Investor Meetings June 26, 2017

Transcription

1 Investor Meetings June 26, 2017

2 This presentation is made as of the date hereof and contains forward-looking statements as defined in Rule 3b-6 of the Securities Exchange Act of 1934, Rule 175 of the Securities Act of 1933, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. All forward-looking statements should be considered in the context of the risk and other factors detailed from time to time in CMS Energy s and Consumers Energy s Securities and Exchange Commission filings. Forward-looking statements should be read in conjunction with FORWARD-LOOKING STATEMENTS AND INFORMATION and RISK FACTORS sections of CMS Energy s and Consumers Energy s Form 10-K for the year ended December 31, 2016 and as updated in subsequent 10-Qs. CMS Energy s and Consumers Energy s FORWARD-LOOKING STATEMENTS AND INFORMATION and RISK FACTORS sections are incorporated herein by reference and discuss important factors that could cause CMS Energy s and Consumers Energy s results to differ materially from those anticipated in such statements. CMS Energy and Consumers Energy undertake no obligation to update any of the information presented herein to reflect facts, events or circumstances after the date hereof. The presentation also includes non-gaap measures when describing CMS Energy s results of operations and financial performance. A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted on our website at CMS Energy provides historical financial results on both a reported (GAAP) and adjusted (non-gaap) basis and provides forward-looking guidance on an adjusted basis. Adjustments could include items such as discontinued operations, asset sales, impairments, restructuring costs, regulatory items from prior years, or other items. Management views adjusted earnings as a key measure of the company s present operating financial performance and uses adjusted earnings for external communications with analysts and investors. Internally, the company uses adjusted earnings to measure and assess performance. Because the company is not able to estimate the impact of specific line items, which have the potential to significantly impact, favorably or unfavorably, the company's reported earnings in future periods, the company is not providing reported earnings guidance nor is it providing a reconciliation for the comparable future period earnings. The adjusted earnings should be considered supplemental information to assist in understanding our business results, rather than as a substitute for the reported earnings. References to earnings guidance refer to such guidance as provided by the company on May 1, Investors and others should note that CMS Energy routinely posts important information on its website and considers the Investor Relations section, a channel of distribution. 2

3 NEW ENERGY LAW People Planet Profit Performance Consumers Among World s Top Employers PEOPLE Customer Satisfaction.... PEOPLE J.D. Power Customer Satisfaction Index Residential Customers Business Customers % 24% steadily improving. Matching Supply with Demand.... Big Build Excess supply Old Utility Model Supply Excess supply Retirement Expected Demand Big Build Excess supply O&M Fuel Actual Demand Big Bets Results in excess capacity, higher cost PLANET Modular O&M Fuel Clean And Lean Modular Investments Modular EE & DR Fully utilize assets Supply Matches supply with demand Modular Demand.... benefits customers AND investors. Fifteen Years of Growth.... Recession EPS a 7% CAGR Recession PPA Replacements Opportunities Grid Modernization Gas Infra. Future +6% to +8% Customer Investment (bils) $18 O&M Reductions Coal Capacity Wind for MCV 2003 _ a Adjusted EPS (non-gaap) Plan (10)% 21 % Ops $25 (15)% 15 % People Planet Profit.... with a sustainable future. 11 The Consumers Energy Way.... The CE Way Safety. Quality. Cost. Delivery. Morale CUSTOMER FOCUS BUSINESS RESULTS ENABLED EMPLOYEES Safety: Every day is a safe day Quality: We get it right the first time Cost: We see and eliminate waste Delivery: We get it done on time Morale: We are proud to serve CMS Energy: World Class Performance Delivering Hometown Service Sustainability Report Latest Presentation CONTINUOUS IMPROVEMENT STANDARDIZED PROCESSES.... a culture of continuous improvement. 10 The information in this document is current as of June 1, This document contains forward-looking statements that are subject to risks and uncertainties. It should be read in conjunction with the Forward-Looking Statements and Information and the Risk Factors sections of CMS Energy s 2016 Form 10-K and subsequent Forms 10-Q, which are incorporated herein by reference and discuss important factors that could cause CMS Energy s and Consumers results to differ materially from those anticipated in such statements.

4 CMS Energy: a Delivering 6% to 8% Earnings & Dividend Growth Simple, Perhaps Unique Model.... Customer investment (reliability, costs, enviro mandates) Self Funding: - O&M cost reductions - Sales growth - No block equity dilution & other INVESTMENT SELF-FUNDED Rate increase at or below inflation Plan 6% - 8% 2-3 pts pts < 2% Ten-year Customer Investment Plan.... Electric Distribution $18 billion Supply Gas Infrastructure & Maintenance.... continues to drive sustainable growth, with upside opportunities..... with opportunities to expand to $21 - $25 billion. Managing Work Every Year.... EPS a 2016 Mild $ Summer Cost productivity above plan $2.00 Cost productivity Reinvestment +13 above plan Storms $ Hot Mild Reinvestment Summer -13 Winter RECORD Hot WARM Cost Offsets Summer $ Reinvestment productivity above plan $1.40 $1.20 $1.000 O&M Cost Performance Helps to Fund.... Cost Productivity Actual Cost Reduction (Peers 2015 over 2006) Peer Average ~5% Mild Summer Summerless Summer Cost Cost productivity productivity _ a Adjusted EPS (non-gaap) Consumers -3% a year (thru 2016) Source: SNL, Form 1, Electric Non-fuel O&M Cost productivity Storms -13 Hot Summer New Annual Cost Savings Three-Year Avg Good Business Decisions (mils) (mils) Attrition $ - 16 $ - 16 Productivity (Coal Gas) Enhanced capitalization Smart Meters Consumers Energy Way Work Management & Eliminate Waste Increases Mortality, Disc. Rates, & Other Service Upgr./Inflation Net savings $ - 35 $ - 20 Percent savings > 3% a year! 2% a year!.... needed customer investments Customer O&M Reinvestment = $340 million (Source: ½ cost; ½ weather).... maximizes benefits for customers AND investors. Economic Development Growth.... a Our Service Territory Outperforms Grand Rapids Michigan U.S. b Building Permits +331% +227% +104% GDP Population Unemployment (4/17) ½ Grand Rapids ranked third best in USA for job creation & economic development by Area Development Magazine _ a Grand Rapids b Annualized numbers April 2010 April 2017 Spotlight on Ludington Fast Facts: Examples of New Business Electric Gas Combination Announcement Announcement 27-billion gallon reservoir Fourth largest in the world Total cost of upgrade: ~$800 MM Nominal capacity: ~2,200 MW Maximum output capacity: ~2,300 MW 1.65 MM customers post-upgrade References to earnings guidance refer to such guidance as provided by the company on May 1, _ a Adjusted EPS (non-gaap). See handout for reconciliations to the most directly comparable GAAP measures, which are also on our website at Printed on recycled paper Royal Technologies Ottawa Manufactures plastic injection components for multiple industries 66 new jobs $34 mil investment Continental Dairy Knauf GM Assembly Magna-Cosma Betz Post Denso Dicastal Switch Arauco C3 Ventures Enbridge Brembo Zeeland Farm Services Ithaca Products and services to the agriculture and transportation industries 74 new jobs $123 mil investment MACI Durolast Roofing Dart GM Assembly MSU FRIB Inteva.... is strong and diversified.

5 The Customer Experience Brian Rich Senior Vice President, Customer Experience & Technology

6 J.D. Power Customer Satisfaction Index Residential Customers Business Customers % % Today Today 1 Quartile National Avg. 1 Quartile National Avg. 2

7 Platforms For Customer Satisfaction Field Mobility Smart Grid Digital Customer Experience 3

8 Field Mobility IMPROVED FIELD COMMUNICATIONS ACCESS TO CUSTOMER DATA INCREASED FIELD SAFETY IMPROVED STORM RESTORATION ENHANCES CUSTOMER SERVICE 4

9 Operational Excellence & Customer Satisfaction Meter Read Rate Cost Reduction Example Invoice Reversals (MM) 15% Improvement! ~98% 1.1 Translates to $1.3 MM in Savings! 86% YE Forecast YE Forecast 5

10 Smart Grid ADVANCED METER READING OUTAGE RESPONSE PRICING PROGRAMS DEMAND PROGRAMS SYSTEM CONTROL 6

11 Operational Excellence & Customer Satisfaction Smart Meters $750 million customer investment 1.8 million meters; to be completed in 2017 Utilizing cellular connectivity Net Promoter Score Lift since 2012 Residential: 140% Business: 114% In Action Improve customer experience Reduce unnecessary truck rolls Allow faster response to known outages Smart Meter Installations; ~15% Remaining Shorten reported outage durations Reduces O&M costs by $5 MM annually over the next three years Smart meters improve quality while reducing costs. 7

12 Digital Customer Experience SELF-SERVICE OPTIONS Upgraded technology is cellular basedsafe REDUCED and secure CALL ways VOLUME for customers to receive accurate bills, access energy use online, and make outage 2-WAY CUSTOMER COMMUNICATIONS management more accurate. e-billing & PAYMENT PERSONALIZED EXPERIENCES VALUE ADDED PRODUCTS/SERVICES 8

13 Operational Excellence & Customer Satisfaction Performance since 2015 Cost Reduction Example Average Speed of Answer (ASA) has improved by 72% First Contact Resolution (FCR) has improved by 11% Live Call Reductions (MM) 5.5 Translates to $2.5 MM in Savings! 3.5 Combined Alert Enrollments have surpassed the 1M mark a 2,700% improvement! YE Forecast 9

14 GAAP Reconciliation

15 CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.42 $1.66 $1.74 $1.89 $1.98 Pretax items: Electric and gas utility 0.32 (0.60) - - (0.06) Tax impact (0.11) (0.01) (0.03) (0.22) (0.02) - (0.10) (0.01) Enterprises (0.12) 1.67 (0.02) 0.14 (0.05) * (0.01) * 0.05 * * Tax impact (0.19) (0.35) (0.02) 0.10 (0.42) * (0.05) 0.02 (0.11) * (*) (0.02) (*) (*) Corporate interest and other 0.25 (0.06) * - * * * * 0.02 Tax impact (0.09) 0.03 (0.02) (0.18) (0.49) (0.03) (*) (*) (0.01) (*) (*) (*) (*) (0.01) Discontinued operations (income) loss, net (0.16) 0.02 (0.07) (0.03) 0.40 (*) (0.08) 0.08 (0.01) (0.03) * (*) (*) * Asset impairment charges Tax impact - - (0.98) (0.31) (0.33) Cumulative accounting changes Tax impact (0.09) (0.01) Adjusted earnings per share, including MTM - non-gaap $0.81 $0.87 $1.39 $0.57 $0.84 $1.21 (a) $1.26 $1.36 $1.45 $1.55 $1.66 $1.77 $1.89 $2.02 Mark-to-market 0.04 (0.65) 0.80 Tax impact (0.01) 0.22 (0.29) Adjusted earnings per share, excluding MTM - non-gaap NA $0.90 $0.96 $1.08 NA NA NA NA NA NA NA NA NA NA * Less than $0.01 per share. (a) $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock. 4