DTE Energy Company · NYSE:DTE
DTE Energy — Q1 2012 Earnings Presentation
27 slides from DTE Energy's earnings presentation, Apr 27, 2012
Slide 1: 1st Quarter 2012 Earnings Conference Call
1st Quarter 2012 Earnings Conference Call April 27, 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, Vice President, Controller & Investor Relations • Nick Khouri, Vice President and Treasurer • Mark Rolling, Director of Investor Relations 3
Slide 4: Agenda: Overview, Earnings Results, Cash Flow
• Overview • First 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 1Q 2012 operating earnings per share* of $0.91 vs. $1.11 in 1Q 2011; maintaining 2012 operating earnings guidance of $3.65 - $3.95 – Detroit Edison results are flat year over year – MichCon experienced unusually warm weather in 1Q 2012; working to offset weather impact • Rate cas
Slide 7: 2012 Operating Earnings Guidance
2012 Operating Earnings Guidance* 2011 2012 ($ millions, except EPS) Actual* Guidance 2012 Drivers Full year rate order impact at lower ROE, increased earnings Detroit Edison $443 $438 - $448 from renewable investments, and one-time tax items in 2011 Continued cost control to offset 1Q unfavorable w
Slide 8: MichCon Rate Case Filing (U-16999)
MichCon Rate Case Filing (U-16999) Estimated Net Rate Request Rate Case Highlights ($ millions) Represents annual base rate growth of $27 $1 $77 ~4%* since last rate increase; combined with declining gas prices, annual bills decreasing ~5%* • Lower sales due to customer $49 conservation and lower mi
Slide 9: Agenda: Earnings Results
• Overview • First Quarter 2012 Earnings Results • Cash Flow and Capital Expenditure • Summary 9
Slide 10: First Quarter 2012 Operating Earnings Per Share
First Quarter 2012 Operating Earnings Per Share* $0.91 Detroit Edison MichCon** Non-Utility Corporate & Other $0.56 $0.31 $0.13 ($0.09) Gas Storage & Unconventional Power & Industrial Energy Pipelines Gas Production Projects Trading $0.10 ($0.01) $0.05 ($0.01) * Reconciliation to GAAP reported earni
Slide 11: First Quarter 2012 Operating Earnings Variance
First Quarter 2012 Operating Earnings Variance Operating Earnings* Drivers ($ millions, except EPS) 1Q 2011 1Q 2012 Change Detroit Edison Detroit Edison $ 97 $ 96 $ (1) • Higher customer restoration costs and 2011 true-up of EE incentives offset by increased margin and MichCon 83 52 (31) growth in r
Slide 12: Detroit Edison Variance Analysis
Detroit Edison Variance Analysis Detroit Edison Operating Earnings* Variance Drivers ($ millions) $9 ($6) $5 ($8) • Margin reflects rate increase partially $97 ($1) $96 offset by warmer weather • Two year true-up of EE incentives recorded in 2011 • Growth in earnings on renewable energy investments
Slide 13: Agenda: Cash Flow and Capital Expenditures
• Overview • First Quarter 2012 Earnings Results • Cash Flow and Capital Expenditures • Summary 13
Slide 14: Strong Balance Sheet Supports Growth
Strong Balance Sheet Supports Growth Leverage* Target 50% - 52% • A strong balance sheet remains a key DTE priority 51% 51% 50% • Series of credit improvements in 2012 – Fitch upgraded Detroit Edison and MichCon 2010 2011 2012E – Moody’s raised its outlook to Positive • Leverage and cash flow metric
Slide 15: First Quarter 2012 Cash Flow
First Quarter 2012 Cash Flow DTE Energy Cash Flow* Drivers ($ billions) 1Q 2011 1Q 2012 • Cash flow remains strong this year Cash From • Cash from operations down slightly from near historical levels last year, mainly due to Operations $0.7 $0.6 federal taxes Capital Spending (0.3) (0.4) Free Cash F
Slide 16: First Quarter 2012 Capital Expenditures
First Quarter 2012 Capital Expenditures DTE Energy Capital Expenditures Drivers ($ millions) 1Q 2011 1Q 2012 Detroit Edison • Capital spending is higher than last year for all Operational $177 $238 DTE businesses Environmental 39 29 • Detroit Edison investments are up year over year Renewables / EE
Slide 17: Agenda: Summary
• Overview • First Quarter 2012 Earnings Results • Cash Flow and Capital Expenditures • Summary 17
Slide 18: Summary
Summary 1Q 2012 operating EPS* of $0.91 impacted by unusually warm weather Leverage portfolio of businesses to achieve current EPS guidance of $3.65 - $3.95 Mandated utility investments and meaningful, low-risk growth opportunities in our non- utility businesses expected to provide 5% - 6% ann
Slide 19: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030 19
Slide 20: Appendix
DTE Energy’ Appendix
Slide 21: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income Operating Earnings* to Economic Net Income Energy Trading Operating ($ millions) Earnings* • Economic net income ($ millions, after-tax) equals economic gross $0 margin*** minus O&M expenses and taxes 1Q 2011 1Q 2012 ($2
Slide 22: Barnett Shale Operating Metrics
Barnett Shale Operating Metrics Reserves (Bcfe) Acreage Position (000’s Acres) 1Q 2012 Results 87 88 • 9 new wells on-line, 6 in progress 555 559 17 17 Net • Production of 1.3 Bcfe (60% liquids) 201 186 Proven Developed • 58% increase in oil sales volume year- Acres over-year 71 Net 70 354 373 Proba
Slide 23: Unconventional Gas: Barnett Shale Assets Focused on Marble Falls Oil Play
Unconventional Gas: Barnett Shale Assets Focused on Marble Falls Oil Play Oil and NGLs* driving value • Focus on maturing Marble Falls oil play Revenue by product (%) • Wells confirming resource play Oil 60% – Vertical wells initial production up to 250 bbls oil per day plus liquids rich gas NGL 30%
Slide 24: 2012 Capital Expenditures & Cash Flow Guidance
2012 Capital Expenditures & Cash Flow Guidance Capital Expenditures Cash Flow Summary ($ millions) ($ billions) 2011 2012 Actual Guidance 2011 2012 Actual Guidance Detroit Edison Operational $688 $785 Cash From Operations $2.0 $1.9 Environmental 186 255 Capital Spending (1.5) (1.9) Renewables / EO 3
Slide 25: Reconciliation of 1Q 2011 Reported to Operating Earnings
Reconciliation of 1Q 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 performance me
Slide 26: Reconciliation of 2011 Reported to Operating Earnings
Reconciliation of 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 performance measu
Slide 27: 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