DTE Energy Company · NYSE:DTE
DTE Energy — Q3 2014 Earnings Presentation
27 slides from DTE Energy's earnings presentation, Oct 24, 2014
Slide 1: 3rd Quarter 2014 Earnings Conference Call
3rd Quarter 2014 Earnings Conference Call October 24, 2014
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, CFTC and other applicable governmental proceedings and regulati
Slide 3: Participants
Participants • Peter Oleksiak – Senior Vice President and CFO • Jeff Jewell – Vice President and Controller • Mark Rolling – Vice President and Treasurer • Anastasia Minor – Executive Director, Investor Relations 3
Slide 4: Agenda: Overview
• Overview • Third Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 4
Slide 5: Our business strategy is fundamental to how we create value
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by infrastructure investments 5% - 6% Annual EPS Growth Strategic, transparent, low-risk growth opportunities in non-utility businesses provide diversity in earnings and geography Construct
Slide 6: Key project milestones achieved during 3Q 2014
We achieved several important milestones with key projects during 3Q 2014 New electric cost of service rates related to Michigan PA169 filed Electric generation RFP submittals complete and in final negotiations Open season initiated by Vector Pipeline for potential expansion Successful open
Slide 7: Michigan economy continues to improve
Michigan economy continues to improve Michigan is moving up in ranking …and continues to receive of competitive states… positive recognition Top 10 Competitive States of 2013 AMERICAN ECONOMIC Rank State DEVELOPMENT INSTITUTE 1 Georgia with Pollina Corp. Real Estate 2 Tennessee Michigan most improve
Slide 8: Increased 2014 operating EPS guidance midpoint to $4.35
We remain committed to delivering on our growth targets, and we have increased our 2014 operating EPS* guidance midpoint to $4.35 (dollars) Operating EPS* Guidance 7.4% CAGR Midpoint 2008-2014 $4.35 $4.09 $4.30 $3.94 $3.75 $3.64 Dividend $3.33 per share 5.4% CAGR 2009-2014 $2.83 $2.76 (Annualized) $
Slide 9: Agenda: Third Quarter 2014 Earnings Results
• Overview • Third Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 9
Slide 10: DTE Energy Third Quarter 2014 Operating Earnings Variance
DTE Energy Third Quarter 2014 Operating Earnings* Variance (millions, except EPS) Operating Earnings* Drivers 3Q 2013 3Q 2014 Change DTE Electric DTE Electric $ 179 $ 135 $ (44) • Cooler weather and higher storm expense, partially offset by O&M lean initiatives DTE Gas (13) (16) (3) DTE Gas Gas Stor
Slide 11: DTE Electric Variance Analysis
DTE Electric Variance Analysis (millions) Operating Earnings* Variance Drivers $179 ($33) • Cooler weather in 3Q 2014 ($20) Variance to normal weather $12 ($3) $135 - 3Q 2013: $0 - 3Q 2014: ($33) • Higher storm expenses • Lean and reinvestment - 3Q 2013: reinvestment $5 - 3Q 2014: lean initiatives $
Slide 12: Increasing and narrowing 2014 operating earnings guidance
We are increasing and narrowing our 2014 operating earnings* guidance, supported by strength in DTE Gas and Power & Industrial Projects (millions, except EPS) 2014 YTD Prior Revised Actuals* Guidance Guidance Guidance Drivers DTE Electric $400 $520 - $530 $505 - $515 • DTE Electric: Storms and cool
Slide 13: Agenda: Cash Flow and Balance Sheet Metrics
• Overview • Third Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 13
Slide 14: DTE Energy YTD 2014 Cash Flow
DTE Energy YTD 2014 Cash Flow (billions) Cash Flow Summary Drivers YTD 2013 YTD 2014 Cash From Operations* $1.7 $1.2 • Cash from operations decrease Capital Spending (1.4) (1.5) - DTE Electric: higher fuel and Free Cash Flow $0.3 ($0.3) purchased power costs and lower surcharge collections - DTE Gas
Slide 15: Revising our 2014 cash flow guidance
We are revising our 2014 cash flow guidance (billions) (millions) Cash Flow Summary Capital Expenditures Summary Prior Revised Prior Revised Guidance Guidance Guidance Guidance Cash From Operations $1.6 $1.6 DTE Electric Capital Spending (2.3) (2.2) Operational $1,080 $1,160 Environmental 280 200 Fr
Slide 16: Strong balance sheet remains a key priority and supports growth
Strong balance sheet remains a key priority and supports growth Leverage* Target 50% - 52% • Targeting zero equity issuances in 2014 49% 52% • $1.2 billion of available liquidity as of 2013 2014E September 30, 2014 • Refinanced over $1.0 billion of long-term debt Funds from Operations / Debt* – Annu
Slide 17: Agenda: Summary
• Overview • Third Quarter 2014 Earnings Results • Cash Flow and Balance Sheet Metrics • Summary 17
Slide 18: Summary
Summary • Our third quarter operating earnings* reflect cooler weather and storms at DTE Electric, partially offset by strong results in our non-utility segments • We are confident in this year’s performance and are increasing our operating EPS* guidance midpoint to $4.35 • Our balance sheet and cas
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: Third Quarter 2014 Operating Earnings Per Share
DTE Energy Third Quarter 2014 Operating Earnings Per Share* $1.02 DTE Electric DTE Gas Non-Utility Corporate & Other $0.76 ($0.09) $0.34 $0.01 Gas Storage & Power & Industrial Energy Trading Pipelines Projects $0.11 $0.21 $0.02 * Reconciliation to GAAP reported earnings included in the appendix 21
Slide 22: DTE Energy YTD 2014 Capital Expenditures
DTE Energy YTD 2014 Capital Expenditures (millions) Capital Expenditures Drivers YTD 2013 YTD 2014 DTE Electric • DTE Electric capital higher due to timing of Operational $682 $845 infrastructure investments and higher storm restoration costs Environmental 125 119 Renewable Energy 139 179 $946 $1,14
Slide 23: Third Quarter DTE Energy Trading Reconciliation to Economic Net Income
Third Quarter DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $11 $14 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) margin*** minus O&M $3 expenses and taxes 3Q 2014 3Q 2013 • DTE Energy management Accounting 3Q 2014
Slide 24: Year to Date DTE Energy Trading Reconciliation to Economic Net Income
Year to Date DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income (millions) $35 $36 • Economic net income Operating Earnings* equals economic gross (millions, after-tax) margin*** minus O&M expenses and taxes YTD 2014 YTD 2013 $1 • DTE Energy management Accounting YTD 201
Slide 25: Third Quarter and YTD Reconciliation of Reported to Operating Earnings
Third Quarter and September Year To Date Reconciliation of 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 earni
Slide 26: 2008–2013 Full Year Reconciliation of Reported to Operating Earnings
2008 – 2013 Full Year Reconciliation of 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 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