Attached files
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| 8-K - 8-K - CONSUMERS ENERGY CO | d327240d8k.htm |
Exhibit 99.1
Midwest Utilities Seminar
April 5, 2012
Foote Hydro 1918
Zeeland 2007
Lake Winds 2012
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, as amended, Rule 175 of the Securities Act of 1933, as amended, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. They should be read in conjunction with “FORWARD-LOOKING STATEMENTS AND INFORMATION” and “RISK FACTORS” sections of CMS Energy’s and Consumers Energy’s Form 10-K for the year ended December 31 and as updated in subsequent 10-Qs. CMS Energy’s and Consumers Energy’s “FORWARD-LOOKING STATEMENTS AND INFORMATION” and “RISK FACTORS” sections are incorporated herein by reference and discuss important factors that could cause CMS Energy’s and Consumers Energy’s results to differ materially from those anticipated in such statements. CMS Energy and Consumers Energy undertake no obligation to update any of the information presented herein to reflect facts, events or circumstances after the date hereof.
The presentation also includes non-GAAP measures when describing CMS Energy’s results of operations and financial performance. A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted on our website at www.cmsenergy.com.
Reported earnings could vary because of several factors, such as legacy issues associated with prior asset sales. Because of those uncertainties, the company is not providing reported earnings guidance.
| 2 |
Despite Adverse Weather . . . .
First Quarter Weather
Recovery Actions
1.75 +20¢ +15 .70 +10 .65 1.60 +5 1.55 0 1.50 -5 1.45 -10—1.40 15 1.35 -20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2011
+4¢
-16¢
2012
Natural
• Lower cost financing
• Lower UAs
• Lower property tax
• Less “lost” gas
• Lower pension cost
No Regrets
• Efficiencies
• Regulatory
• Lower injuries – damages
• Retire “converts”
. . . . EPS guidance range unchanged.
| 3 |
Business Model . . . .
RESULTS –Consistent Financial Performance
Investment
Risk Mitigation
Enablers
• Michigan Energy Law
• Supportive regulation
• Customer focus
• Cost control
• Base rates inflation
• Sales recovery
• Non-Utility improvements
• NOLs
Self-Imposed Limits
• Customer rates
• Capital
. . . . drivesrives strong performance.
| 4 |
SELF-IMPOSED LIMIT – Capital Investment . . . .
2012 – 2016 Plan
Unrestrained
$6.6 Billion
• Pipe replacements
• Pole replacements
• New gas generation
• Faster smart grid
$10 Billion
Customer rates
<2%
>4%
. . . . holdsolds down customer base rate increases.
| 5 |
ENABLER – Michigan Energy Law . . . .
2008 Law
Growth
• Renewable energy plan
• Energy optimization
Speed
• File and implement ratemaking
• Forward test year
Risk Mitigation
• Retail open access cap
• Decoupling
Regulation
John Quackenbush, Chairman Appointed: 9/15/11 Term Ends: 7/2/17 Republican
Orjiakor Isiogu, Commissioner Appointed: 9/9/07 Term Ends: 7/2/13 Democrat
Greg White, Commissioner Appointed: 12/4/09 Term Ends: 7/2/15 Independent
. . . . enables timely rate recovery and mitigates risks.
| 6 |
Rate Case Timeline
2008
2009
2010
2011
2012
ELECTRIC
$Filed 214 M Increase
$Filed 178 M Increase
$Filed 195 M Increase
Offsets Renewables $(57) DOE (23) Total $(80)
implement Self- $179 M
Order Final $139 M
implement Self- $150 M
Order Final $146 M
implement Self- $118 M
Energy New Law
78%
97%%
Decision
GAS
$Filed 114 M Increase
74%
implement Self-
$89 M
Order Final
$66 M
$ Filed 55 M Increase
Order Final
$31 M
implement Self-
$23 M
$ Filed 49 M Increase
Decision
2008
2009
2010
2011
2012
Frequent and streamlined rate case strategy continues.
| 7 |
Ongoing Regulatory Strategy . . . .
• Michigan investment
• Base rate increases inflation
• Rate “offsets”
• Communication and alignment
. . . . balances customer interests and investor certainty.
| 8 |
ENABLER – O&M Cost Control . . . .
7.5%
3.3%
-4%
-1%
Average Customer Rates
2002-2006 2007-2011
2012 2012-2016
Electric Base a
Fuel & Purchased Power Gas Base a Commodity
a Includes surcharges
1% 3% 1% 1%
| 2 |
4 2 3 |
2% 2% 2%32% 3
14 (4) (5) (3)
. . . . holds down rates with strong customer focus.
9
ENABLER – Sales Recovery . . . .
Electric Salesa
GWh 40,000
35,000 30,000 25,000 20,000 15,000 0
1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2012
7% decline 1979 to 1982
Up 9% 1983 &1984
6% decline 2007 to 2009
2010 Up to 5% 2012
Electric Salesa vs Prior
Years
+2.1%
+1.7%
+1.3%
+2.2%
-0.7%
-2.0%
-3.0%
+5%
-6%
2006 2007 2008 2009 2010 2011 2012
a Weather adjusted
. . . adds rate “headroom”.
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ENABLER – Enterprises & EnerBank . . . .
Michigan Power (Livingston)
Grayling
Filer City
Genesee
EnerBank HQ
Michigan Power (Kalamazoo River)
Renewables Other
DIG
Craven
2012 2012 Operating EPS a Cash Flow a Enterprises .04 (mils) 18
vs 2011 +100%
+33%
EnerBank .04 15
vs _ 2011 +19% a Non-GAAP
Ownership Gross Plant Fuel Interest Capacity (MW) Craven Wood 50% 50 DIG/MI Power Natural gas 100 934 Filer City Coal 50 73 Genesee Wood 50 40 Grayling Wood 50 38
. . . . provide growth without capital.
11
ENABLER – Federal Tax Benefits
Net NOLs and Credits
$0.8
$0.7
$0.5
$0.3
$0.2
$0.1
2011 2012 2013 2014 2015 2016 Gross NOLs (bils) $1.3 $1.2 $0.5 $0 $0 $0
“Block” Equity 0 0 0 0 0 0
No need for equity (dilution) through 2016.
12
RISK MITIGATION . . . .
Risk
Mitigation
Economy Sluggish recovery or •Customer focus downturn •Back-up liquidity
Capital Investments Regulatory recovery •Priority projects •Regulatory alignment
Regulatory / Political ROA and customer •ROA “cap” rate pressure •Base rate increases
“inflation”
Commodities (prices) Regulatory •Follow MPSC-approved plan alignment to ensure recovery
Capital Structure Interest rates •Maintain flexibility •Thick liquidity •Prefund obligations
Shareowner Return Sustainable returns; •Risk management interest rates •Consistent EPS performance •Attractive dividend
. . . customerustomer focus key.
13
Availability
CMS Energy
5-year revolver—2016
Consumers Energy
5-year revolver—2016
3-year revolver—2013 A/R Facility—2012 Cash
$1.8 Billion
$547 mils
499
150
250
345
• Thick liquidity – 2x peers
• Pre-funding
• Robust backup plan
Parent Debt Strategy
. . . . strongtrong and conservative.
14
Credit Ratings . . . .
S&P/Fitch Moody’s
BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+ Ba1
S&P Fitch Moody’s
Consumers Secured Target
BB+ Ba1 BB Ba2 BB- Ba3 B+ B1 B B2 B- B3 Outlook
Present 2002
Stable Stable
CMS Unsecured Target
. . . . reflect March upgrade by Fitch and positive outlook by Moody’s.
15
RESULTS – Operating Cash Flow Growth . . . .
Amount (bils)
$2.5 2.0 1.5 1.0 0.5 0.0 (0.5)
2010 2011 2012 2013 2014 2015 2016
NOLs & Credits $0.8 $0.8 $0.7 $0.5 $0.3 $0.2 $0.1
a Non-GAAP
Cash flow before dividend
Investment choices
Base Investment
Working capital and taxes
Interest
$1.5
$1.6
$1.7
$1.8
$1.9
$2.0
$2.1
Gross operating cash flowa up $0.1 billion per year
16
RESULTS– EPS a and Dividend Growth . . . .
EPS
$0.81
$0.90
$0.96
$1.08
$1.21 b
$1.26
$1.36
$1.45
$1.55 $1.52
7%
5%
$0.84
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Future
a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006 b $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock
Dividend
14%
27%
32%
39%
80%
0
20¢
36¢
50¢
66¢
84¢
96¢
Payout 0% 25% 30% 40% 49% 58% 62%
2006 2007 2008 2009 2010 2011 2012
. . . . providerovide strong TSR.
17
2012 Sensitivities . . . .
Annual Impact
Sensitivity
EPS OCF
(mils) Sales (weather adjusted) a • Electric (37,395 Gwh)
+ 1%
$0.05
+
$20
• Gas (287 Bcf)
+ 1 +
0.01 +
5
Gas prices (NYMEX)
+ 1.00
–+
0.01
–+
60
Uncollectible accounts (mils)
+
5
–+
0.01
* ROE (authorized)
• Electric (10.7%)
+ 20 bps
+ 0.02
+ 10
• Gas (10.5%)
+
20
+
0.01
+
4
Stock price (dilution)
$1 share
+
0.01
0
* Less than 0.5¢ or $500,000 a Reflect 2011 sales forecast
. . . . partly mitigated.
18
Total Shareowner Return . . . .
Investment Considerations
TSR up 9% to 11%
• Predictable and visible earnings growth
• Affordable, sustainable rates
– Customer focus
– Needed investment
– Regulatory support
• Strong risk mitigation
Dividend Yield
EPS Growth
. . . . upp 9% to 11%.
19
APPENDIX
|
Capital Expenditures
Plan
2012-2016
2012
2013
2014
2015
2016
Total
(mils)
(mils)
(mils)
(mils)
(mils)
(mils)
Electric
Distribution
$198
$188
$196
$191
$193
$966
Generation
101
79
136
78
130
524
New customers
31
31
35
40
39
176
Other
93
84
70
73
75
$395
Base capital
$423
$382
$437
$382
$437
$2,061
Gas
Distribution
$130
$144
$145
$145
$145
$709
New customers
$29
$18
$20
$21
$22
$110
Other
56
52
47
39
40
234
Base capital
$215
$214
$212
$205
$207
$1,053
Total base capital
$638
$596
$649
$587
$644
$3,114
Investment choices:
Environmental
$268
$349
$320
$356
$260
$1,553
Reliability
250
236
249
209
212
1,156
Renewables
186
24
112
228
8
558
Smart Grid
61
51
53
54
47
266
Total choices
$765
$660
$734
$847
$527
$3,533
Total Utility
$1,403
$1,256
$1,383
$1,434
$1,171
$6,647
21
GAAP RECONCILIATION
CMS ENERGY CORPORATION
Earnings Per Share By Year GAAP Reconciliation
(Unaudited)
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | ||||||||||||||||||||||||||||
| Reported earnings (loss) per share - GAAP |
$ | (0.30 | ) | $ | 0.64 | $ | (0.44 | ) | $ | (0.41 | ) | $ | (1.02 | ) | $ | 1.20 | $ | 0.91 | $ | 1.28 | $ | 1.58 | ||||||||||||||
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| After-tax items: |
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| Electric and gas utility |
0.21 | (0.39 | ) | — | — | (0.07 | ) | 0.05 | 0.33 | 0.03 | 0.00 | |||||||||||||||||||||||||
| Enterprises |
0.74 | 0.62 | 0.04 | (0.02 | ) | 1.25 | (0.02 | ) | 0.09 | (0.03 | ) | (0.11 | ) | |||||||||||||||||||||||
| Corporate interest and other |
0.16 | (0.03 | ) | 0.04 | 0.27 | (0.32 | ) | (0.02 | ) | 0.01 | * | (0.01 | ) | |||||||||||||||||||||||
| Discontinued operations (income) loss |
(0.16 | ) | 0.02 | (0.07 | ) | (0.03 | ) | 0.40 | (* | ) | (0.08 | ) | 0.08 | (0.01 | ) | |||||||||||||||||||||
| Asset impairment charges, net |
— | — | 1.82 | 0.76 | 0.60 | — | — | — | — | |||||||||||||||||||||||||||
| Cumulative accounting changes |
0.16 | 0.01 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
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| Adjusted earnings per share, including MTM - non-GAAP |
$ | 0.81 | $ | 0.87 | $ | 1.39 | $ | 0.57 | $ | 0.84 | $ | 1.21 | (a) | $ | 1.26 | $ | 1.36 | $ | 1.45 | |||||||||||||||||
| Mark-to-market impacts |
0.03 | (0.43 | ) | 0.51 | ||||||||||||||||||||||||||||||||
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| Adjusted earnings per share, excluding MTM - non-GAAP |
NA | $ | 0.90 | $ | 0.96 | $ | 1.08 | NA | NA | NA | NA | NA | ||||||||||||||||||||||||
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| * | Less than $500 thousand or $0.01 per share. |
| (a) | $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock. |
CMS Energy
Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
(unaudited)
(mils)
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||
| Consumers Operating Income + Depreciation & Amortization |
$ | 1,248 | $ | 1,498 | $ | 1,527 | $ | 1,645 | $ | 1,735 | $ | 1,860 | $ | 1,976 | $ | 2,051 | ||||||||||||||||
| Enterprises Project Cash Flows |
16 | 39 | 24 | 25 | 27 | 33 | 35 | 35 | ||||||||||||||||||||||||
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| Gross Operating Cash Flow |
$ | 1,264 | $ | 1,537 | $ | 1,551 | $ | 1,670 | $ | 1,762 | $ | 1,893 | $ | 2,011 | $ | 2,086 | ||||||||||||||||
| Other operating activities including taxes, interest payments and working capital |
(416 | ) | (578 | ) | (382 | ) | (420 | ) | (412 | ) | (443 | ) | (756 | ) | (776 | ) | ||||||||||||||||
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| Net cash provided by operating activities |
$ | 848 | $ | 959 | $ | 1,169 | $ | 1,250 | $ | 1,350 | $ | 1,450 | $ | 1,255 | $ | 1,310 | ||||||||||||||||
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