DTE Energy Company · NYSE:DTE
DTE Energy — FY2017 Earnings Presentation
28 slides from DTE Energy's earnings presentation, Feb 16, 2018
Slide 1: Year End 2017 Earnings Conference Call
Year End 2017 Earnings Conference Call February 16, 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement Many factors impact forward-looking statements including, but not limited to, the following: impact of regulation by the EPA, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC, as well as other applicable governmental proceedings and regulations, including any associate
Slide 3: Participants
Participants • Gerry Anderson – Chairman and CEO • Jerry Norcia – President and COO • Peter Oleksiak – Senior Vice President and CFO • Barbara Tuckfield – Director, Investor Relations 3
Slide 4: Overview, Financial Update, Long-Term Growth Update
• Overview • Financial Update • Long-Term Growth Update 4
Slide 5: Focus on employees and customers resulted in a successful year in 2017
Focus on employees and customers resulted in a successful year in 2017 Highly engaged employees • Employee engagement in Gallup’s top 4% worldwide • Gallup’s Great Workplace Award for 5th consecutive year • AGA’s Safety Achievement Award for 2nd consecutive year Customer satisfaction* • Ranked 1st i
Slide 6: Growth plans are well supported and deliver results for DTE and Michigan
Growth plans are well supported and deliver results for DTE and Michigan Force for growth in communities • Ranked 1st in Midwest for corporate citizenship* • Significant investor in Michigan economy • Industry-leading initiative to transform energy portfolio; reducing carbon emissions by 80%+ Clear
Slide 7: Delivered strong 2017 financial results, raising 2018 operating EPS guidance midpoint by $0.10
Delivered strong 2017 financial results, raising 2018 operating EPS* guidance midpoint by $0.10 Operating EPS +9% 2017 operating EPS • Surpassed revised guidance $5.78 $5.68 • 9th consecutive year of $5.59 exceeding original guidance $5.31 • Exceeded $1 billion in operating earnings Tax reform i
Slide 8: Maintaining customer affordability while investing in our utilities
Maintaining customer affordability while investing in our utilities DTE Electric 2012 2017 2012 2017 Average annual residential bill Average industrial rate DTE Gas 2012 2017 2012 2017 Average annual residential bill Average industrial rate 8
Slide 9: Tax reform benefits customers and is operating EPS accretive
Tax reform benefits customers and is operating EPS* accretive Good for utility customers − Near-term rates ~3% lower driven by changes in current tax rates − Future rates decline from the deferred tax re-measurement Good for DTE 2018 impact − Non-utility businesses are clear winners with higher
Slide 10: Overview, Financial Update, Long-Term Growth Update
• Overview • Financial Update • Long-Term Growth Update 10
Slide 11: 2017 operating earnings variance
2017 operating earnings* variance (millions, except EPS) Operating Earnings Primary Drivers 2016 2017 Change DTE Electric DTE Electric $ 622 $ 617 $ (5) • Cooler weather and higher storm expenses in 2017 offset by rate DTE Gas 138 149 11 implementation Gas Storage & Pipelines 127 160 33 DTE Gas Powe
Slide 12: Raising 2018 operating EPS guidance midpoint by $0.10 from early outlook
Raising 2018 operating EPS* guidance midpoint by $0.10 from early outlook, driven by tax reform benefit (millions, except EPS) 2018 Early 2018 Outlook Guidance DTE Electric $648 - $662 $648 - $662 DTE Gas 152 - 160 152 - 160 Gas Storage & Pipelines 155 - 165 185 - 195 Power & Industrial Projects 100
Slide 13: Issuing $300 million of equity in 2018 while maintaining strong cash flow and balance sheet
Issuing $300 million of equity in 2018 while maintaining strong cash flow and balance sheet Leverage** Target 50% - 54% Issue incremental equity of $300 51% million* 2018-2020 due to tax reform Issue $300 million total in 2018 2017 2018-2020E using internal mechanisms Target 18% - 19% FFO/Debt
Slide 14: Overview, Financial Update, Long-Term Growth Update
• Overview • Financial Update • Long-Term Growth Update 14
Slide 15: Reliability investments at utilities support long-term growth
Reliability investments at utilities support long-term growth and increase customer satisfaction DTE Electric • Progressing on new 1,100 MW natural gas power plant • Breaking ground on new wind park in 1H 2018 • Modernizing grid to improve reliability for customers DTE Gas • Accelerating the replace
Slide 16: Gas Storage & Pipelines continues to expand its portfolio
Gas Storage & Pipelines continues to expand its portfolio in the most prolific geology in the country 2017 Accomplishments • NEXUS pipeline construction is advancing in Michigan and on track for late 3Q in-service date ‒ Right-of-way clearing and compressor station work is well underway • Bluestone
Slide 17: Power & Industrial Projects continues growing industrial energy and renewables businesses
Power & Industrial Projects continues growing industrial energy and renewables businesses 2017 Accomplishments • Incremental earnings of ~$15 million from new projects achieves one-third of the 5-year goal ‒ Completed agreement with Ford Motor Company to build, own, and operate large-scale central e
Slide 18: Summary
Summary • Strong 2017 results continue track record of 9th consecutive year of exceeding original guidance • Tax reform is good for customers, accretive for shareholders ‒ Provides lower rates for customers of ~3% ‒ Increases 2018 operating EPS* guidance midpoint by $0.10, serving as new base for 5%
Slide 19: Contact us
Contact us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 19
Slide 20: Appendix
Appendix oe DTE Energy 20
Slide 21: DTE Electric variance analysis
DTE Electric variance analysis (millions) Operating Earnings* Variance Primary Drivers • Cooler weather $622 ($65) $74 ($35) $37 $617 Variance to normal weather ($16) – 2016: $59 – 2017: ($6) • Rates supporting infrastructure improvements to enhance customer reliability • Rate base growth (depreciat
Slide 22: Weather and DTE Electric Weather Normal Sales
Weather and DTE Electric Weather Normal Sales Cooling degree days Heating degree days DTE Electric service territory DTE Gas service territory YTD 2016 YTD 2017 % change 4Q 2016 4Q 2017 % change Actuals 1,123 849 (24%) Actuals 2,010 2,273 13% Normal 803 803 0% Normal 2,185 2,190 0% Deviation from no
Slide 23: 2017 cash flow and capital expenditures actuals
2017 cash flow and capital expenditures actuals (billions) (millions) Cash Flow Capital Expenditures 2016 2017 2016 2017 Actual Actual Actual Actual Cash From Operations $2.1 $2.1 DTE Electric Base Infrastructure $805 $831 Capital Expenditures (3.4) (2.6) New Generation 131 69 Free Cash Flow ($1.3)
Slide 24: 2018 cash flow and capital expenditures guidance
2018 cash flow and capital expenditures guidance (billions) (millions) Cash Flow Capital Expenditures 2017 2018 2017 2018 Actual Guidance Actual Guidance Cash From Operations* $2.1 $2.0 DTE Electric Base Infrastructure $831 $750 Capital Expenditures (2.6) (3.6) New Generation 69 340 Free Cash Flow (
Slide 25: 2017 Energy Trading reconciliation of operating earnings to economic net income
2017 Energy Trading reconciliation of operating earnings* to economic net income • Economic net income equals economic 2017 gross margin*** minus O&M expenses and taxes 2016 2017 • DTE Energy management uses economic Operating Earnings $25 $20 net income as one of the performance Accounting Adjustme
Slide 26: Reconciliation of 2017 reported to operating earnings
Reconciliation of 2017 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 2016 reported to operating earnings
Reconciliation of 2016 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 28: Reconciliation of reported to operating earnings (non-GAAP)
Reconciliation of reported to operating earnings (non-GAAP) Use of Operating Earnings Information – Operating earnings exclude non-recurring items, certain mark-to- market adjustments and discontinued operations. DTE Energy management believes that operating earnings provide a more meaningful repres