DTE Energy Company · NYSE:DTE
DTE Energy — FY2016 Earnings Presentation
29 slides from DTE Energy's earnings presentation, Feb 9, 2017
Slide 1: Year End 2016 Earnings Conference Call
Click to edit Master title style 1 EXHIBIT 99.2 Year End 2016 Earnings Conference Call February 9, 2017
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: 2016 Accomplishments, Long-Term Growth Update, Financial Update
• 2016 Accomplishments • Long-Term Growth Update • Financial Update 4
Slide 5: Focus on our employees and customers has been the foundation of our success
• Best employee safety rate in company history • 4th consecutive Gallup Great Workplace award; only utility to be recognized Focus on our employees and customers has been the foundation of our success 5 * J.D. Power 2016 Electric Utility Residential and 2016 Gas Utility Residential Customer Satisfac
Slide 6: Our growth plans are well supported for the long-term
• Constructive electric and gas rate orders • Michigan energy legislation signed into law Our growth plans for the utilities and non-utilities are well supported for the long-term 6 Political & Regulatory Environment • Combined cycle gas plant build announced • Major acquisition at Gas Storage & Pip
Slide 7: DTE achieved strong financial performance in 2016
Achieved operating EPS* of $5.28 Exceeded original guidance for 10th consecutive year Increased operating EPS growth target to 5% - 7% from 5% - 6% Increased 2017 annualized dividend by 7.1%; targeting ~7% dividend increases in 2018 and 2019 Delivered total shareholder return at top quarti
Slide 8: 2016 Accomplishments, Long-Term Growth Update, Financial Update
• 2016 Accomplishments • Long-Term Growth Update • Financial Update 8
Slide 9: Growth through 2021 fueled by investment in utility infrastructure and generation
2017 – 2021 Plan 2012 – 2016 $12 billion $13.5 billion 2017 – 2021 Capital Plan Electric............... $8.4 billion Distribution infrastructure, maintenance, new generation Gas .................... $1.8 billion Base investments, infrastructure renewal, NEXUS related GSP .......... $2.2 to $2.8 bill
Slide 10: DTE Electric distribution investments continue to drive reliability
Infrastructure Redesign Infrastructure Resilience Technology Enhancements structure Upgraded nearly 20% of circuits since 2013; impact 33% of circuits by the end of 2020, improving reliability on impacted circuits by up to 70% Major investments planned at 20-25 substations by 2021 to address load gr
Slide 11: Replacing aging infrastructure at DTE Gas
Main Replacement Pipeline Integrity Meter Move Out Systematically replaces poor performing unprotected main - minimizing leaks and improving customer satisfaction Drives productivity - reducing manual meter reading costs Strengthens the system - decreasing the potential for system failures 11 Replac
Slide 12: NEXUS pipeline and gathering platforms
• FERC certificate of construction expected 1H17 • In-service 4Q17 • Ohio interconnect agreements provide 1.75 Bcf/d of market access • Mainline expandable up to 2.0 Bcf/d NEXUS • Initial shipper demand greater than anticipated – Firming up near-term growth plans • Strong tie with existing markets;
Slide 13: 2016 Accomplishments, Long-Term Growth Update, Financial Update
• 2016 Accomplishments • Long-Term Growth Update • Financial Update 13
Slide 14: DTE Energy 2016 Operating Earnings
2015 2016 Change DTE Electric 562$ 622$ 60$ DTE Gas 132 138 6 Gas Storage & Pipelines 107 127 20 Power & Industrial Projects 95 95 - Corporate & Other (48) (59) (11) Growth segments** 848$ 923$ 75$ Growth segments operating EPS 4.73$ 5.14$ 0.41$ Energy Trading 15 25 10 DTE Energy 863$ 948$ 85$ Opera
Slide 15: 2017 Guidance
2017 Guidance DTE Electric DTE Gas Gas Storage & Pipelines Power & Industrial Projects Corporate & Other Growth segments** Growth segments operating EPS Energy Trading DTE Energy Operating EPS Avg. Shares Outstanding $610 - $624 143 - 151 140 - 150 90 - 100 (64) - (60) $919 - $965 $5.12 - $5.38 $5 -
Slide 16: With tax reform, DTE is uniquely situated to maximize value
With tax reform, DTE is uniquely situated to maximize customer and shareholder value 16 = Consolidated DTE Impact is Manageable Customer savings allow for potential additional reliability investment Increased earnings at non-utilities offset loss of interest deductions at holding company Operati
Slide 17: Summary
Engaged employees create a safe work environment and drive great operational results Value driven utility investments provide an excellent customer experience while ensuring affordable rates Constructive regulatory environment and continued cost savings enable utilities to earn authorized returns St
Slide 18: Contact Us
DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 Contact Us 18
Slide 19: Appendix
Appendix
Slide 20: DTE Electric Variance Analysis
• Warmer weather Variance to normal weather – 2015: $1 – 2016: $59 • Rates supporting infrastructure improvements to enhance customer reliability • Rate base growth (depreciation, property tax and interest) • Other is primarily reliability related spend $562 $622 $58 $101 ($38) ($27) ($34) Primary D
Slide 21: Weather and DTE Electric/Gas sales
YTD 2015 YTD 2016 % change 4Q 2015 4Q 2016 % change Actuals 836 1,123 34% Actuals 1,719 2,010 17% Normal 803 803 0% Normal 2,238 2,185 (2%) Deviation from normal 4% 40% Deviation from normal (23%) (8%) YTD 2015 YTD 2016 % change Actuals 6,283 5,812 (7%) Normal 6,376 6,405 0% 4Q YTD Deviation from no
Slide 22: Strong balance sheet supports growth
21% 2016 2017-2019E 51% 2016 2017-2019E Leverage* Funds from Operations** / Debt* Target 50% - 53% Target 20% + • Cash flow and balance sheet strength are a key priority • No equity issuances in 2016 ‒ Acquisition related equity of $675 million in late 2019 (through convertible equity units) ‒ No ad
Slide 23: DTE Energy 2016 Cash Flow and Capital Expenditures Actuals
2015 Actual 2016 Actual Cash From Operations* $1.9 $2.1 Capital Expenditures (2.3) (3.4) Free Cash Flow ($0.4) ($1.3) Asset Sales & Other 0.1 - Dividends (0.5) (0.5) Net Cash ($0.8) ($1.8) Debt Financing: Issuances $1.1 $2.7 Redemptions (0.3) (0.9) Change in Debt $0.8 $1.8 Cash Flow 23 DTE Energy 20
Slide 24: DTE Energy 2017 Cash Flow and Capital Expenditures Guidance
2016 Actual 2017 Guidance DTE Electric Distribution Infrastructure $567 $690 New Generation 131 45 Maintenance & Other 805 725 $1,503 $1,460 DTE Gas Base Infrastructure $177 $200 NEXUS Related 94 90 Main Replacement* 124 145 $395 $435 Non-Utility $1,533 $900 - $1,100 Total $3,431 $2,795 - $2,995 201
Slide 25: Regulatory Update – Electric and Gas
• Self implemented general rates 3Q DTE Gas DTE Electric 2017 2016 2018+ • Final rate order and IRM ruling 4Q – $122 million rate order – 10.1% ROE • Final rate order 1Q – $184 million rate order – 10.1% ROE • File rate case 2Q • Annual rate cases • Expect rate case filing 2018/2019 25 Regulatory Up
Slide 26: Energy Trading economic net income
$15 $54 • Economic net income equals economic gross margin*** minus O&M expenses and taxes • DTE Energy management uses economic net income as one of the performance measures for external communications with analysts and investors • Internally, DTE Energy uses economic net income as one of the measu
Slide 27: Use of Operating Earnings Information – 2016 reconciliation
Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measurement for external communications with analysts and i
Slide 28: 2015 reported to operating earnings reconciliation
2015 Actual DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 542$ 132$ 107$ 16$ (48)$ 749$ (22)$ 727$ PSCR disallowances 12 - - - - 12 - 12 Tree trimming disallowance 8 - - - - 8 8 Plant closu
Slide 29: Use of Operating Earnings Information
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 representation of the company’s earnings from ongoing operations a