Slide 1: Leading the Clean Energy Transformation: 2022 Year End Results and Outlook
Leading the CLEAN ENERGY TRANSFORMATION 2022 Year End Results and Outlook February 2, 2023
Slide 2: Forward-Looking Statements Disclaimer
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: Investment Thesis
Investment Thesis . . . ✓ Industry-leading net zero commitments Clean Energy Leader ✓ Diversified Service Territory Infrastructure Excellence through the Renewal ✓ a Top-tier regulatory jurisdiction Strong Cash Flow Constructive & Balance Sheet Legislation Affordable Prices ✓ Premium total sharehold
Slide 4: 2022 Successes
2022 Successes . . . People Planet Profit • #1 utility for America’s Best Employers for • 2021 IRP approved – exit coal & achieve • Delivered adjusted EPS of $2.89 – at the b Women and a top utility for Best ~60% carbon emissions reduction in 2025 ; high end of guidance range Employers for Diversity
Slide 5: Financial Results & Outlook
Financial Results & Outlook . . . 2022 Full-Year Results Amount Commentary Adjusted EPS $2.89 High end of guidance 2023 Full-Year Outlook Adjusted EPS Guidance $3.06 – $3.12 Toward the high end Annual Dividend Per Share $1.95 Up 11¢ Long-Term Outlook Adjusted EPS Growth +6% to +8% Toward the high en
Slide 6: Updated Customer Investment Plan
Updated Customer Investment Plan . . . New Utility Investment Plan Rate Base Growth Other Growth Driversb a >7%/yr ~$32B ✓ EWR incentives 20% ~$22½B ✓ FCM on PPAs 59% Electric utility ’23 – ’27 investment $15.5B 41% ✓ 10.7% wind RPS 39% ✓ NorthStar 2022 2027 Clean Energy Generation Electric Distribu
Slide 7: Michigan's Strong Regulatory Environment
Michigan’s Strong Regulatory Environment . . . 2022 2023 Supportive Energy Law Integrated Resource Plan (IRP) • Timely recovery of investments ✓ Forward-looking test years ✓Jun. 23 : rd Settlement Approved ✓ 10-month rate cases U-21090 ✓ Earn authorized ROEs ✓ Monthly fuel adjustment trackers (PSCR/
Slide 8: De-risking Inflationary Pressures
De-risking Inflationary Pressures . . . Near-term Risk Mitigation Episodic Cost Savings Global Risks Countermeasures Year Event Savings ✓ Executed 5-yr union contracts in 2020 (>40% unionized) 2022 Palisades retirement >$90M Labor ✓ ~95% non-union retention ratea 2023 Karn 1&2 coal unit retirementsb
Slide 9: 2022 Results
2022 Results . . . Full Year Adjusted EPS by Segment 2021 2022 2022 Reported EPS $4.66 $2.85 Utility $3.31 Adjustmentsa (2.01) 0.04 NorthStar 0.12 Adjusted EPSa $2.65 [5X $2.89 Parent (0.54) Fourth Quarter 2021 2022 Total Adjusted EPS $2.89 Reported EPS $2.20 $0.58 Adjustmentsa (1.73) 0.02 Adjusted
Slide 10: 2022 Objectives Achieved
2022 Objectives Achieved . . . Objectives Actual Adjusted EPS guidance $2.85 – $2.89 ✓ $2.89 High end of guidance DPS growth guidance +6% to +8% $1.95 (up 6%)✓ +11¢ Target credit ratings Solid investment grade Solid ✓ investment grade FFO/Debt target: Mid-teensa FFO/Debt target: Mid-teensa Utility i
Slide 11: 2023 Guidance Offers Continued Growth
2023 Guidance Offers Continued Growth . . . Adjusted EPS Utility $3.48 – $3.52 NorthStar 0.13 – 0.16 Parent (0.55) – (0.56) Consolidated EPS $3.06 – $3.12 Toward the high end . . . off 2022 actual performance. 11
Slide 12: 2023 Adjusted EPS Growth Range
2023 Adjusted EPS Growth Range . . . a $3.06 - $3.12 19¢ – 25¢ a $2.89 4¢ 14¢ (20)¢ Favorable 2022 weather reinvested 2022 Normal Rates & Cost Savings Usage, 2023 Weather Investment & Productivity Non-Utility, Tax & Other Presentation endnotes are included after the appendix. . . . managing through
Slide 13: Near- and Long-Term Objectives
Near- and Long-Term Objectives . . . 2023 Long-Term Plan Adjusted EPS guidance $3.06 – $3.12 +6% to +8% Toward the high end Toward the high end DPS growth guidance +6% to +8% +6% to +8% Targeting ~60% payout ratio Target credit ratings Solid Solid investment grade investment grade FFO/Debt target: M
Slide 14: 2023 Planned Financings
2023 Planned Financings . . . Financings Existing Facilities Plan YTD a ($M) ($M) ~$1.9B of net liquidity Consumers Energy: $250M First Mortgage Bonds $1,970 $825 (Nov-2024) Securitization 688 -- CMS Energy: Contracted Equity (issued) 439 -- $1,100M (Dec-2027) Retirements (incl. term loans): $550M C
Slide 15: 2023 Sensitivities
2023 Sensitivities . . . Full-Year Impact Sensitivity Adj. EPS OCF 2023 Adj. EPS Sensitivities (1% Full Year in Volume) Salesa (¢) ($M) Electric Gas Electric (~37,000 GWh) + 1% + 7 + 27 Residential 4¢ 3¢ Gas (~311 Bcf) + 1 + 4 + 16 Commercial 2½ ~½ Industrial ½ ~½ Gas Prices + 50¢ + 0 + 60 Electri
Slide 16: Industry-Leading Financial Performance
Industry-Leading Financial Performance . . . Adjusted EPSa +6% to +8% Dividend Weather Help Recession Recession Recession / Hurt Pandemic 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+ Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild P
Slide 17: Q&A Thank You!
Q&A Thank You! 1717
Slide 18: Appendix
Appendix 1818
Slide 19: 2022 Adjusted EPS
2022 Adjusted EPS . . . a 12¢ 3¢ $2.89 21¢ a $2.65 (12)¢ Full Year EPS Results EPS by Segment 2021 2022 2021 2022 Reported EPS $4.66 $2.85 Utility $3.07 $3.31 Adjustmentsa (2.01) 0.04 NorthStar 0.08 0.12 Adjusted EPSa $2.65 $2.89 Parent (0.50) (0.54) Total Adj. EPS $2.65 $2.89 2021 Weather Rates & C
Slide 20: DIG (750 MW) & Peakers (200 MW)
DIG (750 MW) & Peakers (200 MW) . . . Pre-Tax Income Opportunities (M) $60 ~$55M 50 ~$40M +$25M 40 +$10M ~$30M ~$30M 30 20 10 0 2022A 2023E 2025+ 2025+ Capacity Price ($/kw-mo) ~$3.00 ~$3.00 $4.50 $7.50 Capacity Available 0% 0% >50% >50% . . . supports the Plan with future upside opportunities 20
Slide 21: Utility Sales Remain Strong
Utility Sales Remain Strong . . . a Weather-Normalized Electric Deliveries (2022 vs. 2021) b 2.7% 1.7% b 0.8% (1.0)% Residential Commercial Industrial Total Residential Customer Growth Economic Development (5-Yr Avg. Customer Count) Policy Support • $1B of state incentives 230 MW • New energy intens
Slide 22: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured • Strong financial A A1 A+ position Commercial Paper A-2 P-2 F-2 • Growing operating cash flow Outlook Stable Stable Stable CMS Energy • Constructive return on regulated Senior Unsecured BBB Baa2 BBB in
Slide 23: Operating Cash Flow
Operating Cash Flow . . . Adjusted Operating Cash Flow NOLsa & Credits Year Amount ~$2½B ($B) 2022 $0.4 ~$1½B ~$12½B in aggregate 2023 $0.5 ~$7½B in 2024 $0.5 aggregate 2025 $0.5 2026 $0.4 2027 $0.5 2018 - 2022 2023 - 2027 Plan Average Average Presentation endnotes are included after the appendix. .
Slide 24: Utility Customer Investment Plan
Utility Customer Investment Plan 5-Year Plan ($B) 2023 2024 2025 2026 2027 Total Clean Energy Generation $0.7 $0.6 $0.8 $0.5 $0.5 $3.1 59% Electric utility investment Electric Distribution, Covert & Other 1.8 1.0 1.1 1.1 1.1 6.1 Gas Utility 1.2 1.3 1.3 1.3 1.2 6.3 Total $3.7 $2.9 $3.2 $2.9 $2.8 $15.
Slide 25: Endnotes
Endnotes “cus evens?
Slide 26: Presentation Endnotes
Presentation Endnotes Slide 3: aUBS Research, 2022 state rankings and D.C Slide 4: aSource: quartile ranges from CXI Forrester Index, top quartile across all industries bCarbon emission reduction from 2005 base Slide 6: aAssumes $22½B rate base in 2022, $32B in 2027, CAGR bOver plan period years 202
Slide 27: GAAP Reconciliation
CMS Energy provides historical financial results on both a reported (GAAP) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. During an oral presentation, references to “earnings” are on an adjusted basis. All references to net income refer to net income availa
Slide 28: Reconciliation of GAAP Cash Flows from Operating Activities to Non-GAAP
CMS ENERGY CORPORATION Reconciliation of GAAP Cash Flows from Operating Activities to Non-GAAP Adjusted Cash Flows from Operating Activities (Unaudited) 2017 2018 2019 2020 2021 2022 Cash Flows from Operating Activities $ 1,705 $ 1,703 $ 1,790 $ 1,276 $ 1,819 $ 855 Adjustments - Discretionary Pensio
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 12/31/22 12/31/21 12/31/22 12/31/21 Electric Utility Reported net income per share $ 0.23 $ 0.21 $ 1.96 $ 1.95 Reconciling it
Slide 30: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Twelve Months Ended 12/31/22 12/31/21 12/31/22 12/31/21 Net Income Available to Common Stockholders $ 168 $ 637 $ 827 $ 1,348 Reconciling item
Slide 31: 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 2022 1Q 2Q 3Q 4Q Net Income Available to Common Stockholders $ 351 $ 145 $ 163 $ 168 Reconciling items: Electric utility and gas utility - 11 (*) 10 T