Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CMS ENERGY CORP | d564902d8k.htm |
Exhibit 99.1
CMS ENERGY
Investor Meetings
July 8, 2013
Cross Winds® Energy Park
Gas Combined Cycle Plant
Consumers Smart Energy Program
CMS ENERGY
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.
CMS Energy provides financial results on both a reported (Generally Accepted Accounting Principles) and adjusted (non-GAAP) basis. Management views adjusted earnings as a key measure of the company’s present operating financial performance, unaffected by discontinued operations, asset sales, impairments, regulatory items from prior years, or other items. Certain of these items have the potential to impact, favorably or unfavorably, the company's reported earnings in 2013. The company is not able to estimate the impact of these matters and is not providing reported earnings guidance.
1
CMS Energy MODEL . . . .
CMS ENERGY
RESULTS
Consistent Predictable
Self-Imposed Limits
• Base Rates < 2%
• O&M Down 1% Next Five Years
Investment
• Ten Year - $15 Billion
• “Needed Not Wanted”
Catalysts
• Constructive Regulation
• Visible Capital Investment
• Michigan Economy
• Strong Customer Focus
• Credit Rating Upgrade
• Growth Self-funded
. . . . working well.
2
Near-Term Catalysts . . . .
CMS ENERGY
Catalysts
1. Constructive regulation
2. Capital investment
3. Michigan economy
4. Strong customer focus
5. Credit rating upgrade
6. Growth self-funded
Progress
Governor supportive of 2008 Energy Law
Ten-year visibility -- $15 billion investment plan
Michigan GDP up 11% past 3 years (5th best state)
Leader in cost control; base rate increases < 2%
Parent upgraded to investment grade; Utility upgraded as well
NOLs and tax credits avoid need for block equity
. . . . progress made, more opportunities ahead.
3
CATALYST #1 – Constructive Regulation . . . .
CMS ENERGY
New Commissioner
• Previous Experience
• Public Sector Consultants
• Michigan Public Service Commission
• Michigan Department of Environmental Quality
• Public Utility Commission of Texas
• Education
• BS in Environmental and Natural Resources Policy Studies from Michigan State University
• MPA from the Lyndon B. Johnson School of Public Affairs at the University of Texas-Austin
Commission
John Quackenbush (R), Chairman Term Ends: July 2, 2017
Sally Talberg (I) Term Ends: July 2, 2019
Greg White (I) Term Ends: July 2, 2015
. . . . provides improvements for customers and investors.
4
Regulatory Actions . . . .
CMS ENERGY
• MPSC suspends gas rate case schedule
• As requested by Consumers
• Reflects cost reductions beyond plan and
• Sustains capital investment recovery in 2014
• MPSC approved GE turbine contract for Cross Winds® Energy Park
• MPSC approved Smart Energy meter opt-out provision
• Will file gas plantlant Certificate of Necessity early summer
5
CATALYST #2 – Capital Investment Plan . . . .
CMS ENERGY
Major Projects
Karn/Weadock Generating Complex,
Environmental Compliance, Increased capacity
Ludington Pumped Storage Plant,
Reliability & Capacity
Cross Winds® Energy Park
Thetford Natural Gas-Fired Plant
Consumers Smart Energy Program
Campbell Generating Plant, Environmental Compliance
Gas Transmission & Storage
Reliability & Automation
Capital Investment
Amount
(bils)
$7.3
$8.0
$7.0
New Gas Plant
$6.5
Average Base Rate Increases
2013-2017 2018-2022
<2%
<2%
. . . . drives EPS and cash flow growth.
6
Long-Term Capital Investment a . . .
CMS ENERGY
Amount (bils)
$1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0
New Gas Plant and Gas Infrastructure
Peer Average
CMS
$1.5 Pace
Amount (bils) First five years $ 7 Next five years 8 Ten years $15 Average ~ $1.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
a Source: 10K; actual amounts through 2012 smoothed for illustration; future year estimates
. . . . ten-year plan provides long-term visible growth.
7
Capacity . . . .
CMS ENERGY
Installed Capacity Excl Classic 7
Classic 7 Coal Plants
Peak Demand with 11% Reserve Margin
Peak Demand with 18% Reserve Margin
MW 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 0
Up to 1,500 MW Shortfall
2012 2013 2014 2015 2016 2017
. . . . need looms.
8
Gas Plant CON
CMS ENERGY
• Generating plant investments exceeding $500 million
• Demonstrate need through an Integrated Resource Plan
• File CON early summer 2013
• Decision within 270 days
2012 2013 2014 2015 2016 2017
Air Permit Submitted Approval
Certificate of Necessity Submit Approval
Project Award Major Contracts Full Notice to Proceed Commercial Operation
Investment (mils) — $6 $112 $346 $237 $49
Cumulative Spending 6 118 464 701 750
9
CATALYST #3 – Michigan Economy Past 3 Years . . . .
CMS ENERGY
Gross Domestic Product – 2010 through 2012
5th Best 11%
Highest quintile Fourth quintile Third quintile Second quintile Lowest quintile
U.S. Total = 6.7%
Source: U.S. Department of Commerce – bea.gov, real GDP 2005 chained dollars, 2012 advance and 2009 – 2011 revised, 6/6/13
. . . . Michigan performance among the best in the nation.
10
CATALYST #4– Strong Customer Focus . . . .
CMS ENERGY
Electric Non-fuel O&M Cost
Annual Change 2012 over 2006
Peer Average up 7%
-0.5% Consumers
Examples of Cost Reductions
Three voluntary separation programs
Pension prefunding
Health care sharing
Labor agreements
SAP efficiencies
Productivity up 41%
Source: SNL data service
. . . . outstanding cost performance best in class.
11
Strong Customer Focus – O&M Cost Control . . . .
CMS ENERGY
Average Annual Change
7% Peers
Inflation 2% -8% -3%
Consumers -0.5% -2%
Reinvested -6% -6% -1%
2006-2012 Annual Average 2012 2013E 2013-2017E
Examples of Cost Reductions
Amount Past (annual average) (mils)
• Western coal $250
• Workforce restructuring 70 and benefit plans
• SAP 40
• Productivity 50
Future (2013-2017E)
• Small coal plants mothballed $60
• Productivity 50
• Benefit plans 40
• Consumers Smart Energy 60
. . . . holds down rates and allows better system reliability.
12
CATALYST #5 – Credit Rating Upgrade . . . .
CMS ENERGY
Scale
S&P / Fitch Moody’s
A A2
A- A3
BBB+ Baa1
BBB Baa2
BBB- Baa3
BB+ Ba1
S&P Moody’s Fitch
Consumers Secured
BBB- Baa3
BB+ Ba1
BB Ba2
BB- Ba3
B+ B1
B B2
B- B3
CMS Unsecured
Outlook Stable Stable
Positive
Present Prior 2002
. . . . Parent rating best in history of the Company.
13
Operating Cash Flow Growth
CMS ENERGY
Amount (bils) $2.5
2.0 1.5 1.0 0.5 0 (0.5)
Gross operating cash flowa up $0.1 billion per year
$1.7 $1.6
$1.8
$1.9
$2.0
$2.1
$2.2
Interest
$1.4 $1.5
$1.3
Working capital and taxes
Base Investment
Investment choices
Cash flow before dividend
2011 2012 2013E 2014E 2015E 2016E 2017E
NOLs & Credits $0.8 $0.7 $0.7 $0.4 $0.4 $0.2 $0.1
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a Non-GAAP
14
CATALYST #6 – EPS Growth . . . .
CMS ENERGY
Net NOLs and Tax Credits
$0.8
$0.7 $0.7
$0.4 $0.4
$0.2
$0.1
2011 2012 2013E 2014E 2015E 2016E 2017E
Gross NOLs (bils) $1.5 $1.2 $1.1 $0.3 $0.2 $0 $0
“Block” Equity a $0 $0 $0 $0 $0 $0 $0
a Maintain existing DRIP and continuous equity program
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. . . . self-funded.
15
Five Key Takeaways . . . .
CMS ENERGY
EPS a Growth
$1.70
7% +7% 5% +7% +8%
+12% +4% +12%
Target 5% - 7%
+7%
+11% Actual = 7%
Target 6% - 8% Actual = 8%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Growth
• 5%-7% real growth
• Dividend growth in line with earnings
• Gross operating cash flow up $0.1 billion per year
Transparent
• Ten-year investment plan
• Constructive regulatory climate
Predictable
Targeting 11th consecutive year of consistent, attractive financial performance
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a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
. . . . distinguish CMS from our peers.
16
GAAP Reconciliation
CMS ENERGY CORPORATION
Earnings Per Share By Year GAAP Reconciliation
(Unaudited)
| 2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
|||||||||||||||||||||||||||||||
| Reported earnings (loss) per |
($ | 0.30 | ) | $ | 0.64 | ($ | 0.44 | ) | ($ | 0.41 | ) | ($ | 1.02 | ) | $ | 1.20 | $ | 0.91 | $ | 1.28 | $ | 1.58 | $ | 1.42 | ||||||||||||||||
| After-tax items: |
||||||||||||||||||||||||||||||||||||||||
| Electric and gas utility |
0.21 | (0.39 | ) | — | — | (0.07 | ) | 0.05 | 0.33 | 0.03 | 0.00 | 0.17 | ||||||||||||||||||||||||||||
| Enterprises |
0.74 | 0.62 | 0.04 | (0.02 | ) | 1.25 | (0.02 | ) | 0.09 | (0.03 | ) | (0.11 | ) | (0.01 | ) | |||||||||||||||||||||||||
| 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 | ) | (0.03 | ) | |||||||||||||||||||||||
| Asset impairment charges, net |
— | — | 1.82 | 0.76 | 0.60 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Cumulative accounting changes |
0.16 | 0.01 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| 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 | $ | 1.55 | |||||||||||||||||||
| Mark-to-market impacts |
0.03 | (0.43 | ) | 0.51 | ||||||||||||||||||||||||||||||||||||
| Adjusted earnings per share, excluding MTM - non-GAAP |
NA | $ | 0.90 | $ | 0.96 | $ | 1.08 | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||
| * | 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. |
2003-12 EPS
CMS Energy
Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
(unaudited)
(mils)
| 2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
||||||||||||||||||||||
| Consumers Operating Income + Depreciation & Amortization |
$ | 1,527 | $ | 1,635 | $ | 1,735 | $ | 1,821 | $ | 1,948 | $ | 2,011 | $ | 2,113 | ||||||||||||||
| Enterprises Project Cash Flows |
24 | 17 | 20 | 29 | 37 | 44 | 56 | |||||||||||||||||||||
| Gross Operating Cash Flow |
$ | 1,551 | $ | 1,652 | $ | 1,755 | $ | 1,850 | $ | 1,985 | $ | 2,055 | $ | 2,169 | ||||||||||||||
| Other operating activities including taxes, interest payments and working capital |
(382 | ) | (411 | ) | (405 | ) | (400 | ) | (435 | ) | (805 | ) | (819 | ) | ||||||||||||||
| Net cash provided by operating activities |
$ | 1,169 | $ | 1,241 | $ | 1,350 | $ | 1,450 | $ | 1,550 | $ | 1,250 | $ | 1,350 | ||||||||||||||
2011-17 OCF