Entire Cost Structure
Our Entire Cost Structure . . . Cost Components Residential Bills as % of Wallet a 100% 100% (Electric & Gas) Down 90% Utility Bill 50 bps! Utility Bill ~ 4% ~ 3½% 80% Fuel and Power Costs TV & Phone ~ 4% TV & Phone ~ 4% Healthcare ~ 5% Healthcare ~ 8% 70% Food ~ 12% ~70% Food ~ 13% 60% ~70% Transpo
Slide 16: Strong Economic Development
Strong Economic Development . . . Economic Development Residential Customer Growth Economic Grand Avg. Annual Indicators: MI Avg. Electric Customer Count Sales Growth c Rapids U.S. Building Permits a 229 % 139% 128 % 0.7% ~1% 0.6% Population Growth 8% 1% 6% 2010→2018 0.5% 0.4% Unemployment* 3.0 % 4.
Slide 17: 2020 and Long-Term Financial Targets
2020 and Long-Term Financial Targets . . . 2020 Long-Term Plan Adjusted EPS (non-GAAP) $2.64 – $2.68 +6% to +8% +6% to +8% DPS growth In-line w/ earnings In-line w/ earnings Operating cash flow (MM) $1,750 a Up $100 Customer price Electric <1% ~ Inflation Gas <2% FFO/average debt (non-GAAP) ~ 17% In
Slide 18: 2020 Sensitivities
2020 Sensitivities . . . Full Year Impact a Sensitivity EPS OCF (MM) Sales b Electric (~36,500 GWh) + 1% + 6¢ + $ 25 Gas (~300 Bcf) + 5 + 13 + 50 – – Gas prices (NYMEX) + 50¢ + 0 + 55 Utility Earned ROE Electric + 10 bps + 1½ + 6 Gas + 10 + 1 + 4 Interest rates + 25 bps – <1 2 + Effective Tax Rate (
Slide 19: Compelling Investment Thesis
Compelling Investment Thesis . . . Aging Infrastructure Clean Energy Leader Constructive Regulation Strong Cash Flow & Affordable Prices Balance Sheet Diversified Service Territory . . . adaptive to changing conditions. 19
Slide 20: Q&A Thank You!
Q&A Thank You!
Slide 21: Appendix
Appendix
Slide 22: Utility Customer Investment Plan
Utility Customer Investment Plan 5-year Plan (Bn) 2020 2021 2022 2023 2024 Total Renewables $0.4 $0.4 $0.3 $0.3 $0.4 $1.8 Electric Utility 0.9 1.2 1.1 1.1 1.1 5.4 Gas Utility 0.9 1.1 0.9 1.1 1.0 5.0 Total $2.2 $2.7 $2.3 $2.5 $2.5 $12.2 Depreciation & Amortization $1.0 $1.1 $1.1 $1.2 $1.2 $5.6 22
Slide 23: Operating Cash Flow Generation
Operating Cash Flow Generation . . . Amount ~$10 Bn in aggregate (Bn) $2.2 $2.15 $2.05 $1.95 a $1.85 1.7 $1.79 $1.75 1.2 0.7 Investment 0.2 (0.3) Cash flow before dividend (0.8) (1.3) 2019 2020 2021 2022 2023 2024 NOLs & credits $0.2 $0.3 $0.5 $0.5 $0.6 $0.7 _____ a Excludes $531 MM discretionary pe
Slide 24: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured A Aa3 A+ • Strong financial position Commercial Paper A-2 P-1 F-2 Stable Stable Stable • Growing operating Outlook cash flow Highest Governance CMS Energy Practices Score (GA-1) • Return on regulated Se
Slide 25: 2020 Financing Plan
2020 Financing Plan . . . Plan YTD a Issuances: (MM) (MM) Potential Consumers Energy: refinancing First Mortgage Bonds $650 $ -- • Supports Utility investment, Term Loan 300 300 including pension funding CMS Parent: New Debt $325 $ -- • Senior unsecured & hybrids Planned Equity Up to -- $250 MM • He
Slide 26: 2019 EPS
2019 EPS . . . a $2.33 2¢ 23¢ 1¢ $2.49 (10)¢ Detail: Abs. ‘18 Weather (27)¢ 2019 Weather 6 Abs. ‘18 Reinvestment 23 Total 2¢ 2018 Weather & Storms Rates & Usage, 2019 Reinvestments Investment Enterprises, Tax & Other _____ a Adjusted EPS (non-GAAP) . . . illustrates another year of 7% growth. 26
Slide 27: "DIG" (750 MW) & Peakers (200 MW)
“DIG” (750 MW) & Peakers (200 MW) . . . Pre-Tax Income a (MM) Planning Year (MISO) Opportunities $ 100 2020 Through 2023 Contracted ~$90 90 Capacity 100% 80 (~$2.00/kw-month) 70 Energy >95% $7.50 b 60 50 $45 ~$45 40 $38 $38 ~$35/ yr. 30 b $3.00 20 10 0 _____ 2017 2018 2019 2020-2023 2024+ a Assumes
Slide 28: GAAP Reconciliation
GAAP Reconciliation
Slide 29: Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS by Segment
CMS ENERGY CORPORATION Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS by Segment (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Twelve Months Ended 12/31/19 12/31/18 12/31/19 12/31/18 Electric Utility Reported net income per share $ 0.32 $ 0.24 $ 1.79 $ 1.89 Reconciling it
Slide 30: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter (Unaudited) In Millions, Except Per Share Amounts 2019 1Q 2Q 3Q 4Q Net Income Available to Common Stockholders $ 213 $ 93 $ 207 $ 167 Reconciling items: Electric utility and gas utility - - - 6 Tax im
Slide 31: Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income
CMS ENERGY CORPORATION Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Twelve Months Ended 12/31/19 12/31/18 12/31/19 12/31/18 Net Income Available to Common Stockholders $ 167 $ 108 $ 680 $ 657 Reconciling items
Slide 32: Reconciliation of Non-GAAP FFO to Average Debt Ratio
CMS ENERGY CORPORATION Reconciliation of Non-GAAP FFO to Average Debt Ratio (Unaudited) FUNDS FROM OPERATIONS In Millions Year Ended 12/31/19 Net Cash Provided by Operating Activities $ 1,790 Reconciling items: Working capital 63 Other (132) Funds From Operations (FFO) – Non-GAAP $ 1,721 AVERAGE DEB
Slide 33: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) GAAP GAAP 2019 over 2019 over 2003 2018 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 CAGR Growth Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $
Slide 34: Reconciliation of GAAP Operating Activities to Non-GAAP Operating Activities
CMS ENERGY CORPORATION Reconciliation of GAAP Operating Activities to Non-GAAP Operating Activities (Unaudited) (mils) 2020 GAAP Net cash provided by operating activities $ 1,219 Add back discretionary pension contribution 531 Non-GAAP Net cash provided by operating activities $ 1,750 34