Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CMS ENERGY CORP | d593208d8k.htm |
Exhibit 99.1
Investor Meetings
September 4-6, 2013
Cross Winds Energy Park
Gas Combined Cycle Plant
Consumers Smart Energy Program
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 forward-looking statements should be considered in the context of the risk and other factors detailed from time to time in CMS Energy’s and Consumers Energy’s Securities and Exchange Commission filings. Forward-looking statements 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, 2012 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 historical financial results on both a reported (Generally Accepted Accounting Principles) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted 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. These items have the potential to impact, favorably or unfavorably, the company’s reported earnings in future periods. Because the company is not able to estimate the impact of these matters, the company is not providing a reconciliation to the comparable future period reported earnings.
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CMS Business Model
EPSa
7%
$1.55 5%
Consistent financial $1.45 performance $1.36
$1.26
b
$Fair 1.21 and timely regulation
$1.08
$0.96 Utility Customer
$0.90 investment value
$0.84
$0.81 Safe, excellent operations
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E Future
Consistent financial performance
Fair and timely regulation
Utility investment
Customer value
Safe, excellent operations
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
Results
11th year of top performance
Needed investment:
Customer driven
Ten-year visibility
Constructive regulation
Self-funded
Consistent high growth:
EPS & dividend
Operating cash flow
has allowed CMS to execute its strategy and deliver “Best in Class” results.
3
CMS Manages its Work . . . .
2012
Adjusted EPS
(non-GAAP)
First Half Second Half
+13¢
Hot Summer
Guidance $1.55
$1.52 to
$1.55
Warm
Winter
-13¢
2013
Adjusted EPS (non-GAAP)
Reinvestment
Reliability complete 6¢?
Gas case deferred 3 +14¢ ?
Reliability & other 5 Total Reinvestment 14¢
+7¢
Electric Weather
Gas Weather
Better Than Plan
Sales 4¢
Health care 2
Financing & other 1 Net Benefits 7¢
delivering the high side of performance for customers and owners.
4
2008 Law . . . .
Progress Ahead of Plan
Energy Efficiency 2008 2015
Goal Electric 4.1% 5.5%
Gas 3.3% 3.85%
Renewable Energy 8% 10%
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2008 Law . . . .
Regulatory Lag
(Months to Order)
Months
12
10 Peers
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Michigan
File-and-implement 6 months
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File-and-implement 6 months
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0
2008 2009 2010 2011 2012 2013
Source: SNL RRA, 2013 YTD, Electric lag and ROE
Authorized ROE
(CMS vs. Peers)
10.8%
Consumers 10.6 Energy Electric
Small Michigan Premium
10.4
10.2
10
Peers
0
2008 2009 2010 2011 2012 2013
. . . . provided fair and timely regulation.
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2012 Electric O&M Cost Performance . . . .
Overhead
(per Customer)
Consumers Energy Electric $101
Peer Average $206
$0 $400
Source: SNL, Form 1
Non-Fuel O&M
(Pct of Revenue)
CMS 17%
Peers 23%
. . . . better than peers.
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Structural Benefit Changes . . . .
Benefit Costs
2012 over 2009 CAGR
Peers
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+5%
-2 -4% 2012 -2% 2013 -6% -6%
-8
CMS
Source: SNL, Form 1 Electric O&M Benefits
Benefit Changes
Timeline
2005 2006 2007 2008 2009 2010
2011 2012 2013
New salaried employees to DC pension
Union employees, health care cost sharing Increased cost sharing
Healthy living initiated, increased cost sharing Preferred and standard health care plans
New union hires pay full cost retiree health care Union employees, health care contributions Retiree prescription drug cost sharing
Retiree health care cost sharing reduces benefit cost additional 2% CAGR
. . . . better impact than initially planned.
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Electric Prices . . . .
2011 Residential Bill as Percent of Disposable Income
7%
National average 3.7%
UT CO CA WY MA WA MN DC RI NH NJ IL ME AK NM VT WI ND IA ID NE MT MD MI SD OR NY VA CT NV KS IN DE OH PA MO AZ KY OK NC AR WV TX GA LA FL TN SC HI AL MS
Source: eia.gov & census.gov, disposable income 70% of household income
. . . . competitive nationally and improving.
9
Trend of O&M Cost Savings . . . .
Percent Change
25%
Inflation
-21% Cost Reductions
0
Prior Plan
-9%
Accelerated Cost
Reductions -6%
New Plan
-15%
-25%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Lines smoothed for illustrative purposes
. . . . . accelerated; funding investment and reducing risk.
10
New Cost Savings . . . .
Gas Rate Case Avoideda
$49 Benefits
Tax/Other
$0
2013 2014
a Until 2015 test year
Electric Rate Case Avoideda
$100 Benefits
Tax
Cross Winds?
$0
2014
. . . . fund elimination of next gas and electric cases!
11
Rate Case Elimination . . . .
2013 2014 2015 2016
ELECTRIC Avoid
File annual On Track
rate case
New Michigan • Gas Plant
Energy Policy • CON filed July 12
Securitization • Air Permit approved
July 26
CON Case Tax • Tax Accounting Request
filed August 2
GAS • Securitization filing
File annual Avoid September
rate case
Base Ratesa No Increase < Inflation
ROE 10.3% 10.3% 10.3%
EPS 5%—7% 5%—7% 5%—7% 5% -5%7%- 7%
2013 2014 2015 2016
a Includes surcharges
. . . . underway.
12
Enhanced Near-Term Strategy . . . .
Prior New
Rate case filings Annual Avoid until 2015 (test year)
Lowers
ROE Subject to review 10.3% into 2015 Risk
Customer base rate increases < 2% 0% thru 2014, < 2% after
Helps
Investment (2013-17) $7 billion $7 billion Customers
(“Free” 700 MW GCC)
O&M costs (2013-17) -1% -2%
Sustains
Growth
EPS, OCF & dividend growth 5%—7% 5%—7%
. . . . . allows CMS to deliver even more benefits to customers and shareowners.
13
Ten-Year Capital Investment Plan . . . .
Clean Power Capacity Reliability Infrastructure
$3 Billion $2 Billion $3.5 Billion $4 Billion
Environmental New gas generation Consumers Smart Energy Gas distribution
Renewable energy Ludington Pumped Storage Main replacements Propane switching
Gas conversions Pipeline replacements Electric reliability Electric distribution
. . . . in customer projects (none “bet the Company”) represents 80% of $15 billion plan.
14
Ludington Upgrade to 2,200 MW . . . .
Increase capacity by 15%
Increase efficiency by 5%
Operate for 30 years before next major overhaul
$800 million investment over ten years
$200 million upgrade
$600 million maintenance
Consumers Energy share $400 million
. . . . underway.
15
Investments in Electric Reliability . . . .
Customer Outage Minutes
280
262
> 20%
204
5-year improvement
0
2007 2012
Investment
Last 5 years
(bils)
Next 5 Years
(bils)
Customer reliability $0.3 $0.4
Line clearing (forestry) 0.2 0.2
Total investment $0.5 $0.6
Heat-related outages were
down 60% in 2013 compared
to previous year’s peak.
. . . . benefit customers, who can “count on us” for reliable service.
16
Michigan Preparing . . . .
Energy Topics
Renewable energy
Electric choice
Energy efficiency
Additional areas
Length of cases, better process Capacity for future energy needs
“Appendix A” Timeline
2013
Seven public forums,
Jan-Apr Company submitted
answers
May-Jun Analyze data
Sep-Nov Draft reports, public
feedback
Nov Final reports
Future Governor makes policy
recommendations
Source: michigan.gov/energy
. . . . to improve on 2008 Law.
17
Key Takeaways . . . .
EPS a Growth
$1.70
7%
+7%
5%
+7% +8%
+12%
+4%
+12%
Actual EPS = 7%
+7%
+11% Yield ~4%
Actual EPS = 8% Yield ~3%
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 $0.1 billion per year
Transparent
Cost reductions
Low rates
Needed investment
Ten-year investment plan
Constructive regulatory climate
a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
. . . . distinguish CMS favorably with customers and owners.
18
GAAP Reconciliation
CMS ENERGY CORPORATION
Earnings Per Share By Year GAAP Reconciliation
(Unaudited)
| 2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
|||||||||||||||||||||||||||||||
| Reported earnings (loss) per share - GAAP |
($ | 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