WEC Energy Group, Inc. · NYSE:WEC
WEC Energy — Wisconsin Energy — Investor Presentation (February 2015)
31 slides from WEC Energy's investor presentation, February 2015
Slide 1: Wisconsin Energy Corporation February 2015
Wisconsin Energy Corporation Vz February 2015
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of Wisconsin Energy and Integrys and the combined businesses of Integrys and Wisconsin Energy and certa
Slide 3: Additional Information And Where to Find It
Additional Information And Where to Find It In connection with the proposed merger, Wisconsin Energy filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that includes a joint proxy statement/prospectus for the shareholders of Wisconsin Energy and Integrys.
Slide 4: Current Investment Thesis
Current Investment Thesis An “Earn and Return” Company with a Low Risk Profile Positive free cash flow Targeted EPS growth of 4%-6% Best in class dividend growth - targeting a dividend payout ratio of 65%-70% of earnings in 2017 In January, Board approved a quarterly dividend increase of 8.3
Slide 5: Future Investment Thesis
Future Investment Thesis An “Earn and Return” Company with a Low Risk Profile Remain positive free cash flow Targeted EPS growth of 5%-7% Accelerated dividend growth Implies dividend increase of 7-8% from planned 2015 dividend at merger close* Targeting a dividend payout ratio of 65%-70%
Slide 6: A Track Record of Performance: Leading Reliability and Customer Satisfaction
A Track Record of Performance Leading Reliability and Customer Satisfaction Named the most reliable utility in the Midwest for the fourth year in a row and seven of the past 10 years Ranked #1 in the Midwest for customer service and in the top quartile nationally for overall satisfaction * * Sou
Slide 7: A Track Record of Performance: Dramatic Change in Environmental Performance
A Track Record of Performance Dramatic Change in Environmental Performance From 2000 to 2015... Power plant capacity up 50% Emissions of nitrogen oxide sulfur dioxide down 80% mercury particulate matter 7
Slide 8: A Track Record of Performance: Consistent Earnings and Dividend Growth
A Track Record of Performance Consistent Earnings and Dividend Growth Wisconsin Energy is the only company in the S&P Electric Index S&P Utilities Index Philadelphia Utility Index Dow Jones Utilities Average that has grown earnings per share and dividends per share every year since 2003 8
Slide 9: A Track Record of Performance: Industry Leading Total Shareholder Returns
A Track Record of Performance Industry Leading Total Shareholder Returns One Three Five Ten Year Year Year Year Wisconsin Energy 32.1% 67.0% 149.9% 317.9% S&P Utilities Index 29.0% 47.9% 87.1% 150.9% S&P Electric Index 31.2% 40.7% 76.0% 140.9% Philadelphia Utility Index 28.9% 42.3% 79.3% 142.4% Dow
Slide 10: Summary of Wisconsin Energy's Core Business
A Track Record of Performance Summary of Wisconsin Energy’s Core Business Rate Base and Power the Future Investment at 12/31/14 $10.3 Billion Retail Electric and Gas Utilities $0.8 Wisconsin, Michigan, and FERC jurisdictions $2.7 48.5% to 53.5% equity for Wisconsin $2.7 Electric 10.2% allowe
Slide 11: Delivering the Future
Where We Go From Here Delivering the Future From 2015 through 2024, our plan is to invest $6.6 to $7.2 billion in needed infrastructure projects that will: Renew and modernize our grid Meet new environmental standards Reduce our operating costs for customers 11
Slide 12: Ten-Year Capital Investment in our Retail Utilities
Where We Go From Here Ten-Year Capital Investment in our Retail Utilities (Projected Investment, In millions) $900 $800 $765 Renewable: $250 - $450M $690 $681 $670 $700 $657 $647 $650 $660 $660 $628 316 $590 $600 208 227 219 225 260 250 250 213 260 $500 210 $400 234 236 235 247 $300 229 242 260 260
Slide 13: Delivering the Future – Overview
Where We Go From Here Delivering the Future – Overview Between 2015 and 2019, we plan to: Rebuild 2,500 miles of electric distribution lines that are more than 50 years old Upgrade our electric infrastructure by replacing: 27,000 power poles 22,000 transformers Hundreds of substation compo
Slide 14: Major Construction Projects
Where We Go From Here Major Construction Projects Western Wisconsin gas distribution expansion $175-$185 million investment Projected in-service date: fourth quarter, 2015 Projects at our new Oak Creek units Seeking Wisconsin Commission approvals for: $21 million investment for plant modific
Slide 15: Growth at American Transmission Company
Where We Go From Here Growth at American Transmission Company Projected Capital Expenditures Key Assumptions (Millions of Dollars) ATC rate base at year end 2015 is projected to be about $3.1 billion $491 $486 ATC projects a need for $3.3-$3.9 billion of transmission improvements $386 in its foo
Slide 16: DATC
Where We Go From Here DATC Joint venture between Duke Energy and ATC (DATC) Ownership is split 50/50 between Duke and ATC Investment opportunities: California’s Path 15 transmission line (purchased interest) Zephyr Power Transmission Project San Luis Transmission Project Other transmis
Slide 17: Major Segment Earnings for 2013 – 2015
Where We Go From Here Major Segment Earnings for 2013 – 2015 Projecting earnings per share growth of 4-6% annually from the 2011 base 2013A 2014A(2) 2015E(3) Electric and Gas Utilities $1.67 $1.79 $1.75 to $1.85 Power the Future (1) $0.72 $0.74 $0.76 Wholesale Electric $0.18 $0.18 $0.19 Transmission
Slide 18: Transaction Overview
Transaction Overview Wisconsin Energy is planning to acquire Integrys for a total consideration of $71.47 per share based on June 20 closing price 18
Slide 19: Transaction Overview: Strategic Rationale
Strategic Rationale Transaction Overview Acquisition will create the leading electric and natural gas utility in the Midwest Combination will offer significant benefits to customers and shareholders of both companies Meets or exceeds WEC’s acquisition criteria Accretive to earnings per share
Slide 20: Operational and Financial Fit
Strategic Rationale Operational and Financial Fit Operational Strong geographic fit and complementary operations Majority ownership of ATC Regulatory diversification Financial Double the annual capital spending and increase regulated rate base by 70% EPS growth rate of 5-7%, more than
Slide 21: Pro Forma Company Overview
Strategic Rationale Pro Forma Company Overview Combined Service Territory Company Statistics Minnesota $16.9 billion market cap 1.5 million electric customers 2.8 million gas customers 60% ownership of ATC (1) Wisconsin 68,000 miles electric distribution Michigan 44,000 miles gas distrib
Slide 22: Current and Pro Forma Business Mix
Strategic Rationale Current and Pro Forma Business Mix Regulated Business Mix Current WEC(1) Pro Forma WEC(1) Gas Utility ATC Electric Gas Utility 24% 11% Utility 15% 78% ATC 7% Electric Utility 65% (1) Based on 2013 regulated earnings 22
Slide 23: Key Transaction Components
Strategic Rationale Key Transaction Components Headquarters • Corporate headquarters in metropolitan Milwaukee • Continued operating headquarters in Green Bay, Chicago, and Milwaukee Leadership • Chairman and CEO: Gale Klappa • Other senior leadership roles in combined company to be filled by curren
Slide 24: Summary of Financial Terms
Financial Summary and Approval Timeline Summary of Financial Terms Overall Integrys transaction value: $9.1 billion (based on June 20, 2014 closing price) $5.8 billion for Integrys shares $3.3 billion of assumed Integrys debt 74% equity, 26% cash Fixed exchange ratio of 1.128 WEC shares pe
Slide 25: Dividend Policy
Financial Summary and Approval Timeline Dividend Policy Integrys shareholders neutral initially Current dividend policy for WEC shareholders until closing WEC shareholders to receive dividend increase at time of close Expected to be accretive to both sets of shareholders in future years 25
Slide 26: Approval Timeline
Financial Summary and Approval Timeline Approval Timeline Regulatory approval decision dates: Illinois July 6, 2015 Michigan June 15, 2015 Expect Minnesota Commission to review Minnesota application in early May April 16, 2015 targeted for oral decision by Wisconsin Wisconsin Commission Complete.
Slide 27: Integrys Earnings Breakdown
Integrys Overview Integrys Earnings Breakdown More than 99% of earnings 2013 Net Income By Jurisdiction from regulated businesses* 3% 4% Almost 2/3 of earnings from Wisconsin and FERC Wisconsin Wisconsin Jurisdiction: $2.3 billion rate base 24% 40% Illinois 10.2% ROE Electric and Gas FER
Slide 28: Regulated Investment Opportunities
Integrys Overview Regulated Investment Opportunities Up to $3.5 billion investment from 2014 through 2018 Selected Projects by Company 2014 2015 2016 2017 2018 Regulated Electric Columbia environmental upgrade Weston 3 environmental upgrade System Modernization and Reliability Project Other generati
Slide 29: Chicago Gas Infrastructure Investment
Integrys Overview Chicago Gas Infrastructure Investment Twenty-year program to replace gas infrastructure in the City of Chicago Average annual investment over next five years expected to be $350 million Investment recovery covered under Qualified Infrastructure Plant Rider (QIP) Immediate e
Slide 30: Wisconsin Public Service Investment
Integrys Overview Wisconsin Public Service Investment Weston 3 plant environmental upgrade Approved by Wisconsin Commission $345 million of total investment expected from 2013-2016 System Modernization and Reliability Project Approved by Wisconsin Commission $220 million of total investm
Slide 31: Key Takeaways of Transaction
Key Takeaways of Transaction Combination creates the leading electric and natural gas utility in the Midwest and a top ten gas distribution company EPS growth of 5-7% coupled with strong dividend growth Larger ownership in ATC brings opportunity for additional transmission investment Positio
Wisconsin Energy — Investor Presentation (February 2015) on 6ix