Exhibit 99.1
Midwest Utilities Conference—Kohler
August 15, 2013
Cross Winds Energy Park Consumers Smart Energy Program
Gas Combined Cycle Plant
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, 2012 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 www.cmsenergy.com.
CMS Energy provides historical financial results on both a reported (Generally Accepted Accounting Principles) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. Management views adjusted earnings as a key measure of the company’s present operating financial performance, unaffected by discontinued operations, asset sales, impairments, regulatory items from prior years, or other items. These items have the potential to impact, favorably or unfavorably, the company’s reported earnings in future periods. Because the company is not able to estimate the impact of these matters, the company is not providing a reconciliation to the comparable future period reported earnings.
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Key Takeaways
EPS a Growth
$1.70
7% +7% 5% +7% +8%
+12% +4% +12%
Actual EPS = 7%
+7%
+11% Yield ~4%
Actual EPS = 8% Yield ~3%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
Growth
5%-7% real growth
Dividend growth in line with earnings
Gross operating cash flow up $0.1 billion per year
Transparent
Ten-year investment plan
Constructive regulatory climate
Predictable
On track for 11th consecutive year of consistent, attractive financial performance
. . . . distinguish CMS.
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CMS Managed its Work in 2012 . . . .
Adjusted EPS
(non-GAAP) First Half Second Half
+13¢
Hot Summer
$1.55
Guidance $1.52 to $1.55
Warm Winter
-13¢
delivering the high side of performance for customers and owners.
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CMS Manages its Work in 2013 . . . .
Adjusted EPS
(non-GAAP) First Half Second Half
Better Than Plan
Sales
Health care
Financing & other
Net Benefits
Reinvestment
4¢ +14¢ Reliability complete 6¢
2 Gas case deferred 3
1 Reliability & other 5
7¢ Total Reinvestment 14¢
+7¢
Electric Weather
Guidance
. . . . by reinvesting cost savings and weather benefits into customer service.
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Business Model . . . .
EPSa
7% $1.55 5% $1.45 $1.36
$1.26
b
$1.21
$1.08 $0.96 $0.90
$0.84 $0.81
Needed investment
Customer driven
Ten-year visibility
Regulatory support
Self-funded
Consistent high growth
EPS & dividend
Operating cash flow
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E Future
Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
$1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock
delivers consistent financial performance.
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Michigan’s Constructive Regulation . . . .
New Commissioner Commission
Previous Experience
Public Sector Consultants
Provided support for 2008 energy law
Provided research for Appendix A
Michigan Public Service Commission
Michigan Department of
Environmental Quality John Quackenbush (R), Chairman
Public Utility Commission of Texas Term Ends: July 2, 2017
Education
BS—Michigan State University
MPA—University of Texas-Austin
Sally Talberg (I)
Term Ends: July 2, 2019
Greg White (I)
Term Ends: July 2, 2015
strong law on the books supported by a quality commission.
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Trend of O&M Cost Savings . . . .
Percent Change 25%
Inflation
-21% Cost Reductions
0
Prior Plan
-9%
Accelerated Cost
-6%
Reductions
New Plan
-15%
-25%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Lines smoothed for illustrative purposes.
accelerating; reducing risk.
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Strong Customer Focus
– Cost Control . . . .
Average O&M Annual Change Examples of Cost Reductions
7% Amount Avg. Past (annual average) (mils)
Utilities
• |
| Western coal $250 |
2% Inflation 2% • Workforce restructuring 70 Avg. -8% -3% and benefit plans
Utilities
• |
| SAP 40 Consumers Productivity 50 |
-2% -1% -0.5%
Reinvested
Future (est. annual average)
-6% -6%
• |
| Classic 7 mothballed $20 |
• |
| Productivity 10 |
• |
| Benefit plans 30 |
• |
| Consumers Smart Energy 10 |
2006-2012 2012 2013E 2013-2017E
Annual Average 2012 Base Total Future Savings $70
holds down rates and helps fund better system reliability.
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Strong Customer Focus – Cost Control
Average O&M Annual Change
7%
Avg.
Utilities
-8%
2006-2012 2012 2013E 2013-2017E Annual Average 2012 Base
Examples of Cost Reductions
Annual
Future(mils)
Classic 7 mothballed $20
Productivity 10
Benefit plans 30
Consumers Smart Energy 10
Additional cost controls
• Retiree health care $50
Tax benefits (COR) 70
Cross Winds® (PTC) 10
Low cost financing 8
Annual Reductions $208
has been enhanced and accelerated.
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New Cost Savings
Gas Rate Case Avoideda Electric Rate Case Avoideda
?$100 Benefits
$49 Tax
Benefits
Tax/Other
Cross Winds?
$0 $0
2013 2014 2014
a Until 2015 test year
fully fund elimination of gas and electric cases!
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Regulatory Filings
2013 ELECTRIC
File rate annual case
Securitization
Tax CON
Case
GAS
File rate annual case
Base Ratesa
ROE 10.3% EPS 5%—7% 2013
a Includes surcharges
2014 2015 2016 Avoid On Track New Michigan • Gas Plant Energy Policy • CON filed July 12
Air Permit approved July 26
Tax Accounting Request filed August 2
Avoid
Securitization filing September No Increase < Inflation
10.3% 10.3%
5%—7% 5%—7% 5% -5% 7%- 7% 2014 2015 2016
simplified to benefit customers.
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Enhanced Near-Term Strategy
Prior
New
Rate case filings Annual Avoid until 2015 (test year)
Lowers
ROE Subject to review 10.3% into 2015 Risk
Customer base rate increases < 2% 0% thru 2014, < 2% after
Helps
Investment (2013-17) $7 billion $7 billion Customers
(Free 700 MW GCC)
O&M costs (2013-17) -1% -2% Sustains
Growth
EPS, OCF & dividend growth 5%—7% 5%—7%
allows CMS to deliver even more benefits to customers and shareowners.
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Michigan Economy Performance . . . .
Gross Domestic Product – 2010 through 2012
WA 5th
MT ND
8.1 31.0 Best 6.7 MN
8.2 ME
SD 11%
OR WI 2.7 ID 4.7
13.8 VT NH
2.1 WY 5.9
MI NY 8.2 IA 6.1
(3.5) NE 6.6 MA
11.0 6.6
7.4 7.9 IL PA
NV RI 5.9 IN OH CT
UT CO 5.9 NJ
2.9 KS 2.4
12.3 7.3 1.0 8.7 6.2 MO MD 3.1 7.3 WV
4.3 KY VA DE 8.7 6.1 7.5 CA 8.6 1.4 OK TN
5.0 8.4 NC DC 4.7 AR 5.7 AZ NM 5.6 4.6 4.2 SC
0.7 MS
GA 7.6 AL
3.2
TX LA 5.0 5.7
13.0 4.6
FL
HI AK 3.6 Highest quintile 6.9 1.2 Fourth quintile Third quintile
U.S. Total = 6.7% Second quintile
Lowest quintile
Source: U.S. Department of Commerce – bea.gov, real GDP 2005 chained dollars, 2012 advance and 2009 – 2011 revised, 6/6/13
among the best in the nation.
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Central West Michigan
Employment New or Expanding Businesses
10-Year History 2013 Announcements
Thousands
980
UP 7% since Sep-09
Statewide Numbers Investment—$3.3B
955 Jobs—21,600
50,000 jobs
930 JR Automation
Alticor Magna Undercar Challenge Center
905 Pulverdryer
Dieomatic Dart Container Denso Getman Mol-Son Martinrea 880 Summit Polymers
2003 2005 2007 2009 2011 2013
Source: http://www.michiganadvantage.org/Projects/ & http://milmi.org/
employment has returned; businesses are coming into area or expanding.
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Ten-Year Capital Investment Plan
Clean Power Capacity Reliability Infrastructure
$3 Billion $2 Billion $3.5 Billion $4 Billion
Environmental New gas generation Consumers Smart Energy Gas distribution
Renewable energy Ludington Pumped Storage Main replacements Propane switching
Gas conversions Pipeline replacements Electric reliability Electric distribution
.in customer projects (none “bet the Company”) represents 80% of $15 billion plan.
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Capital Investment Plan
2013 – 2017 Plan Opportunity Level
Faster Smart Energy
< $7 Billion Pipe replacements $10
Pole replacements Billion
More gas generation
Customer base rates <2%
>4%
at sustainable and affordable pace, in low-risk, “bite size” projects.
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Capacity Needed
Installed Capacity Excl Classic 7 Classic 7
MW New Gas Plant Peak Demand with Reserve Margin 10,500
9,500
8,500 Market Purchases
7,500 6,500 5,500
4,500
2013 2014 2015 2016 2017 2018
to meet reserve requirements.
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New Gas Plant CON Filed
CON filed July 12th
Expected decision within nine months
Reliability to be maintained for customers
Capacity needed to support future energy needs
Investment in Michigan to provide jobs and economic benefits
2012 2013 2014 2015 2016 2017
Air Permit
Submitted Approved July 25
Certificate of
Filed 7/12 Approval
Necessity? Project
Award Major Full Notice Commercial Contracts to Proceed Operation
Investment (mils) $6 $106 $345 $253 $40
progress continues as spending ramps-up post approvals.
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Near-Term Catalysts
Catalysts Progress
1. Constructive regulation New commissioner appointed, Sally Talberg
2. Rate cases Avoided electric and gas rate cases to 2015 test year
3. Cost of removal Tax order anticipated by October 1st
4. Securitization To be filed this fall
5. Gas plant CON CON filed 7/12, order by early April 2014
6. Capital investment 10-year visibility, $15 billion investment plan
7. Self-funded growth NOLs and tax credits avoid need for block equity
progress continues, more opportunities ahead.
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Key Takeaways
EPS a Growth
$1.70
7% +7% 5% +7% +8%
+12% +4% +12%
Actual EPS = 7%
+7%
+11% Yield ~4%
Actual EPS = 8% Yield ~3%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
Growth
5%-7% real growth
Dividend growth in line with earnings
Gross operating cash flow up $0.1 billion per year
Transparent
Ten-year investment plan
Constructive regulatory climate
Predictable
On track for 11th consecutive year of consistent, attractive financial performance
distinguish CMS.
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Q & A Session
Upcoming Event
Investor Day—Grand Rapids, Michigan October 24
Appendix
EPS Growth
Net NOLs and Tax Credits
$0.8 $0.7 $0.7
$0.4 $0.4
$0.2 $0.1
2011 2012 2013E 2014E 2015E 2016E 2017E
Gross NOLs (bils) $1.5 $ 1.2 $ 1.1 $ 0.3 $ 0.2 $ 0 $ 0
“Block” Equity a $0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
a Maintain existing DRIP and continuous equity program
self-funded.
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Operating Cash Flow Growth
Amount (bils) $2.5
Gross operating cash flowa $2.2 up $0.1 billion per year 2.0 $1.8 $1.7 $1.6 1.5 Interest $1.5 rking capital $1.4 $1.3 taxes
1.0
Base Investment
0.5 Investment choices
0
Cash flow before dividend
(0.5)
2011 2012 2013E 2014E 2015E 2016E 2017E
NOLs & Credits $0.8 $0.7 $0.7 $0.4 $0.4 $0.2 $0.1
a Non-GAAP
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Liquidity (as of 6/30/13)
Availability
$2.0 Billion CMS Energy 5-year revolver—2017 $548 mils
Consumers Energy
5-year revolver—2017 498
5-year revolver—2017 150
AR Facility—2014 250
Cash
537
Recent Financing Activities
CMS Energy
$250 million Senior Notes, 4.7% due 2043
$20 million Continuous Equity Program issued in mid-March
Consumers Energy
$425 million FMB, 3.95% due 2043
$325 million FMB, 3.375% due 2023
. . . . strong and conservative.
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GAAP Reconciliation
CMS ENERGY CORPORATION
Earnings Per Share By Year GAAP Reconciliation
(Unaudited)
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |||||||||||||||||||||||||||||||
Reported earnings (loss) per | ($ | 0.30 | ) | $ | 0.64 | ($ | 0.44 | ) | ($ | 0.41 | ) | ($ | 1.02 | ) | $ | 1.20 | $ | 0.91 | $ | 1.28 | $ | 1.58 | $ | 1.42 | ||||||||||||||||
After-tax items: | ||||||||||||||||||||||||||||||||||||||||
Electric and gas utility | 0.21 | (0.39 | ) | — | — | (0.07 | ) | 0.05 | 0.33 | 0.03 | 0.00 | 0.17 | ||||||||||||||||||||||||||||
Enterprises | 0.74 | 0.62 | 0.04 | (0.02 | ) | 1.25 | (0.02 | ) | 0.09 | (0.03 | ) | (0.11 | ) | (0.01 | ) | |||||||||||||||||||||||||
Corporate interest and other | 0.16 | (0.03 | ) | 0.04 | 0.27 | (0.32 | ) | (0.02 | ) | 0.01 | * | (0.01 | ) | * | ||||||||||||||||||||||||||
Discontinued operations (income) loss | (0.16 | ) | 0.02 | (0.07 | ) | (0.03 | ) | 0.40 | ( | *) | (0.08 | ) | 0.08 | (0.01 | ) | (0.03 | ) | |||||||||||||||||||||||
Asset impairment charges, net | — | — | 1.82 | 0.76 | 0.60 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Cumulative accounting changes | 0.16 | 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 | |||||||||||||||||||
Mark-to-market impacts | 0.03 | (0.43 | ) | 0.51 | ||||||||||||||||||||||||||||||||||||
Adjusted earnings per share, excluding MTM - non-GAAP | NA | $ | 0.90 | $ | 0.96 | $ | 1.08 | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||
| * | Less than $500 thousand or $0.01 per share. |
| (a) | $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock. |
2003-12 EPS
CMS Energy
Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
(unaudited)
(mils)
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||||||||
Consumers Operating Income + Depreciation & Amortization | $ | 1,527 | $ | 1,635 | $ | 1,735 | $ | 1,821 | $ | 1,948 | $ | 2,011 | $ | 2,113 | ||||||||||||||
Enterprises Project Cash Flows | 24 | 17 | 20 | 29 | 37 | 44 | 56 | |||||||||||||||||||||
Gross Operating Cash Flow | $ | 1,551 | $ | 1,652 | $ | 1,755 | $ | 1,850 | $ | 1,985 | $ | 2,055 | $ | 2,169 | ||||||||||||||
Other operating activities including taxes, interest payments and working capital | (382 | ) | (411 | ) | (405 | ) | (400 | ) | (435 | ) | (805 | ) | (819 | ) | ||||||||||||||
Net cash provided by operating activities | $ | 1,169 | $ | 1,241 | $ | 1,350 | $ | 1,450 | $ | 1,550 | $ | 1,250 | $ | 1,350 | ||||||||||||||
2011-17 OCF