Form 8-K DTE ENERGY CO For: Jul 26 Filed by: DTE Electric Co
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 8-K
_____________________________
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 2017
Commission File Number | Exact Name of Registrant as Specified in its Charter, State of Incorporation, Address of Principal Executive Offices and Telephone Number | IRS Employer Identification No. |
1-11607 | DTE Energy Company (a Michigan corporation) One Energy Plaza Detroit, Michigan 48226-1279 313-235-4000 | 38-3217752 |
1-2198 | DTE Electric Company (a Michigan corporation) One Energy Plaza Detroit, Michigan 48226-1279 313-235-4000 | 38-0478650 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under Exchange Act (17 CFR 240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
DTE Energy Company (DTE Energy) is furnishing the Securities and Exchange Commission (SEC) with its earnings release issued July 26, 2017, announcing financial results for the quarter ended June 30, 2017. A copy of the earnings release and the slide presentation, including supplemental financial information, are furnished as Exhibits 99.1 and 99.2 and incorporated herein by reference. In its earnings release and the slide presentation discussed below, DTE Energy increased its 2017 operating earnings guidance range from $5.15 - $5.46 to $5.26 - $5.57 per share.
Item 7.01. Regulation FD Disclosure.
DTE Energy is furnishing the SEC with its slide presentation issued July 26, 2017. A copy of the slide presentation is furnished as Exhibit 99.2 and incorporated herein by reference.
In its earnings release, slide presentation and this filing, DTE Energy discusses 2017 operating earnings guidance. It is likely that certain items that impact the company's 2017 reported results will be excluded from operating results. Reconciliations to the comparable 2017 reported earnings guidance are not provided because it is not possible to provide a reliable forecast of specific line items (i.e. future non-recurring items, certain mark-to-market adjustments and discontinued operations). These items may fluctuate significantly from period to period and may have a significant impact on reported earnings.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Earnings Release of DTE Energy Company dated July 26, 2017.
99.2 Slide Presentation of DTE Energy Company dated July 26, 2017.
Forward-Looking Statements:
This Form 8-K contains forward-looking statements that are subject to various assumptions, risks and uncertainties. It should be read in conjunction with the “Forward-Looking Statements” section in DTE Energy's and DTE Electric Company's (DTE Electric) 2016 Form 10-K and 2017 10-Qs (which sections are incorporated by reference herein), and in conjunction with other SEC reports filed by DTE Energy and DTE Electric that discuss important factors that could cause DTE Energy's and DTE Electric's actual results to differ materially. DTE Energy and DTE Electric expressly disclaim any current intention to update any forward-looking statements contained in this report as a result of new information or future events or developments.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
Date: July 26, 2017 | |
DTE ENERGY COMPANY (Registrant) | |
/s/ Peter B. Oleksiak Peter B. Oleksiak Senior Vice President and Chief Financial Officer | |
DTE ELECTRIC COMPANY (Registrant) | |
/s/ Peter B. Oleksiak Peter B. Oleksiak Senior Vice President and Chief Financial Officer | |
EXHIBIT INDEX
Exhibit
Number Description
99.1 Earnings Release of DTE Energy Company dated July 26, 2017.
99.2 Slide Presentation of DTE Energy Company dated July 26, 2017.
EXHIBIT 99.1
July 26, 2017
DTE Energy reports second quarter 2017 results, raises guidance
• | Announced broad sustainability initiative to reduce carbon emissions |
• | Ranked second in overall customer satisfaction with electric residential customers in the Midwest |
• | Named a top 10 ‘best place to work’ by Indeed in nationwide survey |
DETROIT - DTE Energy (NYSE: DTE) today reported second quarter 2017 earnings of $177 million, or $0.99 per diluted share, compared with $152 million or $0.84 per diluted share in 2016.
Operating earnings for the second quarter 2017 were $191 million or $1.07 per diluted share, compared with 2016 operating earnings of $177 million, or $0.98 per diluted share. Operating earnings exclude non-recurring items, certain mark-to-market adjustments and discontinued operations. Reconciliations of reported earnings to operating earnings are included at the end of this news release.
“Our financial performance this quarter was strong, putting us in a position to raise our 2017 earnings guidance,” said Gerry Anderson, DTE Energy Chairman and CEO. “The second quarter was important and encouraging on many fronts as well: we announced our strategy to reduce carbon emissions by more than 80 percent, achieved top decile customer satisfaction and employee safety results, received national recognition from Gallup and Indeed for the quality of our workplace, and continued our investments in Michigan companies.”
Anderson also noted the following recent company accomplishments:
• | Commitment to reduce carbon emissions over 80 percent by 2050: In May, DTE Energy announced a broad sustainability initiative that will reduce the company’s carbon emissions by more than 80 percent by 2050. This reduction and the 2050 timeframe align with the target scientists broadly have identified as necessary to help address climate change. DTE's efforts to cut its carbon emissions will garner a 30 percent reduction by the early 2020s, 45 percent by 2030, 75 percent by 2040 and more than 80 percent by 2050. |
• | Top decile customer satisfaction: Earlier this month, DTE Energy ranked second in overall customer satisfaction with electric utility residential customers in the Midwest among large utilities in J.D. Power's 2017 study. The recent results mark the seventh consecutive year that DTE Energy has ranked in the top quartile for Midwest large utilities. DTE has improved its customer satisfaction score every year since 2012. |
• | Recognized as great workplace: For the fifth consecutive year, DTE Energy was recognized by the Gallup organization as a Gallup Great Workplace, Gallup’s highest honor that was created to recognize organizations for their ability to create an engaged and high-performing workplace. This award is given to only a select group of companies and DTE ranks in the 97th percentile or top three percent in the world. |
• | Nationally-ranked employer: DTE Energy ranked seventh, ahead of Nike, Apple and The Walt Disney Company, in Indeed’s list of 50 Best Places to Work in 2017. The survey analyzed all Fortune 500 Index companies with over 5,000 employees, heavily weighting the site’s 15 million employee reviews as part of the evaluation criteria. DTE Energy’s top ten ranking was in the company of Salesforce, Facebook and Google. |
• | Consecutive years of gas safety recognition: For the second consecutive year, DTE Energy received the American Gas Association's (AGA) Safety Achievement Award for excellence in employee safety. The award, based on safety results in 2016, recognizes companies that have the lowest number of employee injuries and illnesses as measured by the Federal Occupational Safety and Health Administration (OSHA). |
• | Investing in Michigan: Through the first half of 2017, DTE Energy spent more than $840 million with Michigan-based companies as part of the Pure Michigan Business Connect initiative, with nearly $250 million spent within the City of Detroit. The company is 40 percent ahead of its year-to-date target putting |
DTE on track to spend more than $1 billion again this year with companies located in the state of Michigan. This spend helps drive the state and local economies and creates jobs without compromising cost or quality.
Outlook for 2017
DTE Energy increased its 2017 operating earnings per share guidance to $5.26 - $5.57 from $5.15 - $5.46.
“We are confident in raising our operating earnings guidance from a midpoint of $5.31 to $5.42 per share based on our continued strong performance within our non-utility businesses,” said Peter Oleksiak, DTE Energy senior vice president and chief financial officer.
This earnings announcement and presentation slides are available at dteenergy.com/investors.
DTE Energy plans to conduct a conference call with the investment community hosted by Anderson at 9 a.m. ET today to discuss second quarter 2017 earnings results. Investors, the news media and the public may listen to a live internet broadcast of the call at dteenergy.com/investors. The telephone dial-in numbers are U.S. and Canada toll free: (888) 505-4377 or International toll: (719) 325-2390. The passcode is 9327084. The webcast will be archived on the DTE Energy website at dteenergy.com/investors. An audio replay of the call will be available from noon today through noon Wednesday August 9, 2017. To access the replay, dial US and Canada toll free (888) 203-1112 or International toll (719) 457-0820 and enter passcode 9327084.
About DTE Energy
DTE Energy is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include an electric utility serving 2.2 million customers in Southeastern Michigan and a natural gas utility serving 1.3 million customers in Michigan. The DTE Energy portfolio includes non-utility energy businesses focused on power and industrial projects, natural gas pipelines, gathering and storage, and energy marketing and trading. Information about DTE Energy is available at dteenergy.com, twitter.com/dte_energy and facebook.com/dteenergy.
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 investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors.
In this release, DTE Energy discusses 2017 operating earnings guidance. It is likely that certain items that impact the company's 2017 reported results will be excluded from operating results. Reconciliations to the comparable 2017 reported earnings guidance are not provided because it is not possible to provide a reliable forecast of specific line items (i.e. future non-recurring items, certain mark-to-market movements and discontinued operations). These items may fluctuate significantly from period to period and may have a significant impact on reported earnings.
The information contained herein is as of the date of this release. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this release as a result of new information or future events or developments. Words such as “anticipate,” “believe,” “expect,” “may,” “could,” “projected,” “aspiration,” “plans” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various assumptions, risks and uncertainties. This release contains forward-looking statements about DTE Energy’s financial results and estimates of future prospects, and actual results may differ materially.
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 associated impact on rate structures; the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals, or new legislation, including legislative amendments and retail access programs; economic conditions and population changes in our geographic area resulting in changes in demand, customer conservation, and thefts of electricity and, for DTE Energy, natural gas; environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements; health, safety, financial, environmental, and regulatory risks associated with ownership and operation of nuclear facilities; changes in the cost and availability of coal and other raw materials, purchased power, and natural gas; volatility in the short-term natural gas storage markets impacting third-party storage revenues related to DTE Energy; impact of volatility of prices in the oil and gas markets on DTE Energy's gas storage and pipelines operations; impact of volatility in prices in the international steel markets on DTE Energy's power and industrial projects operations; volatility in commodity markets, deviations in weather, and related risks
impacting the results of DTE Energy's energy trading operations; changes in the financial condition of DTE Energy's significant customers and strategic partners; the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions; access to capital markets and the results of other financing efforts which can be affected by credit agency ratings; instability in capital markets which could impact availability of short and long-term financing; the timing and extent of changes in interest rates; the level of borrowings; the potential for increased costs or delays in completion of significant capital projects; changes in, and application of, federal, state, and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings, and audits; the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers; unplanned outages; the cost of protecting assets against, or damage due to, cyber crime and terrorism; employee relations and the impact of collective bargaining agreements; the risk of a major safety incident at an electric distribution or generation facility and, for DTE Energy, a gas storage, transmission, or distribution facility; the availability, cost, coverage, and terms of insurance and stability of insurance providers; cost reduction efforts and the maximization of plant and distribution system performance; the effects of competition; changes in and application of accounting standards and financial reporting regulations; changes in federal or state laws and their interpretation with respect to regulation, energy policy, and other business issues; contract disputes, binding arbitration, litigation, and related appeals; implementation of new information systems; and the risks discussed in our public filings with the Securities and Exchange Commission. New factors emerge from time to time. We cannot predict what factors may arise or how such factors may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. This presentation should also be read in conjunction with the Forward-Looking Statements section of the joint DTE Energy and DTE Electric 2016 Form 10-K and 2017 Forms 10-Q (which section is incorporated by reference herein), and in conjunction with other SEC reports filed by DTE Energy and DTE Electric.
For further information, members of the media may call:
Stephanie Beres, DTE Energy, 313.235.5555
For further information, analysts and investors may call:
Barbara Tuckfield, DTE Energy, 313.235.1018
Joyce Leslie, DTE Energy, 313.235.3209
DTE Energy Company | |||||||||||||||
Consolidated Statements of Operations (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Operating Revenues | |||||||||||||||
Utility operations | $ | 1,423 | $ | 1,435 | $ | 3,141 | $ | 3,099 | |||||||
Non-utility operations | 1,432 | 827 | 2,950 | 1,729 | |||||||||||
2,855 | 2,262 | 6,091 | 4,828 | ||||||||||||
Operating Expenses | |||||||||||||||
Fuel, purchased power, and gas — utility | 396 | 414 | 925 | 979 | |||||||||||
Fuel, purchased power, and gas — non-utility | 1,248 | 717 | 2,428 | 1,493 | |||||||||||
Operation and maintenance | 559 | 542 | 1,159 | 1,058 | |||||||||||
Depreciation and amortization | 249 | 243 | 498 | 472 | |||||||||||
Taxes other than income | 97 | 91 | 206 | 190 | |||||||||||
Asset (gains) losses and impairments, net | 3 | (1 | ) | 3 | (1 | ) | |||||||||
2,552 | 2,006 | 5,219 | 4,191 | ||||||||||||
Operating Income | 303 | 256 | 872 | 637 | |||||||||||
Other (Income) and Deductions | |||||||||||||||
Interest expense | 133 | 114 | 258 | 227 | |||||||||||
Interest income | (2 | ) | (3 | ) | (5 | ) | (14 | ) | |||||||
Other income | (66 | ) | (57 | ) | (130 | ) | (109 | ) | |||||||
Other expenses | 6 | 7 | 13 | 15 | |||||||||||
71 | 61 | 136 | 119 | ||||||||||||
Income Before Income Taxes | 232 | 195 | 736 | 518 | |||||||||||
Income Tax Expense | 57 | 50 | 167 | 133 | |||||||||||
Net Income | 175 | 145 | 569 | 385 | |||||||||||
Less: Net Loss Attributable to Noncontrolling Interests | (2 | ) | (7 | ) | (8 | ) | (14 | ) | |||||||
Net Income Attributable to DTE Energy Company | $ | 177 | $ | 152 | $ | 577 | $ | 399 | |||||||
Basic Earnings per Common Share | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 0.99 | $ | 0.84 | $ | 3.21 | $ | 2.22 | |||||||
Diluted Earnings per Common Share | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 0.99 | $ | 0.84 | $ | 3.21 | $ | 2.22 | |||||||
Weighted Average Common Shares Outstanding | |||||||||||||||
Basic | 179 | 179 | 179 | 179 | |||||||||||
Diluted | 179 | 180 | 179 | 180 | |||||||||||
Dividends Declared per Common Share | $ | 0.825 | $ | 0.73 | $ | 1.65 | $ | 1.46 | |||||||
DTE Energy Company | |||||||||||||||||||||||||
Segment Net Income (Unaudited) | |||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||
Reported Earnings | Adjustments | Operating Earnings | Reported Earnings | Adjustments | Operating Earnings | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||
DTE Electric | $ | 138 | $ | 10 | A | $ | 148 | $ | 135 | $ | — | $ | 135 | ||||||||||||
DTE Gas | 1 | — | 1 | 13 | — | 13 | |||||||||||||||||||
Non-utility operations | |||||||||||||||||||||||||
Gas Storage and Pipelines | 40 | — | 40 | 35 | — | 35 | |||||||||||||||||||
Power and Industrial Projects | 30 | — | 30 | 15 | 2 | C | 17 | ||||||||||||||||||
Energy Trading | — | 4 | B | 4 | (23 | ) | 23 | B | — | ||||||||||||||||
Total Non-utility operations | 70 | 4 | 74 | 27 | 25 | 52 | |||||||||||||||||||
Corporate and Other | (32 | ) | — | (32 | ) | (23 | ) | — | (23 | ) | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 177 | $ | 14 | $ | 191 | $ | 152 | $ | 25 | $ | 177 | |||||||||||||
Adjustments key | |||||||||||||||||||||||||
A) MPSC disallowance of power supply recovery costs related to a customer settlement — recorded in Operating Revenues — Utility operations and Other (Income) and Deductions — Interest expense (net of tax of $6M) | |||||||||||||||||||||||||
B) Certain adjustments resulting from derivatives being marked-to-market without revaluing the underlying non-derivative contracts and assets — recorded in Operating Expenses — Fuel, purchased power, and gas — non-utility (net of tax of $2M in 2017 and $15M in 2016) | |||||||||||||||||||||||||
C) Closure of Shenango coke battery due to impacts from downturn in North American steel industry — recorded in Operating Expenses — Asset (gains) losses and impairments (net of tax of $1M) | |||||||||||||||||||||||||
DTE Energy Company | |||||||||||||||||||||||||
Segment Diluted Earnings Per Share (Unaudited) | |||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||
Reported Earnings | Adjustments(1) | Operating Earnings | Reported Earnings | Adjustments(1) | Operating Earnings | ||||||||||||||||||||
DTE Electric | $ | 0.77 | $ | 0.06 | A | $ | 0.83 | $ | 0.75 | $ | — | $ | 0.75 | ||||||||||||
DTE Gas | 0.01 | — | 0.01 | 0.07 | — | 0.07 | |||||||||||||||||||
Non-utility operations | |||||||||||||||||||||||||
Gas Storage and Pipelines | 0.22 | — | 0.22 | 0.20 | — | 0.20 | |||||||||||||||||||
Power and Industrial Projects | 0.17 | — | 0.17 | 0.08 | 0.01 | C | 0.09 | ||||||||||||||||||
Energy Trading | — | 0.02 | B | 0.02 | (0.13 | ) | 0.13 | B | — | ||||||||||||||||
Total Non-utility operations | 0.39 | 0.02 | 0.41 | 0.15 | 0.14 | 0.29 | |||||||||||||||||||
Corporate and Other | (0.18 | ) | — | (0.18 | ) | (0.13 | ) | — | (0.13 | ) | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 0.99 | $ | 0.08 | $ | 1.07 | $ | 0.84 | $ | 0.14 | $ | 0.98 | |||||||||||||
(1) Per share amounts for the adjustments are based on the after-tax effect for each item, divided by the diluted weighted average common shares outstanding, as noted on the Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||||||||
Adjustments key — see previous page | |||||||||||||||||||||||||
DTE Energy Company | |||||||||||||||||||||||||
Segment Net Income (Unaudited) | |||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||
Reported Earnings | Adjustments | Operating Earnings | Reported Earnings | Adjustments | Operating Earnings | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||
DTE Electric | $ | 244 | $ | 10 | A | $ | 254 | $ | 262 | $ | — | $ | 262 | ||||||||||||
DTE Gas | 108 | — | 108 | 100 | — | 100 | |||||||||||||||||||
Non-utility operations | |||||||||||||||||||||||||
Gas Storage and Pipelines | 85 | — | 85 | 65 | — | 65 | |||||||||||||||||||
Power and Industrial Projects | 60 | — | 60 | 32 | 6 | C | 38 | ||||||||||||||||||
Energy Trading | 96 | (74 | ) | B | 22 | (30 | ) | 46 | B | 16 | |||||||||||||||
Total Non-utility operations | 241 | (74 | ) | 167 | 67 | 52 | 119 | ||||||||||||||||||
Corporate and Other | (16 | ) | — | (16 | ) | (30 | ) | — | (30 | ) | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 577 | $ | (64 | ) | $ | 513 | $ | 399 | $ | 52 | $ | 451 | ||||||||||||
Adjustments key | |||||||||||||||||||||||||
A) MPSC disallowance of power supply recovery costs related to a customer settlement — recorded in Operating Revenues — Utility operations and Other (Income) and Deductions — Interest expense (net of tax of $6M) | |||||||||||||||||||||||||
B) Certain adjustments resulting from derivatives being marked-to-market without revaluing the underlying non-derivative contracts and assets — recorded in Operating Expenses — Fuel, purchased power, and gas — non-utility (net of tax of $47M in 2017 and $30M in 2016) | |||||||||||||||||||||||||
C) Closure of Shenango coke battery due to impacts from downturn in North American steel industry — recorded in Operating Expenses — Asset (gains) losses and impairments (net of tax of $3M) | |||||||||||||||||||||||||
DTE Energy Company | |||||||||||||||||||||||||
Segment Diluted Earnings Per Share (Unaudited) | |||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||
Reported Earnings | Adjustments(1) | Operating Earnings | Reported Earnings | Adjustments(1) | Operating Earnings | ||||||||||||||||||||
DTE Electric | $ | 1.36 | $ | 0.06 | A | $ | 1.42 | $ | 1.46 | $ | — | $ | 1.46 | ||||||||||||
DTE Gas | 0.60 | — | 0.60 | 0.56 | — | 0.56 | |||||||||||||||||||
Non-utility operations | |||||||||||||||||||||||||
Gas Storage and Pipelines | 0.47 | — | 0.47 | 0.36 | — | 0.36 | |||||||||||||||||||
Power and Industrial Projects | 0.33 | — | 0.33 | 0.18 | 0.03 | C | 0.21 | ||||||||||||||||||
Energy Trading | 0.54 | (0.41 | ) | B | 0.13 | (0.17 | ) | 0.26 | B | 0.09 | |||||||||||||||
Total Non-utility operations | 1.34 | (0.41 | ) | 0.93 | 0.37 | 0.29 | 0.66 | ||||||||||||||||||
Corporate and Other | (0.09 | ) | — | (0.09 | ) | (0.17 | ) | — | (0.17 | ) | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 3.21 | $ | (0.35 | ) | $ | 2.86 | $ | 2.22 | $ | 0.29 | $ | 2.51 | ||||||||||||
(1) Per share amounts for the adjustments are based on the after-tax effect for each item, divided by the diluted weighted average common shares outstanding, as noted on the Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||||||||
Adjustments key — see previous page | |||||||||||||||||||||||||
Click to edit Master title style
2nd Quarter 2017
Earnings Conference Call
July 26, 2017
EXHIBIT 99.2
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
associated impact on rate structures; the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals, or
new legislation, including legislative amendments and retail access programs; economic conditions and population changes in our geographic
area resulting in changes in demand, customer conservation, and thefts of electricity and, for DTE Energy, natural gas; environmental issues,
laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements;
health, safety, financial, environmental, and regulatory risks associated with ownership and operation of nuclear facilities; changes in the cost
and availability of coal and other raw materials, purchased power, and natural gas; volatility in the short-term natural gas storage markets
impacting third-party storage revenues related to DTE Energy; impact of volatility of prices in the oil and gas markets on DTE Energy's gas
storage and pipelines operations; impact of volatility in prices in the international steel markets on DTE Energy's power and industrial projects
operations; volatility in commodity markets, deviations in weather, and related risks impacting the results of DTE Energy's energy trading
operations; changes in the financial condition of DTE Energy's significant customers and strategic partners; the potential for losses on
investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions; access
to capital markets and the results of other financing efforts which can be affected by credit agency ratings; instability in capital markets which
could impact availability of short and long-term financing; the timing and extent of changes in interest rates; the level of borrowings; the potential
for increased costs or delays in completion of significant capital projects; changes in, and application of, federal, state, and local tax laws and
their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings, and audits; the effects of weather and other
natural phenomena on operations and sales to customers, and purchases from suppliers; unplanned outages; the cost of protecting assets
against, or damage due to, cyber crime and terrorism; employee relations and the impact of collective bargaining agreements; the risk of a major
safety incident at an electric distribution or generation facility and, for DTE Energy, a gas storage, transmission, or distribution facility; the
availability, cost, coverage, and terms of insurance and stability of insurance providers; cost reduction efforts and the maximization of plant and
distribution system performance; the effects of competition; changes in and application of accounting standards and financial reporting
regulations; changes in federal or state laws and their interpretation with respect to regulation, energy policy, and other business issues; contract
disputes, binding arbitration, litigation, and related appeals; implementation of new information systems; and the risks discussed in our public
filings with the Securities and Exchange Commission. New factors emerge from time to time. We cannot predict what factors may arise or how
such factors may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak
only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. This presentation should also
be read in conjunction with the Forward-Looking Statements section of the joint DTE Energy and DTE Electric 2016 Form 10-K and 2017 Forms
10-Q (which section is incorporated by reference herein), and in conjunction with other SEC reports filed by DTE Energy and DTE Electric.
2
• Gerry Anderson – Chairman and CEO
• Jerry Norcia – President and COO
• Peter Oleksiak – Senior Vice President and CFO
• Barbara Tuckfield – Investor Relations Director
3
Participants
4
• Overview
• Long-Term Growth Update
• 2nd Quarter 2017 Financial Update
• Increasing 2017 operating EPS
guidance midpoint $0.11 to $5.42
• Announced plan to reduce carbon
emissions by more than 80 percent
• Ranked 2nd in residential customer
satisfaction** in Midwest at DTE Electric
• Gas Storage & Pipelines (GSP)
‒ Achieved milestone at Bluestone
Pipeline & Gathering
‒ Updating NEXUS in-service
• Power & Industrial Projects (P&I)
‒ Closed on second landfill gas
project
‒ Finalizing agreements on a large
scale central energy plant project
* Reconciliation of operating earnings (non-GAAP) to reported earnings included in the appendix
** J.D. Power 2017 Electric Utility Residential Customer Satisfaction Study (sm)(large providers). Visit jdpower.com 5
Strong results in 2nd quarter and increasing
operating EPS* guidance
6
Committed to providing cleaner energy to customers
and reducing carbon emissions by over 80%
Carbon emissions reduction goals
• Retiring aging coal-fired plants - ending use of coal by 2040
• Adding 3,500 megawatts of natural gas-fired energy capacity to supply 24/7
power and ensure reliability
• Constructing up to 4,000 megawatts of additional renewable energy capacity
Early 2020s
2030
2040
2050
2005
45%
75%
30%
>80%
7
• Overview
• Long-Term Growth Update
• 2nd Quarter 2017 Financial Update
8
Bluestone achieved 1.0 Bcf/d delivery milestone;
NEXUS and Link continue to progress
• Construction ready
‒ Right-of-way acquisition
essentially completed
‒ Majority of permits granted
• Two FERC nominees approved by the
Senate Energy and Natural
Resources Committee; two additional
candidates announced
• 2018 in-service date
• Additional wells continue to be
brought online by key producers
• Commercial expansion discussions
with producers on-going
* Includes Appalachia Gathering System (AGS) and 55% of Stonewall Gas Gathering (SGG)
Bluestone Pipeline & Gathering NEXUS
Link* Lateral & Gathering
0.3
Bcf/d
2017
• Achieved
1.0 Bcf/d
2011
• Established long-
term agreement to
build and operate
Bluestone
2012 - 2016
• Multiple expansions
completed
1.0
Bcf/d
• Commenced operations of recently
acquired landfill gas plant
• Began construction of new landfill gas
plant
‒ Contract signed 2Q 2017
‒ Targeting in-service 1H 2018
• Advanced discussions for several
other landfill gas opportunities
9
Recent developments support P&I’s long-term
growth plan
Landfill Gas Projects Industrial Central Energy Plant
• Both Boards approved in 2Q 2017
‒ Currently finalizing agreements
‒ Targeting in-service 2H 2019
• Multiple energy products
‒ Combined heat and power
‒ Chilled and hot water
10
• Overview
• Long-Term Growth Update
• 2nd Quarter 2017 Financial Update
2Q 2016 2Q 2017 Change
DTE Electric 135$ 148$ 13$
DTE Gas 13 1 (12)
Gas Storage & Pipelines 35 40 5
Power & Industrial Projects 17 30 13
Corporate & Other (23) (32) (9)
Growth segments** 177$ 187$ 10$
Growth segments operating EPS 0.98$ 1.05$ 0.07$
Energy Trading -$ 4$ 4$
DTE Energy 177$ 191$ 14$
Operating EPS 0.98$ 1.07$ 0.09$
Avg. Shares Outstanding 179.5 179.5
* Reconciliation of operating earnings (non-GAAP) to reported earnings included in the appendix
DTE Electric
• Rate implementation partially offset by
return to normal May 2017 weather
DTE Gas
• Warmer April 2017 weather and higher
O&M offset by rate implementation
Gas Storage & Pipelines
• Stronger pipeline and gathering
earnings
Power & Industrial Projects
• Higher REF volumes and steel-related
earnings
Corporate & Other
• Timing of taxes
Energy Trading
• Stronger gas performance
** Total DTE Energy excluding Energy Trading
(millions, except EPS)
Primary DriversOperating Earnings
11
2nd quarter operating earnings* were strong, up
$14 million versus prior year
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 - $15
$924 - $980
179.5
$5.15 - $5.46
(millions, except EPS)
* Reconciliation of operating earnings (non-GAAP) to reported earnings also included in the appendix
** Total DTE Energy excluding Energy Trading
Increasing 2017 operating EPS* guidance
midpoint by $0.11
12
Original
Guidance
Revised
Guidance
$610 - $624
143 - 151
145 - 155
100 - 110
(64) - (60)
$934 - $980
$5.21 - $5.46
$10 - $20
$944 - $1,000
179.5
$5.26 - $5.57
* Reconciliation of operating earnings (non-GAAP) to reported earnings included in the appendix 13
Summary
• Increasing 2017 operating EPS* guidance given strong financial performance
• Transforming generation fleet to reduce carbon emissions by more than 80 percent
• Driving utility growth through infrastructure investments focused on improving
reliability and the customer experience
• Continuing strategic and sustainable growth in non-utility businesses
• Delivering strong EPS and dividend growth that drive premium total shareholder
returns
DTE Energy Investor Relations
dteenergy.com/investors
(313) 235-8030
14
Contact us
Appendix
• Cooler weather
Variance to normal weather
– 2Q 2016: $14
– 2Q 2017: $1
• Rate implementation supports
infrastructure improvements to
enhance customer reliability
$135
$148($8)
($13)
$3
Primary DriversOperating Earnings* Variance
(millions)
2Q 2016
Operating
Earnings
2Q 2017
Operating
Earnings
Weather Rate
Implementation
Other
* Reconciliation of operating earnings (non-GAAP) to reported earnings also included in the appendix
$31
Rate
Base
16
DTE Electric variance analysis
YTD 2016 YTD 2017
DTE Electric
Distribution Infrastructure $224 $313
New Generation 55 34
Replacement & Other 361 390
$640 $737
DTE Gas
Base Infrastructure $93 $112
NEXUS Related 14 48
Main Replacement 50 71
$157 $231
Non-Utility $184 $243
Total $981 $1,211
YTD 2016 YTD 2017
Cash From Operations $1.3 $1.2
Capital Expenditures (1.0) (1.2)
Free Cash Flow $0.3 $0.0
Asset Sales & Other $0.0 ($0.1)
Dividends (0.3) (0.3)
Net Cash $0.0 ($0.4)
Debt Financing:
Issuances $0.6 $0.5
Redemptions (0.6) (0.1)
Change in Debt $0.0 $0.4
Capital ExpendituresCash Flow
(billions) (millions)
17
Cash flow and capital expenditures
2016
Actual
2017
Guidance
DTE Electric
Distribution infrastructure $567 $690
New generation 131 45
Replacement & 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
2016
Actual
2017
Guidance
Cash from operations $2.1 $1.9
Capital expenditures (3.4) (3.0)
Free cash flow ($1.3) ($1.1)
Asset sales & other $0.0 $0.0
Dividends (0.5) (0.6)
Net cash ($1.8) ($1.7)
Debt financing:
Issuances $2.7 $2.0
Redemptions (0.9) (0.3)
Change in debt $1.8 $1.7
Capital ExpendituresCash Flow
(billions) (millions)
Cash flow and capital expenditures guidance
support growth target
18
* Updated guidance based on $300 million redemptions announced July 2017 and planned issuances
*
*
21%
2016 2017-2019E
51%
2016 2017-2019E
Leverage*
Funds from Operations** / Debt*
Target
50% - 53%
Target
20% +
* Debt excludes a portion of DTE Gas’ short-term debt and considers 50% of the junior subordinated notes and 100% of the convertible equity units as equity
** Funds from Operations (FFO) is calculated using operating earnings
• Update on equity issuances:
‒ No equity issuances planned for
2017
‒ Acquisition related equity of $675
million in late 2019 (through
convertible equity units)
‒ No additional equity planned
through 2019
• $1.7 billion of available liquidity at
June 2017
• Successfully extended the existing
$1.9 billion credit facilities to 2022
Cash flow and balance sheet remain strong
19
Earnings impact of weather
Cooling degree days
** Includes choice of 2,486 YTD 2016 and 2,393 YTD 2017
Heating degree days
Earnings impact of weather
Weather Normal Electric Sales*
DTE Electric service territory
Variance from normal weather
(GWh)
Variance from normal weather
2Q 2016 2Q 2017 % change
Actuals 274 232 (15%)
Normal 215 215 0%
Deviation from normal 27% 8%
2Q 2016 2Q 2017 % change
Actuals 838 668 (20%)
Normal 774 786 2%
Deviation from normal 8% (15%)
($ millions, after-tax) 2Q YTD
2016 $14 $6
2017 $1 ($12)
($ millions, after-tax) 2Q YTD
2016 $3 ($11)
2017 ($5) ($26)
DTE Gas service territory
($ per share) 2Q YTD
2016 $0.08 $0.03
2017 $0.01 ($0.06)
($ per share) 2Q YTD
2016 $0.02 ($0.06)
2017 ($0.03) ($0.15)
YTD 2016 YTD 2017 % change
Residential 7,112 7,121 0%
Commercial 9,825 9,884 1%
Industrial 5,957 5,804 (3%)
Other 136 140 3%
TOTAL SALES** 23,030 22,949 0%
DTE Electric DTE Gas
DTE Electric service territory
20* Includes adjustments for temperature normalization and customer outages due to weather
YTD 2016 YTD 2017 % change
Actuals 274 232 (15%)
Normal 215 215 0%
Deviation from normal 27% 8%
YTD 2016 YTD 2017 % change
Actuals 3,755 3,461 (8%)
Normal 4,095 4,049 (1%)
Deviation from normal (8%) (15%)
Weather and DTE Electric weather normal sales
DTE Electric and DTE Gas Regulatory update
21
DTE Gas
DTE Electric
• Expect to file late 2017 / early 2018
• General rate case - April 2017 (U-18255)
– Requested rate recovery: $231 million; 10.5%
ROE
Staff testimony: August 2017
Cross examination: October 2017
Self implementation: November 2017
Briefs: November 2017
Final order: by April 2018
• Capacity charge case - April 2017 (U-18248)
• 5 year draft electric distribution plan - June 2017
(U-18014)
• Certificate of Necessity filing - July 2017
• Annual rate cases 2018+
*** Economic gross margin is the change in net fair value of realized and unrealized purchase and sale contracts including certain non-derivative contract costs
** Consists of 1) the income statement effect of not recognizing changes in the fair market value of certain non-derivative contracts including physical inventory and capacity contracts
for transportation, transmission and storage. These contracts are not marked-to-market, instead are recognized for accounting purposes on an accrual basis; 2) operating
adjustments for unrealized marked-to-market changes of certain derivative contracts
* Reconciliation of operating earnings (non-GAAP) to reported earnings also included in the appendix
2nd quarter and YTD 2017 Energy Trading
reconciliation of operating earnings* to economic
net income
22
• 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 measures to review
performance against financial targets and
budget
2Q
YTD
2016 2017
Operating Earnings* $0 $4
Accounting Adjustments** 12 (2)
Economic Net Income $12 $2
2016 2017
Operating Earnings* $16 $22
Accounting Adjustments** 14 0
Economic Net Income $30 $22
2Q 2017 Net Income (millions)*
After-tax items:
DTE
Electric DTE Gas
Gas
Storage &
Pipelines
Power &
Industrial
Projects
Corporate
& Other
Growth
Segments
Energy
Trading
DTE
Energy
Reported Earnings $138 $1 $40 $30 ($32) $177 $0 $177
PSCR disallowance 10 10 10
Certain mark-to-
market transactions
4 4
Operating Earnings $148 $1 $40 $30 ($32) $187 $4 $191
2nd quarter 2017 reconciliation of reported to
operating earnings (non-GAAP)
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 investors. Internally, DTE Energy uses operating
earnings to measure performance against budget and to report to the Board of Directors. Operating earnings are presented both with and without Energy Trading. The term “Growth
Segments” refers to DTE Energy without Energy Trading and represents the business segments that management expects to generate earnings growth going forward.
2Q 2017 EPS**
After-tax items:
DTE
Electric DTE Gas
Gas
Storage &
Pipelines
Power &
Industrial
Projects
Corporate
& Other
Growth
Segments
Energy
Trading
DTE
Energy
Reported Earnings $0.77 $0.01 $0.22 $0.17 ($0.18) $0.99 $0.00 $0.99
PSCR disallowance 0.06 0.06 0.06
Certain mark-to-
market transactions
0.02 0.02
Operating Earnings $0.83 $0.01 $0.22 $0.17 ($0.18) $1.05 $0.02 $1.07
* Total tax impact of adjustments to reported earnings: $9 million
** Total tax impact of adjustments to reported EPS: $0.05
23
2Q 2016 Net Income (millions)*
After-tax items:
DTE
Electric DTE Gas
Gas
Storage &
Pipelines
Power &
Industrial
Projects
Corporate
& Other
Growth
Segments
Energy
Trading
DTE
Energy
Reported Earnings $135 $13 $35 $15 ($23) $175 ($23) $152
Plant closure 2 2 2
Certain mark-to-
market transactions
23 23
Operating Earnings $135 $13 $35 $17 ($23) $177 $ 0 $177
2nd quarter 2016 reconciliation of reported to
operating earnings (non-GAAP)
* Total tax impact of adjustments to reported earnings: $16 million
** Total tax impact of adjustments to reported EPS: $0.09
2Q 2016 EPS**
After-tax items:
DTE
Electric DTE Gas
Gas
Storage &
Pipelines
Power &
Industrial
Projects
Corporate
& Other
Growth
Segments
Energy
Trading
DTE
Energy
Reported Earnings $0.75 $0.07 $0.20 $0.08 ($0.13) $0.97 ($0.13) $0.84
Plant closure 0.01 0.01 0.01
Certain mark-to-
market transactions
0.13 0.13
Operating Earnings $0.75 $0.07 $0.20 $0.09 ($0.13) $0.98 $0.00 $0.98
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 investors. Internally, DTE Energy uses operating
earnings to measure performance against budget and to report to the Board of Directors. Operating earnings are presented both with and without Energy Trading. The term “Growth
Segments” refers to DTE Energy without Energy Trading and represents the business segments that management expects to generate earnings growth going forward.
24
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
and uses operating earnings as the primary performance measurement for external communications with
analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against
budget and to report to the Board of Directors.
In this presentation, DTE Energy provides guidance for future period operating earnings. It is likely that
certain items that impact the company’s future period reported results will be excluded from operating
results. A reconciliation to the comparable future period reported earnings is not provided because it is not
possible to provide a reliable forecast of specific line items (i.e. future non-recurring items, certain mark-to-
market adjustments and discontinued operations). These items may fluctuate significantly from period to
period and may have a significant impact on reported earnings.
Reconciliation of reported to operating earnings
(non-GAAP)
25