DTE Energy Company · NYSE:DTE
DTE Energy — Q2 2013 Earnings Presentation
43 slides from DTE Energy's earnings presentation, Jul 26, 2013
Slide 1: 2nd Quarter 2013 Earnings Conference Call
2nd Quarter 2013 Earnings Conference Call July 26, 2013
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 • Dan Brudzynski – Vice President, Treasurer & Investor Relations • Anastasia Minor – Director, Investor Relations 3
Slide 4: Agenda
• Business Update • Second Quarter 2013 Earnings Results • Cash Flow and Capital Expenditures • Summary 4
Slide 5: Our business strategy is fundamental to how we create value for our investors
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by mandated investments Meaningful, transparent, low-risk growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive regulatory structure and co
Slide 6: We remain committed to delivering on our targets
We remain committed to delivering on our targets (dollars) Early Operating Outlook EPS* Guidance Midpoint 7% CAGR Midpoint $4.27 2008-2014 $3.94 $4.05 $3.75 $3.80 $3.64 Dividend $3.33 per share 5.4% CAGR 2009-2013 $2.83 $2.62 (Annualized) $2.48 $2.35 $2.12 $2.12 $2.24 2008A 2009A 2010A 2011A 2012A 2
Slide 7: Strong growth opportunities in our utilities support 5-6% EPS growth outlook
We see strong growth opportunities in our utilities that support our 5-6% EPS growth outlook DTE Electric • Mandated capital investment and ongoing transitioning of generation portfolio supports $6.4 billion capital investment through 2017 • Rate case deferral strategy through 2014 • Cost control lo
Slide 8: Non-utility segments provide additional long-term growth opportunities
Our non-utility segments provide additional long-term growth opportunities Gas Storage & Pipelines • Targeting 10%-15% earnings growth with 10%-12% ROIC • Multiple asset platforms with expansion opportunities • Partnerships with established pipeline / E&P players • Manage risk exposure through long-
Slide 9: Michigan economic indicators highlight continued recovery in 2013
Michigan economic indicators highlight continued recovery in 2013 Increased Auto Production Housing Starts Up Lower Unemployment Rate (000s) (000s) 2,252 2,447 14.4 13.4% 1,912 11.9 12.7% 1,578 8.8 9.8 10.4% 8.9% 8.3% 1,144 6.8 2009 2010 2011 2012 2013E 2009 2010 2011 2012 2013E 2009 2010 2011 2012
Slide 10: Governor Snyder appoints new commissioner to Michigan Public Service Commission
Governor Snyder appoints new commissioner to Michigan Public Service Commission • Sally Talberg appointed to a six year term beginning July 2013 • Previous work experience includes • Energy efficiency consultant in the private sector • Michigan Public Service Commission, Michigan Department of Envir
Slide 11: Agenda
• Business Update • Second Quarter 2013 Earnings Results • Cash Flow and Capital Expenditures • Summary 11
Slide 12: Overview
Overview Year to date operating earnings* are $1.96 per share vs. $1.78 over same period last year and DTE is on track to meet our earnings target for the year DTE Energy 2Q 2013 operating earnings* per share of $0.62 vs. $0.87 in 2Q 2012 driven by: • Weather related electric sales down year over ye
Slide 13: DTE Energy Second Quarter 2013 Operating Earnings Per Share
DTE Energy Second Quarter 2013 Operating Earnings Per Share* $0.62 DTE Electric DTE Gas Non-Utility Corporate & Other $0.51 $0.05 $0.14 ($0.08) Gas Storage & Power & Industrial Energy Trading Pipelines Projects $0.09 $0.06 ($0.01) * Reconciliation to GAAP reported earnings included in the appendix 1
Slide 14: DTE Energy Second Quarter 2013 Operating Earnings Variance
DTE Energy Second Quarter 2013 Operating Earnings Variance Operating Earnings* Drivers (millions, except EPS) DTE Electric 2Q 2012 2Q 2013 Change • Abnormally hot weather in 2Q 2012, O&M DTE Electric $ 127 $ 89 $ (38) reinvestment, higher storm and planned outage expenses partially offset by lower b
Slide 15: DTE Electric Variance Analysis
DTE Electric Variance Analysis Operating Earnings* Variance Drivers (millions) • Abnormally hot weather in 2Q 2012 $127 ($23) Variance to normal weather ($20) - 2Q 2012: $21 $12 ($7) - 2Q 2013: ($2) $89 • O&M driven by generation and distribution reliability reinvestment ($8 million), increased stor
Slide 16: DTE Electric on track to achieve its full year operating earnings target
DTE Electric on track to achieve its full year operating earnings* target (millions) $483 ($12) ($18) $20 $30 $5 ~$485 ($9) ($25) $10 First Half of Year Last Half of Year ($19) ~$20 (actuals) (estimates) * Reconciliation to GAAP reported earnings included in the appendix 16
Slide 17: DTE Gas Variance Analysis
DTE Gas Variance Analysis Operating Earnings* Variance Drivers (millions) • Cooler weather in 2Q 2013 $3 ($7) Variance to normal weather $2 - 2Q 2012: ($2) $6 - 2Q 2013: $4 $8 $4 • Lower benefits expense due to plan changes • One time $5 million revenue decoupler true-up in 2Q 2012 * Reconciliation
Slide 18: On track to achieve 2013 operating earnings guidance at all segments
We are on track to achieve our 2013 operating earnings* guidance at all of our segments (millions, except EPS) 2013 2013 YTD** Guidance* Guidance drivers Actuals • Load and renewables growth, lower benefits DTE Electric $204 $480 - $490 expense partially offset by O&M reinvestment • Favorable weathe
Slide 19: Agenda
• Business Update • Second Quarter 2013 Earnings Results • Cash Flow and Capital Expenditures • Summary 19
Slide 20: DTE Energy YTD 2013 Cash Flow
DTE Energy YTD 2013 Cash Flow Cash Flow Summary Drivers (billions) YTD 2012 YTD 2013 • Cash flow favorability driven by lower Cash From Operations* $1.2 $1.3 corporate tax payments and increased weather Capital Spending (0.9) (0.9) related collections at DTE Gas Free Cash Flow $0.3 $0.4 Asset Sales
Slide 21: DTE Energy YTD 2013 Capital Expenditures
DTE Energy YTD 2013 Capital Expenditures Capital Expenditures Drivers (millions) YTD 2012 YTD 2013 • DTE Electric capital lower due to nuclear DTE Electric refueling outage in 2012 partially offset by Operational $458 $419 increased investments in renewable energy Environmental 66 72 • Non-utility i
Slide 22: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* Target 50% - 52% • Issued $175 million of equity to date – Targeting $300 million for the year 50% 50% 2012 2013E • Successfully extended credit facility to mature in 2018 Funds from Operations / Debt* • $1.6 billion of availa
Slide 23: Agenda
• Business Update • Second Quarter 2013 Earnings Results • Cash Flow and Capital Expenditures • Summary 23
Slide 24: Summary
Summary • 2Q 2013 operating EPS* of $0.62 driven by cooler weather in 2Q 2013, O&M reinvestment in generation and distribution reliability, solid performance from non-utility businesses, and benefit plan changes • Confident in meeting year end operating earnings target • Mandated utility investments
Slide 25: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 25
Slide 26: Appendix
=> _ DTE Energy’: Appendix
Slide 27: City of Detroit to exit electricity distribution business
City of Detroit to exit electricity distribution business Due to the recent MPSC approval to defer costs related to transitioning City of Detroit Public Lighting Department (PLD) retail customers to DTE, existing PLD customers’ meters will be converted to DTE meters in the next 6 to 12 months. Pendi
Slide 28: DTE Energy 2014 Operating Earnings Early Outlook
DTE Energy 2014 Operating Earnings Early Outlook (millions, except EPS) 2014 2013 Guidance* Early 2014 Drivers Outlook* Revenue decoupler amortized to income, DTE Electric $480 - $490 $515 - $525 renewables growth, continuous improvement Full year of Infrastructure Recovery Mechanism; DTE Gas 115 -
Slide 29: DTE Energy 2013 Cash Flow Guidance
DTE Energy 2013 Cash Flow Guidance Cash Flow Summary 2013 Drivers (billions) 2012 2013 Actual Guidance • 2013 cash from operations decrease due to timing of benefit plan contributions, higher gas Cash From Operations* $2.2 $1.8 inventory purchases and lower surcharge Capital Spending (2.1) (2.2) col
Slide 30: DTE Energy 2013 Capital Expenditure Guidance
DTE Energy 2013 Capital Expenditure Guidance Capital Expenditures Summary 2013 Drivers (millions) 2012 2013 DTE Electric Actual Guidance • Increased investment in operational capital for DTE Electric improved generation and distribution reliability Operational $823 $1,020 • Higher environmental capi
Slide 31: Reduced Emissions Fuel earnings contribution should continue to grow
Reduced Emissions Fuel earnings contribution should continue to grow (millions) Reduced Emissions Fuel Earnings Contribution* • Operations target met at five 2012 ~$40 placed units • 6th unit operational at year end • 7th unit sited; online 3Q 2013 • Marketing two remaining units to 2013E ~$50 poten
Slide 32: Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $7 $5 Operating Earnings* • Economic net income (millions, after-tax) ($2) equals economic gross margin*** minus O&M 2Q 2013 2Q 2012 expenses and taxes • DTE Energy management Realized $9 $12 2Q 2013 Accountin
Slide 33: Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $9 $14 Operating Earnings* • Economic net income (millions, after-tax) $5 equals economic gross margin*** minus O&M YTD 2013 YTD 2012 expenses and taxes • DTE Energy management Realized $31 $22 YTD 2013 YTD 20
Slide 34: Reconciliation of 2Q 2013 Reported to Operating Earnings
Reconciliation of 2Q 2013 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 35: Reconciliation of year to date June 30, 2013 Reported to Operating Earnings
Reconciliation of year to date June 30, 2013 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 pri
Slide 36: Reconciliation of 2Q 2012 Reported to Operating Earnings
Reconciliation of 2Q 2012 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 37: Reconciliation of year to date June 30, 2012 Reported to Operating Earnings
Reconciliation of year to date June 30, 2012 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 pri
Slide 38: Reconciliation of 2012 Reported to Operating Earnings
Reconciliation of 2012 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 39: 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 40: Reconciliation of 2010 Reported to Operating Earnings
Reconciliation of 2010 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 41: Reconciliation of 2009 Reported to Operating Earnings
Reconciliation of 2009 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 42: Reconciliation of 2008 Reported to Operating Earnings
Reconciliation of 2008 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 43: 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