DTE Energy Company · NYSE:DTE
DTE Energy — Q3 2015 Earnings Presentation
29 slides from DTE Energy's earnings presentation, Oct 23, 2015
Slide 1: 3rd Quarter 2015 Earnings Conference Call
3rd Quarter 2015 Earnings Conference Call October 23, 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 EPA, FERC, MPSC, NRC and CFTC as well as other applicable governmental proceedin
Slide 3: Participants
Participants • Peter Oleksiak – Senior Vice President and CFO • Jeff Jewell – Vice President and Controller • Mark Rolling – Vice President and Treasurer • Anastasia Minor – Executive Director, Investor Relations 3
Slide 4: Overview
• Overview • Third Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 4
Slide 5: Our business strategy is fundamental to how we create value
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by infrastructure investments 5% - 6% Annual Strategic and transparent growth EPS Growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive reg
Slide 6: We continue to make progress on many fronts
We continue to make progress on many fronts • Michigan energy policy • 2015 utility rate proceedings • 2015 operating EPS guidance increased • 2016 operating EPS early outlook • 2015 cash and capital guidance update • Non-utility projects − Millennium update − NEXUS Pipeline update 6
Slide 7: Lansing leaders are working toward constructive energy policy reform
Lansing leaders are working toward constructive energy policy reform 1 Clean John Valerie Brader Governor Rick Executive Director for Quackenbush Snyder MPSC Chair the Michigan Agency for Energy 2 Reliable 3 Flexible 4 Affordable Senator Mike Nofs Representative Energy and Aric Nesbitt Technology En
Slide 8: Current comprehensive energy legislation policy proposals address key issues
Current comprehensive energy legislation policy proposals address a number of key issues Position Senate House Retail Open • One-time election Access • Capacity 3 year 5 year requirement requirement requirement • Cost pre-approval Integrated process Resource • Venue for renewable Plannin
Slide 9: 2015 operating EPS guidance and 2016 early outlook midpoints
Our 2015 operating EPS* guidance and 2016 early outlook midpoints provide solid growth (dollars per share) 2015 Operating EPS 2016 Operating EPS Guidance Midpoint Early Outlook Midpoint Total DTE Energy $4.78 Growth segments $4.69 $4.93 $4.93 $4.78 $4.60 $4.69 $4.09 $3.94 $3.75 $3.64 $3.33 Operating
Slide 10: Reaffirming 2015 operating EPS guidance and 2016 early outlook
We are reaffirming our 2015 operating EPS* guidance and 2016 early outlook (millions, except EPS) 2016 2015 2015 Early YTD Guidance Outlook DTE Electric $461 $554 - $570 $588 - $604 DTE Gas 93 128 - 134 135 - 141 Gas Storage & Pipelines 79 95 - 100 102 - 110 Power & Industrial Projects 83 95 - 10
Slide 11: Third Quarter 2015 Earnings Results
• Overview • Third Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 11
Slide 12: DTE Energy Third Quarter 2015 Operating Earnings Variance
DTE Energy Third Quarter 2015 Operating Earnings Variance (millions, except EPS) Operating Earnings* Drivers DTE Electric 3Q 2014 3Q 2015 Change • Primarily favorable weather and rate DTE Electric $ 135 $ 214 $ 79 implementation DTE Gas (16) (11) 5 DTE Gas Gas Storage & Pipelines 20 27 7 • Reinvest
Slide 13: DTE Electric Variance Analysis
DTE Electric Variance Analysis (millions) Operating Earnings* Variance Drivers • Warmer weather in 3Q 2015 $19 ($15) Variance to normal weather $38 $214 - 3Q 2014: ($33) $37 - 3Q 2015: $4 $135 • July 1st rate implementation • Lower 3Q 2015 storm expense and 3Q 2014 lean • Other primarily rate base g
Slide 14: Cash Flow and Balance Sheet Metrics
• Overview • Third Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 14
Slide 15: YTD 2015 Cash Flow and Capital Expenditures
YTD 2015 Cash Flow and Capital Expenditures (billions) (millions) Cash Flow Summary Capital Expenditures Summary YTD 2014 YTD 2015 YTD 2014 YTD 2015 Cash From Operations* $1.2 $1.5 DTE Electric Operational $845 $918 Capital Spending (1.5) (1.7) Environmental 119 106 Free Cash Flow ($0.3) ($0.2) New
Slide 16: Revising 2015 cash flow and capital expenditures guidance
We are revising our 2015 cash flow and capital expenditures guidance (billions) (millions) Cash Flow Summary Capital Expenditures Summary Prior Revised Prior Revised Guidance Guidance Guidance Guidance Cash From Operations* $1.7 $1.8 DTE Electric Capital Spending (2.6) (2.5) Operational $1,270 $1,27
Slide 17: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* Target • Completed 2015 equity issuances of $200 50% - 53% million 52% − Targeting ~$800 million of equity 51% issuances next 3 years • DTE Gas issued $165 million of long-term 2014 2015E 2016-2018E debt in July 2015 • $1.8 bi
Slide 18: Summary
• Overview • Third Quarter 2015 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 18
Slide 19: Summary
Summary • We are confident in this year’s performance and recently increased our 2015 operating EPS* guidance midpoint to $4.69 for our growth segments and $4.78 for DTE Energy • Constructive outcomes expected in both Michigan’s energy policy reform and DTE’s regulatory filings • Utility investments
Slide 20: DTE Energy Investor Relations
Detroit is in the midst of a revitalization DTEEnergy DTE EnergyInvestor InvestorRelations Relations www.dteenergy.com/investors www.dteenergy.com/investors (313)235-8030 (313) 235-8030 20
Slide 21: Appendix
se DTE Energy: Appendix
Slide 22: NEXUS project nearing next major milestone
NEXUS project nearing next major milestone • 50% ownership with Spectra Energy • 1.5 Bcf/d pipeline • ~250 miles of pipe • DTE expected investment $1 billion EPCM* Contracted In-service executed for pipe 4Q17 Commercial Right of way, field work, design, planning Construction operation 2014 2015 2016
Slide 23: Michigan's economy continues to improve
Michigan’s economy continues to improve Gross State Product Auto Production (billions) (000s) 2,439 2,371 2,444 2,434 $443 2,244 $434 $426 $417 $410 2013 2014 2015E 2016E 2017E 2013 2014 2015E 2016E 2017E Lower Unemployment Rate Housing Starts Up (000s) 8.5% 21.9 19.7 7.1% 17.6 15.1 15.8 5.5% 5.4% 5
Slide 24: Weather and DTE Electric Weather Normal Sales
Weather and DTE Electric Weather Normal Sales Cooling degree days Heating degree days DTE Electric service territory DTE Gas service territory 3Q 2014 3Q 2015 % change 3Q 2014 3Q 2015 % change Actuals 408 605 48% Actuals 159 74 -53% Normal 580 580 Normal 130 134 3% Deviation from normal -30% 4% Devi
Slide 25: Third Quarter Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Third Quarter Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $15 $14 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) margin*** minus O&M expenses and taxes ($1) 3Q 2014 3Q 2015 • DTE Energy management uses economic net
Slide 26: YTD Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy YTD Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $39 $53 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) margin*** minus O&M $14 expenses and taxes YTD 2014 YTD 2015 • DTE Energy management Accounting YTD 2015 Econom
Slide 27: Third Quarter 2015 and September YTD Reconciliation of Reported to Operating Earnings
Third Quarter 2015 and September YTD 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
Slide 28: 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 29: 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