DTE Energy Company · NYSE:DTE
DTE Energy — FY2013 Earnings Presentation
43 slides from DTE Energy's earnings presentation, Feb 14, 2014
Slide 1: Year End 2013 Earnings Conference Call
Year End 2013 Earnings Conference Call February 14, 2014
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 and other applicable governmental proceedings and regulations, i
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: 2013 Accomplishments, Long-Term Growth Update, Financial Update
• 2013 Accomplishments • Long-Term Growth Update • Financial Update 4
Slide 5: The success of our system of priorities continues to create value for investors
The success of our system of priorities continues to create value for investors 5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet 5
Slide 6: 2013 Accomplishments
2013 Accomplishments Employee Engagement • Higher employee engagement o Seventh consecutive year of improved Gallup scores – moved from 78th to 85th percentile* in 2013 o Received Gallup Great Workplace Award o Achieved best safety record in DTE’s history Continuous Improvement • Distinctive Continu
Slide 7: 2013 Accomplishments (continued)
2013 Accomplishments (continued) Political / Regulatory • Continuing to play an active role in the review of Michigan’s energy policy • Implemented rate minimization strategy • Spent over $800 million with Michigan companies, exceeding our commitment to Governor Snyder by 30% Growth / Value • Invest
Slide 8: 2013 Accomplishments, Long-Term Growth Update, Financial Update
• 2013 Accomplishments • Long-Term Growth Update • Financial Update 8
Slide 9: We remain committed to delivering 5% to 6% operating EPS growth
We remain committed to delivering 5% to 6% operating EPS* growth (dollars) Operating EPS* Guidance 7.2% CAGR Midpoint 2008-2014 $4.30 $4.09 $3.94 $3.75 $3.64 Dividend $3.33 per share 5.4% CAGR 2009-2013 $2.83 (Annualized) $2.62 $2.48 $2.35 $2.24 $2.12 $2.12 2008A 2009A 2010A 2011A 2012A 2013A 2014E
Slide 10: DTE Energy has many catalysts for strong future growth opportunities
DTE Energy has many catalysts for strong future growth opportunities Constructive REGULATORY Michigan’s economic recovery environment Long-term utility growth Long-term non-utility growth 10
Slide 11: Our electric utility is investing $6.7 billion in three key growth areas through 2018
Our electric utility is investing $6.7 billion in three key growth areas through 2018 Base Generation New Infrastructure Compliance Generation $5.6 billion $700 million $400 million • Power plant reliability • Environmental requirements • 10% renewable energy • Expanded distribution • $280 million i
Slide 12: Our gas utility is making $1.2 billion of reliability and pipeline integrity investments
Our gas utility is making $1.2 billion of reliability and pipeline integrity investments through 2018 Base Main Renewal, Meter Move-Out Infrastructure & Pipeline Integrity $700 million $500 million • Strengthen and expand distribution • Capital recovered through the system Infrastructure Recovery Me
Slide 13: Upward pressure on customer rates being minimized by cost control initiatives
Upward pressure on customer rates being minimized by cost control initiatives and surcharge reductions Reliability Lower Investments Surcharges Cost Structural Pressure Cost Reductions Environmental Continuous Investments Improvement DTE Electric $650 million of surcharge reductions Targeting to
Slide 14: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms Pipeline Gathering Storage 14
Slide 15: Gas Storage & Pipelines has a portfolio of investment opportunities
Gas Storage & Pipelines has a portfolio of investment opportunities that drive earnings growth • New project development ‒ NEXUS • Bluestone lateral ‒ other gathering and expansion pipeline expansions • Millennium expansion II • Millennium expansion III Continued build-out of Bluestone gathering 201
Slide 16: Gas Storage & Pipelines operating earnings potential of $130 million by 2018
Gas Storage & Pipelines operating earnings* potential of $130 million by 2018 (millions) ~$130 New Project $25 Development $20 Storage Platform $78 - $86 $70 $61 $45 Gathering Platform $40 Pipeline Platform 2012A 2013A 2014E 2015E 2016E 2017E 2018E $1.0 $1.0 - $1.4billion - $1.3 billioninvestment in
Slide 17: Power & Industrial Projects is focused in three key business lines
Power & Industrial Projects is focused in three key businesses lines Industrial Energy Services Renewable Energy Reduced Emissions Fuel Wood-fired Plant Cassville, WI On-site Energy Project Wood-fired Plant Reduced Emissions Fuel Plant • Utility services at • Wood-fired power plants • Fuel that redu
Slide 18: Power & Industrial Projects is targeting $155 million of operating earnings by 2018
Power & Industrial Projects is targeting $155 million of operating earnings* by 2018 through growth in each of its business lines (millions) ~$155 New Project Development / $30 Acquisitions $35 Renewable Energy $75 - $85 Reduced $70 $70 Emissions Fuel $52 Industrial $85 Energy Services Corporate all
Slide 19: 2013 Accomplishments, Long-Term Growth Update, Financial Update
• 2013 Accomplishments • Long-Term Growth Update • Financial Update 19
Slide 20: DTE Energy 2013 Operating Earnings Per Share
DTE Energy 2013 Operating Earnings Per Share* $4.09 DTE Electric DTE Gas Non-Utility Corporate & Other $2.76 $0.80 $0.78 ($0.25) Gas Storage & Power & Industrial Energy Trading Pipelines Projects $0.40 $0.40 ($0.02) * Reconciliation to GAAP reported earnings included in the appendix 20
Slide 21: DTE Energy 2013 Operating Earnings Variance
DTE Energy 2013 Operating Earnings Variance Operating Earnings* Drivers (millions, except EPS) DTE Electric 2012 2013 Change • Return to near normal weather in 2013 and higher DTE Electric $ 483 $ 484 $ 1 storm expense, offset by lower benefits expense and increased temperature normal sales volumes
Slide 22: Energy Trading mark-to-market adjustment is timing related and will reverse in 2014
Energy Trading mark-to-market (MTM) operating earnings adjustment is timing related and will substantially reverse in 2014 (millions) Components of natural gas sale transaction • Operating adjustment pertains to pipeline Producer Pipeline Customer contracts in the Northeast that are economically hed
Slide 23: We are raising our 2014 operating EPS guidance
We are raising our 2014 operating EPS* guidance from our previous early outlook (millions, except EPS) 2013 2014 Early 2014 Actuals* Outlook* Guidance* 2014 Guidance Drivers DTE Electric $484 $515 - $525 $520 - $530 • Benefits favorability due to changes in discount rate DTE Gas 143 120 - 126 120 -
Slide 24: DTE Energy 2013 Cash Flow Actuals
DTE Energy 2013 Cash Flow Actuals Cash Flow Summary Drivers (billions) 2012 2013 • 2013 cash from operations favorable to Cash From Operations* $2.2 $2.2 guidance by $300 million Capital Spending (2.1) (1.9) Free Cash Flow $0.1 $0.3 • Reduced capital spending due to on-site energy project portfolio
Slide 25: DTE Energy 2014 Cash Flow Guidance
DTE Energy 2014 Cash Flow Guidance Cash Flow Summary Drivers (billions) 2013 2014 Actual Guidance • 2014 cash from operations decreases due Cash From Operations* $2.2 $1.6 to lower utility surcharge collections than Capital Spending (1.9) (2.3) 2013 and higher cash contributions to employee benefit
Slide 26: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* Target • Targeting zero equity issuances in 2014 50% - 52% – Annual issuances of $200 million 49% 52% to $300 million in 2015 and 2016 2013 2014E • $1.6 billion of available liquidity as of December 31, 2013 Funds from Operati
Slide 27: Our business strategy is fundamental to how we create value for our investors
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by environmental and renewable energy investments 5% - 6% Annual Meaningful, transparent, low-risk growth EPS Growth opportunities in non-utility businesses provide diversity in earnings and
Slide 28: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 28
Slide 29: Appendix
=> — DTE Energy’: Appendix
Slide 30: DTE Electric Variance Analysis
DTE Electric Variance Analysis Operating Earnings* Variance Drivers (millions) • Return to near normal weather in 2013 $56 ($26) $483 ($41) ($6) $484 Variance to normal weather $18 - 2012: $45 - 2013: $ 4 • Other margin driven by increased temperature normal sales volumes • Renewables driven by incr
Slide 31: DTE Gas Variance Analysis
DTE Gas Variance Analysis Operating Earnings* Variance Drivers (millions) • Colder than normal weather in 2013 $12 ($19) $45 ($10) Variance to normal weather $143 - 2012: ($28) $115 - 2013: $17 • Lower benefits expense due to plan design changes • One-time items include 2012 lean initiatives and 2Q
Slide 32: DTE Energy 2014 Capital Expenditure Guidance
DTE Energy 2014 Capital Expenditure Guidance Capital Expenditures Summary Drivers (millions) 2013 2014 Actual Guidance • DTE Electric capital higher due to DTE Electric increased environmental, renewable energy, and reliability spending Operational $999 $1,080 Environmental 165 280 Renewable Energy
Slide 33: Utility rate strategies minimize new rate filings and their impacts on customers
Utility rate strategies minimize new rate filings and their impacts on our customers DTE Electric DTE Gas • Periodic rate cases to support • Infrastructure Recovery Mechanism investment profile provides recovery of investments • File mid-2014; self-implement early 2015 • Anticipate we can stay out o
Slide 34: Gas Storage & Pipelines platforms drive growth through new projects and expansions
Gas Storage & Pipelines platforms drive growth through new projects and expansions Pipeline Platform Gathering Platform Storage Platform Bluestone Pipeline Bluestone Gathering Washington 10 Bluestone Pipeline Bluestone Gathering Michigan Storage • 0.6 Bcf/d to Millennium and • Long-term agreement wi
Slide 35: Gas Storage & Pipelines assets have expansion opportunities
Gas Storage & Pipelines assets have expansion opportunities to accommodate increased demand Pipeline Assets Capacity / d In-Service Millennium Pipeline 0.5 Bcf Expansion #1 and #2 0.3 Bcf 2014 Expansion #3 0.2 - 0.5 Bcf 2016 - 2017 Total Planned Capacity 1.0 - 1.3 Bcf Bluestone Pipeline (bi-directio
Slide 36: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income ($ millions) $24 $21 Operating Earnings* • Economic net income equals economic gross (millions, after-tax) margin*** minus O&M ($3) expenses and taxes. 2013 2012 • DTE Energy management 2013 Operating Accounting 2013 use
Slide 37: 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 38: 2012 Reconciliation of Reported to Operating Earnings
2012 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 39: 2011 Reconciliation of Reported to Operating Earnings
2011 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: 2010 Reconciliation of Reported to Operating Earnings
2010 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 Reconciliation of Reported to Operating Earnings
2009 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 42: 2008 Reconciliation of Reported to Operating Earnings
2008 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 43: 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