DTE Energy Company · NYSE:DTE
DTE Energy — Q3 2012 Earnings Presentation
28 slides from DTE Energy's earnings presentation, Oct 24, 2012
Slide 1: 3rd Quarter 2012 Earnings Conference Call
3rd Quarter 2012 Earnings Conference Call October 24, 2012
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 FERC, MPSC, NRC and other applicable governmental proceedings and regulations, i
Slide 3: Participants
Participants • Dave Meador, Executive Vice President and CFO • Peter Oleksiak, Senior Vice President of Finance • Daniel Brudzynski, Vice President and Treasurer • Mark Rolling, Director of Investor Relations 3
Slide 4: Agenda: Overview, Earnings Results, Cash Flow, Summary
• Overview • Third Quarter 2012 Earnings Results • Cash Flow and Capital Expenditures • Summary 4
Slide 5: Investment Thesis
Investment Thesis DTE Energy has a plan it believes will provide 5% - 6% long-term operating EPS growth, an attractive dividend yield and a strong balance sheet – Utility growth plan driven by mandated investments – Constructive regulatory structure and continued 5%-6% Average Annual EPS Growth cost
Slide 6: Overview
Overview DTE Energy 3Q 2012 operating earnings per share* of $1.31 vs. $1.07 in 3Q 2011; increasing 2012 operating earnings guidance to $3.80 - $4.00 – Detroit Edison results improved year over year due to warm weather with no decoupling in 2012 – MichCon earnings improved due to higher margin and l
Slide 7: Regulatory Update
Regulatory Update MichCon Detroit Edison Rate case filed April 2012 for $77 million Application to defer $127 million • Proposed infrastructure recovery gain from elimination of revenue mechanism for main renewal, meter decoupling mechanism (RDM) was move-out and pipeline integrity capital approved
Slide 8: 2012 Operating Earnings Guidance
2012 Operating Earnings* Guidance YTD Prior Revised (millions, except EPS) Guidance Drivers Actual Guidance Guidance Detroit Edison $417 $438 - $448 $480 - $490 Increasing guidance midpoint to $3.90 MichCon 60 110 - 115 110 - 115 • Increasing Detroit Edison guidance due to weather favorability par
Slide 9: Third Quarter 2012 Earnings Results
• Overview • Third Quarter 2012 Earnings Results • Cash Flow and Capital Expenditures • Summary 9
Slide 10: Third Quarter 2012 Operating Earnings Per Share
Third Quarter 2012 Operating Earnings Per Share* $1.31 Detroit Edison MichCon Non-Utility Corporate & Other $1.13 $0.02 $0.22 ($0.06) Gas Storage & Unconventional Power & Industrial Energy Pipelines Gas Production Projects Trading $0.08 $0.00 $0.13 $0.01 * Reconciliation to GAAP reported earnings in
Slide 11: Third Quarter 2012 Operating Earnings Variance
Third Quarter 2012 Operating Earnings Variance Operating Earnings* Drivers ($ millions, except EPS) 3Q 2011 3Q 2012 Change Detroit Edison • Warm weather absent RDM in 2012 Detroit Edison $ 157 $ 194 $ 37 MichCon (11) 4 15 MichCon • Higher transportation and storage revenue, lower lost Gas Storage &
Slide 12: Cash Flow and Capital Expenditures
• Overview • Third Quarter 2012 Earnings Results • Cash Flow and Capital Expenditures • Summary 12
Slide 13: Third Quarter 2012 Cash Flow
Third Quarter 2012 Cash Flow DTE Energy Cash Flow Drivers ($ billions) YTD 2011 YTD 2012 Cash From • Cash flow increased due to collection Operations $1.5 $1.7 of trackers partially offset by higher corporate income tax payments Capital Spending (1.1) (1.2) Free Cash Flow $0.4 $0.5 • Higher capital
Slide 14: 2012 Cash Flow & Capital Expenditures Guidance
2012 Cash Flow & Capital Expenditures Guidance Cash Flow Summary Capital Expenditures ($ billions) ($ millions) 2012 Original 2012 Revised 2012 Original 2012 Revised Guidance Guidance Guidance Guidance Detroit Edison Base $785 $810 Cash From Operations $1.9 $2.2 Environmental 255 170 Capital Spendin
Slide 15: Strong Balance Sheet Supports Growth
Strong Balance Sheet Supports Growth Leverage* • A strong balance sheet remains a key DTE priority Target 50% - 52% • Series of credit improvements in 2012 51% 50% – Fitch upgraded Detroit Edison and MichCon 2011 2012E – Moody’s raised its outlook to Positive • Leverage and cash flow metrics within
Slide 16: Summary
• Overview • Third Quarter 2012 Earnings Results • Cash Flow and Capital Expenditures • Summary 16
Slide 17: Summary
Summary 3Q 2012 operating EPS* of $1.31 benefited from warm weather Increasing 2012 operating EPS guidance to $3.80 - $4.00 from $3.65 - $3.95 Both utilities on track to earn their authorized ROE (temperature normal) Long-term 5% - 6% operating EPS growth expected from mandated utility inves
Slide 18: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030 18
Slide 19: Appendix
DTE Energy’ Appendix
Slide 20: Detroit Edison Variance Analysis
Detroit Edison Variance Analysis Detroit Edison Operating Earnings* Variance Drivers ($ millions) $40 $(3) $194 • Warm weather in 3Q 2012; $157 RDM in 3Q 2011 20 * Reconciliation to GAAP reported earnings included in the appendix
Slide 21: MichCon Variance Analysis
MichCon Variance Analysis MichCon Operating Earnings* Variance Drivers ($ millions) $3 $4 $3 • Margin due to higher transportation and storage $9 revenue and lower lost gas expense • O&M down due to reduced storage injections • Lower interest and property tax in 2012 ($11) 21 * Reconciliation to GAA
Slide 22: MichCon Rate Case Filing (U-16999)
MichCon Rate Case Filing (U-16999) Estimated Net Rate Request Rate Case Highlights ($ millions) Represents annual base rate growth of $77 ~4%* since last rate increase; combined $27 $1 with declining gas prices, annual bills decreasing ~5%* • Lower sales due to customer conservation and lower midstr
Slide 23: YTD 2012 Capital Expenditures
YTD 2012 Capital Expenditures DTE Energy Capital Expenditures Drivers ($ millions) YTD 2011 YTD 2012 Detroit Edison Base $ 493 $ 599 • Detroit Edison higher base capital for Environmental 120 105 system reliability and 2Q 2012 nuclear Renewables / EE 229 151 refueling outage 842 855 MichCon Base 107
Slide 24: Unconventional Gas Operating Metrics
Unconventional Gas Operating Metrics Reserves (Bcfe) Acreage Position (000s Acres) YTD 2012 Results 652 87 87 • 47 wells completed; 46 on-line 559 17 19 Net 279 Proved Developed • Production of 5.6 Bcfe (58% 186 Acres Liquids) 68 Net 70 • 97% increase in oil production 373 373 Probable Undeveloped (
Slide 25: Unconventional Gas: Focused on Liquids Production
Unconventional Gas: Focused on Liquids Production Oil and NGLs* driving value • Focus on maturing Marble Falls oil play Revenue by product (%) • Wells confirming resource play Oil 56% – Vertical wells initial production up to 250 bbls oil per day plus liquids rich gas NGL 29% – Potential upside with
Slide 26: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income Operating Earnings* to Economic Net Income Energy Trading Operating ($ millions) $28 $31 Earnings* • Economic net income ($ millions, after-tax) equals economic gross margin*** minus O&M expenses and taxes YTD 2011 YTD 2
Slide 27: Reconciliation of YTD September 30, 2011 Reported to Operating Earnings
Reconciliation of YTD September 30, 2011 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 28: 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